November 2, 2014

Questions Regarding The San Diego Market

For this weekend topic, an email I received two days ago, which I asked if I could post here:

Hi Ben,

I’ve been a reader of your blog for more than a year now. Thank you for the informative content. I have several questions regarding the San Diego housing market and I’d greatly appreciate it if you can take time to help me out.

I was in the market looking for a SFH from Spring 2012 to Spring 2013. The pricing then was still reasonable and I got my offer accepted several times. Unfortunately, there were always some issues with inspections so I ended up closing none. Then the market got out of control so I decided to wait it out. However, renting is really getting to me now. People are asking outrageous amount of rent for really crappy places. Tiny run-down studios are asking for $1000 or more! I am now kicking myself for not buying back in 2012. I wonder if price will ever go back to 2012 levels. Many readers of your blogs believe that price will tank hard. I’d love to think that it is true but I also hear that this time around, credit is very tight so most of the purchases were made by people with solid credit or with deep pockets. Therefore, they will not be forced to sell en mass if something goes wrong and hence, no bubble. What are your thoughts on this?

Second, many of your readers believe that current pricing is too high relative to income so pricing will need to come down to meet demand. However, in many European and Asian markets, prices are much higher relative to income. So in places like San Diego, where the weather is good and the scenery is beautiful, the housing price may not be too crazy, comparatively speaking. What do you think about this?

I really don’t want to jump into the market right now, because I do believe that the current price is too high. I’d try to wait but rent is wearing me out. If you think pricing will come down, when do you this will happen?

Bits Bucket for November 2, 2014

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