David Godin sends in an L.A. Times report on the real-estate damage in San Diego:

From 2001 through 2008, more than 8,000 condominium units were built in downtown San Diego. That’s double the number of downtown units constructed over the same period in Los Angeles, a city three times its size. So while sales of urban high-rise units are convulsing elsewhere, nowhere is the collapse more dramatic than in downtown San Diego….

“There was a little bit of a mass hysteria mentality. . . . People thought they would be priced out of the market,” said Bradford Willis, 47, who signed a contract in 2004 to purchase a $341,000, one-bedroom condo in a planned luxury development….

Downtown San Diego, a 2.2-square-mile area, is now awash in condos. About 400 new and occupied ones are listed for sale, and more than 450 are in some stage of foreclosure and will eventually be put on the market. An additional 1,000 units that were under construction when the market soured are slated to be completed this year, adding to the glut and putting further downward pressure on prices….

San Diego condos

Canadian developers with little experience in Southern California, starting with Nat Bosa, a prominent Vancouver, Canada, condo builder, led the condo charge downtown, overestimating its potential, experts said. Buyers likewise bet too heavily on the urban revival triggered by the 2004 completion of the Petco Park baseball stadium, home to the San Diego Padres…

But that almost exclusive focus on upscale high-rises was a mistake, said Howard Blackson, who heads a San Diego urban design firm. Towers aren’t as attractive to families as other types of housing, such as row houses or smaller, walk-up buildings, Blackson said. Nor were they affordable for many. With some three-bedroom units priced at more than $1 million, the pool of purchasers was limited….

People priced out of San Diego during the bubble market may also emerge winners, said designer Blackson, because lower prices will open up the possibility of downtown living to a wider variety of residents.

“Maybe some of my friends will be able to live there instead of having to go to Tijuana or Temecula,” he said. “We had a housing [affordability] crisis; did we inadvertently solve it on the backs of developers gone broke?”

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