About as crazy as ever

[bearishgurl]

I don’t know if SD County currently has more “buyer demand” than normal. Non-resident people who wanted to retire here always did if they could afford to buy a home here.

As far as new household formations, I don’t see that here, but it may be happening in areas I’m not too familiar with. New Gen Y college graduates, even if SD natives are all aware that they can make more money in LA and SF in their chosen fields. I’ve seen not only my kid(s) but many of their HS classmates flee the county for college to never return, except for holiday visits. Many friends, neighbors and former co-worker’s children left CA long ago (either before or after college) and are raising their own children in other states (where they were offered employment). I’m not sure that the SD County HS graduate or college graduate “resident-retention-rate” is that great. Even though SD has a well-paying high-tech sector, other industries, especially state and local government and FIRE industry jobs pay up to 40% less here than for an identical position elsewhere in CA.

I think the typical buyer pool in SD County is more “well-heeled” than those buyers emanating from “new household formations” as most in this group are renters.

I think the vast bulk of SD County buyers of personal residences are comprised of households with W-2 incomes over $150,000 (whether already a resident or a “transplant,” these are the buyers using PM mortgages), former SD residents/natives returning to live near family (some using PM mortgages of all levels), out-of-county residents moving here (or moving back here) to retire (using all cash and poss small PM mortgages) and out-of-state residents and foreign nationals buying vacation homes (all-cash buyers).

Then, there is the investor-buyer cohort, which I believe is about 32% of all buyers (the vast majority paying all-cash).

No charts or published facts to go on, all just my own opinions.

[bearishgurl]

[quote=outtamojo]The new normal? Jim the realtor had an interview w/ the Davidson homes guy a while back

Bill Davidson

There was a map showing how all the land for big projects is gone in S.D. County.[/quote]

I saw this video back when it came out last year. The developer is correct and all is as it should be. Enough is enough. SD County is grossly overbuilt and we were in danger of running out of water and had our landscape water rationed when it had less than half the population it does today. This situation with the State of AZ is still precarious. AZ is now grossly overbuilt as well and needs ALL of its share as is their right.

Short of having (ugly) desalination plants in the future on our bayfront and/or oceanfront (perhaps a huge one in Tijuana, BC to share with their residents … how’s that for “quality control?”), SD County residents have no guarantee how long our future rights to Colorado River basin water will last. The supply is certainly far from infinite.

And it is absolutely wacky to raze avocado groves and build huge subdivisions in Bonsall and surrounds (an idea I have been reading about). It is going to cost a FORTUNE to bring utilities to this area (read: VERY high MR). A good portion of the eastern section is covered with large boulders and is therefore unbuildable. If new home buyers want to live this far from SD, then TV will welcome them … that is, IF there are any new developments currently underway there.

TV is also grossly overbuilt. It is well past time for Big Developers to call it a day and leave SoCal permanently. Most already have.

[all]

[quote=bearishgurl]
Then, there is the investor-buyer cohort, which I believe is about 32% of all buyers (the vast majority paying all-cash).

No charts or published facts to go on, all just my own opinions.[/quote]

It’s ok to be exact while having no data to back results – the study shows that 89% of all study results are made up anyways.

[sym]

Is there any data on how many sfr’s are rental properties in San Diego? This is not quite scientific, but observing my circle of friends I can say about 80% of the folks who purchased a move-up house in the last few years converted their old house to rental.

[SD Realtor]

Don’t know the numbers however my advice to anyone moving up would be to do just what those 80% have done if you can swing it.

[bearishgurl]

[quote=all][quote=zk]
I’d be interested to hear other theories that might explain the lack of inventory.[/quote]

Based on DataQuick data:

County NOD’s
2009Q2: 9,866 2011Q4: 4,813 2012Q4: 2,655

foreclosures
2009Q2: 3,518 2011Q4: 2,044 2012Q4: 1,285

Different source, similar drop in NOD’s, trustee sales (from 1,600+/month in 2008 to <400/month in 2013)

http://www.foreclosureforum.com/stats.html%5B/quote%5D

In looking at the chart, the large amount of trustee sales in January 2013 appears to be overflow from repeated sale postponements in 2012. We haven't yet seen the stats on completed trustees' sales for those (first) NOD's filed in 2013.

The lower number of current NOD filings in comparison to past years is NOT indicative of borrowers catching up on all their back principal and interest owed. It is indicative of borrowers cooperating with their lenders in a loan mod, many of which no doubt have "equity-sharing" arrangements built into them with their 1st or 2nd trust deed holder in exchange for being allowed to pay a 2% or 3% fixed rate and have some or all of their deferred interest and/or late charges forgiven. This deferred interest arose from when these borrowers' mortgages exceeded 125% LTV due to them choosing to pay Option 2 (insufficient to fully amortize) and/or Option 3 (I/O) and/or Option 4 (less than I/O - this choice was not avail on all Option ARMS) for a period of months or years. My guess is that these "equity sharing" provisions will be lifted or lessened if borrowers pay their mortgages under the new, modified terms for X amount of years faithfully, in full and on time.

The result is the same. These many thousands of properties are off the market for the foreseeable future unless these borrowers HAVE to sell for reasons of employment, death or divorce.

[bearishgurl]

[quote=all]It’s ok to be exact while having no data to back results – the study shows that 89% of all study results are made up anyways.[/quote]

I figured as much, all.

I’ve just been around long enough to understand how things work around here :=]

[bearishgurl]

I want to clarify that I didn’t “read too much” into the (scanty) stats provided by foreclosureforum.com when posting above.

Because I was following about 45 NOD’s in my local area from 2010 forward for almost two years, I realized only two of them ever went to trustees sale. After checking MLS aggregators and just intermittently watching the properties in person, I came to the conclusion that about eight of them sold short (more could have done so without puttting the property on the MLS – I didn’t check ARCC sales).

The majority of borrowers who had NOD’s filed from 2007 forward never got a Notice of Sale filed. And the ones that did had up to 12 postponements. So all of those thousands of remaining NOD’s filed were not acted upon by the lenders and a (good) portion of them (don’t know the percentage) were not sold short or taken back with a deed-in-lieu. The only thing to deduct from this study is that the trustor previously in default either still resides there or has tenants or relatives that do.

My guess is a portion of delinquent borrowers did not want to sell short and further ruin their credit so cooperated with a mod when it was offered to them.

[SD Realtor]

The new normal is waiving your appraisal contingency. Seeing that much more. I am sure it is temporary until we get through this leg up.

[SK in CV]

[quote=SD Realtor]The new normal is waiving your appraisal contingency. Seeing that much more. I am sure it is temporary until we get through this leg up.[/quote]

So what happens when the property doesn’t appraise? Prospective buyer loses deposit? Is that happening much?

[SD Realtor]

All I can say is out of the past 8 properties my clients have bid on, 6 of them had counters that came back with a removal of the appraisal contingency. The seller also will move up the inspection contingency to 10 days knowing full well it is hard, but not impossible, to get an appraisal completed in the 10 days. This prevents the buyer from saying he will remove the appraisal contingency when in reality he has no intention to do so. In most of those same counters, the seller jacks up the good faith deposit to 3% as well.

Yes if the property does not appraise you the buyer must cover the shortfall with cash or back out. If you say you are backing due to the property not appraising when you waived that contingency in the RPA then yes you lose your deposit. If you back out and say you are doing so for other reasons but have not removed those other contingencies yet then you will not lose your deposit.

Hard for appraisers right now because the leg up is so steep that there are not enough reliable comps to justify the new prices. Soon there will be but and we are getting more solds to help them bridge the price gap. In the meantime sellers do this sort of stuff.

As for the property not appraising in the cases I have seen the buyer is covering the shortfall with a higher downpayment.

[CA renter]

Yep, the crazies are back in the housing market. IMHO, anyone waiving inspection or appraisal contingencies is a fool unless they are getting a steep discount.

I think all of this is going to end very badly. Hopefully, we won’t be asked to bail out this batch of fools…but I have my doubts.

[The-Shoveler]

I don’t think we will see another crash in the housing market unless there is another economic catastrophe (not caused by housing this time).

Which actually I think there is a fair chance of occurring, but the fed will do “EVERYTHING IN ITS POWER TO PREVENT” such a thing from occurring in the near future (Because it “the Gov” cannot afford another one right now).

Interesting times, the game is afoot (just look at Japan).

[kev374]

best to stay out of this market as it’s a mania right now and it is very dangerous to get caught up in these kinds of manias.

I saw a listing on Thursday, called the Realtor, he told me I needed to put in an offer for 15% over asking by Saturday and I can see the house from the outside only. WTF? Are these people crazy?

So, this house was sold on Saturday for 100% full cash at 20% over asking by someone who did not even care to see the inside…per the Realtor. Oh, and there were 45 bids on the property and it was priced at $250 sqft in La Habra, CA.

[bearishgurl]

[quote=kev374]best to stay out of this market as it’s a mania right now and it is very dangerous to get caught up in these kinds of manias.

I saw a listing on Thursday, called the Realtor, he told me I needed to put in an offer for 15% over asking by Saturday and I can see the house from the outside only. WTF? Are these people crazy?

So, this house was sold on Saturday for 100% full cash at 20% over asking by someone who did not even care to see the inside…per the Realtor. Oh, and there were 45 bids on the property and it was priced at $250 sqft in La Habra, CA.[/quote]

Hi again, kev! Just me again.

What does this “mania” tell you? Do you think a principal residence for yourself (and possibly your family) is going to get any cheaper in the OC in the coming years?

Uhhh, you DO realize that you can sort out the “inside” of the above listing with your inspector if your offer should be accepted with an inspection contingency, right??

What exactly are you waiting for to happen before you feel compelled to place an offer, kev?

[Author]

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