Canary in the Coal Mine

[trex]

I do not purport to have a crystal ball, but my wife held an open house today, and had almost ZERO activity, two agents, one potential buyer in 4 hours, no offers. Asking price is in conventional financing range, which I suspect has been hit hardest by the rate increase. UTC condo.

[gzz]

My 92107 zip has an MLS inventory of 16, but 5 listings go pending (ie accept offers) so far in June.

Inventory could double and the market will still go up.

[XBoxBoy]

Even though it is just a one off event, thanks for providing the account. Personally, I’m not surprised to see significant slowing, particularly in the condo market where the price is in the conventional financing range. The question remains will this continue and cascade into a crisis, or will it cause the market to level off, or will it be a short term situation. Since I don’t have a crystal ball either I guess we’ll have to wait and see.

[Anonymous]

This is just the start, interest rates continuing to climb. Condo market historically has been more volatile and investor driven so would expect Condos to slow/crash first.

[sdrealtor]

Condo market up by me significantly stronger than sfr market at the moment. Virtually nothing under 800k. Just closed one 10% above asking, owner occupant, all cash. Yet again you don’t understand what’s going on

[gzz]

Nominal GDP growth is running about 10%. Rents are growing far faster than that. Local wages I assume are growing somewhat in between.

SD Median income rose from 70,700 in 2016 to 87,200 in 2020, quite an increase when inflation was still very low. I don’t think BLS has anything newer than 2020.

Total wages paid in San Diego region increased by 14% YoY as of Q3-2021, the most recent release.

[gzz]

So what is DZ’s investment thesis exactly? Short RE and lose about 7% if it merely is flat after inflation?

Profitless tech at 10-50 P/S ratio was an amazing short opportunity last year, but I don’t recall him mentioning it.

I added a second small RE short last month, BXP. Nothing wrong with BosWash and SF class A office towers, but I think WFH and urban crime are going to make them underperform and I want to hedge more.

Also still short SPG, the mall owner. They are well run, but in the wrong business.

[Coronita]

hmm. Would you mind sharing details about the property. If there’s a good property priced right, I might be interested…cash…

I wish I could say the same thing is true for 92126
https://www.redfin.com/zipcode/92126

The only thing on the market in the condo market is shit.

$450k for this 1/1: https://www.redfin.com/CA/San-Diego/11187-Kelowna-Rd-92126/unit-75/home/6397715

$420k for this 1/1: https://www.redfin.com/CA/San-Diego/8656-New-Salem-St-92126/unit-52/home/4577039

$550k for this 2/2: https://www.redfin.com/CA/San-Diego/8460-New-Salem-St-92126/unit-38/home/4574165

$638k for this 2/2: https://www.redfin.com/CA/San-Diego/10805-Camino-Ruiz-92126/unit-40/home/4571731

And that’s the better part of town. There’s also these shittier listings.

$425k for this 1/1: https://www.redfin.com/CA/San-Diego/10278-Black-Mountain-Rd-92126/unit-180/home/4855467

$425k for this 1/1: https://www.redfin.com/CA/San-Diego/10278-Black-Mountain-Rd-92126/unit-180/home/4855467

$420k for this 1/1 https://www.redfin.com/CA/San-Diego/10278-Black-Mountain-Rd-92126/unit-171/home/4855458

$474k for this 1/1 https://www.redfin.com/CA/San-Diego/10026-Maya-Linda-Rd-92126/unit-6203/home/12158510

That’s it

I wish prices would come down so I could buy more.

[Anonymous]

[quote=sdrealtor]Condo market up by me significantly stronger than sfr market at the moment. Virtually nothing under 800k. Just closed one 10% above asking, owner occupant, all cash. Yet again you don’t understand what’s going on[/quote]

All cash? Obviously an investor, someone has to be the bag holder when the market crashes.

[sdrealtor]

[quote=deadzone][quote=sdrealtor]Condo market up by me significantly stronger than sfr market at the moment. Virtually nothing under 800k. Just closed one 10% above asking, owner occupant, all cash. Yet again you don’t understand what’s going on[/quote]

All cash? Obviously an investor, someone has to be the bag holder when the market crashes.[/quote]

Wrong again as always! Single mom teacher relocating from East Coast for her kid to finish high school and then enjoy living in a nice place as an empty nester. Some people bought houses, paid them off, saved for retirement and lived within their means instead of being a slacker

[Coronita]

[quote=deadzone][quote=sdrealtor]Condo market up by me significantly stronger than sfr market at the moment. Virtually nothing under 800k. Just closed one 10% above asking, owner occupant, all cash. Yet again you don’t understand what’s going on[/quote]

All cash? Obviously an investor, someone has to be the bag holder when the market crashes.[/quote]

Where do you get your ASSumptions from? Someone buying at this level is most likely not an investor, because it won’t pencil out as a rental. This is owner occupied mostly likely.

The astonishing baseless ASSumptions is just hysterical, because sorry to say this, it sort of demonstrates lack of financial common sense.

And theoretically, there is no bagholding if the person holds on to the property indefinitely…
Yes, some people have $800k cash. I know that’s hard to understand, but there’s plenty of people who do. Probably from the sale of a previous house or stocks or both. In that case, it’s also not bagholding. Because whatever equity paper loss on this property was probably offset by the equity gain in the previous one, which you also don’t understand.

[gzz]

Flu, the 2/2 for 550k would yield about 28k a year after HOA, ins and property tax, 5.1% yield on purchase price. That beats treasuries and CDs.

The condo’s rent will also go up with inflation. If you want that feature in a treasury, you’ll get a lower TIPS rate.

So not a bad deal for an investor IMO.

[Anonymous]

Most cash deals are either investor, or to launder money.

[Coronita]

[quote=deadzone]Most cash deals are either investor, or to launder money.[/quote]

Again, here you go again, making ASSumptions.
But in just this simple sentence, it also highlights, yet again, your gross ignorance on the things you comment about here.

In this particular case, probably because you never purchased a home before, you don’t understand what “cash purchase” really means when used in the context of buying a home….

“Cash purchase” doesnt mean cold hard cash that one brings in a suitcase, “cash purchase” just means you are buying a house without a mortgage tied to that house.

The source of that cash could be from all sorts of sources. Even another loan secured by another property. For example, if I take my $600k cash out refi on one property to buy another property, that is recorded as a “cash purchase” at escrow since there’s no loan on the property in question. There’s plenty of real world reasons why a transaction would show up as a cash purchase. In the case of moving from a high cost area such as Bay Area down here, selling a $3million home up there and buying something comparable for $2million for a primary residence, that would be an example of a cash purchase. Or a parent could be buying a kid a home to live. You don’t know

…And sdrealtor commented again and said it was owner occupied…

There’s no funny business going on here.
Reading comprehension issue much?

So it’s just asinine to assume most “cash purchase” is either investor or money laundered.. Makes no logical sense.. Where’s your data again? Answer: it doesn’t exist because like everything else, you just pulled that out of your ass…

[Anonymous]

[quote=Coronita]
For example, if I take my $600k cash out refi on one property to buy another property, that is recorded as a “cash purchase” at escrow since there’s no loan on the property in question.

[/quote]

That sure sounds like an investment purchase to me.

[Author]

Posts