[powayseller]

I’m not one to jump on any bandwagon. I don’t own any commodities, and don’t have plans to buy any.

I was just posting this to make the point that the runup in gold is not because we are facing economic armageddon and gold is our only safety net, but because of demand from growing economies and speculators. But this will crash faster than housing. When gold goes down, it will be quick, like tech stocks, and gold bugs are going to lose it all.

[powayseller]

Great detective work. Did you speak with anyone involved in these transactions?

[powayseller]

When you say you’ve never been busier, I know you are getting many more listings. You’re a great realtor, so you will get those referrals and repeat clients. Of course, even those who are new in the business are getting more listings, as inventory is up many times over last year.

Are you closing on your listings at the same rate as last year or 2005, or is there a slight slowdown? I read there is a 20% or 30% drop in sales, so is your income also down 20% – 30%? I know this is a personal question, and you may not wish to answer. OTOH, if everyone’s income drops for awhile, and the newbies leave the business, then the stronger can go on, right?

With more listings, and fewer buyers, the key is to work with a buyer who will bite, or to list a house priced right. It’s difficult to get that seller to list his house at the “right price”, since they hold out for what their neighbor got last fall.

[powayseller]

Has the sales slowdown affected you? You have a mortgage you can handle even in a slowdown? This seems a worrisome time to be in the real estate, mortgage, appraisal, title, or construction business.

Perhaps you have a solid customer base already. How do you see the future for the Real Estate profession in San Diego? Do you think most of the people who joined the RE profession in the last few years will go back to their previous jobs?

[powayseller]

I thought prices rose slower in 2005, peaked in Aug 2005, and have gone down slowly since then. I’d say about 5-10% down from August 2005. That would explain why prices are back to 2004 levels – 2005 was not a year of big gains.

I had 2 offers on my house in Nov and Dec 2005, and both offers were 5% below an Aug 2005 comp. There were 2 houses for sale at that time, that were my competition: one was just withdrawn (2 expired listing, this 3rd is withdrawn), and the other is still listed after 6 months without reductions. So I experienced the 5% drop firsthand. If the market in my area of Poway dropped 5% between Aug 2005 and Nov/Dec 2005, I can only guess it dropped another 5% in the following 4 months.

Also, each area is unique. Some areas of SD are still going up, some are going down faster.

I’m glad we have a realtor on this site now, since the Dataquick and NAR data is 2 months lagging, and doesn’t tell us the story behind the numbers.

[powayseller]

Doesn’t the OFHEO data show the price of the SAME house? Of course, that results in dated data. Another problem: the data doesn’t tell the whole story. Median price is going up, but like you said, it’s because the mix of houses is changing. Also, it happens because fewer lower-end homes are sold as first-time buyers are squeezed out by rising interest rates. The distribution of homes sold is changing, making the median go up.

The MLS is not concerned with giving the public accurate data. A realtor can check the history of a property, and find out the total DOM prior to the buyer’s offer. But those of us trying to follow the market only get the most current DOM.

Another problem: what happens to the pendings which disappear? Is a reason ever given?

[powayseller]

RE prices are sticky on the way down. Check out Rich’s charts in the Bubble Primer. The ride up takes 5 – 7 years, the ride down takes 6 – 8 years. While someone who is excited about a new house and the prospect for future appreciation will pay more than they should, that same person, when faced with morgage lates, doesn’t put up a For Sale sign, doesn’t reduce his sales price, and holds on as long as he can.

An analogy is this:
A kid, on a hot summer day, gets to the pool. Excited, he jumps in. An hour later, dad calls him in to dinner. The kid takes a few minutes to slowly swim over, and then gradually pulls himself out of the water. Maybe someone else has a better analogy 🙂

We all need to be patient. I expect the ride down to take 5 – 7 years.

[powayseller]

Interesting, sdrealtor… I admire you for putting your family ahead of money. The world needs more men like you!

It sounds like the high-end ($450K in 2000 was high end to me) moved slower. In 2000, we were looking at $320-$330K homes, which had sold for $250K the year before. I asked the realtor for comps, so that’s how I know. The low end took a big jump from 1999 – 2000. Although my husband was earning close to $100K at that time, we only had $20K to put down, so that was all we could afford.

I think the people with $100K – $200K to put down must be commended for their success and commitment to saving. They are at the margin, I would think, based on median income data.

Personally, I expect a return to 2000 pricing. But your point is well taken – each area of the county, and each price range, will take a different hit.

[powayseller]

So the North Cty Coastal area has not experience the inventory spike and decreased sales, as the rest of SD County. Then to what do you attribute the price decrease – rising interest rates? Have you noticed credit tightening?

I moved here from Phoenix in 1999, and when we were looking at homes in 2000, I noticed that the prices had jumped about 30% between 1999 and 2000. So that’s when the unrealistic jumps happened, from a buyer perspective. Why do you think it was still realistic in 2003? Are you using per capita income/median price, or rent ratios, or are you going on the fact that there was lots of momentum, speculation?

[powayseller]

I agree with you. My comments about the industries that can prosper was just what the USNews article stated. My own opinion, which I stated this morning to my son’s math teacher, is that math and writing are the most important skills our youth need, because those abilities will help us compete in the new economy. We need to invent new products for export, and that requires a great comfort in math. When I was in college, a loooong time ago, I was one of the only women in the engineering courses. I’m glad that has changed.

I’ve heard too many adults tell me they didn’t choose a certain major because they didn’t like math, or they’d have to take too many math catch-up classes. Kids who don’t take enough math end up eliminating about half the majors available to them in college. They say, “I don’t want to study Chemistry because I’d need Calculus”, or “I can’t study Computer Science because I would need to start with Algebra 1”.

The best favor any of us with kids can do, is to make sure our kids take the toughest math classes they can handle, all the way through high school, and get tutoring if needed. They must also write well, and since teachers have too many students to spend adequate time to edit reports, parents have to fill that void. Kids also need time to free play, make up games, ride bikes, and learn how to fill their time. They need to pursue their own interests, and not just ours. That means less time in structured activities, more time in their own creations. And of course, forget the game boy, game cube, TV, or minimize its involvement to a couple hours per week. (My oldest wasn’t allowed to have a game cube until age 12, so he may not be adept at moving his thumb, but you should hear him play the piano and the sax!). Poway High School does not offer Chinese, but I agree this is a language well worth learning. This is my view of preparing youth, and I so much would like to hear more opinions.

Does anyone reading this have any advice on keeping flexible in today’s job market and preparing our youth for the new economy?

[powayseller]

While American companies are prospering with offshoring by increasing their profits, American workers are not.

Job security requires flexibility, and selecting positions which require interaction with other people, whether they are employees or customers. Certain market segments will stay in demand: entertainment, finance, professional and other services.

Personal skills needed: blend of high creativity and intelligence, coupled with motivation, ambition, and good teamwork and communication skills.

I have a friend who is a s/w manager, and she has worried for years about being outsourced to India. She has a high mortgage. I can’t imagine living like that every day. She works from home late at night, so she can call Indian coworkers, who are just arriving at work.

Any other thoughts on how to navigate the new economy?

[powayseller]

Interesting, there’s a U.S. News and World Report (3/27/06) cover story entitled “Can America Keep Up?”

They could have interviewed you for the article, seniormoment. “Nearly half of IBM’s engineers and technical specialists work outside the United States. Hiring trends are similar: While big U.S. firms like Microsoft, Accenture, and EDS are taking on modest numbers of American workers, their payrolls are mushrooming in places like India. Corporations closely guard the details of patent and employment data, but this much is obvious: American companies are becoming less American.” (Go to the Invest in Corporate America link). The offshoring trend, while causing a loss of jobs to American workers, has kept the competitiveness of American companies. It’s better to be a stockholder than an employee of an American company, according to the article.

The main article is about the offshoring of high tech, telecom, and biotech jobs, and our complacency. “We had more sports-exercise majors graduate than electrical-engineering grads last year,” lamented General Electric Chief Executive Jeffrey Immelt in a January speech.

How will this affect our economy, nationally and locally? How do we best prepare our youth for the global marketplace?

I’ve come to believe that keeping our youth in structured activities most afternoons and weekends is going to hinder them in the new economy, but that is a whole different topic. I was one of those parents spending $1K/month on my kids’ activities, driving them all over, and had done that for over 10 years. It was expensive, time-consuming, and restrictive. I now believe that this new way of raising kids is not doing them any good, so a few months ago, I cut back on the activities. A modern kid’s life is a huge social experiment, and what are the benefits of being constantly in an environment where adults tell you what to do? How can you create, socialize, structure your time, make up your own games? What skills do people really need to be productive and make a living in the new economy?

As the article said, while the American college student is drinking beers and watching football, the Chinese student is on his fourth book. And that’s the person that our kids will be competing against.

[powayseller]

The U-T article had a chart

Workers Compensation
Rate per 200 employees, in millions
Idaho $42.1
California $419.1

Yeah, the numbers seem high.

Is your bank thinking of leaving because of high workers comp costs? This is interesting, and many companies may have considered a move to a cheaper location (to save on workers comp, taxes, labor costs), but how many actually follow through?

[powayseller]

I have not read of any trend of companies leaving San Diego or California.

The Buck Knives story was interesting. In it, I found this:
“A 2005 report by the Public Policy Institute of California, a nonprofit research organization based in San Francisco, found that job losses from company relocations have never been more than a tenth of 1 percent of all of the state’s jobs.

“There has been no substantial business exodus from California, and there has been little if any change in the rate at which businesses are leaving California or avoiding California,” the study said. END QUOTE

During the power shortages a few years ago, I remember Buck Knives talk about leaving, to reduce electricity costs. The main reasons for them leaving cited in the article are high workers’ comp and utilities. No mention of housing cost. Workers’ comp insurance is 10X higher in CA than in Idaho, so for 200 employees they’ve saved $400 million. Idaho has no minimum wage law, so only the federal min. wage applies.

Did anyone see the U-T article (12/15/05) about the economy and loss of manufacturing jobs? They mentioned Qualcomm – they can’t fill about 500 positions, since the high cost of housing is keeping employees from moving here. Yet, there is not talk of Qualcomm leaving San Diego.

There has been a loss of manufacturing jobs (U-T article) due to plant closings, not relocation. For example, Sony just closed its Rancho Bernardo TV plant, since consumers are more interested in purchasing plasma TVs made in China.

[powayseller]

How was the appraised value increased? Did the Assessor determine a new value, or did they just increase it automatically by 2% each year?

[Author]

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