OT: Shadow inventory research

[briansd1]

[quote=Essbee]

your math is about correct. About 90K down, and about 30K more eventually paid out to pay off that second mortgage. And then the money we put into improvements. Then again, we got to enjoy those improvements for at least several years, so it’s not like you should really get to completely count them as a loss.
.[/quote]

You didn’t do bad at all. Without counting improvements, you only lost $30,000 or 5% of purchase price… So if you count transaction costs, I’m assuming you priced the house just a tad under your 2006 purchase.

Since you can afford to move up now and can take advantage of lower prices and interest rates, then why not? Not a bad move at all.

[(former)FormerSanDiegan]

[quote=bearishgurl][quote=FormerSanDiegan]…If you completely ignore shadow inventory and simply look at prices, inventory and fundamentals I think you are better off.[/quote]

I think we’re all trying to do this, FSD, but the drag of “shadow inventory” (that shouldn’t even be there at this late date) is insidiously artificially undervaluing many markets by trickling out below market short-sale closings. It is THESE closings that are ruining the comps for those homeowners who “played by the rules.”

[/quote]

As far as I know there is no way to know or measure the “drag” of shadow inventory and whether iit is artificially undervaluing anything (insidiously or otherwise).

However, if the presence of short sales does impact the market that at least has a chance to be measurable.

[bearishgurl]

REOs are currently selling for more than SS’s, but for the most part are already cleaned up, fixed a little and have their junk hauled away. Not so with short sales.

The bottom line is that I am seeing SS listings initially come on the market at a “teaser” price (i.e. 50% of what was paid for it in 2006 and/or 50% of what the last nearby comparable “organic” listing sold for). Yes, they are bid up but NOT to “market price,” probably mostly due to condition (in the absence of listing agent/broker fraud).

Here is a good example in Chula Vista. It is listed at a ridiculously low price range and sits next door to a $2M listing on nearly 2 AC which has a Mills Act contract! Purchased in 2002 for $290K, this owner spent hundreds of hours on rock, brick and ironwork over the last ten years as well as did beautiful stonework for a few nearby properties. It is obvious they put a LOT of money into the property (likely with $$ borrowed against it). The backyard is completely flat, RV accessible, HUGE and surrounded by a beautiful block/brick wall. The house is large, has no stairs and is situated in a very quiet enclave of all custom homes.

http://www.realtor.com/realestateandhomes-detail/35-F-St_Chula-Vista_CA_91910_M26543-00584

Notice the LA posted only unflattering photos (duh … as if they already had a friend/relative’s offer waiting for “approval”). BTW that “puddle” out front is on the city’s easement, lol…

Here’s the listing next door.

http://www.realtor.com/realestateandhomes-detail/21-F-St_Chula-Vista_CA_91910_M26772-30571

There are two other Mills Act beauties nearby, a large Spanish a couple hundred yards away and a large Craftsman one block away, both in turnkey condition. In addition, there are several unusual architect-designed customs (including an infamous mid-century atrium house) within a stone’s throw of this property.

Barring a cracked slab or broken chimney, this short sale bidding SHOULD have started at at least $400K, IMHO.

If this property sells anywhere NEAR this range, this doesn’t bode well for the value of the mostly very well-kept surrounding properties (large houses on large lots) at all.

Can an (out of area??) lender be THIS STUPID??

“Short sale” pricing is BS and it sickens me (due to LA purposely NOT securing the highest price if they have a friend/relative who wants the property at a bargain-basement price). These types of shenanigans are nothing more than fraud, plain and simple, not only against the shorted lender, but against all surrounding property owners.

[bearishgurl]

[quote=UCGal] . . . Next you’ll be saying that an owner that needs to sell quickly because of a job relo is artificially undervaluing the market.[/quote]

UCGal, a “relo” is not an “artificial sold comp” if the seller’s mtg(s) were paid in full at COE. It doesn’t matter what the “reason” is for sale.

It is the sold comps created by (out of area?) ignorant first TD lenders in CA who allow themselves to be talked into taking 50 cents on the dollar in a SS, enabling these deadbeat “debtor-sellers” to drive off into the sunset in their *new* vehicles (paid for with “home equity”) that I have a problem with. These flagrant overspenders just left behind a passel of stunned neighbors picking up the pieces of the ramifications of their *new* lowest-of-the-low sold comp they must now contend with!

[bearishgurl]

[quote=Essbee]Edited to add: I was trying to quote bearishgurl but failed miserably…. reminder to self: it’s “quote” not “reply”.

It’s a fair question. I do think that it was worth it for the following reasons:

1) if we had waited for the price of house #1 to go up (to get our equity out), house #2 would have likely gone up, too.

2) more importantly, we were worried about the interest rates going up in the next few years. that alone could have priced us out of house #2.

3) we want our kids to start school in the new neighborhood. They are 3 and 1, so school is still 2 years away.

and of course the irrational…
4) we were simply excited about the new house/neighborhood and didn’t feel like waiting several more years to move in.[/quote]

I have a couple more questions, Essbee. I’m not the least bit interested in WHERE you sold and bought but more interested in WHAT you sold and WHAT you bought to replace it.

Here is an example:

Recently sold for $600K
SFR, 3 bdrm/2 bath, 2 car gar, 1 story
2150 sf
5500 sf lot
35 years old
8 miles from work

Recently bought for $600K
SFR, 4 bdrm/2 bath, 3 car gar, 2 story
2350 sf
5000 sf lot
8 years old
17 miles from work

These examples are just made up (for format).

Please feel free to use round numbers for house sf and price sold or bought (for privacy purposes). Truly, I’m not interested in locating your transactions nor do I have the time.

I understand the reasons you put forth above (sort of) but am wondering what would compel someone to leave $75K? on the table when, from your posts on this thread and the “man-cave” thread, it appears you went to great lengths to remodel/improve your last property to your liking and then later decided to let it go and (literally) give away your hard-earned improvements to the buyer (along with most of the value of your downpayment).

I understand from your post that you had two additions to your family while living in your last house. I personally don’t see SFR’s in SD County going up appreciably (if at all) in the next two years. I also don’t see a big mtg interest-rate spike in the next two years but I could be wrong on this :={

Thanks for any insight you can shed here!

[briansd1]

[quote=bearishgurl]REOs are currently selling for more than SS’s, but for the most part are already cleaned up, fixed a little and have their junk hauled away. Not so with short sales.

The bottom line is that I am seeing SS listings initially come on the market at a “teaser” price (i.e. 50% of what was paid for it in 2006 and/or 50% of what the last nearby comparable “organic” listing sold for). Yes, they are bid up but NOT to “market price,” probably mostly due to condition (in the absence of listing agent/broker fraud).[/quote]

Actually it makes sense that short sales sell for less than REOs. I know sellers and homeowners don’t like the comps, but tough luck.

With a short-sale, the bank avoids the process of taking back the house, cleaning it up and relisting it. The buyer has to deal with the uncertainty. There’s value in that.

Here’s a short sale for $125,000
http://www.redfin.com/CA/San-Diego/12015-Alta-Carmel-Ct-92128/unit-295/home/6789581

Here are REOs for 16% more in the same complex.
http://www.redfin.com/CA/San-Diego/12019-Alta-Carmel-Ct-92128/unit-278/home/6747344
http://www.redfin.com/CA/San-Diego/12071-Alta-Carmel-Ct-92128/unit-88/home/7530005

The buyer of the short sale did well.

[sdrealtor]

FYI on the short sale. It shows buyer agent to be “out of area agent”. Thats usually a realtor who represented both sides but is trying to hide from their peers the fact that they slipped their own undermarket buyer into the house. It doesnt fool any of us.

BTW, those REO’s havent closed yet and those are asking not sold prices. The first REO looks like it is on the top floor which should be a $10K premium anyway. Not great examples Brian.

[Essbee]

[quote=bearishgurl/] I have a couple more questions, Essbee. I’m not the least bit interested in WHERE you sold and bought but more interested in WHAT you sold and WHAT you bought to replace it.

Here is an example:
Please feel free to use round numbers for house sf and price sold or bought (for privacy purposes). Truly, I’m not interested in locating your transactions nor do I have the time.

I understand the reasons you put forth above (sort of) but am wondering what would compel someone to leave $75K? on the table when, from your posts on this thread and the “man-cave” thread, it appears you went to great lengths to remodel/improve your last property to your liking and then later decided to let it go and (literally) give away your hard-earned improvements to the buyer (along with most of the value of your downpayment).

I understand from your post that you had two additions to your family while living in your last house. I personally don’t see SFR’s in SD County going up appreciably (if at all) in the next two years. I also don’t see a big mtg interest-rate spike in the next two years but I could be wrong on this :={

Thanks for any insight you can shed here![/quote]

OK, why not?

Recently sold for $560K
SFR, 3 bdrm/2.5 bath, 2 car gar, 2 story
1800 sf
10000 sf lot
30 years old
7 miles from work

Recently bought for $800K
SFR, 6 bdrm/4.5 bath, 3 car gar, 2 story
3800 sf
7000? sf lot (can’t remember exactly)
9 years old
16 miles from work

I will miss the 10000 sf lot on the first house, which is quite lovely and certainly helped it maintain its value, but the overall feel of the neighborhood, etc, is much better for house #2.

(P.S. The “man/woman cave” (exercise room) is going to be in house #2.)

[bearishgurl]

[quote=Essbee][quote=bearishgurl]I understand from your post that you had two additions to your family while living in your last house. I personally don’t see SFR’s in SD County going up appreciably (if at all) in the next two years. I also don’t see a big mtg interest-rate spike in the next two years but I could be wrong on this :={

Thanks for any insight you can shed here![/quote]

OK, why not?

Recently sold for $560K
SFR, 3 bdrm/2.5 bath, 2 car gar, 2 story
1800 sf
10000 sf lot
30 years old
7 miles from work

Recently bought for $800K
SFR, 6 bdrm/4.5 bath, 3 car gar, 2 story
3800 sf
7000? sf lot (can’t remember exactly)
9 years old
16 miles from work

I will miss the 10000 sf lot on the first house, which is quite lovely and certainly helped it maintain its value, but the overall feel of the neighborhood, etc, is much better for house #2.

(P.S. The “man/woman cave” (exercise room) is going to be in house #2.)[/quote]

Thanks, Essbee. Congratulations on your new purchase!

Often, buyers “state” they want to “move up” but in reality they instead end up paying a LOT more $$ for about the same size house & MUCH less lot in an inferior location to the old one, just to get newer construction. It seems here that you really did “move up” size-wise. That’s a HUGE house that should last you a VERY long time (no matter how big your family or extended family becomes)!

Due to the fact that 3800 sf homes are VERY hard to find at ANY price range in 30+ yo (or even 20+ yo) neighborhoods in SD Co (ESP under $1M), you likely would not have been able to find that type of home in more convenient older areas in your price range.

And because of the big price difference between your old and new home, we can now see why you wanted to get in ASAP at the very lowest possible interest rate.

You didn’t do too bad commute-wise for the size tradeoff, either. Would you say it’s an additional 15-20 mins each way?

[sdrealtor]

esbee
Did you move to a far flung lizard infested HOA and Mello Roos encumbered community in the far reaches of SD? Maybe some horrific place like 4S Ranch or San Elijo Hills? Nosey inquiring minds demand to know the details?

Just kidding! Enjoy your home. Sounds like a smart move to me.

[Essbee]

[quote=bearishgurl]
Thanks, Essbee. Congratulations on your new purchase!

Often, buyers “state” they want to “move up” but in reality they instead end up paying a LOT more $$ for about the same size house & MUCH less lot in an inferior location to the old one, just to get newer construction. It seems here that you really did “move up” size-wise. That’s a HUGE house that should last you a VERY long time (no matter how big your family or extended family becomes)!

Due to the fact that 3800 sf homes are VERY hard to find at ANY price range in 30+ yo (or even 20+ yo) neighborhoods in SD Co (ESP under $1M), you likely would not have been able to find that type of home in more convenient older areas in your price range.

And because of the big price difference between your old and new home, we can now see why you wanted to get in ASAP at the very lowest possible interest rate.

You didn’t do too bad commute-wise for the size tradeoff, either. Would you say it’s an additional 15-20 mins each way?[/quote]

SDRealtor and Bearishgurl,

I’m know I’m about to give out so much info that someone COULD identify me (or at least one of the relevant transactions) if they feel so inclined, but I guess don’t really see the harm.

YES, we bought in 4S Ranch. I’ve read this blog long enough to get some of the inside jokes, too. 🙂 We bought in the older side, south of Camino del Norte.

[Incidentally, I think this blog opened my eyes to the fact that new construction (Del Sur) would require a large cash outlay for landscaping. Also made me rethink the much higher Mello Roos over there.]

RE: the price difference, we ended up putting down a 25% down payment (long story… stupid appraisers/ lenders!), so there was a huge cash outlay for house #2. However, despite a larger mortgage, the monthly mortgage payment itself is now actually LESS than the mortgage payment for house #1. (Huge difference between a 4.125% and a 6% interest rate).

Of course, property tax, HOA, and Mello Roos are all more for house #2, so the overall monthly costs will be more, but like you said, it’s a LOT more house. Incidentally, even house #1 (30 yrs old) had an HOA fee. And our Mello Roos are not bad because we are in the South side of 4S.

As for the commute, not sure yet. We’re in a rentback phase and actually move in a few days.

[sdrealtor]

Sounds good to me and Lizards make fine pets.

[briansd1]

[quote=sdrealtor]FYI on the short sale. It shows buyer agent to be “out of area agent”. Thats usually a realtor who represented both sides but is trying to hide from their peers the fact that they slipped their own undermarket buyer into the house. It doesnt fool any of us.

BTW, those REO’s havent closed yet and those are asking not sold prices. The first REO looks like it is on the top floor which should be a $10K premium anyway. Not great examples Brian.[/quote]

Not sure about about the out of area agent think. The buyer’s agent is out of area, but the seller’s agent is in San Diego.

Not in San Diego, but I have an offer on a place listed by an out of area agent. The list price is about 10% low, but I don’t know the listing agent.

Anyway, BG has a problem with the “teaser” prices of short sales, but I don’t see a problem with them. There are issues with wait and the work involved with short sales, so the banks should be thankful they don’t have to deal with them.

[bearishgurl]

[quote=sdrealtor]Sounds good to me and Lizards make fine pets.[/quote]

As you well know, ’tis a fact of life that we have to accept lizards in our midst when we want square footage that cannot be had in older, more established areas for anywhere near the same price (IF available at all) ;=]

[bearishgurl]

[quote=briansd1] . . . BG has a problem with the “teaser” prices of short sales, but I don’t see a problem with them. There are issues with wait and the work involved with short sales, so the banks should be thankful they don’t have to deal with them.[/quote]

brian, as you know the wait for approval is so long on many of these transactions that often the aggrieved lender could have foreclosed several times over by the time the transaction closes (IF it closes). Instead these idiot lenders choose to let the defaulted mortgage balance, fees and deferred interest (if applicable) pile up month after month while their opportunist-trustor lives for free with their paid-for luxury vehicles sitting in the driveway and lets the property go to waste.

The first WINNERS of this game are the RE brokers/agents and other ancillary RE svcs making commissions and fees. (I’m NOT saying they don’t deserve it.) The other WINNERS are the deadbeat homedebtors who get to keep their equity they extracted and whatever else they bought with it. (I AM saying they don’t deserve it.)

The LOSERS are all other surrounding property owners and US taxpayers, including our children who have not yet become old enough to pay taxes.

Lender malaise is at the root of this problem.

[Author]

Posts