Massive 26% Markdown on Carmel Valley McMansion

[Coronita]

All of the above, except it would probably require rejuggling of resources to make things liquidable or a small light conforming loan.

Folks that think RE markets here are crazy need to take a look at the insanity in places like Beijing, Shanghai, etc. Bubble appreciation 2-4x in just a few years is even more ridiculous. For example, Sis in law purchased a lakefront home in outskirts of Shanghai at $400KUSD with 20% down. Currently renting to expat VP for current exchange rate converted. $4200USD/month. And she has no capital gains, income tax to pay on this whatsoever. So for example, she could nominally buy a place here with a very light loan that she could probably secure overseas, not factoring in additional USD devaluation relative to the RMB if the RMB does eventually float.

And the other thing, let's say the dollar gets wacked another 20-30% versus the other world currencies. Even those loony buyers north of us will start think RE is cheap here, if there are no actual drop in prices. Add in a price drop, appearance would seem to be even more of a bargain.

That's why I'm starting to think a crashing dollar isn't going to be a good thing in terms of housing affordability for people here dependent on the dollar. Relative to the world, we will just be much poorer. But I'm no economist, so what do I know.

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[New_Renter]

MrWrong,
While I appreciate your opinion, and in fact did start this thread to get everyone’s thoughts on whether a 26% discount on a CV McMansion signified the start of a more serious downturn there, I personally disagree with your assessment of how things will play out in CV. First, you seem to imply (actually stated in an early post) that CV prices were flat and would likely remain flat until the end of the downturn. It’s quite clear from the (unemotional) data that prices aren’t flat in CV. Just compare November’s CV Median of $875K to the 2005 Nov. Median. It’s down about 10%. Aug/Sept/Oct medians also down compared to a year earlier. The Case Shiller index for the top 1/3 tier shows a 8.72% decline through October and will likely go over 10% in the November report. I could also point out many CV sales in this past year that sold at a loss to 2005 comps, with Caminito Stella being one of the most dramatic. Yes I know, it hasn’t sold yet and could go at a price higher than $1.499, but even if it ends up selling for $1.6 to $1.7, it is still a dramatic loss. Another example is a Belmont recently closing for $276/sq. ft. There are many others.

What I am trying to say is that it is wrong to give the impression that CV is flat and thus implying it hasn’t been affected much by the downturn. You also state that you think it will only decline by a small amount (your 20% isn’t small, btw) and only at the very end of the cycle. From what I see, CV is declining just like everywhere else, albeit at a slower rate because of it’s high desireability. Nevertheless, it is declining, and will more likely continue to decline consistently throughout this downturn rather than at the very end. It’s clear that CV is already down 8-10%, and if it continues through 2010-2012 (as SD Realtor and many others think) then I can easily see CV going down at least another 20-25% from here (30%-35% from peak to trough). On the other extreme, I agree with you and others that Masakayo is way off. I don’t think the 75% decline he implies is in the cards.

[New_Renter]

MrWrong,
While I appreciate your opinion, and in fact did start this thread to get everyone’s thoughts on whether a 26% discount on a CV McMansion signified the start of a more serious downturn there, I personally disagree with your assessment of how things will play out in CV. First, you seem to imply (actually stated in an early post) that CV prices were flat and would likely remain flat until the end of the downturn. It’s quite clear from the (unemotional) data that prices aren’t flat in CV. Just compare November’s CV Median of $875K to the 2005 Nov. Median. It’s down about 10%. Aug/Sept/Oct medians also down compared to a year earlier. The Case Shiller index for the top 1/3 tier shows a 8.72% decline through October and will likely go over 10% in the November report. I could also point out many CV sales in this past year that sold at a loss to 2005 comps, with Caminito Stella being one of the most dramatic. Yes I know, it hasn’t sold yet and could go at a price higher than $1.499, but even if it ends up selling for $1.6 to $1.7, it is still a dramatic loss. Another example is a Belmont recently closing for $276/sq. ft. There are many others.

What I am trying to say is that it is wrong to give the impression that CV is flat and thus implying it hasn’t been affected much by the downturn. You also state that you think it will only decline by a small amount (your 20% isn’t small, btw) and only at the very end of the cycle. From what I see, CV is declining just like everywhere else, albeit at a slower rate because of it’s high desireability. Nevertheless, it is declining, and will more likely continue to decline consistently throughout this downturn rather than at the very end. It’s clear that CV is already down 8-10%, and if it continues through 2010-2012 (as SD Realtor and many others think) then I can easily see CV going down at least another 20-25% from here (30%-35% from peak to trough). On the other extreme, I agree with you and others that Masakayo is way off. I don’t think the 75% decline he implies is in the cards.

[New_Renter]

MrWrong,
While I appreciate your opinion, and in fact did start this thread to get everyone’s thoughts on whether a 26% discount on a CV McMansion signified the start of a more serious downturn there, I personally disagree with your assessment of how things will play out in CV. First, you seem to imply (actually stated in an early post) that CV prices were flat and would likely remain flat until the end of the downturn. It’s quite clear from the (unemotional) data that prices aren’t flat in CV. Just compare November’s CV Median of $875K to the 2005 Nov. Median. It’s down about 10%. Aug/Sept/Oct medians also down compared to a year earlier. The Case Shiller index for the top 1/3 tier shows a 8.72% decline through October and will likely go over 10% in the November report. I could also point out many CV sales in this past year that sold at a loss to 2005 comps, with Caminito Stella being one of the most dramatic. Yes I know, it hasn’t sold yet and could go at a price higher than $1.499, but even if it ends up selling for $1.6 to $1.7, it is still a dramatic loss. Another example is a Belmont recently closing for $276/sq. ft. There are many others.

What I am trying to say is that it is wrong to give the impression that CV is flat and thus implying it hasn’t been affected much by the downturn. You also state that you think it will only decline by a small amount (your 20% isn’t small, btw) and only at the very end of the cycle. From what I see, CV is declining just like everywhere else, albeit at a slower rate because of it’s high desireability. Nevertheless, it is declining, and will more likely continue to decline consistently throughout this downturn rather than at the very end. It’s clear that CV is already down 8-10%, and if it continues through 2010-2012 (as SD Realtor and many others think) then I can easily see CV going down at least another 20-25% from here (30%-35% from peak to trough). On the other extreme, I agree with you and others that Masakayo is way off. I don’t think the 75% decline he implies is in the cards.

[New_Renter]

MrWrong,
While I appreciate your opinion, and in fact did start this thread to get everyone’s thoughts on whether a 26% discount on a CV McMansion signified the start of a more serious downturn there, I personally disagree with your assessment of how things will play out in CV. First, you seem to imply (actually stated in an early post) that CV prices were flat and would likely remain flat until the end of the downturn. It’s quite clear from the (unemotional) data that prices aren’t flat in CV. Just compare November’s CV Median of $875K to the 2005 Nov. Median. It’s down about 10%. Aug/Sept/Oct medians also down compared to a year earlier. The Case Shiller index for the top 1/3 tier shows a 8.72% decline through October and will likely go over 10% in the November report. I could also point out many CV sales in this past year that sold at a loss to 2005 comps, with Caminito Stella being one of the most dramatic. Yes I know, it hasn’t sold yet and could go at a price higher than $1.499, but even if it ends up selling for $1.6 to $1.7, it is still a dramatic loss. Another example is a Belmont recently closing for $276/sq. ft. There are many others.

What I am trying to say is that it is wrong to give the impression that CV is flat and thus implying it hasn’t been affected much by the downturn. You also state that you think it will only decline by a small amount (your 20% isn’t small, btw) and only at the very end of the cycle. From what I see, CV is declining just like everywhere else, albeit at a slower rate because of it’s high desireability. Nevertheless, it is declining, and will more likely continue to decline consistently throughout this downturn rather than at the very end. It’s clear that CV is already down 8-10%, and if it continues through 2010-2012 (as SD Realtor and many others think) then I can easily see CV going down at least another 20-25% from here (30%-35% from peak to trough). On the other extreme, I agree with you and others that Masakayo is way off. I don’t think the 75% decline he implies is in the cards.

[New_Renter]

MrWrong,
While I appreciate your opinion, and in fact did start this thread to get everyone’s thoughts on whether a 26% discount on a CV McMansion signified the start of a more serious downturn there, I personally disagree with your assessment of how things will play out in CV. First, you seem to imply (actually stated in an early post) that CV prices were flat and would likely remain flat until the end of the downturn. It’s quite clear from the (unemotional) data that prices aren’t flat in CV. Just compare November’s CV Median of $875K to the 2005 Nov. Median. It’s down about 10%. Aug/Sept/Oct medians also down compared to a year earlier. The Case Shiller index for the top 1/3 tier shows a 8.72% decline through October and will likely go over 10% in the November report. I could also point out many CV sales in this past year that sold at a loss to 2005 comps, with Caminito Stella being one of the most dramatic. Yes I know, it hasn’t sold yet and could go at a price higher than $1.499, but even if it ends up selling for $1.6 to $1.7, it is still a dramatic loss. Another example is a Belmont recently closing for $276/sq. ft. There are many others.

What I am trying to say is that it is wrong to give the impression that CV is flat and thus implying it hasn’t been affected much by the downturn. You also state that you think it will only decline by a small amount (your 20% isn’t small, btw) and only at the very end of the cycle. From what I see, CV is declining just like everywhere else, albeit at a slower rate because of it’s high desireability. Nevertheless, it is declining, and will more likely continue to decline consistently throughout this downturn rather than at the very end. It’s clear that CV is already down 8-10%, and if it continues through 2010-2012 (as SD Realtor and many others think) then I can easily see CV going down at least another 20-25% from here (30%-35% from peak to trough). On the other extreme, I agree with you and others that Masakayo is way off. I don’t think the 75% decline he implies is in the cards.

[pepsi]

Just some numbers for CV (signle family resell):

Medium price (2001 – 2006):

2001: $610K

2002: $670K

2003: $750K

2004: $969K

2005: $1.04M

2006: $1.028M

Medium Price for Nov, 2007:  $875K  (That is less than 5% annual appreciation from 2001 medium price)

[pepsi]

Just some numbers for CV (signle family resell):

Medium price (2001 – 2006):

2001: $610K

2002: $670K

2003: $750K

2004: $969K

2005: $1.04M

2006: $1.028M

Medium Price for Nov, 2007:  $875K  (That is less than 5% annual appreciation from 2001 medium price)

[pepsi]

Just some numbers for CV (signle family resell):

Medium price (2001 – 2006):

2001: $610K

2002: $670K

2003: $750K

2004: $969K

2005: $1.04M

2006: $1.028M

Medium Price for Nov, 2007:  $875K  (That is less than 5% annual appreciation from 2001 medium price)

[pepsi]

Just some numbers for CV (signle family resell):

Medium price (2001 – 2006):

2001: $610K

2002: $670K

2003: $750K

2004: $969K

2005: $1.04M

2006: $1.028M

Medium Price for Nov, 2007:  $875K  (That is less than 5% annual appreciation from 2001 medium price)

[pepsi]

Just some numbers for CV (signle family resell):

Medium price (2001 – 2006):

2001: $610K

2002: $670K

2003: $750K

2004: $969K

2005: $1.04M

2006: $1.028M

Medium Price for Nov, 2007:  $875K  (That is less than 5% annual appreciation from 2001 medium price)

[mrwrong]

New_Renter,

I don’t think we disagree much, but I do like to clarify a couple of things.

My flat price comment was in the context to show that a 14 year appreciation of 100% is not totally unreasonable when taking inflation into account. I actually stated twice that I expected CV prices to decline.

I also didn’t say the decline would be small, but *relatively* small. If San Diego county has declined 15% so far into the cycle and CV only declined less than 10%, then that is relatively small.

I have no idea how much CV prices will fall. The 20% was just a guess. The CV is a upper-middle class community (annual gross income at least 200K). People with that kindof income can support a million dollar house after 20% down, given the current interest rates. More importantly there seems to be more people that fit this profile than the houses available even in today’s market. Want proof? Just look at the interests on this 1.5 million REO house. As soon as people smell a deal, they jump on it. If this is happening a few years back when the market was still hot, I wouldn’t be surprised, but everybody in their right mind should know by now that there is a real estate bubble going on and prices have dropped. So you’ve got to ask yourself what is really motivating these people to buy today and perhaps adjust your expectations accordingly. Also ask yourself now that real estate has turned bearish, are people buying a house to flip or are they buying a place to live.

Mr. Wrong

[mrwrong]

New_Renter,

I don’t think we disagree much, but I do like to clarify a couple of things.

My flat price comment was in the context to show that a 14 year appreciation of 100% is not totally unreasonable when taking inflation into account. I actually stated twice that I expected CV prices to decline.

I also didn’t say the decline would be small, but *relatively* small. If San Diego county has declined 15% so far into the cycle and CV only declined less than 10%, then that is relatively small.

I have no idea how much CV prices will fall. The 20% was just a guess. The CV is a upper-middle class community (annual gross income at least 200K). People with that kindof income can support a million dollar house after 20% down, given the current interest rates. More importantly there seems to be more people that fit this profile than the houses available even in today’s market. Want proof? Just look at the interests on this 1.5 million REO house. As soon as people smell a deal, they jump on it. If this is happening a few years back when the market was still hot, I wouldn’t be surprised, but everybody in their right mind should know by now that there is a real estate bubble going on and prices have dropped. So you’ve got to ask yourself what is really motivating these people to buy today and perhaps adjust your expectations accordingly. Also ask yourself now that real estate has turned bearish, are people buying a house to flip or are they buying a place to live.

Mr. Wrong

[mrwrong]

New_Renter,

I don’t think we disagree much, but I do like to clarify a couple of things.

My flat price comment was in the context to show that a 14 year appreciation of 100% is not totally unreasonable when taking inflation into account. I actually stated twice that I expected CV prices to decline.

I also didn’t say the decline would be small, but *relatively* small. If San Diego county has declined 15% so far into the cycle and CV only declined less than 10%, then that is relatively small.

I have no idea how much CV prices will fall. The 20% was just a guess. The CV is a upper-middle class community (annual gross income at least 200K). People with that kindof income can support a million dollar house after 20% down, given the current interest rates. More importantly there seems to be more people that fit this profile than the houses available even in today’s market. Want proof? Just look at the interests on this 1.5 million REO house. As soon as people smell a deal, they jump on it. If this is happening a few years back when the market was still hot, I wouldn’t be surprised, but everybody in their right mind should know by now that there is a real estate bubble going on and prices have dropped. So you’ve got to ask yourself what is really motivating these people to buy today and perhaps adjust your expectations accordingly. Also ask yourself now that real estate has turned bearish, are people buying a house to flip or are they buying a place to live.

Mr. Wrong

[mrwrong]

New_Renter,

I don’t think we disagree much, but I do like to clarify a couple of things.

My flat price comment was in the context to show that a 14 year appreciation of 100% is not totally unreasonable when taking inflation into account. I actually stated twice that I expected CV prices to decline.

I also didn’t say the decline would be small, but *relatively* small. If San Diego county has declined 15% so far into the cycle and CV only declined less than 10%, then that is relatively small.

I have no idea how much CV prices will fall. The 20% was just a guess. The CV is a upper-middle class community (annual gross income at least 200K). People with that kindof income can support a million dollar house after 20% down, given the current interest rates. More importantly there seems to be more people that fit this profile than the houses available even in today’s market. Want proof? Just look at the interests on this 1.5 million REO house. As soon as people smell a deal, they jump on it. If this is happening a few years back when the market was still hot, I wouldn’t be surprised, but everybody in their right mind should know by now that there is a real estate bubble going on and prices have dropped. So you’ve got to ask yourself what is really motivating these people to buy today and perhaps adjust your expectations accordingly. Also ask yourself now that real estate has turned bearish, are people buying a house to flip or are they buying a place to live.

Mr. Wrong

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