According to this article we should be expecting to see an additional 40% decline in San Diego home prices. That's right 40%!!! Consider the following quote from the article below:
We really are a low-wage town, and our house prices are still too high. The median price needs to fall 40%. First, some facts.
Income disparity in San Diego County is growing.
About 20% of families at the bottom earn only 4% of our County's income, while the 20% of families at the top earn 25%.
Only 9% of county residents earn over $75,000 per year.
The poverty level is over 11%, ranging from 6% in Carlsbad to 15% in Vista. That means over 330,000 people in San Diego County live below the federal poverty level.
Adjusted for inflation, average income fell almost 4% last year.
This income disparity explains why the housing market is being kept afloat by the middle and higher tier of San Diego income earners.
[75%] of our wage earners make less than $ 45,000 per year. The median household income is close to $ 60,000, but it is skewed by the higher wage earners. [Added 5/14/08: One sentence refers to wage earners, the other to household income.]
Now, this is where my forecast is basic economics, but will shock many people. A household can get a mortgage for 3.5x its income. San Diego County median household income is $60,000, and 3.5x that would be $ 210,000. Now, let's assume that the buyer puts down 10% ( 210/,.9), then the median house price needs to come down from its current $ 395,000 to $ 233,000, a 40% drop.
My Thoughts
I absolutely believe that the author's prediction will come true, as I think we're still no where near the bottom of The Great Housing Crisis. That being said, I think many other markets in Southern California and around the country will share the same fate. The bottom line is this, if you're currently considering purchasing real estate, think long and hard before you make that move.
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