San Diego Inventory Sucks…

[no_such_reality]

[quote=CA renter][quote=no_such_reality][quote=CA renter]I don’t think these investors really understand what they’re getting into. [/quote]

Yes they do. For the bigger funds, it’s a distributed apartment complex that will be managed by a subsidiary that will be indistinguishable from the IAC arm of the Irvine Company.

Or the smaller ones, a cut-rate West Side Rental churn and burn.

And what that really means is that sans a significant vacancy problem, renters will see severe upside pressure in rents and churn.[/quote]

Fair enough. We’ll see how things go in 5-7 years.[/quote]

Don’t get me wrong, I think it’s really bad for housing and people the move by hedge funds into housing.

Personally I consider most of the PM firms in LA/OC to be marginally better than slum lords.

I suspect any renters not willing to fight, against people that love to fight, basically will be forfeiting their security deposit and facing the maximum possible rent increase at every opportunity.

[UCGal]

[quote=The-Shoveler]Well I got to throw this out as well, all the time I have been a home owner, I have NEVER lived less than 45 minutes from work., almost EVERYONE of the CA natives I know have ever lived less than 30 minute’s drive from work, none of them had an ocean view home from their first home at least.

None of them bought a New home as their first home, in fact most of the homes were at least 30 years old and needing some repair.

Most were 30, or near 30 when they bought their first home in SoCal, Meaning they were well on their way to established careers by the time they bought their first home in SoCal.

Yes it has ALWAYS been tough to buy a home in SoCal I would say especially for boomers (we had a lot of competition, each other!).[/quote]
As someone at the very tail of the boomer generation (born in early 60’s)…

I left CA in the 1990 because I couldn’t afford the housing…
I bought in WA state… a 2bedroom fixer. I made money. Then moved states again for work.
I bought in PA state… A 4 bedroom twinhome (semi-detached) made money. And moved back to CA…. in my early 40’s.

In both previous purchases (WA and PA) I looked at 15-20 houses, easily… maybe more, before deciding to purchase. My budget was limited by my down payment (this was back when 20% down was the RULE not the exception.) So I wanted the best value for the $$. Both homes were older fixer upppers..

When I moved back home, my criteria was extremely limiting. Within 5 miles of the coast. (Not ocean front, but some coastal weather effects.) Within 30 minutes of work.
Actually – the less than 30 minutes of work was a requirement for all home purchases. I was willing to trade size/newness for proximity.

I agree that some first time home buyers seem to want to start out with their forever homes. They seem unwilling to do improvements or repairs. That’s their choice…. but it limits their options and may keep some out of the market.

Buying when I did, and moving up in size/value each time… allowed me to put a HUGE downpayment when we purchased here. (we financed less than 50% of the purchase price.) If I’d waited for the perfect home I wouldn’t have been able to make equity gains with each transition.

[Coronita]

I surrender… No more new active rental property search for me in SD until we see an economic correction. Beyond a ss I’m waiting on that’s it…

Have fun guys…

[SK in CV]

[quote=flu]I surrender… No more new active rental property search for me in SD until we see an economic correction. Beyond a ss I’m waiting on that’s it…

Have fun guys…[/quote]

A correction would imply something is out of whack now. Are you expecting a residential housing correction? Or a general economic correction? What do you think is currently broken?

[bearishgurl]

[quote=flyer]I agree, TS. As a native, I’ve seen that all of my life also, but it seems that it’s becoming more and more challenging as time goes on.[/quote]

I don’t think it’s more “challenging” for FTB’s to buy a home in SD County today, flyer. Except for the current “low inventory” and the high amount of “contingent” listings and all-cash sales (ALL “temporary” situations, IMO), there are currently traditional-sale properties out there in nearly every zip code to buy.

If more sophisticated and usually older “all cash” investors habitually pounce on these “older” new listings, a FTB who won’t even make an appt to see them after spotting them on a map on the internet has to ask themselves why.

Shoveler is correct. The houses we bought were 18-45 years old (at the time … now much OLDer) and many were VA/FHA repos which were sold in a VA/FHA sealed-bid system by a local property manager. ALL were absolutely “as is” and MANY were pretty rough, requiring the buying party to walk thru multiple rooms of trash, clothing and discarded household goods.

Even “traditional sales” often needed multiple major repairs … but were “livable.”

It was not uncommon for a new buyer to get keys to a fmr gov’t repo and pull in a 20′ or longer dumpster the next day or bring a flatbed in and load up several rusty old appls off the property, as well as junk and trash piled high from room to room. Kitchens often were extremely filthy and their range vents clogged with grease, even if the appliances were fairly new. Bathrooms were filthy and clogged as well.

Why did boomers want these properties? One reason. Sweat equity to the tune of $7-$10K per year of ownership (depending on location), just by hauling out, cleaning up, shoring up or planting new landscaping, painting and installing new window and floor coverings and whatever other minor repairs were needed.

That’s it. It was work one could do after work and on the weekends, while living in 1-2 rooms or on an air mattress.

The current generation of family-raising buyers (Gen Y and younger Gen X) is better-educated and so makes more money during work hours than boomers did. Due to much lower interest rates than boomers had to contend with, many of these buyers seem to be able to afford something more than a “starter home.” In addition (and MOST IMPORTANTLY), they have thousands of properties from within CFD’s to choose from, which are newer and often have wireless internet in every room, double-paned windows and lie within a HOA. Virtually none of these younger buyers seem to care about sweat equity. They just want what they buy to be ready to move right into at closing and to “flow” and fit their furniture in.

Most want their first property to be “perfect” and so are attracted to properties which have less wear and tear (newer) which are not in the most convenient locations. Since location is the best indicator of value in CA coastal counties and always has been, these young buyers will very likely not be able to garner any “sweat equity” from buying properties in new(er) subdivisions in which they only put in a bit of “cosmetic work” or no work at all (because it didn’t need any).

Entire blocks of these *newer* properties are filled with “worker bees,” many with few assets and nearly all whose total household income is tied to their job stability. In these newer subdivisions, is rare to find a paid-off home or a young family who purchased with all cash. When RE values go down (as it does/did in a normal RE cycle), nearly EVERY owner for blocks around who recently purchased at about the same time finds themselves “underwater,” thus this is the beginning of “distress” for the entire subdivision, which severely erodes all owners’ values.

Boomers didn’t have to deal with any of this. There were always plenty of paid-off homes and homes with extremely-low mortgage balances interspersed with those homes of young families. Boomers didn’t “flock” to a handful of zip codes, shunning the rest. They bought close to work and other family members, wherever that was.

The vast majority of FTB’s today don’t seem to care whether they will ever be able to sell for a profit. This doesn’t seem to be important to them, even if they want to stay in their properties ~15 years, because it never occurs to them that they could be forced to sell at any time, due to life changes, job loss and/or high medical bills not covered by insurance, for example.

As a potential buyer, knowing what a property would resell for on a bright sunny day after being cleaned up and rehabbed a little was always at the top of my mind while “touring” a listing with my clipboard (before even making an offer). Yes, even with an infant or a baby/toddler in a stroller in tow. And I know I wasn’t and am not alone in my thinking.

In a nutshell, there are vast differences in the values of FTB’s and 2nd TB’s between boomers and Gen Y.

[flyer]

BG, although I, personally, did not have the same home buying experiences you mentioned with regard to many Boomers, I do agree with your analysis of the changing dynamics at play.

When I mentioned that it seems the home-buying experience is becoming more challening today, I was actually referring to the costs involved, etc., (especially if you actually want to own the property),compared to when I was purchasing the bulk of our properties.

I know everyone has their preferences, but much as UCGal mentioned, most of my family, and my wife’s family has always been drawn to NCC (others just coastal) for climate, schools, easy commutes, etc., long before that lifestyle became so in vogue with the current crop of buyers. NCC living is not really a new way of life as many seem to believe.

At any rate, regardless of preferences, everyone should try to enjoy life, because, as you also said, it is short, and there is much to do!

[bearishgurl]

[quote=flyer]BG, although I, personally, did not have the same home buying experiences you mentioned with regard to many Boomers, I do agree with your analysis of the changing dynamics at play.

When I mentioned that it seems the home-buying experience is becoming more challening today, I was actually referring to the costs involved, etc., (especially if you actually want to own the property),compared to when I was purchasing the bulk of our properties.

I know everyone has their preferences, but much as UCGal mentioned, most of my family, and my wife’s family has always been drawn to NCC (others just coastal) for climate, schools, easy commutes, etc., long before that lifestyle became so in vogue with the current crop of buyers. NCC living is not really a new way of life as many seem to believe.

At any rate, regardless of preferences, everyone should try to enjoy life, because, as you also said, it is short, and there is much to do![/quote]

flyer, I didn’t realize RSF and other communities situated inside the covenant were considered “NCC.” Nor is Carmel Valley, where you have stated here that you purchased rental investments. I would consider both of these areas “inland” but not far from the “coastal zone” as is dtn Chula Vista (~1 mile from SD Bay).

Before the heavy development of Sorrento Valley/Sorrento Mesa and Carroll Cyn Rd in Scripps Ranch, dtn SD, Mission Valley and Kearny Mesa WERE where most of the jobs were.

My workplace has always been centered in or near dtn SD so living <= ten miles from THERE has always been my preference .... and actually still is. And, contrary to popular (often misinformed) belief, there are many top-rated schools in metro SD and south county.

Obviously, if you were based out of SD when you flew, your “workplace” was Lindbergh Field, no? If so, it stands to reason that your fav streets in Sunset Cliffs are far more convenient to LF than RSF 🙂

Climate, schools and easy commutes can be found in several areas of the county 🙂

That was the thrust of my previous post. A good portion of today’s young-family prospective buyers seem to be shunning entire swaths of the county and there is no reason for it. The “prospective FT buyers” in SD County that are still doing this in the current RE climate are making their own beds, causing them to sleep in them as “perpetual tenants.”

IOW, don’t whine that there is “nothing to buy” when it just isn’t true. “Pickiness” never got a buyer anywhere in an era of rising prices, except back in their rental or a parent’s back bdrm.

From the article in the OP:

Ashley and Brian Standing have been house hunting for about a year, and they’re a little tired of the hunt.

In the past 12 months, the young San Diego couple have put in 80 to 100 offers on homes in the $500,000 to $750,000 range in areas like Point Loma, Ocean Beach and Bay Park. They admit some of their offers have been lowballs, but they learned quickly that those wouldn’t work. At times, they’ve tried bidding $20,000 to $30,000 above asking price but still nothing.

“It’s been insane,” Brian said. “When we first got into the market, there was still more inventory. I don’t know if at the beginning we were more picky as far as putting in offers. But over the last nine months, we’ve been operating as not-as picky.”

…The losers in many of these cases are traditional house hunters like the Standings.

“We’re definitely discouraged,” said Brian, who is a firefighter. “We’re staying with my wife’s parents, so that has given us the ability to be picky and be patient … We’re in this for the long haul.”

Ahem ….. Let me see if I have this story straight.

A “firefighter” and his spouse are making offers on “starter homes” in three of SD’s finest ‘hoods (unrealistic expectations, anyone?). All of these hoods are 50-85 years old. At first they were “picky,” lol, but now they have realized they shouldn’t be `as picky’ if they’re going to be a successful buyer in their price range (but they can afford to be picky for the long haul because they’re staying in mom’s back bdrm whilst saving more $$ during a time of rising prices) :=0

The Standings have made 80-100 offers over the last year, all to no avail. For the first ~3 months of their “search,” they were “lowballing” (equity sellers??) in SD’s finest ‘hoods :=D

Uhhhh … what did they expect would happen?

You have to ask yourself here, WHO is their agent? And is there ANYBODY steering this ship??

Good L@rd, this is just unbelievable . . . is the reader supposed to “feel sorry” for this couple?

I couldn’t have illustrated the “Gen-Y picky phenomenon” any better myself :=0

[CA renter]

BG,

Not sure if the article said what the wife did for a living, nor if they had any kind of money from inheritance, etc. They may well not be looking for “starter” homes (not in that price range), so they have the right to be picky.

We had spent over 10 years looking at hundreds of houses, and finally found what we wanted at the right price. We have zero regrets. For you, it might not be desirable to spend a lot of time looking for a house, but for other people it is worth it, and very much so.

You also have to realize that many of the Baby Boomers didn’t have college degrees, and many of the working-class neighborhoods back then were filled with other people very much like themselves: decent, hard-working, but not wealthy or aspirational. They had simple, but fairly well-maintained homes in decent neighborhoods with fairly low crime rates. Today, many of those same neighborhoods have been taken over by gangs and people who do not have the same beliefs about maintaining their homes and neighborhoods, and are a major contributing factor to the higher crime rates.

If today’s first-time buyers are better educated and generally older as a result of putting off a home purchase because they’ve pursued their educations and have worked their way up in the corporate world, they will expect more than the 23 year-old mechanic and receptionist wife of years past. That does not make them more “entitled,” it just means that they expect to live in a home and neighborhood with other people who are similarly situated.

We have to remember that we are all different, and times have most certainly changed. There is no reason for today’s buyers to be bullied by idiotic realtors into over-paying for homes when all the cards are stacked against them by way of artificially suppressed interest rates and artificially constrained home inventories along with the deluge of “investors” competing with them because of the Federal Reserve’s dangerous attempts to prop up asset prices in the face of stagnant/declining wages.

[bearishgurl]

[quote=CA renter]BG,

Not sure if the article said what the wife did for a living, nor if they had any kind of money from inheritance, etc. They may well not be looking for “starter” homes (not in that price range), so they have the right to be picky.

We had spent over 10 years looking at hundreds of houses, and finally found what we wanted at the right price. We have zero regrets. For you, it might not be desirable to spend a lot of time looking for a house, but for other people it is worth it, and very much so.

You also have to realize that many of the Baby Boomers didn’t have college degrees, and many of the working-class neighborhoods back then were filled with other people very much like themselves: decent, hard-working, but not wealthy or aspirational. They had simple, but fairly well-maintained homes in decent neighborhoods with fairly low crime rates. Today, many of those same neighborhoods have been taken over by gangs and people who do not have the same beliefs about maintaining their homes and neighborhoods, and are a major contributing factor to the higher crime rates.

If today’s first-time buyers are better educated and generally older as a result of putting off a home purchase because they’ve pursued their educations and have worked their way up in the corporate world, they will expect more than the 23 year-old mechanic and receptionist wife of years past. That does not make them more “entitled,” it just means that they expect to live in a home and neighborhood with other people who are similarly situated.

We have to remember that we are all different, and times have most certainly changed. There is no reason for today’s buyers to be bullied by idiotic realtors into over-paying for homes when all the cards are stacked against them by way of artificially suppressed interest rates and artificially constrained home inventories along with the deluge of “investors” competing with them because of the Federal Reserve’s dangerous attempts to prop up asset prices in the face of stagnant/declining wages.[/quote]

CAR, you can’t possibly be suggesting that this couple spend “ten years” in mom’s back bedroom while they “pick” thru a dearth of inventory in SD’s finest coastal hoods, ESP during a (lengthy?) period of rising prices? Or while they wait for the economy and the PTB to “right themselves? Or should they?? And if so, do you actually think they can continue to be “picky” and also be able to successfully consummate the purchase of a 50-85 year-old “coastal” home costing under $750K?

IMHO, in ANY RE climate, 80-100 offers by ONE buyer in ONE year just reeks of agent/broker incompetency. Even a “layman” reading this article has got to ask themselves, “What is REALLY going on here?”

CAR, you must admit you didn’t make “dozens of offers.” 80-100 offers in one year is an average of two per week. This means they weren’t likely waiting months on answers from short sales. Instead, “equity sellers” were likely turning them down flat without countering (they were likely insulted) 🙂

This doesn’t speak well of their agent/broker’s competency.

$500K to $750K IS a “starter home” in those areas …. that is, IF one can be found that has had nothing done to it and does NOT sit on a premium lot, view lot or both.

These three areas weren’t full of SS’s OR REO’s. There were “very few” of both in all of them in years past. Why?? Again, a wealth of paid off properties and very high-equity (SFR) owners abound in those areas.

How on G@d’s earth did these buyers think they could “lowball” an “equity” seller in these areas and expect someone who doesn’t HAVE to sell to give their properties away?

The point I was making is that “firefighters” or ANY similarly-situated workers of “yesteryear” (college-educated or not) wouldn’t be looking for their first house in those three areas! Not even close.

H@ll, no.

The “expectations” of the vast majority of Gen Y have run amuck. It’s going to be interesting to see where the Standing’s “lofty expectations” end up when interest rates rise while they’re sleeping on mom’s pillows. What if they had to pay 10%+ for a prime conventional mortgage …. like “boomers” did? What would this do to their “expectations?” Gen Y (as FTB’s) have been “spoiled” by the availability of cheap “artificially-lowered” mortgage money. I’ll bet this couple in the OP article is staying with “her parents” (likely age 50-60) in a neighborhood that they feel they wouldn’t be caught dead making an offer in themselves! But it was “mom and dad’s” third house (after selling twice and moving up in equity).

The ‘hoods these youngsters are hoping to buy in are “move-up” areas, typically purchased by cash buyers and third-time buyers or higher. Many successful buyers in these areas are deep-pocketed enough to do a gut/remodel immediately after closing and before moving in. In essence, in their price range, most of the value is in the lot.

Oh, btw, those VA/FHA repo lists I spoke of? They came out once weekly in the SD Union for about 14 years.

There were plenty of properties on these lists to bid on in north county at the time. Yes, even in La Costa. At that time, there wasn’t a lot of housing there (that was “legal” and above-ground, in any case). The tract(s) that WERE there were situated on what we (in RE parlance) called a “Type `A’ Flood Plain.”

Of course, the lagoon has since been dredged a few times over and shored up on one end … that is, only AFTER lawsuits were filed … and adjudicated/settled.

And those two SD ‘hoods which we bought our govm’t REO’s in? They weren’t “gang-infested” back then and are not now. One of them has TWO renowned (SDUSD) schools within it (one with a very lo-o-o-ong waiting list) 🙂

….The low inventory has left homebuyers submitting multiple bids and upbidding each other, pushing up prices and putting a damper on the idea of finding a deal on their dream property, experts say….

Pray tell, WHY is a FTB searching for a “dream home?” Methinks that is supposed to come MUCH later in life.

That statement is a very apt synopsis of the “values problem” of many of today’s FTB’s.

Certainly, our “sample $500-$750K buyers” have a right to be picky … just not in the areas they have been “shopping” in, IMO.

[CA renter]

Honestly, I think that these buyers would benefit from higher rates. It’s not the buyers who’ve benefited from low rates, but the sellers, who could sell for higher prices, and existing homeowners who could refi into lower rates.

If staying at mom’s house enables them to save a lot of money in the next ten years, they may well find themselves in the enviable position of having a large amount of cash when rates are much higher and the investors’ attention moves on to other investments that are more profitable and easier to manage in a high-rate environment.

Nobody knows, but the current market is very much a seller’s market, so it might be best for many buyers, depending on their personal situations, to wait out this period of “irrational exuberance” that’s been caused by the heavily manipulated interest rate and housing market environments.

[flyer]

When I refer to NCC, I probably (incorrectly) consider that to be anything within a few miles of the ocean such as where we are in RSF, as well as our rentals in CV, etc.

We actually chose these locations out of preference, and when I/we fly out of Lindbergh, or any other airport in San Diego, it’s still a fairly easy commute.

Many pilot and other friends do live closer to the airport in SC and PL, and the commute is definitely more convenient for them. We all enjoy boating, and some even prefer to live on their boats, but we’re happy where we are, and don’t mind driving down to the airport, bay or ocean once a week or so + lots of family live in those neighborhoods.

As far as BB’s vs. any other generation having higher expectations with regard to housing or anything else, or being more discriminating in their life choices–I guess there are always generalities floating around–but we know many BB’s like ourselves who are highly educated and extraordinarily discriminating when in comes to housing, and other aspects of life, as well as individuals in other age groups with these same standards.

The main difference, perhaps, if there is one, is that many discriminating BB’s can actually AFFORD to live the lives they have chosen to live.

I truly hope that whatever choices younger generations make with regard to housing, or life in general, they end up living the lives they want to live as we have, and that they have the funds to do so–through retirement–THAT will be their REAL challenge in life.

[an]

[quote=AN][quote=AN]Right now, there are only 18 SFR and 5 condo for sale. The supply is pretty horrible right now.[/quote]
Spring hasn’t even started yet and it looks like inventory has already gotten worse. Now, there are only 16 SFR and 4 condo for sale today (active).[/quote]SFR went up to 22 but condo went down to 0. It’s official, no condo for sale in MM ATM.

[Coronita]

[quote=AN][quote=AN][quote=AN]Right now, there are only 18 SFR and 5 condo for sale. The supply is pretty horrible right now.[/quote]
Spring hasn’t even started yet and it looks like inventory has already gotten worse. Now, there are only 16 SFR and 4 condo for sale today (active).[/quote]SFR went up to 22 but condo went down to 0. It’s official, no condo for sale in MM ATM.[/quote]

Wow. That means someone bought that 1/1 we talked about being ridiculously overpriced of $174k on the east side.

Time to prepare my condo for sale… Maybe some sucker… Err… I mean “investor” will pony up $250k+??? Just kidding…Sort of….

BTW: I’ve signed up the purchase list on the pardee community in MM…Don’t know why, but hey at least I’ll have the option.

*edit*.. AN, I think the data mining that you’re doing might be leaving some out… It seems like the $174 overpriced condo is still active… Drat!

http://www.sdlookup.com/MLS-130005669-10226_Black_Mountain_Rd_73_San_Diego_CA_92126

[an]

[quote=flu][quote=AN][quote=AN][quote=AN]Right now, there are only 18 SFR and 5 condo for sale. The supply is pretty horrible right now.[/quote]
Spring hasn’t even started yet and it looks like inventory has already gotten worse. Now, there are only 16 SFR and 4 condo for sale today (active).[/quote]SFR went up to 22 but condo went down to 0. It’s official, no condo for sale in MM ATM.[/quote]

Wow. That means someone bought that 1/1 we talked about being ridiculously overpriced of $174k on the east side.

Time to prepare my condo for sale… Maybe some sucker… Err… I mean “investor” will pony up $250k+??? Just kidding…Sort of….

BTW: I’ve signed up the purchase list on the pardee community in MM…Don’t know why, but hey at least I’ll have the option.

*edit*.. AN, I think the data mining that you’re doing might be leaving some out… It seems like the $174 overpriced condo is still active… Drat!

http://www.sdlookup.com/MLS-130005669-10226_Black_Mountain_Rd_73_San_Diego_CA_92126%5B/quote%5D
I’m using redfin and I filter out all pending and only have it show active listings.

[UCGal]

[quote=AN][quote=flu][quote=AN][quote=AN][quote=AN]Right now, there are only 18 SFR and 5 condo for sale. The supply is pretty horrible right now.[/quote]
Spring hasn’t even started yet and it looks like inventory has already gotten worse. Now, there are only 16 SFR and 4 condo for sale today (active).[/quote]SFR went up to 22 but condo went down to 0. It’s official, no condo for sale in MM ATM.[/quote]

Wow. That means someone bought that 1/1 we talked about being ridiculously overpriced of $174k on the east side.

Time to prepare my condo for sale… Maybe some sucker… Err… I mean “investor” will pony up $250k+??? Just kidding…Sort of….

BTW: I’ve signed up the purchase list on the pardee community in MM…Don’t know why, but hey at least I’ll have the option.

*edit*.. AN, I think the data mining that you’re doing might be leaving some out… It seems like the $174 overpriced condo is still active… Drat!

http://www.sdlookup.com/MLS-130005669-10226_Black_Mountain_Rd_73_San_Diego_CA_92126%5B/quote%5D
I’m using redfin and I filter out all pending and only have it show active listings.[/quote]

It shows on redfin as active, also.

http://www.redfin.com/CA/San-Diego/10226-Black-Mountain-Rd-92126/unit-73/home/4855368

[Author]

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