in 1990, Cali was the last state into recession... what is the GRP in cali, like the 6th or 7th largest if it were a country? USA never came outta the duldroms until cali turned up after the 1990-1994 resession. i think san diego county alone would be like 35th in GRP- memory not as good as it used to be. people fight change, they will not move until they lose their jobs. no real unemployment here. the scary part is that the economy really hasnt turned down here; not like aerospace cratering last time. before the blast off, i remember talking to an apt rehab guy doing big deals and 2br units in his project were $21,000/year, which at that time was a housing payment and more in reno, without the commuting traffic and no state taxes. he said people will keep paying until they HAVE to move. if NY, FL, CA go in the dumper, east fargo, ND aint gonna take up the slack. this thread has been over 200 pages w/o name calling. hopefully, we'll all live long enough to see how it turns out. manias are manias. manias dont end with a few people getting a scratch. rates are a myopic view of financing availability, because credit standards have been about as sloppy as they can get. people shud move outta cali, but they havent yet - i think they will, but it will be triggered by sellers realizing that this is an opp to get out and many will not want to risk holding thru another complete cycle and/or unemployment. i think companies shud relocate - how much do you pay a guy to qualify for a $700,000+ median priced home in O.C? i think Dumb & Dumber settled in Aspen, CO
Problem with San Diego is that jobs don't pay anything. I know a ER Doc who gets $300k a year in Portland for 18 days of work. He comes down to San Diego the rest of the time to surf. He has been trying to find a similar job in San Diego but the most he can make is around $180k. The median wage in San Diego is lower then in many other cities. It's almost as if the people who moved to San Diego 20 years live in an entirely different world then those that moved to San Diego 5 years ago. The problem with San Diego is you will not have some company announce that they are moving there and bring 1500 hundred employees like what you see in Dallas, Atlanta, Phoenix. etc. Companies can move to those places and bring tons of jobs and people can afford to relocate there to take jobs that come open. They can't in San Diego. I love San Diego and I will move back sooner or later but it's got problems with wages, and employment growth. John
I wholeheartedly agree. I was simply pointing out how someone could afford to buy in the market you described. You have to understand that the psychology of investing in RE has (did) changed. I ran across a story about how the CEO of Coutrywide was personally calling borrowers who had option ARM's to make sure they understood the risks. Long story short, all of them were CONVINCED that their house would continue to increase in value. None of these people would even entertain the idea of values declining. This is when bubbles pop. http://www.latimes.com/business/inv...83397.story?coll=la-headlines-business-invest
What is really getting interesting is that banks/mortgage companies are already starting to tighten up on their lending practices. They are actually starting to confirm income for example. If enough homes go under, these loans will get even tougher to get. You are going to have some people who are not even under water who can't qualify for another ARM, and then payments double. Ouch! Its going to accelerate what is already happening. This time next year will reveal how bad it will get (or not get). Just my opinion of course. Jayford
i cant agree w/ the ER doc example, i know 2 here who make big bucks, but you're are 100% correct about incomes. lots of people move here and dont realize that they are gonan actually take a pay cut. i moved here 20+ years ago, house is F&C and if things get bad, i may buy another... eventually, im outta here, but yesterday the weather was just perfect. BTW, i do most of my work in L.A. county - fees are higher.
Wow! Just on the news 16,500 homes went into foreclosure in Florida this August alone. I'm glad i paid mine off 5 years ago. I live in Cape Coral and bought my little 1335 sq. ft. house in 1993 for 62,500.00. Now watching all these mansions going up around me and seeing who's buying them is just amazing. Most of these people are just your average 40 hr/week Joe. I couldn't understand how they could afford it and now I'm seeing they can't. It's really kind of sad watching people lose their butt on this.
It won't affect the monthly cashflow, but keep in mind real rates (rate - inflation) are pretty darn low now depending on how you measure the inflation rate. Traveler