San Diego Housing Bubble News and Analysis

That's very useful, thanks XB, and just what I want to see ...keep it coming and long may it last. $755k for a condo is still nuts though!

xbox

Yeah, that is great to see. Thanks for the posting. Ive been watching PB and it is just painful to see prices not dropping (much). Id imagine that it has alot to do with low sales volume.

In march 6 condos sold. Average during the bubble years was 30+ 3bed 1200 sq ft 4 attached town homes are still asking over $600K. It will be nice to see those start to go. One would think PB will falter prior to LaJolla taking the big hits.

Claremont Mesa, east of the 5 is already capituating....PB is next...then Lajolla / Point loma. Chula Vista is already dust.....just a matter of time.

Keep up the reporting, and if you have the time....can you add PB?? Only 6 sales, so it shouldnt be hard :)

Jasper

I don't think you can really include UTC as La Jolla. They are separate communities.

Thanks XB. I appreciate the post. I agree w/ awomba. Can't count UTC as LJ. Many condos in UTC are going bank-owned, Lucera, for example, and prices are in nice declines. LJ has some declines, but when in the million dollar range, hasn't been anything I've watched or paid much attention to, since they're not properties of interest to me, but nice to see they are affected some. I've noticed that places in the 650-800k range have not had any major price changes and prices/sales have continued.

I have to confess that the price decline in PB has been slow. I remember a fixer house selling for 450k in 2000. At almost peak in 2004/2005 it sold for 750k. I haven't seen any changes in prices from that. That seems to be the general going price for POS places in PB.

There was one on Sapphire zoned multi that listed for 525k bank-owned that raised their price very quickly thereafter b/c of all the offers to 650k. I heard it ended up selling, I think, for 715k.

I try to just tell myself it will take a while for it to hit the coast. Sales have been brisk this spring and places w/ridiculous price tags are still getting sold.

If you find any good ones w/declines, please post. It will be encouraging.

I might be too bias but I think La Jolla and PB are going to start loosening up real quick. I hear, feel, see no spring bounce.

xboxboy, speaking of Seahaus, I sure would hate to be a flipper there. How long can you sit on a 3k per month negative cashflow 800k condo with no view? O U C H!!!

Jasper,

I know those townhomes you're talking about; they are all over PB. I noticed this listing for one of the attached townhomes-- 3 bed/ 3.5 bath at $550k-- the lowest I've seen for these. Well, of course I mean the lowest I've seen for a long time. I'm kind of curious to find out what happens with this one (if it's still active; it's been around for awhile).

http://sdhomesearch.signonsandiego.com/s...

I feel the same way about how sticky those prices have been. Kind of hard to believe.

Cool! I want to live in La Jolla- hope it tanks so I can only pay 500k for a home there someday.

Trouble is, mixxalot so do many other people, so don't hold your breath.

Yeah, 500k for a decent home in La Jolla is just not going to happen.

Hopefully some day in the near future, a decent home can be had for 1M in LJ. And I am not taking a 800sqft shit box in bird rock that should go for 725k on a good day.

Is a clean $1M 2000sqft SFR with a back yard ocean view too much to ask for?

"Is a clean $1M 2000sqft SFR with a back yard ocean view too much to ask for?"

I don't think that's going to happen... the 800 sq. ft. no view Bird Rock homes aren't going under $1 million, so I think your scenario is too much to ask for.

awombadavis,

True... but those birdrock homes values are floating on some thin ice. The 2nd story remodel just doesn't pencil out in todays market, and what starter family wants to move into 800 sqft home? Not me.

Time will tell.

awombadavis wrote:

"Is a clean $1M 2000sqft SFR with a back yard ocean view too much to ask for?" - I don't think that's going to happen... the 800 sq. ft. no view Bird Rock homes aren't going under $1 million, so I think your scenario is too much to ask for.

Ummmm... actually..... this is happening. (Well at least darn close)

Several little bird rock homes have sold for under a mil in the last year or so. Here's one that sold for under $900k:
http://www.sdlookup.com/Property-BFE8C89...
and I believe there are others, although I don't have time to try to dig them up.

And you want a more than 2000sqft SFR with back yard and ocean views for less than a mil?? Well, 1034 La Jolla Rancho Rd went pending a week or so ago after being offered for $999,000. ( MLS#: 086024374) That's a 2418 sq ft house with ocean views and a pool. (Not sure how big the back yard is, but it's a 10,100 sqft lot.) I ran past the place when it first hit the market on my morning run, and while it's no beauty, I've seen far worse. (If zillow is to be trusted, it looks like the bank bought it back for $1,753,769 - Ouch that's gotta sting!) Of course, the pending price isn't always the sales price, and so it could easily have gone for more than a mil, we'll have to wait until it closes to know.

But, the point of this thread, and the point of my response, is that things in places like La Jolla are showing a lot bigger cracks than people want to admit.

XBoxBoy,

I am also shopping in La Jolla and the tide is definitely turning. A lot of sellers are chasing the market down. I started looking last summer. At about the same time, I found the Piggs and became a convert, so now I wait. Many, many of the houses I looked at almost a year ago are still listed - well, repeatedly relisted to look "new".

That house on El Paseo Grande was not that great. I think the buyer overpaid at $2.5 million. It is on a corner with horrible traffic and the new Scripps conference center will block some of the view. The place had a very strong mold smell, which the realtor said was because it was closed up since the seller did not live there. Maybe. It is stunning to me that someone paid $3 million for it 2 years ago.

I went to a few open houses yesterday. At all but one, I was the only one there.

xbox,

I looked at 1034 La Jolla Rancho and was certainly ready to put in an offer if the 999k was legit(it wasn't). It needed complete remodel, but nice sized house with pretty nice front/side yard view. I have been watching every day to see the final sale price. I am going to guess 1.4M. I know there were several offers on the place. I would have jumped all over it at the 999k asking price, maybe even 1.1M. If the price comes in below 1.4, we are seeing some big cracks alright.

The question was "Is a clean $1M 2000sqft SFR with a back yard ocean view too much to ask for?"

My opinion is that IS too much to ask, and highly unlikely that will happen. Maybe I'll be proven wrong, but clean, 2000 sq. ft and a back yard ocean view in La Jolla for less than $1M, not likely.

I was interested in it.
It was an absolute zoo at the showing.
Dozens of offers, many all cash.
I heard from my realtor that at least one exceeded 1.5.
The asking price was unrealistically low on purpose.

I continue to watch for REO in La Jolla but it is hard to get them...all get large numbers of offers above asking (except for the UTC area condos).

Lajolla-pig,

If it did get an offer for 1.5 that's really crazy.

There have been a number of sales, in the 1.5 range that are better places, and I can think of several places on the market in that range that are much better deals than this place at 1.5.

But after watching the la jolla market for the last couple of years I can tell you that there is no limit to people's foolishness.

Having said that, I will still stick to my original commentary, which is that there is a good bit of softening, and even some serious pain (ie loss of capital) in La Jolla.

XboxBoy

$1M home with an ocean view in LaJolla??

Ill go out on a limb and say i think it will happen. Im waiting for the same thing in Coronado (sans ocean view)...and i think it will happen there too.

The McMansion wannabee 4plex condos in PB are still mostly $600K+ An ocean view home in Lajolla is easily worth double that.....so as long as PB says high, LaJolla will hold. As long as Claremont stays high, PB will hold.....as long as Chula Vista stays high...oh wait, it hasnt...

It just takes time. 30 year fixed back at 8% and the avg PB income can only afford $250Kish but would need 10% down. PB is still 2x-2.5x overpriced.

8% 30 year fixed isnt much of a stretch since it tracks the 10 year treasury....yes, it's in the tank now, but just wait. The way the fed is printing money and the world is dumping dollars, a 7% 10 year treasury is a very realistic option. And the fed simply cant buy them down, with what?? more 10 year treasuries ??

When PB goes to $250K for the Mcmansion wannabe, the homes on the back side of the hill in PB will be $500K. The homes in Lajolla on the front side of the hill will be $750k.

It all just takes time. The opion ARM, I/O, and ALT A were the toxicity of choice in Coronado and LaJolla (so ive heard)....lions share of resets in 2010.

With no 'move up' market comming in.....the number of fat cats with $1.5 in cash will already be in the homes. One by one, neighborhood by neighborhood the prices will fall. Each rung on the 'move up' ladder will captulate in order. Before this is all over.....home on the hill with an ocean view will be under $1,000,000

Jasper

P.S. Of course, this is based on 2008 dollars. If the fed keeps printing, we'll all live in $10M homes, and drive $1M cars.

"and the avg PB income can only afford $250Kish but would need 10% down."

Where did you get that information? I think you are WAY off base with tht one. Besides, what does the average income of someone who lives there and has owned his/her homwe since 1999 or 2000 have to do with it?

Isn't it the affordability for people looking to buy that is relevant? Unfortunately for many, PB likely is not going to be affordable for the middle class again.

If some people are prepared to pay these sorts of prices, and no doubt there are a few, that's pretty desperate, and wherever there is desperation, it's an indication that it's neither the time not place to be looking. The notion that it's still a great time to buy in places where prices are still appreciating is history. Buyers with any grasp of reality don't want to hear that. Every time a Realtor tells me that prices are still appreciating, or properties are getting multiple offers, I just walk straight out of the door, because it's just the same old insanity that got us into this mess in the first place. It doesn't work as an incentive or pressure in this market anymore. Yes, La Jolla is nice, but not that nice that I'd want to throw stupid money at. No doubt cache is a big part of pricing, and that is probably the hard outer shell that needs more than just a little tap to crack.

Graham

XBox.
Just a little technicallity. Price drop needs to be quoted in percentage terms to be useful for comparison purposes

Awombadavis,

You are correct, i should have stated "looking to buy". And no, there is no official data on that $250K number. Im just using anecdotal info.

The people i know who are looking to buy, would like to, live in PB are the young professionals in the $70-80K range. 3x 10% down is about $250k ish. That's all.

If they're married, they probably would go for a house on the hill @ $500K.

Hey, ill admit, those numbers could easily be wrong.
Im just throwing in a vote that PB will be affordable again to people in that price range. And a decent house on Lajolla will be under $1M.

Patience, 8% ++ interest rates, and the foreclosure wave sweeping towards the coast.

Im not betting $100 or anything on it, im just hoping it happens.......until inventory and foreclosures drop or prices pencil out to rents, im not buying anyway......

Jasper

"Unfortunately for many, PB likely is not going to be affordable for the middle class again."

I vehemently disagree. I am watching PB vigilantly and can tell you little cracks are spreading. Condos are taking some major hits and condos are the first to go. Checking on defaults, many turn into foreclosures. Many of the defaults are on the market. The defaults and foreclosures are bringing down comps. In the Plaza alone, I have see prices fall and sit a looong time.

It's only a matter of time. SFH are selling in the 650-700 range already, at one time were higher. I would not be surprised to see prices next year at 550-600k, townhomes down to 350-400k.

Only an act of God is going to change that. There has to be some miraculous rescue that not only stops what's in the works, but reverses it.

How the $650k PB condo works...

20, 30 something gets down payment from parents, buys 650k condo, has 2 roommates/friends pay $750k a month each, 75% of income goes to housing, 25% toward car and wave runner, lives off the $1500 cash he doesn't claim with uncle sam.

Side note... owner and 2 roommates park on the street because no parking in front of 650k tandem garage which house wave runner, beach cruisers, & skateboards.

Did I miss anything?

All I can do is laugh. I'm not clairevoyant, but I'm getting neurotic about watching the market in PB. Decline is happening and will continue. I'm not worried about that at all. I'm worried I might see something I really like and emotions take over and I buy today and prices will go down even more and I'll regret it. That scares me way more than the fear that prices will remain this level, much less go up. Question is how low and I feel comfortable saying 2002 prices can happen in a year or so from what I've been seeing. Like I say, something has to drastically happen to not only stop it, but reverse it.

This incline did not happen over night. It happened over the course of what, 2001-2006. In not quite 2 years we have seen price declines and we are not halfway through this whole subprime mess.

BTW, some of the default notices on places in PB are going to addresses other than what the default is on, i.e. investors w/other properties. And that doesn't surprise me. Investors renting their units out.

Also, many of the loans on the default notices that I see were taken in 2005. Wonder when the 2006 loans start defaulting. What will happen then?

Stand by to stand by.

What do you think a decent SFH in PB is going to go for to be affordable for the middle class? I'm talking about the areas where people actually want to live, not on Ingraham or in the hood near Mission Bay High. I just don't see it happening.

La Jolla Renter wrote:

"How the $650k PB condo works...

20, 30 something gets down payment from parents, buys 650k condo, has 2 roommates/friends pay $750k a month each, 75% of income goes to housing, 25% toward car and wave runner, lives off the $1500 cash he doesn't claim with uncle sam.

Side note... owner and 2 roommates park on the street because no parking in front of 650k tandem garage which house wave runner, beach cruisers, & skateboards.

Did I miss anything?"

You missed a lot... I know more than one owner of a $650k condo in PB... here is one scenario for you: Married couple, both professionals, 2 children, combined income of over $200k... down payment came from savings. Don't assume families with children don't want to live in condos or PB, because that assumption is wrong.

Here's a 3 BR $600k condo in PB that just closed... not even near the beach but still commanding the higher price, even with the credit crunch:

http://www.sdlookup.com/MLS-076061056-22...

Just curious, La Jolla Renter, who is the buyer for this one with the status of lending and full doc loans?

My point is, while you will likely continue to see drops in PB and LJ, I wouldn't get too excited about buying a nice house for $300k, or even a decent 3 BR condo. I could be wrong, but think that the fact that these areas are holding value very well bears repeating.

Let's see. We can all agree there is a spring bounce. I just w/in the past few months, seen 2 SFH, zoned MULTI sell in the 700k range. One was in turnkey on Diamond and one in the 700 block of Sapphire. If we take into consideration the defaults and foreclosures and inventory and impending inventory, the declining condos and townhomes, the unemployment figures, what to you think the price of the homes will be year-end or next year?

Again, I would not be surprised that the SFH end up going for 550k-600k by the time this is all said and done, easily.