Official 2nd. Phase of Real Estate Bubble is Upon Us

Federal Reserve Chairman Ben Bernanke told Congress Thursday that the once high-flying housing market appears to be staging a safe landing.
This marks the ‘official’ start of the typical 2nd phase in what is sure to be a major real estate price decline.
1st Phase – Denial. No decline, bubble talk just nonsense, market stable to strong, just back to normal etc.
2nd Phase – Consensus is that it is a ‘softening’ market, a great time to buy, just going into a ‘pause to refresh,’ time to pick up a ‘bargain’ when compared to last year! General attitude of ‘it does not affect me; I do not have to sell.’
3rd Phase – Market down 20%+! Buyers very scarce, homeowners realize that a huge percentage of their equity has evaporated! Finally, homeowners realize using their homes equity as their piggybank has a dramatic downside.  Even a modest drop in interest rates will not prevent the forces that have been set into motion. The ideal weather of San Diego cannot mask conquences of over exuberance about real estate values.
4th Phase – Stabilization of the market, setting the stage for better times.
Note…Phase four will NOT occur in a few months, but may well be years from now. We have had ten years of an up real estate market. The last five years were marked by double digit appreciation propped up by adjustable rate, 100% interest only loans. It’s going to take time to work this out.
To search the entire San Diego MLS, visit brokerforyou. We also have a newer downtown San Diego real estate site as well as a San Diego for sale by owner and Del Mar real estate site.