San Diego Housing Bubble News and Analysis

I love Del Cerro. I grew up there. This is a very nice street. The exterior of the house is horrible, the inside is very dated, as you say. But the views from this street are incredible. When my family moved to Del Cerro in the 1960s, the community was "in the sticks." Now it is very central and a relatively easy commute to Mission Valley or downtown. Hearst Elementary is ranked near the top in the SD Unified School District. However, I think, like you do, that the home is overpriced.

I think the Del Cerro Heights are a relatively undiscovered area that has some great view homes. The home you write about doesn't have a city skyline view or sunset view which is what people want most up there. The house also has a lot of trees that block the view that there is (Tijuana). These trees are owned by the neighbor below so you can't cut them down. The house itself has potential. It is owned by the original owners that built it themselves. There has been no updating but there is a lot of space and potential. It is overpriced for it's current condition. There is also an ackward, ugly workshop built on one side and a "maid's room" that was added on and is only accessible from the outside. The stairwell needs re-working - it is very claustrophobic. It has a nice sized, flat back yard. All that said, the house has some potential but would never earn the really "big bucks" because it doesn't have the premium view that the rest of the street has. My idea of a fair price for this house is $725. I have owned a house in Del Cerro Heights and have been intensely watching this market for years. It has been extremely volatile in this market downturn. There have been at least two foreclosures (on Madra) in the last year. I would estimate that downturn to be 20-25% and I'm starting to think about investing again.

If you are looking for a home with views similar to this one at under $850K, I highly recommend checking out the Mt. Helix area. It is a little farther out east than Del Cerro, but still a reasonable commute. The lot sizes are typically larger than in Del Cerro, and some of the homes have spectacular views, particularly those on the western slope of Mt. Helix where views to the ocean are often unobstructed. Although it's farther out than Del Cerro, you could get a larger home with better lot and view for the same or less money than in Del Cerro.

Thanks...I went through the house today and it was exactly as you said. Way over priced and very dated! I also looked at a couple houses on Madra -- not bad but overpriced. Thanks for your input!

I long considered Mt. Helix because of the big lots and country feeling but after living in Del Cerro, I think Mt. Helix is way too far out. The 8 Freeway is a nightmare during rush hour. Mt. Helix is also REALLY hot in the summer. Unless you don't have to commute west and don't mind spending big bucks to keep cool in the summer, I wouldn't recommend Mt. Helix.

I long considered Mt. Helix because of the big lots and country feeling but after living in Del Cerro, I think Mt. Helix is way too far out. The 8 Freeway is a nightmare during rush hour. Mt. Helix is also REALLY hot in the summer. Unless you don't have to commute west and don't mind spending big bucks to keep cool in the summer, I wouldn't recommend Mt. Helix.

I long considered Mt. Helix because of the big lots and country feeling but after living in Del Cerro, I think Mt. Helix is way too far out. The 8 Freeway is a nightmare during rush hour. Mt. Helix is also REALLY hot in the summer. Unless you don't have to commute west and don't mind spending big bucks to keep cool in the summer, I wouldn't recommend Mt. Helix.

Tumbles,
Not that I'd advocate purchasing at this price, and I don't know what you're looking for in a home particularly, but you may want to consider the many townhomes along Caminito Estrellado. A listing always pop up every now and then.

Square footage is similar to the home you're looking at, but of course, the front and back yards are lacking in addition to the HOA. Views are comparable depending where you are on the street.

http://www.sdlookup.com/MLS-076062968-65...

I almost purchased here in the 80s but settled for San Carlos instead.

The most significant problem with this home is the stairs. They were terrible in the 60's, but the owners accepted this, now it is almost a deal killer.

Original owner ( agent selling it himself ) still owns it and has bought a condo in La mesa, so unless he did lots of refi's and took alot of cash out his cost basis is very low.

My thought was to do a significant addition and put in a new interior stair outside of the original footprint, also put on a new master bedroom / bath up, along with an outside stairs to the lower level. New kitchen, windows, deck, etc Since I am in the business I though maybe put in $ 250 - 300K. Not to flip but to have as a great home. So my target would be pay $ 700 K. Alas don't need the space and that much work. I already live on wanderemere and have done that.

Anyway I echo that del cerro is better place than mt helix; closer in, more convenient to everything, better schools; and slightly undiscovered. There are some decent bargains going to come up. It was just that in the 2005, 2006 time period some buyers went stupid and paid way too much for houses that needed everything and then in the down they were left you know where. Overall though the hood is fairly stable, lots and lots of people who have been there along time and when you look at the alternatives in central san diego there aren't very many. Imo this will help to keep the area fairly stable with minimal decline. I think this is one reason seller has been keeping his price up - he maybe able to wait it out for some long period of time.

Mac, I thought the same about needing $200K to update the Crystalaire house, including new stairs and an addition, to make it a nice home to live in.

I drove to Mt Helix to check out the area...was too far out of the way for my liking.

I looked at 2 houses on Madra and was overall impressed with 6207 (which is now in escrow) - their inflated list price was $925K. I'm curious what price the owners accepted. http://www.sdlookup.com/Property-19AA2B6...

5991 Madra had a quirky layout, shoddy workmanship, and doesn't have much curb appeal. http://www.sdlookup.com/MLS-076073694-59....

Was scheduled to look at 5892 Madra but the owners canceled. Was told that it's a short sale. Drove by this house one day and wondered if it was a "mini dorm" by the number of college aged students walking up drive way. Not to fond of the shared drive with the neighbor. http://www.sdlookup.com/MLS-078085946-58...

I really like Del Cerro and will patiently continue watching for the right house/deal.

You will probably have to wait a good little while. Del Cerro is central enough that it will (IMO) be among the last areas to show signficant declines. The relatively low turnover is an indication that a lot of people consider this to be a destination neighborhood, like Scripps or Poway to the north.

Tumbles
Stear clear of 5991 in all cases; flat roof is a big draw bag and the house is a dog; understand it will soon be a REO

6207 had a lot to offer; i too will be interested to see what the price actually was.

Agree with Bugs about stability of the area in regards to pricing.

Patience

del ceroo is a pretty quaint little neighborhood. the schools are really good i hear, so that is a big plus for the families. probably why many of the residents have lived there for really long times. what about that home that troll was trying to promote a month ago? looked like a decent place, could tell the views, but could be good for tumbles since looked pretty updated and in del cerro area (i think).

http://www.sdlookup.com/MLS-076090156-58...

or this one? its been for sale for years and the buyers have lowered from 1.9m

http://www.sdlookup.com/MLS-076089672-64...

A house with any flat roof areas is a big mistake, very prone to leaking bacause water tends to pool and degrade the roof.

i heard 5991 was owned by an NFL player who was no longer in the area. the closet was filled with boxes and boxes of Nike shoes.

http://en.wikipedia.org/wiki/Marviel_Und...

For Bay/Ocean views, easy commute to downtown, you can get a nice house in Bay Park/West Clairemont for 850K and below.

You might check out University Heights as well...

that troll has an offer on his house, that yokohama one http://www.sdlookup.com/MLS-076090156-58...

I called the agent and there is an offer on the table. not sure of status, he said they would look at other offers, but but looks like del cerro area seems to be holding in fairly well. the house looks nice, not sure about what improvements it needs. anyone else ever go see it?

The Yokohama court house is carved into the side of a hill and its backyard is basically a 30 foot wall of rock and dirt. Not the kind of place you want to live if you have any fear of landslides or earthquakes.

We were going to look inside, but wife saw this and said no way. If it was 100k less and without this backyard issue, I think it would be a good deal.

The nice pool/view deck is side yard.

bof i saw that too... it looks to be a granite rock face... the entire hill of del ceroo was pretty built on granite. not sure if that means anything. the lot goes up that hill and back a big distance, the MLS shows it is 27000 sq ft, and from the street the top of the hill looks pretty flat. i'm no structural engineer though.

"Also, looking for recommendations for other San Diego neighborhoods that offer city, bay, ocean or mountain views (safe neighborhood and easy commute to city) with house prices under $850K."
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I echo FSD's recommendation to take a look at Bay Park and Bay Ho, ie: West Clairemont. There are some great streets up there with some pretty tremendous views. You are alot closer to the coast so the ocean/bay views can be spectacular, you get cool ocean breezes, etc. About 10 minutes to downtown. I think you could do pretty well in $850K range and even better next year if you can wait as prices continue to pull back.

Another option is to take a look at the Mt streets in Clairemont - I have been in a few on canyons with excellent canyon views, just not quite the same panorama as you will find on the western hills.

Can't speak to the quality of schools.

I noticed that 5915 Madra, a "corporate owned" property in Del Cerro Heights fell out of escrow and came back with a reduced price $731K. Has anyone see this? The pictures look rough but with that view and sq. footage, the price seems low (even for this day and age). Is there something really awful about it?

I seen this house and it is even rougher condition than the pictures depict! The pool no longer has blue water - it is green and thick looking! The home seemed to have good bones, however, it needs a lot of sweat and money to bring it up to date (new kitchen, baths, windows, flooring and roof). The home really shows it's neglect. The view is really nice. Corporate owned by Citibank.

http://www.sdlookup.com/MLS-076070946-59...

For $70K more you can buy this home across the street:

http://www.sdlookup.com/MLS-078085946-58...

I'm still looking in Del Cerro -- just haven't found the right house.

The pink house an Madra looks nice. One shortcoming for me regarding Madra is that it is double yellow road. That is kind of a pet peave of mine and also probably affecting the relative value of this house.
About the geology of the area...looking at the front of the pink Madra house you see large a granite rock front with a short stuccoed wall on top.This granite is very stable. If that is the situation at Yokhama it is not likely a problem. Notice that the driveway of the same house has no cracks and the retaining wall looks perfect, at least to a casual view. That is what you look for for starters. For several years I have noticed a collapsing hill clearly visible from the 8 going east. Can't remember if it was closer to Waring or College.
I like the Bay Park suggestions too. Another area that is really nice is located of north of Montezuma just east of Fairmont Ave. The zip is 92115. Look for streets off of Santa Yerba. Maybe the views are not so great.The prices get pretty steep in a section that is a gated. East going towards SDSU the houses tend become quite a bit more modest.

I will post a link to one house. I realize that it higher than your stated price range.It is likely that these prices will come down. Just showing you the neighborhood in case you don't know of it already.
http://www.sdlookup.com/MLS-076087860-50...

Tumbles if you can, try to hold out at least until later into the summer. You may see some better deals after the spring activity increase. The only problem is that you may miss out on the higher quality listings that people will scoop up. The leftovers though can be leveraged a little bit more.

SD Realtor

madra is an okay street like rustico said, but i think it is the main road thru dell cerro area, so its pretty steep and busy. we've looked there in the past but with kids and animals it didnt seem too family friendly. i wouldnt rule it out though.

problem is there just are not too many really nice ready to move in homes in del cerro, because most of those on the market have been owned and lived in for decades. so its takes $$$ to fix them up. there are some nice ones listed now, but del cerro doesnt have high turnover, which is too bad we have been looking there a while also

based on the types places you have mentions Tumbles there aren't many places that seem suitable, so our choices are limited

at least 2500 square feet? four bedrooms? view on the hill?

$700-$950
5915 Madra the foreclosure mentioned above
5892 Madra the pink one mentioned above
5838 Yokohama Ct the one mentioned previously in this link
6415 Crystlaire the one you looked at that needs lots of work

$1million ++
6450 Dwane
6456 Dwane
6486 Dwane
6462 Norman
6310 Dwane

square footage wise the places 700-950 seem to be priced 10-15% below what recent sales have been... more if they need more work.

I don't think is so much that prices are staying high as it is that so few houses are actually selling, so there really is no clear trend.

There were two houses for sale on Lourdes Terrace all last fall and winter. (near bottom of hill, just below the condos) Both were vacant and listed around $1m. I thought that the owners would have to give in an lower prices, but they pulled them off market and I think both were rented out.

There was a "must sell" flip gone bad on Madra (5980?) that finally sold at the end of 2007. It was first listed at up to 1.6m, and sold for less than $1m. I think it was about 3500 sq ft and some very extensive rehab work was done there.

I think this is the pattern your seeing in a lot of older neighboorhoods. The "must sells" get marked down until they seem like a value compared to prior comps, then someone scoops them up. Those that don't need to sell refuse to budge.

I agree with Rustico about Madra. People use that as a shortcut (avoiding the rest of College and Navajo Road) to get to the area on the other side (neighborhoods around Patrick Henry High)and many drive screaming fast because it's a fun (well, I thought it was in my 20s) curvy drive. I would worry every day about backing out of the garage.

with this stimulus package raising conforming, you can likely get any of the 700-950 places with roughly 20% down and get a conforming loan soon. that's huge! jumbo is at least 1% higher than conforming.. do you think we will see the activity in these established neighborhood just above conforming start to pick up again? does this change your sentiment Tumbles? it shure does for me, to get conforming will make things so much easier.

There was a "must sell" flip gone bad on Madra (5980?) that finally sold at the end of 2007. It was first listed at up to 1.6m, and sold for less than $1m. I think it was about 3500 sq ft and some very extensive rehab work was done there.

You are right this was flip gone very very bad. They paid 869K and it took almost 2 years and probably put in about 150 - 200 in renovation costs. So cost including carrying was about 1.150 - 1.2. Sold recently for 970 as I recall. Buyers got a pretty good deal, but there were lots of stuff done in the remodel that didn't come out well and looked cheap.

I looked at this hard to buy for myself, but knowing all that was needed my target at the time was $ 700 and they wouldn't listen to a number at that level. So another fish caught the knife.