San Diego Inventory Sucks...

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Submitted by flu on November 11, 2012 - 3:50pm

...According to the Union Tribune....

We all know by the time they report it, it's true... (for the past few months.....)...

http://www.utsandiego.com/news/2012/nov/...

Remember all those opinions about how wrong the pigg realtors were? Looks like they were pretty spot on.....It's close to the end of the year...Where's the inventory dip? Where's the flood of REO's on the market in SD?

Nowhere....It's drip drip drip.....And even the short sales /REO's seem to be fetching not any significant discounts....

Better luck next year...


Do homebuyers stand a chance in tight market?

Prospective homebuyer Michael Lin holds his 1 year-old son, Ethan Lin as they tour one of the model homes in the Maricel at Torrey Highlands development.

Ashley and Brian Standing have been house hunting for about a year, and they’re a little tired of the hunt.

In the past 12 months, the young San Diego couple have put in 80 to 100 offers on homes in the $500,000 to $750,000 range in areas like Point Loma, Ocean Beach and Bay Park. They admit some of their offers have been lowballs, but they learned quickly that those wouldn’t work. At times, they’ve tried bidding $20,000 to $30,000 above asking price but still nothing.

“It’s been insane,” Brian said. “When we first got into the market, there was still more inventory. I don’t know if at the beginning we were more picky as far as putting in offers. But over the last nine months, we’ve been operating as not-as picky.”

Brian Standing is right. He can’t be super picky because of a serious shortage of homes on the market in San Diego County.

The low inventory has left homebuyers submitting multiple bids and upbidding each other, pushing up prices and putting a damper on the idea of finding a deal on their dream property, experts say.

But for some sellers, the market seems just fine.

Ask Ellen Pansky, a Los Angeles attorney who just sold her condo in University City. After two weeks, she got two offers. Two more weeks later, her deal was closed with a buyer who gave her full price.

Submitted by spdrun on November 11, 2012 - 4:01pm.

How picky are the aforementioned buyers, AS IS, or with a lot of conditions? I'm still seeing condos that fetch ~7% on the dollar when rented selling in the 80-150k range. But the offers must be nearly immediate and ideally in cash.

(Example: $95k for a 1/1 condo in Mission Valley that rents for $900 and costs $250 for carrying and insurance = 7% after property taxes).

Submitted by flu on November 11, 2012 - 4:05pm.

spdrun wrote:
How picky are the aforementioned buyers? I'm still seeing condos that fetch ~7% on the dollar when rented selling in the 80-150k range. But the offers must be nearly immediate and ideally in cash.

Well I personally don't think anything wrong with being picky... But I think sometimes what happens is the thought process of "wow, prices are starting to dip... I'm going to wait it out and hope it goes lower...much lower"....Except that didn't happen...

We all sometimes have this mentality...When I was deciding over a condo that came up, at the time I was sometimes I was agonizing over just tiny amount. Not that it really would have affected cash flow...It was pointed out to me that in the long run of things, because the price will look great a year or two from now...And that was spot on too. No way the same property could go for that price today...

Sometimes folks (inclusive) look at the pennies and end up missing the boat.

In other cases, I think sometimes we all have unrealistic expectations that we will find a killer deal all the time....

Submitted by flu on November 11, 2012 - 4:13pm.

...Meanwhile...The rental properties are gonna increase to keep up with demand....

Yup...that explains a lot why there is a sudden rush for developers to create rental property complexes....

Me thinks it's gonna be good times for landlords in the next few years... (with the exception of the "tax" issues)

Bay Area is going even more nuts.....Tenant lease expires next month. They've agreed to a $400/month increase...$3100/month for 2000 sqft, which apparently is still below market price for comparable... I wonder how much more rent would be in places like Cupertino.....

http://www.utsandiego.com/news/2012/nov/...


San Diego County is poised to add an average of 2,000 new rental units a year until 2016 to meet growing apartment demand. That rate marks an increase from previous years but is far below what other major cities are adding to their inventories, said an executive at commercial real estate company Jones Lang LaSalle in San Diego.

"It's been a supply-constrained market for several years," said Executive Vice President Darcy Miramontes, referring to local numbers.

The demand for apartments in the nation has increased following the housing crisis, which brought on a flood of foreclosures and delinquencies. The surge in rental demand also is influenced by Echo Boomers, also known as Gen Y, who are expected to form the bulk of the five to six million new rental households in the next 10 years, based on a March report from the Bipartisan Policy Center.

Over the last decade, developers have delivered an average of 872 rentals a year to the San Diego market, so the expected 2,000 average is much more encouraging to see, Miramontes said.

For perspective, that 2,000 figure represents about 1 percent of the county's total rental stock, Miramontes said. Also, other major metro areas are able to add an average of 10,000 to 12,000 units a year, far higher than we're expecting in the next four years.

"We haven't seen that kind of growth in 20 years," said Miramontes, referring to the rental growth seen in other metros.

Submitted by spdrun on November 11, 2012 - 4:25pm.

Which is why I'm looking at (inland parts of) NJ now. It became very cheap even before the hurricane, which will probably depress prices even in unaffected towns in the short term. In the medium term, there'll be a slight housing shortage till people rebuild. Long term, prices will probably rise due to inflation. Most buyers don't look beyond the near-term though, and another storm hitting on the eve of a full moon is unlikely in the next 25 years.

(If I buy something in the next month or two, I'd be tempted to rent units at cost for the next year to affected families, then turn a profit a year down the line.)

Regarding Bay Area: Danger, Will Robinson! Danger! Tech Bubble 2.0! Greater than Manhattan-level rents in SF are not sustainable for the long-term.

Submitted by Jazzman on November 12, 2012 - 1:32am.

According to a fairly recent Redfin survey, buyers' main concern is lack of inventory. However, a majority of sellers still think it is a buyer's market. So something doesn't quite tie up here. Inventory may be low but some of the reports like this make is seem like bidding wars are going on everywhere and forcing prices up. As much as some corners would like us to believe this is true, the reality is more likely that many buyers hold off, just give up, or don't bother at all when faced with over-competition. If you've made 80-100 offers (an offer every four days) it may be your strategy needs reviewing. There is only one strategy when faced with a scenario like this, and that is "don't buy!"

Submitted by spdrun on November 12, 2012 - 2:02am.

Or you've been saddled with a broker who has a "reputation" and is not being taken seriously.

Submitted by carlsbadworker on November 12, 2012 - 7:20am.

Jazzman wrote:
According to a fairly recent Redfin survey, buyers' main concern is lack of inventory. However, a majority of sellers still think it is a buyer's market. So something doesn't quite tie up here.

That's easy to explain. Just look at the graph on the right bottom corner. Price is up but the gap between the list and the the sold is widening.

Submitted by flu on November 12, 2012 - 8:07am.

Jazzman wrote:
According to a fairly recent Redfin survey, buyers' main concern is lack of inventory. However, a majority of sellers still think it is a buyer's market. So something doesn't quite tie up here. Inventory may be low but some of the reports like this make is seem like bidding wars are going on everywhere and forcing prices up. As much as some corners would like us to believe this is true, the reality is more likely that many buyers hold off, just give up, or don't bother at all when faced with over-competition. If you've made 80-100 offers (an offer every four days) it may be your strategy needs reviewing. There is only one strategy when faced with a scenario like this, and that is "don't buy!"

I think you still have a lot of "buyers" in bizaroworld...You know the ones that still think 50% off is possible today on the ocean front property in SD.... It's like going dealer to trying to buy a Ferrari at 50% discount because you think the economy is bad. The economy might be bad, but it's never *that* bad....I think they make excellent perpetual tenants.

Submitted by spdrun on November 12, 2012 - 8:22am.

Well, some bum-losers did buy property at 1.5-2x current prices back in 2005-6. They're now showing up on homepath.com and auction.com -- every property needs its 15 minutes of fame.

Submitted by AN on December 7, 2012 - 1:53am.

The inventory # seems to keep on getting worse by the day. Currently, there's only 19 active SFR and 8 Condo/TH for sale in my area. That's tiny for an area over over 70k people.

Submitted by flu on December 7, 2012 - 7:51am.

AN wrote:
The inventory # seems to keep on getting worse by the day. Currently, there's only 19 active SFR and 8 Condo/TH for sale in my area. That's tiny for an area over over 70k people.

AN...At least in MM, it seems like buyers are out in full force.

I tried to put another on a 1/1 in MM recently that was asking around $135k.,..full price cash offer just for kicks...It would have just been so-so as an investment, but what the hell I thought. I think my offer went in day after it was listed or close to that. Anyway, ended up I was the 6th offer.....and that was even before any showing or the open house that was being done that weekend...Yup... Didn't get a counter or anything (not that I would have entertained any counter above asking there)...It's also not the first time that that's happened recently..So...yeah, it's kinda brutal right now in your submarket.

Fwiw... Starting to see 1/1 going for higher $140k (some went for $150k recently), when things were in the low $130ies beginning of year.... Also 2/2's that went for high 190ies-200 it seems now entering escrow around $210k....

Not looking good for buyers in MM right now... And with rent prices holding where there are at, more and more people are gonna try get some game...

Just be glad you're not in the bay area though. It's even more ridiculous there. There, people are resorting back to writing letters to owners asking if they plan to sell.. I've been getting them again...

Submitted by flu on December 7, 2012 - 7:58am.

FWIW: about those Pardee attached homes in MM that a lot of people said are overpriced... I'm on the mailing list and paid a visit there recently. They're selling pretty well...Most already sold in the available phases...They must be owner occupied, to my understanding...Didn't check out the SFH there...

Pardee is probably running of out things to sell... (Just kidding about that...but..)...Guess what Pardee is up to in my submarket?
http://www.altadelmar.com/custom/

28 of them are marked for as "custom homes"

Submitted by ocrenter on December 7, 2012 - 8:04am.

flu wrote:
FWIW: about those Pardee attached homes in MM that a lot of people said are overpriced... I'm on the mailing list and paid a visit there recently. They're selling pretty well...Most already sold in the available phases...They must be owner occupied, to my understanding...Didn't check out the SFH there...

Pardee is probably running of out things to sell... (Just kidding about that...but..)...Guess what Pardee is up to in my submarket?
http://www.altadelmar.com/custom/

28 of them are marked for as "custom homes"

oh question, question!!!

will I be able to drive my golf cart from my custom lot down to Grand Del Mar for my daily breakfast? ;)

Submitted by flu on December 7, 2012 - 8:09am.

ocrenter wrote:
flu wrote:
FWIW: about those Pardee attached homes in MM that a lot of people said are overpriced... I'm on the mailing list and paid a visit there recently. They're selling pretty well...Most already sold in the available phases...They must be owner occupied, to my understanding...Didn't check out the SFH there...

Pardee is probably running of out things to sell... (Just kidding about that...but..)...Guess what Pardee is up to in my submarket?
http://www.altadelmar.com/custom/

28 of them are marked for as "custom homes"

oh question, question!!!

will I be able to drive my golf cart from my custom lot down to Grand Del Mar for my daily breakfast? ;)

Only if you don't mind the high voltage power lines running along parts of the new tract.... Yeah, I'm trying to figure that one out... If I'm gonna be spending $2million on a custom home, those power lines better not be visible.....

The 28 custom homes will be built by pardee I think BTW....

http://www.altadelmar.com/lib/pdf/Commun...

Submitted by spdrun on December 7, 2012 - 8:22am.

I tried to put another on a 1/1 in MM recently that was asking around $135k.,..full price cash offer just for kicks...It would have just been so-so as an investment, but what the hell I thought. I think my offer went in day after it was listed or close to that. Anyway, ended up I was the 6th offer.....and that was even before any showing or the open house that was being done that weekend...Yup... Didn't get a counter or anything (not that I would have entertained any counter above asking there)...

Patience ... a lot of games are being played these days. I put an offer on a 1/1 two months ago, 10% below ask. Broker said I had no chance on getting it accepted at below ask. Two weeks ago, I got a call, and it's now been submitted to the bank for SS approval.

Just because some people throw a cash offers out there doesn't mean they can (or are even willing) to perform. Quite a few people are putting 10 offers on different short-sold places seeing which one actually gets approved by the bank.

Submitted by flu on December 7, 2012 - 8:23am.

spdrun wrote:

I tried to put another on a 1/1 in MM recently that was asking around $135k.,..full price cash offer just for kicks...It would have just been so-so as an investment, but what the hell I thought. I think my offer went in day after it was listed or close to that. Anyway, ended up I was the 6th offer.....and that was even before any showing or the open house that was being done that weekend...Yup... Didn't get a counter or anything (not that I would have entertained any counter above asking there)...

Patience ... a lot of games are being played these days. I put an offer on a 1/1 two months ago, 10% below ask. Broker said I had no chance on getting it accepted at below ask. Two weeks ago, I got a call, and it's now been submitted to the bank for SS approval.

Just because some people throw a cash offers out there doesn't mean they can (or are even willing) to perform. Quite a few people are putting 10 offers on different short-sold places seeing which one actually gets approved by the bank.

No hurry at all. But the place wasn't a short sale fwiw... It was a traditional sales.

Submitted by ocrenter on December 7, 2012 - 8:26am.

flu wrote:

Only if you don't mind the high voltage power lines running along parts of the new tract.... Yeah, I'm trying to figure that one out... If I'm gonna be spending $2million on a custom home, those power lines better not be visible.....

The 28 custom homes will be built by pardee I think BTW....

http://www.altadelmar.com/lib/pdf/CommunityMap.pdf

maybe Pardee might be willing to bury the high voltage lines as part of the $2 million per lot cost... or may be not...

Submitted by outtamojo on December 7, 2012 - 9:08am.

What chance does anyone have when things never make it to the open market?

http://www.sdlookup.com/MLS-120059730-92078
http://www.sdlookup.com/MLS-120059768-12...

Submitted by spdrun on December 7, 2012 - 9:23am.

^^^

Look for a crooked broker?

Submitted by AN on December 7, 2012 - 10:31am.

spdrun wrote:

I tried to put another on a 1/1 in MM recently that was asking around $135k.,..full price cash offer just for kicks...It would have just been so-so as an investment, but what the hell I thought. I think my offer went in day after it was listed or close to that. Anyway, ended up I was the 6th offer.....and that was even before any showing or the open house that was being done that weekend...Yup... Didn't get a counter or anything (not that I would have entertained any counter above asking there)...

Patience ... a lot of games are being played these days. I put an offer on a 1/1 two months ago, 10% below ask. Broker said I had no chance on getting it accepted at below ask. Two weeks ago, I got a call, and it's now been submitted to the bank for SS approval.

Just because some people throw a cash offers out there doesn't mean they can (or are even willing) to perform. Quite a few people are putting 10 offers on different short-sold places seeing which one actually gets approved by the bank.


10% below ask doesn't say anything. Maybe asking price was too high. What are the comps? Is it also 10% higher than your accepted offer? Also, just because the seller of a SS accepted your offer doesn't mean the bank will. Unless you mean they already did their BPO and the bank accepted your 10% below list (assuming list is equal to comps) offer.

I've competed with cash offers on SS before and they all have performed. But that's just my small sample space.

Submitted by AN on December 7, 2012 - 10:34am.

AN wrote:
The inventory # seems to keep on getting worse by the day. Currently, there's only 19 active SFR and 8 Condo/TH for sale in my area. That's tiny for an area over over 70k people.

After just 1 day, now we have 15 active SFR and 9 Condo/TH. That's ridiculous.

Submitted by spdrun on December 7, 2012 - 10:35am.

Comps in the last year seem to be within +/- 10% of my offer. Some sold at the price that was the full ask, some sold 10% below my offer price. Bit of a crap shoot.

No idea what the bank will do with the offer, but it's nice to see some action from the seller at least. If this doesn't work out, there are plenty of foreclosures/shorts in the Northeast right now that pay 8-9% cap, so I'm not worried.

Submitted by AN on December 7, 2012 - 10:39am.

spdrun wrote:
Comps in the last year seem to be within +/- 10% of my offer. Some sold at the price that was the full ask, some sold 10% below my offer price. Bit of a crap shoot.

No idea what the bank will do with the offer, but it's nice to see some action from the seller at least. If this doesn't work out, there are plenty of foreclosures/shorts in the Northeast right now that pay 8-9% cap, so I'm not worried.


OK, so 10% below list puts your right in the middle of comp. So, in essence, the listing was just on the high side. Good luck to you on the offer. I've got SS offer accepted below asking before, only to get the bank doing their BPO then saying no.

Submitted by spdrun on December 7, 2012 - 10:46am.

At this point, I don't care either way.

Plenty of inventory ripe for the picking where I am, and a change of appreciation/lower inventory in 6-12 months as people affected by Sandy get back on their feet.

Submitted by flu on December 7, 2012 - 11:18am.

I think people (with funds to invest) are looking for better returns, and with your traditonal "safe" investment being pidly 1,2,3%...People are just itching to take on slightly more risk for slightly more return.

And for that, some people think it's RE..

For most people, putting money into the stock market is still to risky and volatile and while we were seeing decent returns this year on boring indexes (11-13% ), it's not something that necessarily is sustainable each year...

So I don't see this changing...People are saying once rates go up on mortgages, home prices will crater. I'm not so sure...So many factors....My gut tells me it depends on how RE performs relative to other things... For instance, if the equity markets tank, people will probably still be looking at RE as good bet. Risk/return for most people on stock market is still too high I think...

Submitted by flu on December 7, 2012 - 11:37am.

Also, what I'm more interested in is what the more financially well-to-do baby-boomer and generation right before them are gonna do now that they are close to retirement if not already retired... Because there's a lot of them....

Seems like they have more financial resources at their disposable (at least the the early baby-boomers) and will have a decision on either sticking things in cash or cash equivalent ( or sticking into something very volatile like the stock market and possibly (maybe) getting a reasonable return or purchasing RE which I think is somewhere is in between....

If I was a baby boomer retiring, I'd do the cash + buying property thing. Stock market, I wouldn't want to risk waiting another 10-20 years in case I entered at the wrong time... And sticking everything completely in cash, I wouldn't want to get eaten alive with inflation.

So i was thinking..*maybe* that's one the reasons why some folks will still spent $150k in cash on a 1/1 that rents for $1200/month with a $300/month HOA.. Still comes out around 6% I think.... assuming full occupancy which is probably doable in MM given there's plenty of tech geeks to rent it to)...

(Personally, I wouldn't because I think I can take on more risk elswhere since I have more time to recover if I fvck up.)

Then again WTF do I know....

Damn baby boomers....They get to enjoy all their entitlement benefits that I have to pay for... I won't ever get the same entitlement benefits when I retire because they will have long run out... And now, on the investment property scene, I have to use my hard earned post-tax dollars (then ones that I didn't already give to fund their entitlement benefits) to compete for the right to give some stranger a place to live!

Submitted by livinincali on December 7, 2012 - 11:42am.

flu wrote:
I think people (with funds to invest) are looking for better returns, and with your traditonal "safe" investment being pidly 1,2,3%...People are just itching to take on slightly more risk for slightly more return.

And for that, some people think it's RE..

For most people, putting money into the stock market is still to risky and volatile and while we were seeing decent returns this year on boring indexes (11-13% ), it's not something that necessarily is sustainable each year...

So I don't see this changing...People are saying once rates go up on mortgages, home prices will crater. I'm not so sure...So many factors....My gut tells me it depends on how RE performs relative to other things... For instance, if the equity markets tank, people will probably still be looking at RE as good bet. Risk/return for most people on stock market is still too high I think...

It's pretty obvious that single family housing is becoming a target for investment by non-traditional sources. The two biggest issues I see with that is #1 they don't really want to be there. They'd much rather have a nice safe CD or Bonds that yields 5% but since they can't find that return they are being forced into what is perceived to be a safe yield investment in RE. Is is safe to assume vacancy will remain low and rents will remain sticky? Probably but who knows.

The second is they lack experience being landlords. They think I'll get a management company and collect checks in the mail every month. The problem is that landlording tends to be more complicated than that and involves actual work. Getting a 8-9% cap rate requires you to do some work to earn it.

I think the biggest key for the long term appreciation in housing is the wherewithal of all these freshly minted real estate investors. Will they stick it out until their tenants can afford to buy them out at a profit, or will they grow frustrated and liquidate.

Submitted by spdrun on December 7, 2012 - 11:48am.

Speaking for myself, if I could make a profit selling to my tenants, I could also refi and buy more property.

Predictible income by being a rentier rocks the socks off of holding cash.

Submitted by flu on December 7, 2012 - 11:59am.

livinincali wrote:

It's pretty obvious that single family housing is becoming a target for investment by non-traditional sources. The two biggest issues I see with that is #1 they don't really want to be there. They'd much rather have a nice safe CD or Bonds that yields 5% but since they can't find that return they are being forced into what is perceived to be a safe yield investment in RE. Is is safe to assume vacancy will remain low and rents will remain sticky? Probably but who knows.

The second is they lack experience being landlords. They think I'll get a management company and collect checks in the mail every month. The problem is that landlording tends to be more complicated than that and involves actual work. Getting a 8-9% cap rate requires you to do some work to earn it.

I think the biggest key for the long term appreciation in housing is the wherewithal of all these freshly minted real estate investors. Will they stick it out until their tenants can afford to buy them out at a profit, or will they grow frustrated and liquidate.

I agree with you here. I think some people would rather have the 5% or so bond yields and without that, I think a lot of these people buying RE might be underestimating risk and future opportunity cost. Property (short the flipping mentality) is suppose to be a long term thing anyway. But as long as people can't do better elsewhere, I think people will just put up with it....

Rent will probably stay sticky (provided we don't end up like Detroit) as long we have a lot of cash-poor people and getting financing for those cash-poor people is difficult...What choice do they have? Me thinks we have a lot of cash-poor people.

Submitted by NicMM on December 7, 2012 - 12:22pm.

Hi Flu or other piggs,

Are you interested in buying a rental property? I have a one with excellent cash flow. A two bedroom townhouse built in 80s. Monthly rent is $1200. HOA + water bill is about $310.Currently property tax is $1300. The current lease will be expire on Feb 22nd 2013. Tenants probably will extend the lease.

Since my family moved to Bay Area and it is such a crazy place for housing. We need funds to make a purchase here. So I am considering about selling it around $100k (if all cash).

If you are interested, please PM me.

NicMM

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