[R3venge]

I have to say that UCLA is wrong. I have been telling my friends from an economic standpoint I didnt undertand the boom for years. Real wages have been stagnant for years, yet real estate has gone nuts. With the affordability index being so low (I think it is at 10% for SD area) we have a long way to go to reach the 70% historic rate. To many people used RE as a short term investment. RE is not liquid like the stock market.
We are gonig to see a worse bust than the housing bust in Japan. At least the 100 year fixed morgages in Japan were fixed. A lot of people are going to go bust when options arms reset in the next couple years and RE has depreciated and real wages have remained stagnat.
It is also hard to forecast what effect Option ARMs will have on the market as there is no historic data for it. Without the data economists cant make acurate predictions.

Just my 2 cents.

[R3venge]

I work for one of the non-profits that get money from the DoL to help the unemployed.
Many biotechs are working off VC capital. A lot of other biotechs cant find people willing to move to San Diego for the pay because of the high cost of living here. One thing that many people don’t realize is the the high housing costs have hurt many business that need skilled labor. It is hard for many business, to attrach skilled labor from outside of San Diego. Many business will not move here because of the high costs, in fact many are cutting back or moving out. The biggest employers for SD are UCSD, SD County and The Military. None of these are know for high pay.
It will be interesting to see what the effect of the real estate “correction” will have on the employment market. I already know a few real estate agents that are getting out of real estate.

[R3venge]

Ok I will try to rebut your claims.
First I don’t see why you think median home price is useless. I don’t know if you expect it to tell you everything or if you think it tells you nothing. As a starting point it is a useful economic indicator. Does it tell you how much to buy or sell a home for? No, but it is the easiest way to look at trends year over year. I know that in my forecasting class we split it up further by attached or unattached residences and then the median price becomes more useful for future predictions.
A 1% drop in price is not a trend. If the prices fall over a few months then you can say you have a trend. Right now it is hard to say the sky is falling after only a one drop.
I don’t know what you mean by the ARM problem. Many people will refinance because they will have equity in their homes and be fine. Right now there is only the PREDICTION that there could be an ARM problem. The people buying in the past year will have problems with ARMS if the market stays the same but that shouldn’t effect the overall market much.
Seeing a 10% drop in listing price doesn’t mean that prices are dropping. If this were the case you would see a 10% drop in median prices, not just 1%. When a house is listed the agent usually adds a few percent over comparable homes in the area. (Sorry not in real estate, don’t know specifics) what is happening is that agents have to list homes at the same price of comparable homes that have sold in the area, not higher.
You have to realize that Alan is talking about the entire SD area. Some areas are still hot, some are cold. I can see prices dropping quickly over the next couple years downtown but rising in HC. Will they balance each other out?
And about saying Alan is lying to the public. Lying is a harsh term to use. They asked his opinion and Alan gave it to them based on his data. I have seen his work and he wouldn’t doctor it.

[R3venge]

I have to say I am disappointed in people attacking Alan Gin because his numbers don’t match what you think will happen. You have to realize that Alan isn’t telling you what will happen but what could happen. Forecasts are only based on previous numbers, and the current situation hasn’t been seen before to this extent. Could he be wrong? Yes. Could he be right? Yes. What Alan Gin is reporting is the numbers as he has interpreted them.
I had the pleasure of working with Alan Gin in a business forecasting class and he is an amazing teacher, and if you look at all the numbers he has I have to agree with him on the plateau of prices over the next year or so overall. The decline in the RE market will not be overnight like a decline in the stock market. The effects of things like creative financing are hard to forecast because there isn’t the historical numbers there to draw on. People should also remember that Alan is looking at San Diego overall not just one area. I worked on a forecast for the urban core area and I forecasted a slight INCREASE in prices even though there would be a decrease in sales. Some areas are a lot riskier than others. Personally wouldn’t buy downtown.
I was glad to see Alan defend himself. Instead of attacking him take the time to look over his forecasts and you might agree with him.

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