[(former)FormerSanDiegan]

[quote=Huckleberry]

We all know that rising interest rates means lower home prices as it knocks more potential buyers (demand) out of the market.

[/quote]

I don’t think we all agree rising interest rates automatically mean lower home prices.

If rising interest rates occur during an economic recovery (which has happend many times in the past) the opposite has occurred. (look at prices from 1965 to 2000)

Conversely, declining rates do not always translate into higher prices (look at rates and prices from 2006 to 2009).

[(former)FormerSanDiegan]

[quote=Huckleberry]

We all know that rising interest rates means lower home prices as it knocks more potential buyers (demand) out of the market.

[/quote]

I don’t think we all agree rising interest rates automatically mean lower home prices.

If rising interest rates occur during an economic recovery (which has happend many times in the past) the opposite has occurred. (look at prices from 1965 to 2000)

Conversely, declining rates do not always translate into higher prices (look at rates and prices from 2006 to 2009).

[(former)FormerSanDiegan]

[quote=sdduuuude]Thanks, FSD, for the clarification.

So, good discussion – lets hear your final answers – “Why is San Diego real estate still so expensive?”[/quote]

My final thought…
San Diego is an expensive place to rent because there are too many tenants with too much income vying for too few units. Rent levels and current interest rates put a floor on home prices (at least post-bubble) based on the ability to potentially rent out these untis.

[(former)FormerSanDiegan]

[quote=sdduuuude]Thanks, FSD, for the clarification.

So, good discussion – lets hear your final answers – “Why is San Diego real estate still so expensive?”[/quote]

My final thought…
San Diego is an expensive place to rent because there are too many tenants with too much income vying for too few units. Rent levels and current interest rates put a floor on home prices (at least post-bubble) based on the ability to potentially rent out these untis.

[(former)FormerSanDiegan]

[quote=sdduuuude]Thanks, FSD, for the clarification.

So, good discussion – lets hear your final answers – “Why is San Diego real estate still so expensive?”[/quote]

My final thought…
San Diego is an expensive place to rent because there are too many tenants with too much income vying for too few units. Rent levels and current interest rates put a floor on home prices (at least post-bubble) based on the ability to potentially rent out these untis.

[(former)FormerSanDiegan]

[quote=sdduuuude]Thanks, FSD, for the clarification.

So, good discussion – lets hear your final answers – “Why is San Diego real estate still so expensive?”[/quote]

My final thought…
San Diego is an expensive place to rent because there are too many tenants with too much income vying for too few units. Rent levels and current interest rates put a floor on home prices (at least post-bubble) based on the ability to potentially rent out these untis.

[(former)FormerSanDiegan]

[quote=sdduuuude]Thanks, FSD, for the clarification.

So, good discussion – lets hear your final answers – “Why is San Diego real estate still so expensive?”[/quote]

My final thought…
San Diego is an expensive place to rent because there are too many tenants with too much income vying for too few units. Rent levels and current interest rates put a floor on home prices (at least post-bubble) based on the ability to potentially rent out these untis.

[(former)FormerSanDiegan]

[quote=sdduuuude]While it seems we are close to historical norms in price-to-rent and price-to-income ratios, I have some doubts that this tells the right story.

Does the reported average or median income take into consideration all the people making $0? i.e.
if 90 people are making $50K and 10 are making $0, do they report an average of $45K or $50K. Do they average in the “0” values or do they just take the average salary of the people who are working? Hmmmm.

Secondly, are we really at historical norms with unemployment as high as it is ? I mean – we may be at an average price/income ratio, but these are not average times. The last time unemployment was this high, what was the price/income ratio or price/rent ratio ?

Would be nice to see a scatter-plot of local unemployment vs. price/rent ratio to see if we are in the ballpark.

[/quote]

Rich’s curves are based on per capita income, so Yes the zero incomes are averaged in, bringing the average down.

[(former)FormerSanDiegan]

[quote=sdduuuude]While it seems we are close to historical norms in price-to-rent and price-to-income ratios, I have some doubts that this tells the right story.

Does the reported average or median income take into consideration all the people making $0? i.e.
if 90 people are making $50K and 10 are making $0, do they report an average of $45K or $50K. Do they average in the “0” values or do they just take the average salary of the people who are working? Hmmmm.

Secondly, are we really at historical norms with unemployment as high as it is ? I mean – we may be at an average price/income ratio, but these are not average times. The last time unemployment was this high, what was the price/income ratio or price/rent ratio ?

Would be nice to see a scatter-plot of local unemployment vs. price/rent ratio to see if we are in the ballpark.

[/quote]

Rich’s curves are based on per capita income, so Yes the zero incomes are averaged in, bringing the average down.

[(former)FormerSanDiegan]

[quote=sdduuuude]While it seems we are close to historical norms in price-to-rent and price-to-income ratios, I have some doubts that this tells the right story.

Does the reported average or median income take into consideration all the people making $0? i.e.
if 90 people are making $50K and 10 are making $0, do they report an average of $45K or $50K. Do they average in the “0” values or do they just take the average salary of the people who are working? Hmmmm.

Secondly, are we really at historical norms with unemployment as high as it is ? I mean – we may be at an average price/income ratio, but these are not average times. The last time unemployment was this high, what was the price/income ratio or price/rent ratio ?

Would be nice to see a scatter-plot of local unemployment vs. price/rent ratio to see if we are in the ballpark.

[/quote]

Rich’s curves are based on per capita income, so Yes the zero incomes are averaged in, bringing the average down.

[(former)FormerSanDiegan]

[quote=sdduuuude]While it seems we are close to historical norms in price-to-rent and price-to-income ratios, I have some doubts that this tells the right story.

Does the reported average or median income take into consideration all the people making $0? i.e.
if 90 people are making $50K and 10 are making $0, do they report an average of $45K or $50K. Do they average in the “0” values or do they just take the average salary of the people who are working? Hmmmm.

Secondly, are we really at historical norms with unemployment as high as it is ? I mean – we may be at an average price/income ratio, but these are not average times. The last time unemployment was this high, what was the price/income ratio or price/rent ratio ?

Would be nice to see a scatter-plot of local unemployment vs. price/rent ratio to see if we are in the ballpark.

[/quote]

Rich’s curves are based on per capita income, so Yes the zero incomes are averaged in, bringing the average down.

[(former)FormerSanDiegan]

[quote=sdduuuude]While it seems we are close to historical norms in price-to-rent and price-to-income ratios, I have some doubts that this tells the right story.

Does the reported average or median income take into consideration all the people making $0? i.e.
if 90 people are making $50K and 10 are making $0, do they report an average of $45K or $50K. Do they average in the “0” values or do they just take the average salary of the people who are working? Hmmmm.

Secondly, are we really at historical norms with unemployment as high as it is ? I mean – we may be at an average price/income ratio, but these are not average times. The last time unemployment was this high, what was the price/income ratio or price/rent ratio ?

Would be nice to see a scatter-plot of local unemployment vs. price/rent ratio to see if we are in the ballpark.

[/quote]

Rich’s curves are based on per capita income, so Yes the zero incomes are averaged in, bringing the average down.

[(former)FormerSanDiegan]

December/January are extremely slow months in the rental market. I don’t think this unit would be easy to prep and fill in time for a Jan 1 move-in.
You can ask to get out of your lease, but if the landlord does not fill the unit, you are liable for that month.

Subleasing for one month does not seem worth the hassle. But, if you are anywhere near the beach or attractions, you couyld consider renting it out to an out-of-town family member or friend for a week or two around the holidays.

If you close in December your first mortgage payment will be due on Feb 1, so you shouldn’t have any real cash flow problems (but I do understand the desire to save a month’s rent).

Consider yourself lucky that you don’t have to move to an interim place between your current rental and your new home. We’ve had to do that in the past and would gladly have forked over an extra month’s rent to avoid the hassle and extra costs of doing it that way.

[(former)FormerSanDiegan]

December/January are extremely slow months in the rental market. I don’t think this unit would be easy to prep and fill in time for a Jan 1 move-in.
You can ask to get out of your lease, but if the landlord does not fill the unit, you are liable for that month.

Subleasing for one month does not seem worth the hassle. But, if you are anywhere near the beach or attractions, you couyld consider renting it out to an out-of-town family member or friend for a week or two around the holidays.

If you close in December your first mortgage payment will be due on Feb 1, so you shouldn’t have any real cash flow problems (but I do understand the desire to save a month’s rent).

Consider yourself lucky that you don’t have to move to an interim place between your current rental and your new home. We’ve had to do that in the past and would gladly have forked over an extra month’s rent to avoid the hassle and extra costs of doing it that way.

[(former)FormerSanDiegan]

December/January are extremely slow months in the rental market. I don’t think this unit would be easy to prep and fill in time for a Jan 1 move-in.
You can ask to get out of your lease, but if the landlord does not fill the unit, you are liable for that month.

Subleasing for one month does not seem worth the hassle. But, if you are anywhere near the beach or attractions, you couyld consider renting it out to an out-of-town family member or friend for a week or two around the holidays.

If you close in December your first mortgage payment will be due on Feb 1, so you shouldn’t have any real cash flow problems (but I do understand the desire to save a month’s rent).

Consider yourself lucky that you don’t have to move to an interim place between your current rental and your new home. We’ve had to do that in the past and would gladly have forked over an extra month’s rent to avoid the hassle and extra costs of doing it that way.

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