[quote=sdrealtor]single level view house always makes a difference. Like I said the primo houses (top 5 to 10%) were in very high demand but the others sold at a very pedestrian pace. Further up the cost there were lines for new homes selling with 1’s and 2’s in front of them. In the prime NCC, new homes with 3’s and 4’s in front of them were not all sold out in a day or even a week/ I know as I was there.
As far as timing goes, here it is from ground zero. I was shopping around here for my 1st home in 1997. There was very little on the market and the the economy had just turned. Price were beginning to move what seemed quickly though now I laugh at how small the gains were. The prices prior to 1995 were artifically very low here. The first property I bought was in late 1997 for 190K (a townhouse in Encinitas). A year and a half earlier (at the bottom) it sold for about 165K so 1997 was defintely the year things turned around. Two years later I sold it for 240K which was still just about equal on the buy vs rent with 20% down.
I never saw flipping going on and things seemed to sell at a moderate pace. Most of the houses were dated and needed remodelling. More than anything it was hard to find something you liked just like it is now. When the new houses came on the market it was alot easier.
The house next to my current home sold new in 1999 for $425,000. The 1st owners put at least $50K in landscaping, paint, appliances, window treatments etc to make it liveable. They were easily into it for $475K and that was very basic not extragent upgrades or landscaping. They sold in 2001 for $550K so it went up less than 10% each year. At the time the $550K seemed like a high price even though it was pretty much still at buy vs rent parity. People were scared in 2001 when they sold it. Planes were crashing into skyscrapers.[/quote]
I was also looking for my first home (a SFH in O’side) in 1997, and remember how the flippers started becoming a bigger part of the market (bought my house from a HUD flipper, as a matter of fact, but they weren’t nearly as greedy as the bubble-headed flippers).
I was also working in LA, and my family was in RE (in LA, then in SD) for a couple of decades, so have seen the ups and downs of RE over the years. The flippers were buying up everything already in late 1997/early 1998. The shift was very obvious to those of us who were closely watching it. It wasn’t just in Encinitas/Carlsbad, or in O’side, or in L.A…it was going on all across the country to varying degrees (noting that a stagnant market can indicate a bubble, if prices would have otherwise gone down).
Quite frankly, I don’t believe prices can be “artificially low” as there have never been any artificial forces in the market to drive prices down (foreclosures that are the result of unwinding the fraud of the bubble are NOT “artificial” forces, BTW).
Mortgages payements, especially when tax deductions are accounted for, are often lower than rents for similar properties. It was only during the credit bubble that the spread widened so much.
The difference between owners and renters was historically the ability to come up with a down payment, not the ability to afford the monthly payment. That’s why lowering the down payment requirement via 80/20 loans and “zero-down” financing caused the bubble to inflate so much. It brought new demand into the purchase market — people who would have been renters in any other market suddenly were able to buy. That’s a huge shift. Yes, we’ve had VA loans and special programs before, but NEVER to the extent that we saw during the bubble.
BTW, I’d like to know what forces could keep housing prices “artificially” low. To the best of my knowledge, nobody has ever tried to keep housing prices “artificially” low (though that would have benefitted society far more than “artificially high” prices, IMHO). I’ve never seen anything that would cause “artificially low” prices, other than insider deals at banks or S&Ls, but those were never considered “market prices.”
