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“A property that is being sold short is still part of the must-sell inventory and those sellers don’t have the luxury of waiting for their price. They have to discount it enough to move it.”

Egg-actly. I don’t have much of a problem with this as long as the prices drop and the FB learns a lesson.

I’m not enough of a JBR to wish a lifetime of ruined credit over these folks heads.

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“The Chinese student leaves with better grades, but does that necessarily mean that he will be better at global business?”

Find the Indian and/or Chinese equivalent of Microsoft, Google, Intel, Apple etc. and you will have the answer to your question.

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Sigh.

The Libertarians are going to have a field day with this one!

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“Talk about a popping bubble….”

I don’t think whats happening in Detroit has anything to do with a typical speculative ‘bubble’. More like a localized economic collapse.

San Diego does indeed have a more robust local economy than Detroit. No questions asked.

What worries me in SD, though, is the ‘perfect storm’ of an over dependence on RE, building inventory, shrinking population and the sub-prime implosion. Something has got to give.

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As an aside, guess what the common trait I’ve noticed amongst my most successful friends?

Wealthy parents.

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Thanks davelj!

Indeed, I was only considering how dependent the local San Diego economy was on real estate and related industries. And I still feel the comparison is apropos, when any economy becomes over-reliant on one industry its risky business.

Something thats ‘worse’ about SD vs. Detroit is that the auto industry didn’t build equity for home owners. It wasn’t like every resident got a free classic muscle car when they bought a house there. Contrast with San Diego, where lots of folks became REI speculators when they bought into property they either couldn’t afford, or re-financed it into oblivion.

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“Our only hope as a nation lies in the heart and motivation of the part of our population that are driven to make a difference – people like the soldiers, sailors, airmen and Marines I see volunteering to take a bullet for this country. They come home and instinctively find ways to make themselves and this country better.”

Do you mean our young servicemen and women currently over in Iraq, that have been serving multiple consecutive tours of duty? I’ll suggest taking a visit to your local VA, outpatient psych ward and/or any dive bars within walking distance of the above to get a feel of how our current veterans are doing, courtesy of our foreign policy.

Or maybe you mean the current crop of new recruits, like the cat iv’s? You know, the ex-cons, mentally ill and unemployed angry kids dressed up like gang-bangers?

I work at an engineering school and interface with many highly-motivated, intelligent and creative “American” engineering students. Sure, there are not many of them, but its a tough profession and not for everyone. I have a feeling they will be rewarded for their hard work, however, as there is always demand for good engineers, recession or otherwise.

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“LOL, comparing Detroit’s auto industry to our local RE complex is assinine!”

Please explain?

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To those that say it can’t happen here, consider that Detroit’s auto industry compares to our local real-estate complex. I can easily see properties in less desirable neightborhoods crashing hard.

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“I have opined earlier in time that it may not even get to a govt. bailout situation if lenders/servicers modify re-cast terms to avoid blowing borrowers out of the game when their ARM re-casts. There is already evidence that some servicers plan to do just that. Should be interesting to see how it all plays out.”

This is what scares me (and could precipitate a soft-landing).

Basically the banks figure exactly how much they can gouge out of homeowners, per month, and keep them in their homes. Prices would drop slowly, if at all, due to the lack of foreclosures. Rents would likely increase, due to lack of supply, to meet the new bottom.

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“Current sales to high-net worth households do not necessarily give a clear picture of the state of the local real estate market, correct?”

I’ll agree, I’m one of the contrarians here that still feels that prime properties in SD county will weather any downturn better than less-desirable areas.

Something I’m thinking is that perhaps its just going to take mass-foreclosures to bring the median down in a meaningful way, as the average seller is just too emotionally invested to drop their prices in any meaningful way.

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“Ever heard of IIT? Probably the best engineering school on Earth, and IIT grads are some of the world’s biggest movers and shakers. IIT applicants who can’t quite make the cut frequently end up at MIT and Stanford. There are excellent engineering schools all over the world, not just in the US.”

Sure have! Worked with a few grads at AT&T and Bell Labs. Until recently, the majority of them were emigrating to the states. Was quite the scandal in India, as its a state-funded uni!

While it is indeed a great school, world-class in fact, it still can’t compare to our domestic educational offerings. It’s like rolling a few of our top engineering schools into one giant institution and closing everything else except for the community colleges.

Beyond that, the IIT grads are either moving out of india, or demanding salaries that are not attractive to western companies looking for dirt cheap labour.

My personal opinion of the current dearth of engineering students is that its simply due to economics. Why bother investing in four-six years of intense school work in order to get a grueling engineering gig? That starts at less than 100k to boot?

Especially when you can become a realtor with literally only hours of prep work and then make 10k a week selling houses from one flipper to another. Not to mention the dozen or so investment properties you have on the side, paid for with low-interest/no money down loans.

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On outsourcing,

Much of the foreign work is pretty crappy (their schools are *way* behind ours and less folks can afford to buy their own tools to become self taught). Many businesses are finding this out the hard way and hiring locally again. The timezone/language issues are also a pain.

And of course, ultimately, the more work that gets outsourced, the higher demand for foreign engineers and the less cheap they become.

There will always be a demand, domestically, for good local talent.

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sdcellar,

No problem, I give out lumps like they are going out of style, would be hypocritical to complain about ones directed my way.

I think where we diverge is that I am completely apolitical (I’ve never voted and have no interest in the political process); instead choosing take as best a scientific approach as possible in all matters.

I get the distinct impression that you are a libertarian of some sort.

Thats fine, I’m partially libertarian myself, however I do make quite a few exceptions. A big one is that I’m pro-regulation (as long as its enforcing a free market) and willing to accept taxation as method to encourage positive behavior and fund scientific research.

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Bjensen,

You sound a lot like me before I found this blog!

By the time I had gotten myself in a position where I felt I could buy property, I found myself simply priced out. And I make, by myself, above the median household income for San Diego.

I, at first, was somewhat bitter about the whole affair, but after some introspection the logical side of me took hold.

“Well”, I said to myself, “If I make above the median, and I can’t afford a home, who/what is fueling this boom?”

My quest for answers led me to this blog and ultimately being at peace with renting. Find a rental you are happy with; save, save, save and just wait this mess out. You may feel you are in bad situation now (and we are), but things will come around.

And when they do, you will have the cash and good credit to take advantage of them, instead of an interest-only-albatross around your neck.

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