San Diego Housing Bubble News and Analysis

Normal Heights is sort of hanging in there. The gentrification element of the last decade or so must be why. This is not the Normal Heights of the 90's bust. I look at active pending last night and for other clues that it might be ready to crack. The ratio was weak but not terrible. Only the doggiest house is looking anything like depressed. Little declines despite the fact that Normal Heights probably appreciated as much as any other area. some years in the neighborhood of 30% on top decent apprecitation before that. Crazy is right. How much Middle class/bohemian /eclectic can you find in San Diego?It is centrally located and it is adjacent to better places not worse,Kensington and Universtiy Heights. That just must be it. I was hoping to buy one of the few lots left where a second unit can be built there but that action isn't anywhere near penciling out. 92104 is much weaker in the more degraded parts now especially. I think it is just a matter of time until you see Normal Heights take some hard hits.How hard will be interesting to see.I would think it happens in the next six months a year at the latest. Having rented, owned a few houses and worked around Adams ave. I understand the shock. I have mixed feelings because I am glad of the changes for my friends who own businesses and live there still and disappointed in the lack of opportunity for the rest who like the place and face sticker shock still.
I met my wife at Lestat's btw and I knew it could happen after the changes started occuring. Before it was more or less out of the question meeting someone like my wife there.Gotta take the good with the bad!

Normal Heights is also split in the quantity of foreclosure activity between North and South of Adams... I've been watching some pretty heavy foreclosure action on the south side of Adams (Meade/Monroe/Madison), esp. in the condo conversions. (There's a condo conversion on Meade that must have a dozen foreclosures in it now.) While condo conversions and SFHs aren't exactly exchangeable, the instability can't be a good thing for an only-recently stabilized neighborhood. North of Adams, not so much, and most have been resold.

I live a few blocks from that bubble-priced Benton Place house, and if it sells anywhere near that price (or even the Zillow price, marked to $/SF), there will be a lot of happy neighbors hugging the new comp. But I'd give sweet odds the delusional owner will still be the owner come this autumn.

Give it another year. It will top out at 300.

Yeah, but I've been saying give it another year for over five years now. If I could convince the spouse to move we would be gone by now. Long gone. Just turned 40 this year, always been a renter, and the prospect of still paying a mortgage when I'm over 70 doesn't sound too wonderful. Looking at other areas, though. There's a lot available within a 15 minute drive under 300k. If I do give it another year, I'm sure we'll be able to find something around 200k within a 15-mile radius of city center.

Good eye and point about the condos/condo conversions DCRodgers. I never could believe the prices for the little detached homes on Meade between the freeways because of the traffic and location to El Cajon Blvd. These would definitely be good bellwethers too because so many of them sold at or near the peak. Some multiple times.
Really, like Mark, I couldn't believe the prices for any of them in the area. South or Adams was almost on par with the north side and a little into Kensignton. Of course South of Adams had more room to gentrify and it did too, but the housing stock is for the most part shabbier and the traffic, both vehicular and foot, is worse.( I lived south of Adams and I am not knocking it, just observations.) Some people, myself included, like that it is a walking neighborhood. Especially as the walkers got less scary and less likely to mug someone.

People have talked about high prices for funky neighborhoods in Santa Monica or SF and others for decades so It will be interesting if something real puts the breaks on this time around.300k for that house would still be significant.

Mark,
Just read you last post. I Imagine you are familiar with Rolando? Many people who I have met that like Normal Heights and University Heights also like Rolando. It sounds like a small house will suit you and there are some there nestled between nice larger ones which is usually a plus.

Not normal heights but stopped in at an open house in bay park, half a block from Siesel's market. 525k for a 1095 sqft 2/1, no view. Now that is insanity. Oh but it had granite and a nice gas range!

Josh

Mark,

We hear how low ball offers insult sellers. I think your response is a great way to communicate that the sellers are insulting the buyer. Just repeat the price in astonishment, turn and walk out. I wish I heard more of these stories.

On a side note, I heard George Chamberlain on the radio today. He just wrapped up a discussion on how some personal investment guru/vulture based in a Wells Fargo branch put a 70 year old guy into a variable annuity for 5 years. I thought George was going to cry about the injustice he had just heard. Following that heart-felt discussion, he had some guy named Mayron (sp?) on the last 15 minuets of his show pouring on the propaganda. They were talking about all this pent-up demand and how were were probably near bottom of the price decline. The recent inventory decline data was given to justify their point. They said at this rate in 6-7 months we will be at normal inventory levels. The financing problem was addressed with the FHA loan. I can only guess that George and Mayron have some deal together because neither of these guys had an independent thought. They based there discussion on what seemed to be the NAR talking points.

Yeah, but I've been saying give it another year for over five years now.

Yeah but the bust hasn't hit that area yet.

Maybe it never will.

I'm actually fixin' to move as well at this point. San Diego isn't nice enough that I'm willing to rent for the next four years until the prices correct.

there are only so many barista's/bartenders that can afford to "buy" in abnormal heights. look at the rent/own ratio. it's retarded. if you can afford it, hit it. but don't think it's going to be peaches forever; it's still shit. rent a place for awhile first and get a feel for the hood.

I want drama. I’d love to be a fly on the wall and see the realtor’s reaction after the 5th person gave her the same Not-Touching-This-Property-With-Anyone’s-Money treatment that you gave her.

At what point does the realtor give up and tell the seller that no one is willing to pay well over half a million dollars for a 2-1?? At what point does a sulking-seller begrudgingly lower their price by 5 grand and think that will suffice?

I really don’t like putting my purchase on hold while I wait for a seller to work through their emotions, but my coin is hard-earned. Stop your thrashing and be rational already.

Sock Puppet #1: I really like Normal Heights, why aren't the prices drastically falling in Normal Heights?

Sock Puppet #2: because people really like Normal Heights.

Sock Puppet #3: I really like Carmel Valley, why aren't the prices drastically falling in Carmel Valley?

Sock Puppet #4: because people really like Carmel Valley.

Sock Puppet #5: I really like 4S Ranch, why aren't the prices drastically falling in 4S Ranch?

Sock Puppet #6: because people really like 4S Ranch.

Thank you, thank you... I'm here every week. Yes I do have 6 hands.

Very, very,funny

Mark just hang in there and be patient. I know it kind of sucks. If you are in a big rush you may want to consider other neighborhoods. Talmadge is nice but probably pricier then what you want, I lived there a few years and still own a home there and it is a cool place to live... It is a poor mans Kensington. Rolando has some cool little pockets and is like a poor mans Talmadge so you may indeed find some better deals there. I absolutely believe that Normal Heights, even the nicer places north of Adams will indeed fall. By the same token I wouldn't make some of the predictions that others make which quite frankly are based much more on hope then fact. Bottom line is it will take longer then they hope for it to take. Still though, if you have the time, it will get there. Looking for homes now is not fruitless but it may prove to be frustrating. It is like taking an oath of celibacy and then going to strip clubs.

SD Realtor

I agree with SDR. That's why my posts are incredibly OT.. killin' time and trying not to focus on housing for a wee bit. Interesting times we live in.

According to redfin, the lot is over 1/2 acre.

I don't see that by the pictures but maybe there is more 'usable' land behind the retaining wall?

If indeed it is over a 1/4 acre lot, that's why the price is so high. 1/4-1/2 acre in an urban environment, even NH, is worth more than elsewhere.

http://www.redfin.com/stingray/do/printa...

Prices are high there because everyone wants to live in Normal Heights.

I just looked at the satellite imagery for this site and it looks like a level terrace of maybe 6,000 SqFt backing to the hillside overlooking I-15 as it makes its way south out of Mission Valley. You're not getting any more lot utility out of that site. OTOH most people would probably like the view.

Any view likely comes with the downside that the canyon down to the 15 will act as a white noise funnel, giving a constant ambient background of poorly-tuned trucks downshifting to climb the steep grade or "Jake Braking" (noisily using the engine rather than the brakes to slow) on the northwards run.

Other examples of the view/noise tradeoff are the spectacular Mission Valley view homes on the north side of the mesa, where you have to raise your voice to talk over the roar of the expressways. Yuck.

(Oh, and don't be fooled by the lot sizes around here... the property lines were typically drawn to a line at the bottom of the nearest canyon, but most of the land is steep and unusable.)

For me the key point is its sale in 2000 at 183K - nearly eight years from the bottom of the last cycle. And it's square footage of under 700 sq. ft. And its sub-par condition. And the bare rafters in the tiny tiny living room... and the fact that the average income in Normal Heights is around 35K... I could go on, but it basically comes down to the fact that pricing seems completely detached from reality.

Oh, but I do have to say it was nice handing over that info sheet in the realtors' mid--sentence and walking out.

The canyon property = "noisy, steep, unusable" and a fire hazard.

Just spent the morning in Normal Heights and the valley,breakfast at Adams Steak and Eggs. That neighborhood it so great.So many great people and so many great small business run by great people.I always liked it even when I first shared a house with friends back in 1985. I think the San Francisco effect has definitely hit and it isn't going back, even though prices will inevitably go back some, maybe drastically in some cases.

I do also know that many owners in Normal Heights are on easy street, for one reason or another. Many recent buyers did not primarily buy their homes/condos with current income streams and many bought very cheaply in the last bust or beforea nd before teh most estreme parts of the boom. I sold some of these. I sold a condo to a woman who was making about ten dollars an hour as a file clerk.She paid cash from family money in Tijuana(no not that kind of family money)I sold a house on Felton cash. One on Madison 1031 exchange with boot from the other sale these are from just making something like eight sales there total. Since people are so friendly and I also worked in many of the houses as a contractor, I know of many other instances like this. Perceiving Normal Heights as desperately poor is a misconception.

Um, well, I wouldn't consider 35K annual income "desperately poor". Perhaps hard to live on in San Diego, but not desperately poor.

i am fence-sitting on the border of UH and NH and i have to agree with Mark on the asking prices that are beyond laughable. i also agree with some of the other posters, that NH is fun and funky, but it is not the nicest area in town. mark -- im sure you realize this, but you can get something bigger and nicer in a better area of town. don't get frustrated, just go find better. this will sort itself out. good luck!

Um, well, I wouldn't consider 35K annual income "desperately poor". Perhaps hard to live on in San Diego, but not desperately poor.

You're right Mark bad choice of words. I just meant to deal with the concerns about how many people can afford their houses there. How many bought at unaffordable prices is relevant too of course. Thinking about the numbers on that. I sold my house there to someone who got in trouble. Teaser rate and all but I think they might have gotten a workout because the NOD disappeared and they took the house off the market. I am glad for them as they actually got a relatively good deal from me and they loved the house. Anyway just trying to provide some anecdotal info.

For me the key point is its sale in 2000 at 183K - nearly eight years from the bottom of the last cycle.
Actually that was about 4 years above the bottom of the last cycle, but who's counting.