Update time. It’s been 3.5 months since the last post on this thread. So far the price declines have been steeper and faster than I imagined. In mid July I reported the bottom end of the 2bd El Cajon condo price range was 170k-180k. Today it is 140k-160k. My observation is at least a 10-20% reduction in asking prices across the board. I would actually say it has been breathtaking to watch day by day. In August there were about 25 2bd condos priced under 200k. Today there are about 50.
In general it looks like we are already back to 2003 prices. I’m thinking 2000-2001 nominal prices are possible.
On July 15 Temeculaguy posted that the condos at 469 E Bradley could be worth around 150k next year. That prediction seems dead on. None of the units originally listed have sold and I doubt any of them will until they are REOs. The lowest priced unit (199k) has not reduced the price at all and is now competing with units offering garages.
Based on price to rent ratios Bugs speculated investors might begin to bite at the 150k level. It looks like they are going to wait a little longer as a few units are now available in the price range with no apparent action.
PerryChase advised me to wait it out because he believed I would see the 150k price again. It was a short wait. The complex at 745 E Bradley currently has an REO priced at 140k. It is the same unit that represented the complex peak in 2005 at 274k. If anyone wants to win the 50% off previous sale contest you can definitely do it with this unit. It will be interesting to see what it goes for when it is finally sold. It is the cheapest 2bd in El Cajon right now.
4plexowner pointed out how rising interest rates might set a floor closer to 100k for similar units. Based on this early price action with rates the way they are and many more REOs to come, I would agree. A significant rise in rates might push them under 100k. I believe Rustico speculated the 2bd condos at Sunterra might sell under 100k in the next few years. That scenario seems plausible.
Temeculaguy advised me I need to save 30k for a down payment in the next 18 months or so to be ready for the bottom. 30k already represents 20% down for the bottom end units.
I made an offer on an REO at 745 Bradley for 120k when it listed for 181k. Today I wouldn’t do the same for the 140k priced unit (same building). I am afraid they might accept. I am readjusting my sites towards better units with a garage, and possibly a SFR. I am thinking under 200k for an older SFR with garage might happen. I might even find a good deal in a better area in a few years.
In conclusion, I wish I could relabel this thread “50% off Condos in El Cajon”. I have found the first one and this may become common for units sold 2005-2006. I just didn’t think it would happen this year. The REO at 745 Bradley will undercut the last 24 sales, including a knife catcher recently at over 170k. I wonder how many buyers who could actually keep paying the mortgage will just stop paying and walk away.
Still waiting and feeling better every day. I’m thinking 2/3 off peak (nominal prices) could happen in El Cajon given the right conditions. That would require significantly rising rates in the next few years. Anyone else that big a housing bear?
