Ask The Magic 8 Ball…
Filed Under categories: Downtown San Diego, News You Can Use, Real Estate News
posted by Raye Scott on June 2nd, 2009
Consulting the Magic ‘8′ Ball with parenting and real estate advice…
When I was raising my three rambunctious children, there would be days that were mentally and physically exhausting and sometimes, after being bombarded with never ending questions or fights over anything and everything, I would just say “Let’s go ask the Magic “8” Ball and we will let it decide.” So, even if I had already prepared dinner, but the kids wanted pizza, if the Magic “8” Ball said “Outlook Good” I would pick up the phone and order a pizza. It just seemed easier to put our fate into that little black ball once in awhile.
I feel somewhat the same way about real estate these days. On a daily basis I am asked questions about the state of the market. I read every available article to look for answers that are honest and factual. I am constantly analyzing my own business and activity level as a measure of the strength or weakness of the market. But, every now and then I get so tired that I just want to put my trust in the Magic “8” Ball and hope for the best.
There have been some very good indications that the downtown market has hit or will hit the bottom very soon. And, there are some very good arguments in favor of this city being one of the first to feel the effects of a recovery. Downtown condos are more affordable now (prices in some areas of downtown are back to 2002 levels) and buyers seem to be waking up to that reality and getting into the game again. We still have the best year round climate in the country which attracts more and more people from other cities and states for a second home or future retirement. It’s been easier to get the word out with the help of the cruise ship industry, the incredibly successful convention center and Petco Park. We are not just the zoo and Sea World anymore. We hit a speed bump on our way to finishing the downtown development, not a road block.
Recently we have been seeing multiple offers and overbidding on properties in the lower range of the market. And, these are not necessarily short sales or foreclosures (which, by the way, are not always the “deals” that buyers think they are). I think the noticeable increase in activity on the lower end of the market is being fueled in part by the tax credits, lower interest rates and because the pent up demand has become like a dam waiting to overflow.
Eventually, people get fed up reading negative news and many are starting to take action. This could be a “trickle up” recovery starting at the affordable entry level with the support and encouragement of the government and eventually, affect the confidence of the mid and high level buyer.
Prices will not zoom back to 2005 or 2006 levels and there won’t be 25% appreciation a year. Let’s hope not. That type of growth was unsustainable and we have been painfully dealing with the results of that artificial growth for over 2 years now.
There are still some obstacles on the road to recovery. The financial institutions are not loosening up the lines of credit fast enough to allow homes to be purchased and businesses to grow and create more jobs. The requirements for qualifying for a loan have gone from the sublime to the ridiculous. For awhile there, if you could fog up a mirror, you got a loan. Today, it is a much more difficult process. And, don’t get me started with the appraisal issues and the fight to educate out of area appraisers and the need to challenge their numbers. That is a whole other article in itself.
Still, I am more encouraged today than I have been in 2 years that we will see some light at the end of the tunnel and the pace of the recovery will accelerate. Those of us still standing that have weathered the storm will gratefully accept any and all signs of improvement.
I just consulted my Magic “8” Ball and it said “You Can Rely On It”. That’s good enough for me.
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This entry was posted on Tuesday, June 2nd, 2009 at 11:19 am and is filed under Downtown San Diego, News You Can Use, Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed.
Hi, Congratulations to the site owner for this marvelous work you’ve done. It has lots of useful and interesting data.
It’s hard to believe how much things have changed in terms of getting a home loan! If you really stop and think about it, the bankers are pretty foolish.
During the run up, when there was obvious risk, they lent out money like it was free.
Not that we’re obviously at the bottom, and most of the risk has been taken out of the system, you’d think they’d be making loans.
But they’re doing the exact opposite!
Make loans when risk is high, don’t make loans when risk is low= trouble:(
For context, I write a blog on San Diego Property Management.
Cheers
Thanks for posting, I’ll definitely be subscribing to your blog.
At this point the magic 8-ball makes more sense than anything else going on in our market!