San Diego Housing Bubble News and Analysis

This could be the future of any new home that you buy right now in San Diego: http://youtube.com/watch?v=10WoQZKZkNs&m...

When you said "sell out quick", I think you meant "Pardee has buyers lined up for all of the lots in the phase".

Whether these buyers will/can follow through when the homes are built is a different matter.

Now that most lenders are shying away from exotic mortgages & that jumbo loans are more difficult to qualify for, I would expect a good percentage of these buyers will not be able to close escrow 6 months from now.

By then, Pardee will have to find away to sell those houses & you'll have more negotiating power.

I am puzzled on how quickly they are selling in this down market

It's perception vs. reality.

Perception: housing look hot

Reality: many buyers will not get the loans they need. They just haven't realize it yet.

Peter the developers have done an excellent job maintaining demand by squeezing supply and offering incentives. Many people really enjoy the newly built homes and regardless of the market conditions, will continue to buy in these new subdivisions.

I would absolutely wait for a resale in the development if you can. I would absolutely wait for anything anywhere if you can. If your down is going to be 100% based on the proceeds from your sale then I would sell now, then rent, then buy later if at all possible. That way the nut you make on your sale will be safe and locked in, just don't fritter it away anywhere.

The developers will always be able to offer better deals then resale property regardless of the market conditions because of the margins they make.

SD Realtor

We loved those homes, however could not afford the steep price and yes, I agree, they don't seem to be coming down much...actually none of the Pardee neighborhoods including Pacific Highlands are offering any terrific deals YET.
I agree sell your house now and rent...

It would be better to wait for a resell or wait for one to fall out of escrow and try to negotiate a further discount as getting 3% off as you are not using a realtor...last year they did not offer a broker's commission and the last time I went they were offering broker's commission so you should look at that. They are also offering to assist with closing costs now, which is something they refused to do last year...so the longer you wait...the better your deal will be.

I just bought and moved in April, and now this jumbo bomb!
But I think the community will be stable in the long run, since nearly 2/3 of the homes on my street have little kids (many will be going to Ocean Air school). Also, many owners seem to have high paying jobs; lawyers across the street, dentist & doctors to the side, etc.

Quality-wise, Pardee is okay, and we've had a bunch of little problems but nothing major yet.

1.2 million dollar homes. 20% down you need to make at least 300,000 a year to afford it...I wonder how many of your neighbor either put 20% down or making 300,000 a year especially with new families with small kids (very interesting).

many parents seem older (mid 40's & few 50's on 2nd marriage, etc). Maybe they were former home owners and had more than 20% down. (Actually, i recognize one family whose house I looked at before buying here) Anyways, my point was that there are families here, not flippers. That's all.

Anyways, my point was that there are families here, not flippers.

I think what Arty was trying to say is: most of these people probably used ARMs to buy. Sooner or later these mortgages will reset. These families may want to stay a long time, but the rise in mortgage payments may preclude that.

There are actually people who live in San Diego that have MONEY!!! Not everyone has an ARM or shotty loan. There are a lot of people that moved here with money. You say that there are people moving out. Yeah, they are the poor people that can't afford to live here. People with money are moving here.

true, i don't know what loan programs others used.

Where are there statistics about incomes in SD County?
Not what the median is...but rather, what percentage of people make X, etc.

Yeah, they are the poor people that can't afford to live here. People with money are moving here.

Alex, why don't you put your money where your mouth is & buy. I think prices will collapse, so I'm renting. I walk the talk. You should do the same thing :-)

Actions speak louder than words :-)

Some people buy home for reasons other than investment.

Although some people buy houses for reasons other than investment, that doesn't mean the financial consequences is not there when they make speculative assumptions when buying that home.

IMO you can have other reasons than investment on your top 3 reasons to buy a home, but it still needs to be considered highly as an investment...a very large one for most. What if a family had to relocate or their was a illness or job loss? Not always easy to dump a house quickly at the necessary price.

Of course it would be best if one could buy low and sell high and pocket the change. But for a family with bunch of kids, it might be more important to have the space and stability. Even after selling a house, a family needs a equivalent place to live in; perhaps for rich families, the hassle isn't worth a few 100K. For singles and couples who smartly bought back in 2000, I agree they should have sold last year and sit on the side line for few years.

I'm not talking about timing the market when you sell. I'm talking about jumping head first into a property when there are extreme risk involve and you can't truly afford it in the first place. If I bought in 2000, I wouldn't have sold. I would just enjoy my home for the stability and space you describe as well as a mortgage that's probably cheaper than rent.

Why is there any risk when you can afford the payments? If you pay $5000 a month on a $800k home and in two years it is worth $600k yet you still cn make the $5000k a month payment then were is the risk? It's only a risk when you can't afford it. Waiting to get in when there is no risk is never going to happen.

my point too. I am guessing that my neighbors make enough money and seem serious about staying, like I am. So I think it's going to be a stable neighborhood, unlike many that are becoming ghost towns.

Alex, that's the craziest thing I've ever heard. I may very well be able to afford to take the hit you describe, but I would be extremely upset about it. It would mean that the $200k I've saved over the past few years was effectively flushed down the toilet. You're right, I could handle it, but I just don't want to. Especially since that money would have been sacrificed because of a bunch of Kool-Aid drinking fools who artificially inflated the housing market.

I'll continue to rent and keep my money, thanks.

Alex and justbought, IF you can truly afford your home and losing $200k is a non event for you, then it's not a very big risk for you. Risk is very different from person to person. Someone who stretch to afford that same home and losing $200k would drive them into bankruptcy, then it's a huge risk. While someone with millions and losing $200k is just another day for the, this risk is minimum relative to their circumstances. Also, everything in life has some kind of risk associated with it, so I agree that it would never happen if you're waiting for no risk time. But we all want to minimize risk as much as possible. Financial risk for a minimum wage worker vs a CEO is very different.

Navydoc, very well said.

And this is the point that a guy named Cyphire (who has a lot of money, but decided to rent in La Jolla instead of buying) was making too.

For most people, whose assets is less than $5M. Losing a few hundred thousands dollars is going to hurt them.

There is absolutely no reason to buy today. You are not doing your family justice by buying. What so you can paint it purple if you want to? If you can afford an x payment on a mortgage you can get so so much more by renting if you really wanted to. If you do not look at a house as both a home and investment you are foolish.

Why would you pay x dollars today when you could wait 18 months and get so much more house for you money. And in the mean time rent the equivalent or better and save the rest.... There is no argument for buying today.

No I can't afford to lose $200K & I am not a CEO. But I can ride out the depreciation and losing 200K on PAPER, and I hope I don't have cash out on a down market when I get old. Why would someone go to bankruptcy if mortgage manageable? Also, if I have to move to a similar market when home prices are down, I can probably afford a similar home even if I lose money on the current one.

Also, I am NOT suggesting anyone to buy. The guy asked about the community, and I am just giving him my opinion of it, since i have a first-hand experience. Like he said, he can't even buy (from a phase release) even if he wants to.

Alex_angel-- Not everyone has an ARM or shotty loan.

You are absolutely correct (well, at least if you meant shoddy). However, I can almost promise you that not everybody in justbought's neighborhood doesn't.

If the double negative trips anyone up, what I'm saying is that right now you can look at any newer development pretty much anywhere in the county and there will be home "owners" who have overextended themselves and/or signed up for a toxic mortgage.

If you don't believe me, you can just trek over to foreclosure.com and check street names for any ZIP you'd care to.

Even after selling a house, a family needs a equivalent place to live in; perhaps for rich families, the hassle isn't worth a few 100K.

Gotta love it. What is a few 100K nowadays, anyway?

sdcellar:

Would you be able to us how many homes on arabian crest rd, foxhound way, mustang ridge dr, cherry hill ln, birch hill ln, heather ridge dr, have a "shoddy loan"?

search on foreclosure.com didn't show up any homes on the above streets, but I know it take ~7 mo after owner stops paying mortgage to get NOD..

You only take a loss when you sell. For those that think these prices will dip 40% and never come back to todays prices are mistaken. The bar has been set and even with a dip in the next couple of years, housing will get ack to todays's prices. It is just the way the economy works.

I didn't mean shoddy. I meant shitty.

Justbought,

Public records give no indication of type of loan. Probably the best indicator of potential distress is how much they financed. If the did not put money down there is no cusion if the have to sell. You can check zillow.com for that.

I take it you are watching your neighborhood for potential value drops due to distressed homeowners. If that is the case check all the homes for sale, see if the financed 100% in the past 3 years. If they did there could be problems.