Big Loss for Agent in San Marcos

[(former)FormerSanDiegan]

So, in other words we had 37% appreciation in one year (3/2003 to early 2004) ?

It was more like 23% appreciation in that period. So it is pretty close… within 15% or so of early 2004 prices.

sdr – I agree with your general premise that it is unlikely we will get back to early or pre-2003 numbers, because we did see a 40-50% run-up during the period of Jan 2003 to mid-2005.

[sdrealtor]

FSD,
On the entry level homes we had nearly 40% appreciation at least in my area. I dont care what the statistics say. I can provide real examples of homes with that much apprecitiation.

In my area a house that sold for $740,000 (March 2003) closed exactly 1 year and 21 days later for $1M (Early April 2004). That is an increase of 35% for the same house with no changes made. Less expensive homes had even higher % gains as everything jumped by $100,000 or more almost overnite.

BTW, that house would have a very hard time selling for $1M today.

[sdcellar]

I think the rub in all this is that you’re saying (and FSD agrees to) is that we’ve hit these 2003 prices *and* that’s where it’s going to stop. I frankly find that hard to believe right now. If it is true, then it is just a soft landing and that just seems out of whack with how much everything has run run up.

Maybe I’m missing something though? Perhaps you’re thinking the rest is just flat sales and the remaining losses will be all in terms of inflation rather than nominal prices. Even so, I would consider that pretty soft. Are you really that optimistic about 2007?

[sdrealtor]

Maybe my point wasnt clear. WE ARE NOT DONE! We are at or close to Late 2003/Early 2004 prices which are very very very diofferent from early 2003 prices. Getting back to early 2003 prices would entail losing another 20% or so.

[PerryChase]

We are far from done. The last time around the peak was 1989. In 1997/1998 you could buy brand new houses for 1989 nominal prices.

2005 was the peak. I expect a downward slide/stagnation until 2012/2013. It will slow and painful.

[sdcellar]

Ahhh, got it. Now that I look back, I can see that’s what you’re saying. I think my problem is that I wasn’t paying attention (at all) to the market in that time period, so it these differences don’t become fully tangible for me (pretty much the opposite of your situation).

[(former)FormerSanDiegan]

sdr – getting down to early 2003 prices would be another 27 % according to the example I showed. I tend to agree with the point that we are not likely to see prices to pre-2003 levels. I am in the 18-25% nominal price correction camp. (30-37% real dollars).

This DOES NOT mean that we are at the price bottom in either duration or level. As others have stated above… expect more years and tears to pass before that happens.

[sdrealtor]

PC,
In 1997 prices were too low and it was cheaper to buy than rent. I bought then in what was a very desireable area and it was.

I may be alone in this belief, but to me SD is a very different place today than it was 20 years ago and even 10 years ago. The desirability and notoriety of SD has and continues to rapidly increase. Where I grew up on the other side of the US (in a couple of the very metropolitan cities), very few people knew anything about SD beyond the ZOO, the military and ugly brown/yellow Padres uniforms. To them SD might have well have been on Mars.

Now pretty much everyone knows what SD is about. Friends who thought I was crazy for moving to a “3rd World Country” now entertain thoughts of moving here. I don’t mean to suggest that accounts for all the run up but I certainly believe it added to it and has forever changed SD.

[sdcellar]

I’ve been here a long time and I don’t think San Diego is notably different in 10 (or 20) years than many other places in the country. Specifically, what I mean is that plenty of cities in the country have changed a lot in the last decade or two as well.

Plenty of cities have revitalized downtown areas, new stadiums, more urbanization, and a perceived upswing in cultural activies (I say perceived because I believe the upswing is really the desire to participate rather than availability). I could go on and on, but I don’t think San Diego is unique in this regard (and don’t get me wrong, I love it here).

[sdrealtor]

I guess that I wasn’t clear. I agree with you that SD hasn’t changed substantially more than many other places. What I think has changed is the awareness of the desireability of SD and what it has to offer as perceived by people around the US and the world.

[PerryChase]

sdcellar, i think that Santa Luz will be great value in the long term like Fairbanks was in the 1980s. I like the Belsera one-story plan 1. Look for a great discount after after the crash.

The world is full of new “glamour” cities. Cities are trying to out-do themselves in terms of lifestyle. Even Philadelphia, long seen as declining city, is a place be.

In my view, San Diego is nice because of the weather and the topography. We have rolling hills so we can see things when driving around. The scenery is not boring. But our houses, buildings and urban planning are nothing special. Our politics show that we’re still a good ol’ boys town. The sunshine makes everything look brighter and cleaner.

Personally, I like LA. It has a combination of Southern California cool, diversity, culture and a large employment base. I’d move up there in a hollywood minute. However, in terms of culture and city living, New York City is the best that America has to offer.

Thanks to the weather, San Diego is overall a pleasant place to be. I like it here, but I wouldn’t say that it’s the best of the best.

[sdrealtor]

Having spent a good portion of my life there and as a frequent visitor I can definitively say that Philadelphia is a good place to be from not a good place to be.

having also spent a good portion of my life in NYC, I can defintively say it is an incredible place to be. The major problem is that it is an exhausting place to live and eventually wears you down.

[davelj]

sdrealtor, I agree completely with you. The perception of SD as a living/vacation destination has changed considerably over the last 15 years. SD is now considered one of the handful of U.S. “glamour cities,” for better or worse. That’s why I think prices may not go down here as much as some think (or would like), although I still think there’s a long way to the bottom from here, like another 20%-25% or so, depending of course on how you’re measuring where we are (which is a different topic entirely). But I don’t think we’ll see properties changing hands at 10x rental equivalents. The bar has been raised a bit over the last several years. I think we’ll see out-of-market buyers emerge once prices start to decline in earnest; wealthy buyers that either want to retire here or want a second home but are waiting for prices that aren’t completely insane. Having said all that, I still think the RE market is going to look and feel pretty ugly over the next few years.

[no_such_reality]

Maybe my point wasnt clear. WE ARE NOT DONE!

Actually, I’ve understood you to be saying something more dire.

Not only are we not done depreciating, but that we’ve seen this big depreciation already on the best of the available housing crop.

And as you pointed out, Jan 2003 to Dec. 2003, lower end housing rocketed. So while we are likely back and possibly past winter ’03/’04 pricing, there’s a long way to go to early 2003 pricing.

[sdcellar]

PerryChase, that’s our favorite place that we can’t afford! I’ll keep an eye out for that discount 😉

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