Of course home prices are up; there is a significant drop in the amount of homes for sale. A lot of properties are being held off the market, causing a mini bubble for those who are overbidding $20k to get an $8k rebate. The foreclosure moratorium contributed as well, as it's dragging the bottom-out of prices. Then again, the banks will probably just trickle out properties for the next few years, seeing how well it's working for them now.

When you can borrow money at 0% where is the urgency for an ROI?

Response to post #1: Add in the one-time subsidy and the artificially low mortgage rates, gift of the Federal Reserve. No one should be surprised at the slower fall of home prices. Like the stock, bond, and commodities markets, this is almost wholly liquidity-driven. Best, Don Bauder

Response to post #2: Good point. Mortgage buyers aren't borrowing at zero, of course, but the big institutions are. Best, Don Bauder

San Diego homebuyers and homeowners lose.

Here’s why.

What concerns me is how much distress is stacking up out there that has not entered the foreclosure system at all.

The looming foreclosure or shadow inventory continues to grow…creating an illusion of value.

To analyze the strength of San Diego's real estate market a couple of things have to occur simultaneously. First the head of the National Association of Realtors admits; “shortage might be somewhat artificial, since many lenders are holding off marketing foreclosures in hopes that asking prices will rise.This is a form of price fixing by the banks and needs to be addressed immediately.

In a free market economy the real value of San Diego’s real estate cannot be determined until all the banks foreclosures are released for sale and foreclosures level off.

There are lots of qualified buyers just waiting to become homeowners in San Diego County…until the pending foreclosures are released for sale, San Diego’s homeowners and homebuyers lose.

1. comments are correct.

Response to post #5: Meanwhile, foreclosures artificially inflate home sales statistics. A foreclosed home is auctioned and bought by a speculator, who flips it. This makes it look like there more sales activity than there actually is. Best, Don Bauder

So, putting it all together, it looks like current government policies aleviate some pain in the short term, but makes the overall market worse for longer to the benefit of banks and the detriment of buyers and sellers...

Have I got it right?

We are behind the 8-ball for a HUGE second wave of forclosures. The reason is very simple-no private sector, middle class jobs are being created, and it is going to be that way for at least another year IMO-if not longer. This is not called the "great recession" for nothing.

Lack of jobs, combined with people who are not in foreclosure yet-but are hanging on by a thread, and who will eventually go into foreclosures if things do not improve-they aree the next wave to come in.

Do not forget that any home bought between 2000 and 2008 is now underwater. Some people are not trying to sell, but are just hoping and praying that the economy gets better and home prices rise-again, that won't be happening anytime soon.

I wish Obama would forget about healthcare, bring home the army from overseas, forget about meeting with China and other nations, and JUST work on the economy. We need to get the private sector rolling, we need to dig out of this mess.

Response to post #7: That, in essence, is what two of the posters say. Best, Don Bauder

Response to post #8: Economists say the recession is over, but unemployment is a lagging indicator, they emphasize. It will continue around 10% through 2010, economists concede. Consumption is more than 70% of the economy. With employment prospects this dim, do you really think the recession is over? Residential real estate has another drop coming, commercial real estate is in the tank, consumption is exceedingly weak, balance sheets at every level (consumer, governmental, financial) are in tatters, the manufacturing base is recovering a bit, but is a small part of the economy now. And the recession is over? Best, Don Bauder

We had GDP growth of 2.8%, which to me is shocking, all things considered. Does it matter if there was growth at such a low rate-with so many out of work and the banking system broken and more and more banks folding, and gov budgets upside down???

San Diego has a $1.7 Bilion (minimum, may be much larger)unfunded pension/health liability-there is just now way that can ever be reconciled. The San Diego budget deficit is $180 million-nearly 25% of the general fund-where is that going to come from??? I can't wait for JF and his side kick JW to come on here and make their usual bogus claims about fixing the impossible-like raise taxes. I wonder if San Deigo started charging for trash collection to residential customers (a public union employee favortie) if they could charge each home $10K per year to pay for that deficit??? Still wouldn't wipe out the shortfall.

Response to post #11: The City is facing a deficit of $200 million, at least. Best, Don Bauder

The City is facing a deficit of $200 million, at least. Best, Don Bauder

I read $180, but I think $200 is within the ball park.

The thing is, our general tax revenues are WAY down. Less than $900 million from what I have been reading, when we used to have revenue of over $1 billion. That is very hard to overcome on it;s own, but when you add in the pension hanky pankly going back to 1996 and you have a death spiral. There is absolutely no way San Diego is getting out of this without filing BK. it is now a matter of if we will-just a matter of when we will.

The good news-every other major city in CA (Oakland, SF, LA, Sacramento) is going through the exact same problems, and wil most likely have to file BK too.

Here is the latest pension doom and gloom from LA, and it makes our problems look like a picnic;

L.A. faces $1-billion deficit by 2013; budget chief calls for pension reforms

November 25, 2009

Los Angeles could be facing a $1-billion deficit by the time Mayor Antonio Villaraigosa wraps up his second term in 2013, a dire forecast driven primarily by escalating employee pension costs and stagnant tax revenues, the city’s top budget analyst said today.

http://latimesblogs.latimes.com/lanow/2009/11/la-faces-1-billion-deficit-by-2013-budget-chief-calls-for-pension-reforms.html

Response to post #13: While pension assets may improve in the current liquidity-driven recovery in stocks, bonds, and commodities, the liabilities of these funds are burgeoning. I got the $200 million deficit figure from Andrea Tevlin, the independent budget analyst. Best, Don Bauder

We are behind the 8-ball for a HUGE second wave of forclosures.

By SurfPuppy619 7:24 p.m.,

This article just came out this morning, and fully supports my contention that were are a LONG way from getting out of this economic downturn and indeed will have many more bank owned/foreclosed homes coming onto the market in the next 1-2, maybe even 3 years.

It is a double whammy-no jobs, preventing appreaciation due to lack of demand (demand enabled by jobs) and the lack of demand keeping prices from appreciating, below what many people currenlty owe on their home (underwater);

"Few mortgages have been permanently modified"

"Lenders have temporarily restructured hundreds of thousands of loans, but long-term changes have proved elusive, raising the specter of a new wave of foreclosures."

http://www.latimes.com/business/la-fi-mortgage26-2009nov26,0,4853098.story

Well, if Barney Frank would pass a law and make them allow home-loans for people under the age of seven, as he made them make loans for people who should never have gotten loans, then maybe we'll loan our way out of this mess.

Response to post #15: As the Times points out, there are still risks aplenty out there. The Federal Reserve wants to have it both ways. It continues to assert that the economy is recovering, at the same time that it says it must keep interest rates near zero because the economy is barely moving. Those zero interest rates keep the Wall Street gamblers smiling. And the Fed is in business to bolster Wall Street, not Main Street. Best, Don Bauder

Response to post #16: You are correct: the Congress is partly responsible for this mess. It encouraged and facilitated lending to those who could not pay off their mortgages. Best, Don Bauder

It is tough to see the economy really recovering anytime soon. Between an irresponsible, or oblivious government spending money it does not have for non-wealth creating purposes, the expectation of higher taxes and demonizing success by the political class, and a residential and commercial real estate market that has far too much debt relative to equity, you have to wonder about a positive economic future.

Real estate prices ultimately have to have a relationship to the income of those who purchase it. In the case of residential properties it is the salary of those who purchase it. In the case of commercial real estate, including rental homes/apartments, it is the income the property generates relative to the cost to purchase it. In neither case, is the current economic situation likely to improve the market. On top of all this, you need to add the number of homes, about 25%, where the owners owe more than the current value of the property to realize that an actual real estate improvement will take a fair amount of time.

As far as having a successful government loan modification program, I will take the lottery odds, which is another government enterprise. What is happening to many of these homeowners is sad, as our homes are usually our biggest investment and where we live and have our family memories. Unfortunately, the government is incapable of dealing with such a complex problem where you almost need a custom solution for each situation.

"You are correct: the Congress is partly responsible for this mess. It encouraged and facilitated lending to those who could not pay off their mortgages.+

Dr. Thomas Sowell's recent book "The Housing Boom and Bust" provides an excellent view into the role government played in this debacle. He also discusses how data was selectively used from studies to promote a political agenda. The statement "Statistics do not lie, but you can lie with statistics" is very applicable to what the political class did to promote criminal lending.

Response to post #19: Residential real estate may well go back in the tank again, as foreclosures and defaults mount. Commercial real estate is definitely sinking for lack of funding. I worry about state and local governments, too. Big trouble. Best, Don Bauder

Response to post #20: My suspicion is that Sowell twisted some statistics himself to make his case, but it is true: government is partly to blame for the mortgage mess. Best, Don Bauder

"The City is facing a deficit of $200 million, at least."

I do not understand why the public sector pensions cannot be modified just like private pensions. If the money is not available for the 3% sweetheart deal, then why can the pensions not revert to the 2% per year that existed before the corrupt pension boards made the change. Or at least, do a pro-rated 2%/3% for the years each was in effect.

I am fortunate to work for one of the few private sector employers that provides a pension. However, to provide a point of reference, my retirement at 50/28 years my pension is about 25% of my salary at retirement; at 52/30 years my pension is about 33%; it never exceeds 50% of my salary and it is not indexed for inflation. The company does match my 401k contribution at 80% up to 6%, or 4.8%. However, the 401k contributions are made by me and are really a salary reduction.

It is disturbing to hear that some public employees complain about their "low" salaries but do not include the value of all the benefits paid by the taxpayer. These benefits can sometimes almost double their total compensation. You also see the spiking of pensions by including overtime, vacation time and even car allowances. These actions are at best unethical and should really be criminally prosecuted.

Thomas Sowell referred to the Boston Fed study that was used to create the perception of unfair lending to minorities. There were some methodology problems with the study that I do not remember, but the study included the percentage of loans made to Asians, which was higher than whites. Since the fact that more Asians were given loans than whites does not fit into the discrimination theme, this data was not included by the politicians trying to prove systemic "discrimination" against minorities--i.e. blacks and hispanics.

The other point that Dr. Sowell made is that the politicians focused on the loan rejection rates and not on the loan approval rates. Since the majority of all ethnic groups were approved for loans, by focusing on the rejection rate the disparity between the groups were made to appear larger than actual. The example given in the book for this sleight of hand is that if group A is approved 99% and group B is approved 98%, you can say that group B was rejected twice as much (2%) as group A (1%). While this is statistically true, it is also misleading.

I hope everyone had a pleasant Thanksgiving. Even with all the challenges we face, this is still the best country for the average citizen and we should all be grateful for living here.

I do not understand why the public sector pensions cannot be modified just like private pensions.

John, state law prohibits public employers from reducing an individual's vested pension without the consent of that individual.

As a point of reference, the safety pension in SD was on a sliding scale prior to 1996. It started at 2.5% at 50 and added a tenth of a percent to 2.9999% at 55. The average safety employee retires at 52+, so we're really talking the difference between 2.7% and 3%, or a 10% (or so) increase. Somehow that broke the system? I don't think so.

Additionally, the 3% at 50 was not the result of a contract, but rather the result of a lawsuit. In other words, it wasn't a "sweetheart deal" but rather court ordered.

The average safety employee retires at 52+, so we're really talking the difference between 2.7% and 3%, or a 10% (or so) increase. Somehow that broke the system? I don't think so.

Wow, another trough feeder lie-why I am not surprised????

You seemed to somehow, don't ask me how, left out the fact that the retirement age was dropped by 5 years, or a drop of close to 20% of years worked before you can retire. Now, try adding on that 20% to the 10% RETROACTIVE (unworked for, un paid for)pension increase and the total is close to 30%-and YES, that can break the system.

In 1994 San Diego paid 6% of it's general fund revenue on pension costs-today it is over 20%, and still unerfunded. If the fully funded amount were contributed (and under Corbett it is supposed to be fully funded) it would be clsoer to 25% of the general fund, or an increas of 400% in 15 years-but hey it won't break the system, will it JF!

Response to post #23: What really rankles is that public sector pay, on a job-by-job basis, is higher than private sector pay. (A public sector plumber makes more than a private sector plumber, e.g.) There is no comparison with pensions. In the public sector, people retire at very young ages (say, 50-55) with hyper-generous pensions. Best, Don Bauder

Response to post #24: I would not be surprised if statistics were twisted in studies that showed minorities were discriminated against. I simply made the point that one should make sure Sowell wasn't also twisting statistics. Best, Don Bauder

Response to post #25: Good thought. Best, Don Bauder

Response to post #26: But if the government entity will go broke making the payment, can't the law be changed? That's the key question. Best, Don Bauder

Response to post #27: I thought JF's remarks would awaken you, SP. The public sector pension situation is a colossal mess. Something HAS to be done. Best, Don Bauder

Calling public pensions sweetheart deals is being charitable. Given that virtually everyone involved--the politicians, unions and bureaucrats--have a potential conflict of interest in their own retirements, what has happened is apparently not illegal, but OJ was legally "not guilty." The DROP program is indefensible and is equivalent to looting the taxpayer. The politicians have an additional conflict of interest in that having union support usually improves their chances of staying in office.

I grant you that the unions' power comes from their political contributions that convinces a majority of voters to support candidates that will not make difficult fiscal decisions. Ultimately, it is the voter's fault for voting for these knaves and their supporters. I look at who paid for political mailings that I receive and they are more likely to get me to vote against their proposal than for it. I still know very little and I am oblivious to most of what goes on.

About 15-20 years ago Contra Costa County (SF Bay Area), which is almost as bankrupt as the City of San Diego, did a "comparable worth" study that determined that about half of the positions were "underpaid" and about half of them were "overpaid." The "underpaid" positions were typically filled by females with non-technical college degrees; the "overpaid" positions were typically filled by males with high-school degrees and required physical work. In typical government fashion, the compensation for the "underpaid" positions was increased to the "comparable worth" level, but the compensation for the "overpaid" positions was not decreased because the county needed to pay competitive market salaries to retain the employees. I would say that the market-based salaries would have been the right decision for all the employees.

I believe that both policemen and firemen should be paid well to attract high-quality individuals. I also do not believe that you necessarily need a college degree to perform these jobs well. My biggest problem is the lack of transparency and public disclosure regarding the total cost of public sector employee compensation. If the pension and medical plans costs were clearly published and fully funded using conservative financial returns, like 5-6% annual returns, then I would not have much of a problem. The sad fact is that we have a ponzi-like scheme that is not sustainable in the long run and some type of insolvency and renegotiation will probably occur. The state, counties and cities are all rapidly heading towards bankruptcy and taxpayers who on average make significantly less money cannot pay much more.

Response to post #33: The business establishment has done little to control the excessive pay and pensions of city workers. Why? Because those workers are instrumental in keeping the development industry on the welfare rolls. Examples: The City's Development Services Department is completely run by and for developers. (Remember Sunroad?) Second, when Mayor Golding wanted phony numbers to justify the massive ballpark subsidy, City employees juggled the numbers to make it look like the project would be revenue-neutral. In providing such disingenuous services, these bureaucrats believe they deserve juicy compensation. Best, Don Bauder

A probing and independent local media is very important to bring sunshine to the political process and to all those who are seeking special favors. The more money/power a government or agency has, the more people will try to use it for their gain--it is just human nature. Sunshine laws and transparency can be very helpful. The bureaucrats are like cockroaches, when the light is turned they scurry and hide.

Development is beneficial as long as no one is being subsidized and legitimate concerns are addressed. You do have NIMBY and people who will just say no to everything. Developing an accurate measure of the costs and benefits of a particular development is not easy and, depending on the assumptions used and perspectives, they can vary significantly. I am not much of a proponent of subsidizing sports stadiums, other than assisting with government rules and expediting the approval process. I remember being at Seaport Village, by chance, when it was dedicated by Mayor Wilson around 1980. Although I am sure that there have been a lot of special favors granted for developing south of Broadway, the area today is vibrant and enjoyable. I remember when downtown was ghost town after 6 p.m. and you would not walk past E street--even in the daytime. I also remember a high school teacher saying that Mission Valley was going to be the new downtown and that downtown was dead. Sunroad is another matter and it is an example of incompetence, corruption and greed.

As far a Thomas Sowell's book, I do not remember any statistics being twisted. It is true that he does not spend much time with Wall Street corruption and the unethical lending industry, but the point he makes very well is that government officials are the root cause of this fiasco. Without their complete ignorance of economics and the allocation signals that prices send, this would not have occurred. They created the environment where greed and speculation could grow unfettered. Fannie and Freddie are the center of this disaster and are the worst examples of state capitalism: private and ill-gotten gains for the politically well-connected and the taxpayer assumes all the risk. FHA may be going down the same path. Other than the WSJ Editorial Page and Dick Morris Book (Fleeced?) there was very little information on all these time bombs.

I always enjoy your responses. Even if I do not agree with them, I learn and understand things better.

Response to post #35: Development is beneficial as long as no one is being subsidized. No argument there -- but try to find developments that aren't subsidized in one way or another. Incompetent and corrupt government certainly contributed to the current crisis, but the primary blame belongs with Wall Street, which owns government. Fannie and Freddie were bad, but weren't the biggest scandals. The whole derivatives fiasco, cooked up by Wall Street and other world financial centers (and winked at by governments) was the major problem. Greed was a greater contributor to this crisis than was bureaucratic incompetence.Best, Don Bauder

Johnsd, Pete Wilson is an important figure in the current state of the city. Apparently, he was monkeying with property tax rates in the city when he was surprised by Prop 13. Today, that results in the city getting back a lower percentage of property taxes from the state than other cities. Then Susan Golding reduced business taxes to 25% of what they had been.

It's easy for pundits to criticize city worker retirement as a function of percentage of the general fund. It doesn't seem to be so easy for them to admit that the percentage would still have gone up due to the reduced revenues created by Wilson's and Golding's policies.

You seemed to somehow, don't ask me how, left out the fact that the retirement age was dropped by 5 years

Um, did you read the part where I clearly wrote that the system pre-1996 ranged from 2.5% at 50 to 2.9999% at 55. You scream all you want about how the retirement age dropped. It did not.

I note that you somehow, I don't know how, left out the fact that before Corbett, retirements were uncapped. I know many firefighters who retired at 110%-130% of final salary. Now it's capped at 90%. Regardless of your position on that percentage, I'm guessing that balances out the retirement factor increase just a little bit...

Response to post #37: City workers in the current environment will have to get used to all kinds of comparisons that they consider invidious. The bottom line is that San Diego and other cities simply cannot afford to carry these costs at current levels. Best, Don Bauder

Response to post #38: The question is how many retired at 110%-130% of final salary? Best, Don bauder