Impact of foreclosure in prices

[Farls]

Poppa,
I already knew you were an experienced agent….as I said so in my last post. I agree that if you’ve done that many deals you have to be good at it…..I think you’re a master at spinning the information in the direction that it helps you best…and helps your paycheck the best. As shown by you saying that prices are still increasing…just not as much now.

I was surprised how strong you came on pimping your own websites….and saying that prices have still been increasing.

So, when you were working with your buyers and sellers today were you telling them the same thing? Or were you telling your buyers that prices are increasing and they should buy fast…while telling your sellers that prices are declining and they need to price their homes aggressively? Did you tell them there’s no such thing as a housing bubble? Are you doing their loans too?

I don’t think a 3-hour ethics course at the Board of Realtors office automatically gives someone great ethics…You either have them or you don’t. I feel just fine with my ethics….

Why would you attack my web name? Sorry it’s not as creative as yours…

But, thanks for replying and happy fathers day tomorrow.

[waiting hawk]

why would realtors want to come and argue on a site like this? How come they arent on NAR’s forums or what not?

[North County Jim]

High end tract homes ($1M to $1.5M) in Encinitas and South Carlsbad.

Absolutely correct SDR. La Costa Greens is getting crushed. Check out the history on 6857 Citrine Drive.

What do you think their final loss will be on this investment?

[docteur]

NCJ – Thnaks for your responses.

Please support your statements with data and list it with your post.

I am not an active realtor and use a title service for information. I could find nothing on that address that supports your statement that “La Costa Greens is getting crushed.”

I would really appreciate it if all of us could leave the emotion out of these discussions and simply present our findings. Then each and everyone of us can draw our own conclusions based on what is going on as it pertains to our own particular set of circumstance and locale.

Let’s stop this incessant editorializing and just present the facts. Like Rich states: “In God we Trust. Everyone Else Bring Data.” And I might add, bring enough of it to present a convincing argument that supports your position on any given issue. One or two instances of something happening (or worse, possibly going to happen) does not make it so.

Blanket statements (BS) with no backup are just that, BS.

[docteur]

Error.

[North County Jim]

Okay doc, crushed might be a poor choice of words. Let’s say the market in LCG is less than healthy from a seller’s standpoint.

The house on Citrine I alluded to was purchased from Pulte Homes in October for $1.316 million. The owners immediately tried to flip it with an initial asking price of $1.4-1.7 million.

Their biggest problem is they’re competing against Pulte who has reduced their asking prices to move inventory. If you have access to sales data that would disprove the discounting, please share.

To make a long story short, they’re now asking $1.3 million and it doesn’t look like they’ll get that much with Pulte selling two competing and larger units through the MLS for less.

While LCG as a whole may not be getting crushed, I think it’s fair to say that anyone who has bought and tries to sell will get crushed.

[docteur]

Thanks for clarifying that.

I have “flipped” properties successfully (never homes though, always land or commercial pieces that were obviously undervalued due to economic mismanagement) but was always prepared to hold the property and operate it profitably if I couldn’t realize my intended profit.

I would never take on a deal entertaining the notion that I might lose money with it, by either selling at a loss or operating it with negative cash flow. The “flip mentality” that surfaced in this last run-up of residential real estate values was very dangerous to the novice real estate “investor” (almost everyone in the market recently), if you can even use that word with a house flipper.

I am simply amazed at how cavalier some people are thinking they can get rich quick, especially in a market that is obviously topping or at best slowing considerably. I guess it’s the greater fool theory gone awry.

Loss is always a consequence of greed. And in real estate, as with any investment, good planning (always with a fall back position) along with precise timing is everything.

[Anonymous]

“Resale (median) house prices actually set a record last month, UP $19,500 from May 2005, DataQuick said.” This item was buried in SDUT today on page B4 below the fold. Their headline is “COUNTY HOME PRICES SUFFER RECORD DROP”

Incorrect, derogatory headlines make realtors steam.

Yes, there many price drops on individual homes. It is part of the market process wherein Sellers Greed IS trumped by Buyers AWARE. This is most evident in shifting housing markets over the years. (Did Shiller ten years ago shout “Buy now, a growth bubble is developing!?”)

Thanks, Docteur. When ethical realtors, lenders, title, escrow bring ALL details together, precise timing and “facts” are ultimately supported by trust BETWEEN buyers and sellers at COE. Both of them often DO THANK GOD when it’s done!

[sdrealtor]

PK,
Who cares what prices did compared to 1 year ago when they just reported at 15K drop from LAST MONTH. You are scary.

Hope everyone had a HAppy Fathers Day!

[powayseller]

Bugs, could you tell us again how the last downturn varied among neighborhoods? I remember some areas went down more than others. Were any areas immune?

[Bugs]

No areas were untouched. The properties in Rancho Santa Fe and La Jolla were still among the most desirable in the county but they still declined some. Just not nearly as much as the less desirable market segments.

In general, the areas that will probably get hurt the worst will be those that are farthest from meaningful employment. “Farthest” in this case being measured by commute times as well as distance. Unlike some people here, I don’t think Carmel Valley is at nearly as much risk as parts of East Carlsbad and San Elijo, ’cause of how easy it is to get to Hwy-56 and points south. Depending on traffic you can make it into Sorrento Valley in 10 minutes and Downtown in 25 minutes. Valley Center and Ramona are vulnerable because it takes 30 minutes just to get to a freeway.

The lower end should be more stable than everything above it except for the extreme upper end where buyers are coming in from out of town with cash. I say “should be” but I note the disproportionate slowdon in the lower end at these prices, possibly because of buyer exhaustion.

I would say that older homes will do worse than newer homes in the same price ranges, but the older homes are generally located in areas that were developed first because they were more proximate to employment.

What’s going to be interesting about the new homes is that the developers have been using the same pricing and sales tactics as car dealers – I think it’s possible that some of those buyers may end up taking a “new car discount” after having driven their homes around for a couple years. The base price of a new home is for a model nobody wants, and the retail markup on the upgrades and options is a separate profit center in itself. It’s been my experience that the difference in upgrades packages between homes may start off at 10% or even 15% of the total, but that spread generally disappears in the market within 5 years. So we’ll see how much of a return a homeowner gets in exchange for their $250,000 landscaping costs that includes the outdoor kitchen and “tropical paradise”. It may end up being as little as 10 cents on the dollar.

[sdrealtor]

Bugs,
For the record, i too believe Carmel Valley will fare muc better than most areas because of proximity. However, I dont believe it will be immune.

[rhinopham]

sdrealtor,
I’ve been following this thread for months now and love your thoughtful analyses. My wife and I have been renting for the past 2 yrs and waiting for the market to cool down before buying our first house. I am looking for a realtor who is realistic and honest about the market and was wondering if you’re taking clients. Please contact me via my personal address: [email protected]. Thanks again.
ryan

[powayseller]

I see that Poway homes are still selling pretty fast. Does anyone have an analysis of Poway price drops?

Nonetheless, if a Poway house worth $700K in 2000 is worth $1.4mil today, is that house likely to be worth $900K in 2009? What would make it keep its $1.2-1.3 mil price tag, despite the popularity of Poway? I’m thinking of the Grove and homes near Lake Poway in gated Bridlewood. How much will those drop?

Also consider how pricing will change in the upper ranges of Poway, in the multi-million dollar homes in Maderas and Lomas Verde Estates.

I’ve followed Poway foreclosures and I can tell you that most foreclosures are in the lower priced neighborhoods, where homes are under $600K. I found less than 5 homes in NOD status in the +$ 1 mil range. However, they do exist in Poway and La Jolla.

As far as Carmel Valley, which people believe is immune from foreclosure, I took the liberty of checking foreclosure.com. Zip code 92130 lists 168 tax liens, 13 bankruptcies, 42 preforeclosures, and 3 foreclosures. This is a sample of some of the larger homes in 92130.

Please correct me if these addresses are not the proper ones.

FORECLOSURE
5255 Vallery Ct, 6 br/5ba, 3656 sq ft, Timothy Kaler, also filed bankruptcy

PREFORECLOSURE

13166 Sunset Point Way, 5/4.5, 3922sq ft, William Welsome, amt of defaulted lien $972K

5136 Meadows Del Mar, 6/7.5, 6555 sq ft, orig loan amount $3.6 mil. This one is now inactive, but did at one point fall far enough behind to have a NOD filed.

13267 Larkfield Ct
Four homes on Meadows del Mar (right on the golf course?)

TAX LIEN
13425 El Presidio Way, Jeffrey and Melissa Clagg

I think it’s safe to say that people of all income levels are overextended. The lower income people are quicker to go into default, since they don’t have as good access to credit and savings to bring their payments up to date. I wonder how long the inactives can go before they become Active again…

If anyone has any requests for their zip code, let me know. Poway is full of NOD and foreclosures, too.

[sdrealtor]

It looks like the folks on El Presidio were able to sell for a nice profit and bail themselves out in March. As for Sunset Point, that one hasnt hit the market yet.

BTW, I think it is inappropriate and meanspirited to post the names of the homeowners here. An address like XXX3 Sunset Point would have been more than sufficient to prove your point.

[Author]

Posts