Going Back to Cali

Landing late and delayed in San Diego last night, after a day of planes, trains and automobiles, a trip to In-N-Out was in order as food never quite made it on the day’s agenda and due to the late hour options were limited.

Upon entry to any of our great U.S. cities, the K-shaped economy with all its contradictions and conundrums will immediately present itself to those who are observant. That is indeed what we saw - the long lines at 11pm in the drive-thru, the homeless, crippled man with his sign working those who waited while valiant, red letters on a stark, white background boldly advertised wages of $22-$26 per hour. I now have a backup to my Buc-ee’s backup plan if things get too bad out there. Joking - sort of - but how much longer will there be enough folks in that line to support wages that seem “decent?” It’s all relative as they say as even with those high wages San Diego is unbelievably expensive. Per the American Community Survey, the median household income in San Diego city is $104,321 while the median price for homes sold in January was $949,000 per Redfin. Make that math work! Using Bankrate’s mortgage calculator a household making $105K with a 20% downpayment and very little debt could qualify for a home priced at $408K.

Although there is much to say and discuss - including the shocking (not to you) WSJ piece about the riskiness inherent to a FHA program that has gone off the rails - time is of the essence as the sun has finally risen on the West Coast and there is much to see.

Long-time readers know that I have been pounding the table about this FHA delinquency since the inception of this Substack. It seems as if others now agree it’s time to discuss it. In an upcoming post I will do a deep dive addressing the article and what it means that awareness of our government subprime problem is around the corner. Vindication is bittersweet knowing the wreckage that is to come.

New and existing sales have been published for January, and they are telling in terms of consumer sentiment (abysmal). Listings for sale however tell the story of a seller who cannot afford to wait any longer. And, finally, I will share detailed results for sales, price and days-on-market for the cities I track in California as preparation for the days ahead. San Diego - LA - San Fran and places in between. What do the numbers tell me about what I might see?

Let’s begin…