The U K's Twin Hpi Market-san Diego Is Viewed With Trepidation

[Realistbear]

Why is San Diego our twin market? In the Great Crash we went down at the same time and remained down for the same length of time. Their economy is almost an exact mirror of ours in terms of affordability, boom and bust dynamics and the constant tendency to tax businesses to the point that they begin leaving for more profittable climes.

IMO, when San Diego goes we go. They are down 6% from November 2005 and about where we are nationally.

http://www.signonsandiego.com/news/busines...1b20berson.html

'No question' about slowing, says official

By Emmet Pierce

UNION-TRIBUNE STAFF WRITER

July 20, 2006

Widely seen as a forerunner in national real estate trends, San Diego County is being viewed “with some trepidation” by lending giant Fannie Mae as its housing market cools.

“San Diego is one of the areas of the country that has had incredible . . . price gains,” Fannie Mae Chief Economist David Berson said yesterday during an economic and mortgage market report. “There is no question that the San Diego housing market has slowed.

“Inventories have surged in San Diego and the surrounding areas,” he continued. “Home price gains . . . are certainly down from their peak and perhaps will fall.”

San Diego is one region that is experiencing low affordability after a rapid and unsustainable rise in home prices, Berson said. Major metropolitan areas on both coasts are experiencing their lowest affordability levels “since the mid-1980s, when interest rates were considerably higher than they are now.”

While San Diego County's economy is basically sound, the strong presence of investors in the housing market makes it subject to price fluctuations, he added. “We view it with some trepidation. It is one of the areas we are concerned about.”

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We too have the same level of affordability despite low IR compared with the Great Crash. I am expecting a full on slide to begin at the end of this year regardless of IR going up or staying put. 80% + of the SD market went IO in the last two years. We had 200,000 IO buyers in the same time period. There are a lot of similarities.