bad wrote on Oct 27, 2005 10:14 PM:a bad read, and a tap dance of infomation

jason K wrote on Oct 27, 2005 11:24 PM:Just because 90 percent of the people in southern california cant own a home using a NORMAL fixed rate mortgage doesnt mean there is a problem. After all what are reverse amortization, or interest only loans for. Just cause your loan either never goes down, or better yet increases every month, is no reason for concern, is it MR.Realtor.

Randy wrote on Oct 28, 2005 4:33 AM:"In reality, things are not as desperate as they are made out to be. Based on the North San Diego County Housing Affordability Index's conservative traditional definition of affordability, there are at least seven areas in North San Diego County alone where one out of three households can afford the median-priced attached home." Does this include Oceanside's three neighborhoods that are controlled by gangs? Affordable, perhaps; attractive, no!

anti-realtor wrote on Oct 28, 2005 4:48 AM:This is classic damage control by realtors. Very typical of crys of everything is fine on a sinking Titanic. There are currently 16,000 listings in San Diego county, not counting new home constructions. This is a far cry from the record low inventory of 2,300 in March 2004. Looking back, this is quite close to the record high inventory of 19,000 at the low point of the last real estate bust in 1995. Traditionally September and October are months when inventories decline, certainly not this year.

Gus Torres - Temecula wrote on Oct 28, 2005 5:53 AM:The wave of baby boomers reaching retirement are not going to Florida.(Guess why?) They are going somewhere else, and next to Florida on the list is Southern California. So, get ready for a boom in housing demand. If you think prices are high now just wait. The majority of baby boomers are not poor.

Nick L. wrote on Oct 28, 2005 6:34 AM:Interest rates are going to continue to rise. Appreciattion will/has stabalized. Does this equal "housing bubble"? Probably not. It will significantly reduce the number of qualified borrowers as lenders tighten guidelines and raise rates. Housing prices will adjust accordingly, at least in the short term. Don't sit on the sidelines waiting for a 30% adjustment - you will miss another opportunity.

Bob wrote on Oct 28, 2005 6:36 AM:What is the point of this article? It provides zero insight. Thanks for informing us that, unlike mutual funds, people live in their houses. What a waste of time.

Dave H wrote on Oct 28, 2005 7:56 AM:The only argument I ever hear about the "bubble" not popping in San Diego is the never-ending demand created by our beaches, babes, and good weather. Come back to earth guys. Housing prices have risen because investors have needed some place to put all the free money Uncle Alan gave them in 2001-2003. It went to 2 other places as well. The first is the bank accounts of big corporations, the second is the pockets of oil-exporting and developing Asian economies. Interest rates only stay low because they keep feeding their profits (created by you refinacing your house) back into treasury bonds. Eventually they will invest in their own people (if not they'll have a revoultion on their hands) and rates will have to continue to rise. When rates rise this market is doomed. It won't flatten, it will crumble and it will bring the entire economy with it. Goos thing our corporations, unlike our residents, are preparing for it... Now think about it - Housing in our country has increased our net worth by 7-10 trillion dollars. This wealth is all imaginary. Does our country really deseve to be richer than it was in 2000? Perhaps the terrorist attacks, the unprecedented expansion of government, and the Iraq war has made America so much "better off." LOL... I suggest all you optimist take a trip up to Anaheim and get some practise riding the roller coasters. It won't be long until you're in for the ride of your life!!! I can't wait to meet up with y'all at the bottom !!!

How ridiculous wrote on Oct 28, 2005 8:55 AM:The writer fails to understand the effect of rising interest rates on both current and future home sales. Almost 50% of San Diego Counties home purchases were done with some sort of non-fixed adjustable rate/interest only mortgage with very loose lending terms. People that could not afford to buy a home with a traditional 30 year mortgage have heavily leveraged themselves to try and cash in on this so called boom. Just wait and see what happens when these loans start adjusting higher. I wont even start on the cost of construction materials and the effect that is going to have on both condo conversions and new home construction. Doesn't anyone remember all of the professionals saying there was no stock market bubble in early 2000.

Financial Analyst wrote on Oct 28, 2005 9:55 AM:The real estate bubble (and there is one)is caused by a credit bubble, and to a lesser extent, speculation. When interest rates rise, and it is clear to people that prices have stopped rising, you are going to see a crash caused by people that can no longer afford their variable mortgages, and speculators (and some average people) that want to sell before prices hit bottom. You are never going to get a straight answer from either real estate people, banks, or the Fed. If Greenspan came out and said there was a huge real estate bubble, there would be pandemonium within days (if not hours). It is not that there is no real estate bubble, it is that Greenspan can not come out and say that there is. Did Greenspan speak out in 2000 and say that tech stock prices were in a bubble? That five years later (in 2005) the NASDAQ would be less than 1/2 of it's high in 2000? Greenspan knew this, but could not say it. A tip for Southern California - where most of the mortgages are variable rate/interest only/what we consider "wacko" mortgages in the East - you are going to see a crash like has never happened in this country before. And this is because conditions have never existed like this before. People live in their houses, of course (they are not just investments), but people with highly leveraged variable mortgages will not be able to afford them and there will a rash of defaults. In the highly leveraged markets in this country, the year is 1929 before the crash.

AZ Mortgage guy wrote on Oct 28, 2005 10:19 AM:to the guy who thinks baby boomers are coming to California instead of Flroida you are dead wrong.....maybe you are forgetting your neighbor to the east, Arizona. In addition many boomers are moving to small college type towns with an arts scene such as Austin, TX. This generation of retirees is not so much caught up in warm weather.....Cali has too many young punks and snobby people for people from the midwest, nice people, to retire there.

Unbelievable wrote on Oct 28, 2005 10:48 AM:All I can say is that it is too bad that people like Kevin Forrester cannot be held liable for their opinions the way stock analysts were following the tech bubble. I think you would hear them singing a more realistic tune. I would venture to say that all of the people that are failing to see the writing on the wall are either betting the farm on the market going up from here or have their current paychecks tied to it's health. I look forward to hearing your excuses for the misinformation after the market starts to slide.

matt h wrote on Oct 28, 2005 10:58 AM:The head of the North San Diego County Association of Realtors thinks it's a good time to buy in North County... wow. Good counterpoint here: http://piggington.com/bubble1_evidence.php

Chester wrote on Oct 28, 2005 12:40 PM:Every year it's more bubble fear mongering. And anyone who sat on the sidelines then is wishing they'd taken the risk. Had I waited as some suggested, my $300,000 house I bought a few years back would be selling for $700,000 and I'd still be renting and locked out of the market. Worse case scenario my house goes back to $600,000 and I still have a place to call home and 50 appreciation in 5 years. And I know plenty of boomers chomping at the bit to come here. They'd rather have snobby Californians than Arizona summers or Florida hurricanes.

Lurker wrote on Oct 28, 2005 12:56 PM:It would be nice to see comments from Kevin Forrester (president of the North San Diego County Association of Realtors) on the question of appraisals. Here is what I found. Report: Mortgage Fraud Epidemic Fuels Housing Bubble Fears; Appraisers Point to Pressure From Lending Industry http://newswire.ascribe.org/cgi-bin/behold.pl?ascribeid=20050425.110359&time=11%2042%20PDT&year=2005&public=0 "Appraisal fraud is part of a bigger, more ominous picture," says David Callahan, Home Insecurity author and Director of Research at Demos. "As home prices have continued to increase above inflation, even nearing 20 percent per year in some cities, American homeowners are vulnerable as never before to financial ruin if home prices fall to their natural market value." "To make matters worse, an increasing number of Americans have reduced the equity in their home to meet rising living expenses, like education and health care, or to pay off credit card debts. From 2001 to 2004, homeowners pulled out a staggering $485 billion worth of equity, and the trend is expected to continue. It is beginning to look like the American dream of financial security through homeownership is becoming a myth for far too many." The data and findings of the Home Insecurity report were based on a number of sources, including: the National Association of Realtors statement before a Senate subcommittee in March 2004, detailing how the problem of lender pressure and appraisal fraud had worsened; a petition sent by 8,000 appraisers to the Federal government complaining that the lending industry had applied pressure on them to exceed values; and the testimonials of individual appraisers about such abuses. Among the Report's Key Findings: - Serious conflicts of interest pervade the mortgage industry, stemming largely from the refinancing craze. Lenders, brokers and real estate agents have an increased incentive to inflate the value of residential properties. - Appraisal fraud often encourages homeowners to borrow more money than their homes are worth, putting them at risk of not being able to sell for a high enough price to pay off their mortgage. - Up to half of all property appraisers have reported feeling pressure from lenders or brokers to overstate property values. Appraisers who have not complied with strong-arm tactics report not being paid for work and being blacklisted. - The inflation of home prices through appraisal fraud may be helping to push real estate prices up to unsustainable levels and contributing to a housing "bubble."

Fallout Boy wrote on Oct 28, 2005 12:57 PM:The party is over. Most people have very little job security and little common sense when it comes to carrying debt. The fallout from the realestate bubble will be far reaching and cause massive job losses in many sectors. People will default on loans in record numbers because they will find themselves upside down on their home. Interest rates will rise and lending standards will tighten again. Everything runs in a cycle and it is foolish to believe that "This time it will be different."

VegasMan wrote on Oct 28, 2005 1:09 PM:The real estate shill said, "Unlike stocks, real estate, especially at the national level, rarely decreases in value." One's house is not in any sense national, it's location is as local as one can get. I sold my house for a double and am now renting until after the collapse. Also, unlike stocks, real estate is not very liquid, and many will watch its value go down without being able to bail.

What??? wrote on Oct 28, 2005 3:05 PM:This reply is for Chester. The bubble we speak of is related to today's prices, not those of 5 years ago. If you had to buy that same home now for $700,000 would you still think it was realistic. One more thing, Kevin Forrester's article claimed that real estate prices only dropped 6x between 1968 and 2000 and the worst drop was 5%. Im not sure where he gets his stats but I think he left out what happened in Los Angeles in the late 1980's to early 1990's. The drop was well over 20% and things were not anywhere near the levels of absurdity we are seeing in todays southern cali market. If you adjust those declines for inflation they were near 30% declines and did not recover until the year 2000. Do your homework!!!!!!

Living in OC wrote on Oct 28, 2005 3:41 PM:I was raised in San Diego some years ago and San Diego is no treat anymore. Gangs are rampant, people don't water their grass (guess they can't afford to), stores I used to go into as a child are typically dirty and the sales people don't speak english. I miss the old San Diego. I really can't see the demand for living there. If the demand was that high, why are so many homes on the market? The buying frenzy was caused by pure speculation and they're gonna lose if they haven't bailed out yet. Most people have some common sense and buying with an interest only loan is setting up yourself for disaster. It happened right before our crash in 1929. I think we should worry about this and when I hear that there is no bubble... it's because they need the next sucker to come around. Good luck all.

amoney wrote on Oct 28, 2005 6:21 PM:This is the just the shrill of a shill. He knows the tripling of inventory in the past 18 months and the 10 rate hikes have killed off the golden goose - the no doc, bogus loans given to idiots that have driven prices up the past 3 years. Now many people are gonna find they could never REALLY afford that house at the absurd price they bought it for, and will have to leave the keys in the mailbox. Whoops, now they have to pay the IRS for that "gift"! And filing for bankruptcy is now much, much harder. All the idiots who bought in the past 3 years are gonna be out of this state inside of 2-3 years, trying to duck their creditors, and for the most part, good riddance!

mike wrote on Oct 28, 2005 7:46 PM:I've lived in San Diego since 1974, and guess what. The weather and beaches have always been nice! What changed in the last 5 years that caused houses to triple? Did our population increase their paychecks by 300 percent in the last few years? Did we have a population explosion that I missed? I bought my current townhome in 1997 for $82000 and yes it was a repo, the prior owner paid $120000, thats a loss of over 30 percent. Now my home is worth almost 400 grand! And your telling us this aint a bubble?

Greg wrote on Oct 28, 2005 9:42 PM:A brief history: bought a condo in Los Angeles suburb (valencia) in 1989 for $130,000 1990, it was worth close to $200,000 1991, it was worth $120,000 1995, following the EQuake, it was worth $105,000 2000, It was worth $150,000 2005, it was worth $365,000 I sold in July 2005 for 365K, I'll take my chances renting for now. Look at the history I just described, and interest rates were in my favor on an ARM between 1989 and 2005. I'm moving out of Calif at first chance. I bet the market tanks starting this fall, and holds flat for a short while, and tanks for several years, to recover once again 5-9 years from now. I'm glad the majority of those that respond feel the same way, it gives me confidence. Too many factors against RE now, rising int rates, bad loan practices, poor consumer confidence, speculators, tax reform, affordabilty, insane prices, etc etc etc. But I'm glad I held on during that drought of the 90s to hit it big in 2005 :-)

Jack wrote on Oct 28, 2005 9:49 PM:People were saying the same for Nasdaq bubble, they thought it will go up forever. Same with housing. Some say it will flatten out, stay at the same level. Nothing stays the same, house prices can and has gone down. It should track increase in incomes which is 2% at best. So we are looking to go down to 95 level, roughly %70 within couple of months. This is no joke.

EDITOR's NOTE wrote on Oct 29, 2005 7:32 AM:This column accidently ran twice under two different names. This is the original with all comments in place.

Harold wrote on Oct 29, 2005 8:51 AM:"Housing prices in the West declined on six occasions during that period; however, the largest annual decline was under 5 percent." Okay Kevin, you failed to mention the 40% real decline that occured 89-96. In a few years all the freshly minted realtors will go back to their flight attendant careers. All the new "senior loan representatives" will go back to driving cabs. Foolish buyers will be defaulting and Kevin will find that he'll have to break out his freshman intro to economics text.

Daniel K wrote on Oct 29, 2005 9:39 AM:I am a San Diego (Del Mar)local, and I read the NC Times frequently. If you look at their paper you will see that a large ammout of their advertising is real estate related (realtor, mortgage, etc). I speculate (pun intended) their economic interest is bleading into their editorial position. But, its an editorial, not strait new, they are entitled to what ever opinion they want. If they are wrong, they will be in good company in a year. There is an old joke that the job of a banker is not to avoid ruin. It is just to ensure that if he is ruined, it is in a respectable way, along with everyone else. That way no one can blame him.

BubbleBoy wrote on Oct 29, 2005 10:14 AM:It's only a bubble if you are dumb enough to sell it cheaper than your latest neighbor's purchase price. Home owners hold the cards, but please, run screaming into a panic and sell it to me cheap. Please, Please, Please. I'll flip it in 6 months and be happy with a 10 percent return. Just cuz it ain't goin up 30 percent a year doesn't mean it ain't going up.

Sean wrote on Oct 29, 2005 11:27 AM:"The only threat we face is loss of confidence on the part of those who want to buy or sell homes and other real estate. The plain fact is there is a lot of misleading and jaded information out there." Gee that's cute... the slowdown is not caused by insane prices and people cashing out... its caused by the Fear Mongering of people talking about a bubble.

Deneen wrote on Oct 29, 2005 11:43 AM:Stop thinking with your hearts. Real Estate may go down for brief periods, but if that is the case DON'T sell and you don't loose. Only people who are forced to sell for some reason loose in a slow market. Don't overextend yourself and then blame real estate agents and lenders. No one holds a gun to your head and makes you borrow too much. Real estate agents are not evil. They market and sell a product. Were the toy companies who sold Beanie Babies and Cabbage Patch Kids evil? Or were they a business providing a product that was in high demand by CONSUMERS? You people are the consumers and you (not agents) control the market. Maybe you should all go back to college and take Econ 101. Real estate agents and lenders give the people what they demand and the ones who don't go out of business. Yes the market will level off as interest rates increase. That is also historic. Be careful in your investments, don't over borrow and ride out dips in the market and you will be fine.

Canada J wrote on Oct 29, 2005 11:52 AM:Paul Krugman definitively called the San Diego top back on August 8, 2005 in the New York Times. Get used to it.

LucyLove wrote on Oct 29, 2005 12:06 PM:The author is either very naive or uninformed. Real estate prices has not risen to absurity in all parts of the country. It has on the east and west coasts. The real estate bubble is real and it will go "pop." But, not in all areas of the country. The author is correct, the bubble is not national, it's local. In some markets the housing prices will decline, but in others it will not. Some locations will sustain the rise in real estate. Places like, Washington D.C., San Francisco, New York or home that has a water view. People will always pay to live there, no matter the cost. It's the fools who are purchasing in markets that can't sustain the rises in real estate that will lose out. It's the fools who are purchasing homes just because their friends and neighbors purchased them who will be left out in the cold. Some people are just buying without any critical thinking behind it. I shudder to think what will happen to them when the real estate market corrects itself.

Greg wrote on Oct 29, 2005 7:17 PM:Deneen and bubble boy, you say it will be brief if it goes through a downturn. Notice Harold and I both pointed out between 1990 and 2000 the market suffered a 40% decrease, and horrible stagnation. That's 10 years before LA prices recovered, another 3-5 years to see gains from those prices. SURE, YOU'LL BUY FROM US AND FLIP IT IN 6 MONTHS......IT happened all the time in the mid-90s......Jeez, do some homework people.

chicken little wrote on Oct 29, 2005 8:32 PM:I'm a Northern california Bay Area bubble believer. The inventory in the Tri-valley where I live has tripled in the last three months and "Price Reduced" signs are starting to pop-up. The other trend I have been noticing is how a house disappears from the MLS only to re-appear with a lower price a day later as a "New Listing". I decided not to jump in and buy what was an overpriced house two years ago because of the fear I felt regarding the financing being peddled on me and the amount of capital it was going to take to fix everything the seller wasn't willing to fix. Houses are "consumable" assets requiring a constant infusion of cash to maintain and operate. Stocks and bonds don't require the same. The bubble isn't going to burst right away, it is going to float along for awhile and just like back in the 80's when all of those 30 year amortized due in 5 year loans came due at the same time, these interest only loans are all going to start converting at the same time and "pop" goes the bubble. I find it humorous the RE people are now refering to the air coming out of the housing "balloon". The only difference between a bubble and a balloon is the balloon is harder to pop. But when it does the explosion is so much louder and damaging.

John M wrote on Oct 30, 2005 9:43 AM:If housing existed in a vacuum you could make a case that the only communities to be hurt are those where prices have risen exponentially. Unfortunately, housing is only one part of a complex economy that has been brought to the brink in an attempt to forestall what might have been a "normal" recession a few years ago. Now, it is an economy of extremes and housing is only part of the problem. Over 70% (an extreme) f the nation's GDP now comes from personal expenditures. These have only been possible by using houses as ATM's as prices have risen. Robert Schiller (Yale professor who predicted the stock bubble collapse in 2000) has shown 4 past periods in time where the median real (adjusted for inflation)house price has risen more than 20% over the 10 year median. The worst case was about 128% over the median. In each case (1894, 1959, 1979, and 1989), real housing prices declined significantly in the next few years. Where are we now? Prices are more than 185% of the median (to boldly go where no one has gone before). When housing prices in the most bubbly areas decline (as they must) they will set off a chain reaction of nasty economic events that will eventually reach into even the non-bubble parts of the country and hit prices there also. An extra added attraction to the economic mess is that the level of debt relative to GDP is also at an extreme level only seen once before -- in 1929.

Jason D wrote on Oct 30, 2005 3:11 PM:Most people today are buying into interest only loans, arm's and worse reverse amortized intrest only arm,s. My sister chose this rought despite my warnings. My concern is simple eventual rates go up and even on most reverse amortized loans have a dead line when you start paying back the pricipal. when the two compoud each other your home morgage becomes unmanageable. And to make things worse people have been using their homes like atm machines to sustain a high standard of living. In the long run this spells foreclosures, bankruptcy and overall economic collapse in a few years when morgages and equity loans start to criple the unprepared homeowner. will a housing bubble burst I think so, however it will probably be over the course of the next few years as more and more people realize not rich in home equity but bankrupt on a home that lost 10-40% of its value over the coming years

Waiting in RB wrote on Oct 30, 2005 10:40 PM:Home price in 92127 keeps increasing. I keep waiting. I cannot afford to buy even a 600k home price goes down 20%. Building cost of a 700k home is 200k or less. RE agents claim that land is limited. San Diego population density is far less than many places where home prices are lower. In a world where I can work from AZ and TX and still report to a manager in CA, why would not I move out? When my wife's new job stabilizes both of us will work from home [somewhere in Utah?]

Scott wrote on Oct 31, 2005 5:43 AM:"The prices in Utah are decreasing. a house for 189900 Right now, they are selling it for177900"

Dreaming wrote on Oct 31, 2005 11:13 AM:The argument about house prices holding up because retirees will pay any price to live near the beach is ridiculous. As a financial planner I can tell you that a large percentage of my retired clients are taking advantage of the nieve and selling their real estate to buy in states with affordable homes. There is going to be a huge reality check in the next several years. People that are buying properties now with the intention of flipping it in the next 6 months for a profit are going to be sorely disappointed. With the recent change in bankruptcy law you will find that getting rid of your bad debt will be much more difficult. Good luck!!!!

northCounty 3 wrote on Oct 31, 2005 11:31 AM:It's unbelievable that the press can take this sort of puff piece seriously. This guy, along with other industry spokesmen, can and will only say that things are great, etc. This is like quoting a tobacco industry "scientist" if smoking is bad. Or a PR person if their client is good - totally meaningless.

Waiting in RB wrote on Nov 1, 2005 8:43 AM:Weather in Poway or RB is nowhere close to the weather near beach. Say I am a 60 yr old retiree with income 120k/yr. Would I sell my 2000 sft home for 120k and buy a 1500 sqft 600k 30 yr old house and plan for a 30 yr mortgage? Or I will buy a 150k house at NM or UT [no mortgage at all]. I will need money for the household help, medical emergency, travel, and helping out my kids [one of them is still in college]. If I live in RB or Poway, I still have to drive 25 miles to go to the beach. I would not find anyone near my age there. People retiring from San Diego even move to Riverside to save money. Homeowners can hold on to their homes, builders and city can limit the supply the number of new developments, with high paying jobs going to asia, with companies like intel moving from CA to AZ/NM, with houseing affordibility 10%, price has to go down in the long term.

Murray wrote on Nov 1, 2005 8:06 PM:FYI - I moved to LA (Burbank) in May, r/e market was still HOT. Since then inventory has doubled. By this time next year LA will be where SD is today. I predict LA will drop further than SD -you wouldn't believe the speculation that has gone on here. A lousy small 1940's house goes for > $600k!

needshelp wrote on Nov 2, 2005 12:13 AM:I write to support the article. While I believe that some/most of the statements overreach, there is a fundamental truth to the message: the future of prices will be dictated by the market and largely by perceptions. If perceptions remain positive then prices will continue to rise despite the talk of bubbles. If perceptions become negative (and I believe they are turning), then prices will drop. Essentially, few should care if interest rates hit 7% if appreciation is at 10-15%, you are still making between 3-8% on the bank's money. While you would likely get a better return in the stock or bond market, there is no other investment that allows you to control so much capital with so little cost. Thus, I would argue that 5% return/per year on an $800,000 ($40,000) bank loan (i.e. mortgage) is a far better investment than 10% on a $100,000 investment in the stock market WITH YOUR OWN MONEY. I do not support the easy credit standards of today, but certainly it is providing more people than ever with a chance to leverage themselves to riches...now if only all of us could do the same, we wouldn't be having this forum discussion. Notwithstanding, I have been seeing price reductions on almost every home for sale in Scripps Ranch. Some houses previously priced in the high 8's are now in the mid 7's. Good luck to all.

waiiting in RB wrote on Nov 2, 2005 9:42 AM:Perception matters as long as buyers are able to make payments and people have money to put the downpayment. The perception of people who bought home recently and are barely making their payments meets the reality. The perception of investors who have -ve cash flow meets with the reality. It cannot go up at 10-15% rate unless income grows in that rate. In SD median income is lower than many cities where median home price less than 300k. It is reality that the bank will ask for the mortgage payment. If the rent is much lower than the mortgage payment where will I get the money to cover it? Investors' perception means nothing. Price depends on the supply and the demand [people's ability to pay]. If someone cannot pay my rent/mortgage in SD there are other cities to live. People have education. healthcare and other expenses, you cannot just burn all your paycheck on your mortgage.

Steve M. wrote on Nov 3, 2005 7:02 AM:"Kevin Forrester is president of the North San Diego County Association of Realtors" Sorta says it all. Wonder if he'd put his money where his mouth is and be willing to put up 50K (to charity) if he's wrong. He won't. You'll find realtors don't heed their own advice - their job is to sell you a bill of goods and lock in their undeserved profit.

Simple wrote on Nov 4, 2005 10:12 AM:Today's prices are ridiculous. At least with a stock, I can average down if it drops in value. Waiting to recover from a 15% drop on a 800,000 mortgage (120,000) while making mortgage payments, upkeep, insurance and property taxes is for people that have not done the math or their homework. I have never considered an investment that loses value almost instantly, takes several years to recover while I am making payments on it, a good investment. Anybody who thinks that the real estate market is not going to correct, I have some some Lucent stock I would like to sell you for $75 per share. TRUST ME, IT'S GOING TO GO UP FOREVER!!!!!

lies , damned lies and statistics wrote on Nov 11, 2005 9:58 AM:"There are lies, damned lies and statistics" This artilce is a very good example of the saying. Mr. FORRESTERm, you said: "... there are at least seven areas in North San Diego County alone where one out of three households can afford the median-priced attached home." 7 of out how many area ? How big is your defininition of "area" ? 1 block ? 2 blocks or a city ? And where are these area at ?
You also say:
Housing prices in the West declined on six occasions during that period; however, the largest annual decline was under 5 percent.
Sure! Including the whole west in the calculation to average out the decline is an excellent way to educate the public that San Diego will not decline over 5%, just like the whole west index!

Professional Investor wrote on Nov 11, 2005 4:36 PM:This is the usual garbage spewed by a salesman selling debt to Lemmings who follow the crowd. Just as stocks fell in 2000, You will see current absurd prices fall much further. Prices have already been reduced by $150,000 on many homes, and buyers are not even looking at them. Homes are lingering on the market. There are over 19,000 properties on the MLS for sale in San Diego, up from 5,000 this time last year. There are thousands more new condos, tract homes, and for sale by owner listings not mentioned in that count. The market is swamped because flippers, gamblers (so called investors) are desperate to bail out of the condos and homes they bought and had hoped to flip for a profit. Now many owe more than they borrowed for them. The poorest of the poor were talked into dangerous loans to keep this market going, and now those poor people, 4 families buying 1 house, and all the no money down loans and adjustable rate mortgage borrowers, will soon not be able to make the payments, as their payments increase with interest rate hikes. So many more people will be upside down in their homes (owing more than they are worth) all thanks to salesman who made huge commissions by selling heavy debt to the poor. Before you salesmen call me an upset renter, you should know I own multiple income properties, and can pay cash for a home, but I didn't become a Millionaire by buying high and selling low. I know better than to pay absurd prices. They are not making any more land in Japan either, but housing prices have fallen there for 16 years. Don't tell me to buy now or I'll never get in, I guarantee you that there will be many deals at half the prices of the peak along the coast in June of 2004. This place will be foreclosure city.

Not the Patsy wrote on Nov 14, 2005 3:20 PM:Basic economic principles dictate a market down turn. Aside from inventory increases, price decreases, and longer marketing times, there are other grim factors to consider. 1) Median income to median price, 2) rental property availability & market rents, 3) rising interest rates, and most importantly: 4) Credit tightening. Yes, I already see credit tightning. Now, go back to your stats, and look at the increase in ARMS and high risk programs. Now ask yourself what is likely to happen when supply increases 40%-60% due to forced liquidation. The fact is that the median income DOES NOT support the median price, and that it is much cheaper to rent than own and renting is getting easier and cheaper. Based on experience (history), I expect no less than a 20% haircut before prices finally stabilize. Note: Low interest rates may have been significant fuel for the fire that fed the housing bubble, but it was the 80/20's, interest only, and neg am ARMS that made the ridiculous ascent to 10 times the median possible. I find it extremely irresponsible to represent that all is fine and dandy with the market when in fact it is not.

Glad wrote on Nov 14, 2005 11:47 PM:I hope everyone is right - I would love to see the smug smiles of realtors and so called "investor" homeowners replaced with frowns. I should not feel this way but I guess I'm human. Of course I'm angry at having to wait for the bubble to burst. All I wanted was a home - not an investment. I was a careful buyer and did not follow the crowd. I did not want to be the last person standing when all the chairs were taken up. I knew the bubble would burst someday soon -unfortunately it kept going up for 4 years...FINALLY...MAYBE it will finally go down some... I agree - the light credit standards, insane prices, etc. will make these smug people cry and I'm happy to see it because I have been crying for years - I'm human...sorry...

frank wrote on Nov 15, 2005 9:18 AM:prices in los Angele's county are dropping 4 percent per month and still not selling , real estate was a ponzi scheme that ran its courses its criminal for so called real estate experts trying to keep ponzi scheme going

JOKE wrote on Nov 15, 2005 9:51 AM:Is this Forrester guy for real. He is the in the business, it is his livelihood. These are the idiots that are writing this propanganda and trying to pull the wool over the general public. This makes me sick. It is going to pull back and BIG.....

billy wrote on Nov 15, 2005 10:36 AM:most of you are completely off base. i bought 4 houses 2 years ago with less than 100000, and now it is worth more than a million. yes i cashed out some of it, but i am still hunting for bargains. keep waiting for the bubble to burst fools, you will be 65 year old renters and the price will have tripled again by then. ever here of inflation? we have alot of it coming. 500000 wont seem like alot for a house then.

Calm and rational wrote on Nov 15, 2005 11:04 AM:Wah, Wah, Wah . . . looks like all the posters here and the fools that listened to the screaming heads 1, 2, 3, 4, and 5 years ago that were screaming the same thing "BUBBLE, BUBBLE, BUBBLE" and DIDN'T BUY, regret it and are venting their frustration and wishful thinking (it's just gotta drop now . . . right!?). Don't continue to be fools, find a way to buy yourself a home/condo in San Diego. For a much more sane, reasoned, and scientific analysis see the following: http://www.realtor.org/Research.nsf/files/San%20Diego.pdf/$FILE/San%20Diego.pdf

Are you for real? wrote on Nov 15, 2005 12:46 PM:Using the "If I had listened to this bubble warning 1,2,3,4 years ago I wouldn't have made a million dollars from my 100,000 investment" garbage is laughable. Markets correct people!!! There have been 34 bear markets in the Stock market and quite a few in Real Estate also. Whoever made those posts must truly be rookie investors and I certainly dont want to be in the same market with them when they get hurt!!

Gary W wrote on Nov 15, 2005 2:56 PM:Everybodu should read the Housing Bubble II blogg. It will give you a more balanced idea of the changes that are occurring in our housing market.

confused wrote on Nov 15, 2005 4:44 PM:It's funny how everyone feels rich now a days but yet nobody has cash (unless they just refinanced). Most don't have $10,000 and are living paycheck to paycheck (proof is the highest amount of consumer debt ever outstanding currently... although in the last 3 years home owners have supposedly cash-out refinanced over 1 trillion to pay off this debt... yeah right) People now, will not want to make $3,500 a month payments on a $600,000 home thats worth $450,000 which they could rent for even less than they payment on their home equity lines of credit in some cases, therefore, they'll stop making payments, go through the foreclosure process which will last about a year, saving $30,000 + in mortgage payments only to walk away and put down $20,000 to pre-pay rent for the entire year somewhere else, still be $30,000 ahead (1 year free living & 1 year discounted rent) up with no tax consequence of a short-sale.

Calm and rational wrote on Nov 15, 2005 5:40 PM:You guys missed the big bubble burst in San Diego real estate !!!!!! San Diego Median prices by month: 10/05 - $513,000 -Biggest gain this yr. 09/05 - $498,000 -BURST OVER :-( 08/05 - $493,000 -BUBBLE BURSTS !!!! 07/05 - $496,000 - rising 06/05 - $493,000 - rising 05/05 - $488,000 - rising 04/05 - $484,000 - rising 03/05 - $477,000 - rising 02/05 - $472,000 SEE http://www.dqnews.com/RRSCA1105.shtm

Been There Done That wrote on Nov 15, 2005 6:32 PM:Take a look at the recent Notice of Default lists. Generated each week, these lists show those who are behind on their loan by 90 days. Over the last 3 months+ the lists are growing in number and the majority of these loans (and sometimes more than 90%) the loans on the list were originated in either 2004 or 2005. This means one of two things, either the buyers bought recently and are already having trouble making the payments or the owner pulled equity out and has none left to show for it. I believe it is a combinaion of the two. I have followed this list for years and the new listing toals are sometimes 5-6 times as many new adds as this time last year. Good luck to those trying to sell, I already have. Cashed out this time last year, do you really think I have missed anything? All I have missed is paying my property taxes to a city that has its fiscal head up you know where. Opportunity awaits those on the side with cash (and their good credit).

mortgageless wrote on Nov 15, 2005 9:06 PM:This is all out of the National Association of Realtors Market-by-Market Home Price Analysis Reports. This is strait NAR propaganda.

Maryland bubble watcher wrote on Nov 15, 2005 9:07 PM:Forrester is just spouting the talking points he got from the National Association of Realtors to try to bolster perceptions and convince people that this crazy market is somehow sustainable. NAR has put out "local" reports for 130 markets in the country saying exactly the same thing. http://www.realtor.org/research.nsf/pages/anti-bubblereports Perceptions don't matter now--There's nobody left who can buy the houses as these crazy prices, even if they want to!

Augie from Florida wrote on Nov 15, 2005 10:27 PM:What is going to happen is anybody's guess. I have difficulty believing what realtors say, as they have a vested interest in pushing transactions. Could it be a coincidence that the bankrupcy laws have been stiffened recently, which protects fat-cat creditor's interests? Too many negatives are converging and I fear "the chickens will come home to roost." I know too many people who never got anything right, that now feel they're "real estate/investment experts." They are the sheep that will be shorn!

anti-realtor wrote on Nov 16, 2005 6:19 AM:calm and rational, you are anything BUT calm and rational. A good investor knows markets go in cycles, that you must buy low and sell high. 3-4 years ago you must buy, now you must sell to realize the gain. I don't know about your world, but all of the financially savy folks I know are eagerly awaiting the golden opportunity to pick up cheap foreclosures for pennies on the dollar in the next couple of year from fools that overstretched with HELOC ARM I/O loans. And all the buyers I know of these days are waiters, medical assistants, and day laborers. Which group would you like to be with?

me wrote on Nov 16, 2005 6:39 AM:The only thing that is busting San Diego's real estate bubble is the dorks who are throwing their houses up for sale in this current market and trying to cash in before the "pop". All those for sale signs going up are scaring folks when really nothing has changed, except for the panic-stricken homeowners. Meanwhile, prices still are up a few percentage points year-to-year, better than my CDs are doing.

the economist wrote on Nov 16, 2005 6:45 AM:in the final analysis, who do we trust more? Kevin Forrester or The Economist? http://economist.com/finance/displayStory.cfm?story_id=4079027

What the ???? wrote on Nov 16, 2005 7:14 AM:As a professional real estate investor that has bought and sold over 100 commercial and residential properties I feel the need to add my 2 cents. Real Estate can and will drop in value. Los Angeles dropped almost 21% starting in 1990 and took 10 years just to get back to previous prices. San Francisco dropped 10% starting in 1990 and took 8 years to recover. The percentage drop is not as disturbing to me as how long you had to sit (pay) on the property just to get back to the purchase price. I am confident in stating that people like Calm and Rational have to be the worst investors I have ever had the pleasure of reading. Being unable to understand the other side of a market is a costly mistake for rookies and a huge benefit to professional investors that will be waiting to buy it up on the other end. Im out of this Cali market for a few years. See you at the foreclosure auctions!!!

paul wrote on Nov 16, 2005 1:48 PM:I've read recently that people are leaving California faster than they are coming here - Is this true? And I'd imagine those that are leaving are cashing out. "real estate rarely decreases in value". Well, housing markets rarely see 10-20% gains every year for several years. We rarely see people standing in line to get in a lottery to win a chance to buy a home. What are the factors driving such gains? Interest rates. New types of loan products. Job market. Economy. Speculation. Fear of not buying before prices go too high (less than a year ago, my wife actually made this comment- as well as friends and neighbors) etc... I think were going to see a slow down within the next year. How much of a slow down is unknown to most buyers and sellers. Just as how much of a gain we would have predicted 5 years ago was unknown by most buyers and sellers. If I had several million dollars right now, I wouldn't be "investing" in real estate. I've been reading all the info I can on the housing market and when putting it all together - the peak has occurred. What kind of "peak" I don't think anyone really knows. Probably not a "bubble" for the reasons mentioned in the article. I'm a college grad working as a Senior Software Development Engineer - annual salary is 70k+. Me and my pregnant wife have about a 20% down on a median priced home. We have no debt, no car payments, renting a two bedroom apartment for $1600 a month. We can't "afford" this housing market. Our tax, insurance, and mortgage would be too much. There's no way I'm going to buy a house on interest only.

The Aussie wrote on Nov 17, 2005 7:38 AM:When the housing bubble "burst" in Australia last year, there was a decline in values of about 10% and then a leveling off. They figure that when wages catch up with the cost of a mortgage, that is in 5 to 10 years, there'll be another bubble. These things a cyclic, rapid growth of value, followed by minor decline, followed by flat growth, followed by rapid growth. Investors will pull back from housing for a while and I wouldn't be suprised to see another bull stock market.

Jay wrote on Nov 17, 2005 10:43 AM:When people in positions of "authority" start yelling "Don't panic", thats the time you should panic. They're just trying to do damage control. When the authorities are middle aged housewives, then you should be kicking youself in the butt for listening in the first place although its hard to argue when people are telling you what you want to hear. These "modern" lending methods like reverse amort., zero down, etc, aren't so new at all. The last time they were big was right before the Great Depression. Following that unfortunate event in our history we went back to the fully amortized loans most of remember from years past. But now what's old is new again! Lets face it prices are going down. But the people that say, it'll just level out are missing the point that if inflation is 5%, and your "investment" is flat but requires you to pay taxes and do maintenance, you really lost >5%. Any asset has to keep pace with the treadmill called inflation just to stay even, thats not gain, even though you'll be taxed as if it was. The guy that said something to the effect that 5% gain on $500K house is better than 10% gain on $100k market doesn't understand that there are leveraged plays you can make in the stock market also, regular people just avoid them because they're SO RISKY. So forclosure sales are trending up, go check for yourself at the San Diego Recorder web site, search term "NT OF TRUSTEE SALE" I think I'm going to go for a nice repo after nobody bids at the sale on some of these maxed out properties. So why do RE people care which way the market goes, don't they make money both directions of the market? I guess volumes go down dramatically on the down side of the market. And banks may not use RE people to sell bank owned property. National Bubble- Interest rates are a national characteristic- areas that aren't on the coasts that haven't been going up (like the Rust Belt area) would have been going down had it not been for the free money being lent at rates below the real inflation rate. Lending standards and appraisers- I wouldn't be suprised if the appraisers are made out to be the skunks after all this happens. A group of individuals makes a good target that can't defend itself. The real culpret is the GSE's, you know them as Fannie and Freddie. When they buy loans from the banks, the banks no longer care about the quality of the debt, and just need appraisers that will "hit the numbers". The GSEs have been buying their own, and each others debt, which creates the effect of a larger market for debt than there really is, and this has supressed interest rates while bloating their retained portolios. The guy's running the GSE's are just trying get as much juice out before the scheme implodes. And when it does, it will be the taxpayer left holding the bag.

Dusty in Nor Cal wrote on Nov 17, 2005 11:59 PM:We have a supply and demand issue. There are not enough homes being built, which leads to a lack of supply. The baby boomers will by 2nd homes and the hispanic market will by first time homes. My supply and and demand ( ECON 101) could be argued and the market may struggle for a while, but your home is always a good investment. Those that very recently purchased may have to hold on a bit longer before they cash out. Investors, take advantage of the tax laws! Real Estate is a Good thing.

regretsnotbuying wrote on Nov 18, 2005 11:09 PM:I just cannot see new first time homebuyers buy more houses paying 3500 per month. The ones that did not buy does not have high income. Sure homeonwers would not want to sell because of what realtors are saying. In the mean time investors are unloading their house in the market [making the profit]. Offcouse they will say price will go up because otherwise they cannot sell. Why would you pay 3500 per month when you can pay less than 2000 for rent? [hope that price can still go up]. People like have to wait for 3 years or so when people realizes that shortage of land is artificially created. When home price went up people spent the most they can spend to make sure they get more appreciation. They cannot pay anymore. In the market where jobs can go anywhere from india to phoenix why will the companies raise salaries of San Diego employees to an unreasonable level.

Jay wrote on Nov 20, 2005 11:59 AM:Dusty, your econ 101 class was a simplification to explain a concept too a group of 18 year olds. If the demand is stimulated by a false notion, it only explains the short term move. Supply and demand explains speculation, which by definition is unsustainable. As for waiting a little longer to sell before coming back even, if you mean 10-15 years, then you're probably right.

kevbo wrote on Nov 29, 2005 3:28 PM:I think this is more of a liquidity bubble. The Economist magazine said the growth in the Chinese economy has caused a global liquidity bubble. The Chinese has financed a lot of U.S. mortgages. In other words, China has increased the supply of money and lowered the cost of borrowing for average americans, which indirectely allows many more americans to purchase higher priced homes.

Lost It All In 1991 wrote on Dec 4, 2005 8:50 AM:The national statistics use politicaly created formula! In 1991 I lost 30% in Marin on the way down then 60% in San Bernardino and when it was all over my $350,000 home in Venice Ca fetched $160,000. Big layoffs! Good jobs were scarce, my furniture business failed, I went to work for an auctioneer! I could not keep up my payments. Property taxes were killing me. Cash was KING and very few had it and those who did were afraid to let it go.

Armond M wrote on Dec 14, 2005 1:49 AM:This is the biggest crock of a story I have heard. How can you have the gaul to sit here and say everything is good and there's no housing bubble? Just because you realtors have been raking it in and ripping people off by selling homes they can't afford, you claim it's a-ok? The panic buying of the last few years has made a lot of money for many but you know damned well that this isn't the norm and it's not the way it should be. With the affordability index at an all-time low and the people in debt up to their eyeballs, the only saving grace has been the rising prices and it's all been artificial. The only jaded information is yours...and it's no surprise it's coming from a realtor.

concerned wrote on Dec 20, 2005 1:30 PM:To all sayers and naysayers alike...Please LEARN HOW TO SPELL and communicate clear thoughts as these comments fail to forward any progressive conclusions!

Hugh T. wrote on Dec 20, 2005 3:40 PM:We sold our Fallbrook house in 2004 and moved to Fla and bought a business with the cash. I predicted the bubble then, but was a little early. We now rent. Period. The problem is one of herd mentality. Everyone's doin it, so you ought to buy a house NOW before you are left behind, otherwise you will never be a home owner. I Ask this question: Would you personally loan a low-life with a history of not paying bills a thousand bucks? NO. However, there are millions of these people who have been loaned billions to buy inflated houses, houses that will be forclosed on in the coming months. The Feds will step in with liquidty to try to bail out the economy, causing inflation. If you own a home, sell it. If your home is listed, cut the price big time and get out. Get a coffee can, some gold coins, and a shovel.

Lender wrote on Dec 30, 2005 9:28 AM:I dissagree with all you nay sayers. I have been in the mortgage business for several years and even though there are a lot of people getting into risky products, how come nobody complaints about savvy investors buying or even selling stocks or options in the stock market on margin. Like a reverse or neg am loan, people pay daily interest to buy on margin and it cuts into your profits. I guarantee you that if you own ANY sort of mutual fund, there are hedges on their possitions. HOW CAN YOU DO THAT?!?!. If you or anybody else is bullish on the Real Estate market, as an investor or homeowner, who is anybody to say that they are wrong. Like any other real estate investment it's all about location, and in North County San Diego there will allways be a demand. Regardless of what goes on in the economy. You sound like a bunch of angry people that hate your jobs and wished you were or could be a realtor or mortgage broker.

Jay wrote on Jan 2, 2006 10:09 PM:Lender- The people buying on equities on margin are more sophisticate investors, and the limit is something like 30% and then you need special approval. Also, if the stock goes down, the broker can call you immediatly and demand payment to cover the deficit. People putting down 0% or 10% are leveraging to a much greater degree, and these are mostly people who have other professions like nursing or whatever. The only analysis they did is say "Which is a cheaper payment?"

INVESTOR AND LOVIN' IT wrote on Apr 15, 2006 11:10 AM:I read through a lot of these comments and I was baffled at what seems to be so many uneducated citizens making guesses and generalities about the wonderful Real Estate Market here in San Diego. Of course, when someone buys a home at top of the market price and has a interest only loan at 100% loan to value, they are pushing the limits of the market. Especially if the rates they recieved were in the 9-12% combined. That does not mean that they can not afford it. It just means that it mad sense for them at that moment. We should give the public more credit as to the type of loans they choose and why. A negative amoritization loan would give the homeowner the most cash flow now, and a payment equal to or lower than rent. Now if that homeowner had to rent the home to pay the mortgage, he could and may even had some cash left over every month. That homeowner will have less of a chance of deffaulting. Does that make sense? To some. If your interest rate is 7% a year and you only pay one percent on a negative amoritization loan, then you still owe the 6% for that year, which is added to the principal. If your home appreciates at 5%, Then your total cost is only one percent for that year. 1%! Wow! That is cheap leaving in San Diego and you get the Sunshine too!

Chris from OZ wrote on Jun 12, 2006 8:23 PM:In the last 5 years in the city i was born and grew up in i have watched house prices rise to double there worth and then some. The reason (and there is only one) is investors. The avergae house/Unit (one nedroom unit in the city is the same price as 3 bedroom house in suburbs) price in this city of 4 million is around $315,000 with average wage per capita coming in at around $35k pa. The whole housing bubble scenario exists it is a global issue and will only ever continue to exist when governments allow this propoltion towards investing as a realistic approach in getting generations to self fund there retirement. A system which will no doubt put them and us on a massive downward slide in the future. I am sick of hearing the words "get in now before its to late" Those words only ever come from people who have 2+ homes (other than their own) mortgaged to the hilt praying to god that i and and many more like me will be as stupid as they are and become "investors" and give this whole rechard system an extra shove until next rate rise. The system does not work if everyone has wealth, and this wealth creation only works if you have less investors than renters. Think about it, if everyone can afford a new home as well as a few investment properties then who the hell is paying the rent on your investments, just hope to god immigration remains steady!!

Rob wrote on Jul 11, 2007 9:51 PM:I am in the real estate industry and I think that this is a classic case as to why the general public does not have a lot of faith in us and what we say. This is embarrassing. In my opinion, people don't appreciate being fed a load of crap. It is an insult to everyone's intelligence, including mine....

Mark wrote on Jul 26, 2007 10:14 PM:"The housing bubble is an economic myth, particularly in North San Diego County". I'm glad I didn't listen to you. Too bad my wife did.

John wrote on May 9, 2008 7:58 PM:Oh, this was just too much fun to read. In 2003-2005 I was laughed at for calling the housing bubble, while people like this actually got paid to write this drivel. Well Mr. Forrester, I hope you feel good about yourself, spewing propaganda in the guise of financial advice. Do you ever wonder how many people lost their life savings after taking you seriously?