November 18, 2006 at 12:50 PM #7936
I was at Fashion Valley mall last night – it was packed – restaurants busy, shops full of people, and everyone was buying.
I picked mid November for our meet-up because 2 months ago I figured this crash would be well underway, and we’d be seeing more signs in the general economy.
I haven’t seen any changes though. What gives?November 18, 2006 at 1:01 PM #40269
Fashion Valley is always packed. I don’t get it….I think most of the parking is for the restaurants. Pottery Barn and Restoration Hardware are usually empty. The busiest stores are Victoria’s Secret and the Apple store and Nordstrom’s. Housing, auto sales, home improvement/furnishing retailers are feeling the slowdown, but other retailers are still doing well. Could it be that people are out of money for the $40K bathroom remodel, but not for the $95 shoes? So the less costly retail items are still selling. That’s been my conclusion so far. What do you think?
I also noticed that the lending guidelines are not yet enacted, so MEW is still going strong.November 18, 2006 at 1:14 PM #40272
Maybe it’s all the renters that can still afford to shop? What % of SD rents vs. owns?
My brother-in-law (bankruptcy attorney) says he is seeing a lot of people who are about to foreclose. The first thing he tells them is to stop paying their house payment (since it’s going to happen anyway.) So, maybe even people who are going to foreclose are still shopping? We do live in a culture that thinks shopping brings happiness.
Are other malls just as packed? Or is just FV?
All the cars in the lots seemed all shiny and new too.November 18, 2006 at 1:20 PM #40273carlislematthewParticipant
I also noticed that the lending guidelines are not yet enacted, so MEW is still going strong.
I read over the new guidelines and the commentary the feds provided on them. One part that was of interest to me was:
“Many commenters voiced concern that the guidance will not apply to all lenders, and thus federally regulated financial institutions will be at a competitive disadvantage. The Agencies note that both state financial regulatory organizations that commented on the proposed guidance – the Conference of State Bank Supervisors (CSBS) and the State
Financial Regulators Roundtable (SFRR) – committed to working with state regulatory agencies to distribute guidance that is similar in nature and scope to the financial service providers under their jurisdictions. These commenters noted their interest in addressing
the potential for inconsistent regulatory treatment of lenders based on whether or not they are supervised solely by state agencies. Subsequently, the CSBS, along with a national organization representing state residential mortgage regulators, issued a press release confirming their intent to offer guidance to state regulators to apply to their licensed residential mortgage brokers and lenders.”
So, as far as I understand this, the state agencies INTEND to issue GUIDANCE to the regulators that will eventually get around to applying it, presumably through laws or whatever.
Who knows how long this might take. Anyone have any idea or knowledge of the field??November 18, 2006 at 6:19 PM #40284poorgradstudentParticipant
Are you expecting some huge collapse in the economy? Radical tightening of spending?
I bet that people will spend 5-10% less on holiday shopping this year. Enough to put a dent in overall numbers, enough to affect retail stocks, but not enough for a real visual difference in store crowding.
Also, mall traffic is heavily driven by teenagers, who aren’t as affected by housing prices.
The Christmas season has started already. Retailers know it will be a light year, and they’re really trying to grab as much as they can, as early as they can. I think that internet shopping has also made the entire industry start earlier.November 19, 2006 at 11:26 AM #40298
Are you expecting some huge collapse in the economy? Radical tightening of spending?
From all the doom and gloom talk of boards like this and others, I expected to see some type of contraction by now.November 19, 2006 at 11:45 AM #40300
carlislematthew, calculated risk (bubble blogger link)has been keeping us updated. The state lending guidelines were released a week ago, and now each state has to adopt and issue them. 9 states did so in the first week, but CA is not yet on the list.
As far as shopping, there seems to be 2 year lag between falling house prices and reduced consumer spending. See Chart 21 on Gary Shilling’s excellent piece (thanks to some folks at the meetup for telling me about Shilling). Spending slowdown already started in big ticket items, like houses, cars, furniture, and home improvement companies (contractors, Home Depot). It will ripple out. The biggest lesson to me is how slowly this all moves.November 19, 2006 at 3:45 PM #40311PerryChaseParticipant
Talking about malls, Chula Vista opened a new “lifestyle center.” I’ve haven’t been down there yet.
Few Piggingtons discuss Chula Vista and we tend concentrate on Central San Diego or North County. There seems to be plenty of expensive master planned housing in Chula Vista.
Malls have become town centers. That’s where people like to hang out. They are not necessarily shopping but going to the movie and eating out.
What do you think of Chula Vista?November 19, 2006 at 3:59 PM #40312FormerOwnerParticipant
Sheeple will spend until they exhaust all their savings and max out all their lines of credit. At that point, if there’s any way possible, they will refinance their debt to push the day of reckoning off further into the future (and make it worse when it comes). I personally know of a number of families that have gone bankrupt or came close to it seemingly out of the blue when all appearances showed that they were in fat city. I know of others that have refinanced all of their debt into interest-only mortgages with fixed rates for 1-2 years, with the belief that things are going nowhere but up. This economic downturn will be a “slow motion train wreck”, with people in the last few cars not feeling the crash for a couple more years. Ten years from now, people will look back on this time period and say “how come no-one saw it coming?”November 19, 2006 at 4:39 PM #40313VanMorrisonFanParticipant
What others have said in passing I will say more emphatically. Don’t confuse large numbers of people at a mall with large retail sales, especially of the high ticket variety.
I’m not a big spender, but I enjoy going to the malls. I usually look around, buy a plain cup of coffee and maybe a newspaper, sit and read, and then go home.
Next time you are at Fashion Valley try to notice how many people are actually buying big ticket items. I’ll bet not that many.November 19, 2006 at 7:13 PM #40321
When I left Fashion Valley at 6pm tonight, the parking lot was half empty. The mall didn’t seem quite as full of people. Neiman Marcus was really empty, and the sales associate attributed it to Bloomingdale’s opening, which was packed according to my daughter. I didn’t check it out. Long lines at Victoria’s Secret, as usual, but then it’s easy to come up with $50 for a bra. How many people were buying jewelry, computers, furniture, drapes, and other more expensive items? The salary reductions for realtors and contractors will have their effect soon enough.November 19, 2006 at 10:52 PM #40330SD RealtorParticipant
Hi guys –
So maybe I am a bit contrarian here… I mean yes yes yes I believe the real estate market will continue to deteriorate…. but… I just do not see the economic catastrophe that is predicted. I don’t dispute alot of people in the real estate industry will lose work. Yet I think that there is an awful lot of money in this city outside the industry. Personally I am also involved in engineering and my wife also does alot of business with plastic surgeons and skin care professionals in town. Now I will not say a whole lot about the engineering field but it is not nearly as shaky as real estate. As for plastic surgery and affiliated industries, home healthcare etc… these are not going to weaken much no matter what the real estate market does. Home healthcare, senior care, things like that. I know our national GDP is anemic… yet I think we will see an economy that doesn’t quite fall apart as some may predict. I think there is an element of resilience that may surprise alot of us.
SD RealtorNovember 20, 2006 at 7:22 AM #40339
SD Realtor, how do engineering and health care companies do in recessions? Have you followed these companies in past recessions, and what did you find?
I discussed the upcoming recession with my kids’ orthodontist, saying he was lucky to be in a recession proof industry. He said, “No, we are hit by recessions too. Families postpone dental work when money is tight”. How is plastic surgery different? How is engineering different?November 20, 2006 at 8:02 AM #40341The-ShovelerParticipant
Was at the Mall in Escondido Yesterday, Seemed more full of lookieloo’s than anything else. Did not see a lot of people carrying bags of stuff, or many people actually at sales counters. But I did spend $75 on a three day time share Vacation.
Just saw this thought I would add.
Sales of existing homes fell in 38 states during the summer, led by steep declines in Arizona, Florida and California, as the once-booming housing market showed further signs of a steep slowdown.
The declines were the largest in once-booming areas of the country. Sales fell by 36 percent in Arizona; 34.2 percent in Florida and 28.6 percent in California.
In all, nine states had sales declines in the summer of 20 percent or more compared to the third quarter of 2005.
The weakness in sales also affected prices with 45 metropolitan areas experiencing price declines, according to a separate survey the Realtors did of 148 metropolitan areas.
The price survey showed that the median — or mid-point — price for an existing home sold in the third quarter dipped to $224,900, down 1.2 percent from a year earlier.
Hmmmm !!November 20, 2006 at 9:16 AM #40350The-ShovelerParticipant
Did you guy’s see that Falling Down post, OH Man that really brought back memories.
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