Okay, here’s another one to chew on. The best way to track price trends on the neighborhood level is to use sales of the same property that occurred during the time frames in question. These paired sales don’t come up that often so when they do it’s interesting to take a look. As always, one example is just one example. It doesn’t get beyond interesting until we can accrue a bunch of them.
This one is also located in San Marcos near the Carlsbad border; up on the hill overlooking Palomar Airport Road/Rancho Santa Fe Road.
For those who have access to the data, this home is located in the Rancho Dorado subdivision (1128/A-3). It’s a 2001 home of 2680 SqFt with a view amenity, on a 17,000 SqFt lot. It originally sold in 06/2001 for $371,000, which was higher than average for that model at that time and is indicative of above average upgrades and possibly a site premium.
This property has 2 recent sales. It sold in 06/2005 for $767,000 after 7 days marketing time, and was subsequently relisted in 10/2005 for $774,900. It was reduced to a range of $735k – $760k before going into escrow in 03/2006 after 149 days marketing time. It closed in 04/2006 at $740,000.
Now anyone with access to the data can figure out which property this is and verify the facts for themselves. I try to avoid listing addresses on the internet because of privacy concerns, but if someone already has access to the data then my discussion of it is not divulging anything that isn’t already available to them.
Both sales resulted from fairly typical marketing times. There is no indication that the 06/2005 sale was high. In fact, a similar model directly across the street with no view sold 2 months later in 08/2005 for $776,000; and its original sale price in 06/2001 was lower than our subject ($359k vs. $371k). If anything, it indicates our subject’s prior sale in 06/2005 was low, not high.
So, a solid $27,000 reduction in price demonstrated by 2 well exposed sales occurring 10 months apart. The loss itself is less than 4%, but if annualized it would be over 4%. This is by no means a radical loss and it doesn’t necessarily jibe with a blanket assumption (for those who are so inclined) that the market has already receded by 10%. We would have to assume the 06/2005 sale price actually was low to come up with a higher percentage of loss. Obviously, assumptions aren’t what we should be looking for in something like this. It does demonstrate the wisdom in Rich’s motto – “In God we trust – everyone else bring data”.
If this were a cash flow investment it would be a rather painful way to lose the cost of sale ($25,000+), the property taxes ($8,600 or so) and the mortgage payments of at least $25,000. It wouldn’t be quite so bad if this were the primary residence and the interest could be written off and the mortgage payments stacked against the rent. Still, you add it all up and the cash this investment lost in principal loss, carrying costs and costs of sale is nothing to sneeze at if you’re a wage earner here in San Diego County.
I’m headed out of town for a week, so I won’t be following up on this topic any time soon. But if you guys can rustle up some more paired sales we can look at them when I get back.