San Diego Housing Bubble News and Analysis

Surely you must realize that everyone here will tell you that this is a very bad time to buy.

Surely, you're kidding? Buying a SFR in any of those areas before 2011 (at the earliest) would be a huge mistake that could cost you bookoo $$$$$$. You would be wise to read a lot of the threads on this forum (and others). Here's one example: http://piggington.com/how_much_have_u_sa...

I guess I do not see any immediate reasons why you are pressing so hard to purchase at the moment. Most people who are in need of a home for purchase do so because of family needs, school districts, and other issues that generally are not applicable to young single males.

As a Scripps resident and a future buyer I understand your frustration with the current prices so you really have nothing to lose by waiting. Also no this is not central to San Diego. Ideally Carmel Valley is kind of central to San Diego county activity but central San Diego is considered North Park, Normal Heights, etc... which is a vastly different experience then Scripps, Rancho P, and CV.

Absolutely if I were in your shoes I would wait if you can. That said I do know of someone who is very close to your age (overall demographic) and he is closing escrow in a few days. He lowballed a home in Clairemont and they accepted. So... go figure.

SD Realtor

I dont get that thread about the savings... They are saying they brought property and saved money?

Anyway If you're saying I shouldn't buy before 2011, where do I live then? I have a dog so living in an apartment or a condo rental is tough.

Anyway If you're saying I shouldn't buy before 2011, where do I live then? I have a dog so living in an apartment or a condo rental is tough.

Rent a house.

Thanks.

Where's a good place to look for a rental?

I didn't consider a renting a house before because wouldn't it be wiser to put that money in the mortgage rather than pay someone else's mortgage. But maybe it will make sense for the right rental.

Where's a good place to look for a rental?

http://sandiego.craigslist.org

wouldn't it be wiser to put that money in the mortgage rather than pay someone else's mortgage. But maybe it will make sense for the right rental.

letting someone else absorb house price decline on the order of 10%/year far outweighs any other possible financial reasons.

Consider a house that's worth 500K today. Renting it will cost $2000-2500/month. Buying it will cost you at least $2500/month in interest on your loan, plus possibly $5000/month in depreciation.

Well Mate

If you want to buy right now you better have 20 percent, FICO in the high 700s and making around 100k plus a year in order to maybe have a chance.....Oooh and by the way do not forget you may have to pay some of the closing costs if not maybe all since most sellers are banks.... I wonder if you can even get what you want?? I don't believe currently it is about a purchase offer agreement but actually closing escrow since Country Wide is one of the only lenders offering any stated income programs to date??

Well to be honest OCScam,

I only have 10% down. I do 160k annual income with long history, and fico is around 780. The loan officer said he could qualify me for 630k house (assumin 10% down) without problems and no jumbo loan, or higher with jumbo at higher rates. I'm also only interestd in buying with seller paying for full closing.

Deleted. I thought you were considering a $650k condo, which I thought was nuts... Never mind. 

125 I would not worry about what others say with regards to financing. I have two buyers right now in escrow, one with 5% down and another with 10% down. Yes financing is getting harder nowadays but no do not believe it is unattainable because somebody on a blog told you so.

I also have dog(s) and yes finding a suitable rental that is pet friendly was much more difficult then people make it out to be. Just be patient and keep looking around. Check Craigslist and the usual internet sites. Go to google and type in san diego rentals or strings similar to that and see what comes up. If you want to post your budget and areas you want to look at then put them in this string and I will see if there is anything on the MLS for you. The MLS is pretty weak when it comes to rentals but it does not mean it should be 100% ignored.

Now be aware of the timing we are (or at least) I am talking about. You should probably be ready to hunker down for a few years if you are looking to eliminate much of the downside risk of buying. Alternately you should be saving as much as possible. At some point we WILL see interest rates go up. Not if... when and by how much.

In terms of sellers paying closing costs that is pretty easy to get to happen nowadays. Anyways like I said, my rationale for not buying today has nothing to do with whether you can or cannot get the financing because you can. It is more along the lines of trying to recognize that you can save some serious bucks right now by holding off OR if you are gonna buy they lowball the sellers like crazy, then prepare for rejections, repeat the process, and you may get a hit if you don't give up.

SD Realtor

If you are an engineer you should be smart enough to run the simple rent vs. buy numbers and there is no way purchasing for 550-650 makes any sense. You can rent an equivalent house for around 2000 per month. Anyway, those same houses you are looking at will be well under 400K within a couple years.

Better to wait and save

I have saved up 60k and waiting still. Either prices fall when it makes sense to stay and buy in southern California or I am moving in 2010 to Austin or place like Raleigh, NC where tech jobs are plenty and home prices not inflated.

Let the foolish Europeans piss their money away and market crash.

Hi deadzone.. don't you think its farfetched for a 600+ house to be under 400 in a few years on average (none bank owned)? That would mean a pretty crazy collapse. I just can't see that happening.

125mph,

why do you really want to buy soon? Is there a strong and compelling reason?

Remember: Desire is one thing.. that usually leads to impulse buying and want is the other thing. The "want" part is usually more compulsive and more logical.

I came to san diego 2 weeks back and think this area needs some serious correction. everything is almost 25% more overvalued than what I might pay in an upscale chicago neighborhood. i mean everything from food, to necessary services, and to real estate.

futurePrezOfUSofA

PS: By the way.. did you do your MBA from Duke university? My roommate used that 125mph nickname before.. I lost touch with him though.. just curious..

Nope I went to UCLA not duke.

I guess I have a desire to buy and been waiting for about a year now. I will probably rent for another year seeing as though everyone thinks I'm craze for buying now, but I don't think prices will get below 400 for homes at 600 right now though. Well maybe I'll make a few lowball offers to see if anything bites. RE is going down but I don't think it will take a suicide dive.

fprez,
hahha, comparing chicago to san diego is like comparing apples to donuts. Basing an expectation of a housing price correction based upon prices in Chicago is therefore absurd.

I am from chicago and would never ever consider going back to the midwest winter wonderland, no way, no how, and I am certain many others are willing to earn less just to enjoy the better weather in SD, so price comparisons are consequently meaningless. Case in point, I just drove down to bay park today to pick up some fresh sword fish with my convertible top down, you simply can't put a price on that!

In addition, job opportunities for me and the pay is vastly better out here than in the winter wonderland.
thus, for someone such as myself, in addition to the vastly superior weather, I can live better in SD than chicago and have much better career ops, there is simply no way I'd live in Lincoln park or whatever snooty hood you consider upscale in Chicago.

lastly, long term, if you really want to compare cities, I think San diego is similar to the bay area because both have a highly desirable location and a superior high tech industry with electronics and biotech leading the way. Chicago has alot going for it, but nothing in the way of desirable location or technology base, it's essentially a rust belt city. At some point in the future, san diego home prices will reflect bay area prices.

125, what is really farfetched is to imagine that those smallish houses in non-coastal neighborhoods you are looking at ever sold for 600K+ in the first place. Now the correction is going be really nasty in those areas.

Look at what those houses sold for around 1999/2000 and then you will see closer to real value (based on income). Now that credit is shut off, and people actually have to show proof on income, it's a whole new ballgame.

Bottom line, if you buy now, you'll be kicking yourself later.

That's Bs. If you base your decision on trying to buy based on VALUE you will be renting your entire life like many of these others on this board. How many good companies trade for book value, or similar metric? They trade at premiums or other valuation to their intrinsic value for various reasons, the same reason homes in san Diego sell for more than those in Dallas or huntsville, or other locale you all claim to be a better value.

125, the only way you will me able to build equity and leverage up into larger homes is to start somewhere. Heck, if prices drop a bit and you are living in a place you like, who cares?

Or you can just rent like all these others and spend your time on this board trying to convince others not to make a good decision.

160k is obviously a very good annual income and 780 kicks some serious kittens with 10 percent …um you the man!

I wasn’t saying you couldn’t get financing but as SDR says there are people getting loans just not like they were before..
As far as you saying 600k house not going down to 400k? This has already happened here in OC
I have purchased a home in very nice neighborhood because I want to keep my children in the school district and the price was negotiated into my comfort zone. We settled in the mid 400k area and this is a home that sold for around 700k in 2006. My background is 120k combined, 20 percent and 780ish credit and we had some issues with the reserves. You can ask some of the realtors on here but I had to borrow some money to show a 5 percent reserves after putting down the 20 percent. This is something I wasn’t anticipating you may not as well?

And yes to SD R I bought the foreclosure! I’m not a squatter anymore
Good luck!

OC Scam I think yours is actually an example of getting a good deal in a depreciating market. Additionally your motivation for buying the home you now live in falls into one of the more common reasons that people buy. You did it for your family, you did it because you believe (or I shall say I assume you believe) that this home will be a home that you and your family will be leaving in for many yeasrs to come.

125 trying to figure out the depth of the depreciation cycle is quite difficult. A 600k to a 400k drop off is 33% and while that is a large drop off it is not inconceivable. Hard to believe but not impossible. We have already seen 30% drops in some areas here in San Diego County. I cannot say that it will happen in the areas you want to live in but.... well ya never know.

Again, given your salary, your single and as far as I know, you do not have any children I believe that you may be able to position yourself very well by waiting at least a year if not longer. Consequently with enough cash savings you may be well positioned not only to purchase a primary residence but perhaps an investment property as well.

Again, if you feel that you HAVE to buy now then at least drive a hard bargain, shop around...lowball take your time.

SD Realtor

Houses that sold for over $600k have already fallen to the $400k and below in Temecula, Riverside, San Bernadino, Sacramento areas (and some other parts of CA). If you truly believe that it won't happen to San Diego, go ahead and buy................but you'll be crying in your beer every time you make a house payment and pay your taxes because many of your future neighbors who waited for the bottom to hit will have paid hundreds of thousands less.

Good luck to you whatever you decide to do.

That's Bs. If you base your decision on trying to buy based on VALUE you will be renting your entire life like many of these others on this board. How many good companies trade for book value, or similar metric? They trade at premiums or other valuation to their intrinsic value for various reasons, the same reason homes in san Diego sell for more than those in Dallas or huntsville, or other locale you all claim to be a better value.

125, the only way you will me able to build equity and leverage up into larger homes is to start somewhere. Heck, if prices drop a bit and you are living in a place you like, who cares?

Or you can just rent like all these others and spend your time on this board trying to convince others not to make a good decision.

I would sort or agree with some things RO is saying here. I personally think in some neighborhoods, there will be an intrinsic premium for owning versus renting. That said, if you want to find bargains, it's not happening in CV,RP (yet). There are some homes in the off of Camino Del Sur (part of RP) that are relatively new, about 2000 sqft in the mid $650k. (Next to the new Intuit campus). I've always a been a proponent that you own your primary when you can afford it without going out on an arm and a leg. But I never view primary homes as investments. I would though recommend you spending your time to be picky and choosy.

I don't think it is a terrible time to buy if it is a place you really like.

That said, if you are 29 and single, I would not be in a hurry to buy something. I don't think prices will drop as dramatically as many here say, but I do feel strongly that they won't go up. So, if you are single, 29, and chances are prices won't go up, I would wait.

If you buy now, you want to avoid situations which would lead to selling too early. New job, relationships, etc.

125, the only way you will me able to build equity and leverage up into larger homes is to start somewhere.

I laughed out loud at this. You say it like he would actually be building equity from the start.

Or you can just rent like all these others and spend your time on this board trying to convince others not to make a good decision.

How is buying on the downside and watching a $120k down payment evaporate in two years a "good decision"? Why NOT wait until prices level out, when you can save that $120k and tens of thousands more by renting and live exactly the same lifestyle, and then have a larger down payment on a cheaper house and have actual equity from the beginning?

Personally, the satisfaction of ownership is not a good enough reason to make the decision to buy now. The pros of waiting so far outweigh the cons that it's not even a question for me.

SD R

Yes we are very happy and it was for the family and the neighborhood to stay for as long as possible and based on the reasons I had wished to buy a house for years now!

RatherOpionated you should change your name to RatherClueless. Value is a realtive factor. Were you also advocating buying tech stocks in 2000 with P/E multiples of over 100?

Ultimataly prices will correct to within normal historical levels based on income and other factors. That is historical for San Diego, nothing to do with other cities.

That's why if you want to look in the crystal ball and get a ballpark estimate for what houses SHOULD and WILL be selling for, look at sales prices in San Diego from 1999-2000 timeframe and adjust for inflation.

R.O. if you think it is such a good time to own real estate why are you selling a very nice SFR, in a nice part of town? I am just curious.Do you plan on moving up since it has paid off so well? Maybe you could link it again so everyone can see what I am talking about? Is it that you don't like alligators but you think playing with them is fine for everyone else. Is it a "misery loves company" thing? Maybe you can use your personal story to convince the O.P. of your sound reasoning?

OC Scam good for finding what you want.

FLU made the most insightful statement. I have tried to expand on his point in many posts. Home ownership is not as much about investment as a lifestyle. Many on this site vehemently disagree with that sort of statement and I respect AND understand that stance.

RO I think that your statement was more to stir the pot then anything else. Come on now, you are probably quite successful financially and whether you made your money through real estate or through other means, to make a statement such as the one you made above really was.... well it was kind of a laugher dude.

SD Realtor

If 125 can get into a primary residence, and possibly even subsidize his mortgage with a roommate or two, why would you all try and Tell him to time the market? Prices are already well off their highs, and there truly is no way to know when the bottom has hit until it has already passed. If 125 likes a place enough to live in it even if it drops a bit more, who cares?