[powayseller]

I can’t speak for how S&P came up with the homebuilder index, and how they decided this was a representative sample for homebuilders in the U.S. The chart does show that the builders boomed, and their valuations are falling. They were clearly overpriced, just as technology stocks were at one time. They were selling for much more than they should have. They were bubble stocks, if you will.

[powayseller]

I’ve read about underreporting of occupancy, to get a cheaper loan. Getting the Assessor records is the only way to know for sure.

SD had many more speculators than other parts of the country. If the average for the country is 35%, then Omaha NE is 5%, Kansas City is 5%, and SD and Phoenix and FL are 40% or more. Again, we need assessor records to be sure. You ask the Assessor for a list of homeowners whose mailing address differs from the property address. Some County Assessors provide it – not sure if ours does so.

[powayseller]

I don’t know about y’all, but I’m getting bored of the same old stuff about having to explain why prices revert to the mean. They just do! No asset bubble in history has avoided this pain.

My points in regard to asset correction are clear to me, were presented over the past few months, and I am ready to move on.

My most pressing interest is in allocating my financial assets during the real estate downturn and ensuing recession. Housing has become only a secondary interest.

So if I no longer participate in answering objections made to “prices cannot revert to the mean because of demand”, or “Prices cannot revert to the mean because they cannot possibly go under replacement costs”, or “prices cannot revert to the mean because that would mean large unemployment and practically a depression”… I think I’ve heard it all. What all these irrational responses have in common is “It’s different this time. SD housing prices will be the first asset bubble in history to defy correction to the mean because things are different here”. Who really believes this?

There are some homeowners who don’t want to accept it, and I don’t blame you. But you’ve made your choice. You came here to get educated, and decided to ride it out. Now you are upset with the possibility of losing half your equity. Well, you had all the information that we sellers had.

I can’t keep coming here to debate you, because I am wasting my time. All bubbles correct to the mean. Read about it sometime.

Any discussion of dollar vs percentages, demand vs profit margins and replacement costs, vacancies decreasing or not, has nothing to do with the fundamentals: housing has to revert to the basic value where HOUSE PRICE = 8 * ANNUAL RENT.

Study Irrational Exuberance, Manias by Kindleberger.

Just read my thread where I posted Graham’s study, where NOT ONE ASSET BUBBLE studied escaped Correction to the Mean, to the fundamental valuation. For housing, it is wages. Rents are a proxy for wages. So even if housing prices are half of replacement cost (because replacement cost is made up of LUDICROUS land valuations), they will go there.

I’m done explaining this stuff. Some people just don’t get it or don’t want to get it. A good investor prepares for the future, and does not live in dreams and hopes. My goal is being a good investor, and that’s why I study everything I can get my hands on. That’s why I sold my house. That’s why I don’t care if it goes down 75%.

If you are bothered by a 50% loss, then sell. Stop arguing with history, with corrections to the mean. They happen regardless of how many times you want to argue about it, about why it cannot happen to your neighborhood. Yes, even Carmel Valley can drop in half. Only time will tell which neighborhoods are affected most. For now, Rich’s data is only about the price/income ratio for all housing for the entire County, so we don’t have the dataset to know what the mean is for each neighborhood. Unfortunately…

[powayseller]

bauerfinancial wants to charge me $10 for the first report (Everbank) and $4 for each additional report. How did you get yours free?

Weiss is the best rating agency. Bauer is rating everbank as 4 starts! They have severe banking issues, rated as E by Weiss who actually studied it, and bauer is just glossing over it. Weiss gave E ratings to many banks that went under, that had been rated A by AM Best up to the day they went under.

If you really want to know about the safety of your bank, get the Weiss report. Otherise, you are basically at the mercy of the FDIC.

[powayseller]

Who knows what Qualcomm’s plans really are? The current cell phone technology is used only in the US, and I wouldn’t be surprised if the US eventually adopts the European and Asian standard. Then what happens to CDMA? Their job openings have been posted for a long time – UT reported 500 openings as of last December. My friend, a VP at one of their divisions, had never even heard of a hiring problem, so who knows if these are just ongoing postings.

I read in the papers about companies leaving, but don’t read about new ones coming in, or expanding. I get the monthly SD Labor Market report, and have read nothing in the last few months that indicates expansion.

Wireless could be hiring, as there has been an increase of a few hundred jobs in that sector. But in a workforce of over 1 million, it is peanuts.

[powayseller]

Welcome back, docteur. I fractured my leg/hip from running, so the pain and the summer school for the kids is keeping me home more than ever. I had looked foward to a nice vacation, but it won’t happen this summer.

Daniel, you are right. My 5.3 acres in rural Poway were worth $350K last summer, because only one house could be built on it. If the zoning were changed to 1 house/acre, that land would have multiplied in value. Real estate researchers, such as John Talbott, found the same result as you did, in studies of land value.

docteur, the high cost of housing is due to the high cost of land. The high cost of labor/materials is due to the short supply during the construction boom. As this cools, both will fall in price. Even the commodities boom will fizzle out once consumer demand slows down. By next year, I bet copper will be back at before-runup prices. The material costs were artificially high due to the overconsumption. If housing can or cannot go below replacement cost, depends on how much the builder overpaid for the land. Could Lucent stock go below what someone paid for it a year before? An interesting thing about bubbles: they correct to baseline, so any overpricing will be corrected on the way down. As long as you are comfortable with the possibility of your house being worth $1 mil, who cares? You said you are a millionaire, and you love your house, so why do you care if it loses value? Someone in your situation has nothing to be worried about, except the possible loss of the cash that you stashed away (dollar falling, etc.)

sdrealtor, a rule of thumb in construction is that one should spend no more than 1/3 of the total price on the land. Builders who owned their lots for many years, are earning a huge premium on their homes just on the lot value.

[powayseller]

The National Association of Realtors, a trade organization that represents real estate brokers, said in a study being released on Tuesday that the percentage of homes bought for investment might be as high as one-quarter of the 7.7 million sold last year.

“Americans are treating real estate as a viable alternative to stocks and bonds,” said David Lereah, chief economist at the Realtors association. And some are buying at least two properties at a time.’ 3/31/05

The second home market now accounts for 38 percent of the existing housing stock and 36 percent of all homes purchased last year, NAR said.

“These aren’t second homes. You know where that down payment is coming from. People are leveraging one price asset against another on a pure momentum play. We couldn’t be at greater risk right now,” said Robert M. Campbell Campbell a San Diego-based realty broker, investor and author of “Timing The Real Estate Market”.

According to La Jolla-based DataQuick Information Systems, 37 percent of buyers in local condo conversion projects last year were nonresident owners. Conversions – in which a developer buys an apartment complex, performs cosmetic upgrades and then sells the units as condos – have become popular as prices for new homes and condos have soared.

Downtown, nearly 30 percent of new or converted condos that changed hands were bought by nonresidents last year, according to DataQuick’s analysis of property tax records. Countywide, nonresidents make up only 15 percent of owners. “We’re convinced that the number of speculative investors in the downtown market hovers in the 30 percent range,” said Gary London of The London Group, a San Diego real estate research firm. “The market has been so hot, and people have profited from the relatively small number of units put on the market relative to demand.”
UT Story

[powayseller]

The vacancies are higher in condos, then.

As far as the SFH, it’s one thing to have your home vacant when its value is appreciating 10-20% annually, and quite another when it is losing value. I don’t know what the impact is though.

[powayseller]

Yes, I saw it. The other builders had no incentives, or just lousy cars. Who wants a teeny little VW in this city?

[powayseller]

NCJim – I was picturing the guy as an actor, on those VHS tapes, or a model in a magazine. I shouldn’t assume anything. Maybe he is on the internet too.

Here is a write-up of Roubini’s reasons for a 2007 recession. He makes a lot of sense!

[powayseller]

I’m hoping that some other forum members, who tell us they are flush with cash from selling their homes and earning big bucks, would come forward and put down $14.95 to research their own bank, and post the results. That would be swell, and will benefit the entire piggington community.

[powayseller]

Was he laid off because of the soft problem? I think that industry marches with a different drummer – perhaps the internet is more of a competitor now. Can you get more info about the industry?

[powayseller]

equalizer, this is horrific. Any way to edit out your link?

[powayseller]

I have been writing that 30% of all listings are vacant. That includes attached homes and condos. Your search was only for SFH?

Can you check vacant status for ALL listings: condo, attached, and detached, and compare the base year, 1998, to 2006?

To answer your question, I don’t know how many houses were rentals where I grew up.

[powayseller]

lindismith, can you comment on the latest 2 companies to leave CA? (Nissan, Sanyo)

What about Nokia laying off its entire workforce? Nokia is shutting down only the SD location. They are continuing work on their alternate cell phone technology that is in progress at other locations. A couple years ago, Gateway left. They downsized and moved to eMachines headquarters after the merger.

When was the last time we heard of a company expanding or moving to San Diego?

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