Tuesday, September 06, 2005

San Diego Real Estate Analysis

A little off topic of Windows development but...

Here are a couple of good, recent articles by Rich Toscano, an independent real estate analyst, on the San Diego Real Estate market.

Part One: Evidence of a Bubble in San Diego Residential real Estate

Part Two: Evidence of a Bubble in San Diego Residential Real Estate

You can't argue the charts and stats, and it sure seems pretty unrealistic to think that the housing prices could keep rising at the rate it has the last couple of years. How much of a bubble and how much prices will either stabilize or go down is still pretty questionable.

Suze Orman believes that the widespread use of the no interest loan may cause whatever housing bubble exists to pop. Her premise is that in a couple of years, these interest only loans will switch to require paying off the principal and interest. At the same time, interest rates will have increased. Together, the monthly payment for such a loan will have gone up significantly (she had an example of a >75% increase in the monthly payment given a 2% increase in interest rates) which will cause a critical mass of people to foreclose.

I actually do expect some kind of correction to the market but I've expected one for years now. The only thing I hope is that whatever happens, there won't be too many people adversely affected by the outcome.

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