San Diego Housing Bubble News and Analysis

Welcome to the board.

I believe Poway is at the very least a year away from the bottom.

Start thinking after December 2008 - really a fresh look you will get. You might have heard 'don't catch falling knife'. Things would be settled including jobs/economy ( not in bright way but in worst way) then you can also have some fresh look vs opinion.

Any ideas of %down from now? Solely thinking financially, I would wait at least a year for things to settle. That being said, we would still really like to get in a house sooner rather than later. What price would you think is/will be reasonable for ~1500sf range? If we could get catch a deal on a foreclosure now, I'm hoping we could mitigate most of the short term losses (in the next year or so) and making up the rest in sweat equity. Do you guys foresee another 20% drop in prices, i.e. prices under 300k for that area? I think it's possible with any big event in the economy, but long term I feel like the prices are getting close to reasonable... i.e. 2 working adults with decent jobs can afford it on a fixed 30yr. mortgage.

Sorry, I'm rambling a bit now. Basically, I'm asking how much lower do you expect Poway to go? Also, if we got a decent deal on a "fixer upper" do you think we'd be upside down after ~5yrs?

You should change your name to "powaybuyer". You'd be a lot more popular around here.

I second sdrealtor's suggestion.

I'm no Poway expert, but here's my generic advice ...

IF you can find a place that suits your needs and price

and

IF you could potentially rent this out and nearly break even (a fall back plan in case of lost job, etc)

Then ...

Consider buying.
The ability to rent it out is a backstop or fall back plan. But, I wouldn't consider buying anything until at least late summer/early fall (Sept or later) to take advantage of seasonal effects.

I feel like the rent fall back plan is getting close. I was looking on craigslist and 3/4 br 2 bath houses @1500 sf in Poway look like they rent for ~$2000+ (Any more information on this would be greatly appreciated!)

I'll try to hold my wife back until the fall buying season (this may be tough ;-)), but I think we're going to put our feelers out there and might jump at something in the sub $350 range...

I haven't looked lately, but I think it will be awhile before you start seeing $350k tract homes in Poway. I think Poway will always outperform MM, if for no other reason than the reputation of the school district.

"I was looking on craigslist and 3/4 br 2 bath houses @1500 sf in Poway look like they rent for ~$2000+"

Well, a $350,000 house with 20% down and 6% interest would have a mortgage+tax payment of about $1900 dollars. Not enough to cover your all your costs completely but it could help in an emergency.

I would say that if you only plan on staying in the house for 5 years then you should rent. Houses have a lot of transaction costs associated with buying and selling and that'd be hard to make up in 5-years during a normal market much less the one we're in.

If you fail to hold off your wife now, expect a lifetime of servitude and misery. Partnerships are not based on doing what one half wants, when they want and how they want.

I would have to agree that the rental price represents a minimum price floor. In the really depressed areas the purchase option can be significantly cheaper even with a minimal amount brought as cash (think subprime parts of El Cajon or really any part of Chula Vista). However nicer areas seem to put that floor higher. That means you are break-even with rent at 10 or 20 or 30 percent cash.

I will use an urban example here. A 2-bedroom condo property in Hillcrest will sell for about $300k or so. It will rent for 1800-2000/mth. That means at 25% down, this will cash flow about evenly (depending on HOA fees). A property in Normal Heights of a similar character will sell for 220,000K and rent for $1600/mth. In other words it breaks even at almost nothing down. In this case you pay a value premium for the desirable location.

Boiling it down: What this means is you need to figure out what you have for a down and how close to rent you can bring your monthly payments. If you can find a place you like where you can buy and pay about as much in mortgage as you would in rent, then for christ sake's, buy it.

Note: You will need a good loan officer (who is recommended and honest). Also, you will maximize your benefit by buying between September and February. That is when sellers are most stressed and likely to accept lower offers.

I think you need to be a bit more specific. Your original post mentioned a 3/2 SFR "unit" which to me sounds like condo but then it seems like maybe you mean perhaps a home?

If you know Poway, and it kind of sounds like you do, then you know it is pretty diverse with respect to the housing stock. If you are talking a 1500 sfr in the 350k-400k range then you are ending up in 1 of two spots, out on the east part of Poway to the south of where Poway Road makes the big left turn or perhaps somewhere right off of Pomerado to the north of Poway Road.

Now the biggest misconception about depreciating markets is the timing of them. That is if you think that a home today that drops 20% in the next 2-3 years will then come back to todays price in 5 years total, you are mistaken. Take 400k as a sales price today. Lets run a 7% depreciation for 2 years then 6%... So after year 1 we are at 372k. Then another 7% down from 372k is approximately 346k... Then another 6% is about 325k....Now even if the market took a full on V lets say 6%, then 7% then another 7% to get back to where you were. Plus you need another 4-6% to cover the sales costs...

Can you see where I am going with this? Okay even if Poway didn't go down another 20% and over say 10-15% you still have a hard time breaking even.

I do know Poway pretty well as it is right around the corner from where I live. My wife LOVES Poway in a big way. If you are thinking long term... then yeah if you find a home you really love then okay I can see it. However if you are buying the home with the idea that you can fix it up and make a profit in 5 years... I would say the odds are not much better then 50/50. I am an active buyer right now but not to buy a home and sell it in a few years.

I know the renting lifestyle is not one I relish. Others do... Family harmony to me is more important but only you can make that call.

knifecatcher would be a good name too

powayknifecatcher would make you very popular

Thanks... I agree completely with your assessment, and we are definitely thinking long term, not just investment. I figure it would be better to wait, but hopefully not a long term liability if we want to upgrade 7-10yrs down the line.

Thanks to everyone for their input... I know I'm setting myself up to catch a knife, just trying to minimize the bleeding ;-), any help (besides just wait... that's a given) i.e. rent/price ratios, specific areas to go to/avoid, anything I haven't thought of...?

Anybody have advice on trolling for foreclosures... good resources etc?

My guess is that you don't have much to put down on this house. Just a guess. But, I can only imagine that this type of thinking can only happen with other people's money.

You seem to know the price is going down at least another $70,000 and yet you are still considering buying. If that money were in your bank account, then you might be a little more conservative with your decision.

When I buy...I will buy with my own cash. I have done a lot of saving and am in a great position. I can't bear to think about losing that type of money.

ha ha, this forum cracks me up sometimes.. the funny thing about this forum is it's supposed to be a bunch of older fuddy duddies

I am primarily looking in the southeast portion of Poway (near the bend in Poway Rd). What do you guys see as a good price or where you expect it to go in the next year or so. I feel like the 325-350 range brings in a lot more buyers and may represent the bottom (kind of like what we are seeing in Mira Mesa). Do you guys expect it to go lower than that? I don't really foresee prices under 300k for a 1300+ sf house... maybe I'm being too optimistic?