…

[bearishgurl]

Very insightful post, Econprof.

My experience has been that these projects which need a “set aside” of a certain number of units for rent or purchase by low-income individuals and families (in order to get a permit to build at all) are invariably situated in smaller cities who want to “grandstand” that they’re “doing something” about the cost of housing. I’ve seen this type of “set aside” in complexes in Del Mar and Coronado (yes, Coronado). And there are several in Carlsbad. They serve as political “showpieces” for these small governments who can now say they did! “And look, [visiting dignitaries] … here it is! Let me take you on a tour of the grounds. We’re so proud of it!” Of course, they don’t advertise the fact that those new sucker “owners” are going to lose their a$$es on their “investment” in this debacle.

I’ll bet if the same developer wanted to put up low income rental units on 69th Street or Skyline Dr in SD and sell them to non-profits and let the local housing agency manage them, the City of SD would not only give them tax credits to do so but PAY THEM a BIG BONUS to tear down and clean up the unfinished albatross the last “low-income” housing developer left behind 20+ yrs ago when they went belly-up! They could REALLY MAKE A DENT in the “affordable housing” problem there. They won’t HAVE to “set aside” a “token” amount of units built on expensive land. It may have an existing teardown but they can likely still get a very suitable parcel for these projects in 92105, 92113, 92114, 91945 and 91977 … yes even today.

My personal feeling (however “unpopular” it may sound) is that housing in CA coastal cities has traditionally been tiered in a “caste system.” The “dues-paying” homeowners (ones with prior “sweat equity” in two or more CA coastal properties or those who are otherwise independently well off) are the ones who are likely to have the cash and stamina for the long haul to purchase and maintain a SFR in the most coveted coastal areas.

A “transplant” family of four making <$50K should not expect to waltz into one of these counties and demand to live in a beach area or other coveted, established area, unless they can otherwise afford it. They can start their property-shopping (or rental shopping) expedition on 47th St in SD (or other similarly situated areas), just like I did. And a “native” family of four making <$50K can often employ their local relatives' help in obtaining and getting a nearby available fixer ready for them to occupy. Many young locals DO go this route, especially those who want grandparents nearby (for childcare). Some Piggs might be shocked to learn that if they took a door-to-door survey of longtime homeowners on the best streets in SD (WTH, start on Rutgers Rd in LJ) they would learn that many of these owners bought their FIRST properties in nondescript tracts on very "humble" streets in 92102, 92104, 90105, 92115 and 92116. Everybody has to start somewhere. I'm not referring to the OP here (don't know how old they are or their preferences) but too many Gen Y entering the housing market today seem to just want the best areas or nothing. Or brand new construction or nothing. Their "expectations" are very often unrealistic for their earning capacity and asset level, IMHO. The most desirable CA coastal cities have never been "set up" to house families who can't afford to live there. They're not for everyone. That's what places like Fresno, Victorville, AZ and TX are for 🙂

[Jazzman]

[quote=SDEaves]BG,
Just as you said last month, homes in our price range are getting snatched up by cash buyers.
Since last month’s post, we have put in 2 offers in LM but to no avail. One was taken by an investor; the other we were outbid.
We are still searching. As you and other Piggs have said, inventory is extremely low in our price range. So this all should come as no surprise to you 😉 Your last post implies some sort of impatience at us taking our time with buying and asking questions in the meantime. Perhaps I read into your last post wrong? We will gladly update you once we close escrow on a home. Please send us good luck with our search- we need it![/quote]

With inventory so low, and the frustration of being out-bid, why don’t you put your search on hold until things improve. Look at these numbers. Things aren’t improving. http://www.deptofnumbers.com/asking-prices/california/san-diego/

Never, ever bow to pressure from a Realtor. As far as your OP is concerned, you may be a little over-concerned in respect of values. Although some appraisers may be initially confused, it seems pretty clear cut that the two values are not interconnected, which would be made clear to any prospecting buyers, just as you yourself found out.

I personally wouldn’t hold out for any appreciation down the road anyway. The best investments in this market are not based on future potential, but on how well you managed to negotiate the seller down on price. If that is not possible due to shortage of supply, you run the risk of your investment remaining flat. A great time to borrow doth not a great time to buy maketh.

[SDEaves]

[quote=Jazzman][quote=SDEaves]BG,
Just as you said last month, homes in our price range are getting snatched up by cash buyers.
Since last month’s post, we have put in 2 offers in LM but to no avail. One was taken by an investor; the other we were outbid.
We are still searching. As you and other Piggs have said, inventory is extremely low in our price range. So this all should come as no surprise to you 😉 Your last post implies some sort of impatience at us taking our time with buying and asking questions in the meantime. Perhaps I read into your last post wrong? We will gladly update you once we close escrow on a home. Please send us good luck with our search- we need it![/quote]

With inventory so low, and the frustration of being out-bid, why don’t you put your search on hold until things improve. Look at these numbers. Things aren’t improving. http://www.deptofnumbers.com/asking-prices/california/san-diego/

Never, ever bow to pressure from a Realtor. As far as your OP is concerned, you may be a little over-concerned in respect of values. Although some appraisers may be initially confused, it seems pretty clear cut that the two values are not interconnected, which would be made clear to any prospecting buyers, just as you yourself found out.

I personally wouldn’t hold out for any appreciation down the road anyway. The best investments in this market are not based on future potential, but on how well you managed to negotiate the seller down on price. If that is not possible due to shortage of supply, you run the risk of your investment remaining flat. A great time to borrow doth not a great time to buy maketh.[/quote]

Very sage advice. Thank you.

[spdrun]

Never bow to pressure from a broker is about right. A few months ago, I put an offer on a short in MV at ~90% of ask. Broker kept saying that I’d never get it unless I offered ask or above. Well, today I got a call that the winning bigger failed to perform, and could I please send an updated proof of funds.

[SDEaves]

[quote=spdrun]Never bow to pressure from a broker is about right. A few months ago, I put an offer on a short in MV at ~90% of ask. Broker kept saying that I’d never get it unless I offered ask or above. Well, today I got a call that the winning bigger failed to perform, and could I please send an updated proof of funds.[/quote]

Congratulations!

[dumbrenter]

[quote=Jazzman] A great time to borrow doth not a great time to buy maketh.[/quote]

I’ll have to frame this and send it as a holiday gift to some of my ‘friends’.
You might want to (TM) it!

[spdrun]

Congratulations!

Thanks! We’ll see – could be 8 other offers on the place getting the same runaround.

[Jazzman]

[quote=dumbrenter][quote=Jazzman] A great time to borrow doth not a great time to buy maketh.[/quote]

I’ll have to frame this and send it as a holiday gift to some of my ‘friends’.
You might want to (TM) it![/quote]
I’ll happily forego the TM to see it indelibly stamped on the forehead of the CEO of the NAR. 🙂

[bearishgurl]

[quote=Jazzman][quote=SDEaves]BG,
Just as you said last month, homes in our price range are getting snatched up by cash buyers.
Since last month’s post, we have put in 2 offers in LM but to no avail. One was taken by an investor; the other we were outbid.
We are still searching. As you and other Piggs have said, inventory is extremely low in our price range. So this all should come as no surprise to you 😉 Your last post implies some sort of impatience at us taking our time with buying and asking questions in the meantime. Perhaps I read into your last post wrong? We will gladly update you once we close escrow on a home. Please send us good luck with our search- we need it![/quote]

With inventory so low, and the frustration of being out-bid, why don’t you put your search on hold until things improve. Look at these numbers. Things aren’t improving. http://www.deptofnumbers.com/asking-prices/california/san-diego/

Never, ever bow to pressure from a Realtor. As far as your OP is concerned, you may be a little over-concerned in respect of values. Although some appraisers may be initially confused, it seems pretty clear cut that the two values are not interconnected, which would be made clear to any prospecting buyers, just as you yourself found out.

I personally wouldn’t hold out for any appreciation down the road anyway. The best investments in this market are not based on future potential, but on how well you managed to negotiate the seller down on price. If that is not possible due to shortage of supply, you run the risk of your investment remaining flat. A great time to borrow doth not a great time to buy maketh.[/quote]

Ahem … a few of things come to mind, here Jazzman …

First, if you’re referring to me, I am not at present a “Realtor.” I am a nearly 30-yr licensee (not active) and have resided in SD County (permanently) for ~35 yrs. I have resided in CA for nearly 50 yrs. So I have seen more than a few RE cycles here. In addition, I have been a “principal” more times than I can count on my fingers.

You are opining here that RE will remain flat when that is not what has been happening in the last nearly two years in CA coastal counties, especially in areas within ~12 mi from the coast. Of course, desirability varies widely from community to community but they aren’t making any more land <10 mi from the coast. I don't think the OP's "Realtor" was "pressuring" them. In fact, he stated his "realtor" showed him properties for a year simply so he and his spouse could “familiarize” themselves with SD County.

http://piggington.com/townhouse_close_to_work_or_house_in_the_burbs

The reality is that most “Realtors” acting as buyer’s agents (myself incl) not only would want an executed Buyer-Broker Agency Agreement in place at all times to do this, but WOULD grow impatient spending hundreds of hours and many gallons of gas with a FT buyer who might ultimately defect (and purchase) in a new construction tract. Based upon his posts, not only has he toured new construction tracts (incl the complex in the OP) and considered purchasing there, his agent has been exceedingly patient and cooperative with the OP’s “window shopping,” even though he may very well end up making nothing, due to not taking better control of the situation.

LOL. Compare what I’m telling the OP here to Pigg flu’s recent assertion that he can’t get good advice out of a “financial advisor” because they “get paid to tell people this stuff” and the info they dole out is “proprietary.”

http://piggington.com/cash_out_refinance_then_tax_free_muni_investment#comment-222505

I “gave” this OP a little tidbit of “free advice” on how to win a bid for a single family home in his $360K price range for his young family in THE CURRENT market in SD County. And I’m not even his “Realtor!” Of course, he is free to take it or leave it.

I see here that the OP states he has recently placed two (unsuccessful) offers in LM (an area I suggested to him in Oct). He needs to keep on keepin’ on, IF he really wants a house, IMHO. And the sooner they can close, the better. They’ve had enough time to “familiarize themselves.” There’s nothing wrong with that, btw, but in their case, this “familiarizing time” turned out to be concurrent with a time which prices in areas of their original target market (NE suburban SD) rose exponentially.

***

Jazzman, let’s assume arguendo that SDEaves buys a market-rate unit in the complex he posted about in his OP.

I have looked at a ~3 yr-old version of the CA Transfer Disclosure Statement (and don’t know if it’s changed since then), but I don’t believe there are any questions on there that ask the seller whether they know of any “inclusionary” or “set aside” units in their complex for low-income buyers or renters (UR, SDR, etc, please correct me if I’m wrong here). If there is no current sold comp or current listing among the five inclusionary units when the OP accepts an offer to purchase in the future, then why would he have to disclose at all that such units even exist? This “cloud” on the title of the five IU’s won’t be on HIS title report (which will be ordered up by potential buyers) and I am unclear if the CC&R’s would have any need to mention it because those five owners are entitled to the same rights of enjoyment of the amenities, etc as the market-rate buyers.

If I’m reading your post right, Jazzman, you are stating here that a market-rate seller in this complex should tell a buyer he has in escrow to, “[i]gnore that (~20% lower) recent sold comp because my unit is `market-rate.'” However, their lender is not going to “ignore” the appraisal they just got. Who do you think buys these units, Jazzman? Do you think it is buyers who are able and willing to reach into their pockets (while in escrow) to make up the difference between what the condo appraises for and what the seller wants??

Even if a future seller of a market-rate unit doesn’t have to contend with a listing or recent sold comp from among the five inclusionary units, I just feel that those five owners are so vulnerable to short sale, foreclosure or walking away due to the high carrying costs (over rent of a comparable unit) and later possibly taking their title report to an attorney and being advised to let it property go. These five units perpetually in “distress” on the public record don’t bode well for the market-rate sellers’ future values, IMO.

***

Jazzman, I agree with your statement about “deal-making at the outset” being critical. This applies to accepting employment, also :]

HOWEVER, “deal making,” if it includes counter-counter-counter-counter offers are a wee bit harder to get a seller to “entertain” when there is so little on the market to choose from. Of course, sellers today are aware of the inventory shortage. Jazzman, you’re forgetting that THIS buyer (the OP) isn’t looking for a retirement home or a second home, as you were (and you didn’t want to but ended up “giving up” on Cali, even though your spouse’s relatives live here):

http://piggington.com/8_years_later_it_happened_we_bought_a_home#comment-206359

http://piggington.com/8_years_later_it_happened_we_bought_a_home#comment-206393

Conversely, the OP here is looking for a suitable place to raise three young kids, which he can purchase for ~$360K, with a short commute to his work, which is in the Tierrasanta/Miramar area.

Jazzman, I’m happy for you that you found a “retirement” home in HI which you are happy with and were/are looking for another home in Europe.

http://piggington.com/housing_a_lost_decade#comment-214197

January 2012 Resale Data Rodeo

January 2012 Resale Data Rodeo

http://piggington.com/ot_where_would_you_live_if_not_in_usa#comment-179757

But that’s not the situation this OP is in. He NEEDS a home HERE in SD County because he WORKS HERE and he NEEDS a mortgage in order to buy one.

Ask yourself how much less than a $360K home SDEaves will be able to buy if interest rates go up even .5% ? And more importantly, if rates begin to rise, how long will it take them to do so? And will the OP be “locked in” and in escrow, already closed, or “still looking” while rates are rising??

You are imparting your views to this OP of Cali RE being “overpriced” because you refused to pay the price sellers wanted for the retirement homes you wanted in Cali after “shopping” and “making offers” up and down the state for many months. So you don’t have a house in Cali because someone else paid more for the ones you wanted. And you never “bowed to any `realtor pressure'” … but … were you successful? Uhhh … no.

That is how I see your story. Do I have it all correct, Jazzman??

SDEaves, you may take Jazzman’s “sage advice” at your peril. And while you’re doing it, just keep in mind ONE THING … Uhhh …. he’s not here anymore and there’s a reason for that. ;=]

[Coronita]

Speaking of new construction….

A lot of new construction give a buyer agent commission. But the deal is you have to let the buyer agent sign you up… (And no, i don’t think the new construction gives you the credit if you don’t have a a buyer agent, at least not with the Pardee communities)

[Jazzman]

I should I suppose presage my posts with “now wait for the Realtors responses to come fighting back”. BG, it was not aimed at you, just a general note of caution, and since you claim not to be a Realtor, I’m sure you will agree that pressure from a broker is usually a pretty one sided affair and to be avoided. As for the rest of your essay, I will have to come back to you. Got to dash (from my $270/sq ft home in paradise with no property tax) to catch the next big surf. Yep, there’s a good reason indeed. Common sense mostly.

[bearishgurl]

[quote=Jazzman]I should I suppose presage my posts with “now wait for the Realtors responses to come fighting back”. BG, it was not aimed at you, just a general note of caution, and since you claim not to be a Realtor, I’m sure you will agree that pressure from a broker is usually a pretty one sided affair and to be avoided. As for the rest of your essay, I will have to come back to you. Got to dash (from my $270/sq ft home in paradise with no property tax) to catch the next big surf. Yep, there’s a good reason indeed. Common sense mostly.[/quote]

Hmmm, looks like Jazzman’s current tax bill for his condo is approximately $2173.50.

http://www.co.maui.hi.us/index.aspx?NID=755

http://www.co.maui.hi.us/documents/24/99/519/Reso%2012-053.PDF

That’s not “nothing” …. it’s .575%, which is a little less than half the (ad valorem + local svcs) rate of “city” parcels in Cali w/o MR (more than half of the tax base of uninc parcels). Perhaps Maui doesn’t have as many “services” available to its residents as we do. Being completely “waterlocked,” they certainly don’t have anywhere near the population we do to use them.

Acc to his post below, Jazzman paid ~$378K for his 1400 sf condo (new construction):

January 2012 Resale Data Rodeo

That’s not such a “good deal” in a lot of areas of SD but might be there. I have no idea.

Jazzman, are there sidewalks, street lights and storm drains in your neighborhood??

I will concede that one doesn’t need a full wetsuit to get into the water in Maui in Nov/Dec, lol 😉

[Jazzman]

I think I paid about $450 in property tax, so small I can’t remember and can’t be bothered to look it up, but your calculations are way off. Different rates for kama’aina. There’s street lights, a run-off canal, sidewalks, ocean front (literally pied dans l’eau) restaurants, cafes, movie theaters and yes a Costco. I’m one minute from stores and restaurants and the best beaches in the world, lots of sunshine, and the whales arrive this month and will be frolicking about outside my front door (well …nearly).

Soon we’re off to France and will be buying a beautiful stone farmhouse. The total tally will be our budget for California. Yep, two homes, in two of the most beautiful regions of the world for the price of one nothing-out-of-the ordinary single family home in southern California.

Here’s what’s on offer in France
http://www.rightmove.co.uk/overseas-property/property-32298586.html
http://www.rightmove.co.uk/overseas-property/property-20292576.html
http://www.guillon-immobilier.com/detail-IJL5135279-maison-lhoumois.html

Now I love California and the people, so don’t get me wrong here, but they think they’ve got it right, and when it comes to home prices …well, they haven’t! According to a survey reported on NBC tonight, CA is the worst run state in the country. Now I don’t know about that, but I do know value when I see it.

[spdrun]

Apart from the ages of the homes, it’s not as if you can’t find similar deals in rural Vermont or some parts northern California/rural Oregon. We’re not talking about Parisian pricing here.

As far as bureaucracy and taxation, France is far from being free of it, rather the opposite. Though the good thing is that there’s a much bigger tradition of lawbreaking and evasion there, so the effects of the bureaucracy tend to be tempered.

Vive l’anarchie!

[an]

I don’t know all the areas in France, but looking the maps for those houses, they look like they’re out in the country side. I was expecting Paris or something similar at Inland Empire pricing. How much is property tax in France?

Maui’s beaches are nice, but hardly what I’d call the best beaches in the world. I’d rate Bora Bora, Moorea, Tahiti, Fiji, Maldives, etc heads and shoulders above Maui.

[Author]

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