They're finally getting around to what those of us who track the housing bubble sites have known for a long time now. San Diego,is in trouble.
Some are going as far as to declare all California will go the way of San Diego, one of the hottest U.S. housing markets in recent years, with large gains in home values soon to be undone, perhaps by a sharp correction.
Ooooh, a sharp correction. Such as a big fat interest rate nail to pop this bubble. They still use such terms as "some going so far" as though one were speculating about UFOs and not the reality of the RE market. Observing how things have gone up and down in cycles over the last several decades one would think they are merely toying with the idea of RE gravity.
I remember being urged by our economist friends' wife to jump into the condo pool in SD back in '04. A great investment fior ones' mad money. Personally I've never been much in favor of the concept of "mad money", or as they call it in Hollywod "F you money". Mad money should be no sum over 100 dollars, a cool purse, a cute pair of sandals (gotten on sale) not a condo down payment. Oh, but now I remember, people were getting condos back then for no money down and I/O loans, with neg am , stated income only and all that good junk. If one asks the experts what thy think about all this here's what they have to say:
"The conditions aren't there for a big rebound in prices or for a big drop," he said. "We would need a big drop in interest rates to get any significant movement on prices on the upside. We would need to see some significant job losses, a recession at the national level, to get a big drop in prices."
No mention of a rise in interest rates. They act as though that is not even a possibility. Everything is tied to jobs and not the toxic deals that so many have gotten themselves into.
Meanwhile, this article on timing the housing market
has some interesting reminders on past bubbles and crashes. Though why they see no connection between the hard landing of the early nineties, which they partially blame on the S&L bailout, and what's been going on in the lending industry in the last several years puzzles me. It would seem that we're dealing with very similar conditions, so why should be be talking soft now, hard back then?
Back at Toll Brothers and their ilk, homebuilder shares have dropped, which is attributed to the Fed "bombshell" of interest rates.
``If the Fed wanted to cool housing, they certainly succeeded,'' said Dan Poole, assistant director of equities research at a unit of National City Corp., holder of 382,000 shares of D.R. Horton, the second-largest homebuilder. ``It's like a bombshell went off in the housing industry.''