Bubble bust and changing landscape

[Eugene]

Let’s draw our attention away from the economic crisis and the bailout and back towards the housing bust for a minute.

We have, roughly, three tiers and they all behave differently in this bust. Top tier (Rancho Bernardo & up) is very resilient and sticky, not a lot of foreclosures, everyone wants to live there if they can afford to, the dynamic is obvious. Middle tier (Clairemont) is not doing so well, but ultimately it consists of areas where you might agree to live if the price is right. So, there’s a light at the end of the tunnel somewhere.

Now the interesting one is the low tier. Places like Golden Hill, National City. No one really likes those. I think that people live there just because they happen to own a house (maybe they’ve inherited it, or bought when National City wasn’t such a dump – if there ever was such a time). There was some kind of balance in those areas before 2000. Since 2000, prices skyrocketed, many houses changed hands, many people refinanced into subprime loans. And now the balance is broken. Lots and lots of poor people are getting kicked out of their houses, and buyers are nowhere to be found. The shallow pool of potential owner-occupants is exhausted by years of subprime excesses. Investors tend snatch properties here and there, but most sane people would keep out of there.
I see many houses in the low tier below 150k, surely they’d pencil out as rentals … except you have to keep in mind that prospective renters aren’t exactly model citizens.

Race is another factor that throws the wrench in the works. Much of the low tier is Hispanic, and many of them are in the country illegally. Illegal status is a big obstacle to getting a government-sponsored loan.

So what’s going to happen to the slums of San Diego County over the next years?

– Will investors save the day, buy off all foreclosures, and convert them into rentals?
– Am I underestimating the number of people willing to buy in National City and Encanto?
– Will we see an exodus of illegals (and some legals, too) followed by bulldozers tearing down parts of the city? More generally, what’s going to happen to all the people who lose their low-tier houses?
– Is there possibility of gentrification in some areas, as losers make way for honest working people with abilities to qualify for mortgages? Or the other way around – half-decent neighborhoods ruined by the collapse in housing prices?
– Does the municipal attitude towards illegals affect things? For example, San Diego is a “sanctuary city” (if I’m not mistaken), and Escondido is a rather inhospitable place for illegals. I think that San Diego has a better chance to “weather the storm” without major changes in demographics, and Escondido will either gentrify or turn into a ghost town.

So many big questions, so few answers.

[Ex-SD]

Good questions!
* Unfortunately, when either McCain or Obama is elected to the Presidency, it’s not a far stretch to see that the door to legalizing all the illegals that are already in the USA will swing wide open. So, once they’re legal (Probably within two years after the election), this will open another door for new government programs to help the poor immigrants find a low cost home. I can see it coming like a Greyhound Bus coming right at us.
Of course, as values continue to fall over the next couple of years, investors will buy many of these properties and convert them to rentals.
That’s my vision through the crystal ball. YMMV 🙂

[Ex-SD]

Good questions!
* Unfortunately, when either McCain or Obama is elected to the Presidency, it’s not a far stretch to see that the door to legalizing all the illegals that are already in the USA will swing wide open. So, once they’re legal (Probably within two years after the election), this will open another door for new government programs to help the poor immigrants find a low cost home. I can see it coming like a Greyhound Bus coming right at us.
Of course, as values continue to fall over the next couple of years, investors will buy many of these properties and convert them to rentals.
That’s my vision through the crystal ball. YMMV 🙂

[Ex-SD]

Good questions!
* Unfortunately, when either McCain or Obama is elected to the Presidency, it’s not a far stretch to see that the door to legalizing all the illegals that are already in the USA will swing wide open. So, once they’re legal (Probably within two years after the election), this will open another door for new government programs to help the poor immigrants find a low cost home. I can see it coming like a Greyhound Bus coming right at us.
Of course, as values continue to fall over the next couple of years, investors will buy many of these properties and convert them to rentals.
That’s my vision through the crystal ball. YMMV 🙂

[Ex-SD]

Good questions!
* Unfortunately, when either McCain or Obama is elected to the Presidency, it’s not a far stretch to see that the door to legalizing all the illegals that are already in the USA will swing wide open. So, once they’re legal (Probably within two years after the election), this will open another door for new government programs to help the poor immigrants find a low cost home. I can see it coming like a Greyhound Bus coming right at us.
Of course, as values continue to fall over the next couple of years, investors will buy many of these properties and convert them to rentals.
That’s my vision through the crystal ball. YMMV 🙂

[Ex-SD]

Good questions!
* Unfortunately, when either McCain or Obama is elected to the Presidency, it’s not a far stretch to see that the door to legalizing all the illegals that are already in the USA will swing wide open. So, once they’re legal (Probably within two years after the election), this will open another door for new government programs to help the poor immigrants find a low cost home. I can see it coming like a Greyhound Bus coming right at us.
Of course, as values continue to fall over the next couple of years, investors will buy many of these properties and convert them to rentals.
That’s my vision through the crystal ball. YMMV 🙂

[LAAFTERHOURS]

ESmith – A couple of thoughts. Where have you seen RB not having a lot of foreclosures when 4s, Del sur and Santaluz are considered RB West and has REOs/SSs/Fore’s everywhere? I guess you can quantify 92127 as top tier bc of their sale prices.

Secondly, Part of golden hill (The northwestern corner that hugs the park around Grape) is not a slum, nor would it be on the same level as National City. I would say clairemont is worse and therefore should be in the low tier.

I highly doubt you will see a home for 150 in Golden Hill/North Park unless it is east of the 805 or north of University and is a 2 bed 1 bath.

[LAAFTERHOURS]

ESmith – A couple of thoughts. Where have you seen RB not having a lot of foreclosures when 4s, Del sur and Santaluz are considered RB West and has REOs/SSs/Fore’s everywhere? I guess you can quantify 92127 as top tier bc of their sale prices.

Secondly, Part of golden hill (The northwestern corner that hugs the park around Grape) is not a slum, nor would it be on the same level as National City. I would say clairemont is worse and therefore should be in the low tier.

I highly doubt you will see a home for 150 in Golden Hill/North Park unless it is east of the 805 or north of University and is a 2 bed 1 bath.

[LAAFTERHOURS]

ESmith – A couple of thoughts. Where have you seen RB not having a lot of foreclosures when 4s, Del sur and Santaluz are considered RB West and has REOs/SSs/Fore’s everywhere? I guess you can quantify 92127 as top tier bc of their sale prices.

Secondly, Part of golden hill (The northwestern corner that hugs the park around Grape) is not a slum, nor would it be on the same level as National City. I would say clairemont is worse and therefore should be in the low tier.

I highly doubt you will see a home for 150 in Golden Hill/North Park unless it is east of the 805 or north of University and is a 2 bed 1 bath.

[LAAFTERHOURS]

ESmith – A couple of thoughts. Where have you seen RB not having a lot of foreclosures when 4s, Del sur and Santaluz are considered RB West and has REOs/SSs/Fore’s everywhere? I guess you can quantify 92127 as top tier bc of their sale prices.

Secondly, Part of golden hill (The northwestern corner that hugs the park around Grape) is not a slum, nor would it be on the same level as National City. I would say clairemont is worse and therefore should be in the low tier.

I highly doubt you will see a home for 150 in Golden Hill/North Park unless it is east of the 805 or north of University and is a 2 bed 1 bath.

[LAAFTERHOURS]

ESmith – A couple of thoughts. Where have you seen RB not having a lot of foreclosures when 4s, Del sur and Santaluz are considered RB West and has REOs/SSs/Fore’s everywhere? I guess you can quantify 92127 as top tier bc of their sale prices.

Secondly, Part of golden hill (The northwestern corner that hugs the park around Grape) is not a slum, nor would it be on the same level as National City. I would say clairemont is worse and therefore should be in the low tier.

I highly doubt you will see a home for 150 in Golden Hill/North Park unless it is east of the 805 or north of University and is a 2 bed 1 bath.

[peterb]

Interesting observations and analysis. However, I think that the RE market does not exist in it’s own universe. The overall economy plays and huge and dynamic role in the condition of the RE market. Rising unemployment is going to really kill it. IMO.
(I’d be curious to know how South Park and North Park are holding up?)

If you follow Mr. Mortgage, then you will see a huge number of larger dollar loans coming into the foreclosure arena. My thesis is that these loans are in the more coveted areas like RB, 4S, etc…
An economic contraction usually hits the low-end first because they’re often already financially stressed and have little back-up reserve. As this contraction persists, it starts to effect wealthier people that have been holding-out for the recovery that has not yet arrived.

One of the realtor’s on this site brought up the concept of seeing who’s behind on their property tax payments as in indicator of financial stress. I believe this may be better than NOD’s from lenders because I think it’s public record and not subject to the crap that lenders are pulling right now in a sorry effort to save themselves.
Anyone have feedback on this?

On areas changing:It has been my experience that a recession has the opposite effect of gentrification. That is, bad areas get worse and areas that were getting gentrified start going south fast as the recession continues.

[peterb]

Interesting observations and analysis. However, I think that the RE market does not exist in it’s own universe. The overall economy plays and huge and dynamic role in the condition of the RE market. Rising unemployment is going to really kill it. IMO.
(I’d be curious to know how South Park and North Park are holding up?)

If you follow Mr. Mortgage, then you will see a huge number of larger dollar loans coming into the foreclosure arena. My thesis is that these loans are in the more coveted areas like RB, 4S, etc…
An economic contraction usually hits the low-end first because they’re often already financially stressed and have little back-up reserve. As this contraction persists, it starts to effect wealthier people that have been holding-out for the recovery that has not yet arrived.

One of the realtor’s on this site brought up the concept of seeing who’s behind on their property tax payments as in indicator of financial stress. I believe this may be better than NOD’s from lenders because I think it’s public record and not subject to the crap that lenders are pulling right now in a sorry effort to save themselves.
Anyone have feedback on this?

On areas changing:It has been my experience that a recession has the opposite effect of gentrification. That is, bad areas get worse and areas that were getting gentrified start going south fast as the recession continues.

[peterb]

Interesting observations and analysis. However, I think that the RE market does not exist in it’s own universe. The overall economy plays and huge and dynamic role in the condition of the RE market. Rising unemployment is going to really kill it. IMO.
(I’d be curious to know how South Park and North Park are holding up?)

If you follow Mr. Mortgage, then you will see a huge number of larger dollar loans coming into the foreclosure arena. My thesis is that these loans are in the more coveted areas like RB, 4S, etc…
An economic contraction usually hits the low-end first because they’re often already financially stressed and have little back-up reserve. As this contraction persists, it starts to effect wealthier people that have been holding-out for the recovery that has not yet arrived.

One of the realtor’s on this site brought up the concept of seeing who’s behind on their property tax payments as in indicator of financial stress. I believe this may be better than NOD’s from lenders because I think it’s public record and not subject to the crap that lenders are pulling right now in a sorry effort to save themselves.
Anyone have feedback on this?

On areas changing:It has been my experience that a recession has the opposite effect of gentrification. That is, bad areas get worse and areas that were getting gentrified start going south fast as the recession continues.

[peterb]

Interesting observations and analysis. However, I think that the RE market does not exist in it’s own universe. The overall economy plays and huge and dynamic role in the condition of the RE market. Rising unemployment is going to really kill it. IMO.
(I’d be curious to know how South Park and North Park are holding up?)

If you follow Mr. Mortgage, then you will see a huge number of larger dollar loans coming into the foreclosure arena. My thesis is that these loans are in the more coveted areas like RB, 4S, etc…
An economic contraction usually hits the low-end first because they’re often already financially stressed and have little back-up reserve. As this contraction persists, it starts to effect wealthier people that have been holding-out for the recovery that has not yet arrived.

One of the realtor’s on this site brought up the concept of seeing who’s behind on their property tax payments as in indicator of financial stress. I believe this may be better than NOD’s from lenders because I think it’s public record and not subject to the crap that lenders are pulling right now in a sorry effort to save themselves.
Anyone have feedback on this?

On areas changing:It has been my experience that a recession has the opposite effect of gentrification. That is, bad areas get worse and areas that were getting gentrified start going south fast as the recession continues.

[Author]

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