Posted on 04/06/2006 3:14:09 PM PDT by ex-Texan
The area's home prices have a 60-percent chance of dropping, one of many factors making San Diego the riskiest real estate market in the nation, according to a quarterly report put out by a California mortgage insurer.
The report, put out by the Bay Area insurance company PMI Group, is well-respected by experts, who said it usually gives an accurate picture of the state of the nation's 50 largest home-buying markets. However, they stressed that the report is merely the latest in a long line of analyses that point to something the industry already knows: The nation's housing market is cooling, and San Diego is ahead of the curve.
"You guys are leading the nation -- congratulations," remarked Chris Thornberg, a senior analyst at the University of California, Los Angeles Anderson Forecast.
Last year at this time, the quarterly report ranked the San Diego region as the fifth-riskiest market in the nation. That report put Boston as the riskiest.
The report bases its ratings for each individual market on three factors: How well the local economy is doing; how much and how quickly home prices are appreciating; and the affordability of housing in that market.
San Diego's took a hard knock because of the third criterion. The area's homes are among the least affordable in the nation, according to PMI's data, and that means the people who buy them are more likely to default on their mortgages despite the relatively strong local economy. Hence San Diego's high-risk rating.
The area is also suffering from a slowed price appreciation.
In the last few years, San Diego's risk factor has been tempered by consistent price increases. But those increases dropped dramatically from last quarter, compounding the poor score the area received in the report.
Gary London, president of The London Group Realty Advisors in San Diego, said the report adds to the "parade of statistical indicators" showing that the real estate market is slowing. However, he doesn't think that slowdown is going to affect most homeowners, but only people on the fringes of the market.
That means people who have bought in the last year and who need to sell this year, or people who have entered into mortgages that they simply cannot afford, London said. Those people should probably be concerned at the signals the market is giving off, he said.
Indeed, even if prices do drop, London said, that's only going to open the door to a lot of people who have been watching the market from the sidelines, unwilling to get into the action. If prices drop, even slightly, he said, there are a lot of people waiting to buy.
Stephanie Corns, a spokeswoman for PMI, said the purpose of the report is to better inform home buyers and sellers about the real estate market. She said that people looking to buy a home need to consider how risky an area is before buying there. That's especially important when a buyer is considering buying their home using a non-traditional loan such as an interest-only mortgage, she said.
"Some of the exotic (loan) products transfer a lot of the risks to the borrower, so you really need to gauge what amount of risk you are comfortable taking on. Are you comfortable having a lot of risk in your mortgage and a lot of risk in your market area?"
However, Corns stressed that PMI still considers buying a home to be a safe investment on the whole, even in risky markets like San Diego. She said the company's research has shown that real estate prices always increase in the long term, so buying a house is always a sensible long-term strategy.
Alan Gin, a professor of economics at the University of San Diego's Burnham-Moores Center for Real Estate, said the report is certainly worth considering for home-buyers before they take out a mortgage, but he pointed out that the riskiness of a market is not likely to be the defining factor for a potential buyer.
"It gives you more information, but you probably shouldn't base your decision exclusively on this information," Gin said.
Topping out the top five riskiest markets in the nation were Santa Ana/Anaheim/Irvine; Boston; Nassau/Suffolk, New York; Riverside/San Bernardino; and Sacramento.
Never said there was. Not me. Talk to Petronski,
You live in Mira Mesa?!! Not the nicest place in San Diego.
With all that money you're making, why not live in a better place?
Does that include me?
No, it doesn't!
Hey, everyone is wrong once in a while!
:-)
There is no way that thing is selling for 260K.
Are you serious???
Smart man... good for you!
Only once in a while? You're lucky, I think I'm wrong a lot more often than that...
Well, I am by no means perfect!
Of course I make mistakes!
:-)
It really is a beautiful area, I couldn't imagine living anywhere else.
I thought this was going to be a thread about not buying a house in East St. Louis, or the West side of Chicago, or East LA, or Oakland, or the South Bronx, or Roxbury.
You must not be familiar with ex-Texan's posts - he only posts doom and gloom real estate stories to drive traffic to his own website. Just do a keyword search on "bubble".
I suspect the fact that he wasn't smart enough to stay in the great state of Texas, one of the best places in the world, probably tells me all I need to know about him.
Better for turth if you view all my posts. Search ex-Texan. This poster is not telling the whole truth.
On that photo you just emailed of the house in Seattle... How come when I lift the MLS number off the listing and put in the database, it comes up with the same listing but says "No Photo Available".
This beauty is on realtor.com today for only $352,700. She's got 2 whole bedrooms and a bathroom as well. 702 square feet of pure paradise. You might not want to stand near the windows after dark, but at least you will not be far from the nearest crackhouse or meth lab.
Here's the link to the listing 'cause I know you all are going to want to tour this manse. Paradise in Long Beach, CA
Better for turth if you view all my posts. Search ex-Texan. This poster is not telling the whole truth.
You're right, I didn't tell the whole truth - I omitted the fact that he also gets a commission for driving traffic to various sites.
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