Nearly 130 new listings today on ZipRealty (4/19)

[lendingbubblecontinues]

This certainly looks to be building into a big mess. I am aware of quite a bit of hidden inventory, too; people I know who will be listing soon.

Some of them actually NEED to sell, too, so they will likely price their homes quite a bit lower than the stuff that’s been rotting on the market since January.

When will the sellers blink? It is just a matter of time before we’ve got it as bad as those poor, stupid bastards down in Florida.

I predict mid-July before we see the cracks begin to show. All those C230’s with the “Ask a Realtor” plate holders will be the first to go. Followed by the mortgage brokers and the 5 series BMWs.

I’m looking to scoop up a nice barely used plasma first. Then I may buy some used Brown Jordan patio furniture for a song. I’ll have my furnishings ready for my new digs, that is if I EVER decide to buy here.

I love SD. I just don’t know that the next phase of San Diego’s future will be very pleasant. There’s something to be said for being ABLE to buy a nice house here, yet being NIMBLE enough to escape should things deteriorate into chaos. This is where I stand today. And there are a lot of people just like me out here.

Friends REALLY don’t let friends buy real estate, at this point in time. Too much entitlement in the sellers’ minds. We need to starve them out.

[LookoutBelow]

Totally agree. I have personally talked 3 friends of mine out of buying hideously overpriced SD real estate in the last 3-5 weeks. I am proud of myself and they are feeling like they dodged a bullet that had their name on it !

After I pointed out the facts to them, they breathed a heavy sigh of relief and put their checkbooks away when they saw the reality of it all.

Friends dont let friends buy SD real estate.

[hs]

I am doing the same thing, trying to convince my friends not to buy now.
If more and more people stop buying now, price definitely will go down.

[Bugs]

Think about this. The only reason that “now is a great time to buy” for a buyer is if they think the long term pricing trend is stable or going up. WHEN it becomes apparent that the trend is going down, that motivation is no longer applicable. The more the trend declines the less motivation there is to buy. At whatever point the majority of buyers come to perceive that the price trends will decline a long way the volume of sales will drop off so much that there won’t be hardly any sales at any price.

Already we can see people who might want to get in but who are recognizing that now is not the right time. Think about what it means when a friend or casual acquaintance can dissuade a potential buyer to hold off on making this kind of investment, even in the midst of the “please remain calm” media campaign being run by the biggest names in the real estate business. Think about how many more people will sit on the sidelines, not buying at ANY price, until the cost of buying is somewhere close to renting. Because that’s the benchmark the economists are going to end up pushing in answer to the question of “when should I buy?”

When the pricing trend reaches that critical mass, it won’t matter how badly a seller wants to sell because their buyers won’t pull the trigger until the prices recede. Because a seller basically can’t sell for much less than the current balance on their mortgages, those sellers who are maxed will end up being trapped in their homes until they either default or the market comes back around in the next cycle. Or perhaps I should say, IF it comes back to this point in the next cycle.

I’ve been in the appraisal business for 20+ years now and this is the first time I’ve ever even heard of people seriously considering selling in favor of renting. Yesterday, I spoke with a friend of mine who retired after 45 years in the appraisal business and he said he’d never heard of it either. The current attitude going around about questioning the true value of “ownership at any price” is as unprecedented as the price spike that has contributed to it. I don’t think it is being too unrealistic or too negative to extrapolate an increase in the number of people who will eventually come to hold that attitude as it gets more media play. Social acceptability of renting could possibly end up having a huge impact on the market psychology, which in turn could have an impact on how well the “buy now or get priced out” marketing ploy works in the future.

[powayseller]

What will be the impact on rental prices?

The Q is: Will sellers leave CA, or move into a rental?

[Bugs]

I think there’s a difference between a homeowner thinking about renting and cashing out to actually do it. But if a lot of owners did move out to rent it would probably lead to an increase in SFR rents. Let’s face it, when compared to paying $1,400/month to rent a 2bd apartment in a nice project, paying less then $2,000/month for a detached home in a comparable neighborhood is indicative of an SFR rental market that’s somewhat undervalued when looking at the relative utility of these different property types. Those SFR rents probably SHOULD come up a couple hundred bucks. At least.

[rockclimber]

Just thinking out loud here… Let’s limit the analysis to SFR rentals.

If people cash out in favor of renting, who’s buying their house? Is it someone currently renting? If so, then the demand for rentals does not increase, it’s just a swap. Although, I could be convinced that few people currently renting a SFR are likely to be buying any time soon.

Let’s consider population flux: I’d guess that if we start to see significant housing price declines, very few people coming to town who would normally buy, will do so. So this is an argument for an increase in demand for rentals. However, some portion of the people leaving town will be owners and have to make the choice of either; a) selling in an unfavorable market possibly under distress; b) Grit their teeth, hang on to the property waiting for the cycle to come back… and of course rent out that property. So, at least some will choose option b thus putting more SFR inventory on the market for rent. This could have a balancing effect on supply/demand. It really depends on the flux rate. I bet there will not be as many people coming to town as leaving.

If the psychological effects of the loss of all that paper wealth cause people to spend less, resulting in a real impact on the local economy, people will become much more cost conscience and this could put downward pressure on the SFR rental market. (Wow, that was a long sentence… Sorry to the grammar police out there…)

I think I can convince myself that the SFR rental market could stay flat or decline. Knowing what happened in the last downturn would be interesting. Is there any historical record of rental prices out there?

[Bugs]

I don’t know of any historical records. All I can do is tell you that SFR rents never did go down – they just stayed where they were and didn’t go up. Matter of fact, rents didn’t increase at all until the sale prices moved out of the low side of the cycle and passed the historical trendline itself. Since 1990 the rent amounts have increased an average of about 50%; which is not unreasonable when compared to housing prices and when considering the effects of inflation on the dollar.

[North County Jim]

I bet there will not be as many people coming to town as leaving.

A quick hop over to U Haul’s website for quotes on one-way rentals will tell you all you need to know.

17′ truck (SD to LV): $405
17′ truck (LV to SD): $159

[rockclimber]

I love the u-haul test! Similar % spread for various locations? Or is LV an anomoly?

[sdduuuude]

I love this:

“friends don’t let friends buy SD Real Estate”

I’ll use it often and pretend I made it up myself 😉

[sdduuuude]

> “If people cash out in favor of renting, who’s buying their house?”

The bank.

[rockclimber]

dude, banks don’t buy houses.

[North County Jim]

Same 17′ truck from Phoenix to SD: $99.
SD to Phoenix: $319.

I’d guess you’d see similar lopsidedness just about anywhere you’d check.

[Anonymous]

We just moved back here to SD,last lived here in 10/02. It was our thought that we’d buy a place, really don’t like renting, but very scared of buying in this market.
Also looking at listings, doesn’t seem as if sellers are reducing their prices very fast. When we sold here our realtor was always after us to reduce the price, the argument (at that time) being that after 30 days with no price reduction you aren’t going to get any viewings.
Now I’m seeing 100+ days and no reduction, what’s with that?

[Author]

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