I wonder if defense industry layoffs will trigger a serious real-estate downturn in San Diego? Long deployments aren't good for defense contractors because the defense budget gets spent on the war rather than new weapons. I'm not sure how important the defense industry is to the San Diego economy, now-a-days...
Somebody said some thing once like how there were lies, damn lies and statistics. Only the home that were closed are in those numbers. The homes on the market with NO offers are not. It's going to be disaster here in SoCal unless of course the Fed lowers rates to 1% again. John
the economic base is fairly diverse, although if miramar or camp pendelton closed, iwe would feel it. we have extensive biotech industries, among others. when you look at Socal, it has a HUGE economic base... its like a good-sized country. im amazed that people in $800,000 - $1,000,00 crapholes arent cashing out and going to other states. i think that will come. im also surprised that companies dont relocate to lower labor costs. my sec'y is trying to sell a +/-$650k townhome and move to a similar home in colorado for $250k. last summer - no offers. thsi spring, a contingent offer - buyer needs to sell 2 nasty little rental SFRs to exchange to coastal TH. i think there is a "ghost" supply that will hit the market this summer when potential sellers realize that prices have stalled. people have been delaying selling becuase they didnt wanna miss the top. i think they already have, but again unemployment is low and businesses are not really leaving en masse. its interesting times. F&C house makes me a spectator.
There was an article in the local paper here about how people were moving out. They estimated that around 50k have left the San Diego area in the last 2 years. This guy who gave me a quote to move my stuff back to Atlanta said that he has given out a lot of quotes to people who are trying to sell out and flee the area but are stuck and can't sell. This is a strange area. The jobs don't pay any more then they do in other areas but somehow the real estate has gotten really expensive. I am no idea how people are paying their notes based on what the jobs pay. I was bs'g with this mortgage broker guy in a bar during lunch one day about 2 years ago about it. He just rolled his eyes. He was telling me about a couple, she was a waitress at a casino here in the area and her boyfriend was a bar tender at the same casino. They bought a duplex for $1.2m with the intention of flipping it while renting out one side of it for themselves. They got one of the interest only, no doc loans with 100% financing. He said that was happening all over the area. Their combine income was only about $75k. The payment on a $1.2 million loan at 6% fixed is with property taxes is at least $8k if not more. How long are two bar workers going to be able to keep that payment going? I guess here in North County there were are a lot of people who had lived in the area for 20-30 years and had a lot of equity. Those were the ones leaving and selling out to those using the teaser rate adjustable rates and financed by lenders who were giving out the no doc loans. John
San Diego is like 85% ARM + interest only. People are feeling quite a squeeze already. Something has got to give. The job market here has never been good either. Ive had several friends who had to leave the area over the last few years because they simply could not get a job. These are people with degrees, with very solid track records and experience. Now you have joe blow average and wife buying homes with 10:1 leverage along with everyone else in the neighborhood and again, almost all of them are ARMs with interest only. Next year, 10X as many ARMs reset, as they did this year. Its going to be very interesting to watch, for sure. Maybe this doesnt guarantee a burst, but its the best setup ive seen since the 80's crash, actually, a lot better.
I could stay here and do the headhunting business but I am afraid of the fallout and what it will do to the local job market. Atlanta's real estate never really got out of hand like it did here plus the jobs pay more there and the cost of living in Atlanta is less than the national average. I love it here but I just don't feel that good about the area over the next few years. I would have already left if I didn't feel an obligation to hang around to be a father to my x's daughter. Now, my X got involved with this house she is in. It's a cluster fuck all the way around. I feel bad for her and bad for the moron that bought the house with her. He had no business buying a house with that big of a payment John
======================= CoVer; In west Tennessee [rural area], its closer to 7% average; some hot spots here more than that , like any area. Actually the upticking interest rates seem to help the RE polar bears a bit, I am ready to go shopping for the first time in a long time. No big rush to buy with interest rates upticking
Yes when rates are expected to rise it usually brings a surge of buyers who have been interested but waiting until prices come down. Once they feel that rates are going to go it it prompts them to go through with it. Sort of a paradox. I experienced when I work for US Home, a national builder in the early 80's and also when I built spec houses for myself in the mid 80's. I remember we use to wish for rates to be rumored to be headed up so it would bring the buyers out of the woodwork. 30 year fixed money is still incredibility low. I remember when the va rate was 21.5% in the early 80's. However fixed money is not the problem. The problem really is there that are not enough buyers that can qualify at today's rates to bail these people out Imagine what would happen to daytrading brokers if the sec came out and said that daytrading accounts had to have at least $100k in them. It would not lower the number of people who wished to daytrade, it would just lower the number who could participate. John