Foreclosure in La Jolla

[sddreaming]

sdr – what year were those La Jolla comps for? It would be fun to adjust those prices to take into account inflation.

[Bugs]

Umm,

With respect to the La Jolla area, I’d say the truth lies somewhere in the middle. Yes, values did decline significantly, but I think if you used house-to-house comparisons you’d probably see it wasn’t 50%.

I was appraising throughout that entire time period (though admitedly, not a lot of houses) and I’d have pegged it at 35% or perhaps a touch more in La Jolla. There were a few market segments that lost 40% in pricing during the last bust. Enough so that I often wonder why that dip is commonly characterized as being limited to 15%. Based on my experience, -15% off the peak was the exception, not the rule.

As for personal wealth, I think it’s important to take note of how much of that wealth is in the form of RE money or Stock money that is subject to catastrophic losses. Our region has not created that many businesses that are not related to RE or directly benefitted from RE equity. I think that when RE declines, the number of wealthy people will decline at a disproportionate rate; i.e., the percentage of wealthy people will decline faster and farther than the percentage of sales prices. And the stock market may not be the haven people seem to think it is.

[CardiffBaseball]

sdr has never used the forum to conduct business, so much so that I couldn’t get figure out how to contact him a couple of months back about a nice rental that he was going to be placing someone in. Of course he can feel free to harass me by using ell.fall.reds AT gmail.

And for the record, I don’t mind SD Realtor, making his contact info known, more power to him.

[NotCranky]

Baseball guy,
For the record I never said he was conducting business and I begrudge no one for doing that. I was speaking about a bias mentality that seems apparent to me. I have learned a lot form him as well. To his credit he takes challenges well, just either a little evasive or lazy to deal with the nitty gritty.

Sales and marketing is the devils playground …Lots of slippery slopes too.

[sdrealtor]

sddreaming,
They were from 1995. Could you imagine being able to buy homes in LJ at anything close to those prices? Wow, that would really be something I’d be excited about.

Have it w/ the inflation adjustemnts and please post the results.

sdr

[sdrealtor]

jg,
Somehow I believe your feelings are intact at the moment;). Thanks for posting the graph and it pretty much confirms what I thought. The 800K+ median data point was a major league outlier. Heck, it was a HOF outlier. The peak looks like it really was around 650,000 and the trough looks like it was around 450,000 which translates to a nominal loss around 30%. I’d agree that passes the sniff test. A 30% decline in nominal prices would be a very significant fall in prices this time around and coupled with 5+ years of stagnancy like last time would represent real declines around 50%. I’ll buy that.

sdr

[bob2007]

As for personal wealth, I think it’s important to take note of how much of that wealth is in the form of RE money or Stock money that is subject to catastrophic losses. Our region has not created that many businesses that are not related to RE or directly benefitted from RE equity.

Hi Bugs,

I find that I agree with most of your posts, but my experience with you last comments is a bit different. I am involved with many business groups here in town, and very few have their money tied to RE at this time. Again, “at this time”. I know this is not a large cross section, but it does include about 200 people. They made their wealth outside of RE, and sold off the RE assets in 2004, 2005.

There is a LOT of money in other investments that can be moved to RE if a 50% price drop occurred in LJ. Yes, the stock market can have problems, but the investments are diverse. If the price of LJ properties drops like jg says, then those looking for a primary residence are going to be up against investors again as the rent proposition gets better.

On the issue of sdr, I have found his posts useful, and have never felt like he was trolling or forcing BS on the group in any way.

Bob

[Anonymous]

I’m slowly getting over the slight, sdr.

Here’s the plot, again, with a three point moving average.

[img_assist|nid=3435|title=|desc=|link=node|align=left|width=466|height=311]

To me, it looks like peak of $750K in late ’90 and a trough of $425K in early/mid ’96, a nominal decline of 43%.

It will take awhile, but, in my opinion, I expect to see a replay, amplified.

[blahblahblah]

FWIW, I know someone that bought a 2000sf sfh in Bird Rock a couple of blocks from the ocean for ~$350K in 1994. I can’t remember the exact number but it was mid-3s. It had an ocean view from the second story but it also had some “economic obsolescence” as they used to say. All in all an “okay” house but nothing great.

[sdrealtor]

Rustico,
We all have our biases. Its the baggage we carry as a result of life experiences. I try to make mine as apparent as possible so people understand where my seat is positioned. Its always vital top consider the source of any thing you read or hear. I apologize if you feel I’m evasive or lazy. I’m just so busy these days tending to RE matters, 2 other businesses, kids, pets, extended family, the house, landscaping, several large circles of friends etc. The reason my posts are always full of typos is that I never proofread things….just dont have the time. I try to get out what is in my head at a given moment because if I dont I’ll be around the corner picking up my kids from school.

Yikes..gotta run. School lets out in 15 minutes

[PerryChase]

I was young but around in the 1990s and I remember well.
Bugs is pretty much right on as far as same-house declines in La Jolla. On history, I agree with jg — it’ll happen again, in proportion to the run-up.

jg, you’re a student of history yet you support the war on Iraq? What books have you been reading?! You know I’m givin’ you a hard time in a friendly way. Hope you don’t mind. 🙂

[Anonymous]

OFHEO (same house sales over time) does not have a segment for La Jolla, only for San Diego County as a whole.

When I plot OFHEO vs. median price per DataQuick, there is a nice tight fit between the series:

[img_assist|nid=1685|title=|desc=|link=node|align=left|width=466|height=311]

I know folks complain about ‘the median,’ but it seems a good tool — understandable, readily available — for analysis, to me.

So, Bugs, I hear you, but I would say that ‘median’ probably does reasonably approximate ‘same home.’

On Iraq, Perry, as we know, reasonable minds can differ.

[drunkle]

what is the population growth since then? what is the growth of residences?

despite the current slight outflow of people from san diego, since the mid nineties, there must have been a total influx. verses, the absolute amount of land available in la jolla.

if anything, why wouldn’t the north county folks dump their boonietown plaster casts for a spot in the village? traffic is crappy in both locations, might as well have the more “prestigious” zip.

[sdrealtor]

JG,
Glad to hear you are recovering well. I guess you got the flowers.

When I look at the graph I see exactly 2 data points above 700K at the peak time period. In a thinly traded market like LJ at a time when volume fell through the floor, I have a hard time calling a meaningful peak at 750K. If so there was a major recovery in Spring of 1992 that we werent aware of previously. Similarly, I see very little under $450K in the trough. It looks alot more like statistical noise to me as a result of the a possible change in the ditrbution of homes sold rather than a change in pricing. Does the data you purchased have sales volumes? Not that you dont have plenty to do but I’d be interested to see what that looked graphically.

The good news is that I see a 4 year trough between mid 92 and mid 96 where prices were at a pretty consistent level. Assuming, as you expect, that we see the samething happen again, that would give you plenty of time to find the “right house” rather than “any house” when things are at or near the bottom.

[DaCounselor]

“I remember a pretty nice house in Bird Rock going to the court house steps at 165k. I don’t know what it went for but those were indeed crazy times.”
_________________________

I doubt anything sold for anywhere near that amount in Bird Rock in the mid-90’s trough. Too low. I was perusing homes in the area during that time frame in the $400-500K range – 3/2, less than 2000 sq. ft., modest and in need of some sprucing up. I don’t doubt that some fixers sold for under $400K.

Looking at let’s say $450K in the mid-90’s – that probably equates to about $600K today. Jumbo mortgages back then were pressing 9%. I haven’t run the numbers, but I would guess that a trough of around $800K today would equate to an estimated $450K trough in the mid-90’s – conventional financing, apples to apples of course.

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