Real estate market outlook

Real estate market opinions just like political opinions are highly debated and often is unclear who is correct. But, the passage of time always proves who was correct.

Bob Schwartz Times of London

Real estate is a sales industry, and as such it is very rare that any spokesperson or individual related to the industry, will ever champion an opinion of future trends that is not overly optimistic. Yet, it never ceases to amaze me that the majority of news outlets still seek out industry spokespersons to give their ‘opinion’ on current and future trends. Think about it, when is the last time you saw on a TV news program any real estate spokesperson say anything that was not positive about the market?

Here in Southern California and in San Diego in particular, back in 2005 and 2006 the media in general pooh-poohed anyone who suggested that the prior years of double digit annual real estate appreciation were about to end, let alone, collapse.

I recall, there was even one TV news commentator who suggested that if only the national media outlets did not report ‘negative’ real estate news, the market would be fine. As ridiculous as this sounds, I never saw in any of the local news outlets any one criticizing this commentator.

Also, it seems always around year end, real estate spokespersons would say how the new year looks like a great buying opportunity and how one could really get a real estate value when comparing the prices to the prior year. Well, they’ve only been right in one aspect of this forecast, a real estate buyer in San Diego could’ve gotten the better value and 2006 compared to 2005, but then again they would’ve gotten the better value in 2007 compared to 2006. I could go on here, up to today, where I believe the majority of San Diego homebuyers in 2011 got better value then San Diego homebuyers in 2010.

The sad part of this, is the fact that many first-time San Diego homebuyers who bought into the hype of what a great value they could get compared to the prior year have lost a significant amount of equity and in many cases, especially for the buyers in 2006 and 2007 and even 2008, may now be paying on a mortgage that is substantially higher than what the current value of their property is now worth.

This real estate collapse has been devastating for many San Diego property owners. I know hindsight is 20-20, but I also know the truth about any market is best described in the lyrics from one of Kenny Rogers songs where it goes like: “you have to know when to hold them and know when to fold them”.

For now, I’ll say the media shouldn’t be looking for the real estate market to pull the economy out of its doldrums. I believe it will be the economy, the improvement in jobs, (at some point) that will in turn put in place a real floor for real estate values to then build on.