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San Diego Real Estate Market In 2008 – Just When You Thought The Worst Was Over!

It seems that the consensus of opinion on the San Diego real estate market is a continued decline into spring or summer, at which point the market will stabilize and start to improve.

Even though I’d like to say that I agree with the above opinion, I cannot. With two more waves of mortgage adjustments due to hit in 2008, tighter mortgage qualifying rules in effect, and the high unsold inventory of homes, I feel the above consensus opinion of stabilization or recovery is way too optimistic.

Please keep in mind that I’m just a local real estate broker and not an economist. My opinion is just that; an opinion from an opinionated guy. I would suggest my readers not use my opinion to base any financial decisions on. But rather consider it a call to action for both potential buyers and sellers to check with their trusted advisors and thereby form their own opinions.

With that said, I think the new year will continue to produce declines in San Diego (*See
http://www.brokerforyou.com for current San Diego MLS listings) residential real estate. I see both the magnitude of the decline, and the number of properties affected, increasing substantially over 2007. The only bright spot to my outlook would be the fact that 2009 may very well mark the real bottom for the San Diego real estate market.

For those who disagree with my comments, there are a number of economists who are predicting a similar scenario. At Wells Fargo, economist Scott Anderson has said that Southern California home prices will decline over 10% in 2008, and additional half a percent in 2009, where he too believes the market will bottom. Another Wells Fargo economist has said that he expects to see a housing decline to accelerate and that we are “entering a more dangerous phase.” The chief economist for the Los Angeles economic development Corp. also believes that it will be early or mid-2009 before the market starts any turnaround. He said, that even when the market turns, what you’re going to see is slow, slow growth. An economist at Beacon Economist in Los Angeles feels that real estate prices in San Diego and Southern California will continue to decline through 2009 and will not show significant improvement until 2012.

So, as is customary at this time of year in a declining real estate market, there will be many who say they’re beginning to see signs of life, business seems to be picking up slightly, or buyers have started nibbling at the many fantastic values in today’s market. Just to be politically correct here, I would say remarks such as these should be taken with a grain of salt, and considered as basically just wishful thinking.

Lastly, as far as all the talk of a possible national recession goes, I believe it will be a toss-up in 2008. On the other hand, as far as San Diego is concerned, I believe a “housing-bust induced” regional recession is all but a certainty. Keep in mind nobody can accurately predict the economy with any degree of success. I honestly hope that my above opinions are proven wrong. But, at this time I would not bet against it.

Why You Should Buy Real Estate in 2009

The real estate business has been on a downturn for the past few years. No one wanted to buy property because they had no money and no one was willing to give credit. Real estate agents and owners had to work hard to make a decent sale. But this year will see a marked improvement. In spite of the economic crisis, 2009 is most likely to be a great year to buy real estate. The government is doing its best to stimulate the economy, so interest rates and housing prices are low. It is likely that by mid-year, it will be the best time to buy real estate.

When you wish to buy real estate now, there are two important criteria to be fulfilled. First, you should have a steady job that you kept for at least a year or two before taking the plunge. Also, you need to have your finances and credit issues in place. It is time to start indulging in healthy buying and borrowing habits if you want to buy real estate this year and make a viable investment.

This coming year will provide you with millions of opportunities and options in buying real estate. It will, in fact, bring you back to reality and force you to adjust your lifestyle. The economic crisis might even end up being a positive element in your life in this regard. So why is this a great year to buy real estate?

Here is why:

Buyer’s market – There is an increase in standards of lending loans and down payment requisites, so there will be fewer people that will qualify to take a loan. The number of houses on the market is lesser, as homes in foreclosure in some areas are increasing, along with the marketing time for listings. Higher renters and rent rates – People do not have enough money to buy their own homes, so most people will switch to living in rented houses. Home owners, who had to face bankruptcy or foreclosure due to their inability to make payments on time, will not be able to afford their own homes without sub-prime loans. Many people who fall below the stated income level or are self-employed also will not be able to buy homes. As a result, rent rates everywhere will go up, which will support and increase the value of property. It is a good idea to take advantage of this situation and buy real estate now, because it will most probably last for at least the next 5 to 7 years. Housing stabilization – Even though the strength of real estate markets everywhere varies a lot, many markets are getting steadier and more stable. Sales are increasing slowly and inventory is decreasing, as the prices of daily goods falls. Value of property goes up with low inventories and higher rent rates. A housing bottom such as this is significant, as it will improve the market as it brings prices down further, making it easier for you to buy real estate. The entire economy will benefit from this cycle.

2009 Predictions for the San Diego Real Estate Market

When one loses 30% or more home equity in one year, don’t buy the old cop-out line of “in the long run the housing prices will return to their old highs.” For San Diego residential real estate, this is the worst market since the great depression. Unlike a ‘normal’ correction or pull-back, this once in a lifetime evaporation of real estate values will not soon be forgotten. Partially because of the trauma inflicted on the public’s perception of ever-escalating real estate values, will the San Diego real estate market ’snap back’ anytime soon.

First the decline has to bottom and then it will most probably take a few years of base building prior to any return of meaningful appreciation.
Naturally, at this New Year period, the glowing forecasts for a real estate recovery have already started. Will these pundits be right this time around? You’ll have to draw your own conclusions. Why not see how some of the prior forecasts really paned out:

On July 14, 2008 Barron’s magazine said: “Home prices are about to bottom.” Well, since than, the decline has only accelerated. In 2005 a local radio/TV commentator said: “If the media would just shut up, housing prices wouldn’t fall.”

”People think the market is down and the market will still go down. That’s not the truth. The market is down, but it’s not going down anymore,” said John Tuccillo, former chief economist for the National Association of Realtors. “I think it’s because consumers focus on national news and not enough on local news.”

Bob Schwartz, San Diego, Certified Residential Specialist on November 17, 2005 in a published article said: “Yes, we have started on the down leg of the typical ‘Bell Curve’ and the probability of surpassing our approximate 20 percent drop in San Diego home values experienced from 1990 through 1996, seems assured. Plus, as real estate trends seem to start in the West and then move east, any U.S. real estate market that experienced huge price appreciation the past five years, will experience the same depreciation in real estate residential values”.

Often when real estate values go south, it’s typical to hear the industry blame the media for making the situation seem worse than the reality. The truth is, for our current home equity bust, the reality, in many cases, is far worse than the local reporting.

It seems that finally the preponderance of evidence has caused the die-hard San Diego real estate bulls to admit the folly of their over optimism. Now a number of these same misguided forecasters are forecasting a 2009 turnaround. Perhaps that would have a faint possibility if this was a ‘regular’ correction. However, this huge erosion of San Diego home equity was is far from typical.

Realistically, I feel the best 2009 can bring to the San Diego housing market is some easing in the rate of depreciation with a possible beginning of a bottoming process starting late in the year or early 2010.
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Mexico Real Estate: is it Going to be a Buyer’s Market in 2009?

â??Is it a buyers market in Mexico Real Estate  for the semester of 2009?â?Â  This projection is being questioned throughout many channels of communication.  But as people review closer the market conditions and interview brokers throughout the Mexico real estate industry, the interpretation of the market projections becomes interesting.  The sellers who are placing discounts in their pricing and urgencies on their advertising are made up of mainly Mexican Foreigners placing their second homes on the market.  The country of Mexico, to the surprise of many people, is still an EMERGING COUNTRY versus the  DEVELOPED MARKETS such as Japan and USA whose real estate markets have been exposed negatively by the recent recession.  This lack of development is actually helping the real estate market of Mexico shield itself from the affects of the mortgage crisis.  Finally, demand in regions of the Mexico real estate markets are being fed mainly by the internal market growth of the middle class and on a lesser extent but still important, demand from international foreign buyers.  As Rita Sheese broker/owner of Cozumel Capital and President of the AMPI organization in Cozumel pointed out  â??We are not experiencing anything at all of emergency real estate sales because we hardly have any properties here on the island of Cozumel that have been mortgagedâ?Â Â Â Â 

Currently in Mexico, in the resort cities such as Cancun, Puerto Vallarta, La Paz, it is the Mexican foreign property owner who is most likely to be the motivated seller while a much less quantity of Mexican sellers are feeling the pressure to liquidate.  Linda Neil,  who has over 30 years of experience working in the Baja California real estate market stated  â??Although prices have not declined significantly in the major areas of interest for foreigners, they remain far lower than comparable properties in the US and Canada.  And in some markets, a hurting seller can offer a deal if the buyer can move quickly.â?

Over the past five years, there has been a great increase in the quantity of Americans, Canadians, and Europeans who have purchased properties in Mexico.  With an economy that has become quite stable in the past decade and with much lower costs for oceanfront or waterfront properties in comparison to their northern neighbors, this Latin American country has become a leading second home destination.  Although the quantity of foreign property owners that exist in Mexico is extremely high, estimated to be above one million for Americans alone, it is still quite a smaller percentage when compared to national home owners.  â??This is a buyers market, but you do need to shop around a little.  Some Mexican foreigners are really in the need for cash, and they WILL adjust their pricesâ? was the advice from Hector Moreno a broker whose been advising investors in the Tulum real estate market over the past 7 years.    

Unlike the United States and Canada of the North American region, Mexico is still an emerging country In developed countries including Japan and the majority of the European Union members amongst others, the financial markets are in a further advanced stage of maturity.  Financing and access to mortgages is more sophisticated and more accessible to the private businesses and consumers.  On the contrast, in Mexico and other emerging countries, financing is quite new.  The more restrictive access to leveraging has kept demand of Mexico properties at a lesser pressure over the past decade, which therefore has maintained the prices comparatively lower than their northern neighbors.  The steep price adjustment in the real estate market that occurred in several regions of the United States and cities of Canada is not expected to repeat to the same scale in Mexico. 

A large demand in the Mexico real estate market and housing is growing from the immense Mexican middle and lower income population.  In several resort cities throughout the coast lines and in picturesque villages, another boom is closely being monitored for middle valued and luxurious properties by Mexican foreigners.  The engine of the Mexico real estate demand though is focuses around the demand of middle and lower income housing that has been building up since the 1990â??s.   Only recently in the past several years, have major regulations and public programs been slowly introduced to assist these families to have access to financing for their home acquisitions.  The great advantage that the Mexican government has in respect with its northern neighbor is that they have been able to witness some of the painful errors and study the flaws of the United States mortgage systems and is in a position to implement corrective regulatory measures in creating an even healthier program for a sustained long term growth in these industries.  In the same concept, financing for Mexican foreigners has also only recently been introduced to the markets.  Foreigners wishing to buy their winter homes would either pay cash for their properties or leverage off of assets from their home countries.  In the past two years, large Mexican banking institutions have begun offering programs to the American, Canadian, and some European citizens assisting them in mortgaging the purchase of their Mexican homes using the same Mexican property.  As the programs are slowly being implemented to the market, it is projected that over the next 10 years, it will increase substantially the options and possibilities for many Mexican foreigners to purchase and invest in retirement and second homes in Mexico.          

From the responses and feedback of several Mexico real estate experts interviewed, it appears as if Mexico WILL be a buyerâ??s market atmosphere for 2009.  Further conversation with the experts reveals that finding a great deal will require a bit of digging, and creating a great deal will require a bit of negotiating.  Definitely this year is much more favorable to the buyers than the years before where various Mexico Real Estate markets were witnessing appreciation between 20% – 30%.   For those buyers and shoppers who are in the financial position and have already decided to make their investment in a Mexico property but have yet to find the ideal home or oceanfront lot,  2009 is the perfect year to acquire real estate in Mexico.

What Will the Next Real Estate Cycle Look Like?

Many economists consider real estate cycles to be a mirror reflection of the economy. As one of the three major factors of production (land, labor and capital) demand for real estate is a necessary and important part of economic growth. As the population of the world grows, these additional people need a place to work, sleep, eat, shop and be entertained, which constantly increases the amount of space needed. Many consider real estate a cyclical industry because its demand side is affected by economic cycles and supply historically lags demand.

The price of real estate tends to move in an 18-to-20-year cycle. From one top to the next bottom, as from one bottom to the next top, about 9 or 10 years usually elapses. The Moon’s Nodes move backwards or retrograde in an average 18.6-year cycle around the Zodiac. Most real estate price tops have occurred with the North Node in Taurus and/or moving into late Aries.

The Nodes are points where the Moon’s orbital path intersects with the Sun’s path. The Moon’s Nodes influence mass psychology, which translates economically to ups and downs in interest rates, employment and productivity. A real estate calculation called the Brennan Cycle moves in tandem with the Moon’s Nodes. Where real estate is concerned, the 20-year cycle of Jupiter-Saturn conjunctions is also of interest. Jupiter, the influence of optimism, energizes speculative buying, and cautionary Saturn is associated with land.

From an astrological perspective the expectation is that real estate prices should rise when the North (Jupitarian) Node moves through Cancer, the Sign most associated with Home. The North Node arrived in Cancer in April 2000 and moved into Gemini October 2001, when a bubble in stock prices crashed. The Fed lowered interest rates to stimulate the stock market, which in turn brought a dramatic rise in home buying, creating what is seen now in retrospect as a speculative bubble in real estate.

This latest surge in RE prices peaked in the spring of 2005 when the North Node moved from early Taurus into late Aries. Prior to this latest speculative bubble in real estate prices, history shows tops occurred with the North Node in Taurus or Aries—unless distorted by other planetary cycles, especially those coinciding with wars or depressions.

Through the 1800s, RE price tops were made in 1819, 1837, 1857, 1873 (distorted by the great depression of the 1870s) and 1893. In 1819, the North Node was in Aries; in 1837 moving from Taurus into Gemini; 1857 moving through Aries into Pisces; 1873 and 1893 moving through Taurus into Gemini.

The next top occurred in 1918, 25 years after the top of 1893 with the North Node moving into early Sagittarius. The Federal Reserve System (Fed) was created by Congress in 1913, shifting control of the US monetary system to a group of bankers, and institutionalizing a debt-based money system. Henceforth, the bankers of the Fed sold dollars into circulation. In effect, the government borrows money from the Fed’s bankers and sticks the public and/or taxpayers with the bill at ever-compounding interest.

Another definitive RE cycle top was made on the cusp of the Great Depression 1929. At this time the North Node was again in Taurus and moving into Aries. Through the roughly 40 years of the Great Depression and the aftermath of World War II, real estate prices made no dramatic tops, as the Fed now controlled interest rates. And to curb an expected spike of inflation, the Roosevelt Administration imposed price controls during and after World War II. Construction of new homes boomed through the late 1940s and 1950s. The next definitive RE top in prices came roughly 4 cycles after 1893, or 80 years later in 1973.

Prior to the creation of the Fed in December 1913, interest rates (which drive real estate development and buying) were unregulated. The prime duty of the Fed is to control interest rates. Nevertheless RE prices returned to their correlation with the North Node when calculated over longer periods of time, as evidenced by the most recent top arriving in 2005 with the North Node moving from early Taurus into late Aries, roughly five Lunar Nodal cycles after 1893.

By March 2007, with the Node moving through Pisces, there were plenty of economic indications that RE prices were on a determined downswing. Some “sub-prime” lenders and borrowers were in trouble. The number of building permits issued nationally had plummeted. In suburban Las Vegas, the fastest growing area in the USA, 9,800 of roughly 22,000 homes on the market were empty and desperate home sellers were cutting prices by 45%.

Based on past history, we can expect the downtrend in housing to turn around when the North Node reaches the constellation opposite Cancer, where it usually is when prices rise. That constellation is Capricorn and the North Node is due to enter it in August 2009, 20 years after the last low in 1989.

But don’t rush headlong into the real estate market in 2009 without being aware of two major reasons the RE cycle may again be distorted and its downside extended.

1. Astrologically, Uranus and Pluto will be within orb of a square, with Pluto opposite the US natal cluster of Venus, Jupiter and Sun in Cancer. And Saturn will be moving through Virgo, coming conjunct the US Neptune, which is square the US Mars—a combination that has coincided with stock market crashes historically. Also, in 2009 Pluto and the North Node will conjoin in Capricorn. The combined effect of these astrological patterns bodes ill for the overall economy, of which the housing industry is a major part.

2. Because the recent housing price bubble was extended and taken to new record highs, its deflation may be extended. We may experience a crash of the dollar and a subsequent spike in inflation, causing the Fed to raise interest rates dramatically. Also waiting in the wings is the weather-related effects of global warming, expected to bring catastrophic storms, Hurricane Katrina being a hint.

If the dollar crashes or continues its slide down against other world currencies, foreign investment in US assets (a major stimulus to the most recent housing bubble) will be withdrawn, worsening the situation by exacerbating US debt—federal, corporate and personal. The world’s monetary system, now based on the dollar, is likely to go through a wrenching change, mainly because US total debt is approaching the point where it will be un-repayable, which in turn could lead to a change in the existing Fed-dominated, debt-based monetary system.

When Congress created the Fed in 1913 and institutionalized a debt-based money system, it meant that, instead of the federal government lending money into the system at no interest, bankers lend money into the system at ever-compounding interest. In turn, this creates a gradual but snowballing rise of inflation, as the money to pay the interest must be “found,” and the primary “finder of interest” is inflation, called “the hidden tax.” What $100 bought in 1913 now costs around $2,000.

By March 2007, when the downturn in RE prices became undeniable, the North Node was moving through the middle of Pisces. The North Node will enter Capricorn in August 2009, signaling the bottom of this down cycle, and move into Sagittarius in March 2011, signaling an expected rise in RE prices. But other factors in the overall economy—especially the debt-based US monetary system, snowballing inflation and the likelihood that the dollar will continue to slide or crash—can be expected to distort the RE cycle this time.

During the RE bubble that followed the stock market crash of 2000-2001, a lot of investment money went into real estate, and prices continued to rise after the North Node went into Gemini. As a consequence of the boom and the Fed’s holding interest rates down, the housing bubble was extended beyond the average cyclical top. As a consequence of that extension, the RE price bottoms may be extended beyond 2011.

The longer cycles of the outermost planets overwhelm shorter cyclical indicators to concur with well-defined economic turning points. And we are moving toward one that can be expected to bring the most difficult decade since the USA was founded in 1776: Pluto moving though Capricorn, a Uranus-Pluto square lasting from 2008 to 2019, forming a grand cross with the natal US Sun-Saturn square. In August 2009, Pluto will conjoin the North Node in Capricorn, with both opposite the USA’s natal Jupiter and Venus. This combination can be expected to distort the RE cycle, and more importantly, bring an atmosphere conducive to changing some basic economic assumptions. This difficult period could be a blessing in disguise.

Our present economy is based on medieval assumptions, and we have moved into a period when democracy is on the rise, so we are looking at a clash between two philosophical forces: “traditional” medieval beliefs (an unproductive ownership class dominant) and the modern move toward more and purer democracy. Currently most of the world’s wealth is owned by less than 1 percent of the world’s population.

We are approaching a time of transformations as huge as those experienced by Native Americans after the arrival of Columbus, and then during the years leading up to and through the American and French Revolutions, when Pluto was where it will be again during the second decade of the 21st Century.

Delhi Real Estate 2009

New Delhi, the capital city of India, has become one of the hotspot real estate destinations in India.  There is a great demand for both commercial and residential properties in Delhi real estate due to presence of multinational companies, corporate houses, media houses, IT, BPO, KPO and host of others.  The real growth drivers of real state in Delhi are NRIs and working population. They prefer to settle in Delhi due to the fact that it has state of art infrastructure, proximity to other cities like Noida, Gurgaon, Faridabad, Ghaziabad and other new developments that in turn increase the demand of commercial and residential properties overall.

The recent study estimates that Delhi is one of the investorâ??s choices for real estate investment in Asia. Thus, the large number of real estate companies is flocking to the city to construct both residential and commercial complexes. It is evident that Delhi real estate is growing at a phenomenal rate in India.

Delhi Real Estate Trend

Delhi real estate segment is undergoing a lot of transformation due to government initiatives like relaxation in foreign direct investment policies. With strong economic growth, revival of financial markets and investor friendly government policies are the major factors that boost demand in Delhi property market. The following are the new projects that are sprouting in Delhi property market:

65 km-long Delhi Metro Railâ??s project Common Wealth Games 2010

The factors like easy availability of home loans, rising income levels and global lifestyle that increase residential property demand in Delhi real estate. The real estate developers are luring the customers with different alternatives of housing such as flats, apartments, studio apartments, condominiums, villas and luxury homes as well depending on the different lifestyle of the buyers in Delhi property market.

In addition to this, Delhi is witnessing other infrastructural developments in the road and transport system with a six lane National Highway will be constructed to join New Delhi and other extension areas like Noida, Faridabad, Ghaziabad, and Gurgaon. This in turn will help the working population to commute out of Delhi for work and make Delhi as the preferred residential destination due to its modern outlook.

Delhi commercial segment is also witnessing a burgeoning growth due to the following factors:

Industrial development Organized retail IT/ITES segments Auto sector etc.

This has witnessed the upsurge in prices of commercial property in the city. DLF, Unitech, Omaxe, Parsvnath, Ansal etc. are the leading real estate developers in Delhi property market. Since Delhi is witnessing a rapid infrastructure developments, these players play a pivotal role in making Delhi as one of the most modern and cosmopolitan cities of the country overall.

Conclusion

New Delhi is one of the most sought real estate market in the country. And also, itâ??s adding different tags to its credentials like:

Most expensive city Costliest retail destination

The source of real growth drivers in Delhi property market is from IT/ITES sector, settlement of global diplomats and industrial and retail growth. And also, revival of global economy, fall in home loan interest rate and infrastructural developments are key factors in creating demand in Delhi real estate market- both commercial and residential space on a whole.