Foreclosure in La Jolla

[Anonymous]

You want sales, you’ve got sales (in red), sdr (and, thank you for the flowers, kind sir).

[img_assist|nid=3437|title=|desc=|link=node|align=left|width=466|height=311]

Remember the relationship: sales (red) decrease for 2-3 years, then prices (black) fall. So, it is not surprising that peak prices correlate with weak sales.

Then, in the upturn, sales increase, and prices increase shortly thereafter (shorter lag on the upturn).

And, I agree with you completely, that when things are bad (as they were in the mid ’90s), there will be plenty of time (years) to pick from the inventory before prices start consistently moving north, again.

[sdrealtor]

Thanx JG,
Weak sales also result in a smaller sample subject to outlier effects. The 850K peak point corresponds with what looks like a 50% decline in teh number of sales. I’m ready to throw that data point out of the mix as an outlier.

I think plenty of time at or near the bottom is a good thing as your timing has been less than perfect this time around. Badabadum! (rimshot)

[Anonymous]

The year is young, grasshopper. I look forward to doing an investment return tally at the end of the year. I feel very comfortable in my choices.

[Anonymous]

Remember, sdr, this is not a ‘sample,’ but in fact the ‘universe’ of sales for La Jolla, by month.

The sales are an actual count of the closings, and the median is in fact the median of the actual closing prices. No samples involved.

The peak is what it was, the trough is what it was.

I stand by my statement that, factually, median prices for resale homes fell over 50% in La Jolla during the last downturn. Not too difficult to believe, given that there are lots of examples in recent history of specific La Jolla homes appreciating by over 100%.

[Bugs]

“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.”

I thought about that and decided I’d look some numbers up. The $165k was clearly too low, but I didn’t remember a lot of $500k sales during that time frame.

Public records currently list 67 properties in the 1200-2000 SqFt category that sold the Bird Rock area between 01/1993 and 01/1997. Of the 67, 5 of them sold above $500,000; 11 of them sold between $400,000 – 500,000; and 36 of them sold between $300,000 to $400,000; and 13 of them sold for less than $300,000.

By my count, more Bird Rock area properties sold between $300k – $400k than all other price ranges combined.

I tried to parse it a little further to pin it down, but I kept coming up with roughly 50/50 distribution all through the 300-400 range. That indicates to me that the median is probably at or close to $350k.

[sdrealtor]

jg,
I think we are splitting hairs now. Perhaps after this coming cycle with the benefit of hindsight one might be able to find data points illustrating a 50% median decline but that doesn’t mean a specific house lost that much. The median is a rough measure and I think we need to be a bit more pragmatic. I’d say it was safe to say that around the prior peak there was an extended period of time whereby the median home price was around 650 and at the trough there was an extended period of time whereby it went down to around 450 representing a nominal decline of around 30%. Given all this, if history repeats itself nominal declines of 30% are forthcoming and it is reasonable to assume you will be able to find one with a decline fo that magnitude.

sdr

[Bugs]

Except for the fact that this recent boom was about 3 times farther over the long term trend than the last boom was.

[sdrealtor]

I defitinely agrre with that one Bugs. My point really boils down to the fact that you buy a house not a statistic. The peak is seldom a single point in time nor is the trough. With a straight thinking mind and good help, you should be able to match or even beat the market. Personally, I always take it as a challenge to help my clients beat the market whatever it might be.

[Author]

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