Foreclosure in La Jolla

[Anonymous]

sdr, the La Jolla median prices are from DataQuick; I purchased data on median prices and number of sales for resale homes for both San Diego and La Jolla from them last year. That was the basis for the analyses that I did last year and posted here.

What colors my view is the underlying economics: I see household debt to income levels at all time highs; I see negative savings for the first time in 70 years; I see massive credit fueling bubble prices in many, many assets. We saw personal consumption (71% of GDP) growth go negative in March. We’ll see if such continues in April and May.

I’m a big fan of history, and am a voracious reader. Tom Wolfe (the old one, not the current one) described life in North Carolina in the ’20s in ‘You Can’t Go Home Again’ — folks making money hand over fist selling real estate to each other. Then, he described the collapse.

This sure feels and reads like the Roaring ’20s to me. Specifically, with consumption falling, now, it feels like September ’29.

Stock prices fell 86% during the ’30s and home prices (purportedly) fell 80%. Gold mining companies rose 6X.

I think this is what we have before us.

[NotCranky]

Masayko,
I was hoping someone would make that comparison.
Best Wishes, Your day will come

[sdrealtor]

Rustico,
Sorry but you are completely off base. I am a bear not a bull and believe prices will fall. I wouldnt be here if I didn’t. My question for JG re: La Jolla was whether the low median price he quoted of 395K was representative or just yet another problem with using median price data. Those of us who have been around here for a long time fully understand the weakness of the using a median price yet occassionally one of us will pull it out to justify what we believe. If you read my message you will see I said ther was no individual tx data prior to 1995 but wished that there was so we could examine what really happened.

I wasnt taunting JG at all, at least that wasnt my intention. I posted a hypothesis and then went back to test it providing some examples of pricing as far back as I could get. Frankly, I dont think there is person on this board that wouldnt love to see those prices in LJ again, present company included.

RE: CV for inventory of SFR’s to drop 10% through the 1st 2 weeks of May is not insignificant. It is a sign that supply and demand are far more in balance than many of us, myself included, hoped for. I report on what I see not what I hope for. What I hope for is extraordinarily strong affordability so all the great folks out here with solid careers can afford to live in the type of neighborhoods they really deserve and provide their families the type of environment I’ve been fortunate enough to land in. Believe me, i’m no genius and I truly feel blessed to have what I do.

Lastly, you are completely off base with the outing of Powayseller. I NEVER did that….NEVER. She stepped forward and made herself public out of choice.

[sdrealtor]

There is defintely a difference between us. I am not here to make friends or gain clients. I am here to learn, to share with others who want a taste of the cold reality (good or bad) that is happening on the streets and to have a little fun. SD R, who I have never met but like and respect, is here for different reasons.

[sdrealtor]

jg,
I hope you got the gist of my post last nite and suspect you are sharp enough to get it. The thought of being able to buy an 8000 sq ft ocean view home on an acre in LJ Farms for less than $2M sends goose bumps down my spine as I’m sure it does for you.

I see all the negative signs you do and am constantly amazed how we got here and how we have been able to stay here. It really defies any logic. On the otherhand, I am also amazed by the number of ordinary people I run into everyday who have accumulated significant wealth and liquid assets. For every wingnut living the high life with an Option ARM I see a high earning professional or business owner living well within their means. I look at Del Mar, where there are about 15 to 20 decent properties available under $2M each year and know that there are alot more people than that looking for one.

Comparing to life in the 20’s, I have nothing to support this but suspect that wealth is far more spread out than at that time when the only wealthy people were the industrialists. I dont know how this will play out and my crystal ball only extends out 6 months to 1 year at a time but whichever way it goes I hope you reach all your goals.

[4plexowner]

When I was trying to decide whether to keep or sell my investment real estate I looked into what rents did during the depression

From what I could tell, they dropped significantly when the economy tanked in the late 20’s / early 30’s

It was 1948 before rents started to recover and rise again

Yep, almost 20 years where being a landlord was NOT the place to be

~

In San Diego we have some factors that will contribute to a drop in rental rates:

> 3400 condos coming online downtown in the next 18 months – the market is already in a glut condition

> 30-40% of listings on the MLS are vacant – these units will become rentals at some point (housing that won’t sell becomes rentals)

> net out-migration of educated salary earners – these are the people who MIGHT be able to afford San Diego entry-level homes and they are leaving the city

~

I no longer own any investment real estate

[sdduuuude]

You know, rustico – just let it go.
You are harping on sdrealtor for no reason.

He has been here a long time and always provides an interesting angle so – a little respect, please.

[NotCranky]

You are not a bear or a bull you are a dishonest Salesman. I am sorry I spoke for JG at all, his last post was fantastic. I thought he might be one of the less experienced types you BS. He handled it real nicely for himself. Look,I know your’e not going to stop doing what you do. Have at it. As far a SD Realtor if he is working the blog more power to him(If that is what you are saying). I like him in front of our Industries trademarks. I wish I was more of his demeanor myself at times. I won’t last long around here it would be bad for my health given my temper and how the anonymity of the WEB seemingly encourages outrageous behavior.
Best wishes.

[NotCranky]

Here come the dogs!

[NotCranky]

4plex,
I am not second guessing what you did but I do think about this topic fequently and I would like to share my point of view. I think the chance that the worst recession in our life times is knocking a the door is good. Will rental income become challenge? It seems that rentals will always carry some relative weight in the economy. I like them if they are not extremely leveraged and especially if they can be covered by other assets. But, I have a low tolerance for risk. If the rental or rental portfolio was leveraged I would dump it.In the case of a depression If one was in good shape with debt ..depending on their other resources and abilty to gain income,which could become pretty sketchy of course, the rentals might be their best source of obtaining necessities and helping friends and family out or both? As far as the migration issue goes maybe California has tidal efect on both the west and the east cost? Tide goes out tide goes in. People want to be back here and people have always wanted to come here for the first time.I think that will give our economy some support.Hopefully businesses will obey the tide theory to some degree.I hope policy makers are bright enough to try to facilitate it too. Maybe you or someone else has ideas? An aside… I have a friend who is way up there in years . He said his dad bought hotels on the California coast during the depression, after it had hit hard of course,He rented them out to nearly busted single men and made a killing. Some people make money at whatever they do he says!

[Anonymous]

4plex, I’m with you: I gently recommended to my father-in-law that he sell his investment properties (apartment complex, strip mall, industrial park), but to no, avail, yet.

I think rents are going to get hard for exactly the reasons that you list.

[sdrealtor]

Rustico,
Sorry you feel that way but I am neither dishonest nor a salesman around here. I tend to be bearish but I constantly challenge my beliefs. I provoke people to question their assumptions and look for answers. The beauty of the web is that we can challenge each others viewpoints without ending up in each others face. I never take anything personally around here and hope no one does either though i suspect some do. To me it is a wonderful outlet for learning and a virtual version of Trump’s Boardroom entertainmentwise.

SD Realtor has never stated his reasons for being here and I suspect they are different than mine. At first it annoyed me that he was prospecting but it doesnt bother me anymore. The truth is he is a far more agressive prospector than myself and I think thats great. He’s trying to support his family and get somewhere in life. I hope he succeeds because he seem’s to be a real good guy.

[SD Realtor]

masakayo I am enjoying the posts… I do have to say though, that I just closed a transaction in Carmel Valley…

SD Realtor

[SD Realtor]

My motivations for being here are that I enjoy the site. Of course I am prospecting sdr, but I believe my posts and viewpoints add value to this website. You and I have had many debates. We have vast differences in opinions on things but we also agree on many topics as well. Eventually I tire of the debates and let you have the last word. I had typed up a long diatribe arguing the points you had in the foreclosure thread but we could literally go on forever.

I think our most substantial agreement is on the conditions of the market at present and moving forward. Maybe I interpret your statements differently because I see what is going on daily from the realtor side of the channel.

My only issue is that sometimes both of us lump each other in with the majority of our brethren. For instance you lump me in with the behavior/performance of the majority of discounters when that is not true. For instance for properties that I DEEM IT helpful, I do hire a professional photographer and go for the caravans. Similarly, while you put in 2k worth of marketing before your MLS listings hit the market, I can honestly say that is not nearly true with the majority of other full service providers. So when we debate about the merits of the two different models, I think that my points are trying to point out the behavior I see in the majority of full service providers, not necessarly you.

I try not prospect in an obnoxious manner. I try to post helpful points and add value for people here. I will say I get an email a week or so from lurkers or posters here, asking for clarifications about how rebates work and such. Those people do not use me for business but they use me to get leverage with the agents they are working with.

SD Realtor

[Anonymous]

sdr, my feelings are hurt, hurt that you accuse me of data mining/selective data sharing.

Sure, I picked the top and bottom to illustrate my point. But, there is no doubt that there’s a nice drop in median prices for resale homes in La Jolla from $600-800K in mid ’91 to $400-500K over mid ’93 through mid ’96.

[img_assist|nid=3433|title=|desc=|link=node|align=left|width=466|height=311]

Source: DataQuick

I feel comfortable that the pain of significantly falling prices will return to my neck of the woods. And, that it will be worse this time around, due to the weak (recession, moving to depression) national economics.

[Author]

Posts