how low can it really go?

[urbanrealtor]

On this topic, there are several places in my complex that pull rent of 1100/mth and are for sale for 135k. The HOAs are 233/mth. This means that the effective rent is 867/mth. At full asking that is a 7.7% return. At 110k that is a 9.4% return. The last one to close (an REDC auction) closed at 105k. This is about 10% return. While 105 seems low, I think the 110k is where we are headed.

At the current asking prices, we are seeing offers and closings happen regularly.

[Bugs]

FYI, for those of you who consider yourselves property barons in training, we’re rapidly getting to the point where rents pencil on residential properties here in SD County. I’ve seen some 3-4 unit properties in a couple areas that are now selling for 100x monthly rents. A handful have sold even lower than that. To get there, their REO resale prices have been coming in 40% – as much as 50% below their prior sales at the top of the market.

And the bulls said it would never happen here. LOL

Different market segments will arrive their respective trigger points at different times. After a certain point the availability and terms of mortgage financing is going to be more of a factor than whether the sale prices have reached absolute bottom.

As TG said, if you think the prices are within 10% or 15% of their eventual bottom then maybe you really should consider the merits of the bird in hand.

[Bugs]

FYI, for those of you who consider yourselves property barons in training, we’re rapidly getting to the point where rents pencil on residential properties here in SD County. I’ve seen some 3-4 unit properties in a couple areas that are now selling for 100x monthly rents. A handful have sold even lower than that. To get there, their REO resale prices have been coming in 40% – as much as 50% below their prior sales at the top of the market.

And the bulls said it would never happen here. LOL

Different market segments will arrive their respective trigger points at different times. After a certain point the availability and terms of mortgage financing is going to be more of a factor than whether the sale prices have reached absolute bottom.

As TG said, if you think the prices are within 10% or 15% of their eventual bottom then maybe you really should consider the merits of the bird in hand.

[Bugs]

FYI, for those of you who consider yourselves property barons in training, we’re rapidly getting to the point where rents pencil on residential properties here in SD County. I’ve seen some 3-4 unit properties in a couple areas that are now selling for 100x monthly rents. A handful have sold even lower than that. To get there, their REO resale prices have been coming in 40% – as much as 50% below their prior sales at the top of the market.

And the bulls said it would never happen here. LOL

Different market segments will arrive their respective trigger points at different times. After a certain point the availability and terms of mortgage financing is going to be more of a factor than whether the sale prices have reached absolute bottom.

As TG said, if you think the prices are within 10% or 15% of their eventual bottom then maybe you really should consider the merits of the bird in hand.

[Bugs]

FYI, for those of you who consider yourselves property barons in training, we’re rapidly getting to the point where rents pencil on residential properties here in SD County. I’ve seen some 3-4 unit properties in a couple areas that are now selling for 100x monthly rents. A handful have sold even lower than that. To get there, their REO resale prices have been coming in 40% – as much as 50% below their prior sales at the top of the market.

And the bulls said it would never happen here. LOL

Different market segments will arrive their respective trigger points at different times. After a certain point the availability and terms of mortgage financing is going to be more of a factor than whether the sale prices have reached absolute bottom.

As TG said, if you think the prices are within 10% or 15% of their eventual bottom then maybe you really should consider the merits of the bird in hand.

[Bugs]

FYI, for those of you who consider yourselves property barons in training, we’re rapidly getting to the point where rents pencil on residential properties here in SD County. I’ve seen some 3-4 unit properties in a couple areas that are now selling for 100x monthly rents. A handful have sold even lower than that. To get there, their REO resale prices have been coming in 40% – as much as 50% below their prior sales at the top of the market.

And the bulls said it would never happen here. LOL

Different market segments will arrive their respective trigger points at different times. After a certain point the availability and terms of mortgage financing is going to be more of a factor than whether the sale prices have reached absolute bottom.

As TG said, if you think the prices are within 10% or 15% of their eventual bottom then maybe you really should consider the merits of the bird in hand.

[nostradamus]

You’re right bugs I have seen some things that pencil out but at the same time we have a bunch of people buying in areas like Mira Mesa and Clairemont. IMO they are exhausting their resources on lower quality purchases and if/when much nicer homes start to hit the market at reduced prices there will be much less competition. I’d rather be a slum lord in a nice area than a slum lord in a real slum (not saying MM or C is a slum). Inventory in nicer areas is increasing while inventory in poorer areas is decreasing.

[nostradamus]

You’re right bugs I have seen some things that pencil out but at the same time we have a bunch of people buying in areas like Mira Mesa and Clairemont. IMO they are exhausting their resources on lower quality purchases and if/when much nicer homes start to hit the market at reduced prices there will be much less competition. I’d rather be a slum lord in a nice area than a slum lord in a real slum (not saying MM or C is a slum). Inventory in nicer areas is increasing while inventory in poorer areas is decreasing.

[nostradamus]

You’re right bugs I have seen some things that pencil out but at the same time we have a bunch of people buying in areas like Mira Mesa and Clairemont. IMO they are exhausting their resources on lower quality purchases and if/when much nicer homes start to hit the market at reduced prices there will be much less competition. I’d rather be a slum lord in a nice area than a slum lord in a real slum (not saying MM or C is a slum). Inventory in nicer areas is increasing while inventory in poorer areas is decreasing.

[nostradamus]

You’re right bugs I have seen some things that pencil out but at the same time we have a bunch of people buying in areas like Mira Mesa and Clairemont. IMO they are exhausting their resources on lower quality purchases and if/when much nicer homes start to hit the market at reduced prices there will be much less competition. I’d rather be a slum lord in a nice area than a slum lord in a real slum (not saying MM or C is a slum). Inventory in nicer areas is increasing while inventory in poorer areas is decreasing.

[nostradamus]

You’re right bugs I have seen some things that pencil out but at the same time we have a bunch of people buying in areas like Mira Mesa and Clairemont. IMO they are exhausting their resources on lower quality purchases and if/when much nicer homes start to hit the market at reduced prices there will be much less competition. I’d rather be a slum lord in a nice area than a slum lord in a real slum (not saying MM or C is a slum). Inventory in nicer areas is increasing while inventory in poorer areas is decreasing.

[peterb]

If you examine the last two RE cycles we’ve had here in SD county, the greatest factor to indicating a rise in RE prices has been declining unemployment. Even with high interest rates and other factors, when unemployment goes much below 6%, we start to prices stabilize and then rise.

Right now we have more foreclosures entering the market and liar loans (Alt A) about to join the party…couple this with rising unemployment and we’ve got more room for price declines. There’s very little, if any, evidence of this trend subsiding for the next 12 months.

Having said this, home prices have a historical average in SD County of about 5 times annual income. These are mediums, of course. But if you are considering buying a home that’s 3 times your annual income and you have stable income, then you would be paying a multiple that’s more common in KS than CA.

[peterb]

If you examine the last two RE cycles we’ve had here in SD county, the greatest factor to indicating a rise in RE prices has been declining unemployment. Even with high interest rates and other factors, when unemployment goes much below 6%, we start to prices stabilize and then rise.

Right now we have more foreclosures entering the market and liar loans (Alt A) about to join the party…couple this with rising unemployment and we’ve got more room for price declines. There’s very little, if any, evidence of this trend subsiding for the next 12 months.

Having said this, home prices have a historical average in SD County of about 5 times annual income. These are mediums, of course. But if you are considering buying a home that’s 3 times your annual income and you have stable income, then you would be paying a multiple that’s more common in KS than CA.

[peterb]

If you examine the last two RE cycles we’ve had here in SD county, the greatest factor to indicating a rise in RE prices has been declining unemployment. Even with high interest rates and other factors, when unemployment goes much below 6%, we start to prices stabilize and then rise.

Right now we have more foreclosures entering the market and liar loans (Alt A) about to join the party…couple this with rising unemployment and we’ve got more room for price declines. There’s very little, if any, evidence of this trend subsiding for the next 12 months.

Having said this, home prices have a historical average in SD County of about 5 times annual income. These are mediums, of course. But if you are considering buying a home that’s 3 times your annual income and you have stable income, then you would be paying a multiple that’s more common in KS than CA.

[peterb]

If you examine the last two RE cycles we’ve had here in SD county, the greatest factor to indicating a rise in RE prices has been declining unemployment. Even with high interest rates and other factors, when unemployment goes much below 6%, we start to prices stabilize and then rise.

Right now we have more foreclosures entering the market and liar loans (Alt A) about to join the party…couple this with rising unemployment and we’ve got more room for price declines. There’s very little, if any, evidence of this trend subsiding for the next 12 months.

Having said this, home prices have a historical average in SD County of about 5 times annual income. These are mediums, of course. But if you are considering buying a home that’s 3 times your annual income and you have stable income, then you would be paying a multiple that’s more common in KS than CA.

[Author]

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