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I was trying to avoid directly identifying this project, but yeah, that’s the one.

Actually, I think that there’s a huge market for housing in the downtown area. I just disagree that it all needs to be in the form of luxury condos geared for adults. There’s nothing wrong with average quality and reasonably priced condos or apartments.

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Does anyone remember a certain downtown high rise condo building that sat vacant for almost 10 years and went through 3 changes in ownership whilst awaiting better times? They let those units stand vacant rather than rent them out. The Union-Trib ran an article on the one guy who had purchased a unit and how he had all the common areas to himself.

That was one strategy. I wouldn’t think it would happen again but….

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I agree with the part about the effects of outmigration and doubling up to the extent that occurs, but I disagree that rising inventory will force those units into the rental market. I think the gap between market rents and market prices is so high that the average investor wouldn’t be able to carry the nagative cash flow even if they wanted to.

Some of the high-rise developers or their successors will probably be able to carry the condos, but the SFR developers can’t possibly do it nor can most of the investors. Even a homeowner looking to downsize wouldn’t be able to justify renting out their house and moving into an apartment because of the negative cash flow on the house – they’re better off trying to make-do.

One way or another these alternatives will seek equilibrium. Either the rents will increase and/or the prices will decline until that gap reduces to something within reason. I think that unsold listings will either be retained as principle residences, be discounted until they do sell, or else they’ll go into foreclosure. I don’t think renting them out is a viable option for most would-be sellers.

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SDAppraiser didn’t say anything about being in opposition to anything. He just made a comment about the apparent entitlement some of us feel about looking into our neighbors lives. In his defense, I can tell you that appraisers and other banking and financial services professionals who regularly handle personal information are subject to privacy laws that regulate the use and dissemination of that information. You wouldn’t want a professional to take that responsibility too casually.

Just because the personal information is available doesn’t mean that it’s not an invasion of privacy to bandy it about so casually on an internet forum. These people are not rock stars and they haven’t agreed to trade their privacy for fame and fortune.

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They call that area “Nestor”. That’s another area that could have a lot of potential in the future.

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Every rental house is owned by someone and that someone hopes to make a profit at some point. It is reasonable to assume that when the market is on its way down some of these rentals will be sold. There can never be enough rental properties to accomodate everyone in the region, so it CAN’T be the answer for most people.

While we’re at it, the rental market can become just as volatile at the sales market if the supply/demand dynamic changes a lot. The only difference is that a rental tenant can’t make or lose money by participating in that market.

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CFO/SDR

I realize you guys are getting ready continue down this tangent and I would respectfully ask that you both just let it go. The topic of this thread is inventory levels.

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I think the rate of increase on the listings demonstrates what we were talking about a couple months back about how the ready availability of information might change the pace in which the market moves. Back in the early ’90s the masses didn’t have so much information from so many different sources to influence their decisions.

If a lot of people really do get financially hurt in this cycle it will cause a lot more people to research their markets from multiple sources and in multiple ways in an attempt to get in front of the trend instead of behind it. Taking that idea a little farther, a better informed buying public could self-regulate on pricing and cut down on the extreme swings we’ve been getting. That could result in a more orderly market with less drama.

Or not. An appraiser can dream too, you know.

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Lots of the homes and cabins out there are 2nd homes and vacation homes, although the trend seems to be for purchases of primary residences.

I’d agree with the boomer/2nd houses thing, except I think most boomers have their hands full with their kids, their parents and their incredible shrinking 401k right now. I think the wealth transfer from the greatest generation to the boomers may enable some luxury purchases like vacation homes, but only if the boomers haven’t already spent their inheritance on their H2.

Now retirement homes may be another matter. The boomers are retiring now and they won’t need the same proximity to employment. Frankly, I’m seeing more boomers leaving the region altogether rather than go halfway to Julian. My parents left the O.C. and retired to the Black Hills of S. Dakota – they never looked back.

I think Julian, and to a lesser degree, Palomar Mountain and Idyllwild will continue to draw some traffic from the metor region for vacation and retirement plans. I also think luxury spending winds down during an RE recession. Especially if a lot of people get hurt by it.

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If it bleeds it leads.

Again, the distribution of the data in the datasets being used really has an effect on the results. Minor changes in the distribution of the data can have an disproportionate effect on the median.

Medians are too blunt an instrument to really see what’s going on. I think that headline overstates it. It also gives the bulls an opportunity for a “cry wolf” comeback if/when that percentage eases up, as I’m sure it will.

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I hate to keep reverting back to the cars analogies, but this looks just like when the automakers were canibalizing their future sales volumes in order to book the volumes for the current quarter. Adding to the inventory imbalance right now is only going to make it harder to recover.

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Actually I think you’re pretty close, what with the utilities and septic already worked out. Julian is an unincorporated community but I think they have their own local design review. If you’re using stock plans and its something that would fit in reasonably well with the neighborhood they probably won’t hassle you.

As for timing the costs, 2007 may not be a bad time to start but I’ll bet 2008 would be better. There’ll probably be a lot of local labor actively competing for your contract by then, which will be good for you and for them.

The only possible downside to waiting is that interest rates and underwriting for the construction loan and the subsequent long term financing will probably get tougher as time goes by. If local pricing is in decline it could also affect the amount you could borrow for construction. Be aware that Julian’s location far from employment puts it at higher risk for pricing declines, especially in light of the costs of gasoline.

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Good point.

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The Pacific Northwest markets are still on fire and there are still some builders more locally who are too far into the process to turn back. They know they need to build and get out ASAP.

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In that price range there may not be a problem.

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