Fortune Magazine: 10 Worst Real Estate Markets for 2009

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Submitted by JC on December 22, 2008 - 11:56pm

#8: San Diego
2008 median house price: $412,490
2009 projected change: -21.1%
2010 projected change: -2.9%

As the luxury condo boom continues to fizzles, median home prices in this southern California market are forecast to fall $87,000 to $326,000 in 2009.

Submitted by Ex-SD on December 23, 2008 - 5:53am.

Buying before 2010 (at the earliest) in San Diego is a fools game. Example: If you buy now at what appears to be a bargain for $500k, it's most likely going to be worth $400k (or less) by 2010. That extra $100k plus the long term interest, higher property taxes etc, are like flushing money down the toilet: Not to mention your resale value if you have to sell due to transfer, job loss, divorce, etc. I just don't understand why people are rushing to buy at this time. The economy's certainly not headed anywhere but down for the next year (++).

There are plenty of markets around the USA that are probably close to their individual "bottoms" and some are in CA. Example: I can understand why TG bought in Temecula since that area is probably close enough to it's bottom but as the pain train moves closer and closer to the more desirable area, the prices will only fall further. The Forbes article is right on the money and if you're thinking about signing on the dotted line for a new mortgage in 2009, you'd be wise to give it a whole lotta thought before picking up the pen.

Submitted by carlsbadworker on December 23, 2008 - 7:56am.

I don't believe in this article at all. They probably just take this year's drop and extrapolate it into next year. That is always the wrong way to predict the future with a rear-view mirror.

Submitted by carlsbadworker on December 23, 2008 - 8:08am.

I don't think buying now is most certainly a fools game. However buying last year this time was most certainly a fools game. I have a friend couple who bought last year and we tried our best to persuade them not to. But even now after seeing all the blood, they have developed "Stockholm syndrome" and kept telling us that housing is not an investment, and you should just buy when you can afford it. Of course, their combined salary was much higher than ours so I bet they can afford it. But still I think there is no reason to flush $100K into the toilet.
I think it becomes more subtle now (maybe because I already bought). We are seeing demand going up to meet the supply. However, like TG, I am all focused in Temecula area therefore I don't have much data in SD area. But when more and more properties become cashflow positive (as sdr mentioned in some of the thread), it is hard to call that a fools game.

Submitted by Raybyrnes on December 23, 2008 - 8:23am.

100000 over 2 years is only 50 k from the bottom when you factor renting for 2 years is going to run you 50K.

Not saying it is a time to buy but there are areas and price points where margins of safety are built in. Real estate has a natural floor once rent/ buy align.

Submitted by bsrsharma on December 23, 2008 - 8:30am.

I bet they can afford it

That answers it. I think people who can afford to buy comfortably (either mostly cash or with price = less than or 3 times annual income) should buy it. If everyone stays out, the whole market will freeze over and certainly there will be a depression. The best thing now is for wealthy people to start spending so that the market thaws.

Submitted by 34f3f3f on December 23, 2008 - 8:46am.

Many people bought right at the top of the market. Some people would buy even if we were in the middle of huge war. There's no escaping that, but I think we are well into the self-fulfilling prophesy cycle at the moment, and although some people are prepared to buy in some areas, it stands to reason that things won't improve for as long as people are convinced we're in the middle the worst economic crisis most of us have ever seen. Anyone with any sense, is going to wait for the first signs of a turnaround before committing. Mind you, common sense was wanting before so who knows?

Submitted by Ex-SD on December 23, 2008 - 11:49am.

From The L.A. Times:

"Sales of existing homes declined 8.6% last month, to a seasonally adjusted rate of 4.49 million, according to the National Assn. of Realtors. The median price of a home plunged 13% from October to November, to $181,300 from $208,000 a year ago. That was the lowest price since February 2004 ...

The Commerce Department also reported that new home sales dropped to a seasonally adjusted annual rate of 407,000 in November, from a downwardly revised rate of 419,000 in October.

Housing values have plummeted since the peak of the market in July 2006, when the median home price in America was $230,200.

The Commerce Department said that the median price of a new home sold in November was $220,400, down 11.5% from the period a year ago. It was the biggest year-over-year price decline since a 12.7% drop in March.

The capper on those existing home sales figures: 45% of all were distressed or foreclosure related. And it isn't nearly over yet."
My comment is:
Does this information make you believe that now is a good time to buy?

Submitted by sdrealtor on December 23, 2008 - 11:51am.

It was already covered in another thread but for those that missed it this is lousy journalism. The median was 350K in November and they are using an annual median which is meaningless. Most of that "projected" 21.1% decline has already occurred. Thats not news.

Submitted by BGinRB on December 23, 2008 - 1:07pm.

sdrealtor wrote:
It was already covered in another thread but for those that missed it this is lousy journalism. The median was 350K in November and they are using an annual median which is meaningless. Most of that "projected" 21.1% decline has already occurred. Thats not news.

Keep in mind that today's median is tilted by the elevated volume on the lower end.
What Fortune says is that there will be no bottom for at least another two years. Instead, there will be another drop of 10% (more, since they talk about the annual median).
So, today's ratio in volume between different parts of the city needs to be maintained.

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