Distress comparison of 2 neighborhoods

[temeculaguy]

Here’s my theory on primo areas and distressed areas, the percentage will be exact, the timing will not. If desirable areas of the county would have suffered lower percentage losses in the last 4 or 5 bust/boom cycles, then the disparity would increase with each cycle, but it has not. Don’t ridicule the “things will be different this time” theory and then subscribe to it with regards to carmel valley or some other desirable area. The NOD/NOT analysis is just an indicator of when it will hit the fan. If 4-S falls 50% from peak, within a year, the areas without high NODS/NOTS will fall the same percentage. The knife will be the same size, it will just show up later. It’s a market force. You may dislike 4-S but the majority of the buyers will not pay double for Carmel Valley, so in order to sell in CV it will have to follow suit within a year, don’t think everyone can hold forever just because they can survive longer, someone will get a divorce, job transfer or layoff despite being upper class. The buyers won’t pay when they don’t have to give much up in the way of schools, climate, etc. and can get a significantly better deal not that far away. It’s Bugs’ butterfly effect and it is very real. This virus will spread, just because it hasn’t spread yet doesn’t mean it won’t and it will have the same effect in every area. If it is Del Mar you seek, you will have a much smaller window and will have to pay attention but don’t think that window won’t be there.

SD, don’t bet on the patsy’s this week, I don’t think they cover the spread and I doubt they win. They have the talent but the cheating controversy is a huge distraction and Belichick is a huge history buff, he’s not making his usual preparations this week, he’s stressing about his legacy and facing a suspension, not to mention LT has been thinking about this game for months, if the pats win with all this, then we can crown them.

[NotCranky]

“Here’s my theory on primo areas and distressed areas, the percentage will be exact, the timing will not. If desirable areas of the county would have suffered lower percentage losses in the last 4 or 5 bust/boom cycles, then the disparity would increase with each cycle, but it has not. Don’t ridicule the “things will be different this time” theory and then subscribe to it with regards to carmel valley or some other desirable area. The NOD/NOT analysis is just an indicator of when it will hit the fan. If 4-S falls 50% from peak, within a year, the areas without high NODS/NOTS will fall the same percentage.”

Sounds like you got it Temecula Guy.
I think the declines in prices, percentage wise will be similiar. A few more “desirable” areas are really going to surprise to the downside and a few less “desirable” areas are going to show surprising resiliency. Frankly I think it is a waste of time to speculate on this topic. What you and Bugs are saying seems to handle it.

[SD Realtor]

That very well could be….again, I am not in the same camp that they will be the same in all areas but I not of the belief that they were untouchable either.

Once more, the real point I was trying to make is the timing of it. We will continue to see frustrated I want to buy now or in 4 months from now buyers in some of these areas and I don’t see these areas being forced down substantially for awhile. That is the point I was trying to make, that for people thinking La Costa Valley is going to plummet 20% in a year, I don’t see it… maybe in 2 years, maybe not… UTC or Eastlake 20% in a year or 18 months? Much better odds…

SD Realtor

[beachlover]

Sd Realtor –
very interesting comparison.

I own a home in a currently non distressed area and I want to buy in a currently non distressed area. Housing prices for both are down a similar percentage; assuming I’m buying a more expensive and larger home, am I’m coming out ahead? Not as good as selling in non-distressed (say down 3%) and buying in distressed (say down 18%), but still…

Is there anyone who should buy/sell right now? I’m in a position where I am a few months from paying off my mortgage, and need a different floor plan for my family and plan to live in my next house for 10 years at least. With housing prices continuing to drop for the next …. whatever you believe…. what market position is best for a buyer/seller such as myself?

Thanks.

[Bugs]

If you have to swap between two homes that have generally equivalent levels of risk for loss I would think you’d be better off doing it while the financing is still cheap.

Who knows that financing will be like in 5 years? I’m betting that it probably won’t be as cheap or as easy as it is right now.

[Raybyrnes]

I sort of think this is better represented as a finanacial instrament called Beta. In general we can look at the San Diego Market Representing the general market. La Jolla, Del Mar, PB might have a Beta of .75 whereas National City, Temekula, Santee might have a Beta of 1.4. There fore as the market moves these areas with higher Beta will ahve greater swings in pricing as a percentage.

[stansd]

I’ve been thinking along these lines a bit as well. Does anyone know how La Jolla, Del Mar, PB, etc. fared during the boom? If they appreciated at the same rate as San Diego overall, I see no reason why they couldn’t fall just as far or hard. They were just as nice 5 years ago as they are now.

If OTOH, if they didn’t grow as fast, the beta idea from raybyrnes is an interesting way to think about it. Crazy exotic mortgages notwithstanding-if they went up as fast, they can fall as hard.

Stan

[SD Realtor]

beachlover I would have to agree with Bugs on that one. All things being equal right now the financing opportunities are pretty good. Do you think you would be able to sell then buy with a conforming loan?

Look I will stick to my usual line. If you only look at the pure economics of the situation…just purely economics only, and if you believe that there will be substantial depreciation in the neighborhood you want to live in… and you are willing to wait for that depreciation to occur… then the prudent move is to sell now, then rent for a few years, then buy.

I think if you are considering selling then if you don’t do it now then you may want to do it as soon as spring comes along. It would not surprise me if we get a little bump in the spring. Of course that bump will hurt you when you buy so maybe that means you sell now and then buy now…. I know it is a tough call.

As far as the board is concerned the overwhelming majority of people here will tell you to sell now and rent for 3 years and then buy but I suppose you already know that. So to be honest I would say if you can sell now and rent for a few years then yeah I would agree with that. Otherwise if not then I would sell now and get the next home.

SD Realtor

[SD Realtor]

I will stick my neck out on this one. I have always said that I am not so sure that all neighborhoods will depreciate in the same manner. I think that there will be a bit less distress in these areas and there is an element of higher homeowner equity in these areas as well. Yes I could very well be wrong. I don’t know if LJ and Del Mar ran up as much as the rest of the county. They very well could have. Yet I believe more people also buy in these neighborhoods to live rather then to flip.

Anyways I am sure lots of darts will be thrown at me. I am not saying LJ and Del Mar will not go down, I think they will go down, but %wise I am not sure if they will run down as much as they ran up.

SD Realtor

[NotCranky]

We are the armchair quarterbacks or the sd real estate market SDR. Who knows who is going to throw an TD or an interception until time passes? No darts friend, just “banter”. While we are on the football motif…Go Chargers! Go to Bakersfield or Fresno!

[cyphire]

started new thread…. Are the developers as a whole in trouble?

http://piggington.com/are_the_developers_as_a_whole_in_trouble_big_trouble

[Author]

Posts