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NC is a backwards southern city. Most people don't like LA as much as other coastal CA cities until they get more familiar with the city. People who know the city well love it. People from New York love it so much that they relocate there driving up the housing prices and then complain that it isn't like New York.
NC is a state Spicoli.
My sister lives in San Diego and we paid a visit two summers ago. I picked up a paper and on the front page of the real estate section was a two bedroom / two bathroom trailer (located in a trailer park). Asking price was $695,000. Talk about supply demand, nice weather, and saving money on AC all you want. Prices out there don't make sense.
I've visited NC and So Cal several times. If I were to relocate, NC would win hands down.
My sister lives in San Diego and we paid a visit two summers ago. I picked up a paper and on the front page of the real estate section was a two bedroom / two bathroom trailer (located in a trailer park). Asking price was $695,000. Talk about supply demand, nice weather, and saving money on AC all you want. Prices out there don't make sense.
I've visited NC and So Cal several times. If I were to relocate, NC would win hands down.
You can buy a trailer in a park in SD for anywhere from 50-100k, I have never seen one over 100k. Maybe you are talking about a trailer on an oceanfront lot?
My sister lives in San Diego and we paid a visit two summers ago. I picked up a paper and on the front page of the real estate section was a two bedroom / two bathroom trailer (located in a trailer park). Asking price was $695,000. Talk about supply demand, nice weather, and saving money on AC all you want. Prices out there don't make sense.
I've visited NC and So Cal several times. If I were to relocate, NC would win hands down.
Actually, North Carolina has at least one very expensive trailer. We took a boat tour on Lake Lure, NC, and were told about a trailer that was sold for a lot of money. If I remember correctly, it was a million dollars. The people who bought the house trailer really just wanted the land. The prices have gone through the roof in that area. Location, location, location!
You can buy a trailer in a park in SD for anywhere from 50-100k, I have never seen one over 100k. Maybe you are talking about a trailer on an oceanfront lot?
I agree, this is completely unrepresentative of the local market.
Unless your looking at homes within a mile of the coast, 695k in San Diego buys you a pretty nice 2000 sq/ft 4Bdr/2Ba home in a posh suburban area to the north. I know, I just sold one for alot less than that.
The sub 600k market is growing daily as well. Lots of choices.
The problem I have with these surveys is that they attempt to create some P/E ratio against residential housing, typically some ratio of the median income to the median home price.
Personally, I don't see how it is relevant. It is only a measure of the volume of people available in the market. The situation it describes is obvious - prices are very high in some areas, and without a lot of equity, it is hard for first-time buyers to break in. Is this really new information?
People earning the median income in any major coastal US city (50k) simply don't buy homes. They are not part of the real estate market. The real estate market in NYC is comprised of people mostly earning several multiples of the median income. The real estate market is determined by those who can afford to buy a house, not those who can't. How long has this been the case in NYC, LA, SF....?
I tend to think that the data is valuable data. Especially for people who may be thinking of moving to a certain city. It tells them where they can get value for the money.
Also I would disagree with the lumping of every coastal city over 50k into the category of the median wage earners aren't part of the real estate market. Cities like Pensacola, FL or like Houston, TX or like Savannah, GA have median wage earners purchasing a home. NYC, LA, SF have been overcrowded for 100 years. Overcrowding means high demand, low supply, so one would expect homes to be more expensive there. However, what we've seen recently is that speculation has turned cities with reasonable supply/demand ratios into cities with outrageous prices, as if they were low supply/high demand cities.
The housing market should reflect true (not artificial) supply/demand characterstics and local costs of construction. And in that these lists give us a clue as to where an investment in a home would be a good one (cities that are not overvalued) versus a poor one (cities that ARE overvalued), it can help people to make probably the most important decision of their lives. If somebody moved to Houston or Indianapolis in 2005 instead of to San Diego or Miami because they saw they could get a better value for their money, how well have they made out during the bursting of this real estate bubble? How valuable would that information have turned out to be for them? And if they WANTED to move to San Diego but chose to wait until prices came out of the bubble phase, and they purchase this year or in the coming years, how valuable did that information turn out to be for them.
I agree in one thing. People have treated homes too much like stocks, expecting outrageous returns in short time periods. And one thing we all know about the stock market is that it contains corrections. If people treat homes like stocks, they ought to expect the corrections that come with stocks. At this point, the housing market seems to BEHAVE like the stock market. A person buying a home might be trying to do the prudent thing, but they're buying into a market whose behavior is out of their control. Therefore, if data which equates those cities to P/E ratios helps buyers to purchase based on the best value, then I say thanks for the information and please continue to give it to us. A stock with a high P/E but with low actual demand (SD, MIA 2005) is a losing proposition. A stock with a high P/E and high demand (NYC, SF) is still shaky, but at least has a solid foundation. It's not the information on overpriced cities that caused people to speculate on housing, thus treating the housing market like the stock market. What the information has done is made it so that people who just want to own their own home can do some homework and make a decision that doesn't result in them losing their shirt. You say you don't see how it's relevant. Well it's relevant to somebody like me who may not want to take a big gamble on losing my shirt by moving to a place which has a good supply/demand balance but astronomically priced housing, just to live in a "cool city."
Everyone has to remember san diego is a surrounded city. Ocean to the west mountains to the east TJ to the south and LA to the north.I dont think the buble in san diego can burst a slow leak definitely but never burst.We will never see prices go back down to pre 2000 prices
Arguably pre 2000 prices were based on REAL supply/demand characteristics. Simply put, at any given fixed interest rate for a 30 year mortgage, there are only so many residents of a particular city who can afford a certain priced home. Median income is a good indication of where that "so many residents" tend to fall. If houses are priced beyond where those income levels (and the numbers of people who make them) can afford to buy, then homes sit on the market and MUST be priced lower in order to sell, if the demand doesn't significantly outstrip supply (ex NYC).
The baby boomers aren't going to retire anytime soon after this market collapse, so don't expect an influx of retirees with big bucks into the SD market anytime soon. Eventually the SD housing market is going to have to more closely reflect SD income levels. And it may not get all the way back down to pre-2000 levels, but it really ought to come close. With people not retiring on schedule and job losses being what they are, who is going to purchase SD homes? I would think it would be those working in SD, ie. those with SD incomes. Banks have learned their lesson about ARMs, and also about lending to people who don't really qualify, so who ARE the banks going to lend to? People who CAN afford X price on a fixed 30-year mortgage based on their income. Their SD income. So I say prices have no choice but to more closely reflect SD incomes (and population, but people are moving OUT). It never should have gotten away from that in the first place.
For the bubble not to completely burst, people have to come back into the SD market and purchase homes and form a bottom to the market. So who exactly are these people who will do so and whom the banks will loan money in this market? And how much is it realistic to say these people can afford? And how many of them out there are there?
You say you don't see how it's relevant. Well it's relevant to somebody like me who may not want to take a big gamble on losing my shirt by moving to a place which has a good supply/demand balance but astronomically priced housing, just to live in a "cool city."
I guess... anyone could have told you that. You don't need statistics :-)
Median income is a good indication of where that "so many residents" tend to fall. If houses are priced beyond where those income levels (and the numbers of people who make them) can afford to buy, then homes sit on the market and MUST be priced lower in order to sell, if the demand doesn't significantly outstrip supply (ex NYC).
There is a tremendous demand for housing in San Diego.... it is almost the definition of a place where demand outstrips supply. There are literally millions of people who would move here if they could afford it, not to mention the millions already living here who already can't afford it.
Look at the sales volume for low-priced homes in San Diego over the last 6-8 months. Our market is seeing triple-digit volume increases in some cases. that's what happens when prices fall... buyers rush in.
The current foreclosure-driven market is the window of affordability that a lot of people have been waiting for. But it won't last forever.
There is a tremendous demand for housing in San Diego.... it is almost the definition of a place where demand outstrips supply. There are literally millions of people who would move here if they could afford it, not to mention the millions already living here who already can't afford it.
Look at the sales volume for low-priced homes in San Diego over the last 6-8 months. Our market is seeing triple-digit volume increases in some cases. that's what happens when prices fall... buyers rush in.
The current foreclosure-driven market is the window of affordability that a lot of people have been waiting for. But it won't last forever.
But the thing is- demand isn't just people who wish they could buy a home. Demand is the people who are actually ABLE to buy a home at a certain price level AND willing. Lots of people having a dream to move to SD (like myself) but not moving doesn't drive up actual demand. If I'm don't see a home I can afford and I therefore am not ready to spend my money on one there, though it may be my dream, I don't contribute to the actual demand for housing there. The example you gave is a good example of actual demand- the sales volume for low-priced homes. That gives us a clue to at what pricing point homes WILL sell.
I just think that at the end of the day, if SD is a city constructed towards a certain economy, and that being not one particularly high in business growth but one being particularly high in service jobs, then income growth isn't likely to happen, which means the market for homes will generally be only in the pricing range which those incomes can accommodate. Housing prices can only go up to the extent people are able to pay for the inventory on the market. With ARMs being off limits in the foreseeable future, it really comes down to the fact that the market is always going to have a certain pricing level at which the overwhelming majority of people in the city can't afford that much of a fixed rate mortgage. And the real question for SD will be when the influx back into homes at low prices pushes median prices to that point, whatever number that point is, how much supply remains on the market.
I think the banking collapse has introduced a new dynamic into mortgage lending, and that is that banks are only going to lend based on actual income and the ratio of overall debt to that income, on a fixed rate basis, and with a certain amount of down payment. I think that, moreso than anything else, is going to determine pricing points and the direction of the market. Banks only want to make good loans now. That means people not making a lot of money won't be getting a lot of mortgage any more, and if most San Diegans aren't making a lot of money, they won't be getting a lot of mortgage, and so those homes better not cost a lot of money if the sellers really want to sell. The previous housing market was based on people's wishes and dreams. I think this one will be based on lending and budgetary realities. And not just for SD, either. Vegas, Phoenix, and Miami are in that boat too.
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Talk about supply demand, nice weather, and saving money on AC all you want. Prices out there don't make sense.
Expensive trailers
