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:

1. Owner-occupiers

2. Flippers

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
Jan
137
$368/sf
Feb
143
$376/sf
Mar
216
$395/sf
Apr
230
$375/sf
May
248
$389/sf
Jun
256
$385/sf
Jul
223
$361/sf
Aug
207
$368/sf

How does last month compare with previous Augusts?

Aug-Yr # of sales $$-per-sf
2002
304
$315/sf
2003
436
$346/sf
2004
293
$439/sf
2005
281
$473/sf
2006
234
$473/sf
2007
246
$463/sf

2008
183
$405/sf
2009
215
$373/sf
2010
207
$368/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.

 

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