San Diego Housing Bubble News and Analysis

Oceanside isn't generally considered a good area of San Diego to buy in - yes, it's on the coast, but it's demographics are pretty low end, it's a long commute to most of the good job centers and attractions in San Diego (with the exception of the Carlsbad area jobs/attractions), it has significant gang issues in areas, an overall poor school district, and is generally considered a lower middle-class area to live in.

Scripps Ranch is considered a well-to-do upper middle-class area, some of the best schools in San Diego (Poway Unified School District, one of the two best in SD), and while definitely a suburban area, isn't too far out from the main job centers and attractions in San Diego. Drawback is that the particular developments you are looking at are at the edges of Scripps Ranch, which is considered to be a very severe wildfire hazard area.

Between the two, I'd take Scripps Ranch in a heartbeat (and have - lived in San Diego all my life, I've lived in Scripps twice. I wouldn't live in Oceanside unless I was paid to). Just keep your fire insurance up to date in Scripps, and make sure your builder is creating a very good perimeter (and that you maintain that perimeter once bought).

You might also try looking in the Carmel Valley and 4S Ranch areas - both are also high end areas with excellent schools with ample choices in the million $$$ range.

nybuyer a couple of questions... Have you been living here in San Diego long? Also what sort of commute are you looking at? What part of town do you work in? Are schools important or not? Are you a beach person or does something like that not really matter?

I guess what I am getting at is if you had your whim at ANY location in San Diego where would it be? If you could take your ideal home and plop it on any lot in the county what would be best for you? I think that is an important consideration given what you have stated.

Based on the two regions you spoke of, to me it is a no brainer, I would rather be in Scripps then Oceanside. Yet that is only my choice and it is also driven by my need to be in a somewhat central location in the county and my engineering offices in Sorrento Valley. As for Scripps itself my taste is not for the Preserve or Stonebridge. Personally I feel that those areas are still in for a pretty heavy ride down. If I have my choice I would go for old Scripps south of Pomerado but that is just me. As a side note I think Oceanside is also going to continue to get hit pretty hard.

As for the fire hazard card that is a true fact that cannot be denied. Yet if you are going to scratch off homes because of fire hazards then ALOT of areas will drop off your list.

Again this is just my personal taste and it has no bearing on what may work for you. If I had more money I would gravitate towards the coast rather then live in Scripps. Noting against Scripps cuz I like it here but if I could get a 2500 sf home on 10k sf lot in say Carmel Valley with no MR then I would. Not much of that out there though except I do like the area off of Del Mar Heights and pricing there is just starting to come down to that level and there are no MR there. I also would like Cardiff west of 5 but pricing there is not at 1M yet for most of the stock... Again, I could go on forever reeling off places I would rather be if I had a million but if you can answer some of the above questions I may be able to throw you some ideas.

Of course, if you could rent for another year or two that would be most optimal.

SD Realtor

La Costa Valley LCV. here is a good one you can deal on. OC Blog

http://bubbletracking.blogspot.com/2008/05/case-for-more-stringent-re-li...

Thanks guys for your responses. Let me answer some of the questions you've raised and also bring up some other points I've been considering.

I don't currently live in SD. I grew up in LA and have family spread out across LA/OC/Riverside. I currently live/work in New York, but am planning to move back to Southern California in the next 1-3 years - so no immediate pressure to buy right now (other than the housing bug!) I've seen a lot of homes in SD priced chopped 30% or so thus far and am thinking now may be the right time to jump in. I don't want to be one of those bearish guys looking back a couple years from now and realizing that summer 08 was the bottom (that's what happened in 1996-2000 in LA county). It always seems like the herd mentality overshoots on timing (they were bullish on the way up, and may be equally bearish on the way down...and miss the optimal timing completely both ways!)

I'm fortunate enough that in my situation, I could support a $600K-800K mortgage on a second home while still living/working in NYC. Until I move back permanently to SoCal, this second home would really be a place for my family from the region to gather on holidays, use as a weekend home, etc. That's part of the reason I've been looking at bigger homes (4000sf+) that are ideal for entertaining, as that is what this home would be used for in the short-term. In LA, I grew up in the South Bay/Beach Cities area, so have always enjoyed the temperate coastal climate. Problem is $1mm in the South Bay and Orange County only gets you a 2100sf townhome, while in SD, you can get a 4000sf SFR in some areas.

I'd love to be on the coast, or have an ocean view. Don't think even with my budget that I can afford a reasonably sized house there though (correct me if I'm wrong). So I've been looking a little further inland (5-10miles) in places like Carlsbad, Oceanside, Chula Vista, etc. where the climate is the same, but you get more bang for your buck. Also, I love new construction (not necc. the treeless neighborhoods or small-ish lots, but the design of the homes, architecture, etc)

With that in mind, any thoughts?

Also, here's my rationale on the Oceanside development by KB Homes (Buckingham): The homes start at about 4000sf and go up to about 7000sf, with prices ranging from $730K-$850K (so $130-170psf), 1+ acre lots, most with views of a flower farm or the rest of Oceanside, and it backs up to Camp Pendleton. The things I like about the development are the space, the value for the dollar, and the proximity to LA/OC and SD (about 40 min from Irvine, 1.5 hours from South Bay), and about 30-40 min from SD. Would have thought that this opens up the potential buyers market to both OC and SD residents, since you can commute to southern OC and SD. Again, would love to hear your views on that. Oh, and the plan I'm looking at which starts at $799K for a 4900sf home, used to start at $1.3mm in 2006 (10 of the 32 home sites were sold above $1mm...only 22 remain, and are now at the new discounted prices). Do you think prices there could fall further?

Scripps Ranch did seem out of the way, but I loved the designs at Scripps Preserve (Plan 1) and Tiburon (Plan 2) - by far the best I've seen out of the 45+ model homes I toured last weekend. The downside for this development is the views from the various lots are of the many hundreds of treeless new home neighborhoods, the relatively small lots (only 14,000sf, compared to 0.5-1.0acres), and the fact that all the homes are so close together!

My ideal house would be within 2-3 miles of the ocean, ocean view, 1 acre lot, 5000sf for $1mm. I know we're not there yet (and maybe we won't get there).

Any other areas or developments I should consider?

Thanks again guys

You still have not said whether you are concerned about schools, if you buy in O-side count on private school for the rugrats, if you buy in Scripps or Carmel Valley, you have the cream of the crop in terms of schools. It is worth the money if you don't plan on private school.

MANmom

No kids at the moment, so schools are less important to me. I know it is a factor for re-sale later down the road though.

On a different note, I really liked the listings I saw at The Crosby. Lowest priced homes of size are around $1.3mm-1.5mm. Anyone heard of stories of them taking offers well below asking? Think they would entertain a $950K-$1mm offer on a $1.3mm asking price?

If you don't have to worry about the school district, why buy in North County at all ? I have no idea. Maybe Encinitas or Leucadia if you don't have to work every day.

If you don't feel the need to be close to LA, I'd suggest looking in University City or Bay Park down in the central part of San Diego.

University City has some great 50's homes (which I like as they are built well) in really nice neighborhoods. No HOA/Mello Roos either. For the same price, compared to Oceanside, you would probably get a smaller house, but it would be closer to more fun "San Diego" things like Mission Bay, La Jolla beaches, and Downtown.

Bay Park and Bay Ho have remarkable views of Downtown and Mission Bay. Sometimes the sloped lots force you into a deck instead of a yard, but other canyon/view lots can be stunning.

I think a million in either place would get you a good house on an awesome lot.

Some say the three most important words in real estate are "location, location, location" but I'm starting to think they are "space between houses". So many new developments build them soooo close together.

Have heard from a couple of friends that they "might" be negotiating at "The Crosby." It seems to depend on whether anything has recently fallen out of escrow, etc.--don't know if they'll go under $1MM or not.

If you are really interested in the area, you might want to give them your price range, and ask them to let you know if anything comes up. You also might want to look at Avaron at Del Sur, and The Lakes, in the same general area. In all of these areas you would be well-positioned with schools, etc., should that need arise in the future.

As far as the coast is concerned, it may be awhile before you see 5000sf on an acre for under a mil. Unless it's a real dump, you'll see a line from here to LA to buy it.

We have about that square footage on almost an acre in the LJCC area, and most of the homes for sale around us are going for over $5MM++ at the moment, but you never know what the future might hold.

If I were you, I'd probably enlist the services of a great realtor in the San Diego area (several post on this forum)
and have them watch the market for you. They might also be able to negotiate a deal on your behalf with a builder, should you decide to go with a "new build."

Good Luck!

*I should have added, I echo the caution expressed by other posters regarding buying in Oceanside. Yes, it's a lot less expensive--there are many reasons why, and most of them are not good--especially with regard to resale. However, if all of the negatives don't bother you, you will definitely get more for your money.

http://www.redfin.com/CA/San-Diego/10055-Rue-Chantemar-92131/home/497592...
http://www.redfin.com/CA/Poway/13331-Fallen-Leaf-Rd-92064/home/4261562

Thanks. The more i read about Rancho Santa Fe and surrounding areas, the more I begin to think of holding off until I can get a deal there. Maybe Oceanside isn't the right place for me, if there really is as much of a crime/gang problem as people have been saying.

Have just been reading through some of the older posts by raptorduck and others on the RSF area. I drove through the area last weekend as well and thought it was amazing. But you still can't get much for $1mm there, unless you're willing to settle for something small and older.

I guess what gives me pause at the moment is the uncertainty on prices. In every single development I toured last weekend, there were dozens of people touring the models. At Scripps Preserve, 3 people left deposits that weekend on lots. My sense was that most of these were sideliners like me who are thinking about jumping in.

Perhaps it was a bout of naivete, but I went into the weekend with a pre-approval letter in hand and a hefty down payment thinking that these developments would be willing to negotiate on price. Most weren't taking offers (including Buckingham and Tiburon), which was surprising.

In addition to some of the areas people have named, where else should I be looking if I want new, spacious homes at decent values?

Don't forget about MR, HOA dues -- and property tax, which will be a lot on a $1 million dollar home.

Hi nybuyer -

Yeah there has been a pretty fair amount of activity this spring. In my opinion moreso then last spring. How long this will last is questionable but for the moment it is a fact.

If you are indeed looking for larger lots and newer homes then definitely browse the areas that Raptor has mentioned in his posts. Many if not all of them though will come with Mello Roos and HOA. That is the price of admission for newer stock though. Also some places like Santa Luz, Crosby, Santa Fe Valley will fit your bill but are still north of the 1M mark. Slowly they will get to your asking price if you have patience. There is another huge area of inventory where you can get large homes and lots out in Blossom Valley but that is east county and is a different world altogether. You will get more for you money out there but it is not as prestigous as the areas you have mentioned in this thread. I also like older areas such as Fairbanks Ranch etc but those as well are not near the 1M mark. Some with Solana Beach. The only thing under 1M there are homes that sit on the north slope of the hills and those are small places and are not in the gendre of what you are looking for.

There are nice homes in Elfin Forest that may suit you with respect to the size of the home and the lot size however alot of stuff there was built as far back as the 80s. I would say that many of the homes are custom built and not tract homes so they bring more quality to the table.

There has been a ton of development of large (3000 sf+) homes out in northeast county on large lots as well. Again though you are talking out in the foothills of Escondido. Lots and lots of new stuff out there... These homes have taken a beating and continue to do so. Personally it is not my cup of tea out there but nonetheless there is alot to choose from.

Finally even parts of Carmel Valley (up on Del Mar Mesa) may suit ya but to get what you are wanting for 1M will be tough if not impossible here.

SD Realtor

How sad is it that here we are in a major housing recession and yet this gentlemen is limited to what he can buy for $1M in San Diego. Crazy if you ask me.

I do agree 100% cowboy... prices have come down but they sure the heck are not affordable to me for the size of home and area I would like to buy in.

SD Realtor

SD Realtor, what area of SD do you specialize in? Know of any good agents that specialize in the RSF area? Being based in NY makes it hard for me to tour personally, and it is always so difficult to find good agents by just looking at their websites.

There are about 4-5 listings in The Crosby that are between $1.3-1.4mm. Any sense on how the sellers would likely respond to an offer at $1mm? Some of the listings have been on the market for quite some time (~6mo). Also, any idea what the property tax/MR is in the Crosby? Having grown up in SoCal, there is a real appeal to me of a gated community (and the golf course is a plus, for an aspiring golfer like myself).

Also, still keeping the KB Homes Oceanside development ("Buckingham") on my short list for now, given that it has no MR and HOA fees are only $145/mo. Property tax is also low, at around 1.06%. Still keeping it on the radar on the value factor alone (where else in SD can you get a 5000sf brand new home on a 1.5 acre lot with views of a flower farm for $850K and no MR???)

Hi nyb -

I live in Scripps and specialize in the I15 corridor. I know La Costa Valley and the coastal areas very well but I would not say I am a specialist in these areas. Same goes with the what I call the eastern rim which includes Cielo, Crosby etc.. Both Jim Klinge and sdr have offices that are in the north county coastal area and would be considered neighborhood experts in those regions. Not sure if the EXACT submarket they focus in is RSF or not. They can comment.

As far as submitting a 15-20% lowball offer to any of the listings in the Crosby I would say that you would have a better chance of success in July then May. That may not preclude you from trying though. Each listing needs to be analyzed in terms of length on the market, level of distress or possible distress, etc... With that said, could it hurt to lob them an offer? No I don't think it could at all. One thing for sure, you never know if you don't try right? Also you let them know politely that you don't mean to be insulting or anything like that, and if they don't take it you check back in a few weeks.

As for the a sample of Crosby dues let's look at the 16991 Going My Way home that was originally at 1.579 and is now 1.399. It has been on the market 285 days. They slid the price down a few times at the end of 07 and the beginning of 08 but have not budged since then. Are they due for another notch down? Absolutely. Will they notch it down 20%? My read on sellers like this is not a chance. Now I am only looking at one mapcode within the Crosby which is 1169 A2 and there have been 2 closed sales in all of 08 back in Feb. There are NO pendings and there are 7 active listings. Similarly this same listing was listed last year and expired. So to say these guys have been on the market a long time is an understatement. Are these sellers potentially in distress? Potentially they are.

As for your costs of living there? Right now they list the HOA at 475 a month and 6500 a year MR. If you got it for say 1.2M just to use a nice number you are looking at a minimum of 2k a month between property tax, hoa and mr. So that is what, 1.8%? I am to lazy to bring up the calc tool on my laptop...

Anyways like all of the high end stuff... I see these places all coming down... eventually... as they do come down they will get slurped up by people with money... so it will take awhile to get something for a million but no way does it hurt to try.

SD Realtor

NY,
I'm a bit surprised no one has pointed out Olivenhain as an area for you to watch and/or check out. It is a fabulous area close to everything with everything you would want. Think Colts Neck/Holmdel if you know those areas in NJ. There are lots of 1/2 acre to 2 acre properties there with mature trees. If you have any questions, I'd be happy to point you in the proper direction. My true expertise lies in everything along the coast from Carmel Valley/Del Mar to Oceanside. More specifically my greatest expertise is in Encinitas/South Carlsbad (La Costa). I can pretty much tell you who your neighbors are, what builders are best, which floorplans have/will continue to sell best, what street and even what side of the street you would want to live on. Having grown up back East for about 30 years, it is the closest place I have found in SoCal to having a real sense of place and/or community.

As for RSF, I wouldnt hold my hopes up too high of getting something other than a teardown anywhere close to $1M. The areas you mentioned like The Crosby/Cielo arent true RSF. They are closer to Escondido than RSF. I'm not sure what part of NY you are from but if you crave access to anything you will likely feel very isolated out there. I come from a long line of NYers and could never live that far out.

BTW, what part of NY are you from?

sdr

Hi NY,

I echo everyones comments, do avoid Oceanside. I'm following The Crosby and The Lakes fairly closely and doubt you'll find any takers at $1mil. Have a look at San Antonio Rose St. in Crosby, I've seen a couple homes pop up there for $1.1 but they are under 4k sq. ft. More info here: http://www.redfin.com/search#lat=33.03807902341769&long=-117.14916944503...

Lennar is building 2 new communities in the Lakes (models open in June), Espada and Revena. TBD on pricing but they say "low millions".

I like Scripps Preserve in Stonebridge, but don't like the heat that far east. Traffic can also be a problem during commute hours but it doesn't sound like that is an issue for you. The supporting infrastructure in Scripps is also a bit older than you'd find in west of the 15 in 92127.

The tax rate in The Lakes and the Crosby are similar, about 1.6%. This includes special assessments/MR. Homeowners in The Lakes is about $540 and I believe the Crosby is around $520.

+B