San Diego Housing Bubble News and Analysis

Rehab? Looks like some money was spent on the interior. Add crown molding and I'll give them a million for it! :-)

The pictures on listings are often misleading. On redfin you can look at the google streetview from the listing. This is often very enlightening.

Agreed, it has been fixed up very nicely. Someone paid a premium for that at over $400/sf, especially considering it has no garage or yard. Nice looking street though.

Trust me, if you walked into this house and looked at it, you would not think it had been fixed up nicely. It looked like someone did some cheap remodeling. The living room looks like an add on and someone threw that on. You would have thought, this looks like an apartment but everything is super crammed in there.

Super loud street and you have no yard. The couple who sold the house had a small child and you would not let your child play in that front yard, its a super busy street.

I lived 2 blocks north of there for about 3 years and it was a great neighborhood. I would move back there in a second if the right house at the right price became available.

I too am waiting for prices to come down in the uptown areas. Been waiting for years.

Because govt programs like FHA allow people to buy houses solely because they want to, and some people are afraid if they dont buy now they will be priced out forever.

Others are buying because they want to get $8000+ credit from the govt (before that bailout goes away) not realizing that they are overpaying for the house and it will probably be worth $10,000 less by the time they move in.

This is a very nice 60K-80K house in many parts of the country, that would rent for $500-$600 a month.

Foolishness replaced common sense for many long ago. (Millions of NOD's ago)

This is a very nice 60K-80K house in many parts of the country, that would rent for $500-$600 a month.

I think the rent here for that place would be more than $1000/mo. They still overpaid in this case, people probably always will in certain neighborhoods.

In the 1980's, houses that rented for $1000 a month sold for $125,000 +/-,,,,and there wasn't any shortage of them. What has changed other than foolishness and govt manipulation ??

I was so impressed that this house actually had room for a STACKED washer and dryer. Need to throw out the side by side...they failed to mention that with bunkbeds you this would be comfy for 6-10 occupants.

Was this a 3.50% down FHA buyer ???
Or did someone actually fork over the cash with 20% down that could have bought them a house free and clear elsewhere...

I wouldn't do it. But it's close to the Market Overview. But I have been seeing a few of these kind of sales lately.

As HLS said, I think there is a little pressure on some buyers b/c they want the 8k incentive before it runs out and many people qualify under 500k, particular FHA, and b/c media is somewhat painting a better picture of things being bottom. Many are falling under that mentality that they are going to get priced out again.

All the money the government has spent has succeeded at least for now to stablize prices somewhat, rather than a freefall.

Now last night I just went through a list of NODs in over 10 ZIPs. There doesn't seem to be much let-up. My question: What's going to happen to all the NODs? Will they ALL get modified? Will the banks let them squat for years until we get back to peak? Will the government give more money so as to absorb the losses so banks can foreclose?

Mish - Wave of foreclosure seems to suggest really 5 states are the worst performing re markets. How long can the rest of the country shell out money for 5 states?

This little "updated" Craftsman is in a decent area of Northpark and should rent for $1500 or so per month.
If you do the math, and apply a GRM of 10 then the place would value about $180k.
During the recent bubble the GRM's went nuts to over 20 and sales price became completely disconnected from the fundamentals.
I think prices in this area will come down to 10xGRM eventually, perhaps by late 2010 or 2011.
I'd wait a while to buy and watch the prices and GRM's come back down to reality.

I think prices in this area will come down to 10xGRM eventually, perhaps by late 2010 or 2011.
I'd wait a while to buy and watch the prices and GRM's come back down to reality.

I would agree if I believed that we were going back to the days before massive government intervention in the housing and MBS markets and the packaging/selling of mortgages as securities in the MBS market. Those two factors alone are responsible for the housing bubble more than anything else. If banks actually had to carry mortgages again, 20% down would be de rigeur. Is that going to happen? Your guess is as good as mine.

This house is not an updated Craftsman. More like updated shed or garage of a Craftsman turned into a house

My feelings exactly!

What has changed other than foolishness and govt manipulation ??

One -- interest rates. The prime rate in 1981 was over 20%! Higher rates, lower prices.

Two -- the widespread growth of mortgage backed securities, allowing financial institutions to play hot-potato with mortgages.

Three -- the repeal of Glass-Steagall, allowing unimaginable levels of chicanery by financial institutions.

That's the trifecta. And FNMA and FMAC are part of #2 since they offered the first MBS investment products.

The real question is what happens next? Are we headed back to the good old days of local banks writing mortgages for their neighbors and carrying them for the full 30 years? Or are we in for even more market manipulation, government intervation, and financial hooliganism?

I know where I'd put my betting money (if I had any left).

South Park is nice but way over priced. I don't see many price drops there so I'm guessing people that live there are just hanging in and hoping for a rebound. There are definitely pockets that are nicer than others, I've heard vehicle break ins are common, I would pay about half of what they are going/asking today.

Cant speak to the house but where its located is a nice pocket in North Park. Two schools within walking distance.

The stuff that is close to the park is generally more than 650 (again, depending on how close to the park and how big and how well kept...)

Usually stuff north of grape tends to be more desirable than stuff south.

Palm and 33rd does not have a comparatively huge amount of noise and as far as the "east of 30th" or "north of Nutmeg" definitions, those simply do not hold up to effective demand. All of the expensive Burlingame neighborhood is east of 30th and almost all is south of Nutmeg.

Many houses over there have little or no parking.

As far as the funky floor plan, that is common in the 20's houses.

Really I think the price most reflects the fact that it has a second bathroom. Not a lot of those right now at that price.

Update:
Currently, in the area bounded on the north by University, on the south by Nutmeg, on the West by Florida, and on the east by 805, there is exactly one house for sale with more than one bathroom for less than $500k. It is a short sale at 3030 Bancroft with 1.5 bathrooms.

That is not realistic.
At 15 GRM, people still go bananas even in crappier pockets. It is possible that this will change but it seems unlikely. If I could buy a place and the revenue could equal the full purchase price in 10 years (where I, the borrower, still get 30 to pay the bank), then everybody would jump in and the effective demand would drive the grm right back up.

The only places you see a grm that low is where rents are really high and interest rates are too.

Again, if rates spike (like to 15%) then that may happen.

But that seems an unrealistic projection as of today.

urban, you're right, I didn't include Burlingame, sorry it was late last night, but I have viewed some open houses in that area and there are some beautiful homes, albeit very overpriced.

wow.

as long as this kind of property continues to fetch this kind of price, I'm even more resolute in my stubborness to stay out of this insanity.

I will agree that this place does need that second bathroom though, given there isn't enough room to pee in your own backyard.

Irish, if I remember correctly, the couple wanted $2100 for rent on this house.

You don't even have to go to a different part of the country.

Just a few miles away, south of 94, houses this exact size and age go for 75k-100k.

Location, location, location.

I don't pretend to be intimately familiar with all the downsides to living in the "city," but this suburban kid would die to own in a place like Burlingame. Believe me, my wife has had her fill of that talk.

Yup

It looks like they used floor tiles on the kitchen counters, no?

From what I saw in North County, prices were very soft or down from 2006 to 2007. Look at the premium they paid in 2007 over the 2006 price. Then, some idiot came in and paid even more!!!!

We are also witnessing the same kind of insanity in North County -- people paying MORE than peak prices in a number of cases. Is nobody paying attention to what's going on, or do we live in a different dimension now?

Oh, and I couldn't agree more with what you've said, HLS.

Some folks are panicking right now, trying to get that $8,000 before it gets rescinded or buy before rates go up. It never dawns on them that that $8,000 could very well cost them $100,000 if/when prices go down, and higher interest rates = lower prices.

But not everyone is a financial wizard.

Why do you think they "go bananas"? It's not logical to buy a house that costs WAY more to buy than rent. If it doesn't pencil out as a rental then why the demand?

To me it's just bubble conditioning. People think buying at 30% or so off the peak is a great deal. Never mind that it's still double the price of 12 years ago.

Why do you think they "go bananas"? It's not logical to buy a house that costs WAY more to buy than rent. If it doesn't pencil out as a rental then why the demand?

Newsflash for Mr. Spock -- people do not always act in a logical manner. Your guess is as good as mine as to why.

Are they stupid?

I'm not so sure. Here's the one thing that's bugging me -- money seems to be worth less every year. If you think that that trend will continue, then borrowing a bunch of money now might actually make some sense. Now you don't want to overpay of course, but assuming that prices have come down 20% or so from the top, maybe you get in now at low interest rates and then in 10-15 years money is worth a lot less and your loan is looking like a bargain then?

Just guessing. But probably for most buyers they're not thinking that far ahead, just "I want a house, here's one I can make the payments on, I'll take it."

Or maybe they're dumb.