Early March Numbers

[sdrealtor]

It is still about 2 weeks early to say for sure but the number of March closings countywide are looking pretty weak. The pain is not evenly spread and some markets are doing much better than others. The North County Coastal market (Carmel Valley to Carlsbad) is pretty strong and should end up between 10% off and same as last year sales volume. perhaps that explains why I havent seen much real weakness in the market.

On the otherhand, the I-15 corridor (Scripps Ranch to Rancho Bernardo) will probably be down 30 to 40%. This really surprised me as they are both relatively similar markets (i.e. Upper Middle class areas with top schools).

The I-78 corridor (Oceanside to Escondido) is also getting whacked with what is looking like a 40% drop in volume.

South Bay is looking aweful with about 50% drop.

Downtown about 30% off.

I-8 corridor (Old Town to El Cajon) is off about 30%.

Mid Coastal (Ocean beach to La Jolla) is holding up better with about 20% drop.

By Mid April after the late reporters enter their closed transactions we’ll have a better picture but the results in all but the coastal areas are very sobering.

[Anonymous]

Thanks for the early read, sdr. Ugly; wow!

[lendingbubblecontinues]

BRING ON THE PAIN!!!

By the way…no pain here…just an awful lot of disposable income at hand and extreme flexibility with respect to my family’s options of whether to buy or continue to rent. Show me a recent buyer who claims to have what I have and I’ll show you a liar!

Time to invest in companies that make body-bags?

And really…just who are the idiots that are buying right now, anyway? I suspect most are recent immigrants (legal or illegal, it doesn’t matter) who have absolutely no frickin’ clue…

[Rockemsock]

Well I guess i should be happy that my condo is for sale in Encinitas. Big money, no whammies! SELL!

As for who is buying, I don’t know, but I will say that I’m literally laughed at when I mention any significant reductions in home values. I have a co-worker that is considering relocation from one PB condo to another. I sent him a link to this site and Patrick.net and he laughed. His comment was “there’s always somebody predicting doom and gloom” (incidentally I think that is the #21 argument on Patrick.net). Anyhow, i’m sure many more on this site are familiar with the sideways glances and the smirks that accompany their bearish predictions. I think it’s just a bit odd that people can ignore it, WHEN ITS ALREADY HAPPENING.

~insert humorous Titanic anecdote here~

[kiki]

i know 3 people that purchased a house in the last 6 months. One sold both her house and her husband’s house (just got married) and bought a new bigger house. i do not think they will have problems with the payments as probably downpayment was huge. do not know details but does not look like the type will take money from their houses. They are willing to ride any downturn as they do not plan to move ever. i guess in their case it is ok, however, they might be paying a hell lot more in property taxes.

another is a coworker, a transfer from the midwest. I advise not to buy but she claimed that if she does not buy she will lose the company paying for closing cost (first i thought now you could get the seller to pay closing, second why is she so desperate to get a $20K benefit when her house could drop $100K or more in value) Anyway, she has high position in a company and supposed to be very smart but did not care at all “real estate always goes up!!”

last is also a couple that purchased after living abroad. it was funny they said he bought a new house because they could not stand to give a lot of money to someone that bought a house for half the price 3 years ago, but had no problem to pay it to a builder (because then they would not know the profit). They keep pushing me to buy,”its all about demand and supply” “san diego only has so much land”. i laugh, i tried to explain but they do not listen. i found it funny when one of them told me that i could look for foreclosures at Costco! maybe in a few years i will buy my groceries and be able to buy 2 or 3 foreclosures.. for now i will rent and save.

I think we overestimate the number of people that is really on top of what is happening with RE. The cases i mentioned are managers with MBAs, very bright people. They bought because that is what you supposed. they have no idea of foreclosure rates, ARM reseting or people using their houses as ATM or frauds that are inflating the values. Is like i am speaking greek to them (i include other co-workers who own and insist that i should buy too)

I wonder how many people are really on top of what is happening, 100? 1000?

[sdrealtor]

Rockem,
Dont be so confident. Encinitas condos are by far the weakest part of the market I described as being relatively healthy. Sellers are too slow to reduce prices there and there arent many sales happening in the 92024 condo market because you can get better for alot less nearby. I dont know what you’ve got but I did some research for attached properties east of ECR 2 weeks ago and found that about 70% purchased in 2006 were done with 5% or less down (most were 100% financed). With the recent sub prime issues, 2/3rd of your potential buyers just vanished. Cut your losses and get out now while you can.

SDR

[Rockemsock]

SDR,

Don’t take my comment as being confident, I just happen to be happy that of all the data you presented, my locale was in the top.

I’ve priced somewhat aggressively, the equity is “funny money” and is way more than I ever expected to have in such a short amount of time…so i’m not too greedy. And our price per sq. ft. is one of the best in 92024. I’m trying to cut and run…I’m trying! It’s only been 5 days…

I’m hoping to sell quick so i can jump on that sweeet deal in Amarillo! ;^)

[gn]

>> I think we overestimate the number of people that is really
>> on top of what is happening with RE

kiki is right. The readers/posters on all of the RE blogs represent a small percentage of the total population.

For most folks, their thinking is: no one really know what the future hold. Since I need a roof over my head & get a tax deduction, I’ll buy. In the long term, RE always appreciate …

When the bubble bursts, there are still buyers. It’s just that the supply being released onto the market will overwhelm the demand from the buyers.

[kewp]

Haha, I just had a mental picture of a sixpack of foreclosed condos for sale at Costco.

I’m really pretty sure the smart investors have seen the writing on the wall for some time, are keeping mum and are well-hedged against against the coming tsunami. Probably sold all their investment properties last year, are vacationing in Europe and are waiting to buy back in when the market crashes.

What is beginning to worry me, however, is what all the fallout is going to do to SD county. My long term plan was to stay here (I have a rad, recession proof job and lots of friends, plus love the weather and women). So I’m totally cool with renting for a few years, improving my credit and savings and buying at the bottom. Sad that I’ll be almost 40 by then, but so is life.

I wonder if the future SD, with affordable real estate, will be a place I want to live in anyway.

[Bob G]

People tend to believe what they what to believe. Most folks are “homeowners” now. They want to believe that there house;s value holds up. RE industry will feed into their need. Only an actual collaspe will convince them. It’s kinda like the O.J. jury. Blood DNA evidence wasn’t convincing enough. In terms of RE, glut, credit contraction, oversuppy, increased forclosures, ARM reset aren;t enough evidense.

If the glove don fit, you mus aquit.

[Critter]

Hey Rockem,

You might want to send this link to your co-worker who is enamored with PB:

http://www.pacificbeachbubble.blogspot.com

Then again, he might be so full of the Kool-Aid that he won’t take it seriously. I find it a good read.

On a side note, I met someone yesterday who was crapping on about how a “doctor friend of his” bought a cliffside property in La Jolla for 1.5 million and now it’s worth 25 million. Before I could make a comment, the gal next to me said snappishly, “Now all he has to do is find a buyer with 25 million.”

I then said, “What it’s worth and what the market will bear are usually two different numbers.” The conversation stopped at that stage…

Bragging about home appreciation is so 2005!

[sdrealtor]

No problem Rock,
I just get a little ornery some time. If its the one I think,

y ou’ve g ot g ood r epresentation. 😉

Just dont underestimate the impact of the new subprime borrowing guidelines in that market. Short sales are popping up all over the place in that market for hispanic homeowners that were put in homes they never should have bought with 100% sub prime financing. My best advice would not be to position oneself as “one of the best price/sq ft” but rather at the price level where things are actually selling. For most of the last year there have been 100+ attached properties for sale in 92024 and less than 20 in escrow at any given time with many of the sales at the beach.

Best of Luck

SDR

[Rockemsock]

Hey Critter, I’ll send it along, thanks. I’ll also add it to my ever-growing bar of bubble-links…so i can check it out here and there.

[Rockemsock]

Yeah SDR, i am pretty happy with my agent…although the day we went on the market, he went on vacation. What’s up with that! ;^)

Two of the exact same model went into escrow within the last 30 days. One at 470k and one at 510k. 470k was for a beater…510k has some nice upgrades. I’m really interested to see if these close, and for what price. Our home probably shows as well, if not better than the 510k listing, and we put our price right between the two.

This is our first home, and I’m learning a ton from the housing blogs like this one. I’m just hoping that someday in the near future i can post a thread about being a renter. I’m trying to get rid of this “sheeple” sign around my neck.

[no_such_reality]

Ouch, you really think it looks like Volume on resale homes is coming in at 50% of 2005 numbers?

[Author]

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