Doses of Reality

[SD Realtor]

sdr I am not sure if you see it nearly as much in your sub market but I would say I go to at least 1-2 listing appts a week now where I have to show comps to sellers that really slap them into reality. None of these appts are in the more desireable areas. They vary and are in places like downtown, La Mesa, El Cajon, Oceanside, Eastlake, etc… The majority of these people, (I would imagine) either don’t list or they list with someone else.

[sdrealtor]

To be honest, I’ve been spending more time on my other businesses rather than banging my head against the wall all day in RE. They are much more profitable and growing at a healthy clip. I’m already more than satisifed with 2007 and anything else that comes my way is a bonus. I’ve also got a couple nice things lined up for 2008. I’m really sitting back and taking it all in. I have seen an increasing number of realtors listing their homes of late including some pretty high profile guys and gals with big mortgages. I have also seen a bunch of listings in my area see 50K and more price drops. Mostly long time owners with lots of equity who are moving on and willing to do so at these price levels.

[Sandi Egan]

Mostly long time owners with lots of equity who are moving on and willing to do so at these price levels.
Interestingly, these are the kind of people that drive the prices down. I always thought foreclosures will lead the way. I guess these are the only people who can afford to cut the price somewhat.

[NotCranky]

sdr, If you feel like answering…How does a name brand office take it when associates back off on their commitment to the business? How is the brokerage doing?

Today I bought a bunch of office furniture from now defunct office. Really nice guy too…He wondered why an agent would be buying office stuff now. I didn’t say so,but it’s because it is cheap.(and I need it). Contrary to what you and I believe about anybody in the business being able to see it, he says he didn’t see the bust coming. He definitely wasn’t prepared.

[HereWeGo]

Agreed, Sandi. That’s how the top end will ultimately fall. I’m more than a little surprised that the process is already underway, I would have thought those folks would feel a bit more secure at this time.

[sdrealtor]

Mine is doing fine though I’m sure many others are in deep sh#t. I just ran a report on one of the top agent/teams in my area. The full page weekly UT ad kind. He’s got about 50 active listings and 1 in escrow. I’m sure he’s got plenty of reserves but still thats gotta hurt to carry that much. Cyphire’s agent has his house on the market for about 6 months and will probably go under within a year or two just like they did in the last go round.

My office actually is looking to gain market share and will continue to push. There could be a couple casualties but the vast majority will do just fine. As for me, my broker understands my position and knows I am an asset to the office. I also produce a good level so they accept it for what it is.

[SD Realtor]

My sister in law works for the brand name as well… I think the same one as sdr. Same thing that sdr said about his office Rustico. There is alot of freedom for the agents to provide value to the office without having to maintain the standard work week that is everyday life of other professions. Especially agents that have been involved for many years and have built up a considerable client base. That is much more valuable to the broker then having someone providing face time in the office.

SD Realtor

[sdrealtor]

Sandi,
I said that I have seen some but it certainly isnt widespread. They are also dropping prices down around or just below comps rather than truely dumping on price. It will still take quite some time.

[4runner]

Mostly long time owners with lots of equity who are moving on and willing to do so at these price levels.

Interestingly, these are the kind of people that drive the prices down. I always thought foreclosures will lead the way. I guess these are the only people who can afford to cut the price somewhat.

It makes sense from a foreclosure standpoint too. Take two cases:

1) You buy a house w/0 down for 600k$ and now try to sell. If you can’t sell for something close to that price, it doesn’t matter to you how far the price drops. In other word, if the lender forecloses, it doesn’t matter to you whether the house ultimately sells for 300k$ or 500k$. With California foreclosure laws, in either case, the only thing that you’ve lost is your credit rating. Why bother to chase the market down? There is always a chance that the price could suddenly rise back up to 600k$, so why not hold out?

2) You buy a house for 400k$ four years ago and now try to sell. The price at the peak was 600k$, but may have dropped in the meantime. You have every incentive to try and ensure that the place sells sooner rather than later because you actually have skin in the game. Rather than trying to hold out for 600k$, you may list at 550k$ and be happy to get what you can…

[SD Realtor]

sdr I think you got everyone whipped up with the statement about lots of homeowners with alot of equity moving on!

One thing that also needs to be taken into account is what were the original list prices to begin with. The other is, what is the actual quality of the home.

Many moons ago you made a VERY PERTINENT statement about there may be alot of good deals out there, but not alot of good homes. I think this is still holding very strong, especially in the more desireable areas. To me someone knocking 50k off a 949k list price or even an 800k list price doesn’t mean much at all. I think the sales volume will bear that out. This statement is not to disagree with you but more to point out to the board that (at least in my opinion) this is not indicative of a major chunk downwards yet.

SD Realtor

[sdrealtor]

SD R
I agree that clarification is needed and I dont believe that I said Lots of homeowners with alot of equity moving on, at least that wasnt my intention. What i have seen is more 50K price drops on the asking than I have seen in a while. I didnt take the time to comp them out but did check the tax records to see how long they were there in a few cases. I dont believe the asking prices represent new lows or big chunks down but rather a willingness of some sellers to try a find where the market actually is today. My general recollection is that these homes were owned for at least 10 years and were well maintained but in need of lots of updating/remodelling. Prices in my area are still relatively stable but I expect them to creep down ab it over the next couple months.

[Ex-SD]

It always takes “X” length of time for reality to set in. I told my wife several months ago that I didn’t think that there would be any significant drops in the SFR segment of the San Diego housing market until the end of next summer. My reasoning is that by then, reality will have truly set in and panic will be the next phase. Right now, anyone who doesn’t truly have to sell is not going to significantly drop their price. By the end of next summer, when those who have to sell due to job transfers, job loss, divorce, or loss of income due to illness are going to really start feeling the squeeze. Add to this equation the REO’s that will be at a staggering number………………then, we’ll see some real price cutting in the single family home segment of the market in SoCal. Of course, we already have homes dropping like dead birds in Temecula and other outlying places but these areas were a whole different can of worms in the first place. I don’t think that this whole mess will hit the bottom until late 2011 or well into 2012 at the earliest due to the large amount of inventory that will be on the market and lack of qualified buyers that will be able to qualify for a loan.
Just my two cents.

[HLS]

Take 2003-2006 transactions out of the equation completely, including the price rise. 75%+ of SD homes probably haven’t changed hands.

Under “normal” historical conditions there are always people buying and selling homes at whatever the market happens to be at that point.

The “must sells” can only deal with reality at that point, regardless of future potential or past price.
There will ALWAYS be transactions from people that bought before 2003.

[HereWeGo]

4runner-
Your analysis is spot on, IMO.

Soon, we may see both resellers and builders chasing the market in the more primo areas.

[SD Realtor]

I think builders are already out in front and have been for awhile now. They may not have cut prices as much as everyone wants them to, but they are definitely far more aggressive then resellers. I would classify a builder as a must sell homewoner. They have no choice and have to sell the home. A reseller, unless pressed by a NOD or a relo, divorce, or other substantial event, is never as motivated as a builder. Similarly resellers are always more emotional… Hopefully they will get it eventually.

SD Realtor

[NotCranky]

Thanks to sdr and SD R for your comments.

Pt. Loma question… this listing:

http://www.sdlookup.com/MLS-076061833-3327_Lucinda_St_San_Diego_CA_92106

Bought for 1.4 million recently, plans drawn up for a new house but the old shack still stands (one bdrm, two bath). Now on sale for 1.9 million. Is this realistic? Is it worth another $500K because an architect drew up plans

This sold for a little over million 3 months before the 1.4m sale. I don’t think the architects usually make the price go up much beyond the value of any significant engineering to the land .The costal review progress is worth something and maybe those plans have to be used or the process would have to be started over.So the plans and the review progress are worth something but I don’t know how much but I have no idea what nothing like 600K or 1M. Maybe someone else knows? So the property list price is almost double from a sale last August.By the sirname the earlier sale looks like it might have been by one of the old time Portuguese, They are established there from the old tuna fishery days.I don’t know how many families are still there. The current owner is some kind of business entity.The view is marvelous.

[SD Realtor]

Thanks sdr… agreed completely….

SD Realtor

[4plexowner]

Several new listings in Pt Loma in the last few weeks

The signs went up without any of the usual activity indicating a flip in progress (remodel, new landscaping, etc)

I am assuming that these are long-time owners taking their profits off the table while there are profits to be had

[Critter]

Pt. Loma question… this listing:

http://www.sdlookup.com/MLS-076061833-3327_Lucinda_St_San_Diego_CA_92106

Bought for 1.4 million recently, plans drawn up for a new house but the old shack still stands (one bdrm, two bath). Now on sale for 1.9 million. Is this realistic? Is it worth another $500K because an architect drew up plans?

[Author]

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