This post is an e-mail from John Hokkanen, where he was kind enough to answer my question: what kind of premium, if any, is placed on Poway homes for their good schools? Are DOM less than other inland areas such as Escondido or San Marcos? Here is his response.
Here are the numbers for 5/1-7/15
81 days – Poway <900K
102 days - Poway >=$900K
80 days – Escondido <900K
150 days - Escondido >=$900K
76 days – San Marcos <900K
146 days - San Marcos >$900K (about 10 data points)
As you can see, the numbers at the low end are nearly identical at 81,80,76. However, Escondido and San Marcos jump by 50% above $900K. Though the high figures have a little distortion because the 900K+ bracket is a higher percentile
bracket than in San Marcos/Poway (thus yielding a higher DOM), it is still more discrepancy than can be explained by bracketing. (I know this from experience in looking at such numbers.)
I hope this REALLY conveys to you the point that I’ve tried to make on numerous posts: The crash is not going to be felt evenly. Obviously Escondido >900K is going to feel a LOT more pressure
to correct than Poway >900K. The most desirable markets have unique value and are partially insulated from this corrective force. This also applies to the coastal zone (<7 miles to ocean)
where temperatures are mild.
I know that most of the data analysis is probably San Diego County wide, and that is good for broad brush strokes. But I would not use those county wide statistics for any personal decision making; they are simply inadequately coarse.
John, could you run the Rancho Bernardo (92127, 92128) and Rancho Penasquitoes (92129) data? Both are in Poway schools. RPQ is very old, but close to Hwy 56 access and at least 8 miles closer to the coast. RB is considered a retirement community.
What I’m really curious about is which factors are helping homes keep their value better. Coastal one stories are a shoe-in, right? But inland, which areas are better for holding value? Second, does Poway’s reputation for their good schools show up in housing prices, either in higher prices or in lower DOM? I would think lower DOM equates to higher price.
John, Bugs, does either of you have time to check this?
In Huntington Beach, it’s $800,000 for a small, severely dated single story 3-2 needing lots of work away from the beach bordering Fountain Valley or Garden Grove. $1M+ for anything move in ready.
But basically, it’s still the same point, basic middle-class homes are $1,000,000.
It’s a good point and the underlying theory also illustrates how one should approach purchasing property for the long haul. In a blazing hot market such as we have seen in recent years in SD, buyers could seemingly do no wrong. The mantra was “buy anything – just get in the game”. That philosophy only works over the short term and during a red hot market. As the market cools, it is likely that the least desireable areas and properties will get whacked the worst. To insulate oneself, one should always looked for properties with what I call a “hook” – such as an ocean view, or an end unit, or on a cul-de-sac, a vibrant walkable neighborhood, a well-situated lot, etc etc. Adhering to the first 3 rules of real estate will protect you and always serve you well over the long haul. Guess I’m just rambling and stating the obvious, but so many people have bought so much junk over the past several years that I thought it was worth saying.
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