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October 10, 2007 at 12:35 PM #87836October 10, 2007 at 12:35 PM #87841
ibjames
ParticipantA lot of people get carried away by this, a lot of the nation did not have the same problems as SoCal in the crazy mortgage biz. Many people in a large part of the country used low interest rates with 30 year loans to buy a house. You didn’t need a crazy mortgage.
I don’t understand why the general thought process is that if southern CA, AZ, and LV take a big dive the whole country will.
I’ve lived here for almost two years and I don’t know many people, but I do know people that are leaving/have left already because of the mortgage fiasco and inability to buy a home. White collar professionals.. who have worked to have the american dream and live here, looking through the glass window wondering if they will ever own. Many are asking why the hell are they here? It’s not a question in most of the US with their income, so they are leaving for greener pastures.
Honestly, look at the numbers, a LOT of great wage earners would have to be here to keep prices near current levels. So has the median household income in SD up to 140k now? If not, it just seems like a big stack of cards is being built up and it’s just being added and added to. There will be a time when that card pile falls down.
I do not expect prices to be the same as the midwest or other affordable places, but I just can’t see how prices will not adjust dramatically either.
Or perhaps I should just be looking for greener pastures..
October 10, 2007 at 12:43 PM #87840JWM in SD
Participant“Over 50% would be several hundred dollars less than going rent…….”
Yes, but you are not accounting for what credit standards may be like at that point in time. Most likely much harsher than even now.
I think some of you are still not getting it. No, the rest of the country willn not suffer 50% losses (not nominal), but SoCal very well might. Sorry if you don’t like that, but historically things overshoot the mean in a correction. I wouldn’t bet against that happening.
October 10, 2007 at 12:43 PM #87845Participant“Over 50% would be several hundred dollars less than going rent…….”
Yes, but you are not accounting for what credit standards may be like at that point in time. Most likely much harsher than even now.
I think some of you are still not getting it. No, the rest of the country willn not suffer 50% losses (not nominal), but SoCal very well might. Sorry if you don’t like that, but historically things overshoot the mean in a correction. I wouldn’t bet against that happening.
October 10, 2007 at 12:56 PM #87849betting on fall
Participantbsrsharam-
good points, and I agree that wealth effect will reduce spending, but its probably spending that shouldn’t have been going on in the first place.My frustration is that for years we pay lip service to the fact that we want the “middle class” and “public servants”- teachers, police officers, military personnel- to be able to buy a house in the communities in which they work.
The answer to this problem to date has been building 50 or 100 income restricted units a year, which clearly is next to useless.
Now, falling prices might make this possible again- a teacher’s salary might be enough to buy a house, like it was for my wife in 1996 (I married into San Diego housing wealth).
Instead of the next housing article featuring someone whining about how their loan officer lied to them and now they can’t afford their house, I want the reporter to talk to a local cop or local teacher who has been renting- or commuting absurd distances- who is now thinks they may actually be able to buy in the community in which they work.
Heck- I don’t know many reporters who make enough to afford a house in San Diego. They could just interview themselves and make my point.October 10, 2007 at 12:56 PM #87853Participantbsrsharam-
good points, and I agree that wealth effect will reduce spending, but its probably spending that shouldn’t have been going on in the first place.My frustration is that for years we pay lip service to the fact that we want the “middle class” and “public servants”- teachers, police officers, military personnel- to be able to buy a house in the communities in which they work.
The answer to this problem to date has been building 50 or 100 income restricted units a year, which clearly is next to useless.
Now, falling prices might make this possible again- a teacher’s salary might be enough to buy a house, like it was for my wife in 1996 (I married into San Diego housing wealth).
Instead of the next housing article featuring someone whining about how their loan officer lied to them and now they can’t afford their house, I want the reporter to talk to a local cop or local teacher who has been renting- or commuting absurd distances- who is now thinks they may actually be able to buy in the community in which they work.
Heck- I don’t know many reporters who make enough to afford a house in San Diego. They could just interview themselves and make my point.October 10, 2007 at 1:01 PM #87851patientlywaiting
ParticipantI agree with ibjames. We need to stop thinking in terms of SD and California.
If SD drops 50%, that doesn’t been the national economy will suffer the same fate.
Look at Las Vegas, Phoenix or Florida. The prices are 1/2 San Diego’s but the prices keep on dropping.
I think that a 50% nominal drop is very likely.
October 10, 2007 at 1:01 PM #87854ParticipantI agree with ibjames. We need to stop thinking in terms of SD and California.
If SD drops 50%, that doesn’t been the national economy will suffer the same fate.
Look at Las Vegas, Phoenix or Florida. The prices are 1/2 San Diego’s but the prices keep on dropping.
I think that a 50% nominal drop is very likely.
October 10, 2007 at 5:37 PM #87904kewp
ParticipantOk lets get down to brass tacks.
Assume that SD RE drops 50% overnight.
Pro’s for the economy:
People/businesses migrate to SD
People spend less on mortgage payments, freeing equity.
It becomes cheaper to own than rent (and a tax break), freeing more equity.
RE becomes a decent investment in SD, drawing more folks/money.
Neg’s for the economy:
Construction and related industries are dead until all the overhang is cleared.
Massive HELOC’s are a thing of the past, so big downturn in sales of luxury goods.
Reverse wealth effect, people feel poorer when their homes aren’t worth as much. So more saving and less splurging.
My guess is overall its a much bigger loss than a gain. After all, we are basically rolling back to how SD was in ’98, which wasn’t exactly a boom town.
October 10, 2007 at 5:37 PM #87909ParticipantOk lets get down to brass tacks.
Assume that SD RE drops 50% overnight.
Pro’s for the economy:
People/businesses migrate to SD
People spend less on mortgage payments, freeing equity.
It becomes cheaper to own than rent (and a tax break), freeing more equity.
RE becomes a decent investment in SD, drawing more folks/money.
Neg’s for the economy:
Construction and related industries are dead until all the overhang is cleared.
Massive HELOC’s are a thing of the past, so big downturn in sales of luxury goods.
Reverse wealth effect, people feel poorer when their homes aren’t worth as much. So more saving and less splurging.
My guess is overall its a much bigger loss than a gain. After all, we are basically rolling back to how SD was in ’98, which wasn’t exactly a boom town.
October 10, 2007 at 5:46 PM #87906drunkle
Participantlbjames: welcome to 5 years ago.
fall:
“Heck- I don’t know many reporters who make enough to afford a house in San Diego. They could just interview themselves and make my point. ”probably because they’re worthless to begin with.
October 10, 2007 at 5:46 PM #87911Participantlbjames: welcome to 5 years ago.
fall:
“Heck- I don’t know many reporters who make enough to afford a house in San Diego. They could just interview themselves and make my point. ”probably because they’re worthless to begin with.
October 10, 2007 at 5:59 PM #87908HereWeGo
ParticipantRents will likely fall with prices, given the massive oversupply of residential units. The whole “rent/own” equation will be more dynamic than many think.
October 10, 2007 at 5:59 PM #87913ParticipantRents will likely fall with prices, given the massive oversupply of residential units. The whole “rent/own” equation will be more dynamic than many think.
October 10, 2007 at 7:17 PM #87937little lady
ParticipantI rented during the start of the last downturn, and I vaguely recall the rents being a little lower. The house I rented was I believe 925$. I think they may have dropped 50 to 100$. Not a huge amount. My mortgage payment was 1100$ when I bought in 1995.
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