Overcorrection? 1985 pricing? – Piggington's Econo-Almanac

This topic has 185 replies, 19 voices, and was last updated 15 years, 8 months ago by Nor-LA-SD-guy.

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February 27, 2009 at 9:22 AM #15176

temeculaguy
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My plan was to wait until about mid 2010 and then look for a rental to buy, “dollar cost average”, “double down”, whatever you want to call it. Some casual study of potential rentals have revealed that the lower end, smaller and older properties are just taking a beating. Since Temecula has been the canary in the coal mine for other places, thought a few of you might enjoy my findings while you wait out the declines in your area. Before you say “it can’t happen here,” read some old posts, the pain train is real, coming to a neighborhood near you:

http://www.redfin.com/CA/Temecula/42500-Carino-Pl-92592/home/6198129

Just in case it delists or sells here are the basics, it’s a 3/2, old neighborhood, not far from apartments, sold in 1989 for 140k, again in 2003 for 260k, was listed for 142k (it’s 1989 price) and the bidding war didn’t start, it has been reduced twice and is now listed for 110k. Is it an anomolie? The ten or so listings below it that redfin considers similars all have a “1” as the first number and are similar, many boast similar chronological prices, like 1989. It’s only happening to the old and smaller sfr’s, one’s with sq ft similar to apartments. The nearby apartments rent for about 1k for a 2/2, about $1200 for a 3/2 apartment some a little more but that’s about it.

http://www.move.com/apartments_california/temecula.aspx

The tax rate is real low because it is an old neighborhood, about 1%.

So here’s the numbers, 110k sales price, 20k down, 90k financed, $550 mo P&I, $100 for taxes, another $75 for insurance. $725 PITI, fair rent at about $1100-$1300.

I realize the economy is going to hell, we all need to stock up on ammo and canned goods, but 30% rent positive day one, sfr purchases cheaper than apartment rent? How long will the lack of credit and the current disdain for owning keep the low/middle demographic paying more to rent apartments 300 yards away than buying sfr’s? If you could find 4% interest (which you will have trouble finding), that 20k will yield $66 a month, this example represents between 20% and 40% interest, even if it never gains value in the next thirty years, if rents never rise in that time, it still pencils out on rent alone, with enough cushion for rent declines and maintenance. I never understood the massive price increases of the bubble and I’m beginning to get confused about the massive decreases during the meltdown.

February 27, 2009 at 10:00 AM #356254

kewp
Participant

[quote=temeculaguy] I never understood the massive price increases of the bubble and I’m beginning to get confused about the massive decreases during the meltdown.[/quote]

No buyers!

The overwhelming majority of the population is either a current/former FB’er, unemployed (or about to be) or already tied to a mortgage.

I’ve said for years that the real scarce commodity is buyers, not land, when discussing RE investing.

The miserly Pigg’s like myself with cash, job stability and good credit are going to wait for the absolute bottom. I also prefer renting for the moment as I’m busy with enough projects that I don’t have time to tend to a house.

My prediction for the last couple years was to watch for 1997 pricing as a bottom, if it keeps dropping watch for 1989.

If its *still* dropping on the low end I honestly have no idea how far this is going to go. Maybe the IE is going to get plowed under, like Cramer has suggested.

February 27, 2009 at 10:00 AM #356559

kewp
Participant

[quote=temeculaguy] I never understood the massive price increases of the bubble and I’m beginning to get confused about the massive decreases during the meltdown.[/quote]

No buyers!

The overwhelming majority of the population is either a current/former FB’er, unemployed (or about to be) or already tied to a mortgage.

I’ve said for years that the real scarce commodity is buyers, not land, when discussing RE investing.

The miserly Pigg’s like myself with cash, job stability and good credit are going to wait for the absolute bottom. I also prefer renting for the moment as I’m busy with enough projects that I don’t have time to tend to a house.

My prediction for the last couple years was to watch for 1997 pricing as a bottom, if it keeps dropping watch for 1989.

If its *still* dropping on the low end I honestly have no idea how far this is going to go. Maybe the IE is going to get plowed under, like Cramer has suggested.

February 27, 2009 at 10:00 AM #356698

kewp
Participant

[quote=temeculaguy] I never understood the massive price increases of the bubble and I’m beginning to get confused about the massive decreases during the meltdown.[/quote]

No buyers!

The overwhelming majority of the population is either a current/former FB’er, unemployed (or about to be) or already tied to a mortgage.

I’ve said for years that the real scarce commodity is buyers, not land, when discussing RE investing.

The miserly Pigg’s like myself with cash, job stability and good credit are going to wait for the absolute bottom. I also prefer renting for the moment as I’m busy with enough projects that I don’t have time to tend to a house.

My prediction for the last couple years was to watch for 1997 pricing as a bottom, if it keeps dropping watch for 1989.

If its *still* dropping on the low end I honestly have no idea how far this is going to go. Maybe the IE is going to get plowed under, like Cramer has suggested.

February 27, 2009 at 10:00 AM #356726

kewp
Participant

[quote=temeculaguy] I never understood the massive price increases of the bubble and I’m beginning to get confused about the massive decreases during the meltdown.[/quote]

No buyers!

The overwhelming majority of the population is either a current/former FB’er, unemployed (or about to be) or already tied to a mortgage.

I’ve said for years that the real scarce commodity is buyers, not land, when discussing RE investing.

The miserly Pigg’s like myself with cash, job stability and good credit are going to wait for the absolute bottom. I also prefer renting for the moment as I’m busy with enough projects that I don’t have time to tend to a house.

My prediction for the last couple years was to watch for 1997 pricing as a bottom, if it keeps dropping watch for 1989.

If its *still* dropping on the low end I honestly have no idea how far this is going to go. Maybe the IE is going to get plowed under, like Cramer has suggested.

February 27, 2009 at 10:00 AM #356836

kewp
Participant

[quote=temeculaguy] I never understood the massive price increases of the bubble and I’m beginning to get confused about the massive decreases during the meltdown.[/quote]

No buyers!

The overwhelming majority of the population is either a current/former FB’er, unemployed (or about to be) or already tied to a mortgage.

I’ve said for years that the real scarce commodity is buyers, not land, when discussing RE investing.

The miserly Pigg’s like myself with cash, job stability and good credit are going to wait for the absolute bottom. I also prefer renting for the moment as I’m busy with enough projects that I don’t have time to tend to a house.

My prediction for the last couple years was to watch for 1997 pricing as a bottom, if it keeps dropping watch for 1989.

If its *still* dropping on the low end I honestly have no idea how far this is going to go. Maybe the IE is going to get plowed under, like Cramer has suggested.

February 27, 2009 at 10:15 AM #356264

ibjames
Participant

For san diego, it is a clusterf*ck this spring, people are crawling out of the woodwork shopping for houses, it doesn’t seem like 97 prices will be any time soon 🙁

February 27, 2009 at 10:15 AM #356569

ibjames
Participant

For san diego, it is a clusterf*ck this spring, people are crawling out of the woodwork shopping for houses, it doesn’t seem like 97 prices will be any time soon 🙁

February 27, 2009 at 10:15 AM #356708

ibjames
Participant

For san diego, it is a clusterf*ck this spring, people are crawling out of the woodwork shopping for houses, it doesn’t seem like 97 prices will be any time soon 🙁

February 27, 2009 at 10:15 AM #356736

ibjames
Participant

For san diego, it is a clusterf*ck this spring, people are crawling out of the woodwork shopping for houses, it doesn’t seem like 97 prices will be any time soon 🙁

February 27, 2009 at 10:15 AM #356847

ibjames
Participant

For san diego, it is a clusterf*ck this spring, people are crawling out of the woodwork shopping for houses, it doesn’t seem like 97 prices will be any time soon 🙁

February 27, 2009 at 10:24 AM #356274

AK
Participant

IIRC Fannie and Freddie want 30% down for most investment properties. Plus it’s reasonable to assume that rents will stay flat or decline in many markets.

Still it sounds like a good deal … just not an absolute no-brainer IMO.

February 27, 2009 at 10:24 AM #356579

AK
Participant

IIRC Fannie and Freddie want 30% down for most investment properties. Plus it’s reasonable to assume that rents will stay flat or decline in many markets.

Still it sounds like a good deal … just not an absolute no-brainer IMO.

February 27, 2009 at 10:24 AM #356718

AK
Participant

IIRC Fannie and Freddie want 30% down for most investment properties. Plus it’s reasonable to assume that rents will stay flat or decline in many markets.

Still it sounds like a good deal … just not an absolute no-brainer IMO.

February 27, 2009 at 10:24 AM #356746

AK
Participant

IIRC Fannie and Freddie want 30% down for most investment properties. Plus it’s reasonable to assume that rents will stay flat or decline in many markets.

Still it sounds like a good deal … just not an absolute no-brainer IMO.
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