Housing Bubble Bursting?

[Steve Owen]

Steve, if the home prices decline at all, it won't be anything but lack of buyers and sellers who can't wait out the market and have to sell.

No problem with that. But, what will cause the lack of buyers? General economic conditions or something else? If your main industry declines and nothing else replaces it, you will shortly have an increase in available housing inventory and a decrease in the number of potential buyers. You have indicated the result, not the root cause.

 

[moh malekpour]

This guy is talking about the "Sun" that brings tourism to the county. Well, the sam sun was there and shining in 1990 when the housing went down. Why it didn't bring tourism then? The only thing that is the same and remains the same is the sun. Yes, toursim helps the econmy but it is an small potato in a large county like San Diego with multi industry economy. All counties along the coast have tourism attractions but it is seasonal and small part of the whole economy.

 

[Randolph Kinney]

No problem with that. But, what will cause the lack of buyers? General economic conditions or something else? If your main industry declines and nothing else replaces it, you will shortly have an increase in available housing inventory and a decrease in the number of potential buyers. You have indicated the result, not the root cause.

I really can't tell you why the buyers are declining but the symptoms are there. There are twice the number of sellers today than last year and the number of transactions have declined.

There was a large number of second home buyers, investors and speculators that bought into this market. It could be that a much lower rate of sales to this group is occurring this year.

The job growth that has occurred has been mainly in the housing related industries and hospitality industry. There are new homes still being built. As the article Moh posted pointed out, there is fierce competition with builders offering big concessions. The layoffs that have occurred have been in mortgage lending. World Savings is being bought up and I suspect there will be layoffs because of that. WAMU is going to let go their appraisal staff. The refi business has declined significantly from last year and that will cause other lenders to reduce staff.

I don't see any major employers expanding operations here and I don't see any new employers relocating here. We had Buck Knives here but they sold their land and buildings and moved operations to Idaho.

 

[Steve Owen]

Markets are sometimes influenced by news and the general feelings of participants. So, maybe the market expanded because buyers felt good, and now is contracting because they don't. Why do you think they called it the Great Depression?

Still, if what Moh is saying is correct, then the assertion that tourism is the primary industry is incorrect. Also, note that most markets in industrial areas are very diversified. Usually, no one industry has too much influence.

 

[Randolph Kinney]

San Diego has a base of small medical, biotech and pharmaceutical companies. These are the highest paying jobs here. Recently, Alexion Pharmaceuticals decided to expand in Rhode Island instead of San Diego. The average pay at Alexion’s Smithfield, Rhode Island plant is expected to be about $50,000. You can't get anyone to move here for that pay. The cost of housing is killing the job growth market here.

Funding from local, county and state incentives brought San Diego, California-based DR Technologies, Inc. (DRT) to Dayton, Ohio. Lost another one to Ditech ... I mean competing state.

The city of San Diego has lost and is losing it police force to competing cities. A police sergeant in San Diego can make a top salary of $81,619, compared with $105,352 in San Jose, $96,798 in San Francisco, $95,025 in Los Angeles and $90,177 in Escondido (north county San Diego).

Washington Mutual Inc. said it is cutting an additional 900 jobs here.

New residential construction permits for the county are expected to fall by 38 percent on the year, with further declines in 2007. Housing permits peaked in 2003, with 18,314 permits issued. There will be 9,450 permits issued in 2006.

 

[Randolph Kinney]

Home builders index falls to 15-year low in July

Home builders index falls to 15-year low in July

By Rex Nutting
Last Update: 1:15 PM ET Jul 18, 2006

WASHINGTON (MarketWatch) - Home builders' confidence plunged to a 15-year low in July, reflecting growing worries about rising interest rates and declining affordability, the National Association of Home Builders said Tuesday. The NAHB/Wells Fargo housing market index fell three more points to 39 in July, the lowest since December 1991. The index peaked at 72 last June and has fallen in 11 months since then. In July, all three components of the home builders' index fell. Current sales index fell to 43 from 47, the expected sales index dropped to 46 from 51, and the traffic of potential buyers index fell to 27 from 29. (This is an update to correct the month of the index)

 

[Terrel L. Shields]

We are far from a bottom and may be seeing only the first of a long slow downward spiral. And it seems to be on every front. Further, the desperation calls I have gotten from borrowers seeking appraisers who will help them commit fraud is just starting...."I paid $210,000. The appraiser said it was only worth $180,000. I know I got a good deal last year. Surely its worth $230,000 this year...."

 

[Big ole Boy]

Had dinner with daddy

My dad and brother build custom homes (30 years). Fortunately they got plenty of work this year; but, all their sub-contractors are desperate for work. My brother said folks around here are pretty worried. THings around here are usually steady Eddie ....... but now .....

Talk to a sawmill owner tonight; prices for whole timber is in the tank, but retail is still high.

Lots of speculation around my parts for this big development here and this big development there ........

..... weird ......

....maybe things will improve ......

.... seems strange though tht thier is so speculation for land development ......

.... but, "Where's the beef?" -

Daddy was serving pot roast and potatoes - thats the only beef I see right now ........

 

[Terrel L. Shields]

Bank story from Joplin. Seems my bro. let it be known he was from NWA originally and a local banker told him they had heard rumors one bank in NWA had a builder come in and leave a ring of about 10 keys and said, "you own these now." Another banker chased a guy into the parking lot and drug him back to the bank and said, "let's talk before you walk."...The guy had left him the key to a new house he built and couldn't sell. They worked out a delayed payment and its back on the market.
In other development, a greenfield subdivision developer is telling people he has 16 lots sold but his partner, a broker is telling people they haven't closed any of the lots and he pulled out of another venture for a lack of cash and concern about the future of the 160 lot greenfield.

Drove by another small rural subdivision today and noticed it said "Price reduced". It was an agent owner deal that caused me no small grief because I said the property wasn't worth what the developer paid for it and they had to find another appraiser to skippy it. Agent called to chew on me and I informed him he was talking to the wall. Write the report yourself and sign it. I'm not.

 

[Ultraviolet]

It'll be interesting to see what happens here. The brakes seem to have been applied - heavily.

It's a bit surprising that little old Tucson is in the top 10 overpriced metro areas. Right behind NYC and ahead of Boston, Oakland and Los Angeles.

Those AOL and Intuit call center jobs sure aren't paying enough to afford a $268,000 house ... :-(

http://www.forbes.com/forbeslife/2006/07/10/high-priced-metros_cx_lr_0711feat.html