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I am watching south San Marcos every single day. The schools in 92078 are equivalent to Carlsbad, with housing costing 2/3rds of Carlsbad. I'm hoping the excess inventory and high Mello Roos in SEH pushes the prices down another 5-10%. I think $188/sqft is attainable by Feb 2009.

Any thoughts as to why/how Carmel Valley continues to defy the bears? Do you think it can possibly hold up like this? I see very little price decline in my area. Are there that many rich people who want to live in Carmel Valley with big down payments?

"The schools in 92078 are equivalent to Carlsbad"

... shhh, Chris. Don't let the word get out, or SM will stop falling... ;-)

I think you are right on. SEH was built right at the beginning of the bubble, so pretty much everybody in there is underwater right now. Ever looked at it on realtytrac? It's a sea of pre-foreclosure icons.

Carmel valley has perfect location. It's minutes away from all the benefits of San Diego, yet has all the conveniences of the suburbs.

I really don't see Carmel Valley taking too much of a hit. Everyone grinding the 15 or 5 commute south daily from north county has a built in reason to like Carmel Valley.

I live in 92078 on the other side of the hill from SEH. I keep wondering what the stats for the zipcode would look like if SEH was excluded.

RE SEH schools - what about the high school? I don't think that one is good.

SEH is San Marcos High School, the one at the corner of SM Blvd and Rancho Santa Fe. We don't have any kids, so can't comment on any of the SM schools. Was there supposed to be a HS built specifically for SEH?

Chris,
Regarding Carmel Valley holding it's value... I agree with the desirability of the neighborhood. It is where I live. However, it will not defy gravity. For those in CV who own their homes or have 30 year fixed mortgages they will be secure. However, there are some houses in my neighborhood that have been for sale for months and the owners either decide to rent it out or take it off the market. There are a lot of Alt-A and option Arm mortgages in CV that will recast from 2009 to 2012. That will bring on distress to the owners that bought during the bubble peak using high leveraged mortgages. Those people, considering the rest of San Diego RE will be in the dirt by that time, will likely just give the bank back the keys.

Qualcomm is a big employer in Sorrento Valley. I'm sure a lot of CV residents work there. Qualcomm stock fell $7 last week because Nokia and Qualcomm both announced a weak market outlook for the coming year. If things start to slow down for the company then that could make those potential buyers think twice about buying into this market. I'm one of them.

Schools tend to be a good indicator of which way the neighborhood is going.

San Marcos high just posted an API of 773 - year over year, the gains are pretty impressive.

GeneK, I'm also on the other side of the hill from SEH, right next to the university. My daughter will be going to Knob Hill next year, which posted an API of 892. That's 40 points higher than the elementary I went to in Carlsbad, so I'm pretty confident in the area. I think it was around 700 when we all moved in a few years ago, so the increase is clearly tied to the people moving into the neighborhood.

I think you'll see SM High change in a similar fashion in the years to come. Just think about the demographics: Rancho Carillo and SEH are both zoned for this school. Both areas have outstanding elementary schools. As these students begin to feed the high school, one would expect an increase in academic performance. Also, SMH has gotten much less crowded since the new high school was built.

The fact that prices are falling as they are in SM, makes me think it will pull Carlsbad along eventually, because one day folks will wake up and compare and realize SM ain't all that bad...

Regarding qualcomm stock and carmel valley - you can't really associate QCOM with CV housing prices. Yes the stock fell $7 in the past week, but it is up over 15% for the year...QCOM is still growing (albeit very slowly), but they are not laying off. Anyways, CV is full of doctors, lawyers, financial profesionals, etc... not just chip engineers.

I'm hoping that the worst-case scenario for employment doesn't happen, but am also curious about whether it would have a noticeable effect on home values if it did or would just be another drop in the bucket compared to the already ongoing debacle.

The "new" houses in CV seem to prop up the price. The Carmel Country houses offer high prices with less square footage, which help's CV's numbers.

The "old" houses in CV seem like the sit on the market forever, without any sales or price reductions.