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Tuesday, June 6, 2006 | Excellent article. Pinnegar and London have interesting comments.
While there may be some point to the price of gas causing people to move closer to work argument, I think that the reality is that group is negligible and the number of people who are negatively impacted by rising fuel costs to the point that they double-up or move in with family is much larger. In other words, if you are now spending $150 more per month on gasoline, it doesn’t make sense to give up the apartment in Escondido to move downtown where (even though it is a softening market) the rents are still going to be $200-300 higher. But it might make sense to move in with roommates or to move back in with family in San Carlos/Clairemont/etc.
I do agree with the “spotty market” concept but see it differently (more like London) – the coastal areas and the newer master planned areas (e.g. UTC, Mission Valley, Carmel Valley, Rancho Bernardo) will hold their own while the less-desirable areas will see flat to declining rents.
Of course, these are the same areas where most of the decent condo conversions are available or have been “banked” for conversion in the next wave. So we will see a steady supply of rental units being converted to condos for the foreseeable future in Mission Valley, UTC, etc. The blue collar condo conversions have run their course and those unfortunate investors that bought those units will be the primary source of declining rents and the best value for selective renters looking for deals – thus my opinion the segment of the ownership market that lacks staying power.