Are home prices just silly right now?

[poorgradstudent]

According to Zillow, our 3/2 SFH in Poway has risen in value 2% in the last two months. I have a coworker who recently moved to San Diego and is trying to find a slightly larger 3/2 or 4/2 SFH to buy for his family and every home they’re interested in has multiple offers and bidding wars.

I guess my question is has something really changed since the Spring, when price gains seemed to be more modest and reasonable? Is there a bit of “rate panic”, where everyone who is on the fence knows that rates will go up in the next 6-12 months and it’s (somewhat ironically) driving prices up? Is this just a sign of an improving economy and more household formation, along with people moving to and back to San Diego? I know building activity has been slow in SD County since the bubble and starter homes aren’t very popular with builders, so maybe that’s also causing an inventory crunch?

Are these gains remotely sustainable? Is it all going to come crashing down if rates go up?

[The-Shoveler]

I am not saying that home prices are not silly right now but I will say they are not and have not been building near enough homes.

I was hearing that resale inventory (below 800K in price) is down about 28% from last year and it was even low then.

[urbanrealtor]

[quote=The-Shoveler]I am not saying that home prices are not silly right now but I will say they are not and have not been building near enough homes.

I was hearing that resale inventory (below 800K in price) is down about 28% from last year and it was even low then.[/quote]

I agree with this.

[poorgradstudent]

[quote=The-Shoveler]I am not saying that home prices are not silly right now but I will say they are not and have not been building near enough homes.

I was hearing that resale inventory (below 800K in price) is down about 28% from last year and it was even low then.[/quote]

Yeah, it seems like all the building that is happening is in the 2000+ sq ft range. I’ll admit I don’t know areas like Santee, Chula Vista and San Marcos that well, which may have building activity that is more in line with starter homes.

It sort of feels like builders just want young families to buy condos for their first home 😛

[Rich Toscano]

[quote=The-Shoveler]I am not saying that home prices are not silly right now but I will say they are not and have not been building near enough homes.
[/quote]

Inventory is indeed low, but that’s a function of how many people want to sell and how many want to buy at any given time, not necessarily of how much new building is taking place, or of overall housing supply. For example, inventory was very low during the bubble, despite lots of new construction/rapid expansion of housing supply, and then it was very high in the bust despite zero new construction.

It may be true that new building isn’t keeping up with population growth (I don’t know one way or the other, offhand), but current level of inventory for sale isn’t really a good indicator of that, is my point. To determine this you’d have to look at population growth compared to housing supply… SANDAG probably has that info. Might be interesting to look into.

PS my take on whether prices are “silly” -> http://piggington.com/shambling_towards_affordability_midyear_2015

Summary: yeah, they seem kind of silly, but it’s hard to get an exact read on that, and they were a lot sillier during the bubble.

[bearishgurl]

[quote=poorgradstudent][quote=The-Shoveler]I am not saying that home prices are not silly right now but I will say they are not and have not been building near enough homes.

I was hearing that resale inventory (below 800K in price) is down about 28% from last year and it was even low then.[/quote]

Yeah, it seems like all the building that is happening is in the 2000+ sq ft range. I’ll admit I don’t know areas like Santee, Chula Vista and San Marcos that well, which may have building activity that is more in line with starter homes.

It sort of feels like builders just want young families to buy condos for their first home :P[/quote]

I don’t know about SM or Santee (both “inland” cities) but, as far as I know, Chula Vista, a “coastal” (bayfront) city, doesn’t have any building going on, unless it is a very small spec/infill project. Builders don’t get to decide what 1st time buyers and/or “young families” get to buy in SD County. There are plenty of SFRs currently available in at least a dozen zip codes in metro/south/east county (and likely in a dozen-plus zip codes in north county) which meet the criteria of a “starter home” (for 1st timers/young families) and priced under $400K.

And no, these SFR’s generally aren’t anywhere near “new” or “newer.” I honestly don’t understand why millenials tend to shy away from older homes in SD County. They certainly don’t in LA County (where there has been next to zero SFR tracts built in the last 25 years) or the SF Bay Area (where there has been next to zero new SFR tracts built in the last 15-20 years, depending on micro area). It doesn’t make sense.

Yes, a “newer” (<15 yrs old) condo can be had for under $400K in SD County today (even well under $400K) but with that purchase, the buyer typically has 12-25 more miles driving distance to work centers (one way, amounting to $200+ month higher gas/maintenance expense for daily commuters) and HOA dues and Mello Roos tacked onto its property tax bill. PITI + HOA dues + MR amounts to several hundred dollars more per month than a comparably-sized (older) SFR would cost them in PITI alone. For that extra $500 - $750 per month, the new homebuyer of a (dated) older home can make incremental improvements to it, selecting top-notch materials to their own taste, ESPECIALLY if they can DIY some of those improvements! And in the months they don't want to spend money on improvements, they have the flexibility not to.

Not so with monthly HOA/MR (whether the buyer actually uses the community facilities or not).

What's the point of buying a condo with no yard and a single garage or carport when a FTB can get a nice backyard AND double-car garage for the same price or less than a comparable-sized condo (but NOT "newer") and not grow out of their home immediately when kids are born and are not allowed to play anywhere close to their condo's front door (so they can be supervised by a parent or other caregiver working in the home)?

SD millenial-homebuyers' sense of entitlement for newer construction doesn't make sense to me. Their housing choices in SD County are cutting off their noses to spite their faces.

[thejard]

I have a hard time justifying some of the prices in Chula (west 91910, 91911) that I see they are going for compared to just a year ago. Maybe we missed the boat?

In fact, we took our savings and plunked it into debt. But, because I really want to own I keep obsessing about this!

How did they get such a price on this one?
http://www.zillow.com/homedetails/331-1st-Ave-Chula-Vista-CA-91910/17105110_zpid/

or this one?
http://www.zillow.com/homedetails/177-Shasta-St-Chula-Vista-CA-91910/17105487_zpid/

or?
http://www.zillow.com/homedetails/253-K-St-Chula-Vista-CA-91911/17108770_zpid/

Are they cash buyers? FHA?

I just feel very deflated when it comes to me trying to get into something. Is it different this time? Or will there be a dip sometime in the next 5 years?

Spending that kind of money on something terrifies me lol; I’ve been driving the same car for 14 years now, so spending more than a $1k on a single thing scares me!

[bearishgurl]

[quote=Rich Toscano][quote=The-Shoveler]I am not saying that home prices are not silly right now but I will say they are not and have not been building near enough homes.
[/quote]

Inventory is indeed low, but that’s a function of how many people want to sell and how many want to buy at any given time, not necessarily of how much new building is taking place, or of overall housing supply. For example, inventory was very low during the bubble, despite lots of new construction/rapid expansion of housing supply, and then it was very high in the bust despite zero new construction.

It may be true that new building isn’t keeping up with population growth (I don’t know one way or the other, offhand), but current level of inventory for sale isn’t really a good indicator of that, is my point. To determine this you’d have to look at population growth compared to housing supply… SANDAG probably has that info. Might be interesting to look into.

PS my take on whether prices are “silly” -> http://piggington.com/shambling_towards_affordability_midyear_2015

Summary: yeah, they seem kind of silly, but it’s hard to get an exact read on that, and they were a lot sillier during the bubble.[/quote]

There’s no law mandating builders “keep up with population growth” in any particular jurisdiction. In fact, the opposite is true in many west coast jurisdictions within the states of CA and WA. Many (coastal) cities and counties in these states have disallowed permits for tract subdivision for at least the last 30 years or even as far back as since the city was formed.

Those cities are among the best-planned in the nation and have among the best quality of life for their residents today.

More residents does NOT EQUAL better, folks.

Obviously, SD County was not one of the above jurisdictions (whose leaders were more astute and concerned for impacts to their local environment). SD County’s (and a good portion of its brethren cities’) elected officials have consistently sold their constituents’ quality of life out to Big Development since 1986/87 at every available opportunity.

[bearishgurl]

[quote=thejard]I have a hard time justifying some of the prices in Chula (west 91910, 91911) that I see they are going for compared to just a year ago. Maybe we missed the boat?

In fact, we took our savings and plunked it into debt. But, because I really want to own I keep obsessing about this!

How did they get such a price on this one?
http://www.zillow.com/homedetails/331-1st-Ave-Chula-Vista-CA-91910/17105110_zpid/

or this one?
http://www.zillow.com/homedetails/177-Shasta-St-Chula-Vista-CA-91910/17105487_zpid/

or?
http://www.zillow.com/homedetails/253-K-St-Chula-Vista-CA-91911/17108770_zpid/

Are they cash buyers? FHA?

I just feel very deflated when it comes to me trying to get into something. Is it different this time? Or will there be a dip sometime in the next 5 years?

Spending that kind of money on something terrifies me lol; I’ve been driving the same car for 14 years now, so spending more than a $1k on a single thing scares me![/quote]

thejard, I’ll look at your links in a bit but I just want to remind you that 91910 and 91911 are “coastal” (bayfront). Chula’s more recently annexed-in zip codes of 91913, 91914 and 91915 are “inland” and thus up to 10 degrees hotter or colder at all times of day, depending on season. Temperature alone is a BIG ENOUGH DIFFERENCE to affect the pricing in the well-established areas of Chula Vista as you are seeing. And, for the most part, there is little to zero HOA dues in SFR subdivisions within these zip codes and no MR (except for Sunbow and parts of RDR, in which the lower-priced bonds may be already or nearly paid off).

Oh, and btw, thejard, my vehicle is 21 years old and I just got back from another 2500-mile (RT) road trip with it and it ran like a top, even at elevations exceeding 10K feet!

[thejard]

I agree with all of that… that is a big driving factor in why I would like to live there 🙂

I may be a bit whiney 😉 but I can afford what I can afford and for me to pull the trigger it has to be the middle bowl of porridge: juuuuust right!

I don’t want a fixed up home, I want a fixer upper or something that has ‘good bones’ that is livable but needs updating.

Example of a house I would’ve liked, but CASH buyer:
http://www.zillow.com/homedetails/1319-E-30th-St-National-City-CA-91950/17100460_zpid/

I also feel like the few Real Estate agents I have briefly worked with are all like (lol): I don’t do foreclosures or much of anything, here is the Sandicor sight with some numbers I plugged in, call me when you like something.

I guess I thought the RE was supposed to have some insights or some hookups or call me up and say OMG this is so you, come check it out. If we act fast maybe we have a shot at beating out CASH or conventional financing. I don’t, something for $10K!

I do a lot of lurking on this sight and watching what is on sale and what is sold 🙂

[bearishgurl]

[quote=thejard]I agree with all of that… that is a big driving factor in why I would like to live there 🙂

I may be a bit whiney 😉 but I can afford what I can afford and for me to pull the trigger it has to be the middle bowl of porridge: juuuuust right!

I don’t want a fixed up home, I want a fixer upper or something that has ‘good bones’ that is livable but needs updating.

Example of a house I would’ve liked, but CASH buyer:
http://www.zillow.com/homedetails/1319-E-30th-St-National-City-CA-91950/17100460_zpid/

I also feel like the few Real Estate agents I have briefly worked with are all like (lol): I don’t do foreclosures or much of anything, here is the Sandicor sight with some numbers I plugged in, call me when you like something.

I guess I thought the RE was supposed to have some insights or some hookups or call me up and say OMG this is so you, come check it out. If we act fast maybe we have a shot at beating out CASH or conventional financing. I don’t, something for $10K!

I do a lot of lurking on this sight and watching what is on sale and what is sold :)[/quote]

Yes, thejard, that was a good buy in that it had forced air and central A/C which the vast majority of older coastal-situated SFRs in SD County weren’t built with (instead were built with “whole house” wall heaters in the LR and no A/C). The homes in that neighborhood are very well-built but that street is now a VERY busy street with Food-4-Less and Toys-R-Us diagonally and directly across the street. BUT, the homes lining 30th on those 2-3 blocks are both elevated 3-5 feet and mostly “walled off” to the street, IIRC. Most of these homes have frontages allowing for driveway turnarounds (to prevent having to back out onto what is now a 4-lane thoroughfare with a left-turn lane in the middle).

I note the subject has a .26 AC lot which is typical for this area as well as part of its (uninc) neighbor of 91950 directly to the east known as “Lincoln Acres.”

$250K was a very good price for the cash buyer, thejard. Thanks for sharing this very conveniently-located listing in a nice area just 6.5 to 7 miles from dtn SD!

[bearishgurl]

[quote=thejard]I have a hard time justifying some of the prices in Chula (west 91910, 91911) that I see they are going for compared to just a year ago. Maybe we missed the boat?

In fact, we took our savings and plunked it into debt. But, because I really want to own I keep obsessing about this!

How did they get such a price on this one?
http://www.zillow.com/homedetails/331-1st-Ave-Chula-Vista-CA-91910/17105110_zpid/

or this one?
http://www.zillow.com/homedetails/177-Shasta-St-Chula-Vista-CA-91910/17105487_zpid/

or?
http://www.zillow.com/homedetails/253-K-St-Chula-Vista-CA-91911/17108770_zpid/

Are they cash buyers? FHA?

I just feel very deflated when it comes to me trying to get into something. Is it different this time? Or will there be a dip sometime in the next 5 years?

Spending that kind of money on something terrifies me lol; I’ve been driving the same car for 14 years now, so spending more than a $1k on a single thing scares me![/quote]

Uhh, thejard, these were all good buys with the first one being the best buy and I haven’t checked but all likely sold for all cash at these prices. (If I could stomach acting as my own property mgr, I might have purchased one of them.) All are completely walkable to all with multiple public transportation choices within 1-3 blocks walk with your 3rd sold comp link being the most conveniently located. All are in very safe, walkable, bikeable, skateboardable neighborhoods with mature-tree-lined sidewalks …. great places to raise a family!

Your first recent sold comp link for $305K on 1st Ave just north of G St is located on a very good street in a great area and has the typical 9700 sf lot of the area (up to 1 AC lots exist on 1st Ave and up to 2 AC lots exist on 2nd Ave in this area). Within 1.5 to 4 blocks of this home are dozens of homes valued at $850K to $2.7M (incl “move-on” Mills Act gems). This listing is directly adjacent to a very stately, shaded and beautiful area . . . absolutely THE “crown jewel” of Chula Vista.

Your second recent sold comp for $320K is a good-sized house, just one and two blocks respectively from two different bus lines (the stop for the one-block-away bus line is just one mile from the trolley stn). The subject is just 6-8 minute walk to Hilltop HS (taking the shortcut) and a 7-8 block walk to a regional mall anchored by Sears (incl BIG auto center), Macys and JCP. Much of Shasta St is overly obliterated with power lines but not this particular section.

Your third recent sold comp link for $340K is incredibly conveniently located, yet still very quiet. The houses around there have an average space between them of 20-30 feet, with the homes on adjacent 2nd Ave sporting an average of 35-50 feet between them. This home is on a very well-kept street sandwiched between the prestigious SD Country Club area (5-6 blocks to the east) and the reknowned Del Mar Mills Act corridor situated 1 block NW of this home on Del Mar Ave. A fabulous location, 1.5 blocks to large post office and cleaners, 2.5 blocks NW to Albertsons, 2 blocks to Fresh n Easy, 3 blocks to Sprouts and 7/11, and to the SW, 2.5 blocks to Wells Fargo, Haggen (fka “Vons”) and CVS. In addition, there are three large medical buildings in the immediate (2-3 block) vicinity, including a Quest Lab and numerous doctor’s offices. The South County Courthouse, County ARCC, and several banks are located 4-6 blocks northwest, J St Marina/boat launch just over one mile west and same regional mall as above is located 7 blocks NW of this home.

I’m not sure why you didn’t place offers on these properties if they were in your price range, thejard. I don’t think these prices will ever come around again, ESPecially if the new owners significantly modernize and/or improve them.

Perhaps your agent didn’t know the area well (or didn’t know what they were really looking at)?

If any of these three buyers took out 80%+ mortgages, then, IMO, these listings were absolutely the best an end-user buyer (taking out a mtg) could do at this price point in SD County.

I seriously doubt any of them went FHA, which has never been very widely used in SD County.

It doesn’t get any better in Chula Vista than those (April 2015) sold prices you linked here, thejard. Thanks for sharing them!

[thejard]

BG – Thanks for the insight 🙂 Sounds to me you really know your Chula well! Got any recommendations on an awesome RE agent that knows Chula? 😉 😉 nudge nudge

When I was actively looking the good priced homes went pending prior to even being able to send an offer. I called on a few to see how they were sold and got CASH as an answer. There was one that sold… (http://www.zillow.com/homedetails/633-4th-Ave-Chula-Vista-CA-91910/17108155_zpid/)… that was sold by the brother of the owner and they took the first full asking 20% conventional offer they had.

This led me to the conclusion that I was seriously outgunned.

[utcsox]

Where is rockingtime? Ok.. I will post on his/her behalf..

This time is truly different. Houses in Southern California can only go up. I am not saying this but a lot of folks on this board are saying this as they have already bought houses during the last down turn..

[paramount]

In my experience it’s a bad time to sell. Buyers extremely picky having spent to much time watching HGTV.

Seeking perfection in a starter home, and in the perfect school district of course.

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