San Diego Housing Market News and Analysis

Mission Valley is for the most part considered rental property and like many other rental stocked areas has long since bottomed out. With few outlets available for decent returns that are fairly low risk there has been a lot of investor activity the past few years in stock like mission valley condos. Expect them the continue to appreciate modestly this year.

Typically, this is a lower inventory month than August. The Q is - what was inventory this month last year. That is more of an indicatory.

Also, look at months of inventory (i.e. inventory / monthly sales) for a better idea of market direction.

Thanks for the responses. I've been getting my info from SDLookup, and their inventory history only goes back 6 months. I assume as spring gets closer there will be more inventory coming onto the market. Using SDLookup, it looks like there were 28 sales in this zip code in December, so the current inventory would be 3.6 months. I realize December and January are probably not good indicator months of market direction.

SDR, when you say modest increases do you think that if she waits another year to buy there won't be too much of a difference in prices?

I still think she'll be better off waiting to buy as owner occupied and not as a rental. What do you think?

I think it depends on alot of things. I cannot say how much the prices will have increased by the time she is ready to buy, only that I think they will be higher. I wouldn't be surprised to see a 5-7% increase. Another parameter will be what are interest rates when she wants to buy?

As for the rental property aspect of it, that is more of a quandry. If she is looking for cash flow then I am not a big fan of rental property purchases in San Diego. If she is looking for appreciation then yeah I guess it is okay. The only rentals I have left are ones that I bought as owner occupied and lived in and then grew out of but kept. So yes your point may have some merit. However it is hard to say what the landscape will be a year from now.

I think this will be a very interesting year.

There's the Civita development in MV, it's not that far from Fashion Valley, like half a mile.

I took a look at the first phase in the development about 2 weeks ago, 200 units of townhomes, real pricey and real nice, about 500k plus approx 500 a month which covers 2 HOAs.

I asked the saleswoman and she said there weren't moving fast, so if she has the cash, she has time.

I don't know how you can make this prediction with so many condos being held by the banks. It seems irresponsible to me. Show me how many bank owned Condos there are still that haven't been foreclosed and then make this prediction.

At the end of the day, he's a "realtor".

Have you two even read any of SD Realtor's other posts??

I'm just reading this thread but it is well known that there 25%+ of the homes in the country are underwater, and SD is probably worse. People have been living in homes for years and haven't been kicked out yet all over the place. To consider Mission Valley a "bottomed out market" for any reason in a state with a very unhealthy housing market is ridiculous to me. If the condos could some how pencil out for the rent then I guess you might consider it but I highly doubt there is anything Mission Valley you wouldn't be taking a huge loss on if you had to move sometime in the next 5 years. I saw his posts about the GOV intervening in the market more this year, but like all GOV intervention it just prolongs the bubble and makes it worse. Even if it went up 3% this because of GOV tinkering with loans it will go back down 10% in the following years as a result. Yes it sounds like Realtor speak to me.

Of course, he's been posting here forever. It's one his of his avenues for marketing.

I don't understand this false logic. If interest rates increase and I have been saving money, I am fist pumping to the sky! The increase in interest rates will collapse the market even further. I would much rather pay a higher interest rate with a bigger down payment with the opportunity to refi in 5-10 years. The best time to buy is when everyone is saying don't buy and they are exiting the market. We haven't seen that yet. I have patiently saved 150k and counting in the last 5 years and I am very happy to wait! Those $600k homes will be $400k soon enough.

Actually if you read my posts back from when I started which was long before any of you ever joined this board, I was one of the most bearish people here.

Similarly, I regularly receive requests for evaluations of property, for opinions, for thoughts and none of this is solicited and these are not for clients of mine. Also when everyone was gleefully predicting the tsunami and how we would all get great affordable deals I was one of the few who warned about how this would not be the case due to interventions by the govt.

Again, try to read my comments carefully. I have not told anyone to buy. What I have been saying is to look for a continuation of what is a concerted effort to revive the market via good old fashion manipulation. This manipulation will be in the form of pushing further risk onto the taxpayer backed GSEs. Furthermore the timing of this effort is particularly ironic given it is an election year.

Yes a homeowner underwater with a 600k loan and a turd 450k home will soon be able to refi it for the full 600k. That loan will be backed by fannie mae. This is nothing short of fraud. An asset that is not worth 600k will be moved to a GSE and that 600k is insured by your tax dollars in an indirect manner. This also will remove this home from a potential buyers pool as a short sale or reo. This is market manipulation. This will happen on a larger scale. This is not a free market.

This will however goose the market. You can hide your head all you want. You can deny you missed a local bottom, it doesn't matter to me... If you follow investment property closely you will see it has been moving over the past few years. Similarly where is the tsunami of homes? Markmax where are they at? Have you seen them?

How about you jameswenn? Do you really think the original poster would be idiotic enough to spend 500k on a condo in mission valley? This is not rental stock. Try to understand what rental stock really is ok? Have you been tracking the sales of true rental stock and watching as the prices have been going up?

If you don't want to use valuable advice to your advantage that is fine. Why don't we wait a year and look back on what I have said. How does that sound. If you haven't been reading recommendations that the Fed has been giving regarding the GSEs, and what a hell of alot of other news has been with regards to changing the current model in order to stimulate things, then that is fine, keep your head buried and keep waiting for that mirage of a tsunami. Meanwhile myself and others will continue to purchase rentals and take advantage of the opportunities.

Fist pumping to the sky?

Friends who had been very bullish in real estate were telling me not to buy at the end of 2010.

I think there was some, maybe not maximum, but some real fear in the real estate market at points over the last few years.

I only bought after conceding To myself that the GOV mainpulation was potentially limitless and that resistance was futile.

I live and work in MV I watch the market just to laugh over the years at all the banks and flippers and short sales. My prediction is MV is down another 10% by this time next year.

Redin this one for a good laugh.
2258 Gill Village Way #1014
The realtor owner is an expert!

Interest rates will increase sharply in the future.

The conundrum that every person with money has right now is should I spend my money or not? My answer would be yes I would spend money now to buy tangible assets however I would try to finance them at low rates as well.

You once more are making a mistake of me telling you to buy. I don't do that. Just because I have bought does not mean you should buy. I am in a position to do so and have taken advantage of that. I am also preserving cash to take advantage of what will be extraordinary opportunities when interest rates to go high.

Make no mistake about it that when rates to go high, and they will someday, that prices will decrease, perhaps sharply. Show me a post where I have not maintained that thought. However you cannot also have a very high interest rate environment without accompanying costs for pretty much everything. High gas, high energy, high fuel, high rent, high food, high water, high everything prices... So your cash pile will suffer somewhat. However I do think keeping a cash pile is a good thing... personally I will be getting bonds when that happens. however the rentals will still be there, and even though they will be devalued, they will still be a fantastic income generator due to the fixed financing.

The best time to buy varies for everyone. It depends on their goals, finances and mostly personal situation. More often then not people are driven to buy because of pressure from one or the other spouse and because they want to start a family. Single people like you don't have that problem. It is not a particularly good reason to buy but it is the way things work. Anyone who is going to buy better damn well know that interest rate shock is in our future. Well it has been in our future for how long? A decade? Will it happen this year, next year? next decade? I don't know... however anyone that buys obviously should have a strategy that will cope with it.

I will admit like any area I do find deals that pop up that pencil out. What a huge pain it is to be a landlord and deal with HOA's and tenants for the few $$$'s and the hopes of appreciation. The deals that pop up are very shady, like the agents only sent in a buddys clients offer to the bank. Pending or Contingent in 1 day under current closed comps pricing.

akbar try considering rental stock in a complex like Mission Valley Plaza. Buying in overpriced newer complexes is how you lose money. Yes ridiculously overpriced stuff will depreciate. More common rental stock in older 70's and 80's complexes in Mission Valley has already moved up.

Enjoy the HOA increases and special assessments, they will gobble up any chance of profits really fast in the older ones.

Try to understand something once more okay? The argument is not for profits or not in the older ones, the argument is what will prices be for that type of rental stock. You maintain it will be down by 10%, I say it will be up a year from now for that particular stock.

Personally I find it hard to justify buying rental stock in San Diego, I would be purchasing out of state.

I haven't seen you talk about the supply glut. Remember in a market it is supply and demand. In 1989 at the end of the savings and loan scandal the GOV set up the RTC to liquidate the bad assets from the market. If you believe in GOV intervention and look at history the most damaging thing to the housing market has not occurred yet in this market. Do you remember the prices of condos during the RTC sales in 89 or 90, whenever it was? I have been told there were lots of condos near the beach selling for $10k each for cash. The market must liquidate or it can never get fixed.

There are tons of bank owned properties that the banks won't liquidate yet and they haven't been processing many foreclosures in the past 2 years because of the robo-signing scandal.

If your pride yourself on predictions you have to look at what history has done in the past and project it will happen again.

Yes I remember the RTC liquidation quite well. There were those people who took advantage of them and there was the overwhelming majority of people who stayed on the sidelines and were scared.

There were also those who predicted there would be a solution similar to the RTC for our current bubble. This would have been fantastic... It should be intuitive to figure out why that didn't happen.

See the main problem here is a somewhat innocent belief in how this all works. Try to understand, it is not a free market anymore. It stopped being a free market long ago. Those in control of the market have cornered themselves and the only way to keep a lid on it is to continue to manipulate it, subsidize it, and massage it for years if not decades until it can inflate its way back to the true value of the asset.

Like you, I do not believe that will happen. The big pop will happen when the bond market realizes that we will default on our debt and the charade will come falling down on everyone. I don't know when that will happen but I do think it will. Unlike you I believe there is opportunity, there is ALWAYS opportunity. I don't believe in waiting for it, but rather trying to build up so I can act when it comes.

Again, read what I said, not what you want to put in my mouth. I think rental opportunities are fantastic right now for cash flow... in San Diego? no. In other states yes? It doesn't work for everyone though. There is no easy path to make money, to many people think there is.

My background is in engineering and logically the things that you say should happen should happen. What you fail to see is that there are much stronger forces in place that have not let it happen and they have only entrenched themselves further.

I still stand by my prediction for pricing for various types of property. Try to understand that is independent of whether you or jameswen or anyone else should buy.

Do you get it yet?

Ok, what I mean is I predict rents go down, prices go down, HOA's go up. The OP's friend will not miss anything but a pain in the ass by waiting a year.

SDR,

Give it up trying to explain things. I think the majority of the people that have already taken advantage of this RE implosion have already left this board. the remainder of the folks are ubber-bears still waiting for that 80%+ discount in La Jolla, and will think of every possible reason/excuse not to (nothing wrong with that really, quite entertaining)...And for the remainder of the people, life goes on.

Analysis to paralysis.... You know the old saying

B.S. = Bull shit
M.S. = More shit
P.H.D. = Piled higher and deeper.

I hear you FLU.

You know, jameswenn, this comment is so far out of line, I can't believe how stupid it is.

If you have a reasonable financial/economic argument, make one. If not, shut up.

I still don't think it's a good idea to have savings in cash, I still stick with savings in cef, gdx and energy shares.

I'm also not persuaded that interest rate jumps will lower prices.

Have you seen the article in Harpers this month on mers litigation.

Kind of another example of power and status quo.

As my wife reminds me, without her I'd probably still be living in a filthy hole having skipped law school and eating microwave stuff.

She makes a valid point. Sill, the filthy nest sounds cozy sometimes.

At the beginning of the day, he's a seismologist. Midday, a dealer in rare books. But at the end of the day he's a realtor.

We are too specialized nowadays.

As my wife reminds me, without her I'd probably still be living in a filthy hole having skipped law school and eating microwave stuff.

She makes a valid point. Sill, the filthy nest sounds cozy sometimes.

****************************

Yes that is true for me as well scaredy... Our wives do make us better... however the real question is do we really want to be better?

I don't agree with the "it would have been fantastic". It can still happen is my point. We aren't in a healthy market and I see the fed trying to inflate the currency to catch up to home prices but it still doesn't rule out the GOV taking over all the assets and having a fire sale. We are not in a significantly less free market than we were in 1989 if that's what you are implying. It is not as free, agreed, but it doesn't mean the GOV won't step in. Look at what happenned with the automakers in 2008. They got bailed out through cash for clunkers, abnormally low interest rates and TARP funds. Don't think that just because the GOV hasn't done it to the housing sector yet that it won't. There is a significant supply overhang especially in SD. This leveling off of the market due to GOV intervention is only temporary. I also don't rule out a new administration starting to play hard ball with the banks and telling them to liquidate and stop looking for handouts.

I also think it is kind of ridiculous for any consumer to look to a real estate agent for advice in the housing market. I think it is unproffesional for a Real Estate Agent to provide advice whether you predicted the collapse or not. You don't go to the barber everyday and ask him if you think you need a haircut. There is no other industry where the sales agent is looked to as an economist to predict that industry's economic future. I think this should be one of the lessons learned from the bubble. The consumer was being fed false information from all angles in his life and now all of those people point to the consumer as evil. It's even worse in Real Estate because the sales agent/economist stands to make $10,000+. I'm not just calling you out SDR, I'm calling them all out.

P.S. I am not single and I am in the demographic to buy and I am probably not going to buy any time soon.

His point is 100% valid. Real esate is the only industry you look to the sales person making $1000s in commision as an Economist. This should have been one of the biggest lessons learned from the housing bubble. I can't believe educated consumers could fall for it again quite frankly.