Jim the Realtor: “Market is a buzz”

[Jazzman]

Isn’t this guy usually pretty down on the market? Or is he being ironic?
http://www.calculatedriskblog.com/2011/10/jim-realtor-market-is-buzz.html

[tdelamater]

Maybe it is.. I’m in, so that’s +1

Moved to the area in 07, conditions and life circumstances have culminated into the “right time” for me.

However, I don’t have any experience to say the market is “a buzz”. The places I have liked so far have had offers on them within a couple of days. Nice places go fast, plenty of stuff I don’t like that is readily available.. I have assumed this is typical.

[Rich Toscano]

Jim is in the trenches and calls it like he sees it… if he says the market is abuzz in his segment right now I believe him. Of course, what’s true in his segment may not be true everywhere.

[Jazzman]

[quote=Rich Toscano]…what’s true in his segment may not be true everywhere.[/quote]
Yes, hence the curiosity.

[jimklinge]

Down on the market, or ironic?

Maybe I need to lighten up!

I’ve taken so much crap for so long that I never want to come across as a cheerleader.

But everywhere I go in San Diego County, which lately has been covering more than just North San Diego County Coastal, I see the same results.

Homes listed in line with the comps are selling with ease. Those sellers that insist on tacking on 10% to 20% above the comps are priced to sit, and they do.

The buyers are well-educated, and can recognize value with a few clicks. Sellers are able to come to the same conclusions, and those that do have no trouble selling.

Examples:

5420 Chollas Station, 92105, was listed as a short sale for $190,000, and had an approved buyer – but Fannie Mae foreclosed instead. They listed it with me for $214,900, and no interest so far.

3936 Alabama #8 sold for $302,000 in 2004, but somebody tore it apart – needs new flooring, kitchen, etc, and even then it’s still a 872sf condo in a small complex in an OK area.

The last sale was a model match that closed for $163,000 in March. So because we need $30,000 in repairs, BofA lists for $124,900 five days ago and we have five cash offers and it’ll sell for over $140,000, as-is.

http://www.sdlookup.com/MLS-110056448-3936_Alabama_St_8_San_Diego_CA_92104

3403 Belle Isle is an old-Spanish style built in 1928 near City Heights, and on it’s second foreclosure in three years. The last guy was going to flip it after he paid $285,000 in 2008, but tore it all apart and ran out of money. Needs all new kitchen, bath etc.

Here’s a tour with repair costs included:

http://www.youtube.com/watch?v=sRvnS0WVPYQ

Fannie Mae listed it for $149,900, and it’s closing tomorrow for $162,500, but if it weren’t for the stupid owner-occupiers-for-the-first-seven-days, I could have sold this 20-30 times easily.

6702 Bisby Lake was built in 1961, had very little done to it since, and was rode hard the last few years. It’s on a busy street, and others nearby aren’t selling.

http://www.sdlookup.com/MLS-110048817-6702_Bisby_Lake_Ave_San_Diego_CA_92119

It listed for $328,300 originally, which was 10% higher than any realistic person would pay.

It fell out of escrow once, and the second guy worked over the bank because it needed a roof, but still closed for $295,000 to an investor who paid cash. Look at those photos and location and tell me if you would pay the same?

Any properties priced reasonably around the coast sell the first week, and usually for list or higher. I have been in 20 bidding wars over the last 2 years, and almost always the price ends up 5% to 10% over list, if not higher, and most start at $800,000 and go up from there – with several over $1,000,000.

Buyers are holding out for top quality locations and condition of home, but when they see one they have no problem paying the price.

Are “prices” going up? No.

Is the market hot? Yes, for those sellers who get the price right.

[Jazzman]

[quote=jimklinge]

I’ve taken so much crap for so long that I never want to come across as a cheerleader.

But everywhere I go in San Diego County, which lately has been covering more than just North San Diego County Coastal, I see the same results.

Is the market hot? Yes, for those sellers who get the price right.[/quote]

From what I have seen of your videos, you don’t some across as a cheerleader, hence my surprise with your “market is abuzz” title. Isn’t it true that bidding wars were happening even when prices were falling off a cliff, and any home priced to attract buyers will sell? The question is what percentage of sales fall into this category, and has there been a marked increase in that percentage more recently?

[jimklinge]

I can only tell you what I see in my little world.

Yes, there have always been bidding wars for the top-quality premium properties. I listed those addresses and stories to show how even the marginal properties are getting a lot of attention.

Look at the one on Alabama.

We had five all-cash offers come in, and I probably had 30-40 phone calls, which, once I tell them that we have all-cash offers in hand, they give up.

There were probably 20-30 people who would have bought it if they could have gotten it under list price, or financed their purchase.

Look at the photos to see how much work is needed, and compare to the resulting end-value. Our contractor visited the property and quoted $30,000 to restore.

What’s a flipper going to make, $10,000 or $20,000 max? That’s a big gamble to try to make that little $$ on such a marginal property.

Maybe an investor would keep it for income?

He’s going to blow $400/month on taxes and HOA fee, so what is the max net rent, maybe $1,000 per month? That’s a better return than he’d get from having $170,000 in his savings account (sales price + repairs), and probably the reason many people are in the game.

But once you factor in vacancy, property mgmt fee, and worry, let alone any unforeseen expenses like HOA special assessments – is it worth it?

Not for me, but for others, apparently.

If others here aren’t experiencing the same results, then it’s just my little world that is abuzz, and I’ll apologize for causing a stir.

[sdrealtor]

In my world I wouldnt say abuzz but rather solid for properties perceived to be below market. I’ll add that seems to be the way its always been around here. I see nice properties priced at or just above recents closed comps sitting around lots of places. Everyone wants a deal and there just arent many out there. At least that is what I see.

BTW, the rent assumption for Alabama is off. I have a 1BR not far from there but in a much worse area that I easily rent for $1,000. Figure 1200 to 1400 for a 2BR in that location. I just closed a short sale listing not far from there for $157K and it was the low comp. Nicer location/complex, good condition but could use updating but only 1BR and rent is about 1200. BTW, it sold to a cash buyer. The market for low priced rentals in the urban core does seem pretty good as long as they are the perceived deals.

[jimklinge]

I said $1,000 net after the $400 for the taxes and HOA – we’re seeing it the same.

[sdrealtor]

Sorry about that chief. Got it and I stand corrected.

[Fearful]

[quote=jimklinge]I can only tell you what I see in my little world.
[/quote]
Hey Jim, thanks for continuing to provide straightforward reporting from the field. I for one have never found you to engage in the sort of I-will-sell-this-house-today hooey that distinguishes your profession.

[tdelamater]

[quote=Fearful][quote=jimklinge]I can only tell you what I see in my little world.
[/quote]
Hey Jim, thanks for continuing to provide straightforward reporting from the field. I for one have never found you to engage in the sort of I-will-sell-this-house-today hooey that distinguishes your profession.[/quote]

I second that

[SD Realtor]

I would strongly agree with the market is abuzz condtion that you reported about Jim. People on an overall bearish post don’t like to hear stuff like that. There is and will always be a sort of perpetual misunderstanding that the market in San Diego will normalize in some way. That is, it will float down to a price/income ratio closer to a national average. The reality is that there is and will for the most part always be people that will step in as buyers to prevent that for the most part regardless of whether they are locals, investors or relocated professionals. The desireability factor simply makes it so. Price declines can and will happen but not to the extent of some of the wishful thinking (including my own) that I have seen….unless interest rates get to high levels… then all bets are off however it will not be a proportional drop.

[NotCranky]

http://www.trulia.com/real_estate/San_Diego-California/market-trends/

[jimklinge]

Thanks fellas.

There was a bit of a lull there too, right about the time that school was starting – which is understandable and normal.

But then rates started dropping and the sun came out, and I don’t know if either was just a coincidence but boom, things are stirring.

We’ll see if any of them close.

Interesting chart there, jacarandoso, on the number of listings surging. A push of well-priced listings can cause a spurt of activity, or a bigger bag of duds could discourage buyers to wait until next year.

There should be more sellers cancelling for the holidays – I haven’t seen that many yet.

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