North Park Loss ($75k)

[GoUSC]

You guys are losing a fundamental here….You can’t price it below replacement cost. There is a fundamental bottom point in pricing and that’s the cost of the land plus the cost of the structures that sit on it. The land is worth more than $144k…significantly more.

[GoUSC]

You guys are losing a fundamental here….You can’t price it below replacement cost. There is a fundamental bottom point in pricing and that’s the cost of the land plus the cost of the structures that sit on it. The land is worth more than $144k…significantly more.

[patientrenter]

I don’t think there’s a bottom to the market, radelow, over limited periods.

Over longer periods, existing homes have to compete with the option of buying land and building on it. So home prices converge to the price of land plus the cost of building. But the bottom to land prices is just about… zero. It doesn’t happen often, but 1996 was pretty close, at least by today’s standards.

Patient renter in OC

[patientrenter]

I don’t think there’s a bottom to the market, radelow, over limited periods.

Over longer periods, existing homes have to compete with the option of buying land and building on it. So home prices converge to the price of land plus the cost of building. But the bottom to land prices is just about… zero. It doesn’t happen often, but 1996 was pretty close, at least by today’s standards.

Patient renter in OC

[no_such_reality]

really? It’s R1 and only 6500 sf. The value of the land is the value of the resale price for the home that can be built on it. As stuff slows, custom build will drop back below $200/sf. Builder new buildout will be in the sub-$100 range, like Phoenix and Texas.

So, you put a new 2500 sf house on this lot sucking up most of the land for the house and garage, what’s the resale going to be? $450K? That puts a pretty nasty cap on the value of the lot. Is there anything that makes this lot better than any other lot in San Diego?

[no_such_reality]

really? It’s R1 and only 6500 sf. The value of the land is the value of the resale price for the home that can be built on it. As stuff slows, custom build will drop back below $200/sf. Builder new buildout will be in the sub-$100 range, like Phoenix and Texas.

So, you put a new 2500 sf house on this lot sucking up most of the land for the house and garage, what’s the resale going to be? $450K? That puts a pretty nasty cap on the value of the lot. Is there anything that makes this lot better than any other lot in San Diego?

[Bugs]

Land isn’t worth much of anything to anyone until someone is ready to build. That’s why not much gets built during downturns – no profit.

The site value at peak was probably in excess of $300k, maybe more. Not counting fees and permits, the costs to build are about $100/SqFt, and that includes a small profit margin for the builder. Those fees do add up though, which is why in California we probably won’t be getting down to $100/SqFt construction costs.

There’s no reason that site can’t devalue back to $50,000 or even less. As far as the value of an existing home never dropping below the cost of land and improvements, I direct your attention to Exhibit A; all the towns across the US where you can still buy an average condition home for less than $50,000. It’s all relative to local wages and employment, and if this place ever gets that bad for wages and employment the prices will reflect that reality.

“It hasn’t happened yet” is not the same thing as “It can’t happen.”

[Bugs]

Land isn’t worth much of anything to anyone until someone is ready to build. That’s why not much gets built during downturns – no profit.

The site value at peak was probably in excess of $300k, maybe more. Not counting fees and permits, the costs to build are about $100/SqFt, and that includes a small profit margin for the builder. Those fees do add up though, which is why in California we probably won’t be getting down to $100/SqFt construction costs.

There’s no reason that site can’t devalue back to $50,000 or even less. As far as the value of an existing home never dropping below the cost of land and improvements, I direct your attention to Exhibit A; all the towns across the US where you can still buy an average condition home for less than $50,000. It’s all relative to local wages and employment, and if this place ever gets that bad for wages and employment the prices will reflect that reality.

“It hasn’t happened yet” is not the same thing as “It can’t happen.”

[drunkle]

4plex:

ah, i wasn’t sure. i’m glad i didnt condescend and lecture you on how shitty north park is!

i figured 200k based on “inflation” would be a reasonable mark to aim for. under that is just gravy… relatively speaking… maybe providence is a better word…

and as far as building in np goes… that area of np is mostly sfr. nicer than the areas cramped with apartments and auto shops. just one block over is exactly a little shop. come to think of it, the house in question is probably butted up behind the shop. go ahead and build your custom home, drop your 400k. in the end, you still live next door to an auto shop. and that doesnt even address the damn hippies/college kids, tweakers and sex offenders.

edit: nope, a block over and down. here’s to hoping for 100% raises for everyone.

[drunkle]

4plex:

ah, i wasn’t sure. i’m glad i didnt condescend and lecture you on how shitty north park is!

i figured 200k based on “inflation” would be a reasonable mark to aim for. under that is just gravy… relatively speaking… maybe providence is a better word…

and as far as building in np goes… that area of np is mostly sfr. nicer than the areas cramped with apartments and auto shops. just one block over is exactly a little shop. come to think of it, the house in question is probably butted up behind the shop. go ahead and build your custom home, drop your 400k. in the end, you still live next door to an auto shop. and that doesnt even address the damn hippies/college kids, tweakers and sex offenders.

edit: nope, a block over and down. here’s to hoping for 100% raises for everyone.

[GoUSC]

My point was to assume that this house would drop in value to $144k is plain ridiculous. I am as bearish as the next guy but a $144k home with $14k down has a $780 payment. That is way way way out of line with rents. A house like this would rent for around $2500. That equates to a home value around $425k (based on a $2500 mortgage payment & the same $14k down) that is a much more reasonable number to expect.

Sorry guys things are definately going to devalue but not to the extent where everyone can afford a house. This is still San Diego and if homes get to pricing like $144k for this, I’ll be buying them by the boatload.

[GoUSC]

My point was to assume that this house would drop in value to $144k is plain ridiculous. I am as bearish as the next guy but a $144k home with $14k down has a $780 payment. That is way way way out of line with rents. A house like this would rent for around $2500. That equates to a home value around $425k (based on a $2500 mortgage payment & the same $14k down) that is a much more reasonable number to expect.

Sorry guys things are definately going to devalue but not to the extent where everyone can afford a house. This is still San Diego and if homes get to pricing like $144k for this, I’ll be buying them by the boatload.

[drunkle]

anyone find the details on this one?

http://sandiego.craigslist.org/rfs/367928585.html

and how it compares to the op?

[drunkle]

anyone find the details on this one?

http://sandiego.craigslist.org/rfs/367928585.html

and how it compares to the op?

[blahblahblah]

A house like this would rent for around $2500.

Really? It’s only 1200sf, that works out to over $2/sf. I pay $1.25/sf in a better neighborhood closer to downtown, just under $2500/mo. Nicer, bigger place too. Maybe I’m just lucky…

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