The July update of the Case-Shiller San Diego home price index is in. The index increased by 2.5 percent from June — a substantial (if expected) one-month bounce.
As usual, Kelly has done a nice writeup on month-to-month changes with and without seasonal adjustments. I’ll supplement her piece with some visual aids.
First up is a look at the three price tiers and the aggregate price index from their respective peaks in the 2005-2006 region:
continue reading at voiceofsandiego.org
September 30, 2009 @ 8:16 PM
Not quite sure we will get
Not quite sure we will get the “if” referenced at the end of your article but there should be two more months of slight upward ticks since the charts are backward looking. I predict that by the end of the year it will taper off it’s lengthy spring/summer bounce, maybe even drop a hair or two and start on the long flat journey. The prediction applies to the aggregate, I always thought the high end would converge a bit but some charts rich posted a few weeks ago that showed the lower end enjoyed more bubble during the bubble made me doubt myself. We had a boom, we just finished the bust, and now the flat part is about to begin. I need a name for the flat part, I think I’m gonna refer to 2010 and 2011 as the A cup years.
September 30, 2009 @ 10:56 PM
You still got it tg.
You still got it tg.
October 1, 2009 @ 10:25 PM
As I said recently, I can
As I said recently, I can only wish that our local data sets over the last 20 years (pick whichever versions you like) could provide a sufficient set of statistics for making an optimal buy decision. To view the problem in this limited context seems to me to be akin to “it’s different here” (the buyer’s rally cry just a few short years ago). Yes, I can believe that we might see “flat” for 2010-2011 (while the stimulus cash is still flowing). But then what?
The end of cash-for-clunkers has shown how fragile the big-ticket economy remains. Without free money handouts, many people will now try to nurse their clunkers along and infuse cash only when necessary. The current economy has bolstered their willingness to pay with inconvenience for owning an aging vehicle.
Q: What percentage of SD new vehicle sales in August was not subsidized? A: I know for a fact that it was not 0% as I was forced to replace my ’89 Accord, which finally died after 20 years of honorable service. I would still be driving it if at all possible. Unfortunately for me, I had to compete as a buyer in a (clunkers) market that otherwise might have given me an even sweeter deal due to the bloated inventory of 2009 Civics.
Even if Congress renews or doubles down on the $8k real estate subsidy, it is not clear how long the game can last.
Q1. Did $8k even make a shred of difference here in SD?
Q2. Where did the money come from to fund this housing “rally” in SD?
Q3. How much inventory is still hiding in the shadows?
A3. I suspect “lots” despite all the argumentative threads I have read. We simply do not know how many homes would be offered with an adequate price bounce – or with the eventual realization that “adequate price bounce” ain’t gonna happen.
A1. Who knows since the effect of the $8k might be difficult to untangle from the many other manipulations that have been implemented to stop the housing price slide.
A2. I am most interested in this one, for which I haven’t a clue. Anecdotally, a colleague at the office has invested a substantial portion of his savings in a pair of Inland Empire rentals in the past several months. He also commented on trying to get “Urban Renewal” funds to subsidize extending his IE holdings.
Nonetheless, I am still waiting. The inconvenience of remaining in a rental is the housing equivalent of nursing a clunker in some respects.
1. China appears to have malinvested a huge chunk of the windfall from the trade bonanza that it enjoyed for the better part of a decade (or more). It’s not clear that China can sustain its own economy, let alone lead the world out of repression.
2. FDIC cannot fund itself according to design without squeezing more of its clientele out of business even faster than they are falling on their own. All we have managed to do with the banking system is hide its problems – nothing is fixed and the risks due to moral hazard have mounted further. Commercial real estate (and Alt A) concerns still loom on the horizon or have already arrived to some extent.
3. I have never been fully convinced that the WPA in the 30’s did anything more than prevent greater civil unrest (I pray that we do not need a world war to recover this time). I think that today’s stimulus will do no better. What will restart the economy? Where will the new jobs come from? WHAT SORT OF INCOME WILL THE NEW JOBS PROVIDE, EVEN IF WE MANAGE TO PULL OFF A MIRACLE AND REVITALIZE OUR INDUSTRIAL BASE WITH THE DEVELOPMENT OF GREEN TECHNOLOGY? WHO WILL BUY THE GOODS PRODUCED BY SAID INDUSTRY? CHINA? AT WHAT PRICE? WOULD WE IN EFFECT BE TRYING TO RE-PATRIATE DOLLARS THAT HAVE PREVIOUSLY FLOWED TO CHINA? CHINA BUYING OUR LABOR VERSUS THEIR OWN? EVEN IF WE WERE TO BUY SAID TECHNOLOGY FROM OUR OWN MANUFACTURERS, WOULD IT HAVE TO BE AT WALMART PRICES?
All I know is that my salary is not climbing much the past few years. I am way more concerned about it falling or possibly even disappearing. The global mess is overwhelmingly complex. In the end my decision will be gut-based.
October 2, 2009 @ 12:10 AM
A couple of problems using
A couple of problems using the 8k, SD real estate and cash for clunkers comparison. Everyone needs a car, but only 60% of the population buys a house.
The 8k has income limits that eliminate most SD buyers, especially in the sfr market and especially in the stickier markets. I doubt very few carmel valley buyers get the 8k, so why has it and other similar areas held up the best, the 8k doesn’t explain it. I live in one of the cheapest areas, I took a reasonable mortgage and I make a fairly moderate income yet I made too much to qualify for the 8k. 75k for a single is where they start phasing it out, anything over 90k and you get squat. Not one of my three neigbors who recently moved in got squat and we bought homes under 300k homes. Couples making under 150k can get the credit, but couples making under 150k aren’t the people buying homes in the sticky areas, 200k yr minimum is the price of admission to the north coast and the north coast is holding up the best. The 8k theory can apply to the sfr’s under 400 and the condos under 200, over that it gets dicey.
October 2, 2009 @ 10:52 AM
I think what you’re saying is
I think what you’re saying is that the $8k probably hasn’t played a role in SD, a premise to which I am open. My biggest question remains unanswered: “What kind of money played a role in this SD rally?”
I gave one anecdote of a colleague deciding it was time to move some stagnating savings into a couple of IE rental purchases. He is close to retirement and probably did not trust the rally in the equities markets. However, his return-on-savings has been crushed by the repression tactics of the Federal Government and the Federal Reserve and other CBs globally, so I believe he finally decided he could do better as a landlord (and maybe he’s right). His savings were “chased” back into the “economy” by government intervention into the markets.
Presumably others have made the same move. There seems to be a fair amount of controversy about shadow inventory. What about the demand side of the equation. Is this even more difficult to analyze? Can we find out, for just the past 6-8 months:
1. How many SD purchases were owner-occupied?
2. Where did the money come from? (A histogram showing distribution of percent cash into each purchase would be awesome but sounds a bit greedy 🙂 )
3. Did any particular sources of money dominate?
I don’t know much about how to chase such info. Can anyone point me to possible data sources?
October 2, 2009 @ 5:25 PM
sdnonserfer, i can’t say if
sdnonserfer, i can’t say if your friend is right or wrong, if anyone knew for sure then it wouldn’t be any fun now would it. I can say that the IE is a big place, rentals are complicated, without details, it’s hard to give an opinion. I can say that I have been evaluating rentals up here and in some cases they do make sense, however the slightest mention will bring the cheerleader accusations, screw it, bring it on. Here’s a recent article from the nc times on percentages of communities in North County SD and SW Riverside county.
Percentage of people living below the federal poverty level in Temecula and Murrieta is half that of all North County cities with the exception of Carlsbad. And half that of both SD and Riv counties as a whole. If his rental is there, he may be ok, but that depends what he pays and what he rents for. I’ve mentioned this before, but a relative of mine paid cash recently for a rental at about 90x rent, they paid somewhere around 130k and rent for 1500. I learned recently that they went with a management company and don’t actually deal with the place, after hoa, taxes and the company’s cut, they get a check for 1100 or 1200 a month. They were getting about 4k a year in interest in whatever savings vehicle they had it in. For them, as retirees, they tripled their return, the place peaked at 400k so even if it returns to half of it’s peak, they’ll make out well there too.
Flipside, other relative owns rentals in Sun City, San jacinto and Hemet (don’t ask me why). They bought them before the bubble with cas and paid almost the same for each (100k) and their rents are and have always been in the $700-$800 range, they primarily rent to senior citizens, stable but not exciting. After ten years of owning them, not much appreciation, they are about even. They figure they get 5-7% return on their cash investment. It could be worse, my 401k is worse.
So two scenarios, same county, different math. That’s why your friend might be making a bad decision, a fair decision or a great one, can’t really tell without the actual numbers.
October 2, 2009 @ 7:31 PM
I’m not trying to make a
I’m not trying to make a mountain (statistically relevant conclusion) of a molehill (anecdote). My point was neither to focus the attention on my colleague’s investment decision nor on rental properties in general. My own personal interest is not in rentals, it is in getting my 7 year old son the yard and the dog he’s been wanting for almost 5 years now. I just don’t want to sacrifice his college education or worse to pull it off.
I am back to my point. Can we collect any relevant data regarding the demand side of the equation for the greater SD housing market. Again – where is the money coming from right now (the past 6 months)?
Q1. Has there been a statistically relevant burst in the number of number of retirees and others moving from interest-bearing cash to (arguably) more profitable rental investments?
Q2. Have most of the buyers simply been those of us who have been waiting for “a yard and a dog” finally capitulating and deciding it was time to get in?
Q3. Do either of questions Q1 and Q2 matter? Are anecdotes all that we have when trying to address these questions?
October 1, 2009 @ 7:26 AM
Technical question for you
Technical question for you … What’s the difference between a chartfest and a rodeo ?
October 1, 2009 @ 2:29 PM
It’s been a while since I’ve
It’s been a while since I’ve seen the historical charts (showing the 90’s bust) that’s CPI adjusted. Any reason this isn’t a staple of the rodeo any more?
P.S. I’ve been living in my new house for a year now but am still addicted to following housing and mortgage markets.
October 2, 2009 @ 6:59 AM
Very good points by
Very good points by SDnonSerfer about the data not being reliable enough to use to make a confident decision on when to buy. And I think the issue of reliability can be extended to most govt data, including the employment report that came out this morning. There are so many bad assumptions in the birth death model that no one can really trust the job data. That is why I feel that one of the few areas that remains a good investment is gold, because I think the fundamentals continue to align in its favor, and it is a hedge against economic uncertainty. There are also many unintended consequences of the Fed’s efforts to avoid deflation that the world is going to have to deal with eventually, in my opinion.
October 2, 2009 @ 11:25 AM
I don’t know if I’d use the
I don’t know if I’d use the word chased when referring to liquid funds trying to find a home, so much as chasing. I hope your friend can find a tenant in IE. What confuses me about the uptick in CS index is that the tiers move down in value are prices decline so the mix must change. How can you compare y-o-y when that happens? What actually are the 600-800k or $1-2m homes doing?
October 2, 2009 @ 7:46 PM
“Investors” (unflopped flippers?)
and others with cash to burn– several sources have stated that all-cash “investors” are a heavy proportion of the buyers and they have been outbidding earnest young couples with approved mortgages to do it.
Anecdotally a coworker (who is a temp) stated that his dad just “bought a couple of properties”.
(“sources” = several realtor Piggs as well as Calculated Risk and similar ‘expert’ sources)
October 2, 2009 @ 10:00 PM
So can we project the stamina
So can we project the stamina of these “investors” going forward?
How detailed is the available profile on these guys?
How good is the data backing up the claims of the expert “sources”?
Did I miss a critical post? (or several)?
It seems that we can hammer away in pursuit of supply side data and/or demand side data. With respect to the supply side, wouldn’t those who might be holding “shadow” inventory find it in their best interest to hide as much info as possible? But on the demand side, even though the data may be more scattered and difficult to collect, I’m not sure there is any inherent need to deliberately hide information. Is it simply a matter of fragmented data?
October 2, 2009 @ 10:30 PM
The info you want just isn’t
The info you want just isn’t readily available. You are gonna have to guess a little. When someone buys a house and pays cash or obtains a loan, the recording is public info and the lien is public info but the background and demographics of the buyer and their liestyle, intentions and plans are mostly private. Have you ever bought a house? You don’t have to give up that much info to the recorders office, just your name, sex, marital status and where you want the tax bill sent. You can’t glean that much from that info. You can go in person and look up lien amounts or pay for the docs, but there is so much data that nobody has compiled it. The loan info other than the amount, like the persons credit, net worth, etc. is private info between the borrower and the bank.
What is an investor? Is it a group of people buying ten properties, a single person buying a hundred, or some couple buying one or two. maybe they aren’t even buying a rental, maybe they are buying a bigger house with plans to rent out the old one, that happens quite frequently and it isn’t a recorded stat. They are all investors. About all you can get is the stat on how many buyers are claiming the owner occupied tax rate, but even that’s a little hokey because they don’t check and lots of small investors check the box to pay lower property taxes. I ran both places i rented and both were claiming the owner occupied tax benefit.
You are gonna have to use the force, luke. It’s not a poker game, you don’t get to see how many chips the other players have, you don’t get to know their intentions and you don’t even get to know how many are playing. The only absolutes are these, don’t buy a house you can’t afford, even if you want a yard or a dog, if you cant afford it, you dont get it. You can wait for it to cost less or your income to rise, you can buy something for less or you can move. These are the absolutes, the rest is educated guesses and nobody is right all the time.
October 3, 2009 @ 12:05 AM
So I guess we’re somewhat in
So I guess we’re somewhat in agreement then. The demand side analysis is also intractable, but mostly due to data fragmentation.
What you are calling the force I will call the “gut topology”. No metrics here – we are only able to base our decisions on a nebulous sense of convergence – we trust our gut to decide when the deal is right. Now, we already know that everyone’s buying situation is unique (at the very least to some small extent). So this gut-based decision making approach is reasonable- IF the housing market itself is not whacked out with distorted pricing. A gut-based decision in a distorted market might be lethal to one’s financial well-being.
I thought that was the whole point of this blog – to seek data that might illuminate us as to when the market is no longer distorted. That is why I am seeking better demand-side data. I never thought it would be easy.
October 3, 2009 @ 12:40 AM
You are overthinking and
You are overthinking and underthinking at the same time, but based on your vocabulary, this is probably not the first time this has happened (this is not an insult, being too smart or too well read can slow you down sometimes).
You cannot make a lethal financial decision if you do not make an appreciation based decision. Trust me this won’t get complicated but I have to use some made up numbers because I don’t know yours.
For a primary home purchase, the market is not nearly as relevent as your ability to afford the house. As long as the place you settle on has had it’s bubble air already let out. Use a listing website like sdlookup or redfin that shows you the historical price, do not pay more than the comps were in 2003.
Then figure out your income, your downpayment and your comfortable monthly payment, ignore what lenders say you qualify for. Let’s say you pay 2k in rent right now and life if just fine. You have no credit card debt, you can pay your monthly bills, you can put what you want toward retirement and college funds. So you know 2k for your housing bill works for you. Then figure out based on today’s interest rate what size of a mortgage comes out to 2k, Let’s say it is 400k. Then look at your bank account, decide how much you want to put down, for fun lets say 80K, now you can go buy a house for 480k, the P&I comes out to what you pay in rent are are comfortable with, it’s a tested number in your home budget, the taxes and insurance and stuff get washed out roughly by the tax benefit, you are all done. Here’s the big trick, if that 480 doesn’t buy you a house you can be totally happy with for the next ten years, then this doesn’t work, rent.
Because if you can afford it, if you are already affording it, if you are going to pay it anyway in rent, then it doesn’t really matter what the market does, it doesn’t really matter if it goes up to 700k or down to 300k, because you live there and you don’t lose or gain while living there. If it goes up to 700k and you decide to take out a heloc for 100k, then you will end up like the bubble buyers, because you have to pay that back and you cannot afford it, if you could you wouldn’t need to borrow it. I almost think that appreciation is a bad thing for long term owners it gives them temptation to borrow something from something that doesn’t exist. Take the appreciation/depreciation out of the equation and decide based on affordability. Now if you can’t buy something comparable for 480k that you are renting for 2k, don’t buy, it’s overpriced (the downpayment should bring rent parity).
Markets and appreciation and profits are for rental properties, aka investments, primary home purchases are not investments, they are merely 30 year leases.
Free your mind a little, ignore what the other buyers are doing or who they are. Make it about you. In 2005, so many people did things because others were doing things not because something worked for them. They based their decision on expected future values and past performance, that is where the trouble began. If everyone only bought what they could afford, they would be fine. That is not a gut feeling, that has worked since the concept of borrowing began.
October 3, 2009 @ 1:23 PM
I’d say that pretty much
I’d say that pretty much nails it, TG. Course, I wouldn’t mind 2001/02 comps…
October 14, 2009 @ 12:52 PM
You cannot make a lethal financial decision if you do not make an appreciation based decision. . . .
Here’s the big trick, if that 480 doesn’t buy you a house you can be totally happy with for the next ten years, then this doesn’t work, rent.
Because if you can afford it, if you are already affording it, if you are going to pay it anyway in rent, then it doesn’t really matter what the market does, it doesn’t really matter if it goes up to 700k or down to 300k, because you live there and you don’t lose or gain while living there.
If everyone only bought what they could afford, they would be fine. That is not a gut feeling, that has worked since the concept of borrowing began.[/quote]
Uh, TG, your advice is great advice in a “normal market.” It’s very poor advice right now. What is a “normal market”? A normal market is a market that is not experiencing wild fluctuations in value. Why does this matter if I buy the house you describe for 480 that (a) I can afford and (b) that I “can be totally happy with for the next ten years”?
The answer is that most people can’t answer (a) OR (b) with any certainty-especially in this economy. I can get a pay cut. I can lose my job. I can get sick. I can decide I want to take a job in another city. I can get transferred to another city (SAIC anyone?). Heck, I can decide I don’t like the crazy neighbor.
If I buy a house for 480 and I put down a down payment and it drops to 300, I am in big trouble because my options have just been destroyed. If I can’t afford it anymore, I can’t sell it for anything close to what I paid for it so I can’t get out. Even if I can afford it, I can’t move if I want to move because I can’t sell it for anything close to what I paid for it , and that’s a bad thing.
In a normal market, if I decide to move, I sell the house, eat the minimal transaction costs and I am on my way. In a declining market, that may not be possible, so the risk of a “lethal financial decision” remains whether I can afford the house (now) or not.
October 20, 2009 @ 9:48 PM
According to the CS graph
According to the CS graph above only 1/3 of houses in San Diego sold for over $421K. I don’t think it bears out all that well that the San Diego market is too expensive that the 8K tax credit would apply. It’s pretty easy to have the income to buy sub $421K house by the income limits. If you’re prudent with your money you wouldn’t want to do it, but it’s not impossible to do.
October 3, 2009 @ 8:09 PM
TG– I so agree with
TG– I so agree with you.
This is the exact same logic I am using too.
Although, I also agree with sdcellar; 2000-2001 prices would be really nice… and I think they are possible. Per my back-of-the-hand math a while ago, 2000 price is the inflation-adjusted equivalent of 1996 prices. And I am pretty sure the economy is worse this time around than it was in 1990-96.
October 3, 2009 @ 8:19 PM
Some rentals anecdotes–
Some rentals anecdotes–
I am hunting around for a place to live by myself again, and today on Craigslist and in the U-T there seemed to be an unusual number of 2BR places listed for under $1400; several under $1300, in the RB/RPQ area. Mere months ago most 2BRs in these areas were in the $1400’s – $1500’s.
Even a nice apartment complex– Bernardo Crest in RB– is advertising a 2BR upper, 1,005 sf, for $1365 with a $199 deposit. A year or two ago, a neighboring complex, the Overlook, was renting 2BRs for $1500-$1600 (I haven’t checked with them today).
Another apartment complex further south in southern RPQ by I-15 is (apparently) giving away, or at least providing, a 42″ flat screen TV to entice people into their units. It’s not a shabby-looking complex, either– granite countertops, whipped cream, cherry, etc per the photos on their website (linked from the Craigslist ad).
Meanwhile, scant furlongs north in Escondido, a condo I looked at today was recently purchased by one of those “investors” who lives in Solana Beach, and is renting it out for $1050.
October 3, 2009 @ 9:56 PM
Although I’d loved to see
Although I’d loved to see 2000-2001 price in the nicer areas ($700k+ right now) going back to 2000-2001 price, I highly doubt it’ll happen, unless we have extremely horrible economic condition (2-3x worse that what we have now) or sky high rates w/out rampant inflation. I’d love to see houses like this one (http://www.sdlookup.com/Property-A33C7E6D-12322_Darkwood_Rd_San_Diego_CA_92129) goes back to its 2000 price. Can you imagine paying $425k for a 2600 sq-ft view house in Park Village? Those are going for low $700k right now and were fetching at least high $800k in 2005. That’ll be over 50% off peak price.
October 3, 2009 @ 11:14 PM
I wouldn’t put half off peak
I wouldn’t put half off peak out of the realm of possibility even without a catastrophe. There’s more to it than that, even in the sticky areas. sdrealtor has shown us some places in the north coast that didn’t go up as much percentagewise during the bubble and it explains why they haven’t gone down as much, not every place doubled or tripled, so not every place falls the same. The timelines don’t all match exactly either, not every place started it’s climb in 2001. Not knowing the particulars and the history of the place you mentioned I can’t cast a vote, but I’m also not willing to agree that half off peak or 2001 pricing is out of the question for any area, there is more to this cake than flour and sugar. High 8’s to low 7’s does not match the case shiller decline average for the county, so it either got a lower than average rise from 2001-2006 or it owes something to the housing gods. And if it doesn’t pay it’s debt to the housing gods soon, it wont go up on the next cycle because housing has to stay within it’s demographic range, unless it’s place in the pecking order changes, but most places stay in their place (community x costs 20% more than community y that costs 20% more than community z). If house x is worth double house Y in 1998 and it’s worth double in 2005 but it decides to be worth triple in 2010 because it doesn’t go down the same, then in 2015 it will be worth double again, house x and house y have to maintain their relationship, it is the order of things. It also becomes a much worse investment in the low 7’s because however many years it takes to return to 2005 prices (3,5,10,15, take your pick), it really won’t have gone up that much.
October 3, 2009 @ 11:36 PM
temeculaguy wrote:It also
[quote=temeculaguy]It also becomes a much worse investment in the low 7’s because however many years it takes to return to 2005 prices (3,5,10,15, take your pick), it really won’t have gone up that much.[/quote]Exactly, TG, and now you might better understand my recent “somebody make sense of PQ for me” theme.
October 3, 2009 @ 11:41 PM
TG, I think you and I can
TG, I think you and I can agree with mortgage vs rent create a pretty decent floor or pricing, right? These houses can easily rent for around $2600-2800/month. @ $425k (2000 price), w/ today’s rate of 4.825% and 20% down, your mortgage would be ~$1800/month. That’s $800-$1000/month cheaper to buy vs rent. I would think most renter in that type of house would jump in well before it get to that point.
I agree with you that % premium will more than likely stay roughly the same over time (except for short term stretch/shrink). However, I think some areas are more prone to undershoot than others. Which would then cause the % premium to stretch. However, since % premium is based on 2 moving variable, the question is, would the higher end area move down to meet the low end or will it just stay flat to slight down while the low end rise back to fundamental and restore the % premium that way?
Like I said, I would love to see 2000 price for these type of houses. I’m just extremely skeptical it’ll happen. Considering how sticky these areas have been, I’m not holding my breath for something to change drastically.
October 3, 2009 @ 11:50 PM
I agree AN, 2000 pricing with
I agree AN, 2000 pricing with those rents and todays rate probably wont happen but if the rates change, sdcellar’s 2002 estimate of 562k, is reasonable, run the numbers at 6.5% and 562k, it could happen, or like you said, the next community down will rise to meet it, but one of the two should happen.
October 4, 2009 @ 12:39 AM
temeculaguy wrote:I agree AN,
[quote=temeculaguy]I agree AN, 2000 pricing with those rents and todays rate probably wont happen but if the rates change, sdcellar’s 2002 estimate of 562k, is reasonable, run the numbers at 6.5% and 562k, it could happen, or like you said, the next community down will rise to meet it, but one of the two should happen.[/quote]
Yep, I agree that one of the two should happen. I just think it’s much more likely for the next community down to move up than these to move down. Just my wild guess based on what I see the government doing.
I agree that 2002 price is much more likely to happen. That extra $135k to bring it down to 2000 price seems unrealistic to me, unless we see 8-9% interest rate. I still think 2002 price at today’s rate would still be a reasonable probability. $560k @ 4.5% w/ 20% down would bring its rent vs mortgage ratio to similar level as what I got my house for. But that’s not the same as TV and Chula getting 2000 price @ 4.5% today. I’d love to pick up a few SFR rentals in MM too if it ever drop to 2000 price and rates stay at these level.
After checking out some more houses on Darkwood, I found something very interesting. The conventional wisdom is that 1989-1991 was the peak of the last cycle and 1996-1997 was the bottom of the last cycle. The interesting thing I found is that, the houses on Darkwood didn’t drop between 1991 and 1997. It actually increased.
I can probably go on and on, but you get the idea. How can houses on this street rise while everything else fell in the last cycle?
October 5, 2009 @ 2:39 PM
Talking about 2000 price, I’d
Talking about 2000 price, I’d love to move up to this house: http://www.sdlookup.com/Property-690B12FC-12911_Longboat_Way_Del_Mar_CA_92014 if it ever get back to its 2000 price.
October 3, 2009 @ 11:27 PM
A reasonable number for
A reasonable number for 2001/02 price on Darkwood would seem to be about $562ish and I can totally imagine paying that (or at least that’s all I’d pay).
2 of the 3 that sold on the canyon side in the last year were under $700K ($665, $630), so it doesn’t seem like that big a stretch. Not saying it’ll be easy or will even happen, but it’s within reason.
October 3, 2009 @ 11:45 PM
sdcellar, Now that matches
sdcellar, Now that matches the case shiller chart a lot better, which shows a 30% decline for the high end and the low one is only 10% off your fair price estimate. 10% is easy, a little bump in the interest rates, some crappy news in the msm, some bad weather, seasonal decline in winter. If you want to get creative, find a rental on that street, rent it under a fake name, then go find some recently released high profile sex offender and give him a few months free rent, tip off the media, whammo, 10% right there!!!!
***disclaimer*** aforementioned evil plot was intended for entertainment purposes only.
October 4, 2009 @ 12:46 AM
sdcellar wrote:A reasonable
[quote=sdcellar]A reasonable number for 2001/02 price on Darkwood would seem to be about $562ish and I can totally imagine paying that (or at least that’s all I’d pay).
2 of the 3 that sold on the canyon side in the last year were under $700K ($665, $630), so it doesn’t seem like that big a stretch. Not saying it’ll be easy or will even happen, but it’s within reason.[/quote]
Are the $665k and $630k sold price for the 2600 sq-ft floor plan? If so, then I’m pleasantly surprised. $560k for a 2600 sq-ft view house on Darkwood would be reasonable to me too. But that’s $135k above its 2000 price. I would definitely move up to these houses if they drop to this price point. I would much prefer 2000 price of around $425k, but $500-550k wouldn’t be too bad either.
P.S. can you post SDLookup links to these 2 properties? I can’t seem to find anything on Darkwood south of Rumex selling for those prices.
October 5, 2009 @ 3:24 PM
AN wrote:P.S. can you post
[quote=AN]P.S. can you post SDLookup links to these 2 properties? I can’t seem to find anything on Darkwood south of Rumex selling for those prices.[/quote]
October 5, 2009 @ 3:52 PM
Thanks for the links. Those 3 are all smaller floor plan with the 12316 being the closest at 2,572 sq ft.
Here’s the 2,698 sq-ft floor plan with sold price in 2001, 2002, and 2003. So, it seems like the 12316 is back to around 2003 price. However, the difference between 2001 and 2003 price is huge. based on the 12310 house, the difference is $180k. Going back to mid/high 500s will bring it back 2002 price.
October 5, 2009 @ 4:44 PM
I wouldn’t put too much stock
I wouldn’t put too much stock into square footage alone. The most expensive recent sale was actually the smallest and the only one significantly different in that regard. One would really need to know the properties to figure out who got the best deal.
Yes, the difference between 2001 and 2003 is significant and guys like sdrealtor have given vivid descriptions of the price arcs during those and surrounding time periods–I wouldn’t mind stumbling across one of those particular posts again.
All of that is what makes me feel that 2002 prices are generally a reasonable target and if you’re willing to be patient, watchful, and possibly a little disappointed, then shoot for 2001. Anything beyond that would seem to require another level of economic erosion that none of us would like much. (can’t say I’m too stoked about what we have right now…)
October 5, 2009 @ 5:31 PM
Of course sq-ft alone won’t
Of course sq-ft alone won’t tell the whole story. However, 12310 was sold for 3.6% more than the 12316 house in 1993. So, at least we can say that if neither had any upgrade, the 12310 would probably sell for about 3% above the $660k price, or ~$680k if it’s on the market earlier this year. What I’ve found while following data is that people will over pay for move in ready vs places that need work. So, that 2200 sq-ft house might be in perfect condition.
I definitely think 2002 price is a reasonable target too. I just don’t know when that’ll happen though. What if we go into the slow decline stage and we won’t see 2001-2002 price for another 5-7 years? I personally would love to pick up something like these that need some work for 2000-2001 price. Any chance of that happening?