How severe will the impact of #48 be on the fragile Real Estate Market

[paramount]

There’s an uneasiness out there, we know the connection between real estate and jobs (except for the .0001%ers), and in most areas housing has already taken a beating since 2008.

The MSM has convinced the zombie’s that were in a recovery; however unemployment is running out and foreclosures waves may kick into high gear following the fraudulent agreement between the banksters and the states.

Jobs creation seems to have peaked in Feb. 2012; we may already be in another recession:

http://www.youtube.com/watch?v=4p0iig46zDc

Inventory for San Diego is currently down about 27% year-over-year and 34% for Riv Co; however if this turns out to be a deep recession even buyers post 2008 crash may turn out to be knife catchers.

I know there are a lot of San Diego perma bulls out there, but San Diego is still largely a military town which is a sector that could get hit hard.

[EconProf]

#48 being the predicted 48th recession in our country’s history.
Well, Paramount, I wouldn’t bet on a recession. But I wouldn’t bet against it either. Hopefully we’ll keep on with our weak recovery and pray europe doesn’t emplode.
More immediate is the future of the CA economy and fiscal problems. Gov. Brown just announced our deficit jumped from his $9 billion prediction last January to $16 billion. Tomorrow, Monday, he’ll give a speech arguing for higher taxes on Californians.
Yes, that’ll fix it. The investors, job creaters, and manufacturers will really want to come to CA then.
We also need high speed rail to attract these taxpayers. And we need to bump up our share of the nation’s welfare population from 32% to 40%. And we need to raise public sector pay and pensions and let them retire earlier. Governor Brown and the CA legislature surely know what’s best for us.

[Coronita]

Is San Diego really still heavily military dependent??
My observation would be it is a much more diverse economy now, with tech, tourism, government, defense, military,etc,etc,etc.

I think that’s why SD faired better than general So Cal because of the diversity.

[briansd1]

I think that on a nominal basis real estate is at a bottom. Real estate may go sideways but prices won’t drop with low inventories.

Paramount, didn’t you recently post a worldwide survey showing that the US has the lowest cost of housing of all developed countries?

[FormerOwner]

What happens if mortgage interest rates go up from the current record lows of 4% for a 30 year mortgage to a more typical 7-8%? How much would people be willing/able to pay for houses then?

Also, while the US as a whole has low housing costs, that is not true for San Diego. In addition, transportation costs in the US (and especially San Diego) are much higher than almost anywhere else in the world. Just think about the cost of buying a car, paying the taxes/reg fees, insurance, maintenance, and all the gas. In much of the world, people walk to work or take public transit, which is much more cost effective.

SD House prices may go sideways for a long time, but I think there IS a lot of downside risk.

[Coronita]

[quote=FormerOwner]What happens if mortgage interest rates go up from the current record lows of 4% for a 30 year mortgage to a more typical 7-8%? How much would people be willing/able to pay for houses then?

Also, while the US as a whole has low housing costs, that is not true for San Diego. In addition, transportation costs in the US (and especially San Diego) are much higher than almost anywhere else in the world. Just think about the cost of buying a car, paying the taxes/reg fees, insurance, maintenance, and all the gas. In much of the world, people walk to work or take public transit, which is much more cost effective.

SD House prices may go sideways for a long time, but I think there IS a lot of downside risk.[/quote]

Folks keep saying interest rates are going to rise to 7-8%…I don’t see that happening in the near future. It might steadily creep up, but not going to “jump”…Nope……

As we have seen, contrary to otherwise, Government will do just about anything to ensure we get out of this mess…Even if it means slight at hand work to keep rates artificially low…And it seems like they can pull a lot of rabbits out of the hat…

We might see interest rates rise 7-8% after say a decade or so… Personally, if it were me, I wouldn’t want to be holding my breath that long if I could find a place that pencils out near the cost of rent…Which should be possible now.

Rates are a historic low again…

And of course, if FLU keeps refinancing, rates will keep dropping. That’s a given..

I don’t think it makes sense to compare SD housing to other parts of the U.S. in as much it doesn’t make sense to compare Bay Area housing to SD…Each market has its own rules…. Judging by how things are, with folks still making purchases, and with stricter lender standards, I’d say that there are people who can afford to buy an arguably expensive house in Sandigo tells me the local economy is not doing THAT bad…In fact, it doesn’t seem like it’s doing bad at all.

And furthermore, I’m pretty near a “luxury apartment home” complex…And frankly, I’m seeing more and more moving trucks bringing people into SD…

Back in Feb/Mar, when I was renting out my condo, interest from folks that were “relocating”, private sector tech and biotech….So, I don’t think economy is doing bad here at all.

I would say what’s going on in SD now is a “flushing out process”. Folks that still have employment or still meeting ends meet probably are so because they happen to be lucky in in the line of work/profession/business where it’s pretty still in demand…While others who have “dropped out” because of lack of opportunity have already dropped out/relocated out of SD (maybe folks in construction/newcomers to RE???)…And still it appears there are employment opportunities that are unfilled by local people (which suggests why we see folks relocating here)…

[ocrenter]

We’ve had 3 year of opportunity to buy real estate at bottom pricing provided someone casts a wide enough net instead of following a very narrow list of criteria. I think MSM will be widely reporting the “bottom” pretty soon. Along with the very low inventory, I think the bargain basement and low offer days are done. The low interest rates will continue to help prop this slow recovery up.

Given the mess in Europe, our government will have the ability to keep down the low rates for quite a while. Remember, an ultra low rate is very good for world’s leading debtor nation.

[Author]

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