August 24, 2006 at 10:58 PM #7300SD RealtorParticipant
Just another hard luck listing appointment. Seller is a very nice military couple who have a condo down in Eastlake. Current balance is over 450k. There have been NO SALES in thier complex for over 6 months. Three identical floorplans to thiers have expired in the past week after being on the market all summer. The most recent expired listing was listed at 425k. I told him he needed to call his lender to discuss a short sale. He must relocate to Virginia in January.August 25, 2006 at 7:51 AM #33166powaysellerParticipant
I have another listing on my little street, 2 doors down from the current townhome. (Realtors, it’s Creek Park Lane).
I stopped by during the realtor Open House yesterday, where not a single realtor stopped by. The listing agent told me he was holding a broker tour, and when the owner returned home, saying, “You told me to go out for an hour”, he said the broker tour was winding down. There wasn’t a single broker who came by! At least he was honest, and didn’t say there were any coming by.
I chatted with the owner, my neighbor, and she said that SD has a strong economy, esp. in defense contracting and the military.
I didn’t have the heart to tell her that military families don’t have the income to buy $540K townhouses.
The identical floorplan 2 houses down is reduced now to $499K. It has been on the market since February. The new listing is a little nicer, corner lot and nicer yard, but same old 1980’s kitchen. What do you think these townhouses are worth, realtors? My guess is mid 400s.August 25, 2006 at 11:00 AM #33226bob007Participant
i have no sympathy. people need to feel the consequences of their decisions.August 25, 2006 at 11:06 AM #33231AnonymousGuest
Agreed, its called natural selection.August 25, 2006 at 11:26 AM #33233no_such_realityParticipant
My guess, low to mid $200s.
I townhouse is slightly better than an condo. A condo is a glorified apartment. My distinction between a condo and a townhome is townhomes share walls. Condos share ceiling/floor.
I get my number a very simple way, average new (built after 1998) 2 BD apartments rent for $1500. At 7% interest, that’s a loan on $225K. The “owner” then picks up illiquidity, property tax, insurance and HOA dues.August 25, 2006 at 12:29 PM #33246BugsParticipant
Depending on the interest rate that just about does it. I’d probably peg it right equal to the long term fixed interest rate. The extra costs of taxes, insurance, and HOA dues are offset by the potential for price increases at the average rate less inflation.August 25, 2006 at 12:37 PM #33247CAwiremanParticipant
I can sympathize because I was in the same boat about 7 years ago in LA. Had I not researched and found this blog I’m sure I’d be in the same situation right now (again).
What it boils down to is this – the internet affords people to ability to know more about the real estate market than they did before. Information abounds. People who apply themselves can make smarter decisions.
To get this kind of information otherwise, is either much more difficult or impossible for the common person.
Also, the element of kicking ideas around between the forum speeds up the learning process dramatically.
To my knowledge it wasn’t available before in any format to the non-RE folk. Glad it is now.August 25, 2006 at 1:42 PM #33260AnonymousGuest
With all due respect to forums like Piggington, it is not necessary to have Internet access to figure out that real estate is in an unsustainable bubble. The most obvious clue is when mortgage payments are double the rent for an identical place, as they have been for quite some time in the better areas of SD. It doesn’t take a rocket scientist to figure out that is not sustainable long term.
What is someone thinking when they purchase a house that is clearly so overvalued (basically anyone purchasing SD real estate in the last 2-3 years)? Simple, they believe it will continue to appreciate. Pure speculation and gambling.August 25, 2006 at 1:50 PM #33262no_such_realityParticipant
The problem with seeing the bubble came from the same problem people have with any debt.
They simply don’t understand the actual capital cost and instead focus on the monthly payment.
If you track the run up against payment in the early years, it was flat. If you track the same aginst the exotic loan and insanely low ARMs, it was still flat into late 2004/2005.
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