Is 25 – 30% off a good deal?

[4plexowner]

(at least) 25% of our local economy is real estate related

how could a real estate downturn not spill over into the rest of the economy?

when General Dynamics left town the statistic being floated was that every engineering job that left town meant that two 7-11 clerk type jobs (retail/service industry) left town as well

people working in the RE industry have been making engineering-level incomes (or better) for several years – when they lose their income stream there WILL be a spillover effect

[Bugs]

According to the U.S. Census Bureau, median household income in San Diego County was $39,497; median household income for 2004 was $51,939. This represents a 24% increase in incomes over those 7 years. That’s a 4% annual increase that occurred during the biggest RE boom of our time. Assuming 2005 and 2006 added another 4% each year we’d be up to about $56,000 in 2006 but probably a little less in 2007. I don’t think anyone here would disagree that losing all those lucrative RE-related jobs is going to cut into our regional income averages.

Anyways, the difference in income between $39,497 and the extrapolated $56,000 for 2006 is about 30%. Add 30% onto a 1997 price and that would represent what it could look like if we assume the same level of damage at the bottom of this cycle. Obviously, less damage would result into a higher adjusted value, but more damage would result in a lower adjusted value.

Assuming a $211,000 average sale price in 1997, the income-adjusted equivalency adjusted price would come in at $274,300. Bear in mind, that may not be the worst case scenario, just as it isn’t the best case scenario.

The average sale price (attached+detached) reported in the MLS for 2006 was $617,074. 50% off of that would be $308,537, which is significantly higher than the income-adjusted “could be” value of $274,300.

Mortgage interest rates will play a significant role in pricing, and nobody here knows where interest rates will be by the time this is all over and all those losses are finally booked. Suffice it to say that any expectation of sub-7% interest rates probably isn’t reasonable at this time.

[Bugs]

According to the U.S. Census Bureau, median household income in San Diego County was $39,497; median household income for 2004 was $51,939. This represents a 24% increase in incomes over those 7 years. That’s a 4% annual increase that occurred during the biggest RE boom of our time. Assuming 2005 and 2006 added another 4% each year we’d be up to about $56,000 in 2006 but probably a little less in 2007. I don’t think anyone here would disagree that losing all those lucrative RE-related jobs is going to cut into our regional income averages.

Anyways, the difference in income between $39,497 and the extrapolated $56,000 for 2006 is about 30%. Add 30% onto a 1997 price and that would represent what it could look like if we assume the same level of damage at the bottom of this cycle. Obviously, less damage would result into a higher adjusted value, but more damage would result in a lower adjusted value.

Assuming a $211,000 average sale price in 1997, the income-adjusted equivalency adjusted price would come in at $274,300. Bear in mind, that may not be the worst case scenario, just as it isn’t the best case scenario.

The average sale price (attached+detached) reported in the MLS for 2006 was $617,074. 50% off of that would be $308,537, which is significantly higher than the income-adjusted “could be” value of $274,300.

Mortgage interest rates will play a significant role in pricing, and nobody here knows where interest rates will be by the time this is all over and all those losses are finally booked. Suffice it to say that any expectation of sub-7% interest rates probably isn’t reasonable at this time.

[Bugs]

According to the U.S. Census Bureau, median household income in San Diego County was $39,497; median household income for 2004 was $51,939. This represents a 24% increase in incomes over those 7 years. That’s a 4% annual increase that occurred during the biggest RE boom of our time. Assuming 2005 and 2006 added another 4% each year we’d be up to about $56,000 in 2006 but probably a little less in 2007. I don’t think anyone here would disagree that losing all those lucrative RE-related jobs is going to cut into our regional income averages.

Anyways, the difference in income between $39,497 and the extrapolated $56,000 for 2006 is about 30%. Add 30% onto a 1997 price and that would represent what it could look like if we assume the same level of damage at the bottom of this cycle. Obviously, less damage would result into a higher adjusted value, but more damage would result in a lower adjusted value.

Assuming a $211,000 average sale price in 1997, the income-adjusted equivalency adjusted price would come in at $274,300. Bear in mind, that may not be the worst case scenario, just as it isn’t the best case scenario.

The average sale price (attached+detached) reported in the MLS for 2006 was $617,074. 50% off of that would be $308,537, which is significantly higher than the income-adjusted “could be” value of $274,300.

Mortgage interest rates will play a significant role in pricing, and nobody here knows where interest rates will be by the time this is all over and all those losses are finally booked. Suffice it to say that any expectation of sub-7% interest rates probably isn’t reasonable at this time.

[Bugs]

According to the U.S. Census Bureau, median household income in San Diego County was $39,497; median household income for 2004 was $51,939. This represents a 24% increase in incomes over those 7 years. That’s a 4% annual increase that occurred during the biggest RE boom of our time. Assuming 2005 and 2006 added another 4% each year we’d be up to about $56,000 in 2006 but probably a little less in 2007. I don’t think anyone here would disagree that losing all those lucrative RE-related jobs is going to cut into our regional income averages.

Anyways, the difference in income between $39,497 and the extrapolated $56,000 for 2006 is about 30%. Add 30% onto a 1997 price and that would represent what it could look like if we assume the same level of damage at the bottom of this cycle. Obviously, less damage would result into a higher adjusted value, but more damage would result in a lower adjusted value.

Assuming a $211,000 average sale price in 1997, the income-adjusted equivalency adjusted price would come in at $274,300. Bear in mind, that may not be the worst case scenario, just as it isn’t the best case scenario.

The average sale price (attached+detached) reported in the MLS for 2006 was $617,074. 50% off of that would be $308,537, which is significantly higher than the income-adjusted “could be” value of $274,300.

Mortgage interest rates will play a significant role in pricing, and nobody here knows where interest rates will be by the time this is all over and all those losses are finally booked. Suffice it to say that any expectation of sub-7% interest rates probably isn’t reasonable at this time.

[Bugs]

According to the U.S. Census Bureau, median household income in San Diego County was $39,497; median household income for 2004 was $51,939. This represents a 24% increase in incomes over those 7 years. That’s a 4% annual increase that occurred during the biggest RE boom of our time. Assuming 2005 and 2006 added another 4% each year we’d be up to about $56,000 in 2006 but probably a little less in 2007. I don’t think anyone here would disagree that losing all those lucrative RE-related jobs is going to cut into our regional income averages.

Anyways, the difference in income between $39,497 and the extrapolated $56,000 for 2006 is about 30%. Add 30% onto a 1997 price and that would represent what it could look like if we assume the same level of damage at the bottom of this cycle. Obviously, less damage would result into a higher adjusted value, but more damage would result in a lower adjusted value.

Assuming a $211,000 average sale price in 1997, the income-adjusted equivalency adjusted price would come in at $274,300. Bear in mind, that may not be the worst case scenario, just as it isn’t the best case scenario.

The average sale price (attached+detached) reported in the MLS for 2006 was $617,074. 50% off of that would be $308,537, which is significantly higher than the income-adjusted “could be” value of $274,300.

Mortgage interest rates will play a significant role in pricing, and nobody here knows where interest rates will be by the time this is all over and all those losses are finally booked. Suffice it to say that any expectation of sub-7% interest rates probably isn’t reasonable at this time.

[Jumby]

Ex-SD, while I generally agree with most of your posts on this thread, I live in Ft Lauderdale and (I’m a real estate broker) 50% drops HAVE NOT HAPPENED. There has been one instance of 50% off 6 units at a developer auction for The Platinum condos in Miami, but that’s about it for S FL so far (and they still sold for over $250 per sq ft). It’s happened quite a few times already on the west coast (Ft Myers and Tampa). I’m not saying it’s not going to become more prevalent, it just hasn’t happened yet……..

I frequent this board everyday because I plan on moving back to Diego next year. I’d love to see prices keep dropping there and I’m sure they will. One thing we all have to remember…..There are many people that have Internet based jobs and can live any where in the world and are probably watching places like So Cal very closely….just waiting so they can swoop back in when they feel the time is right (I’m on of them).

[Jumby]

Ex-SD, while I generally agree with most of your posts on this thread, I live in Ft Lauderdale and (I’m a real estate broker) 50% drops HAVE NOT HAPPENED. There has been one instance of 50% off 6 units at a developer auction for The Platinum condos in Miami, but that’s about it for S FL so far (and they still sold for over $250 per sq ft). It’s happened quite a few times already on the west coast (Ft Myers and Tampa). I’m not saying it’s not going to become more prevalent, it just hasn’t happened yet……..

I frequent this board everyday because I plan on moving back to Diego next year. I’d love to see prices keep dropping there and I’m sure they will. One thing we all have to remember…..There are many people that have Internet based jobs and can live any where in the world and are probably watching places like So Cal very closely….just waiting so they can swoop back in when they feel the time is right (I’m on of them).

[Jumby]

Ex-SD, while I generally agree with most of your posts on this thread, I live in Ft Lauderdale and (I’m a real estate broker) 50% drops HAVE NOT HAPPENED. There has been one instance of 50% off 6 units at a developer auction for The Platinum condos in Miami, but that’s about it for S FL so far (and they still sold for over $250 per sq ft). It’s happened quite a few times already on the west coast (Ft Myers and Tampa). I’m not saying it’s not going to become more prevalent, it just hasn’t happened yet……..

I frequent this board everyday because I plan on moving back to Diego next year. I’d love to see prices keep dropping there and I’m sure they will. One thing we all have to remember…..There are many people that have Internet based jobs and can live any where in the world and are probably watching places like So Cal very closely….just waiting so they can swoop back in when they feel the time is right (I’m on of them).

[Jumby]

Ex-SD, while I generally agree with most of your posts on this thread, I live in Ft Lauderdale and (I’m a real estate broker) 50% drops HAVE NOT HAPPENED. There has been one instance of 50% off 6 units at a developer auction for The Platinum condos in Miami, but that’s about it for S FL so far (and they still sold for over $250 per sq ft). It’s happened quite a few times already on the west coast (Ft Myers and Tampa). I’m not saying it’s not going to become more prevalent, it just hasn’t happened yet……..

I frequent this board everyday because I plan on moving back to Diego next year. I’d love to see prices keep dropping there and I’m sure they will. One thing we all have to remember…..There are many people that have Internet based jobs and can live any where in the world and are probably watching places like So Cal very closely….just waiting so they can swoop back in when they feel the time is right (I’m on of them).

[Jumby]

Ex-SD, while I generally agree with most of your posts on this thread, I live in Ft Lauderdale and (I’m a real estate broker) 50% drops HAVE NOT HAPPENED. There has been one instance of 50% off 6 units at a developer auction for The Platinum condos in Miami, but that’s about it for S FL so far (and they still sold for over $250 per sq ft). It’s happened quite a few times already on the west coast (Ft Myers and Tampa). I’m not saying it’s not going to become more prevalent, it just hasn’t happened yet……..

I frequent this board everyday because I plan on moving back to Diego next year. I’d love to see prices keep dropping there and I’m sure they will. One thing we all have to remember…..There are many people that have Internet based jobs and can live any where in the world and are probably watching places like So Cal very closely….just waiting so they can swoop back in when they feel the time is right (I’m on of them).

[Ex-SD]

Jumby, I read an article last month on either MSNBC, CNN or Fox (can’t remember which one) where the author said that there were many homes that had been discounted 50% from the prices that they were selling at in 2005 in Ft. Lauderdale, Miami, Tampa and Fort Myers. I also saw the YouTube videos several months ago where new condos were auctioned and sold for 50% discounts in Miami and new townhomes in Fort Meyers. I also saw a television program that followed the stories of three sellers (one was in Fort Lauderdale) and all the things they had done to sell their home………………but with no luck. They had reduced their selling price several times and had reduced it over 25% at the time the program aired……………..still no sale.

I didn’t mean to imply that every piece of property in these markets had already dropped 50% in value but when you have the examples that I listed, that is enough smoke to believe that a fire is in the vicinity.
Yes, I am a Uber-Bear. Enough so, that my wife and I sold our home in Leucadia (with a great ocean view) in 2005 and moved out of CA because I was convinced that this would eventually happen. We had lived in San Diego for over 30 years. I knew it would be bad but I think it’s going to be much worse than I envisioned back in 2005.
I hope your plans work out to return to San Diego. It’s a great place to live.

[Ex-SD]

Jumby, I read an article last month on either MSNBC, CNN or Fox (can’t remember which one) where the author said that there were many homes that had been discounted 50% from the prices that they were selling at in 2005 in Ft. Lauderdale, Miami, Tampa and Fort Myers. I also saw the YouTube videos several months ago where new condos were auctioned and sold for 50% discounts in Miami and new townhomes in Fort Meyers. I also saw a television program that followed the stories of three sellers (one was in Fort Lauderdale) and all the things they had done to sell their home………………but with no luck. They had reduced their selling price several times and had reduced it over 25% at the time the program aired……………..still no sale.

I didn’t mean to imply that every piece of property in these markets had already dropped 50% in value but when you have the examples that I listed, that is enough smoke to believe that a fire is in the vicinity.
Yes, I am a Uber-Bear. Enough so, that my wife and I sold our home in Leucadia (with a great ocean view) in 2005 and moved out of CA because I was convinced that this would eventually happen. We had lived in San Diego for over 30 years. I knew it would be bad but I think it’s going to be much worse than I envisioned back in 2005.
I hope your plans work out to return to San Diego. It’s a great place to live.

[Ex-SD]

Jumby, I read an article last month on either MSNBC, CNN or Fox (can’t remember which one) where the author said that there were many homes that had been discounted 50% from the prices that they were selling at in 2005 in Ft. Lauderdale, Miami, Tampa and Fort Myers. I also saw the YouTube videos several months ago where new condos were auctioned and sold for 50% discounts in Miami and new townhomes in Fort Meyers. I also saw a television program that followed the stories of three sellers (one was in Fort Lauderdale) and all the things they had done to sell their home………………but with no luck. They had reduced their selling price several times and had reduced it over 25% at the time the program aired……………..still no sale.

I didn’t mean to imply that every piece of property in these markets had already dropped 50% in value but when you have the examples that I listed, that is enough smoke to believe that a fire is in the vicinity.
Yes, I am a Uber-Bear. Enough so, that my wife and I sold our home in Leucadia (with a great ocean view) in 2005 and moved out of CA because I was convinced that this would eventually happen. We had lived in San Diego for over 30 years. I knew it would be bad but I think it’s going to be much worse than I envisioned back in 2005.
I hope your plans work out to return to San Diego. It’s a great place to live.

[Ex-SD]

Jumby, I read an article last month on either MSNBC, CNN or Fox (can’t remember which one) where the author said that there were many homes that had been discounted 50% from the prices that they were selling at in 2005 in Ft. Lauderdale, Miami, Tampa and Fort Myers. I also saw the YouTube videos several months ago where new condos were auctioned and sold for 50% discounts in Miami and new townhomes in Fort Meyers. I also saw a television program that followed the stories of three sellers (one was in Fort Lauderdale) and all the things they had done to sell their home………………but with no luck. They had reduced their selling price several times and had reduced it over 25% at the time the program aired……………..still no sale.

I didn’t mean to imply that every piece of property in these markets had already dropped 50% in value but when you have the examples that I listed, that is enough smoke to believe that a fire is in the vicinity.
Yes, I am a Uber-Bear. Enough so, that my wife and I sold our home in Leucadia (with a great ocean view) in 2005 and moved out of CA because I was convinced that this would eventually happen. We had lived in San Diego for over 30 years. I knew it would be bad but I think it’s going to be much worse than I envisioned back in 2005.
I hope your plans work out to return to San Diego. It’s a great place to live.

[Author]

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