expensive La Jolla townhomes – how low will they go?

[Eugene]

[quote=Scarlett]Has the higher-end housing bottomed out yet then?

I thought that the higher-end housing still has a way to go down – in any case, to bottom out later than the cheaper houses. No?[/quote]

I think that there’s a bit of a disconnect at the high end. If you take one of those condos and pick a SFR in La Jolla that sold for the same price as the condo before the bubble (say, 500k in 2000) … today, the condo may be listed for 650-700k and the house may be listed for 850k.

To illustrate.

http://www.sdlookup.com/MLS-090032062-1688_Caminito_Asterisco_La_Jolla_CA_92037

Sold for 475k on 5/01/2000, listed for 697k today.

http://www.zillow.com/homedetails/921-Candlelight-Pl-La-Jolla-CA-92037/16856315_zpid/

Sold for 460k on 5/26/2000, zestimate 856k.

So the condo may be bottoming out (especially if you can negotiate down to 650k) and the house has further to go.

[patientrenter]

[quote=Eugene]
I think that there’s a bit of a disconnect at the high end. If you take one of those condos and pick a SFR in La Jolla that sold for the same price as the condo before the bubble (say, 500k in 2000) … today, the condo may be listed for 650-700k and the house may be listed for 850k.[/quote]

I’d say the greater disconnect is at the low end. The numbers you give are pretty close to the dividing line between Monopoly Money no money down FHA loans and loans that are given by banks backstopped by the FDIC and Fed purchases etc. So one market’s prices are 99% held up by taxpayer money, and the other is held up only 80%. Both still have prices that you’d expect with such an arrangement – crazy high – but the low end is the craziest.

[patientrenter]

[quote=Eugene]
I think that there’s a bit of a disconnect at the high end. If you take one of those condos and pick a SFR in La Jolla that sold for the same price as the condo before the bubble (say, 500k in 2000) … today, the condo may be listed for 650-700k and the house may be listed for 850k.[/quote]

I’d say the greater disconnect is at the low end. The numbers you give are pretty close to the dividing line between Monopoly Money no money down FHA loans and loans that are given by banks backstopped by the FDIC and Fed purchases etc. So one market’s prices are 99% held up by taxpayer money, and the other is held up only 80%. Both still have prices that you’d expect with such an arrangement – crazy high – but the low end is the craziest.

[patientrenter]

[quote=Eugene]
I think that there’s a bit of a disconnect at the high end. If you take one of those condos and pick a SFR in La Jolla that sold for the same price as the condo before the bubble (say, 500k in 2000) … today, the condo may be listed for 650-700k and the house may be listed for 850k.[/quote]

I’d say the greater disconnect is at the low end. The numbers you give are pretty close to the dividing line between Monopoly Money no money down FHA loans and loans that are given by banks backstopped by the FDIC and Fed purchases etc. So one market’s prices are 99% held up by taxpayer money, and the other is held up only 80%. Both still have prices that you’d expect with such an arrangement – crazy high – but the low end is the craziest.

[patientrenter]

[quote=Eugene]
I think that there’s a bit of a disconnect at the high end. If you take one of those condos and pick a SFR in La Jolla that sold for the same price as the condo before the bubble (say, 500k in 2000) … today, the condo may be listed for 650-700k and the house may be listed for 850k.[/quote]

I’d say the greater disconnect is at the low end. The numbers you give are pretty close to the dividing line between Monopoly Money no money down FHA loans and loans that are given by banks backstopped by the FDIC and Fed purchases etc. So one market’s prices are 99% held up by taxpayer money, and the other is held up only 80%. Both still have prices that you’d expect with such an arrangement – crazy high – but the low end is the craziest.

[patientrenter]

[quote=Eugene]
I think that there’s a bit of a disconnect at the high end. If you take one of those condos and pick a SFR in La Jolla that sold for the same price as the condo before the bubble (say, 500k in 2000) … today, the condo may be listed for 650-700k and the house may be listed for 850k.[/quote]

I’d say the greater disconnect is at the low end. The numbers you give are pretty close to the dividing line between Monopoly Money no money down FHA loans and loans that are given by banks backstopped by the FDIC and Fed purchases etc. So one market’s prices are 99% held up by taxpayer money, and the other is held up only 80%. Both still have prices that you’d expect with such an arrangement – crazy high – but the low end is the craziest.

[davelj]

[quote=patientrenter][quote=Eugene]
I think that there’s a bit of a disconnect at the high end. If you take one of those condos and pick a SFR in La Jolla that sold for the same price as the condo before the bubble (say, 500k in 2000) … today, the condo may be listed for 650-700k and the house may be listed for 850k.[/quote]

I’d say the greater disconnect is at the low end. The numbers you give are pretty close to the dividing line between Monopoly Money no money down FHA loans and loans that are given by banks backstopped by the FDIC and Fed purchases etc. So one market’s prices are 99% held up by taxpayer money, and the other is held up only 80%. Both still have prices that you’d expect with such an arrangement – crazy high – but the low end is the craziest.[/quote]

Here’s the difference, however. Most of the low-end purchases since the middle of last year result in the owner with a mortgage + expenses that are less than renting. Even with just 3% down. And most of the investors are buying for cash. So, the incentive to walk on these low end purchases is very, very low. Even the homeowners that don’t have much of a down payment aren’t able to save any money by substituting – that is, renting. This was not the case when prices where double where they are now. The ability to walk and save money by renting was huge. And so they did, and continue to do so.

At the high end there are larger down payments. But in many cases that equity is now long gone and the borrowers are underwater. And there STILL exists a pretty large difference between mortgage payments + expenses and rent on a comparable SFR. So, the incentive to walk at the high end – generically – is much greater than that to walk for recent purchasers at the low end.

If I’m a bank (or We the People via Freddie/Fannie), I’d MUCH rather own a 100% LTV loan where the buyer only only put down 3%, but where the ability to save money by walking away and renting is minimal, as opposed to a 125% LTV asset where the buyer originally had some equity but it’s now gone AND where the incentive to walk away and save money by renting is considerable. The collateral position in the latter case is much weaker. And the reason is the disconnect between mortgage + expenses and comparable rents.

[davelj]

[quote=patientrenter][quote=Eugene]
I think that there’s a bit of a disconnect at the high end. If you take one of those condos and pick a SFR in La Jolla that sold for the same price as the condo before the bubble (say, 500k in 2000) … today, the condo may be listed for 650-700k and the house may be listed for 850k.[/quote]

I’d say the greater disconnect is at the low end. The numbers you give are pretty close to the dividing line between Monopoly Money no money down FHA loans and loans that are given by banks backstopped by the FDIC and Fed purchases etc. So one market’s prices are 99% held up by taxpayer money, and the other is held up only 80%. Both still have prices that you’d expect with such an arrangement – crazy high – but the low end is the craziest.[/quote]

Here’s the difference, however. Most of the low-end purchases since the middle of last year result in the owner with a mortgage + expenses that are less than renting. Even with just 3% down. And most of the investors are buying for cash. So, the incentive to walk on these low end purchases is very, very low. Even the homeowners that don’t have much of a down payment aren’t able to save any money by substituting – that is, renting. This was not the case when prices where double where they are now. The ability to walk and save money by renting was huge. And so they did, and continue to do so.

At the high end there are larger down payments. But in many cases that equity is now long gone and the borrowers are underwater. And there STILL exists a pretty large difference between mortgage payments + expenses and rent on a comparable SFR. So, the incentive to walk at the high end – generically – is much greater than that to walk for recent purchasers at the low end.

If I’m a bank (or We the People via Freddie/Fannie), I’d MUCH rather own a 100% LTV loan where the buyer only only put down 3%, but where the ability to save money by walking away and renting is minimal, as opposed to a 125% LTV asset where the buyer originally had some equity but it’s now gone AND where the incentive to walk away and save money by renting is considerable. The collateral position in the latter case is much weaker. And the reason is the disconnect between mortgage + expenses and comparable rents.

[davelj]

[quote=patientrenter][quote=Eugene]
I think that there’s a bit of a disconnect at the high end. If you take one of those condos and pick a SFR in La Jolla that sold for the same price as the condo before the bubble (say, 500k in 2000) … today, the condo may be listed for 650-700k and the house may be listed for 850k.[/quote]

I’d say the greater disconnect is at the low end. The numbers you give are pretty close to the dividing line between Monopoly Money no money down FHA loans and loans that are given by banks backstopped by the FDIC and Fed purchases etc. So one market’s prices are 99% held up by taxpayer money, and the other is held up only 80%. Both still have prices that you’d expect with such an arrangement – crazy high – but the low end is the craziest.[/quote]

Here’s the difference, however. Most of the low-end purchases since the middle of last year result in the owner with a mortgage + expenses that are less than renting. Even with just 3% down. And most of the investors are buying for cash. So, the incentive to walk on these low end purchases is very, very low. Even the homeowners that don’t have much of a down payment aren’t able to save any money by substituting – that is, renting. This was not the case when prices where double where they are now. The ability to walk and save money by renting was huge. And so they did, and continue to do so.

At the high end there are larger down payments. But in many cases that equity is now long gone and the borrowers are underwater. And there STILL exists a pretty large difference between mortgage payments + expenses and rent on a comparable SFR. So, the incentive to walk at the high end – generically – is much greater than that to walk for recent purchasers at the low end.

If I’m a bank (or We the People via Freddie/Fannie), I’d MUCH rather own a 100% LTV loan where the buyer only only put down 3%, but where the ability to save money by walking away and renting is minimal, as opposed to a 125% LTV asset where the buyer originally had some equity but it’s now gone AND where the incentive to walk away and save money by renting is considerable. The collateral position in the latter case is much weaker. And the reason is the disconnect between mortgage + expenses and comparable rents.

[davelj]

[quote=patientrenter][quote=Eugene]
I think that there’s a bit of a disconnect at the high end. If you take one of those condos and pick a SFR in La Jolla that sold for the same price as the condo before the bubble (say, 500k in 2000) … today, the condo may be listed for 650-700k and the house may be listed for 850k.[/quote]

I’d say the greater disconnect is at the low end. The numbers you give are pretty close to the dividing line between Monopoly Money no money down FHA loans and loans that are given by banks backstopped by the FDIC and Fed purchases etc. So one market’s prices are 99% held up by taxpayer money, and the other is held up only 80%. Both still have prices that you’d expect with such an arrangement – crazy high – but the low end is the craziest.[/quote]

Here’s the difference, however. Most of the low-end purchases since the middle of last year result in the owner with a mortgage + expenses that are less than renting. Even with just 3% down. And most of the investors are buying for cash. So, the incentive to walk on these low end purchases is very, very low. Even the homeowners that don’t have much of a down payment aren’t able to save any money by substituting – that is, renting. This was not the case when prices where double where they are now. The ability to walk and save money by renting was huge. And so they did, and continue to do so.

At the high end there are larger down payments. But in many cases that equity is now long gone and the borrowers are underwater. And there STILL exists a pretty large difference between mortgage payments + expenses and rent on a comparable SFR. So, the incentive to walk at the high end – generically – is much greater than that to walk for recent purchasers at the low end.

If I’m a bank (or We the People via Freddie/Fannie), I’d MUCH rather own a 100% LTV loan where the buyer only only put down 3%, but where the ability to save money by walking away and renting is minimal, as opposed to a 125% LTV asset where the buyer originally had some equity but it’s now gone AND where the incentive to walk away and save money by renting is considerable. The collateral position in the latter case is much weaker. And the reason is the disconnect between mortgage + expenses and comparable rents.

[davelj]

[quote=patientrenter][quote=Eugene]
I think that there’s a bit of a disconnect at the high end. If you take one of those condos and pick a SFR in La Jolla that sold for the same price as the condo before the bubble (say, 500k in 2000) … today, the condo may be listed for 650-700k and the house may be listed for 850k.[/quote]

I’d say the greater disconnect is at the low end. The numbers you give are pretty close to the dividing line between Monopoly Money no money down FHA loans and loans that are given by banks backstopped by the FDIC and Fed purchases etc. So one market’s prices are 99% held up by taxpayer money, and the other is held up only 80%. Both still have prices that you’d expect with such an arrangement – crazy high – but the low end is the craziest.[/quote]

Here’s the difference, however. Most of the low-end purchases since the middle of last year result in the owner with a mortgage + expenses that are less than renting. Even with just 3% down. And most of the investors are buying for cash. So, the incentive to walk on these low end purchases is very, very low. Even the homeowners that don’t have much of a down payment aren’t able to save any money by substituting – that is, renting. This was not the case when prices where double where they are now. The ability to walk and save money by renting was huge. And so they did, and continue to do so.

At the high end there are larger down payments. But in many cases that equity is now long gone and the borrowers are underwater. And there STILL exists a pretty large difference between mortgage payments + expenses and rent on a comparable SFR. So, the incentive to walk at the high end – generically – is much greater than that to walk for recent purchasers at the low end.

If I’m a bank (or We the People via Freddie/Fannie), I’d MUCH rather own a 100% LTV loan where the buyer only only put down 3%, but where the ability to save money by walking away and renting is minimal, as opposed to a 125% LTV asset where the buyer originally had some equity but it’s now gone AND where the incentive to walk away and save money by renting is considerable. The collateral position in the latter case is much weaker. And the reason is the disconnect between mortgage + expenses and comparable rents.

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