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January 5, 2009

4

San Diego Real Estate Appreciation Up 100%+

by Bob Schwartz

 

San Diego home appreciation of 2000 to 2005 (100%+) made all but a few cautious investors into something very much like a Madoff investors: If you thought about it, you realized something had to be wrong (how do San Diego home prices double, when San Diego household income is essentially static?) . . . but doubting didn't pay; the small band of doubters were the ones gloomily renting condos while all the fun was being had by more aggressive sorts.

 

 

One underestimated factor is the "fear of losing out"– the danger that someone else is getting rich flipping condos, while you do the boring responsible thing, and build up equity. Even  prudent investors were influenced by all the voices saying "buy and leverage".

 

 

What the TV talking heads said about the real estate market for 2007:

 

 

 [youtube]yoZV5jt9puc[/youtube]

 

 

Prudence is a virtue which needs to be nurtured, particularly in the face of speculative excess.

 

 

Bob Schwartz, San Diego real estate broker

 

 

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4 Comments
  1. Downtown San Diego hotels
    Jan 6 2009

    Just because people with funny money from stocks and people who got loans who could not afford them drove prices up doesn’t mean this will last. A home is still your best investment in my opinion.
    San Diego Vacations

  2. Los Angeles Lawyers
    Jan 6 2009

    If you could not afford to buy a house then you should not have. Plain and simple.
    Los Angeles Criminal Attorney

  3. San Diego Cosmetic Dentist
    Jan 6 2009

    Home prices do not double in price on average every ten years. There is no evidence to support such a statement. S&P case shriller home index which goes back to 1890 found that SFR prices went up at the rate of inflation over time. If they do double in any short period it’s called a asset bubble and values return to medium as the bubble implodes. OFHEO also shows long term prices run with inflation and return to normal price levels rather than continuing to rise. In order for RE to double every 10 years average income would also need to rise with it, which if you haven’t noticed doesn’t happen and when it does as during the 70’s yield on bonds jump into the teen’s and the FED pushes up interest rates causing home prices to decline.
    San Diego Smile Makeovers

  4. Hoodia Gordonii
    Jan 6 2009

    Buying a home is a long term deal. I bought 10 years ago, value has doubled (a couple of years ago I could say tripled), and in 5 years house will be paid off. No more mortgage! Try that with a rental! Yeah… commute sucks.
    >Hoodia Diets

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