San Diego Housing Bubble News and Analysis

HB,

Now that the lenders are tightening credit standards, the pool of buyers in San Diego that can purchase $1M homes is shrinking. I think the "Plan 1" in Derby Hill will fall into your price range by the end of 2007.

Going forward, the size of the mortgage loans will
be based on incomes. Where as, in the past, any John Doe
who makes $30k can get a $800k loan

The question is: why would one buy at the end of 2007 ?
IMO, this correction has a long way to go before we
get to the bottom.

i noticed that back in Sep-Nov 06, there were 5-6 homes available and somehow many got sold and now they are down to 2. I do feel that buyer traffic in CV is definitely picking up a bit compared to Sep-Nov. Talking to my agent, # of SFD homes that went into/close escrow (in 92130) in Nov, Dec, Jan+few days in Feb were something like 3, 18, and ~40. May be those who made money else where are moving to CV? I don't know.

I tried to shave the price on a DH plan 2 by ~100k, but they wouldn't budge... It may take longer than end of 2007 to see that drastic of price cut here.

just my 2 cents.

I agree wontanamo. The developers in CV have pretty much stopped negotiating altogether. Traffic has been brisk over there. I think that a tightening of credit standards will help the market revert to sanity. However I personally do not believe that this will happen in the near term. I believe it will take quite awhile for this to happen.

SD Realtor

Thanks for the insite GN. I agree that the pool of $1M + home buyers should be shrinking and hopefully running dry soon. However, I've noticed that the existing/built inventory has unfortunaltely decreased over the past couple of months. My hope is that it is just buyers who may have been intimidated by recent realtor schemes.

One schemes I have witnessed recently is realtors pulling homes off the MLS and marking them as inactive - leading potential buyers to believe that the home was sold, when in reality the agent is just trying to hide the longevity of the home's time on the market. These homes then re-appear 2 to 3 weeks later as "NEW" listings. Another scheme that seems to be prevalent in todays market is for the listing agent to have a home on the market for say 120 days or more and then increase the asking price, leading potential buyers to believe that the market is running away from them and they feel compelled to move quickly.

I really hope all this nonsense shakes out soon and we can get back to real values.

I literally laugh at those; anyone who's been following the market for more than a month or two would recognize those schemes easily. WHen my agent sent a new listing the other day, I knew right away it was a re-list, with different picture & higher price. So at least for me, those schemes didn't work.

I was tracking starting Sep, and started making offers in mid Nov, and got scooped on a 3 (went into escrow the day I tried to make offer), and got outbid on 2 very reasonable offers (~5% off asking price). So I do think the market is picking up a bit, after the initial correction back in Sum 06. I hope (& pretty sure) it doesn't continue to heat up. Probably a cyclical thing.

Thanks Wontanamo. When you say they wouldn't budge, do you mean they would not drop the price by 100k or that they would not move on the price at all?

In any event, the next few months will be very intersting as the next couple of phases are released. One thing is for certain, the days of preselling these phases are over. Just about eveywhere you go in CV, there remains existing inventory among the new home builders. My guess is that if we see a decrease in the number of $1M + home buyers, these builders will be singing a different tune when October rolls around and the corporate parents of these builders put the pressure on to get the inventory sold before their fiscal year end numbers are locked in.

sorry, I meant the full 100k. I was able to get ~30K pretty easily (on available lots with nearing completion date), but nothing on just-released lots. I think there might be a line waiting for those canyon-view lots, which are later releases. (next few releases will be those next to Carriage Run)

When negotiating, it appears that much of decision on sale price is determined by builder, since the sales rep told me that they had to contact builder to get approval on discounts, etc.

IMO, another possibility in the future might be bimodal distribution of buyers on low (now middle class) and high ends (real estate moguls & old money riches).

There are sone real con artists for Realtors. Its buyer beware with them. They are just looking at the bottom line.
Have you noticed "The L--- team" gets all the builders listings.How come no other agents get these?
Its not a level playing field.
I agree with housingbear. I just think the traffic is hyped.
The salaries do not match addordability. Financing scams are still rampant.
Its hard to get a true DOM figure.

WHen my agent sent a new listing the other day, I knew right away it was a re-list, with different picture & higher price. So at least for me, those schemes didn't work.

This is the kind of thing the agent should be pointing out to their clients. If it were my agent, I'd let them make this mistake exactly one time and for that one time, they better have a good explanation.

I just saw another one of these re-listings today as well that had the added bonus of a higher price (and it'd only been on the market a little over 8 months). Definitely seems to be a bit of a new trend. I'm annoyed with seller's agents who pull this kind of thing, but I'd be downright pissed off at my buyer's agent if they didn't advise me of it.

I hear ya; but i do have a trusting agent, and this was from the agent's automated system...

I wonder if we're talking about the same prop; I was referring to the one on Flintwood (Bordeaux), was listed at 1.05 all winter, now at 1.075. I'll take it for may be 9-950K, for the nice lot. (also the current price of Saratoga)

Well, he certainly can't be faulted for that. I'm curious though, does he comment on any of this, or just send you automated listings?

The property I'm talking about is in Santaluz. Originally listed in May for $1.1-$1.25, went to fixed pricing of $1.155 and continued to lower to $1.095. It relisted at $1.15.

Funny how these properties are somehow worth $25-50 kilobucks more all of a sudden...

I'd have noticed your CV listing as well, but my wife says I'm not allowed to track any more areas! (even though we've expanded our search to include CV. She must not be serious about it...)

my agent knows me pretty well & points out certain prop that fit my criteria. This is in addition to automated stuff. Also, my agent previews properties, to see if there are big noisy roads, etc, which saves me a lot of time. Also I get those stats on pending & sold homes and the sale price every so often. (i had to work at it though)

Santaluz is a nice area too; i love the homes there but I am really focused on CV with good schools (that excludes Torrey Del Mar area)...

Since I posted, another Santaluz property came back from the dead (at a higher price!). This one was had been off market for about a month and had already been relisted at least once. It's effectively been on the market for over a year. Here's the recap:

Listed 1/26/2006 $1,299,000
Reduced 3/31/2006 $1,239,000
Reduced 5/10/2006 $1,187,000
Reduced 5/31/2006 $1,129,000
Reduced 7/11/2006 $1,090,000
Reduced 8/29/2006 $995,000

Relisted 12/12/2006 $995,000
(off the market after 3 days)

Re-relisted 1/30/2007 $1,089,000-$1,195,000
(listing went active today)

I'm sure it's worth another 90 to 200 kilobucks today.

Must... rush out... and buy...

Okay, maybe not.

Bringing this back to the question at hand--Derby Hill and the Pardee family of fine homes...

The developers in CV have pretty much stopped negotiating altogether. Traffic has been brisk over there.

I kind of thought the same thing myself having visited the models for Arabella, Santa Rosa, and Derby Hill for the first time recently. It sure seemed like things were peppy, people were checking out models, walkin' lots. They also talk a pretty good game (I will admit they're nice), but are the homes actually selling?

A bunch of Arabellas and Santa Rosas were listed on the MLS over the last couple of days. It's the same standing inventory they've had for at least a little while and they just had new release events as well along with the accompanying mail and email. To top it off, I just got an email today regarding a special one-day only (!) invite only (!) pricing event for Arabellas.

These don't seem like the marketing tactics of somebody with houses flying off the shelves... If you ask me, the non-negotiating angle is just another sales approach--gee, if they won't negotiate, I must need to hurry or something.

This was the same tactic I saw with a couple of developers in Del Sur--right up until they dropped prices $50-75K.

Patience my friends, patience.

Yes, patience, patience... it's a virtue.

I recently visited some Carmel Valley models also. Buyers are in the dark of what's going in new developments because many sales don't go through the MLS so the sales data is not readily available out there.

About, Arabella, Portico, Santa Rosa and other CV developments. I recommend that potential buyers drive the neighborhood, jot down addresses and look at the closed sales on SDlookup.com. Compare lots with view and non-views and adjust accordingly.

I noticed that buyers accross the models have already "lost" money on their purchases last year. There are more many more such losses to come. Remember, that the closed prices don't reflect incentives. I'm sure it's not a good feeling for homeowners to see new houses in their development selling for less than they paid.

Developers are masters of gamesmmanship, lowering and raising prices as the winds blow. As the houses sit prices will come down and developers will be the first to react.

I agree with sdcellar and PerryChase. Here's another reason to be patient.

I believe we are now just seeing the tip of the iceberg with regard to foreclosure activities in the $1M+ homes.

A large percentage of these buyers bought with 100% financing and/or exotic mortgages. Many resale homes in CV have high asking prices because the owners cannot lower the price without being "under water".

Unless one must have a brand new home in CV, in the next 2 years, we'll see a raft of REOs on the market.

Just got my weekly update of new NOD's and REO's. The list is getting longer every week but there wasnt any if CV.

what about these?

http://www.foreclosure.com/search.html?t...

I said NEW one's. Those are all at least a few weeks old.

sd realtor,How does one get these?
A freiend of mine placed offers on 3 foreclosures and bankedowned and she never had a courtesy of a reply.As a matter of courtesy should the listing agent of the REO at least negotiate?
Sure the list is getting larger. Perhaps the investors are buying them again !!

The new thing is: bulk sales of REO properties.

Want to buy a hundred fixer-uppers anyone?

No. Well, don't expect a reply then.

repeat post

It's important to differentiate between 2 different things:

1. The underlying "fuel" for the market. The rising prices were primarily the result of "easy credit" & lower interest rates. Of these 2 factors, "easy credit" is a more dominant factor.

Institutional investors are shying away from mortgage-backed securities, because foreclosure rates are going up. So, the easy credit is going away. This trend is not reversing anytime soon (the pendulum is swinging).

This means: going forward, the size of the mortgage loans will be based on incomes.

2. Home buyer confidence: this tends to fluctuate and show
up in real estate activities. I think this plays a minor factor because: it doesn't matter how confident a buyer feels, he can only buy with what the lender is willing to lend him.

Many people mistakenly interpret the pickup in sale activities as signs that the market has turned around. But the reality is that the fundamentals are just not there to support current prices.

I've been thinking that rumors of the market's recovery could actually help fuel further declines. How you ask?

One of the main reasons that some consider the market to be picking up is based on the fact that inventory hasn't come back as quickly as some expected. This leaner (although still significant) inventory has helped spur a few additional sales. Nothing fantastic, but the listing to pending to sales ratios are certainly better than they were.

One of the reasons put forth that inventory is down is because those sellers "testing" the market have left. If this is indeed true, then when these "testers" catch wind of a recovering market, they'll be right back. After all, why not?

Up goes inventory and the ratios start going backward and then it's just a replay of last year.

I could be wrong of course, but I guess time will tell. These re-listers tell me I could be right though...

Here's a Santa Rosa flip trying to come out unscathed. Let's see what he eventually sells for.

http://www.ziprealty.com/buy_a_home/logg...
http://sdlookup.com/PropertyDetails/tabi...

List Price: $1,099,000 - $1,099,000
Sales History
Date Price
08/04/2006 $982,593

Bedrooms: 4
Full Baths: 3
Partial Baths: 0
Square Feet: 2,961
Lot Size: N/A
Year Built: 2006
Listing Date: 02/09/07
On Market: 0 day
Type: SFR
Status: ACTIVE
MLS #: 071011460

Description
$1,099,000. Sellers loss is your gain! Santa rosa plan 1, priced far below any other including builder! Meticulous detail & design! Loaded; surround sound,stainless steel,granite,brailian walnut floors,custom mantle,chandeliers,solar panels,tankless h2o heater, upgraded bathrooms,approved landscape design! Must see!

Approved landscape design. Is that a new term for "dirt yard"?

It shows up as pending now in MLS, so apparently it must have sold after 3 days. Interesting . . .