San Diego, We Have A Problem
The market for condos in San Diego has been out of wack for a while as the Professor has tracked so well. But with new construction growing, the whole thing seems set to drive right off a cliff.
V.O.S.D.., "With more than 7,400 new downtown San Diego condominiums scheduled to come on line for sale by 2008, concerns are rising that the rapid price increases of the last few years could be coming to an end."
The Professor points out; "In total, then, there were 1,075 condo sales in Downtown last year." You can guess where prices are headed. In fact, they already are.
The Voice again, "In June of 2004, the average sale price for condominiums downtown was $1,005,161, according to figures from the San Diego Multiple Listing Service. As of the last week of March, the average sale amount was $854,039."
Incredibly, there are a large group of speculators waiting to cash in. "'I would say [the rate of speculators] is about 30 to 40 percent,' said real estate broker Lew Breeze. He says many buyers don't move into the units, and aren't even bothering to rent them out. '(They are] paying $700 a month homeowner's fees … It wasn't like that two or three years ago.'"
3 Comments:
It boggles my mind, but people are still "flipping" houses, and worse, people are still buying them. San Diego bloggers probably know the little house across the street from Morley Field, which is now in escrow. The asking price was 795K. That house sold last year this time.
On my street in North Park, houses are still selling for between 595K and as high as 765K. These houses are 70 years old, and barely 1000 sq ft. Remember when 1/2 a million bought you TWO baths......
I wish people would just stop buying these homes. Don't they realize they contribute to the problem? Oh, and I love the signs the realtors place in front of these homes, with the mantra "NO MONEY DOWN".
Don't people get it???? It's insane.
When you think about it, it's not that insane. People are being paid to speculate ala your "no money down" phrase. Risk is being priced at near zero thanks to easy Al and his chums at the fed. In fact this irrational pricing of risk started back when Mr. Magoo decided to bail out Long Term Capital back in 1997. Instead of allowing them to fail and maybe a bank or two with them, what we have today is an endless stream of carry trades spawned of cheap money and high leverage along with a massive dose of derivatives to hedge it all. No this is pretty rational; if you were paid to speculate you would. Individually that would be fine. The problem is that there are so many people doing it so that on an aggregate level you have a problem.
Was there ever a better name for a real estate agent than Lew Breeze?
Lew "Shootin' the" Breeze...
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