San Diego Real Estate — It’s Always Hard to Sell Into a Rising Market

Below is an editorial I wrote for my print newsletter in March 2005. Many, especially other real estate professionals, thought I was way out of 'reality' by my comments and having sold all my San Diego investment real estate in 2003. It's sad, but, probly just human nature that the herd mentality causes the majority to suspend reality:

"The paradigm change in property financing has been occurring that may be setting up time bombs that could under-mine our local housing market. There is a huge increase in zero down and adjustable rate loans being pushed on poor credit risk borrowers and first time buyers (below market start/qualifying), as well as move up buyers being induced to purchase homes that otherwise are far beyond normal qualifying loan guidelines! The majority of the new adjustable loans have artificially low start rates for the first year or two, interest only payment terms, and are indexed to volatile interest rate indexes.  This is setting the stage for a huge decline in home values as interest rates increase.

While a huge housing value decline seems unnatural to many, this phenomenon was last seen locally in the mid-90’s!  At that time, an approximate 20% housing depreciation took many by surprise. The easy loan practices today, the double digit housing appreciation of the past few years, and irrational enthusiasm, clearly signals another approaching decline in the San Diego housing market!" [tags]San Diego real estate, San Diego real estate market,  real estate bubble, housing bubble[/tags] San Diego real estate brokers