Chula Vista local housing front: Q & A’s

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by Jennifer Davies: San Diego Union Tribune

An opportune time in the housing market BY JENNIFER DAVIES, UNION-TRIBUNE

McMillin recently took the time to outline his views on the local housing front:

Question: What do expect to happen to the San Diego market in the next six months? The next year? How about beyond?

Answer: Inventory will continue to grow over the next 6 months as lenders release more of their properties onto the market. Prices will come down more in some areas. There still are significant barriers for new-home builders to re-enter the market and time to develop and build new homes is extremely long. So it will be a long while before existing homes on the market have new homes to compete with. Beyond one year, we will begin to recover simply due to our extremely desirable location.

Question: How are you preparing for these upcoming changes?

Answer: Our family has been in business for 50 years and we want to be in business in 50 more years. The time to differentiate your company and increase your market share is when everyone else is pulling back. So I am investing in new tools, increasing my marketing spend, and providing more for agents so that they are able to do a better job. We are positioning ourselves to be the market leader in the South County when the market rebounds.

Question: You seem more optimistic than others? Why is that?

Answer: I believe real estate will recover. We may be at the bottom for a while, but it will head back up. You can count on that. I don’t necessarily make plans based on the next 12 months but, rather, what lies in the next 3 to 5 years. I plan on being the market leader in 3 to 5 years so I am planning for that future. I believe in San Diego.

Question: How do you compare this downturn to the others San Diego has experienced? How is it different? What are the parallels?

Answer: In the 1980s, the crisis was high interest rates. We certainly do not have that problem today. In the 1990s, it was the crash of the savings and loan industry. This current recession is very similar because credit, like then, is extremely difficult to find, if not impossible. Without financing to buy a new house, people can’t move up. Without people moving, the market is stagnant.

The banking industry is either hot or cold. There is no middle ground. The loose credit we had in recent years wasn’t correct, but we have swung too far in the other direction. People with decent credit should be able to get a loan. The ’90s, however, did not have the same loss of jobs as we have had now. The job losses were not as long and deep as they were in the past couple of years. We can’t head out of this recession until we have more jobs. And that includes jobs in the home-building industry. And we need credit restrictions to ease up or we won’t have any of those.

Question: What would you tell a potential buyer about the market? How about a potential seller?

Answer: I would tell a buyer that real estate is cyclic and it will continue to be so. Yes, the market has been adjusting downward. But if you plan to buy any time in the next 3 to 5 years, now is the best time. Our current interest rates give you higher purchasing power. And your taxbase will set at a much lower level, which will save you money for many, many years.

I would tell a seller that if you need to move up or down, now is the time to do so. If you wait for more equity to accrue in your house, or to recover lost equity, you will be trading up or down to a more expensive house. Property taxes will be higher on your new home. And no one knows how long we can sustain the historically low interest rates we have been seeing.

Interview by Jennifer Davies: San Diego Union Tribune

(619) 293-1373; jennifer.davies@uniontrib.com