San Diego Housing Bubble News and Analysis

I know someone who lives in this community, and we've looked at the sample homes. The people I know bought with 100% no-doc financing, and are currenty paying option 1 every month. A couple of times a week I check to see if their house is listed.

There was every bit as much Kool-Aide in this neighborhood as anywhere else, maybe more, as people with real money probably wouldn't be interested in living in this area.

dumb question..

So I am curious if/when prices come down in 4S such that properties actually pencils in as a possible rental (I know, not likely in this particular community and a long way to go in 4s ranc), would folks be adverse to owning a rental in 4s, given the past wildfires in san diego?

I know that it probably isn't worth worrying about too much. But I'm just thinking if I had a rental out there, it would suck if every so often I needed to worry about a brush fire.

I'm leaning more towards MM as possible rental income. (1) being that it seems like pricing is coming down faster (2) it seems more convenient into companies in sorrento valley area (3) less brush fire worries.

selfportrait

----- Sour grapes for everyone!

This raises a second question, Can you insure you loss of income in the event of the fire. If you are using the rensts to cover a portion of the mortgage then I would think that you would not only have to insure the property but would also have to carry a policy that would insure the income for 24 months. Otherwise you would need to carry a reserve equal to 2 years rent to offset this type of risk.

As far as rentals go, it seems to me that you'll find the most favorable relationship between rents and sale prices in the lower priced neighborhoods. If a 3bd home in 92113 rents for $1,700 and sells for under $280k, why would you bother with a $500k home in 92126 that only rents for a couple hundred bucks more?

The pool of renters at $1700/mo is a lot larger than the pool of renters at $2,000, let alone $2,500.

Actually Bugs we are seeing prices for 3/2 in MM at the 400k and below level now. As bad as people talk about MM it is a step up above 92113.

However people who are serious about generating income from rentals would be well served to listen to your point which is to use as little of your own money as possible.

In terms of my own search for possible rental investments I am sitting on the sidelines for awhile now. IMO San Diego does not pose many viable opportunity for rentals yet but they are slowly getting there. Actually Temec will get their first.

SD Realtor

BobS
I bicycle through that neighborhood occassionally, and yes, there are a lot of houses for sale there.
They were all sold at the peak of the bubble, and probably with lots of leverage, so will take the biggest hits now on the downside.
They also strike me as the kind of product that will be shunned in the future...monster houses close together with crowded streetscapes. Recessions always force a healthy downsizing of our appetites, something we Americans can use right now.
Also, they would be terrible rentals...do the numbers on costs vs. rents and they make no sense whatsoever.

FYI- Fire issues were discussed at length on this thread:

4 closure Ranch errr scratch that "Fire proof" Ranch = new nickname for 4S Ranch
User Forum Topic
Submitted by 4Sbuyer2002 on October 25, 2007 - 9:36pm.
Looks like, per Rancho Santa Fe fire chief, 4S Ranch is deserving of a new nickname. (it should really read "Fire resistant" Ranch but "Fire Proof" Ranch is more catchy . . . don't you think????

Hello esmith .. do you have speicific links or any listing numbers for this IVYgate properties at 4Closure Ranch?.

5yearswaiter

Ah yes, I remember that thread that you started awhile ago. I don't care about how fire-resistant a house can be. If it's in a fire zone, it's in a fire zone. period. No house (unless made out of concrete completely) is fireproof. I guess the issue I have is as a rental, financially 4s doesn't make sense it seems.

But even if the dollars do line up in the future, I'm just wondering if there are others that would consider 4s as rental, given the past firestorms we had, and the risk these communities are in this firezone....because I don't think it's the last firestorm we will see.

 I'm wondering how insurance deals with rental income lost from a firestorm. I know that insurance companies were paying homeowners loss of use compensation from the fires, but wondering how rental properties were compensated (if at all).

selfportrait

----- Sour grapes for everyone!

There's a condo converter who lives in that neighborhood. He's not developing much these days.

4s Renter

Ivy gate is part of the 4s master plan. www.4sranch.com

As far as insurance companies go, usually part of your insurance policy covers lost income - they set reserves to hedge against this type of claim. I guess it depends on the limits set forth in your policy but usually this should be part of the homeowners, if you in fact run a business or utilize the property for business income.

I noticed that someone in this community filed for bankruptcy....What does that do? Can you still lose your home? Or by filing bankruptcy does that protect you from losing your home?

Not my thread, I just had some opinions about 4S. I live in another fire prone area and will evacuate if the next fire gets close enough. I think most of the County is vulnerable and the areas that are next to national forest or brush that has not burned in several years will eventually burn during the next round of fires. It is just the law of probability.

As far as I know, filing for bankruptcy temporarily stops the foreclosure process and allows you to get back on track with your mortgage payments. Mortgage debt is not wiped and bankruptcy courts can't modify loan terms (e.g. reduce the amount owed). All that happens is that you're not kicked out while your case is decided, and then you get a second chance.. If you're behind on your payments, you can work out a 3-5 year repayment plan.

Obviously does not do you much good (long-term) if you got yourself in an option ARM or your monthly payment is 60% of your net income. But if you're a responsible buyer, there's light at the end of the tunnel.

But I heard today that they're talking about BK judge rewriting home loans and banks raising hell about it.

That is interesting info on bankruptcies....My question is why isn't more people doing the same thing? Is there a surge in the bankruptcies? It was noted in an earlier post that only one homeowner in this community filed for bankrupcty....why wouldn't the rest of the homeowners do the same if they also are in trouble?

gracie,

Bankruptcy is much more serious (in term of damage to credit) than foreclosure. For a homeowner who knows that he is "underwater" & has no chance of keeping his house, there's no use in declaring bankruptcy just to delay the foreclosure. It's better have foreclosure than bankruptcy.

Thanks for the explanation.....I did not realize that bankruptcy was more serious than a foreclosure...I thought they both did similiar damage to your credit.

I think Ivy Gate should be called Poison Ivy Gate.

lost income and insurance

I'm wondering how insurance deals with rental income lost from a firestorm. I know that insurance companies were paying homeowners loss of use compensation from the fires, but wondering how rental properties were compensated (if at all).

It depends on whether a lender will require rental income protection (and I can only speak to my own situation, as that I am not an authority on insurance and its intricacies). I was only required to have income protection on my commercial/residential property. From my understanding of the policy, yes, the insurance would cover certain expenses if a disaster (such as a fire) destroyed the property.

My SFRs do not have income protection, but the insurance does cover the lender in case of a fire...

(I'd have to re-read the insurance policy that I have, I dont' have all the details in mind).

Have you guys read the update on Poison Ivy Gate?
http://bubbletracking.blogspot.com/2008/...

wow...I feel sorry for the folks who bought into this development....