[Bugs]

I occasionally surf out in front of that house, it’s just a few doors down from Junior’s house. That site backs to Pacific Street but it fronts the Strand and is beachfront.

The $2,500,000 is (more or less) the lot value and the last time I looked at lot values down there on the Strand it was worth it. The excavation for the relatively big house is already done. Someone building on that lot would probably just have to redo the retaining wall and finish grade.

[Bugs]

As I read it you are basically making two arguments here:

1 – People with money are moving to town; and

2 – Great jobs are being added that will support that pricing structure.

However, neither of these suggestions are borne out by the data. The U-Haul test only shows 1 household coming in for every 4 households that leave. The breakdown of employment that Rich posts every month shows that the distribution of employment is migrating away from the higher paying jobs toward the lower paying jobs.

Not only that, but the data for sales volume, foreclosures, and pricing all indicate that this area is indeed not disconnected from the rest of the region nor is it in any way immune from the same trends that are happening in other overextended markets. Indeed, SD is running faster into decline than LA or the OC.

So far, we have seen no data that indicates that this time it is different or that SD is now so special that it will somehow escape its own historical trends. All the data we’ve seen shows SD is well on its way to repeating it’s pattern.

Maybe it is Seattle and the Bay area that will correct to their wage and population trends.

[Bugs]

As I read it you are basically making two arguments here:

1 – People with money are moving to town; and

2 – Great jobs are being added that will support that pricing structure.

However, neither of these suggestions are borne out by the data. The U-Haul test only shows 1 household coming in for every 4 households that leave. The breakdown of employment that Rich posts every month shows that the distribution of employment is migrating away from the higher paying jobs toward the lower paying jobs.

Not only that, but the data for sales volume, foreclosures, and pricing all indicate that this area is indeed not disconnected from the rest of the region nor is it in any way immune from the same trends that are happening in other overextended markets. Indeed, SD is running faster into decline than LA or the OC.

So far, we have seen no data that indicates that this time it is different or that SD is now so special that it will somehow escape its own historical trends. All the data we’ve seen shows SD is well on its way to repeating it’s pattern.

Maybe it is Seattle and the Bay area that will correct to their wage and population trends.

[Bugs]

As I read it you are basically making two arguments here:

1 – People with money are moving to town; and

2 – Great jobs are being added that will support that pricing structure.

However, neither of these suggestions are borne out by the data. The U-Haul test only shows 1 household coming in for every 4 households that leave. The breakdown of employment that Rich posts every month shows that the distribution of employment is migrating away from the higher paying jobs toward the lower paying jobs.

Not only that, but the data for sales volume, foreclosures, and pricing all indicate that this area is indeed not disconnected from the rest of the region nor is it in any way immune from the same trends that are happening in other overextended markets. Indeed, SD is running faster into decline than LA or the OC.

So far, we have seen no data that indicates that this time it is different or that SD is now so special that it will somehow escape its own historical trends. All the data we’ve seen shows SD is well on its way to repeating it’s pattern.

Maybe it is Seattle and the Bay area that will correct to their wage and population trends.

[Bugs]

I think the question is, how long can these lenders hang on to their REOs, literally throwing good money after bad? The numbers of buyers ARE decreasing, foreclosures WILL increase, and those properties WILL have to eventually be sold at whatever the market at that time will bear. There’s no IF involved.

Those distressed sales will eventually be sufficient in number relative to the sales volume that they WILL drive it, thereby resulting in an ever-declining market level.

Those people who can hang on will do so, but they aren’t the ones setting prices. It’s the must-sell transactions that will do that.

Really, the only thing that’s even halfway surprising so far is the pace at which the credit markets are unwinding. Everything else up until now has been moving along according to earlier projections.

– The outlying areas got it first while the more central areas have lagged.

– The investors have left the building and the inventory has racked up as a result.

– The builders have tapered off on those developments they were in a position to walk away from, and they’ve played games with concessions and deceptions to avoid showing the losses in their neighborhoods so they could continue selling off their units.

– Jobs in the RE sector are drying up and all the retail sectors are sucking gas.

If you’re looking at the cycle as showing catastrophic losses between months 12-18 then you’re bound to be disappointed. The last downturn lasted 5 years and they were correcting from a spike that was only 1/3 the size of this one.

We’re not kidding – this will take years. Sign the 2-year lease and relax ’cause you might have to sign another one before this is all over.

[Bugs]

I think the question is, how long can these lenders hang on to their REOs, literally throwing good money after bad? The numbers of buyers ARE decreasing, foreclosures WILL increase, and those properties WILL have to eventually be sold at whatever the market at that time will bear. There’s no IF involved.

Those distressed sales will eventually be sufficient in number relative to the sales volume that they WILL drive it, thereby resulting in an ever-declining market level.

Those people who can hang on will do so, but they aren’t the ones setting prices. It’s the must-sell transactions that will do that.

Really, the only thing that’s even halfway surprising so far is the pace at which the credit markets are unwinding. Everything else up until now has been moving along according to earlier projections.

– The outlying areas got it first while the more central areas have lagged.

– The investors have left the building and the inventory has racked up as a result.

– The builders have tapered off on those developments they were in a position to walk away from, and they’ve played games with concessions and deceptions to avoid showing the losses in their neighborhoods so they could continue selling off their units.

– Jobs in the RE sector are drying up and all the retail sectors are sucking gas.

If you’re looking at the cycle as showing catastrophic losses between months 12-18 then you’re bound to be disappointed. The last downturn lasted 5 years and they were correcting from a spike that was only 1/3 the size of this one.

We’re not kidding – this will take years. Sign the 2-year lease and relax ’cause you might have to sign another one before this is all over.

[Bugs]

I think the question is, how long can these lenders hang on to their REOs, literally throwing good money after bad? The numbers of buyers ARE decreasing, foreclosures WILL increase, and those properties WILL have to eventually be sold at whatever the market at that time will bear. There’s no IF involved.

Those distressed sales will eventually be sufficient in number relative to the sales volume that they WILL drive it, thereby resulting in an ever-declining market level.

Those people who can hang on will do so, but they aren’t the ones setting prices. It’s the must-sell transactions that will do that.

Really, the only thing that’s even halfway surprising so far is the pace at which the credit markets are unwinding. Everything else up until now has been moving along according to earlier projections.

– The outlying areas got it first while the more central areas have lagged.

– The investors have left the building and the inventory has racked up as a result.

– The builders have tapered off on those developments they were in a position to walk away from, and they’ve played games with concessions and deceptions to avoid showing the losses in their neighborhoods so they could continue selling off their units.

– Jobs in the RE sector are drying up and all the retail sectors are sucking gas.

If you’re looking at the cycle as showing catastrophic losses between months 12-18 then you’re bound to be disappointed. The last downturn lasted 5 years and they were correcting from a spike that was only 1/3 the size of this one.

We’re not kidding – this will take years. Sign the 2-year lease and relax ’cause you might have to sign another one before this is all over.

[Bugs]

So true.

[Bugs]

So true.

[Bugs]

So true.

[Bugs]

Apart from the stability factor, one of the primary reasons to buy rather than to rent is to stabilize your housing costs. Assuming you don’t refinance, your mortgage payment stays the same no matter what the market rents are.

There are some people who think that rents are as subject to decline as sale prices during economic downturns, but so far that hasn’t ever happened yet in SD County to any significant degree. That could change, but if that happened it would be the first time.

The one thing about buying an affordable housing unit is that you’re not looking at as large a profit opportunity as you would be looking at if the property had no such restrictions. If you think your income is going to increase a lot over the next 10 years you may be considering this home to be the first of 2 or 3 homes, in which case you might be better off timing the market to buy low so as to be able to sell high later on.

On the other hand if you think your income is going to be relatively stable and you aren’t planning to move up this becomes a long term decision that relates to your quality of life, control of housing expenses and such rather than profit opportunity.

Personally, I think if you stick around for a few years you’ll be able to buy a similar unit without the affordable housing restrictions for less than these units are now selling. But nobody knows the future and you will have to come to your own opinions at some point.

[Bugs]

Apart from the stability factor, one of the primary reasons to buy rather than to rent is to stabilize your housing costs. Assuming you don’t refinance, your mortgage payment stays the same no matter what the market rents are.

There are some people who think that rents are as subject to decline as sale prices during economic downturns, but so far that hasn’t ever happened yet in SD County to any significant degree. That could change, but if that happened it would be the first time.

The one thing about buying an affordable housing unit is that you’re not looking at as large a profit opportunity as you would be looking at if the property had no such restrictions. If you think your income is going to increase a lot over the next 10 years you may be considering this home to be the first of 2 or 3 homes, in which case you might be better off timing the market to buy low so as to be able to sell high later on.

On the other hand if you think your income is going to be relatively stable and you aren’t planning to move up this becomes a long term decision that relates to your quality of life, control of housing expenses and such rather than profit opportunity.

Personally, I think if you stick around for a few years you’ll be able to buy a similar unit without the affordable housing restrictions for less than these units are now selling. But nobody knows the future and you will have to come to your own opinions at some point.

[Bugs]

Apart from the stability factor, one of the primary reasons to buy rather than to rent is to stabilize your housing costs. Assuming you don’t refinance, your mortgage payment stays the same no matter what the market rents are.

There are some people who think that rents are as subject to decline as sale prices during economic downturns, but so far that hasn’t ever happened yet in SD County to any significant degree. That could change, but if that happened it would be the first time.

The one thing about buying an affordable housing unit is that you’re not looking at as large a profit opportunity as you would be looking at if the property had no such restrictions. If you think your income is going to increase a lot over the next 10 years you may be considering this home to be the first of 2 or 3 homes, in which case you might be better off timing the market to buy low so as to be able to sell high later on.

On the other hand if you think your income is going to be relatively stable and you aren’t planning to move up this becomes a long term decision that relates to your quality of life, control of housing expenses and such rather than profit opportunity.

Personally, I think if you stick around for a few years you’ll be able to buy a similar unit without the affordable housing restrictions for less than these units are now selling. But nobody knows the future and you will have to come to your own opinions at some point.

[Bugs]

This trend will be working for years, not months. Between now and the time the trend truly reverses there probably will be at least a couple mini-rallies.

I would urge everyone to stop looking at prices as the primary measure of “progress” and keep an eye of the ratio of sales to listings. It’s okay to watch price trends for the entertainment value, but that’s just the egg – the chicken is the supply/demand dynamic.

There is a chance the pricing may decline less than some of us may think, but there is also the chance that the declines may be greater than we think too. The 50% correction a lot of us talk about only reaches the long term trend without passing it. So far, all corrections have had a corresponding overcorrection, which in this cycle would point to price declines well in excess of 50% off peak.

My opinion only – stop watching prices as the barometer and use supply/sales instead. When they approach a more reasonable level the price declines will slow and eventually reverse.

[Bugs]

This trend will be working for years, not months. Between now and the time the trend truly reverses there probably will be at least a couple mini-rallies.

I would urge everyone to stop looking at prices as the primary measure of “progress” and keep an eye of the ratio of sales to listings. It’s okay to watch price trends for the entertainment value, but that’s just the egg – the chicken is the supply/demand dynamic.

There is a chance the pricing may decline less than some of us may think, but there is also the chance that the declines may be greater than we think too. The 50% correction a lot of us talk about only reaches the long term trend without passing it. So far, all corrections have had a corresponding overcorrection, which in this cycle would point to price declines well in excess of 50% off peak.

My opinion only – stop watching prices as the barometer and use supply/sales instead. When they approach a more reasonable level the price declines will slow and eventually reverse.

[Author]

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