About UTC condo conversions…

[mixxalot]

Drops in UTC condos

I like the convience of the UTC area. Hoping that condos drop a lot more and would consider a 2 bedroom condo in Lucera once they drop to 200k.

[4runner]

Actually– is your elderly auntie considering a 55+ community?

The baby-boomer demographics are actually in favor of increased demand for those communities. I also think that they are usually 1/2 the cost or so of comparable housing open to the general public…

[patientlywaiting]

Wow, 100k loss on a 2/2 condo!! Those suckers must be kicking themselves.

Are these condos on the 92037 La Jolla side, or on the University side?

[SmellsFeeshy]

Lucera is in the University City 92122 zip code. I certainly agree that we could see mid to low 200s for a 2BR condo there easily in the next few years. There definitely does not seem to be a shortage of people looking to sell and prices are continually dropping.

I was considering renting a 1BR condo in Lucera last year but decided against it. Even though its one of the nicer conversions in the area, the units are still very small and parking is difficult since all units only have 1 reserved parking space (in a garage that you have to share with your neighbor).

[utcsox]

Just curious, why do you guys think the the price will drop below $250k for 2 bedroom? Using the rent multiplier of 160, and assume the current market to rent a such a place is between $1600 to $1800 per month (closer to $1800), the value of such 2-bedroom apartment shall be $256,000 to $288,000 assuming the rent do not drop. Is there something wrong about my assumption?

[bubble_contagion]

Nothing wrong with your assumptions. These units are almost to the point that it may make sense to buy if you have a 20% down, good credit and plan to live there (and deduct taxes). I say “it makes sense” because the montly payments would be close to the rent payments. In the last cycle prices over corrected and renting was actually more expensive (without considering the loss in equity). Also consider that HOA fees for those 2 bed units are $350/month.

[SD Realtor]

Bubble I agree with UTCSOX, not necessarly on the number but on a number. That is, when the rents cover the mortgage/hoa/property tax at say a 20% dp then I would expect the investors to start coming in.

SD Realtor

[hawk]

I work for the City and just wanted to tell everyone not to hold their breath on the nobel coaster station. I am fully in support of it as is my boss but SANDAG and especially NCTD do not want to do it. They do not think they will have the ridership and there is additional cost in building the station due to some extensive sloping.

There will be a “superloop” bus rapid transit circulator coming online and we are still hoping for Nobel but if it happens at all I think its going to be several years. Midcoast trolley is also not looking too good.

Feel free to contact NCTD, SANDAG and local officials if you want to see the site built!

[bubble_contagion]

Thanks God! I live in UTC and the last thing I would like is a coaster or trolley station bringing strange characters to the neighborhood. Even though I work downtown next to a trolley station and could commute on it, I like driving my car in the mornings, drinking my coffee and listening to the radio.

[johnnyre]

Why buy a condo in UTC when u can own this “Fine Gated Estate” tucked away in the hills of Nestor? Hey at $430k this proves there is no bubble….
http://www.sdlookup.com/MLS-076066162-1530_Kenalan_Dr_San_Diego_CA_92154

[g2006]

Can anyone explain what is rent multiplier 160. Thx

“Just curious, why do you guys think the the price will drop below $250k for 2 bedroom? Using the rent multiplier of 160, and assume the current market to rent a such a place is between $1600 to $1800 per month (closer to $1800), the value of such 2-bedroom apartment shall be $256,000 to $288,000 assuming the rent do not drop. Is there something wrong about my assumption?”

[utcsox]

“Can anyone explain what is rent multiplier 160. Thx” Granted, I am not an expert on this subject, but I will try my best to explain the concept of rent multiplier of 160. From what I understand is that the break even point between buying the property and renting the property is when the property price fall under 160 times the rent you expected to pay for the property. For example, if a condo unit can expected to generate the rent of $2000 per month, the break even point of this property is $2,000*160=$320,000. Anything under that is a solid buy. Please try the buy vs rent calculator and you will see the rent multiplier 160 works fairly well if your tax bracket is around 25% or 28%.

[utcsox]

Some quick update on the Regents La Jolla Condo. The sale office was closed sometimes in the summer and according to the people who now work in the leasing office, the sale office will be back sometimes next month.

In my opinion, Regents La Jolla is one of the best condo conversion property in UTC. However; the price was ridiculously high before the sale office close. One bed room is going to cost you over $400,000 and 2 bedroom cost at least $500,000. If they are trying again to sale these units at this price in this market, I don’t think they will generate many sales.

[temeculaguy]

I can explain the rent multiplier of 160 in one word, “incorrect.”

Depending on the formula, 144 or 150 is the highest rent multipler you should use. 144 is 12x annual rent which many use as a high number for California, 10x for the rest of the country and 8x for low tooth count states. 160x rent is probably from a lender sponsored website rent vs buy calculator. 125 to 150 is the desired range.

If I’m an investor and I can buy a place that rents for 1,000 and sells for 150k (150 x rent) or a place that rents for 2,000 and sells for 320k (160 x rent) I’m better off buying two of the cheaper ones. As an investor I don’t care that the weather is nicer or the schools are nicer, it’s just numbers, like P/E or dividends for a stock. When investors flee, it drives prices down, when they show up, prices rise. They start showing up at or below 150x. Investors don’t care, they will buy stock in a porn company with good numbers over a bible publisher with bad numbers.

Here’s the rub, as the market rises beyond logic, investors ignore the rule and buy at ratios higher than 150x because of the hype. As the market falls and the hype goes the other way, they ignore the rule again and still don’t show up at 150x or lower, this is called an overcorrection which is the opposite of a bubble. You see prices at lower than last year and think it is a bargain, you buy before everyone else does only to find out they aren’t going to show up for years, so even at 150x you have caught a falling knife. People are idiots, even people with money are idiots. They will buy something overpriced to fundamentals because they watch t.v. and they will ignore a fundamentally sound investment because of that same t.v., your job is to predict the cycle of idiots and stay ahead of them. Max price on 1800 rent unit, 270k, when it falls below that, buy it, especially if it falls much below, lets say 125x rent or 225k. BTW I used your high rent number, at 1600 (especially if the 1800 rent places are giving away 1 month free, etc.) your number should be in the range of 200k and 240k. Think it won’t happen, well I didn’t think the stock of the largest U.S. lenders and builders could fall to 30 cents on the dollar in one year either. Wall street is always ahead of main street by a year.

[utcsox]

temeculaguy, I think we are looking from the different perspective. I am looking from a renter’s perspective and you are looking from the investor’s perspective. Factoring in the tax benefit, you are pretty much paying the same in buying or renting. Sure, bubble tends to over correct and you might time the market perfectly and buy it when it is cheaper to buy than rent. However; my point is it will start make sense to buy instead of rent the same property if the property is the rent multiplier reach 160.

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