El Cajon Condo Blowout! (-27% in 8 months)

[garysears]

East Bradley Ave, El Cajon Condos

So I’ve been keeping an eye on the condos for sale right down the street from my apartment in El Cajon. In February a real estate agent came door to door passing out flyers trying to sell one of the units (#11). Since then, two more have come up for sale. I think there are 12 units total, 6 in each of 2 buildings. Several weeks ago some hooligans in the neighborhood vandalized all three of the signs in the yard by the sidewalk but no one has bothered clean them up. One of the signs was put up after the other two were already vandalized. Of course it was broken within a day or two. No real estate agents have bothered to clean up the signs (I wish I had a picture to post right now. Two of them were the nice wooden post signs). I believe one of the units is obviously a foreclosure. Here are the MLS numbers if anyone is curious:

469 E. Bradley Ave #11
List Price: $249,000-$259,000
Original List Price: $279,000
MLS# 076014978
Listed: 2/15/2007

465 E. Bradley Ave #6
List Price: $250,000
MLS# 076037262
Listed: 5/7/2007

465 E. Bradley Ave #2
List Price: $200,000
MLS# 076051074
Listed: 6/14/2007

I say this has to be a foreclosure because it lists a sale date of Oct 31, 2006 for $273,000. Minus 73K out of 273K in less than eight months, or almost 27%! At that rate it should be free in a few years.

I gather the other two will be foreclosures soon. It is hard to compete with someone undercutting you by 50K. I also suspect the foreclosure condo is in the best shape of the three since it is the only one that includes interior pictures on the MLS.

Most interesting to me is the sales history given for #2 on Trulia.com:

$273,000 Prior sale date: Oct 31, 2006
$220,000 Prior sale date (2): May 24, 2004
$104,000 Prior sale date (3): Jan 18, 2002
$55,000 Prior sale date (4): May 25, 1999
$39,500 Prior sale date (5): May 27, 1997
$37,000 Prior sale date (6): Dec 12, 1996

So in less than ten years, the price people were willing to pay for this went from less than 40K to over 270K. That is a 7.38X increase in value in 10 years! I wonder what these condos will be going for in a few years….

[garysears]

I wanted to add that I calculated a 22.12 annual rate of return for Unit #2 between 1996-2006 (had the original buyer kept it). SO maybe -25% per year would not be a bad thing for a few years. If you start with a rounded off 40K value in 1996 and use a 6% compounded annual rate you get a present value of about 76K. I know that 1996 was a low year for real estate and maybe it is not a good base year for a comparison. However, if that was the bottom of the last bust it makes me wonder. A value of 76K today is probably a little low if the median household income for San Diego is in the upper 60Ks. Then again, I wonder what the median income was in 1996…

I keep thinking that I can’t see paying over 100K for an El Cajon 900 sf 2bd/2ba condo. But I also know that means I will probably never own a place out here. I guess it will never be 2002 again. Or will it?

[garysears]

I wanted to add that I calculated a 22.12 annual rate of return for Unit #2 between 1996-2006 (had the original buyer kept it). SO maybe -25% per year would not be a bad thing for a few years. If you start with a rounded off 40K value in 1996 and use a 6% compounded annual rate you get a present value of about 76K. I know that 1996 was a low year for real estate and maybe it is not a good base year for a comparison. However, if that was the bottom of the last bust it makes me wonder. A value of 76K today is probably a little low if the median household income for San Diego is in the upper 60Ks. Then again, I wonder what the median income was in 1996…

I keep thinking that I can’t see paying over 100K for an El Cajon 900 sf 2bd/2ba condo. But I also know that means I will probably never own a place out here. I guess it will never be 2002 again. Or will it?

[temeculaguy]

It would be interesting to see what the sales prices were in 2003, splitting the difference between the 2002 and the 2004 would be 150k and that would be a reasonable guestimate as to what you will end up finding it will be worth next year. I believe that 2003 should have been the top of the last cycle had the bubble not happened. If you took a vote I bet many here would guess a return to 2003 prices in 2008 is fairly likely and demanded by the laws of economics. Factoring five years of inflation it would actually be close to the 2002 price. I don’t know what the rents are but if they are at about $1000 a month or more they will be too attractive as rental to get much lower than 150k. Deciding the bottom is always a guess but if it gets to the point where it is cash positive or neutral from day one then it probably won’t get there, I just don’t think it will hit 100k if rent is $1000, so what do they rent for?

[temeculaguy]

It would be interesting to see what the sales prices were in 2003, splitting the difference between the 2002 and the 2004 would be 150k and that would be a reasonable guestimate as to what you will end up finding it will be worth next year. I believe that 2003 should have been the top of the last cycle had the bubble not happened. If you took a vote I bet many here would guess a return to 2003 prices in 2008 is fairly likely and demanded by the laws of economics. Factoring five years of inflation it would actually be close to the 2002 price. I don’t know what the rents are but if they are at about $1000 a month or more they will be too attractive as rental to get much lower than 150k. Deciding the bottom is always a guess but if it gets to the point where it is cash positive or neutral from day one then it probably won’t get there, I just don’t think it will hit 100k if rent is $1000, so what do they rent for?

[garysears]

I rent at Coral Garden Apts at 425 E Bradley, just about a hundred yards down the street. I pay 1010.00 per month but that includes a one car garage. I have seen other 2 bed/2ba units can advertised for 900-950 per month I think. I don’t know specifically what the 465 E bradley condos are renting for. The 900-1000 range is a good estimate.

[garysears]

I rent at Coral Garden Apts at 425 E Bradley, just about a hundred yards down the street. I pay 1010.00 per month but that includes a one car garage. I have seen other 2 bed/2ba units can advertised for 900-950 per month I think. I don’t know specifically what the 465 E bradley condos are renting for. The 900-1000 range is a good estimate.

[Bugs]

469 / #11 sold in 12/23/2002 for $150,000. I think that would suffice as an early 2003 sale.

I saw 3 early-2002 sales at $105,000 – $110,000, and an mid–2004 sale at $220,000.

Using a 150 gross rent multiplier on a $1,000 rent would equal the $150,000. Many investors would probably bite at that but some wouldn’t. A bottomed out $150,000 price would represent a -45% price adjustment off the peak.

[Bugs]

469 / #11 sold in 12/23/2002 for $150,000. I think that would suffice as an early 2003 sale.

I saw 3 early-2002 sales at $105,000 – $110,000, and an mid–2004 sale at $220,000.

Using a 150 gross rent multiplier on a $1,000 rent would equal the $150,000. Many investors would probably bite at that but some wouldn’t. A bottomed out $150,000 price would represent a -45% price adjustment off the peak.

[PerryChase]

Interesting topic. Thanks for posting.

Gary, you should wait it out because I believe you’ll see that $150k price again.

[PerryChase]

Interesting topic. Thanks for posting.

Gary, you should wait it out because I believe you’ll see that $150k price again.

[garysears]

Since posting a few days ago I also noticed on the MLS that there is a foreclosure just up the street from these condos at 745 E Bradley Ave. While walking around the complex I saw 2 other units that looked bank owned. The only unit I saw listed on the MLS is #41. Units 51 and 45 had lock boxes on the door. Several months ago I saw for sale signs on the corner. I guess no one was able to sell and they got foreclosed.

List Price: $175,000
Address: 745 E BRADLEY AVE 41 92021
MLS #: 078015909
Original List Price: $230,000
Complex: Bradley Condos
Listed on: 2/25/2007

Historical home sale price: $250,000
Prior sale date: Aug 24, 2004

Historical home sale price (2): $45,500
Prior sale date (2): Jan 12, 1996

I see that someone made out quite nicely by selling at the peak on this one! It is especially nice if you consider they probably leveraged the initial 45K considerably.

#45
Historical home sale price: $268,000
Prior sale date: Jan 13, 2005

Historical home sale price (2): $53,615
Prior sale date (2): Feb 9, 1999

This is also quite a good deal for the 1999 buyer. I can’t believe someone paid $268K for that in ’05. I think #41 might likely sell for under $175K. If so, that represents quite a drop from the ’05 price of $268K for a similar condo in the same complex with the same square footage. If #45 sells for 175K that is a 45% drop already! Of course the lender probably has a little more into #45 than does the lender for #41.

#51
Historical home sale price: $102,559
Prior sale date: Jun 26, 2007

Historical home sale price (2): $87,500
Prior sale date (2): Mar 1, 2002

Historical home sale price (3): $38,000
Prior sale date (3): Mar 14, 2000

This one is a 1 bd / 568 sf condo. I didn’t know it was sold until I went to Trulia.com. But the sale price gives me hope that I might get a 2bd/2ba in El Cajon for under $150K. I note that the $175K price on the MLS for #41 does not seem real firm. I think they might even take $150K right now for it. There are several other condos in El Cajon on the MLS with the low side of the range in the 170-180Ks.

[garysears]

Since posting a few days ago I also noticed on the MLS that there is a foreclosure just up the street from these condos at 745 E Bradley Ave. While walking around the complex I saw 2 other units that looked bank owned. The only unit I saw listed on the MLS is #41. Units 51 and 45 had lock boxes on the door. Several months ago I saw for sale signs on the corner. I guess no one was able to sell and they got foreclosed.

List Price: $175,000
Address: 745 E BRADLEY AVE 41 92021
MLS #: 078015909
Original List Price: $230,000
Complex: Bradley Condos
Listed on: 2/25/2007

Historical home sale price: $250,000
Prior sale date: Aug 24, 2004

Historical home sale price (2): $45,500
Prior sale date (2): Jan 12, 1996

I see that someone made out quite nicely by selling at the peak on this one! It is especially nice if you consider they probably leveraged the initial 45K considerably.

#45
Historical home sale price: $268,000
Prior sale date: Jan 13, 2005

Historical home sale price (2): $53,615
Prior sale date (2): Feb 9, 1999

This is also quite a good deal for the 1999 buyer. I can’t believe someone paid $268K for that in ’05. I think #41 might likely sell for under $175K. If so, that represents quite a drop from the ’05 price of $268K for a similar condo in the same complex with the same square footage. If #45 sells for 175K that is a 45% drop already! Of course the lender probably has a little more into #45 than does the lender for #41.

#51
Historical home sale price: $102,559
Prior sale date: Jun 26, 2007

Historical home sale price (2): $87,500
Prior sale date (2): Mar 1, 2002

Historical home sale price (3): $38,000
Prior sale date (3): Mar 14, 2000

This one is a 1 bd / 568 sf condo. I didn’t know it was sold until I went to Trulia.com. But the sale price gives me hope that I might get a 2bd/2ba in El Cajon for under $150K. I note that the $175K price on the MLS for #41 does not seem real firm. I think they might even take $150K right now for it. There are several other condos in El Cajon on the MLS with the low side of the range in the 170-180Ks.

[garysears]

I took a couple pictures of the signs if anyone is interested. Someone finally picked up the broken pieces, but the broken signs advertise more accurately than the realtors probably intended. This sort of thing is common in this neighborhood, as is vandalism of parked cars on the street. This is not really the place most people really want to spend a quarter a million bucks to live.

This second picture shows something that must be fairly typical in many places. Realtors don’t seem to want to continue to refill the little boxes with new flyers. My guess is they realize how unlikely a sale is. It certainly shows lack of interest on their part. You can get a pizza flyer though!

http://tinypic.com/view.php?pic=6ce99mr
http://tinypic.com/view.php?pic=52cha9e

[garysears]

I took a couple pictures of the signs if anyone is interested. Someone finally picked up the broken pieces, but the broken signs advertise more accurately than the realtors probably intended. This sort of thing is common in this neighborhood, as is vandalism of parked cars on the street. This is not really the place most people really want to spend a quarter a million bucks to live.

This second picture shows something that must be fairly typical in many places. Realtors don’t seem to want to continue to refill the little boxes with new flyers. My guess is they realize how unlikely a sale is. It certainly shows lack of interest on their part. You can get a pizza flyer though!

http://tinypic.com/view.php?pic=6ce99mr
http://tinypic.com/view.php?pic=52cha9e

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