So what happens to the local economy of San Deigo?? everyone just leaves and it becomes a ghost town?? Or just a bunch of homeless people everywhere?
It seems in the last 2-3 years, everyone decided to become a realtor to "get rich". Just like when everyone tried to become a day trader for easy money back in 2000. They will all wash out now, and go back to their old professions. The SD economy will take a bit of a hit, but ghost town is a bit over stated. Jobs here are not easy to come by. Ive had several friends move away, and after this real estate wash out, I predict even more will go when there is a sudden mad rush to get a non-realtor job. Non-reality job growth has been an anemic 1%, which has been the norm of San Diego for several years now. People are already moving away because 95% of the people here have been priced out of ever owning a home and rent is as high as owning a very nice house in more reasonable places. The civil servants like police/teachers are complaining they cant afford to live here with their current pay and keep asking for more money, even though San Diego is bankrupt. You see people in their 50's with kids who still rent. Its nuts. The cracks are already showing. There just is no reason for these kinds of price increases except for euphoria. Going to be an interesting ride. Here is an intersting quote: Adjusted for inflation, mortgage payments are 22 percent higher than they were at the peak of the prior cycle sixteen years ago. If course, the difference now is, these are 85% ARM with interest only loans!!! People have paid as muh as 14X their salary for a home. Only the richest 8-9% of San Diegans can afford a home now. How much more of the richest 9% of san diegans are willing to pay now? How many of these guys are left? No one else can afford to buy now, so whats supporting prices?? Nothing. Here is another stat. Notice of defaults Q1 2005 versus, Q1 2006, jumped 60% in San Diego. People are feeling the pain of these Arms clicking up. 10X more will reset next year and the fun will really begin. Ive got a big pile of cash in the bank. If I get lucky, ill catch the bottom of a big panic in a 2-3 years. Keeping the powder dry
Another must read from the San Diego Housing Commission: http://www.sdhc.net/giaboutus2.shtml Some highlights: To afford a median-priced house ($550,000) today in San Diego, buyers need an annual income of about $134,000, assuming a 10 percent down payment and a 30-year fixed-rate financing at current interest rates. But according to the San Diego Association of Governments the countyâs median household income is $64,273 â less than half of what is needed to afford a median-priced home here. (The Daily Transcript/MarketPointe Realty Advisors, 2/15/06) The average new detached home in San Diego County sells for $861,759 â a 350 percent increase over 1996 ($245,884). (The Daily Transcript/MarketPointe Realty 2/15/06) According to the Federal Bureau of Labor Statistics, in the past year, San Diego lost 15 percent of its manufacturing jobs (which are typically higher wage than retail and hospitality jobs). (San Diego Business Journal, 6/27/05) Californiaâs population growth last year continued to slow as more people exited the state than moved here, fueled in part by the steady rise in already high housing prices. Howard Roth, Chief Economist for the Department of Finance: ââ¦I worry about that because I wonder how weâll attract workers from other parts of the countryâ¦â (SDUT, 3/3/06)
Check this out. $861,759 average cost of new detached home in san diego. 5.99% - current 5/1 RM mortgage rate $0 - amount of money put down on a house here. --------------------------------------- $5161.14 <--- your starting monthly payment Know how many people can afford that in san diego??? Who is supporting these prices????
Look at Miami Inventory : http://www.benengebreth.org/housingtracker/location/Florida/Miami/ and there are over 50000 condos still under construction
Holy crap!!! They are going to end up like Houston in the 80's when they over built and housing crashed after the oil problems. Some lucky smoe is gonna pick up some super cheap condos in miami in the not so distant future.
The hot oil market has Houston ripping up again! The cycle repeats. 1.2 million dollar median price in one area :eek: http://www.chicagotribune.com/class...6848014.story?coll=chi-classifiednewhomes-hed 55% increase in price in 1 year! :eek:
I was living in Houston during 1986 and working for US Home. People who were there during the boom years would get glassy eyed telling how it was like a neutron bomb went off. It went from boom town to bust almost overnight. US Home had entire subdivisions with every home foreclosed on and boarded up. The situation is different here now. Back then the jobs evaporated. This time the liquidity did. We will see which is worst. John
2007 will be a scary year. "This year, more than $300 billion worth of hybrid ARMs will readjust for the first time. That number will jump to approximately $1 trillion in 2007, according to the MBA. Monthly payments will leap too, many beyond what homeowners can afford." All those 3/1, 5/1 arms have already started to roll in. Hear people bitching at work about their mortgage payments already. No new car, cant afford anything anymore, because all the money goes to the house. Over extended idiots.
Toll Brothers-TOL CEO says cancellations are higher than last Qtr-Reuters Jun 27 at 13:39 More fuel for the fire.