Fannie Mae Views San Diego ‘With Trepidation’
The Union Tribune has this update from San Diego. “Widely seen as a forerunner in national real estate trends, San Diego County is being viewed ‘with some trepidation’ by lending giant Fannie Mae as its housing market cools. ‘Inventories have surged in San Diego and the surrounding areas,’ Fannie Mae Chief Economist David Berson said. ‘Home price gains…are certainly down from their peak and perhaps will fall.’”
“San Diego is one region that is experiencing low affordability after a rapid and unsustainable rise in home prices, Berson said. ‘The strong presence of investors in the housing market makes it subject to price fluctuations, he added. ‘We view it with some trepidation. It is one of the areas we are concerned about.’”
“Berson said the condo market here is at risk ‘because the supply has gone up dramatically.’ There have been ‘lots of condo conversions. The investor share probably has been far more active in the condo market.’”
“In the fourth quarter of 2005, about 24 percent of condominium buyers here were investors, estimates John Karevoll, analyst for DataQuick. That fell to about 21 percent in the second quarter of this year.”
“In a related report yesterday, there were new signs that the housing industry has lost steam. ‘Our reports from builders and census data and reports from public builders all show the market is falling off,’ said Michael Carliner, an economist with the National Association of Home Builders. ‘Builders don’t want to build more than they are selling.’”
From MarketWatch. “The chief of Fannie Mae and Freddie Mac’s federal regulator said his office needs more power to oversee the giant companies. ‘There is a strong need for legislative reform now,’ said Office of Federal Housing Enterprise Oversight Director James Lockhart.”
“In a question and answer session Wednesday with senators, Federal Reserve Chairman Ben Bernanke said legislation shouldn’t set a hard cap on portfolios and that it’s very important Congress pass a bill this year. The administration and the Fed have worried that meltdowns at either Fannie or Freddie could ripple through the U.S. financial system.”
From Reuters. “The U.S. government is seriously considering limiting debt issuance by mortgage giants Fannie Mae and Freddie Mac if Congress fails to strengthen supervision of them, Treasury Undersecretary Randal Quarles said on Wednesday. ‘If a legislative solution is not achieved, Treasury will have no choice but to consider additional action,’ he said.”
“Eliminating any systemic risk at Fannie Mae and Freddie Mac would only transfer risk to the banking system, which is itself growing, David Dreman, chairman of Dreman Value Management, said on Wednesday at a Reuters panel. ‘There are terms being tossed out there, but I would like to see (that) there’s a lot more proof that there is danger. Maybe we should stop our banking system from growing..we might endanger the entire free world,’ he said.”
Fannie Mae Chief Economist David Berson said. ‘Home price gains…are certainly down from their peak and perhaps will fall.’”
They are already falling. See the recent median year over year depreciation and other supporting evidence.
David
http://bubblemeter.blogspot.com
Yesterday someone posted SD sales data for the first nine days of July 2006 versus the same period in 2005. I am still not sure of the geographic scope of the data (greater SD, SD proper, or something else) nor of its legitimacy, but my back-of-the-envelope calculations showed sales off by 68% for this period in 2006 versus in 2005, and an 11% drop in the average sale price, before adjusting for the fact that the average square feet of floor space is greater for this year’s sales than last year’s.
“Perhaps prices will fall,” indeed.
The yoy price per sq.ft. calc would go a long towards teasing out the true changes in market price - vs. the misleading total price stats currently offered. The overweighting of high-end sales would be mitigated.
no, it would make things even more complicated. It is very likely that a shift in the type of properties sold is occuring now (e.g. relatively more expensive properties), and the price/sqft can be MUCH different for cheap vs. expensive properties. A shift in the price/sqft would not tell you very much, even less that the current (pretty useless) statistics …
the best IMHO would be something that tracks prices of the same properties over the years, like the OFHEO numbers
I have done exactly that for my neighbourhood: OB, CA 92107.
I got the data from
http://users.ixpres.com/~gtriphan/
I found properties with resales in the 1997 to 2006 time-frame, and calculated the accumulated price increase based on 1997 = 100%. There were typically 50-80 each year. I looked at SFH only, beacuse I’m not interested in condo’s and they are much more volatile in price. The resolution in the first cut is one year, because it’s a lot of manual work, even if I have it in a spread-sheet. I get the following numbers:
1997 = 100%
1998 = 118% = 18% increase
1999 = 154% = 31% increase
2000 = 220% = 43% increase
2001 = 248% = 13% increase
2002 = 312% = 26% increase
2004 = 349% = 12% increase
2005 = 432% = 24% increase
2006 = 391% = 9% decrease
2006 is only Jan. to May.
Looks incredible, but we sold our house 6 months ago for 3.4x what we paid for it in mid 1997. We did upgrade the house, but nothing really major.
Even these number don’t give the full picture. I would say there are 5 upgraded houses for each trashed one, so the price increase comes out higher than it is. I don’t have the time to drive around and check them. One thing that sticks out is how the really smart flippers made tons of money early in this run, but not in the last 2 years. Some made $100k or $200k in a month. I hope they bought Florida condos for the profit.
Hi OB-Tom,
thanks for all the work, quite interesting numbers! This looks similar to what I’m seeing in the Netherlands: the individual gains are often much higher than the median gains because of all kinds of statistical flaws and averaging.
I have kept records on individual sales prices for my area in the Netherlands over the last 15 years, and many homes have now crossed the +1000% appreciation line (that’s in 15 years, not in 10 years like in your records), some are already near +1500%. Over the same period, the official national median price gain is around +500% - huge difference!
Still no price decrease in sight here; when I looked today at the realtors website there was another surge of new homes on the market at again much higher asking prices than last months. And average sales prices are still climbing in the Netherlands (now 4-5% yoy).
P.S.: people are still flipping the bigger homes (400-800K euro) for an easy 100-300K profit within a few months here, all totally tax-free of course …
he’ll keep his gov job for life- likes to “go out on a limb”
What is the difference between “down from their peak” and “will fall?”
Isn’t a decline from peak a fall from a higher point?
Perhaps a better way to say it would have been, “prices have already begun to fall, and may continue.”
How did they get “down from their Peak” if they didn’t fall?
“That fell to about 21 percent in the second quarter of this year.”
That shows there are still a lot of dumsh!ts active in the SD market.
Idaho is not much better: 19.5% of home loans were taken out by outside investors so far this year.
so …. it’s not over yet, there are just a little less speculators than one year ago. With Bernanke rate cuts on the horizon for later this year, I think chances are that the housing bubble will be alive and kicking for at least another year.
no it has already popped.prices are dropping in all of so cal.its a free fall from here.
I hear you but I’m not convinced - up to now, it still looks similar to what happened in Europe some years ago.
There were some big (20-30%) price drops in the most speculative areas / market segments, and a change from double-digit to single-digit median price growth. But prices in Europe are still increasing (while inventory has been building for years), thanks to ever increasing crazy lending. I don’t see much difference with the US - yet.
sometimes, I get a feeling that you are one smart implant of NAR
ross, leave your suspicion where they belong and stick to rational discussion, please. We shouldn’t become the sect of the housing bust here on this blog. Things will play out as they do. nhz gives his or her observations from Europe, which gives us another angle on the WORLD WIDE housing bubble.
Interesting, I’ve been figuring oversupply was what would finally kill this thing. Was there ever the change in perception in Europe that we’re having here now? And would you say the lending standards gotten as loose there as they are here?
nhz is 100% correct! Post is totally accurate and if there ever was a “conundrum” it is this. Rising inventory - rising prices.
Def. something to keep in the back of your head. I don’t see that happening in the US but I did not foresee home prices escalating so rapidly either…
to Comrade Chairman Greenspan:
regarding change in perception: some years ago many people thought the housing bubble had started to pop, at least in Netherlands and the UK. Even the realtors organisations started to predict a mild drop in prices (but there was a strong increase again in the next year …).
It didn’t happen, despite strong increases in inventory and despite appreciation % that was MUCH higher then already in some countries (can’t stress that enough!) than it currently is in most of the US.
Crazy lending is a big part of the equation. I can’t compare this to the US because the market is very different - ARMS are nearly non-existent in some countries, other EU countries don’t have long-term fixed mortgages, HMD and other tax incentives vary strongly within Europe. But all these countries have one thing in common: the ECB with its unlimited flood of money that kept the housing bubble growing. There always was another ‘undervalued’ area or country where the bubble could spread to.
And to ross: I’m not saying the US/worldwide bubble will keep growing, I’m very sture it will pop sometime, somehow - just not yet, judging from the experience in the Europe.
I agree, please don’t shoot the messenger (nhz). He provides a warning of what the U.S. will end up looking like if this trend of socialized credit bubbles isn’t stopped.
I think that home prices are heading down, but cheap lending is keeping them from going into a full blown, RAPID, crash at the moment.
This is why most people point to the impending ARM defaults as the ultimate trigger for major housing market pain. Once that happens, lending institutions won’t be able to offload the debt as they have been and will actually underwrite and require down payments, etc. Then this fictitious value increase will reverse itself in earnest.
I’ve suspected that about nhz in the past as well, but I’ve seen enough smarmy comments from him about the mania and inevitability of it’s downfall that he’s good in my book.
nhz: you could be right, but one thing to consider is that since it is a world wide credit bubble and the USA was the latest player in the game we could be the final pin that pops it.
It could very well be that as the credit bubble goes in the USA so goes the rest of the world. Perhaps another round of negative real rates will keep it alive for awhile, but the USA must keep its foriegn creditors happy. Who will purchase all of this MBS paper while the dollar is crashing? IMO the FRB is cornered.
nhz, how large is the market in netherlands? is it as big as say los angeles? san diego? entire southern california? i am curious because this could partly explain why it hasn’t tanked despite the unbelievable run up in prices. think of it as all southern california rich speculators bidding up san francisco RE.
deflation guy: yes, agree about the latest pin; I think the ARM reset problem is special to the US and it is a significant risk. But of course Ben B knows about this as well and because of that I do expect another round of negative real rates soon.
josemanolo7: yes, good point; Netherlands has close to 17 million citizens (6 million homes or so?) in a relatively small area. So in a sense it is similar to some of the highly speculative CA areas.
The Dutch market hasn’t tanked yet because the bubble keeps spreading to other countries (mostly Dutch/UK people buying ‘investment’ homes). This provides extra credit to further increase Dutch home prices. And of course, politicians and banks do everything they can to keep the bubble growing with the most crazy incentives for homeowners; they know that if this bubble pops all hell will break loose.
well nhz europe is socialist and your jobs are for life.here in the usa people lose their jobs and then their homes.what happens in europe doesnt mean squat here.
wow, this sounds pretty ignorant - I don’t think there is any EU country left with ‘jobs for life’, not even Germany. Probably more people loose their homes in EU than in US nowadays. As for economics policy, many EU countries like UK and Netherlands are simply USA satellite states now… they could easily be a 5xth state of the USA.
As a native Dutchman (20 years in the Netherlands, 10 years in USA), I find the answer is somewhere in the middle. In the EU, firing people is still more difficult compared to the US, despite recent changes. Holland is on its way to become a satellite state, but still has a while to go: their welfare state is overwhelming. Anyone interested in 20% sales tax, and 30-50% sales tax on new vehicles?
So this blog has suddenly decided that the real estate bubble is local? Hmm, I still think it is a world wide credit bubble that is bursting. Europe will crash now, too. No one is safe, not Dubai, not Idaho.
Suzanne:
I would say that the credit bubble is worldwide, and the real estates bubbles are local - but they are all linked through the credit bubble.
If the US bubble bursts, the EU bubble will probably burst as well, but it could take another few years. Some of the EU bubbles started more than 15 years ago (often in the financial centres, which proofs the credit link) so I think the decline could be some years apart in different areas of the world as well.
‘In the fourth quarter of 2005, about 24 percent of condominium buyers here were investors, estimates John Karevoll, analyst for DataQuick. That fell to about 21 percent in the second quarter of this year.’
21% seem like it is still high, IMO. Nice to know that taxpayers are asked to backstop the SD condo-casino as part of Fannie Maes’ ‘Mission’.
Note the language. This is not 24% of condominiums purchased were purchased by investors, but 24% of condominium buyers were investors. How many of those “investors” bought more than one?
I recall hearing about a market survey that was done where they estimated 40% of all condos purchased in SD were by investors–measured by looking at buyer lists and finding common names on two or more seperate condominium units. I find it hard to believe that this number went from 40% (+, since they didn’t include one-off investors) in mid-2005 to 24% by the end of 2005.
I remember reading last year that most of the more expensive properties in Auckland (New Zealand) were purchased by people who already owned multiple homes (about 20% of them more than 5), and most of them were planning to buy even more homes in the next years. In the booming RE areas in Spain, the Balkan, Turkey etc. it’s probably the same story: a small group of ‘investors’ who are pushing up prices among themselves. So the leverage is probably much larger than it appears
Most scary part of the U-T article, the last line:
In recent years, “housing has been one of the major forces in raising the economy,” he said. For the time being, economic growth “will have to come from other sectors, like business investment.”
We all know that the housing ATM is a big driver in causing our saving rate to go negative. People are spending money that they don’t have and didn’t make. Consumer spending is appx 2/3 of GDP. What happens when the “wealth effect” becomes the “house poor effect?”
I believe we will see massive declines in r/e in the bubble zones, but I fear for what this may mean for the economy.
People, this isn’t complicated. It is literally 5th grade math. Have you ever heard the gov’t destroying money? Heck no. They are constantly creating. If that is so, then how will there be deflation when the gov’t is still making more? It is from the free-fall in money that banks loaned out that was the “wealth effect”. There was never any money there to begin with. It was money loaned from a “fraction” of their reserves. Why do you think banks are posting record profits? You could too if you could collect interest on money you lend that you don’t really have. If you ever think you’ll hear that from a politician or banker, guess again. You never bite the hand that feeds you. Ever…unless you want to stop being fed of course. If 2/3 of the economy is from consumer spending, and folks here know that the majority is coming from housing, which is coming from lenders who are creating it out of thin air, then by God, connect the darned dots. Even Bernanke said yesterday that economics isn’t a pure science. He just let the cat out of the bag. He is testing his economic theories on our entire country, hoping beyond belief his theory is correct. He’ll be able to stop the massive amount of money drying up from fractional reserve lending my injecting gov’t money to take it’s place. He can maybe get away with it. By terminating M3 early enough, maybe we won’t be able to connect the dots as the gov’t creation of money goes full tilt. We need to start using our brains for other than how to secure our own little piece of the pie, or there’ll be nothing left. THINK ABOUT IT!!
If you watch any of these economic hearings you soon realize that most politicians are as clueless about macro economics as the rest of the world.
To have deflation in housing asset prices, the government doesn’t need to destroy any money.
The market will destroy the credit as the losses begin to mount from flat appreciation and the realization by FB’s that their 800K loan must now be paid for out of their earnings and not by a greater fool.
MBS are debt/credit.
See http://66.102.7.104/search?q=cache:hQ0u8-96XYYJ:www.financialsense.com/fsu/editorials/2005/0925.html+debt+offset+deflation&hl=en&gl=us&ct=clnk&cd=1
‘I fear for what this may mean for the economy.’
I think we all do. IMO, putting all the bets on housing was a conscious decision that was made at the Fed and by congress. Maybe we should ask them how we are going to pay the bills in the future?
I do wonder if they realized what they were going to create. As Martin Mayer has said, the Fed’s problem is that they can’t control where the liquidity goes after they pump it in. Japan, OTOH, actually used to control loan growth in the banking system, so they could make sure that newly created credit went into useful areas instead of speculative crap like this housing bubble.
Back in 2001, being a good public-school-brainwashed Keynesian, I was ranting that the GOP needed to get money into the hands of consumers so they could spend it and thereby get production and job creation going again. Little did I know just how eagerly the GOP was going to do exactly that, or that the production and job creation would end up in China.
Maybe we should ask them how we are going to pay the bills in the future?
The conclusion from the British think-tank established by the financial interests operating out of London has already come up with the answer…
The US is bankrupt. $65.7 trillion in future debt obligations cannot be paid without a doubling of personal/corporate taxations and a halfing of all government benefits.
Ballgame’s over…
The political rats responsible are now lookin’
for a place to flee before the meltdown comes and the shooting starts.
Only took 72 hours to go from organized government to anarchy in NO.
This was the result of a lack of food and potable water.
Wonder what happens when all the bank doors and ATM machines close for an FDIC mandated “indeterminate” timespan.
posts like this make me want to go buy some ammunition
The 800-pound gorilla in the American budget is entitlements. The tricky part is that these long-term obligations aren’t “debt,” strictly speaking. The government can raise the retirement age, means-test Social Security payments, etc., all of which would go a long way towards closing the long-term deficits.
Up to now, there hasn’t been the political will to do these things, mainly because old guys have nothing to do but vote and will throw out any politician who touches Social Security. (”We didn’t earn it — we don’t need it — but if it’s a day late, we’ll raise hell!” — Grandpa Simpson)
But if it ever comes to the point where the choice is between raising the retirement age to, say, 72, and doubling income taxes, the old guys will take it in the neck. Because politicians are likely to calculate that, while retirees may gang up to vote them out of office for reducing their benefits, young guys who are asked to surrender half their earnings to support said retirees are likely to come after them with pitchforks.
The government has made promises to retirees based on faulty assumptions about population growth and longevity. Those promises should be adjusted to bring them in line with observed reality. Seniors demanding that the (unrealistic) promises be kept, need to accept reality.
fortunately, this is not something due at once, and that the payor has the ultimate option to change the terms of payment. i just wish i were as lucky.
Just raise the threshold amount that an individual must pay social security taxes on to $250,000. Social security problem solved. Raise corporate taxes collected from the current 7% to 32% where it was before Regan took office, to pay for the money looted by the government from the SS trust fund. This is only fair.
What happens when the “wealth effect” becomes the “house poor effect?”
I think you can look at what happened in the Netherlands a few years ago when their housing market shifted from double digit to single digit appreciation. There are some reports about this from the OECD and IMF, as a warning to other countries.
Within a few years the Dutch economy dropped into a mild recession and moved from one of the top performing EEC economies to about the worst of all 25 EEC member states. Wealth extraction from the home ATM is similar to what is going on in the US, although the mechanism (huge HMD, stronger price increases, less ARMs, probably less speculators) is a bit different.
Please note that this mild recession was caused by just a deceleration of home price growth - Dutch home prices have been increasing for more than 15 years, and they are still increasing (currently around 4% yoy). Can you imagine what would happen if prices start declining or maybe even correcting to the historical trendline (for Netherlands, that is around 85% down from the current price level)?
US will record yoy declines this fall
nhz,
This is an interesting line of discussion.
I am curious as to what the housing inventory levels were in the Netherlands during the periods of significant price appreciation.
Do you have this information available to share?
no, unfortunately these numbers are not published.
On a national level, I think in recent years the increase was probably around +20% yoy which is significant in a country with a ‘housing shortage’. In some areas it could be higher, but certainly not the extreme increases of some US areas because we have less speculators (that is: less speculators who buy in their own country).
what was IT and cap ex spending in 99 ? remeber y2k buy a computer spree- what would biz have to spend to replace RE ! ?
As a matter of fact, yes I have heard of the government destroying money. That is why there are relatively few bills around from 1980 and earlier, and why people actually collect old currencies. The banks return “unusable” paper money to the governemnt that shreds and or burns it.
“Eliminating any systemic risk at Fannie Mae and Freddie Mac would only transfer risk to the banking system”
Turns out the theory of a GF applies to MBSecs as much as it does to FBs. The above statement translates as; “We don’t know who is going to pay for this mess.”
They may need to invoke the implicit guarantee.
Just reverse subject and object of that sentence and you practically have a definition of the charter statements of these GSEs. “Fannie Mae and Freddie Mac transfer risk away from the banking system.” — that’s pretty much their defintion.
Now don’t you suppose someone could have figured out if you take risk away from the banking system, you can’t PUT IT BACK IN with increasing the risk?
Ah, what a country.
“Fannie Mae and Freddie Mac transfer risk away from the banking system.” Precisely. Privatize the profits, socialize the losses.
Yes, and in ’socialist’ Europe it isn’t much different of course. We also have many institutions that transfer risk in the housing market from the banks and big RE speculators to the general public (usually the taxpayer).
“Eliminating any systemic risk at Fannie Mae and Freddie Mac would only transfer risk to the banking system” BACK WHERE IT BELONGS.
Does anyone think for a minute that lenders would be giving out $0-down, stated-income, 110%-LVT option-ARMs to homeless people and illegals if they actually had to UNDERWRITE any of the default risk for these loans??
Put some of the risk back on lenders/originators and you’ll quickly see those “quaint” old-fashioned lending standards return with a vengeance.
This guy’s a total stroke. I don’t want Fed Chairmen giving policy recommendations, like GSE portfolio caps, or thumbs up/down on tax cuts. I want Fed Chairmen to articulate that, given a certain government policy x, that will require the Fed to take action y to maintain its monetary policy. This BB guy has a fragile ego. I think he really gets off when the markets spaz all over the world when he opens his mouth. Given this fragile ego, I don’t think he likes it when the gold market shouts “PUSSY!” at him everytime he speaks; I think he’s going to overtighten.
I want the Fed dismantled and a hard currency, free from social engineering of a corrupted congress.
we already had that; it was called the Constitution.
the what?
… and bank panics every ten to fifteen years like in the gilded age? If not, how would you prevent them?
We’ve had plenty of bank panics since then. It’s just that the losses are quietly dumped onto the taxpayers instead of only the people who didn’t do their homework when choosing a bank. The bankers make out like bandits collecting commissions, fees, and interest payments on their unsound lending, then you and I get to clean up the inevitable mess.
How would a consumer find a solid bank? Past experience is not always a good guide, as other past experience has shown. I don’t think private consumers can have sufficient information and knowledge. Regulators and institutional shareholders have better insight and are therefore better suited to control the bankers. (This discussion is already way distant to the housing bubble.)
The consumer finds a decent bank the same way I find decent stocks and other investments.
Carefully.
And hey, poor Mr Consumer can choose two banks. Or three.
But this is all pretty much irrelevant since our average modern consumer has no savings anyways.
You really want to get those evil rich people? Let the banks go down. Those godless richies are the only ones with any money anyways, right?
I might find a solid bank, but when other consumers don’t, it becomes my problem, too. The Depression in the 30s took some banks down, as a consequence also banks folded that were not speculating, with ripple effects in the whole financial system. The banking crises took out many people’s savings. Instead of putting their money to the bank, the people kept it home, worsening the deflation, worsening the banking crises.
The development of the Great Depression is still the best example how “hard money” can hurt an economy and the people.
Other examples are the crisis in the 1880, especially in farming. Milton Friedman wrote that the development of the cyanide process for gold prevented the election win of the people who wanted to change the money standard already then to bimetallic or paper alone.
Regards,
Peter
The development of the Great Depression is still the best example how “hard money” can hurt an economy and the people.
Actually the Great Depression is a better example of how extreme leverage (the polar opposite of “hard money”) and speculative exuberance can destroy an economy.
crap -forgot to close, sorry.
I might find a solid bank, but when other consumers don’t, it becomes my problem, too. The Depression in the 30s took some banks down, as a consequence also banks folded that were not speculating, with ripple effects in the whole financial system. The banking crises took out many people’s savings. Instead of putting their money to the bank, the people kept it home, worsening the deflation, worsening the banking crises.
Well, thank goodness we have the Fed to prevent that sort of thing from ever happening.
(Yes, I know the Fed was created in 1913.)
Didn’t Friedman also write “Capitalism and Freedom” where he recommended minimizing government intervention?
You forgot republican in front of Congress
How does this make any sense? Bernanke has been totally consistent so far talking about inflation being an issue and steadily raising rates to be sure they are compensating for that. That markets freak out every time he utters the most basic statements or clarifications is testimony to how volitile the situation is now.
The real problem seems to be that you have totally different views of the situation. For you setting rates is a game played at every meeting by listening hard to what key players are saying. For Bernanke the key is to understand indicators and aim for the right rates and the right adjustments to get there. Adademics like Bernanke have their egos buried deep in their own analysis and care only about the raw numbers. What power players have to say has zero relevance to an ivory tower elitist like Bernanke, and his ego is beyond your power to influence.
“The administration and the Fed have worried that meltdowns at either Fannie or Freddie could ripple through the U.S. financial system.”
In the same way that rainstorms “could” result in water.
The same way a dam breaking might cause a flood downstream.
It sounds like the GSE(s) are starting to sweat. Methinks they are a day late and dollar short, the damage is done. (cliche tag off)
FYI Richard Syron (CEO of Freddie Mac) was assistant to Fed Reserve Chairman Paul Volcker.
I could explain what this means, but I am sure WE Rent and others on this blog have a much better understanding of the situation and would not want anyone to suffer through my (as others call it) “high moral ground” Austrian Economic influenced non native English grammer mistakes.
We Rent and others, the floor is yours.
“If we are lucky, prices will go flat,” he (Thornburg) said, suggesting that we could see five years without price appreciation.
That may be true elsewhere, Husing said, but it won’t happen here.
“Is the housing market vulnerable?” he asked. “Yes, it is. But is a bubble likely to happen? No, it is not. The underlying strength of our economy is too great.” Clearly, the audience was happy to hear what Husing had to say. He has studied the regional economy since 1964 and has watched the Inland Empire grow into an economy bigger than 22 states.
http://dailybulletin.com/business/ci_4071366
Husing comment: “We are right on the cusp of a very powerful period in job growth,” Husing said. “Local unemployment in May was 4.2 percent, and that’s the lowest I have seen for May in 42 years of studying the local economy.
Funny. I would think that such an unusual figure would be cause for concern, as any data point that far out of the norn would suggest a correction is due. But he sees only the upside. Happy days for all. Whee!!!
“San Diego is one region that is experiencing low affordability after a rapid and unsustainable rise in home prices, Berson said. ‘The strong presence of investors in the housing market makes it subject to price fluctuations, he added. ‘We view it with some trepidation. It is one of the areas we are concerned about.’”
SD is not the only region he should be concerned about. Don’t forget Phoenix, Vegas, Tucson, Orlando, Los Angeles …. heck, just about every major metropolitan and it surroundings in this country.
I can hear that squeeky sound thats made when a rusty faucet is being turned off. You know, when its been turned on too long. Problem is, the USA economy is like a golf course in the middle of the desert. Going to be tuff to keep it green without any liquid being pumped in from somewhere else.
“he added. ‘We view it with some trepidation.”
And just what might that level be on the Richter Scale?
To see the San Diego market go down in price check out this blog:
http://sandiegomarketmonitor.blogspot.com/
Nope, San Diego will not go down. I swear. My realtor in one of my networking groups announced today that everyone wants to move here. And it’s a great time to buy. And she’ll help anyone to buy a home. But, hmmm if they want to sell a home maybe they should wait awhile. Everyone wants to live in San Diego. There is NO HOUSING BUBBLE. (Ok, she actually said that at the last meeting.)
Meanwhile I bite the inside of my lip until it bleeds and pray that no one I like listens to her. Or our commissioned based financial planner who has a great deal on “freeing” the equity in your home and investing in her wonderful insurance products. Yep, no one there buying crap and doing it with suicide loans. (BTW There is a moral difference between commissioned based and fee-only financial planners. Educate yourselves.)