- This topic has 84 replies, 23 voices, and was last updated 17 years, 7 months ago by
latesummer2008.
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May 2, 2007 at 4:20 PM #51648May 2, 2007 at 5:47 PM #51652
Anonymous
GuestHere’s a nightmare scenario. Prices rebound next year and steadily increase at a slow rate afterwards. How many thousands of you will flee the county once all hope is lost that prices will sink further? Today there is still hope of further declines. Once they rise steadily for a few years all but the most steadfast will give up hope of ever being able to afford a home. Some have already given up that hope – over 50,000 at last count. The rest are living in rented homes and condos while pulling 75+ a year in professional jobs, and a few blog here on piggington. This next wave of departures will become known as the next ‘great migration’ and will send the region into turmoil. Cheaper regions in the country will thrive, while cities like San Diego will start to resemble Mexico City with a landed white and Asian elite and millions of poor who will mow their lawns, build their roads and babysit their kids. Not to self: this transition is already well under way!
May 2, 2007 at 6:00 PM #51653LA_Renter
ParticipantThanks for cheering everybody up Juice.
May 2, 2007 at 8:05 PM #51658what_a_disasta
Participantwhile cities like San Diego will start to resemble Mexico City with a landed white and Asian elite and millions of poor who will mow their lawns…
That’s what it already seems like to me.
May 3, 2007 at 12:26 PM #51671latesummer2008
Participant“Is it too late to get out?”
Tells it like it is. Looks like the cold hard truth I’m afraid. This is a must read for fellow piggingtons from The Market Oracle:
May numbers for April should begin leaking out any day now…
May 4, 2007 at 7:04 AM #51815ParticipantApril Employment Numbers are Out.
Job losses starting to mount in other sectors, now as housing strains the economy. Construction jobs are disappearing, now that projects are close to completion.
What’s next?
May 4, 2007 at 8:00 AM #51820kicksavedave
ParticipantStrange, but I can sense this twisted state of giddyness among us (myself included) when bad economic news comes out, as it’s one more hole in the bucket of high prices. The more these factors line up, the more closer we get to a the major price corrections we are (mostly) all seeking. But at times I wonder if we’re not whistling past the graveyard. Unemployment is up – that means less buyers, which means lower prices – yay, right? Well, two of my bigger customers (I work in IT services) are KB Home and New Century. One is gone, and one is shrinking. The sales rep who I support has almost no chance to make her quota this year based on that and similar situations.
So unemployment rising might seem like it would ultimately help me buy a cheaper house some day… it also might lead to me joining those folks on the unemployment line. Does this fall into the category of “be careful what you wish for”???
May 4, 2007 at 8:45 AM #51830Participant“Does this fall into the category of “be careful what you wish for”???”
I am experiencing the same thoughts myself. I work for a manufacturer that supplies a variety of products into the industrial and service related industries. Our fist qtr sales were O.K., April we saw softening across the board through most regions of the country. The numbers jumped out because it was so uniform. I’ve seen this trend before namely 1990 and 2000. It’s way too early to tell but this looks awfully familiar. I am hearing that our production is reducing forecast for the balance of the year. That means cost cutting this Fall which means layoffs. In all honesty that is the primary reason for my household sitting on the sidelines. it’s not that I want prices to fall (I really do), it’s the risk of being forced to buy at the peak of what we all know was a bubble (of historic proportions) and then experience a layoff as a result of the negative consequences of that bubble. Then I calculated how much money we save renting verses owning there you have it. I feel confident my household will weather this storm. Once we get though a good portion of this correction and the long term prospects stabilize and homes become something you just live in again it will be time to pull the trigger.
May 4, 2007 at 10:10 AM #51840ParticipantI hear ya LA_R. Its one of the reasons my wife and I have kinda decided that when we finally do take the plunge and buy, we’re going to focus on something close to a price that either one of us could afford on our own, rather than maxing out our combined debt ratios, running the risk of ruin if either of us is out of work for a long period of time. Granted, that means a much lower target price, which ultimately means moving out of San Diego (unless things really tumble). But the benefits of not trying up all our income in a house are pretty obvious. We don’t NEED a McMansion, we just need a nice roof over our heads. Take a few more nice vacations that way.
May 4, 2007 at 10:22 AM #51845Bugs
ParticipantIt is the law of unintended consequences in action. If RE was the economic engine of the last few years, it’s decline should be assumed to have a corresponding effect on the general economy. Several of the bulls have pointed this out, and to that extent I think they are correct. Wishing for the 50% decline is equivalent to wishing for very hard times for a lot of people, including people who currently do not now own a home or who are not employed in the RE sector.
Those of you who intend on timing the market for entry or re-entry at the bottom should probably plan in advance for how much more difficult the process will be. You will need a downpayment, you will need good credit and verifiable income and employment. Interest rates may be significantly higher, thereby increasing your monthly payment beyond what it would be under the current interest rates. I would not anticipate it to be that easy for most people.
Right now, a good way to invest your money may be to invest in your own skills and to increase your employability, ’cause you’re going to need a good job to buy a house when everyone else is on the ropes. And I don’t say that to mean you should run out and get a real estate license, either.
May 4, 2007 at 9:36 PM #51899ParticipantThis summer will be rough on sellers of RE. Next summer will be brutal. As sellers come out of denial, they will awaken to a new RE landscape. PRICES WILL DROP. There is too much evidence coming in daily, to believe otherwise. Soon, the talk will change from “IF”, to “HOW MUCH”. I believe it will adjust quicker and more pronounced than most people think. When we have a massive speculative bubble as in RE, they normally overshoot the downside faster, than they went up. That is why I will stick to my “Latesummer2008” timeframe for entry back into the market for SEVERLY DISTRESSED PROPERTIES. We should drag along the bottom for 2 posssibly 3 years before RE begins appreciating again. But, 2008 will be 3 years into the downturn from late summer of 2005 when this really all started. Add another 2-3 years before we begin to come out of the bust, and there is your typical 5-6 year decline between booms.
MSM and RE Industry is just trying to control the damage. Plus, guess who advertises in the MEDIA? RE, thats right.
Get your financial house in order over the next year, pull up a chair and watch the DRAMA unfold…
May 5, 2007 at 10:49 AM #51909Raybyrnes
ParticipantSeems like all of these threads are leading to a common theme. The reason for not buying is job stability. This was the reason for the previous declines in Southern California housing. A couple things to point out about San Diego. We are a satellite city therefore our economic base is fairly diversified. By this I mean we are not in the same danger as Detroit when it comes to massive layoffs.
Foreclosure and NOD’s are not currently correlating to speculative miscalculations and interest rate resets but are rather a function of job losses, health, divorceetc.
Perhaps the interest rate resent and non conforming loans might push the market over the edge but at the same time the government seems to be sending signals that they are going to intervene to prevent this. This might simply means that dooms day may not come.
Last thing to consider is the fact that by many account San Diego is not that different form Orange County. Climate, Job base, income yet San Diego is selling at a relative discount to Orange County.
I am not suggesting that you run out and purchase now but rather stating some facts that need to be considered as part of the counter argument.
May 5, 2007 at 1:05 PM #51917Dr Kevin
ParticipantInterestingly, recent analysis showed that San Diego was only 30% overvalued, whereas Orange County/LA were about 50%.
May 5, 2007 at 1:21 PM #51918Critter
Participant“Perhaps the interest rate resent and the…” – that is a great typo!
May 5, 2007 at 6:47 PM #51926JWM in SD
ParticipantNice try Raybyrnes, but that ain’t going to cut it buddy. There are three basic industries in San Diego; Biotech, Defense/Military, and Real Estate Related. Which one do you think has grown the most in the past several years? It isn’t biotech. All those do-nothing real estate jobs are going bye-bye as we speak. Wait until Country Wide…or Country Fried as I like to call, finally blows up when their investors realize that the AltA loans are just as crappy as the subprime loans. There will be some unhappy people in Mission Valley that day.
I drive around SD all the time and guess what I see a lot of? Lots of nice vehicles with realtor advertisements on them or home type businesses like..scrapbooking or some crap. Those people are screwed and they are only beginning to realize it.
The reset express is coming
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