San Diego Housing Market News and Analysis

i do not think home prices will undershoot below the fair market value.

Carlsbad -

I understand that you've had a bad experience with AHP. Perhaps they are understaffed, or too big. I will send my tenant a 3-4 question survey.

AHP does provide a recommendation on rental rates at the end of the lease ... and since 2000 they have always (OK, 3 times, not much of a sample size) recommended for me to keep the same rate.

If the owner tells them to raise the rent AHP will do it. The renter will likely leave and the owner will find out what the current market rate is to get a new tenant.

As a side not, I don't think the term "lowly renter" really applies these days. You are living in a place for about 4% of the current "value" annually. That's like getting a mortgage of < 3%. Renters are living like kings now. How about "kingly renters" or "queenly renters" ?

oops... typing too much today ...

Here's the rest of the story ..

As a side note, I don't think the term "lowly renter" really applies these days. You are living in a place for about 4% of the current "value" annually. That's like getting a mortgage of < 3%. You are now living like King. Perhaps the term "Kingly renters" is more appropriate.
(Or Queenly renters).

This paragraph in today's Wall Street Journal's front page article "Housing Slump Proves Painful For Some Owners and Builders" reminded me of this thread:

In April 2005, Jennifer Bloom paid about $229,000 for a condominium in Yarmouth Port on Massachusetts's Cape Cod, where her son planned to live. After his plans changed, Ms. Bloom, a software specialist for a computer company, decided early this year to sell the condo. She initially listed it at $229,000, and then gradually shaved the price to $199,000 as the market weakened. Earlier this month, she gave up on finding a buyer at a price she could bear to accept. Instead, she is renting out the condo for $1,000 a month, which she says is more than $200 below her monthly costs for mortgage payments, insurance, taxes and other items. She says she intends to hold off on selling it until the market improves.

We 20-somethings are a flighty bunch. Not necessarily a deal breaker, just something to include in the analysis.

AHP does provide a recommendation on rental rates at the end of the lease ...

I think this is where things went wrong in our case. Our house was fairly cheap for the area because it is very rundown. We knew that and felt we could deal with that for the price. When it came time to renew our lease I think that AHP looked at comps in the area and made their recommendation, which was a substantial rent increase. Well guess what, they never once came by to look at the house. They didn't know that it had been at a lower price than the rest of the area for a reason. It just seemed like they didn't take the time to figure out the situation.

Since we're on the "breakeven opportunities" topic, I'd say that Ms. Bloom isn't doing too bad on her Cape Cod condo. She could do worse in San Diego, I'm sure.

Carlsbad -

I concur, they are large enough to have per-square-foot rates over large swaths of the county. I'm sure they provided the equivalent of a zillow market eval for rent.

Pretty cool to look back at this thread. I first found out about the GO Zone thanks to it.

After calling every brokerage I could find in the GO Zone I setteled on the guys at www.gozonegateway.com

I just closed on a beautiful investment in the Biloxi area (didn't get damaged by Gustavo, thank God). I'm amazed by the tax break I'm going to get. Thanks to whatever your name is for mentioning this area a couple of years ago.

Time to start buying!!! Oh yeah, historically rents dip down in a recession around 5%. Also, unemployment is increasing and a lot more defaults are coming onto the market. Lending standards are getting tighter. This all spells another leg down in the RE market. You may want to check your math on break-even analysis when your asset is decreasing in value? Even if you're lucking enough to actaully break-even on a cashflow basis, what will your return be if your asset decreases by another 20%?
These are very real possibilities in this market.

On a side note, I was down at the Costco in San Marcos.

On Saturday.

They were Literally being cleaned out of 52" Plasma TV's. Had to park at the back of the lot and did some Struggling just to park there. All the registers were 4 - 5 deep fully loaded carts for the most part.

And they say that this is a recession ???

Weird I tell you.

Regarding property management companies - particularly if it involves an out of state property:

Make sure when they send you their monthly invoice, that it is accompanied with the various receipts to support their invoice. Verify that they spent "x" amount on advertising, or gave tenant "x" a reduction on rent for whatever reason, or spent "x" on water damage/mold remediation. An absentee owner can get taken by an unscrupulous property manager if they don't insist on the receipts. Might seem obvious, but I've seen property owners get screwed.

I don't know where the condo sdrealtor was talking about. But I saw similar situation in Rancho Bernardo. There are several Water Bridge 2bd condos are at low 200k. They were priced over 400k at the peak. With 20% downpay, it could break even. But I thought a break event point at 0% downpay would be more attractive.

Is it wrong to be curious exactly what the details of the potential investment opportunity where 2 years ago?