The Housing Bubble

Moving targets. Age 50 retirement for SocSec will be about 72, forget that 57 1/2 stuff. What didn’t you know that there was a time when? Anyway this will certainly change before they actually retire. Then there’s inflation. SocSec and any other indexed benefits programs are being eroded by false CPI numbers. This may change inmyriad ways. Then there’s taxes. These 50 yos are yje only place to get more so any anticipation of lower taxes in the future are fantasy. Then there’s inhieritance, some will winn the intergenerational lottery others will not. Don’t forget lifespan and changing standards of retirement.

Short answer; ask me something easier like curing cancer.

Here’s the thing that terrifies me.

Suppose you’ve been a great person. You have no debt, and every year of your life you’ve earned enough to pay the MAXIMUM social security tax.

You want to “retire” and have 3M in the bank. You put it all in 5% bonds, reinvest 1% of the return (to keep up with inflation) and have 120K income.

Here are the dangers:

1. The gub’ment thinks you’re “too rich” and takes away your social security, medicare, and taxes you up your ass. You’ve been a model citizen, but you would have been better off if you saved nothing and got medicare and social security. (This is a very real danger for people in their 40s now…one way they can make SS not go bankrupt is by taking it away from the “richest” (i.e., most responsible and worth) people.

2. You live in a state with no “Prop 13″. There’s another bubble. All of a sudden crazy folks with dirty dot-com dollars (or whatever the latest craze is) bit up homes in your neighboorhood to 10 million dollars. Your property tax goes up to 60K a year, even though your little house hasn’t changed. You’re broke. But you have too much $$$ to qualify for any assistance.

I’m terrified that with cuts in SS and medicare for retired people who have “too much money”, it’ll make no difference whether you save or not.

Bud needs to hook up with Cindy.

Hey, it’s cheaper than paying 2%-3% to outside agents to bring in their buyers, which is what most builders are now doing. I don’t blame the builders (clever thinking, actually) I blame the “Judas” friend who pulls out his phone book and starts doing the devils work.

Wow, that house looks suspiciously familiar! I could swear I looked at this house as a rental in 2003 when I wanted to rent in Orinda. (I just looked back through my email; unfortunately I seem to have deleted the email from the craigslist poster.) If this is the same house I am thinking of, it really is a tear-down. The wood floor was sinking at a fairly regular rate. The owner was then looking to rent it very cheaply to someone who would fix it up (heh.) I am pretty sure it would have needed some serious foundation work, however. I doubt it ever rented, or if it did, the tenant finally gave up this POS property a while back.

This is definitely the worst I have ever seen. Is there an ocean view or something I am missing?? Talk about price gouging. I think this may put an end to the term “there is a buyer for everything”…

6 cane corsos inside

Don’t enter the building because it will likely collapse on you, and in the event that it doesn’t, you’ll run away so fast that you may have a heart attack. Just stay 100 feet away at all times, at least until that 600k check from your lender clears.

Sorry for the dupe. I didn’t wait long enough for the page to update.

I don’t know why I can’t get my links to work. Can anybody advise. “Builders take frugal view of market” Todays Sarasota HT:Construction of new homes staged a rally in May after three straight months in the doldrums, but local builders don’t see it as the sign of a return to the rowdy sales of 2004 and ’05.

In fact, even Southwest Florida’s big custom builders are being particularly frugal, living for the moment off as much as 18 months of backlogged orders for new houses.

John Cannon, Pat Neal and Lee Wetherington all are coping with unit sales that are off by at least half from what they were this time last year.

Wetherington is thanking his wisdom in paying down debt during the heady sales days. Cannon has instituted a hiring freeze.

They expect that the pain they are feeling is magnified considerably among smaller, less well-financed builders in struggling markets such as North Port.

Neal expects a “thinning of the herd” among those builders in this phase of the boom-and-bust real estate cycle. In fact, he thinks there is the potential to use his size advantage to pick up new, talented subcontractors “of choice” as things shake out.

The tale of the times is found in the numbers.

As an industry, Neal said “last year we built maybe 10,000 new homes in the region” while the real demand “was perhaps 8,500.”

Even the backlog of homes to be built has dropped during the last two quarters, says Tony Polito of Tampa’s Metrostudy, a leading national provider of housing market information.

Meanwhile, the number of units finished and vacant has grown and overall inventory levels are up.

To Polito, a key number is the “units completed” compared with “move-ins.”

In the Sarasota-Bradenton market, the units completed have exceeded the move-ins each of the last five quarters with the “biggest gap ever” appearing during the first quarter this year.

That led to an overall increase of finished vacant units from 780 in March 2005 to 2,004 by March 31, 2006, Polito said. That is a growth in supply from 1.4 months to 3.2 months.

“Sarasota-Bradenton has the highest level of months of supply among major cities in Florida,” Polito said.

Short-term glimmer

Despite the one-month improvement, analysts said higher mortgage rates would continue to buffet the once high-flying housing market for the next two years.

Home buyers are seeing some benefits in the form of more builder incentives being offered to move inventory.

The Commerce Department reported that builders started construction at a seasonally adjusted annual rate of 1.957 million units last month, a better-than-expected 5 percent gain from April when construction had fallen 5.5 percent.

Analysts attributed the increase to an unusually dry spring in many parts of the country that allowed builders to start work on more new homes.

But they cautioned that construction activity is likely to slide further in coming months as the housing industry continues to slow, but not crash, under the impact of rising mortgage rates.

They noted that applications for new building permits, considered a good sign of future activity, fell for a fourth straight month, declining 2.1 percent to a seasonally adjusted annual rate of 1.932 million units.

“The longer-term trends are downward, but it is not a disaster,” said David Wyss, chief economist at Standard & Poor’s in New York. “We are not expecting a housing bust, just a housing slowdown.”

Cannon, Neal and Wetherington said they are building at a pace that is largely unchanged from the past couple of years.

“We still have sales contracts we’re working through, as do most of the builders,” Wetherington said.

He thinks crunch time will come in the late fall.

Cannon’s got “18 months worth” of homes that he still needs to complete and “zero inventory,” a position leaving him well-prepared to “ride this thing out,” as he put it.

Soft-market strategy

Neal’s soft-market strategy is to keep his core employees intact while possibly picking up talent from struggling builders to help him work through his backlog while “maintaining” market share.

Cannon, Neal and Wetherington all have heard tales of small builder distress — in North Port especially — and expect some failure in that market.

Some of the smaller builders are at risk, especially the ones that have little more than a truck, a leveraged home model and a phone list of subcontractors.

Despite slower times, Neal said he is prepared to build more speculative homes this year and next.

“Sure, it’ll be quite a lot more risk,” Neal says, but all the leading builders have made record profits during the last few years and are in better shape to manage risk now than at any other time.

In 2007, Neal expects to build 40 percent to 50 percent of his homes on a spec basis. He is pushing ahead on his newer communities, such as Forest Creek in Manatee County, where buyers are seeking lower price points.

In the first five months of 2005, Neal sold 104 homes at an average price of $594,000 — about $61.7 million in gross revenues.

This year, he has sold only 57 homes, but at an average price of $706,000, or about $40.2 million. That means his revenues may be off by about one-third, despite the increase in unit prices.

‘I can ride’

Wetherington says he is pulling in his horns a bit: “I’m pretty frugal.”

He has put off for six months breaking ground at a new development in Venice called Bella Terra, but is proceeding as planned at the giant Gran Paradiso project in North Port’s Thomas Ranch. That is despite recent news that he and partner Sam Rodgers are still looking for a third player to commit to building 666 homes during the next decade.

Wetherington sold about 65 homes by this time in 2005. So far this year he has sold 22. But the average price has risen from $750,000 to $1.2 million.

Gross revenues based on those sales numbers would be about $49 million by this time last year, compared with $26 million so far in 2006.

But Wetherington says that his financial situation is good because he taken advantage of the recent fat years to pay off debt.

Not everybody in the industry has followed suit. He expects “a few failures” among his less frugal and smaller competitors.

It is the players who “built too many spec homes, offered builder financing, bought big planes and big spreads in Montana or North Carolina, or built headquarters they can’t afford,” who might hit the wall, Wetherington said.

“I can ride for three-and-a-half or four years.”

And if the market has not recovered by then? “Lots of folks will be in a bad way.”

Despite building a new headquarters in Lakewood Ranch that is not fully rented yet, and seeing unit sales drop by half from 43 last year by this time to 20, Cannon is likewise hanging tough.

As with his counterparts, Cannon said his average sales price has risen — in his case from about $1.1 million to $1.8 million. The drop-off in units sold means his gross revenues are off by about a quarter from 2005.

He says he is not worried about his exposure.

“I have not built a spec house in years” and consequently has no inventory because all his homes are pre-sold.

Cannon is not lowering his staffing levels yet, but has decided to let attrition work its way through his work force. He also is “not taking on any new debt.”

“We’ll ride this thing out.”

– Information from the Associated Press was used in this report.

“REPORT PREDICTS EVENTUAL DROP IN HOME VALUES BUT NO DECLINE IN PRICES”
What does that even mean?

I am here in Silicon valley and “AS OF TODAY” I would agree with the statements in the article….Don’t ask me about the future…I have quit trying to guess…

They’re forgetting inflation, real rates being about 8-13% (CPI and PPI are meaningless number massagings).

Stephanie

Maybe not in CA as a whole, but parts are coming down. The latest DQ numbers are out. Marin, Napa, and Sonoma Counties are down YoY.
http://dqnews.com/RRBay0606.shtm

Renter for 10+ years. After the last FDIC/RTC bust, was very reluctant to commit to illiquid real estate.

What motivates me is I want to buy something to retire on in one of the prime bubble/second home/resort areas and I refuse to pay these prices. I’m waiting for the blood to flow and will then drop in with cash to pick something up.

I own, fixed rate 30 year with about 20 left to go on it. Bought cheap at what later turned out to be the bottom or so in 96. I watch this blog because having been in Southern Califorina for a long time, I was amazed that for the last 4-5 years that even our insane housing prices had kicked it up to “overdrive”. Given how much this false weath effect was inflating the local economy, I was very worried that we were going to be in for a worse time than the 90’s defense implosion. I monitor this situation in order to stay informed, and to be proactive about what many here feel are changes that will take place to the economy as a result of this period of stupidity we are now transiting out of.

I’m a long time owner, and was an active investor until about two years ago because I thought prices were out of whack (which caused me to miss the biggest run-up ever). I watch because I’ve got a ton of cash ready when cash is king, and to get ideas for ways to safely invest the cash in the meantime. I’m thinking something from the treasury…Also, I get pleasant feelings of Schadenfreude and hope to get more and more.

owner. This is one blog that attracts non-dummies and ppl who are interested in finance and the econny overall. Obviously, RE is tied into this big time.

I also think that just because I am ok does not mean that all the idiots and their poor choices will not adversely affect me in some way. All finance is tied togetther and I think that a lot of the posters on this blog have it right. They are thinkers, not the lemmings who will follow a trend until they jump off a cliff.

No matter how strong your conviction or how solid your analysis of the market it’s always hard to go against the herd. It’s reassuring to be around like-minded people and to see events unfold exactly as predicted.

Out in the real world one still gets the pitying look when you say you’re still renting.

I am a home owner in Michigan that cannot sell my home (bought in 2001 w/20% down and 30 yr. fixed) and I work/rent in Chandler, AZ. I was intrigued by this blog after looking at the Phoenix market go crazy over the past year and couldn’t figure out why people behaved this way (camp outs and bidding wars). These homes were cheaply built with the garage as the main focus, no basements and on tiny plots of desert land.

Some of us are fascinated to watch a mania unfold in real time, made especially amazing given that the ashes of the dot com bust are still smoldering. Further, getting caught on the wrong side of the market could cost those of us who still claim middle class status half-a-decade or more of pretax income, so there is a high return to staying informed. Given that the real-estate-industrial-complex has captured the mainstream press with advertising revenue, they do not constitute an objective source.

Owner of a 30 year fixed with 10 or so left if everything goes well. I am actually learning something here. Trying to, anyway.

I have owned my same small house for some time. I have endured the scorn of family and friends as they bought bigger and bigger houses and now they are getting their a$$ handed to them. I mostly fear that this credit bubble is the symptom of a much bigger problem and is history in the making. I never saw the S&L crisis coming, this one I am watching in real time. It is a shame so many people cannot find decent housing at affordable prices because of all the speculation so I am going to enjoy watching them get their just desserts.

I have owned RE before. Sold to advance my career. Can’t bring myself to purchase in So Cal at these unsupported valuations.

I suspect we have an internet morality lecture coming from the new poster Richie Rich.

Like some on this blog I’m a former home owner (14 yrs total) who got lucky by seeing the mania for what it was and decided sell high and sit on the sidelines for a while. Ultimate goal is to buy a home in a country setting with lots of acres preferably with a shop, guest cottage and other outbuildings. I’m old enough to remember the housing market slumps of the 80’s and 90’s and have the patience the wait this out.

This blog says “housing bubble” but most readers and posters understand the interconnectivity of housing to the larger economy, politics, world, etc. This blog is great because the honest discussion and lively debate defied the bought and paid for “experts”. The future is still up for debate but I’d rather discuss possible strategies on this blog rather than wait for the govt. and msm to spoonfeed it to me.

I don’t feel so much schadenfreude but concern about the economy and how the debt bubble will deflate. We rent but would like to buy when the fundamentals are right again.

Sold my last property, the home I lived in, 10/01/2005. It required getting on my hands and knees, begging my wife to let go. (We designed and built the house in ‘01. She was a little attached, to say the least) Now, over 8 months later, she thanks me daily for making her jump. We currently are on the sidelines renting.

The answer to the second question is, as an industry insider, this blog gives me a voice to air-out how I really feel about this nonsense. I have already, in many instances, recieved the wrath of my peers for being vocal on my conviction of a housing bubble. People need to be informed! Finding this blog has allowed many of them to be informed. If I feel I can add anything that will be an aid to that effect, I’ll do it.

Besides, real estate is dead here. What else am I going to do?

I’m an owner. I was in my early-mid twenties when the last RE bubble hit our area. People of my generation felt so down, watching the prices soar so much faster than our wages. We believed we’d never be able to afford our own homes. Then the bubble burst and prices dropped 30%, while we moved into career jobs, and finally, the house price/income ratio worked out for us, and we could acquire homes.

So I’ve been watching this bubble since its initial run-up with a sense of deja-vu and no small amount of concern. It’s not fun watching people line up to get sheared, because the eventual repercussions affect all of us. It’s not fun watching people get caught up in the emotional frenzy of “must. buy. NOW” while you’re trying to explain to them that if they can just wait a few more years, prices will be cycling back downward.
It’s not fun knowing fellow homeowners who re-fied from fixed mortgages into ARMs to get at their equity, and are now watching their ARMs reset while they wonder how they’re gonna make the payments.

Yes, most of these people were idiots in one way or another. But most of them also took the mortgage lender’s word for it that it would be okay, because they trusted the professional. They assumed the old business relationship model was still in force, where the lender and borrower worked out a win/win, and if that couldn’t happen, the lender refused to make a deal. Now they’re gradually realizing they’ve been screwed by a lender/broker who was only interested in the short term deal, and who didn’t give a flying fig what happened to the borrower down the road. And it’s too late for them to do anything about it.

I’ve got an illegal immigrant relative who built himself a fortune and lavish lifestyle by playing the RE/mortgage vulture game. While his idiot in-laws brag about his ’sucess’, I have nothing but contempt for Mr. Married to Get a Green Card. When his house of cards tumbles, *he’s* the one I’ll be pointing and jeering at. Whatever happens to him he’s earned in spades.

I’m an owner! I have a house in “Silicon Valley” ca, and am building a vaction home in Florida (on 20 acres of land I’ve owned for a while, that is outside of any “development” or “home owners association”)

Why do I want to see a “correction”? Because having people buy homes they can’t afford is bad for America. Having houses priced at more than they’re worth is not good.

My house is to live in. It’s not an ATM. I really don’t care what it’s “worth”. Not at all. If the “value” dropped by 40% next year, I wouldn’t blink an eye. It’s still my house.

My house is to

Owner, modest ranch house, bought pre-bubble in fair condition for a good price from a FSBO, handled by my lawyer, no agents. Mortgage payment about the same as rent on a big apartment here, so I’m not worried about owning. No plans to move (yet!). Mortgage due to be paid off by (ouch!) 2025 unless I can’t figure out what to do with the cash and pay it off earlier.

In the meantime, with spare cash in hand — and piling up through modest living — I was looking for rental properties. Not for speculation, for proper rental property management. Unfortunately, nothing works here when you do the math, unless you build some huge appreciation into it, and then its not invesment at all, but speculation. Without double digit appreciation in the formula, you lose money for years on a rental. Nothing like renter-landlord hassles AND losing money, eh? No thanks!

So I watch this blog and wait. And the best things about this blog? Not just moral support, which makes me feel like not the only one saying the “bubble” word, but also the on-topic discussion and links that you guys provide. I really hope that armed with the info, I can at least help a lot of my friends who are less cautious than I am, especially some of my eager young friends who aren’t old enough to have ever seen a real estate bubble explode.

Long time expat. Own two flats in Moscow. One flat is my primary residence and the other is rented. Planning to return to the States.

Scouting out a house to buy in the States became shocked by the increase in housing prices over the last few years. A bit more research and searching led me to Ben’s blog that provides a clearing house of information, research, and opinion that is not available to me in Moscow about the US re market and the housing bubble in particular. I find this blog very educating and as an expat I like the feedback from the guys on the ground.

I’m an entrepreneur who has been running a successful business for the past 5 years. Since I have lived in San Jose since 1999, and do not see myself moving away any time soon (my business is very much tied in here to downtown SJ), I’m very interested in buying a house. Unfortunately, housing prices are so far out of whack here that it’s become ridiculous, so I watch this blog for hopes that the insanity will end. Of course, I’m also hoping the insanity does NOT end in a prolonged slowdown for the economy, which would (obviously) be damaging for my business. Though my business is insulated a bit because we sell directly to other businesses, not directly to consumers, consumer spending does drive this economy, and the current debt-obsessed-spenders are scaring me.

My goal was to sell my business for $1 million. By the end of this year, my business will be worth that much (seriously… 5 years in, I can easily project the numbers), but my dad cracked a joke at me that just goes to show how bad it’s gotten. He said “What are you going to do with your million dollars… take a mortgage on a house?” Sad but true; if I sold my business for $1 million, after taxes, I couldn’t even afford to buy outright the duplex I live in now in south San Jose. This is a sad and pathetic part of the country when it comes to real estate. I am divided between hoping for a 50% downturn and dreading what a 50% downturn and the corresponding total stoppage of consumer spending will do to both my business and our economy as a whole.

That’s why I read this blog every day.

Richie:

I need to buy a five bedroom house in a decent school district.

I don’t want anything fancy, am perfectly happy with formica and a cheap range, with an efficient heating system, safe wiring, and no peeling paint. In short, I don’t give a damn what impression I give the world, I just want safe, effective shelter for five kids, in-laws, a couple dogs, etc. What would have been considered a normal family couple generations ago.

And we are not indiscriminate, undereducated breeders - wife and I together make 150,000 per year, which is not a lot but ought to be enough for people who do not have a taste for luxury or social grandeur. Given the irrational market, it is not nearly enough.

I will not spend more than 3X gross earnings for a house - I would rather rent the rest of my life. Thus, since I would like to buy a house, I am looking for a 40% drop from the peak in order to afford something.

Since there seems to be no-one making a market for people like me, I have little sympathy for the flippers about to take a bath on their luxury one bedroom $600,000 condos or SFH superluxury 3 bedroom 3500sf 1.2 million $ houses.

I’m a renter who came home to San Diego for grad school. By 2003 when I was done the prices were too high for me to purchase. )Actually, I could have purchased but refused simply because I thought the market was so over valued.) At the time I did not have the data to back up my thinking, just that the prices were absurd to a fiscal conservative which is how I was raised. (Also a social liberal - not how I was raised - sorry Mom.)

Over the next two years I watch low income friends buy high priced toys, remodel homes, and take great vacations all on less than $40,000/year. It was all “easy and stress free wealth” and I for one will never trust that. When I finally found this site (a friend introduced it and he was very good at verbalizing and backing up statistically all my fears about the market - thanks Kevin!) I realized that my gut was right and we were (assuming there is no interference) about to see a huge market correction. So I sit on the sidelines with cash in hand ready to buy if and only if the market goes back to traditional fundamentals.

On the other hand, if I am wrong I can leave San DIego (another highly educated professional leaving for greener pastures) in a year’s time. Regardless of what happens I will NOT pay half a million dollars for a shack. And the people who thought it was normal and acceptable are about to get their herd following lives destroy. Which I actually feel really bad about but there’s nothing I can do. At least they had new cars, great trips, high fashion and lots of meals out. But cash in the bank makes my 9 year old truck look really pretty!

Having sold in ‘05 to pay off credit cards and move to Las Vegas from Tucson, I was astounded at housing prices. The more I saw, the more suspicious I became about the whole real estate environment here in Nevada.

I saw 20-something RE agents with Beemers, half-million dollar 1970’s crackerboxes and a ever-expanding horizon of stucco.

I heard the term “housing bubble” somewhere and looked it up on the internet and landed here.

While we’re at it, thanks to all for the fascinating anecdotes and in-depth advice.

MjM

I’m a lifetime renter who owns multi-family income properties in addition to significant parts of three non-RE-related businesses. Bought my first 8-unit building (in Venice, CA) when I was 21 years old in order to shelter my employment income and build some equity.

Thirty years later, I’m looking for a house to retire in, and trying to time it so that I don’t overpay, and can afford the taxes and upkeep after retirement. Of course, I’m also very interested in the various forces that affect the rental property market

And did you throw out any lowballs?

They’re fools. Turn on your television during prime time and watch for 10 minutes.

Case closed.

And don’t forget to trim the bushes! (wink wink)

Some economists (e.g., Berkeley’s Robert B. Reich) have suggested that BB should tread lightly on future rate hikes. Reich goes so far as to assert that the Bernanke Fed is making the mistake of fighting the last war — against 1970’s stagflation — instead of exercising sufficient precaution in the face of a deflation risk.

But if prices are rising pretty much everywhere due to a massive liquidity glut left over from the punchbowl spiking of recent years, and if other central banks are in mop-up mode, don’t rising inflation and the policy response of other central banks force BB’s hand?

One spurious point that Gin made in the interview was that San Diego real estate prices will hold up because of the strong job market, growing population, etc. Check out the contradictory evidence from the headline article in today’s San Diego Union Tribune, which shows that San Diego population is shrinking, and San Antonio just bumped us from the #7 to the #8 spot in the population ranking of US cities. A leading factor cited in the article is, naturally, San Diego’s unaffordable housing prices…

http://www.signonsandiego.com/news/metro/20060621-9999-1n21pop.html

Dude, I thought Dallas prices were too high in 1998 and 1999! I thought there was a bubble fomenting even then. Imagine my suprise that it has lasted another 8 years! LOL

pointing out an extended asset class heading for a correction isn’t wrong.

Guys, we don’t have to lose 80% or retreat to inflation-adjusted 1994/95 prices to cause mass panic and chaos. That will happen even if YOY appreciation drops into the low single digits. The flippers will pull out (or at least try), HELOC-financed lifestyles will be dramatically curtailed, and all the smug grins will turn to expressions of puzzlement.

Go get a 6 pack and mellow out! Your smart $$$ is on the sidelines for at least another year or two - no matter where you live.

Mol - I think Denver is going to be hit hard this time, just like it was a few years after the last wave of California equity locusts moved through town. Be patient. Read this blog and the Denver media - which seems to be fairly open to the idea of an RE pullback. Rent and smile.

Won’t be long now. CO is ahead of the curve because the bust started several years ago. CO is the foreclosure capital of the U.S. right now. I would say by spring you can go take a look around. Don’t get attached to anything in particular and have a discerning eye for quality.

I find San Diego rents to be beyond ridiculous. I also have pets. We gave up on moving back there after about 2 days of looking at the various ads. You have to watch out for these losers trying to sell the house while you’re in it. I see those on Craigslist all the time. “Good tenant in place!” They’d have a serious headache on their hands when they found out that I would not permit any showings while I lived there. I tell them up front that I will not cooperate with any attempts to sell and if they have that in mind, they had better find another tenant.

I live in Serra Mesa, there is a house across the street for rent. I will check to see what they are trying to get for rent. I will post the info here tomorrow.

Good one, wire fly!

I think you can put your finger on fraud, as the buyer would be using a falsely high appraisal, then putting 20% cash in his pocket, all the while being able to walk away from the property as a purchase money mortgage in California will not leave him with a deficiency after foreclosure.

Do not try this at home, unless you like the idea of spending a few years in Club Fed (at least the meals are catered).

Hi Pamela! Hope it’s not to late for this post.

As you might already know, our section (NE) of O’side was one of the strongest markets I follow (especially the presidential area, for some reason — no HOA’s??? — not sure why it did better than most).

I am **just now** starting to see the cracks in that area. Some motivated sellers are pricing homes at around 2004 levels, and they are not selling as fast as they did in 2004. Mind you, this area saw at least a 20% increase since we sold in spring/summer 2004, even though much of SD was stalling.

The inventory in O’side has increased rather dramatically, since there is significant price compression relative to much better areas. For instance, in our ‘hood in Carlsbad (La Costa), the price per SF is actually CHEAPER than O’S. I am seeing the activity shift from the lower-priced areas to the slightly higher-priced (and better) ‘hoods.

Let me know if you want any addtl. info. I’ll give you my e-mail, if you’d like (post here, and I’ll return to the thread).

Take care!

The future of the US is Katrina on a national scale.

As a global bubble, expect global fallout, akin to the 1930s.

Yeah, what a great environment to give amnesty to 12 million illegal aliens. When they all lose their low skill construction and landscaping jobs, they will be able to qualify for welfare.

What kind of ’strategery’ is that.