Monday, July 17, 2006

More on San Diego - from boom to gloom

This July 17 story by David Streitfeld of the L.A. Times is another story about the sinking San Diego market. The story goes to show how terribly confused most people are about the so-called benefits of owning real estate, even as grossly bloated and mega-overpriced as it is. First, the article tends to point to rising interest rates as a major reason for the reluctance of buyers to buy, but then in the same breath quotes one buyer as saying when you rent, you have nothing, but when you own, you get tax breaks. Obviously this was not thought through. Mortgage rates are not that much higher than they were a year ago and they are nowhere close to historical highs. But isn't that a sign of a market top - people just don't think!

Believe it or not some investors in San Diego are calling this a "market low" and are chanting "buy low sell high". There is no aerospace downturn to destroy the market this time, and since the number one industry is tourism, San Diego "will be fine". But others are experiencing it differently. Markdowns are happening pretty quickly, and "prices are dropping faster than the fliers can be reprinted."

The article interviews the founder of piggington.com, so if you aren't familiar with it, do give it a visit.

Curious little side note - there's a lot of happy talk in the media about how this will be a soft landing but nobody's gonna get hurt, and about how some homeowners are putting on a brave face and hanging in there for the long term. But check out the poll in the right hand column of the article and view the results. When I looked, 2.8% of respondents voted "just a hiccup", over 25% of respondents voted "soft landing", nearly 22% said, "I don't care, I'll never be able to afford to own here anyway", but 50% of respondents said "this is the start of a major crash". So it appears that in public we say one thing but when our opinion is registered privately and anonymously, we say another thing entirely.

4 Comments:

Blogger John Doe said...

buy low sell high.

catching the falling knife

10:45 AM, July 17, 2006  
Blogger bearmaster said...

THe people saying this is a market low haven't done the Limbo Rock: "How low can you go?" :)

10:56 AM, July 17, 2006  
Blogger mike said...

i can't count the number of times i've heard the following logic (or lack thereof).

"during the last downturn there was the lost of a lot of defense industry jobs. this time we aren't dependent on any one industry and therefore housing prices can't fall."

of course in the la times article the realtor spouts the same nonsense.

11:20 AM, July 17, 2006  
Blogger judicious1 said...

Bearmaster -

Get plenty of rest and take your vitamins - the beginning of the end is upon us and you will be monitoring declining RE values for some time. Good luck.

1:14 PM, July 17, 2006  

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