ORANGE COUNTY HIGH END gets WHACKED !!!

[cyphire]

If they are planning to be there over 10 years and can easily afford to be there even if prices dropped in half – I would completely agree with you. In my own case I would be OK also – just pissed that I spent so much money on something which might not get back to that price for 10 or more years. I’m renting a house right now for $5,200 / month which would probably sell for 2.5M. I hate renting (it’s not my house which I am not used to) but can’t imagine rebuying a Carmel Valley house for 1.5M-2M which is the same as 20,000 other houses, each held together with spit and stucco, slapped together by crews, and which (in my opinion) will be under 1M within a few years. I also have a problem buying a 2500 foot house in La Jolla which looks like something Ozzie and Harriet owned and should cost $125,000 plus inflation for $2M…

The problem with the current market is that there is so much downward potential (just as there was a huge upside for no reason other than speculation and mass psychology).

And no offense… but…. I doubt that your business consists of 3 families wearing top hats and monocles who carry bags of cash around buying custom homes which they have searched for, for 3 years. This scenario somewhat smells to me. It sounds like my friend who claimed he always won at the track… every time… except of course when we went with him.

I am sitting on a pile of cash and I like most business people want to see at least a 0% increase on an asset. What I mean by this is that if I knew prices were stabilized but I wanted to own my home rather than rent, I might buy the house anyway. But most thinking people, without emotion, can see that the downside potential is enormous and the best case scenario (which I don’t believe) is that prices will stabilize and will slowly go up.

What about your more normal high-end buyers 70-80% mortgage, executive jobs, reasonable salary expectations… Are even this elite group ok with decreasing prices?

[cyphire]

If they are planning to be there over 10 years and can easily afford to be there even if prices dropped in half – I would completely agree with you. In my own case I would be OK also – just pissed that I spent so much money on something which might not get back to that price for 10 or more years. I’m renting a house right now for $5,200 / month which would probably sell for 2.5M. I hate renting (it’s not my house which I am not used to) but can’t imagine rebuying a Carmel Valley house for 1.5M-2M which is the same as 20,000 other houses, each held together with spit and stucco, slapped together by crews, and which (in my opinion) will be under 1M within a few years. I also have a problem buying a 2500 foot house in La Jolla which looks like something Ozzie and Harriet owned and should cost $125,000 plus inflation for $2M…

The problem with the current market is that there is so much downward potential (just as there was a huge upside for no reason other than speculation and mass psychology).

And no offense… but…. I doubt that your business consists of 3 families wearing top hats and monocles who carry bags of cash around buying custom homes which they have searched for, for 3 years. This scenario somewhat smells to me. It sounds like my friend who claimed he always won at the track… every time… except of course when we went with him.

I am sitting on a pile of cash and I like most business people want to see at least a 0% increase on an asset. What I mean by this is that if I knew prices were stabilized but I wanted to own my home rather than rent, I might buy the house anyway. But most thinking people, without emotion, can see that the downside potential is enormous and the best case scenario (which I don’t believe) is that prices will stabilize and will slowly go up.

What about your more normal high-end buyers 70-80% mortgage, executive jobs, reasonable salary expectations… Are even this elite group ok with decreasing prices?

[cyphire]

Hey SDRealtor… My wife wonders what kind of Californian’s keep their homes for ‘generations’. Also I was wondering… could you tell me where these homes are??? I mean just the general area – no specifics… I hope that they aren’t in La Jolla because 1.7 will buy you a run down 2200 square foot 3 bed 2 bath from 1950… are these the custom homes? Or are they in Del Mar Mesa where custom McMansions start at around 2.8M???

[cyphire]

Hey SDRealtor… My wife wonders what kind of Californian’s keep their homes for ‘generations’. Also I was wondering… could you tell me where these homes are??? I mean just the general area – no specifics… I hope that they aren’t in La Jolla because 1.7 will buy you a run down 2200 square foot 3 bed 2 bath from 1950… are these the custom homes? Or are they in Del Mar Mesa where custom McMansions start at around 2.8M???

[SD Realtor]

cyphire – sdr and I have often disagreed on alot of points but sometimes our worlds collide in strange ways. I just closed a home for some buyers who I told over and over again that I would wait to buy. However, as much as they understood my rationale, the display of data I showed them, and the simple logic of long depreciation cycles, the bottom line is they wanted to buy. We worked together several months and they bought a nice place off of Olivenhain. They are a young couple and by no means are a 7 figure couple. They are going to be there long term, they have no intention of selling, and it is where they simply wanted to live.

I cannot say they will be happy in a year from now but I think they will love their home, enjoy the life, and in the long run they will indeed be happy.

One thing that ALL of us here on Piggington have in common is that we all see the same data. We all hear the media portrayals, we all see the BS about how housing is not failing… However one thing that sdr, myself, and I would imagine some other realtors see is that there are people out there who want to buy and that these are not stupid people. I am not saying it is right or wrong, I am not saying these buyers will prop up the market. Yet, they all have reasons that, to the chagrin of most people here, they will stick with. People may call sdr or myself out for hoodwinking these people, but it is not the case. I know it is not for me and I sincerely doubt it is for him either. Yes there are PLENTY of sheister agents out there.

Last month I had a similar situation with another couple who bought a place in Sabre Springs. These are the normal buyers that you spoke of. These are bright people, engineer and pilot… not stupid, fully realizing that they could be buying in the midst of a long downtrend. However they bought because that is the lifestyle they wanted. I am not defending them, but they are out there.

I just don’t know why people deny their existence or cannot fathom why any of them behave like this.

SD Realtor

[SD Realtor]

cyphire – sdr and I have often disagreed on alot of points but sometimes our worlds collide in strange ways. I just closed a home for some buyers who I told over and over again that I would wait to buy. However, as much as they understood my rationale, the display of data I showed them, and the simple logic of long depreciation cycles, the bottom line is they wanted to buy. We worked together several months and they bought a nice place off of Olivenhain. They are a young couple and by no means are a 7 figure couple. They are going to be there long term, they have no intention of selling, and it is where they simply wanted to live.

I cannot say they will be happy in a year from now but I think they will love their home, enjoy the life, and in the long run they will indeed be happy.

One thing that ALL of us here on Piggington have in common is that we all see the same data. We all hear the media portrayals, we all see the BS about how housing is not failing… However one thing that sdr, myself, and I would imagine some other realtors see is that there are people out there who want to buy and that these are not stupid people. I am not saying it is right or wrong, I am not saying these buyers will prop up the market. Yet, they all have reasons that, to the chagrin of most people here, they will stick with. People may call sdr or myself out for hoodwinking these people, but it is not the case. I know it is not for me and I sincerely doubt it is for him either. Yes there are PLENTY of sheister agents out there.

Last month I had a similar situation with another couple who bought a place in Sabre Springs. These are the normal buyers that you spoke of. These are bright people, engineer and pilot… not stupid, fully realizing that they could be buying in the midst of a long downtrend. However they bought because that is the lifestyle they wanted. I am not defending them, but they are out there.

I just don’t know why people deny their existence or cannot fathom why any of them behave like this.

SD Realtor

[sdrealtor]

cyphire,
Their times frames arent 10 years they are the rest of their lives. None of these families are monocle wearers walking around with bags of cash. They are owners of relatively unexciting family owned businesses that built up wealth from nothing. For the most part they have never lived extravagently in their lives. They are in their mid to late 50’s and heading toward a retirement they have looked forward to for many years. No one is going to take this away from them and nothing can.

These are conservative people who in one example want nothing more than to spend every day of the rest of there lives walking down a certain beach they have visited for years. In this example, they had a 4 block radius where sales are rare. A short term loss of several 100K in their homes value wont change a thing for them.

These are far from the only kind of clients I have. I work across all price ranges. I have found it nearly impossible to work with buyers in more reasonable price ranges as I believe prices are coming down, just not as fast or as low as some around believe.

[sdrealtor]

cyphire,
Their times frames arent 10 years they are the rest of their lives. None of these families are monocle wearers walking around with bags of cash. They are owners of relatively unexciting family owned businesses that built up wealth from nothing. For the most part they have never lived extravagently in their lives. They are in their mid to late 50’s and heading toward a retirement they have looked forward to for many years. No one is going to take this away from them and nothing can.

These are conservative people who in one example want nothing more than to spend every day of the rest of there lives walking down a certain beach they have visited for years. In this example, they had a 4 block radius where sales are rare. A short term loss of several 100K in their homes value wont change a thing for them.

These are far from the only kind of clients I have. I work across all price ranges. I have found it nearly impossible to work with buyers in more reasonable price ranges as I believe prices are coming down, just not as fast or as low as some around believe.

[GoUSC]

I am not going to comment on the current debate among people on this thread but I will go back to the fundamentals and ask that someone explain how home prices can stay at the prices they are now based on:

1. Increasing Personal Debt
2. Tighter Lending Standards
3. Stagnant Wages
4. 5%-10% Housing Affordability In San Diego
5. Job Stagnation In San Diego

For me to believe the housing market is going to stay stable or flatten or go up, I want explanations as to why that will happen in the face of all fundamentals.

I am a bear, I won’t hide it, but I am willing 100% to look at the other side if you talk fundamentals and explain to me why you think bullish on the market going forward.

[GoUSC]

I am not going to comment on the current debate among people on this thread but I will go back to the fundamentals and ask that someone explain how home prices can stay at the prices they are now based on:

1. Increasing Personal Debt
2. Tighter Lending Standards
3. Stagnant Wages
4. 5%-10% Housing Affordability In San Diego
5. Job Stagnation In San Diego

For me to believe the housing market is going to stay stable or flatten or go up, I want explanations as to why that will happen in the face of all fundamentals.

I am a bear, I won’t hide it, but I am willing 100% to look at the other side if you talk fundamentals and explain to me why you think bullish on the market going forward.

[sdrealtor]

To make it clear, I believe prices in the general market (not high end) will drop another 15 to 20% nominally over the next 3 years followed by flat prices for another 3 to 5 years. There will also be price erosion in Real terms due to inflation amounting to another 20 to 30% decline (3% annually over 6 to 10 years). I have seen a nominal decline about 10% from the peak in late 2004/early 2005 already.

With a 30% nominal decline and a 20 to 30% decline (over 10 years of falling then flat prices) due to inflation, Real Prices will be be at least 50% below the peak. This of course is just my opinion.

Does that sound bullish to you?

[sdrealtor]

To make it clear, I believe prices in the general market (not high end) will drop another 15 to 20% nominally over the next 3 years followed by flat prices for another 3 to 5 years. There will also be price erosion in Real terms due to inflation amounting to another 20 to 30% decline (3% annually over 6 to 10 years). I have seen a nominal decline about 10% from the peak in late 2004/early 2005 already.

With a 30% nominal decline and a 20 to 30% decline (over 10 years of falling then flat prices) due to inflation, Real Prices will be be at least 50% below the peak. This of course is just my opinion.

Does that sound bullish to you?

[latesummer2008]

sdealtor, perhaps your “clients” should rent over the next few years.

Ever reccommend that option?

http://westsideremeltdown.blogspot.com

By the way, I think the latest median prices and number of sales (Y.O.Y) for San Diego County could be coming out this Sunday in the LA Times.
Any predictions?

[latesummer2008]

sdealtor, perhaps your “clients” should rent over the next few years.

Ever reccommend that option?

http://westsideremeltdown.blogspot.com

By the way, I think the latest median prices and number of sales (Y.O.Y) for San Diego County could be coming out this Sunday in the LA Times.
Any predictions?

[SD Realtor]

radelow, and even ls –

It is frustrating to write the same thing over and over again. Once more, I agree 100% that renting is a much more fiscally correct thing to do. Should I write that 100 times? I guess I need to say it yet again, and again that yes I do tell my clients that renting is a better option then buying.

Is it not possible to fathom that some people buy for other reasons? I don’t understand this reluctance. I don’t read into any of sdr’s postings or my own postings that either of us are bullish on the market at all? Is that what you guys read into the postings? Saying that someone is buying a home in a falling market for various reasons that only pertain to them is not being bullish on the market.

Why do you interpret it in that manner? Saying that there is money on the sidelines and that people buy for other reasons then using housing as an investment is not being bullish.

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