All around the country experts are pointing at San Diego as a disaster waiting to happen. The "bubble" is about to burst, they say, invoking images from a bad sci-fi movie. Except instead of a fierce new enemy for Godzilla, the bubble is going to suck up the life savings of San Diegans, primarily those who thought paying $800,000 for a fixer-upper in Chula Vista was a sweet deal.
Everyone knows San Diego real estate prices are a bloated, gas-filled phenomenon that can't possibly last. Only a simpleton incapable of ordering a Big Mac could possibly believe that a two-bedroom, cave-like condo on the third floor of a concrete tower in the hellhole that is University City is really a "good investment" at half a million dollars.
The lunacy has to stop sometime. A recent study found San Diego to be one of the most over-valued markets in the country, with houses selling for at least 50 percent more than a price that makes logical sense. If anything, that seems conservative, considering the 300-percent price increase in places like Oceanside and National City that will never be compared to Shangri-la.
This news should be especially troubling in the land of master-planned communities, where rows of houses are filled with lil' God-fearing families who thought it was swell to sign a mortgage for a house in Escondido that wouldn't fetch half the price in Fallbrook.
A recent study by the Public Policy Institute of California, a Bay Area nonprofit, found that 20 percent of recent California homebuyers were using more than half their income to pay their mortgage. Sixty-two percent of buyers in 2004 opted for interest-only loans, the modern equivalent of paying for a house with the Sears card.
Throw in the cable-TV bill, and the stats mean a lot of families are just scraping by, cutting back on essentials just so they can have a second family room and spend an hour commuting to Mira Mesa.
No matter how much San Diego's rabid band of civic leaders ignore the outside world, the city doesn't exist in some sort of protected cocoon, immune to the forces of the economy and human nature. Interest rates will continue to rise, thanks to the shrewd economic leadership of the Bush administration. When rates are high and housing prices in one place get ridiculously inflated-say, like now, when the median price in San Diego is $496,000-people will simply buy a home somewhere else.
To those who can afford it, it won't matter. They'll pay the price and turn to San Diego as a playground of golf, ponies and expensive hookers. Sure, there will have to be adequate housing for the gardeners and maids, but that's why God built apartments in Vista.
Heck, there is no law that says people have an inalienable right to own a place within spitting distance of the Pacific Beach pier. That's the breaks. It costs more to live in a cool place.
But there are all sorts of cool places to live, where you don't need to be a millionaire to own a house with a functioning bathroom. San Diego weather sure is sweet, but it looks crappy when you're sucking fumes on I-5. At a certain point, no matter what the economists say, rational, sane, middle-class Americans will simply say it's not worth it.
Already it's starting. People are cashing out, taking the money and going to some other part of the world, where they can live like kings and no one rides a skateboard for transportation. Studies show that housing values in San Diego rose in single digits this summer, the lowest increase in the last eight years.
Soon, it just won't make sense to buy in many parts of San Diego, no matter how tasty that job at Wal-Mart may sound. No one is going to want to buy a postage-stamp-size property in Peñasquitos for $800,000 when gas is $3 a gallon and interest rates are at 10 percent.
It's happening. The bubble will burst. But it won't be a loud pop so much as a gradual roll, a tremor moving across the landscape.
Imagine the horror when Joe and Martha go to sell their stylized Mediterranean condo in Poway only to find that no one is really that eager to pay $700,000 for the right to drive the nightmare that is I-15. So maybe Joe, desperate to take that new job in Spokane, where a house costs only $400,000, panics and sells for $600,000, eating the loss.
Next door to Joe and Martha, Ted and Sue are slitting their wrists over the bathtub, trying to figure out how they're going to make the mortgage payment now that Sue lost her job as a maid. A year ago they might have been able to sell the house for a hefty profit, but now that those rat bastards Joe and Martha sold out cheap, they'll have to come up with a hundred grand just for the right to escape their mortgage.
The domino effect from these transactions will spread across the communities of the Sea Vista Ridges and the Vista del Oro del Craps. It will spread like a virus, infecting every homeowner.
The only response will be to sell, sell now, sell right away and get what you can. Buy a llama farm in Ramona. Retire to a polygamy ranch in Utah. Get out while the getting out is good.
Write to MsBeak1@aol.com and editor@SD citybeat.com.