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.
You have absolutely no credibility on this forum or anywhere else. If fact, your own posts prove you incapable of doing anything except insulting others. Almost singlehandedly took on Protestant Christians posting on FR today. About par for the course. You ought to avoid those types of religious arguments.
Sad really. In fact, based on the parameters I suggested, Portland seems to be the riskiest market. Houses are relatively cheap for the West coast, but wages are low, too. Having said that, as a chap that owns quite a bit of real estate in Portland, Oregon, Orange, Los Angeles, and Riverside Counties, all in the eye of the storm, I expect my net worth to decline in the next two to three years. But not by more than 10%. It isn't as out of wack as it was in 1990, when the roof fell in, in part due to the collapse of the defense industry, along with more real estate specfic factors.
Well, religion and real estate both state with a "r." The web is seamless.
That religious dust up was a bit shocking and should be forgotten...
I agree with you about Portland. The average family income in this city is about $ 41k. Everybody is grossly underpaid. People living here should not be buying median priced homes at $ 230,000. But most people here have not heard about the housing bubble. Radio ads are still going strong offering 1% ARM rates 24/7.
Truth is, you give it far more publicity than I do. As for obfuscation, it doesn't mean what you seem to think it means.
I'll stake my credibility against yours any day of the week.
And you claim there isn't a depression in housing prices! Ha!
There are other writers who link their books on their personal page. There are people who outright post their blogs and books on FR. You just have an issue with petronski, or should I say non-issue. Your ever increasing tone is demonstrating you have NOTHING to back up ANY of your arguments. Stop stalking him or I'll have to open up and tell you about yourself.
You've made a very important point here: various real estate markets face differing growth rates and differing conditions. That's the prime fact that the bubble fearmongers do not understand. Some real estate markets have seen fantastically high rates of growth, while others have seen more historically standard rates of growth, while still others stagnate or even decline.
The basic fact is that there is no "real estate market" in the United States, there are hundreds or thousands of real estate markets with varying conditions. What is true in east Texas or central Pennsylvania might not be true in Portland or the OC.
The only reason he knows the book is not finished is that I told him. Now he tries to taunt me with the fact that it remains unfinished. If I was willing to volunteer that it remains unfinished, why in the world would I be bothered by someone pointing at me and singing "neener neener neener?" In point of fact, I find it amusing. It is the best evidence that he has run out of things to say. Did you know he's been googling my screenname? LOL
Oh, and his paranoid behavior suggests to me he already knows plenty about himself.
Basically, if prices go up, it's proof of a housing bubble. If they go down, it's proof the bubble is bursting. He can't lose.
He has the makings of an anti-freeper.
Want to know more? There's a helpful blog...
I've read these threads and you don't bring any facts just spurious personal attacks and CYBER STALKING.
Are you implying that I'm bragging?
Good grief. The only time it's mentioned in threads is when YOU link to it.
And the cover art I posted isn't very fancy either. In fact it needs work....not to mention that if it ever is published, the publishing house will just chuck my suggestion and pick their own anyway.
Nothing wrong with the book cover. It's very impressionist and fitting considering the subject material. Someone just drank the haterade is all.
He's been saying the bubble is bursting for at least 2 1/2 years. If prices do go down, will they drop to last years level? Will they drop below the level when he first stared whining? Who knows?
He can't lose.
And yet, he's a loser.
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