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Saturday, August 13, 2005 | Two stories occupy my attention: The Los Angeles Times’ “All Eyes on Home Market in San Diego,” and an earlier one: “Bad Lands Now Hot Property.” Early in my professional career, I was retained by various federal agencies to examine the wreckage of the hot-lot market in which ordinary people were enticed into buying properties, many miles away from any known marketplace – desert dry or under water – having no use except to hold the earth together (as my dear brother said).

Yet they had sold by the tens of thousands, bought by people who had never seen them, except for ads exaggerating where they were and how smart to buy one of them. I remember when hundreds of them (actually in a volcano, on the Hawaiian Islands) were sold in two weekends via some loud advertising done by my friend, the advertising giant of his day. No one knew the geology of the volcano, except to know that it had lately lain dormant, but nothing discouraged a person looking to get a piece of the real estate action – besides, they looked wonderfully tropical in the photographs in the ads, bless those palm trees.

That era has returned, joining all the other speculators who have bid up the price of things and land regardless of where they are. The criteria are that they can afford the monthly payment and the low-down payment. They join with the other greater fools, looking to finally get a piece of the action. That party is on its last legs, but along with a sucker born each minute, there is the con man/super-salesman born just as often, greasing the skids of the real estate deflation yet to arrive.

San Diego, self-touted as “America’s finest city,” is far from a bad land or poor marketplace and that’s what makes it dangerous; it is legitimate and proven, but it is also mortal and vulnerable. One respected researcher is quoted as calling San Diego, “the statistical canary in the mineshaft”; you know, the canaries are introduced by miners because they are so sensitive to poisoned air.

Sorry to say that the canary has more sense than the average modern speculator who sees no signs, except dollar-signs, multiplying in his head. The key inevitable vulnerabilities are: coming higher long-term mortgages, repossessions of deals funded by unscrupulous or greedy lenders with their interest-only or no down payments-just a lifetime of regret; the low percentage of people who can afford the high pricing (or even the median level); the high percentage of speculators who price up the market; the unethical Realtors who speculate instead of steadying the marketplaces; and the fact that so many of the “new jobs” created are part of the construction and marketing of homes. This statistic contaminates the net new job statistics and makes them unworthy of our faith.

Sanford “Sandy” Goodkin is acting chairman of Civic Solutions, a group of leaders who analyze San Diego’s problems, prioritize them and search for solutions, representing diverse points of view. He is a trustee of the Urban Land Institute and is a pioneer of residential market and marketing analysis. Read his real estate columns at

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