Watch the live interview
Robert T. Boyer, Ph.D.
The "script" below contains the essential talking points prepared for the live interview, held January 15, 2008, on Fox 6's San Diego Living show with Chrissy Russo and Joe Bauer.
We are all aware the dour headlines and news reports tell us that the real estate market is going to continue to tank for another year or two – that 2008 will be another miserable year for the real estate market.
As a real estate financial planner for San Diego’s Finest Real Estate, I have to disagree. As a Ph.D., I’ve learned to do lots of research and synthesize lots of data and look at things just a little differently; here’s my read...
First, you can’t compare any local real estate market to the national real estate market directly. They’re not the same – there are very different dynamics. In fact, San Diego was at the leading edge of the price run-up, the downturn, and again now that we’re looking at recovery.
2008 isn’t going be an easy year, but it’s going to be a much better home buying year than anticipated.
When you put aside all the emotional baggage, you ultimately get to supply & demand. There are a lot more factors than we have time for, so I’ll just touch on the highlights.
On the supply side:
The builders have cut back drastically - new home construction, condo conversions, and building permits are all down to less than ½ of where they were in 2005
Just 3-months ago, we had the 2007 fires which claimed nearly 1400 homes
All this takes a bite out of supply.
We have plenty of demand – people who were previously priced out of the market. The key on the demand side then is housing affordability which breaks down to
Home prices have come down substantially
o By way of example - Homes in one condo complex in Carmel Valley, were over $500K; now the exact same unit is in the low $400s.
o We’ve seen this correction behavior all over the county.
o We’re at pre-bubble prices in most areas
Interest rates are still amazingly low. At San Diego’s Finest Real Estate, we can get people a jumbo loan, 7/1 ARM for just over 6% with no points – which is truly an awesome rate!
The kicker is rent. Because so many people have stayed out of the housing market, rents have increased by nearly 6% just last year.
With prices coming down and rents going up, there is a tipping point where it makes more sense for some people to own. We see this in the affordability index which has increased by 20% of what it was last year.
Our market has made its major correction. We are already starting to see positive activity. We think it is an ok time to buy. By way of contrast, in 2005, at San Diego’s Finest Real Estate we started advising clients to not buy in San Diego if they could avoid it. We believe now is the time to buy.
And of course some of the best deals are going to be the foreclosures – which are historically available at 20% below market because the banks want these properties off their books.
The challenge with foreclosures is finding them, most are not listed like regular resales.
So, what we are doing is offering bus tours of these foreclosures in January and February, called our American Dream Tours, which people can sign-up for on our website at SanDiegosFinestRealEstate.com (Promotion Code: blog)
To summarize my expectations for 2008
It is not going to be an easy year. We still have to get beyond the fear mongering. We’re going to see:
o more foreclosures
o more aggressive prices from sellers
o but there are going to be some great deals
I think overall sales will be up. And if that is the case, it will demonstrate that the market has stabilized.
For our clients planning to stay awhile, we are now giving you the green light to buy.
The live interview may be found at Where is the Housing Market in 2008? Robert T. Boyer, Ph.D. interviewed by Chrissy Russo of Fox 6 for San Diego Live