Market to pick up in the spring??

[blahblahblah]

A government worker family of a teacher and correctional officer will have a family incomee above $133,000 and possibly over $168,000.

Still probably not enough for a $700K home using traditional financing, once you throw in property taxes, maintenance, HOAs, mello roos, what have you. Also, that’s a $140K down payment. Very few new buyers have that kind of green. And $140K pays you at least $500/mo simply invested in CDs. Also, when we return to traditional financing, I’m guessing it will be unlikely that banks will want to take OT pay into account when calculating DTI.

I do agree that many government employees earn good salaries, I just think they’re more in line for $400K homes using traditional financing and DTI ratios.

[sdrealtor]

Yes but that teacher and correctional officer probably have been in the area for a decade or more and likely has quite a bit of equity that can burn off the $250,000 house they bought in 1997 with 20% down. As for the young teacher/prison guard couple they should be able to buy their first 3BR/2BA townhome in the high 200’s/low 300’s within a couple years.

[an]

What happened in the 90s stays in the 90s.
Oh, that’s right, it’s different this time. Up up and away. Better buy now or I’ll be priced out forever.

Ahem, you may wish to educate yourself. A member of the California Correctional Officer Union (31,000 of them, guards, probation officers, have an average base pay of $65,000, with overtime, 1 in 5 makes over $100,000.

The San Dieguito School District that serves La Costa has an average teacher salary of $68,000.

A government worker family of a teacher and correctional officer will have a family incomee above $133,000 and possibly over $168,000.

At today’s interest rates being near historical lows, that government worker family can afford that La Costa home.

Fire, Police, city workers, all of their union contracts are equally out of whack.
Wow, I didn’t know teachers make that much. $68k for 9 months of work = $91k/year if they work a full 12 months. Is that a fresh out of college salary?

[blahblahblah]

Yes but that teacher and correctional officer probably have been in the area for a decade or more and likely has quite a bit of equity that can burn off the $250,000 house they bought in 1997 with 20% down.

Do you really think they’d buy a new $700K house in this case? Holy cow, that’s a huge increase in property tax, and their 1997 house, if it’s in La Costa, is probably already worth $700K. So let’s see, honey, should we take a little HELOC and add that extra bedroom, or should we sell, pay huge $$$ in commisions, and triple our property tax payment? Oh wait a minute, these are government employees we’re talking about. Yep, you’re right, they probably would do that 🙂

In all seriousness, the original post said that the big increase in government money was going to bring lots of new homeowners into SD, enough to purchase our excess inventory. So that theory relies on new people moving in from out of town, not folks that have been here for ten years.

[no_such_reality]

Wow, I didn’t know teachers make that much. $68k for 9 months of work = $91k/year if they work a full 12 months. Is that a fresh out of college salary?

No, it’s average salary. You can see all the school district info to the school level at Hidden Gap.

Hiddengap researched the tendency of lower income schools getting the most inexperienced teachers due to the seniority clauses in the contracts.

[cr]

I just saw an ad on TV today for a $500 monthly payment per $150,000 financed. If I remember correctly, they had a $500,000 loan for $1667, $1680, something like that.

Of course the fine print at the bottom was so small and blurry, even if you could make it out, you couldn’t read it fast enough as it scrolled by.

I have to think loans like this are the only reason people are still able to “afford” houses. I have no doubt people can still be suckered into this, even at a time when the trend is certainly downward.

Of course this will only draw out the downturn when these loans reset in 5-10 years.

[sdrealtor]

Concho,
Of course they wouldnt. The point is that the prudent people that have lived here more than a few years will be fine what ever happens and will be able to afford to move up, move down or move across if they want to. Young couples with decent jobs will also be able to afford places worth living in soon (within 2 or 3 years) also.

[blahblahblah]

Of course, but what got this whole thing started was this nonsense:

Over the next 5 years, San Diego is going to see about 12-billion dollars invested in local and regional infrastructure. This includes, new highways, transit projects, street improvements, etc. This is the first time that San Diego will ever experience such a large amount of Govt funding to the region. This huge load of money, per Transnet II and Prop 1B and Prob 2B. This will offset any job loss in the housing industry and will likely float SD’s economy for another few year. How does San Diego factor this in to the fact that we will see a significant up swing in construction related jobs over the next two years?

I just don’t buy this idea that government construction jobs are going to keep our housing market afloat and prices from falling, that’s all.

[Anonymous]

Obviously most San Diegans are not working for the government and making 80k a year with wives who are 68k a year teachers, otherwise more than 5% (or whatever the number is now) of households could afford to buy the median priced home here. What’s interesting though is that besides cost of living allowances, that government worker and teacher can make nearly the same salaries in cities that have 1/3 the cost of living. Young families like ours (government salary and wife who teaches) are increasingly looking elsewhere and finding that they can afford the nicest house in the city, put their kids in good public schools, pay 1/5 the cost for day care (35 a month in the Midwest versus 175 in Encinitas at the same denomination church), and actually save for retirement.

I’m amazed that people are actually still buying homes in areas like Carlsbad and Encinitas at current prices. I know a family that paid 1.2 million 4 months ago for an Encinitas home. They make a combined 115-125k a year, had 300k equity and financed with an interest only ARM. They just paid an additional 75k for a yard and pool with a fancy rock landscape. They have effectively staked their entire financial future, to include their ability to save for retirement, in this house that has already depreciated in value. Are these the folks we point to when we say, “People are still buying, the market is not entirely dead.” A 700k home I showed them wouldn’t do, they had to ‘go for it’ because ‘it will all work out in the long run.’ the lure of being able to tell people they paid 1.2 million was just too strong.

[hipmatt]

In Temecula/Murrieta, I don’t see how anything can pick up in the spring. If anything, I think that those who couldn’t get out at the end on 06 are gonna re list and the already high inventory will blow even higher. There are sooo many homes for sale and rent here, its not even funny. When you consider all the new homes, resales, short sales, and foreclosures, there is sooo much to choose from. There wouldn’t be enough buyers to buy them all if people COULD afford these ridiculous prices, but no, they can’t.
Don’t puss out guys because the silly stock market looks like its doing well. You know the fundamentals and the history, and thats all that matters. This market is way overcooked. Don’t buy into like getting priced out of the market. People in the construction industry are loosing jobs. This is the beginning of the end of the worst credit bubble the world has EVER seen. Let the blind lead the blind, and laugh at us all day long, but its better up here on the fence, than it is on sinking ship.

[The-Shoveler]

Nor_LA-Temcu-SD-Guy

Just my opinion but I think we are looking at a shelf before the next cliff, kind of like looking down the grand canyon,

cliff – shelf — next cliff — next shelf — next cliff etc..

Anyway, don’t see a big run-up in prices at this point, so I will wait and see.

[Bugs]

A 10% annual reduction in price might seem like a slow rate of decline, but it adds up pretty quickly if that trend continues for more than a couple years. The drop of the 90s that “trapped” so many people in their homes only amounted to a 25% – 30% decrease in pricing over 5 years.

A 30% cumulative reduction in nominal prices over 3 years + a 10% cumulative increase in inflation = a 40% reduction in value. That’s nothing to sneeze at, and with average prices in the $600k ranges were talking about people losing $200,000 real-life U.S. dollars. Most working people cannot afford to take such a loss.

Don’t forget how many of the jobs that make enough money to buy these homes are, or more correctly, were RE related; and how unlikely it will be that some of the people in those jobs who are now being starved out to replace those incomes in other occupations. There are a lot of people who have the means to hold on during the downturn, but only barely – they have to hope they don’t so much as catch a cold. I guarantee some of them won’t make it.

I haven’t seen so many short sales and bank-owned foreclosure sales since the mid-90s. I don’t think we’re anywhere near a turning point.

[no_such_reality]

A 10% annual reduction in price might seem like a slow rate of decline

I caught myself thinking that this weekend. Homes were down in price about 10% from real pricing from what I was used to seeing so they all seemed cheap.

Compare today’s common realistic Orange County asking price of $850K to last years commonly seen wish pricing of $990K or $1.1M, and the homes seem downright cheap.

[PerryChase]

I concur with Bugs.

One reason I can think of that sales are picking up a little is that people who where dying to get into a house at the peak are now doing it. I was reading cnn.com and I saw an ad by lowermybills.com advertising $510k loan for $1600/mo. Until those non-sense loans disappear, then the market will see downturns then periodic upticks.

A lot of folks still think that housing has nowhere but up to go. My sense is that psychology on Main Street is still on the positive but it’s tempered by some realism. The market won’t find its bottom until psychology turns decidedly bearish.

[(former)FormerSanDiegan]

I think the market will definitely pick up in the Spring ….
The only question is:

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What year ?

[Author]

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