[JES]

Sadly, I have determined that the answer is generally no! I really like the Encinitas neighborhood where we rent right now, and most of the neighbors are nice, middle class folks who purchased before the boom. 900k is a bit much for a home here though and we are considering relocating out of state.

[JES]

When we purchased in early 2004 we looked all over Temecula and even had some $$ down at a place up there. To echo the comments on here, I really liked the areas in the city itself, and especially to the south near 79. Better commute to San Diego, and far away from the northern traffic. We also lived there in an apt. off of Margarita 5 years ago and liked it quite a bit, but it sure was hot in the summer!

In 2004 we ended up buying in San Marcos because prices were not that much higher. 495k for 3000sqft. home in San Marcos vs. 450k for the same one with same yard in Temecula. Beofre buying up there I would seriously look at some areas of San Marcos again. Santa Fe Hills in San Marcos is one area where prices might still be comparable to some areas of Temecula. Even my old neighborhood of Silvercrest in San Marcos a 2700 sqft. home sold for the mid to high 500s this year. IMO Temecula gets buyers with $$ and good jobs from the OC and LA, wheras San Marcos does not, and that may explain the pricing.

[JES]

Here’s the house I was talking about that was bought by a Centex employee:

380 Shelley Dr., San Marcos, CA 92078

Original Purchase:
2005 Total assessed value: = $548,239

Flip:
Sold in 2005 for approx $860,000

[JES]

Interesting situation and it almost makes me want to drive to your neighborhood just to check out this ‘auto pilot’ open house!

Sounds like it makes sense for you to stay put for now if you plan to be here for the next 10-20 years. Having recently sold a home in Feb. in a newer San Marcos neighborhood I have some similar experiences. One realtor owned 3 x homes, and she moved from one to the next as she sold them. Another 3-4 (that I know about) homes were bought by Centex employees and flipped within a year. One was the best lot in the neighborhood and he sold it for 300k+ more than he paid in 1 year. – gee, I wonder how he landed that one! In phases 1-4 (heavy investor phases until Centex started some new rules) 10-15 homes have been flipped 2 or 3 times now. We were the only home for sale in Jan, but now there are 12+ homes, all sitting and none in escorw. Prices are all reduced. We decided to sell in January because literally 75% of the people on my street indicated to us that they were also considering selling this summer and I wanted to sell before them.

Our new ‘established’ area in Encinitas where we rent a home now (15 year old homes) is the exact opposite. No homes for sale, nobody in over their head because almost all bought when prices were low, no investors. I do think there is a case to be made that neighborhoods like yours may see a steeper decline than areas like this. In the future I plan to be very cautious about where I buy and will try to steer clear of brand new communities. None of this is reason for you to sell though since the transaction costs and trouble of selling would likely outweigh and difference!

[JES]

Once homes are no longer viewed as investments then you have to ask yourself why a home in, for example, San Elijo Hills, costs 750k and not 450k. It was driven to 750k simply because of speculation, not any real fundamentals, right?

[JES]

On a less technical analysis, we can simply look at the role that psyschology has played in this last run up in prices. Many buyers the past 5 years have purchased because of an expectation of appreciation, often an expectation of rapid appreciation. No analysis, no thought to whether they can afford the payments, just a desire to ride the wave up. The reverse of this is a huge factor that will now drive the market down and is causing buyers to dissaprear. IMO it has the potential to drive the market much lower than a more technical analysis based on previous bubbles may indicate. You simply cannot compare the speculation factor this time around to previous bubbles, can you?

[JES]

My thoughts are that there is a definate bias out there already in the public and the media the other way, towards the ‘soft landing’ theory. As proof, I am willing to bet that the average person out there would subscribe to the notion that prices will just ‘level’ off, that any downturn will be ‘brief’ and that interest rates probably won’t go much higher. They would probably also tell you that the economy is strong and we need not worry since this is such a desirable place to live, there is a finite amount of land etc. I do agree that people tend to find reasons to back up their preconceived notions, but when it comes to home prices falling most people are dillusional and still believe that they will either keep going up or just level off. In fact, they are already falling.

[JES]

It’s tragic because it’s almost as if all the talk about engineering jobs being exported overseas has caused people to not go into those fields. Truth is there is still a huge shortage. And Americans have always been more inclined to go into business, law, etc. anyway.

[JES]

Funny about the overseas engineers you mentioned. In my previous job I went into to all of the tech companies in the area, specifically wireless, regularly. I would say that over 60+% of all the engineers at Qualcomm, Nokia etc. are from other countries. Some on temp visas I suppose? Not sure how that works. Once had a meeting at Nokia with 25+ engineers and every one of them were from India, Pakistan etc. The defense contractors like Viasat (military side), Northrop etc. mostly hire US citizens for obvious reasons. Never once saw an African American engineer in two years, and if I did run into a black engineer they were from Africa. Only a couple Hispanic engineers as well. A real shame that more American citizens – especially from traditionally disadvantaged groups – aren’t filling at least some of these jobs as far as I’m concerned. I guess Americans just don’t want to get engineering degrees!

[JES]

Just looked on Monster and Cricket Comm in San Diego has an opening for a software engineer, 5 yrs minimum experience, listed at 80-90k / year. AMN Healthcare has one with 5-7 yrs experience, 75-95k.

[JES]

Inflation comes in to play as well. Groceries cost more, gas costs more, cable TV, utilities etc. Count on say 3% inflation per year (I think it averages around that, more or less). That 23 YO software engineer may also get married and have some kids – assuming he can pull himself away from the laptop long enough to meet a mate, and actually ‘mate’. That raise quickly evaporates as you can see. I might be off, but I would say that a software engineer in San Diego with 5 years solid experience may be worth 90+ a year. And would probably start at 55+. Anyone know if I am off on that?

Not sure who has the breakdown on job stats…you would think they would be published eh?

[JES]

Would be interesting to see a breakdown of all of these stats. EG: In the past 3 years, what has been the net gain/loss of say, software engineers, or hardware engineers, or mortgage brokers etc.

[JES]

Any numbers out there for San Diego specifically?

[JES]

Sony has big operation off of I15, and defense contractors like NG and ViaSat have expanded. On Nokia – I have it on good authority that they are at least looking to keep some of their operations here, but for GSM/WCDMA. At least they are looking to possibly purchase equipment for that type of testing.

[JES]

I’d say many are real jobs, but then some are clearly already filled and HR has to post them to meet their internal reqs.

[Author]

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