The Blur said,
“Jim, let me challenge you, if I may. You’ll have a daughter graduating college in a few years. She’ll get a job and soon look to buy a house. The market will be looking to her and her friends for stability. Will they be able to afford something in North County with 20% down at or above today’s prices?”
I doubt it, at least in areas where she would want to live.
I think she, like many, would rather rent in a preferred area, than buy a home in area that she perceives as less desirable. Homebuyers used to consider compromising on location, because it was only temporary – they could move up in a few years using their appreciation gain.
Not any more.
Without move-up buyers, we’re left with three types of buyers:
3. Long-term investors
All three categories mean big money in North SD County Coastal. Either you have a big down payment, and/or income to qualify for a rather large monthly nut.
Every day we see people comment here that, “it has to come down, JIM!”.
Yet, it’s been a few years now, and the Big Collapse hasn’t happened around here. I’d call it more a return to 2003-2004, which if holds up will still be completely detached from fundamentals, and happening in a full-doc-qualifying only environment – leaving out virtually all potential self-employed buyers.
The battle being waged in North SD County Coastal is between the haves, and the have-nots.
So far, there have been enough “haves” spending what it takes to buy a house in NSDCC that the market has been kept afloat. Here are two charts for detached sales from La Jolla to Carlsbad:
|2010||# of sales||$$-per-sf|
How does last month compare with previous Augusts?
|Aug-Yr||# of sales||$$-per-sf|
Given the on-going commotion world-wide, these look remarkably stable to me.
The “have-nots” are hoping that the “haves” run out of gas, and only time will tell. In an area whose population is roughly 275,000, I’m pretty sure we’ll find 200-300 buyers per month for the foreseeable future – at some price. The trend will likely be downward, but at a very disappointing pace for most buyers.