I find it pretty curious the San Diego real estate experts’ worry list doesn’t include shadow inventory. With plenty of people living in homes with defaulted mortgages, and plenty more vacant properties held off the market by the GSE inventory hoarders, I’m guessing it’s pretty large.
I also note their discussion focuses on “CHALLENGES” which support higher home prices; no mention of what happens when the era of extraordinary federal support of housing demand comes to a close, or when an army of San Diego area empty-nesters tries to move to lower-priced markets in Nevada, Utah or Arizona several years from now, or when the recent Eurozone-driven Wall Street swoon trickles down to the U.S. housing market, or when the army of Chinese and Canadian all-cash investors is all spent out and has shifted from buyer to seller.
Most challenges of which I am aware point to lower prices ahead.
EXPERTS FORESEE BIG CHALLENGES IN LOCAL HOUSING
Slow job growth, inventory squeeze viewed as hurdles
Written by Lily Leung
12:01 a.m., June 26, 2012
Updated 6:32 p.m. , June 25, 2012
The local housing market has come off a hot selling streak this spring, but going ahead, it could face a slew of challenges — from slowed job creation to lower-than-normal inventory levels, based on a discussion among economists and housing insiders Monday.
Real estate pros and business-school professors appeared to have mixed feelings about the future of home sales and prices, but most believe someone must do something bold to get the economy back on track.
“We’ve been on a drunken binge for a long time,” said former San Diego Association of Realtors president Bob Kevane, referring to shenanigans before the housing crash. “I don’t see this being better until someone does something significant. We need to grow up and face the facts.”
Kevane and others focused on a few key struggles that the local housing market could face in the coming months and years — in a discussion led by Alan Nevin, economist and a principal at London Group Realty Advisers in San Diego — at the local Realtors’ association headquarters. Here are three worries:
The Dec. 31 sunset of the Mortgage Forgiveness Debt Relief Act. This act has provided tax relief to borrowers whose home loan debt was forgiven after a foreclosure or short sale. Once that relief ends, that kind of debt will become taxable. If the federal government does not extend the protection beyond year’s end, then the effect on San Diegans could be brutal. “It will result in an enormous amount of bankruptcies,” said Nevin, of the London Group. Local real estate broker John T. Altman said the expiration of the debt relief act could create a “serious situation” for local borrowers who owe more than their homes are worth.
Slowdown in job creation. “2012 has kind of stalled, lagged a bit,” said Kelly Cunningham, economist at the National University System Institute for Policy Research. San Diego County added 12,400 jobs from May 2011 to May 2012. Since the recession, the local economy has added a total of 40,000 jobs, so at May’s pace, it will take about five years to return to the pre-recession peak of 100,000 new jobs a year, Cunningham said. Technology and biotech, traditionally the sturdiest and most high-paying sectors, are starting to encounter some struggles with hiring and financing, Cunningham added. A key issue is that the county has turned into a two-tiered structure of high-paying jobs and low-paying jobs without much of a middle.
Available housing is low. An underreported issue is lack of housing inventory in the county. There are roughly 6,300 active listings in the Multiple Listing Service, which equals a 2.2-month supply of single-family homes and condos, Altman said. Market experts generally agree that six months’ supply is considered healthy. The same issue also can be seen within the new-homes sector, according to Nevin, of the London Group. He said new inventory in the Otay Ranch area will be zero by year’s end because housing there has been selling at a fast pace. The next wave of new homes, Nevin said, will come in two to three years.
…
Also of interest
DO RECENT HOUSING REPORTS INDICATE THAT HOME PRICES IN SAN DIEGO COUNTY HAVE HIT BOTTOM?
WILL HIGH GAS PRICES HURT SPRING HOME-BUYING?
Will county home prices rise this year? As of December, the median was $315,000. What do you think it will be in Dec. 2012?
No comments:
Post a Comment