patrick.net

Basically in my neck of the woods (downtown San Diego), real estate in 2014 is now more expensive than the peak prices of 2007 (just before the bust), yet the "experts" say there isn't a bubble!

http://www.kpbs.org/news/2014/may/29/san-diego-home-prices-easing/

I just happen to have a few residential/commercial rental properties so various brokers have been trying to pitch me rental properties, BUT looking at the valuations, it just kinda blows my mind (15 to 18 GRM). Personally I don't think an investment in real estate in my neck of the woods can be economically justified because the rents can't service the loans on a property.

Of great concern is the economic trend I am seeing which is it more unsustainable now than it was a few years ago! Hence I conclude there must be some kind of "reversion to the mean," or put another way I'm kinda worried about the "local" economy crashing because of "unsustaiable" housing costs for one.

http://www.hsh.com/finance/mortgage/salary-home-buying-25-cities.html

All I'm saying is times are kinda OK for now, but watch out starting the summer 2015 and after, because I see all kinda of trends forming for a nasty "perfect storm!"

Basically I'm thinking one strong contender for a black swan trigger event is the change in accounting rules which will expose "unsustaiable" underfunder public employee pensions and put these figures on a balance sheet, which will in turn affect bond ratings, which will in turn tighten up credit.

To illustrate why I am concerned w.r.t. San Diego it seems bottom line here is 12+ BILLION off balance sheet debt?? (8 billion in pensions plus 4 billion in storm water fixes, and lots of unanswered questions IMHO).

FYI The 8 billion dollar range "pension" figure is just one of the things TPTB in SD don't want the voting public to know about

http://www.sandiegoreader.com/news/2013/oct/24/ticker-san-diego-mayoral-debate-canceled/

http://www.sandiegoreader.com/news/2013/oct/24/ticker-san-diego-mayoral-race-whoppers/

There was just a news paper article a few months ago that stated "San Diego’s stormwater bill: $4 billion"

http://www.utsandiego.com/news/2014/feb/17/san-diego-billion-stormwater-cost-shocker

Looking state wide at california there is 170+ BILLION off balance sheet that the markets will have to factor in (according to former Democratic assemblyman Joe Nation, a public finance expert at Stanford University)

http://www.city-journal.org/2013/23_1_calpers.html

http://articles.latimes.com/2014/apr/09/opinion/la-oe-fritz-pension-liability-california-20140410

I've tried modeling capital flows, as it relates to my own real estate holdings and the scary thing is trying to figure out the global economy because of debt(s) in china, japan and the euro zone

Then there is issue of russia selling nat gas to china AND that trade will NOT be in dollars (looks like they are trying to weaken the US dollar as a "reserve currency")

Perhaps its just a tin foil hat theory, but all the data I've uncovered tells me its time to prep for another economic firestorm because everything I see points to a confluence of events that are taking place, and won't end well.

So have any thoughts? What do you think the next black swan event will be??

#housing