San Diego Housing Bubble News and Analysis

But but but it can't be! U-6 is 16%, it means that nobody can afford to buy houses any more.

Yes they all sold, but they still have to close. I bought in the last phase and it took 8 months to sell all 11. There of course were the change of minds or couldn't get financed etc.... It is very reasonable that this new phase sold quickly due to it being released on the culdasac. They have a waiting list of buyers who have been waiting for this street to open. This phase was priced about the same as the last except for the homes that backed up to the hill. For example, the 3100 square foot model on the view side was priced the same, but the same model on the other side of the street was priced $20000 less. No view = 650000, with view = 670000. We received many upgrades in our phase which are not being offered now due to the demand of the dead end road. It will be smooth sailing from now on, I think, because the rest of Chanteclair's releases will be on culdasacs. It seems to me that because the inventory is low in the used house market at this price point, it makes sense to buy new.

I'm ignorant but curious. How big are the lots?

5000 sf (50 x 100) lots are typical in the area. Could get slightly bigger if the lot is non-flat, e.g. backing up against the hill, or it's a non-rectangular corner lot.

my lot is 7000 square feet

U-6 is 16%

What does that mean?

From the BLS website
U6 is Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

Many, myself included, consider this a more accurate number than the U-3 number that is reported as the "official" unemployment rate. 16% of people are unemployed or working part time when they want to work full time.

Be very careful with that reasoning. There are tremendous expenses with new homes that first timers don't realize. Landscaping, upgrades, curtains, shutters can be very expensive if you pay retail. On a resale home between 3-8 years old, you can sometimes get all the upgrades for free and usually have lower Mello-Roos, etc. But "good" inventory is bad now, so a toss up.

How high is mello-ruse (sic)?

Based on my own experience you have to add at least 15% to your purchase price for a new home for interior design and landscaping.

Wow, 15%? Are you sure? At 15%, I'll have a completely remodeled kitchen, 3 baths, all new paints, all new doors, all new baseboards, all new crown moldings, all new doors and windows moldings, all new (high end) flooring, new sod on 1200 sq-ft front yard, all window covering, and all high end appliances.

How much was the house when you bought it? Sounds like a "fixer-upper".
My estimate is based on a house price of $800k with a large yard (8,000 sqft). Landscaping with sprinkler system and swimming pool is about $75k. Plantation shutters, flooring, decoration, some new furniture and new paint another $40k.

Many people don't want swimming pools. Sprinkler systems are cheap (on a 8,000 sqft lot, I'd say $500 in parts to build one from scratch, timer and all). Sod - 30c/sqft. Since at least half of your 8,000 sqft lot will be taken by the house and the driveway, actual grass area will be no more than 4,000 sqft = $1200 worth of sod.

You can have new landscaping for $1700 and some elbow grease...

It wasn't a fixer, I just want to upgrade it to my taste. 8000 sq-ft lot is pretty big, but how big is the actual yard? The pool is your main culprit for most of your cost though. I bet that's ~$60k of your total cost right there. Most houses do not have swimming pool, so if you buy resale, you might end up having to put in a pool anyways. Also, to find a house w/ the right size pool, the right kind of plantation shutter, the right flooring in the resale market is pretty hard if not impossible. Everybody's tastes are different. I can see flooring, shutter, and decoration/furniture being around $40k, if you have expensive tastes. Top of the line bamboo (Taragren bamboo) goes for $10/sq-ft (installed) and if you have a 3000 sq-ft house, that's about $30k right there. Shutters can easily be $5-10k if you have lots of windows too.

The lot itself is 8,000 sqft and the house is close to 3,600 sqft. We hired a landscape designer who was worth the money. He oversaw the entire project. The pool itself was about $50k. The plantation shutters were close to 10k.

Yep, that does it, w/out the pool, you'll spend ~7/8%. Hiring a landscape designer will probably cost you a few grand more too. I doubt most people hire landscape designers, so if you buy resale, you'll have to deal w/ landscape that's not designed by a designer. It'll cost you more to rip it up and put in new one (designed by a designer). 3600 sq-ft house probably have a foot print of around 2000-2200 sq-ft, then the front hard & drive way takes another 2500-3500 sq-ft, so your back yard is roughly about 1300-2500 sq-ft.

One thing I'm reading that people don't consider also is that when you buy a resale/used home, sure, you're getting the landscaping, window coverings, any flooring upgrades for free, etc...but after 10-20 years, the design style is old and you really miss out on modern construction specs such as better insulation, full cat-5e wiring and cable all over the house, dual zone air-con, etc...

Not to mention that many folks will want to rip out all the old freebies anyways and put in their own window coverings, flooring etc so that's a total waste of time and money to rip up and re-install.

Even 5 year old things SHOULD be pretty worthless after so many years of use. In my view, any used item is an auto 50% off already since you didn't select or pick it compared with buying new and your own designs.

The main thing with this builder is they have very little competition now in 4S since Silhouette is completely shutdown (John Laing) and for folks who want a NEW home and a driveway, Chanteclair is the only option.

All the homes being reserved in 1 hour means they left some money on the table so it wouldn't surprise me if pricing for the next phase goes higher.

15% is way too high I think for most folks when if comes to what MOST folks spend for landscaping.

Also, you don't have to get hardwood floors or shutters...I personally like carpet myself.

Chanteclair released yet another release this month. Any locals there who have the price list of the current phase? Is the builder including any upgrades this time? The new home market is completely dried up in 4s ranch.

At least the resales are dropping, albeit slowly.