San Marcos Price Reduction

[sdrealtor]

Actually my experience has been that right or wrong, people buy the house they want to live in and not necessarily the cheapest one. If the 599 is the one they like the best for some reason that it makes it unique to them then that is the one they will buy. A difference of $25,000 or less typically wont sway people’s choices. Renter’s dont put so much emphasis on the house because they dont expect to be there more than a year or two. Most buyers expect to remain in a house longer than they probably will actually stay there.

Everything you say makes logical sense but people buy homes emotionally and their decisions often dont make sense. I cant tell you how many times a buyer has told me what they NEED and what they WONT buy only to buy exactly what they say they didnt want.

Same thing with cars….you go in looking for the economical car and leave with Sports car touring edition.

[ocrenter]

sdrealtor, it appears xx7 Via Del Caballo went into escrow and fell out after a few weeks. recently it just became inactive again. can you update us on the current situation? I’m assuming at $519,900 (they increased the price a bit) they should have found a buyer. I’m also assuming as long as escrow close before the actual Auction date everything should be ok.

[sdrealtor]

It’s currently off the market and I dont know what is going on. My guess is that eventually it will get foreclosed upon. However, it looks like I was pretty much on target with my assessment of things over there. Those looking for a dramtaic crash to 500K have been sadly disappointed.

There are currently 12 homes on the market in the tract and there 2 more that are in escrow. In the last 60 days 4 homes have closed escrow with prices of $580,000, $590,000, $595,000 and $597,500.

The pricing of the homes on the market suggests the sellers are looking to get $575 to $600K. The pricing of the homes in escrow suggest they got between $550K and $575K. These sellers stepped to the front of the line (i.e. reduced price just a tad below the others and got theirs sold). The others are holding the line abover $575K and eventually others will step forward and sell at slightly lower levels.

UPDATE:
One of the pendings just closed. Asking price was 549 to 569 and it closed for 547.

[ocrenter]

I don’t think folks were looking at those going down to $500,000 instantly. It is sticky on the way down. We got this foreclosure coming up, we also have another one pending foreclosure as well. One of the homes for sale is being rented at a $2000/month loss, and that one is actually part of the 7 homes owned by an investor that is pending default on all 7 properties. So in the next few months there’s going to be 3 homes going thru foreclosure in that tract alone. I can’t imagine prices continuing to hold up following that.

[jabrwoki]

sdrealtor,
appreciate your insights as a realtor. One thing I never understood was this BS call value range pricing. I can understand the significance of a lower limit on bids which will be looked at by the buyer but why bother with the upper limit. Are they saying they dont entertain bids above the price ? Or are they hinting to the seller how much they think their property is really worth ! Dont they give the buyer even an iota of credit for looking around to see how much to bid.

thanks

[sdrealtor]

It’s a marketing gimmick to increase interest in a property. Lets say you have a house worth 525K in a rising market. When you price it at 499 to 550, it turns up in searches up to 500 and the seller hopes the people at the lower end will stretch. It also built in cushion when the market was rapidly increasing for overbidding. Now it is used when the seller thinks their house is worth 525 to 550 but the agent things more like 500. Personally, I think it confuses the hell out of buyers.

[Bugs]

I’m seeing a larger percentage of sales closing at prices that are below their listing ranges. I’m seeing almost nothing selling any higher than the middle of their ranges. The days of overbids are over. I’m seeing more and more markets where the tramsactions with the highest sales are becoming too dated to use in an appraisal, and where listings are lower than the previous sales. Come July 1, most appraisers will stop using 2005 transactions as comparables, leaving only the sales that have occurred so far this year.

Once the regional market is conclusively proven to be in decline, the lenders will be compelled to switch gears on their underwriting. They can no longer assume that prices will continue to increase, thereby compensating for any errors. Interest rates don’t have to go up much to affect a decision on a mortgage transaction – increased underwriting requirements will kill a lot of deals that would otherwise have been done in years past.

I don’t think it will take very many deals going south because of tightening credit requirements to have an outsized effect on the market psychology.

[sdrealtor]

ABout 3 or 4 months ago I did a study on range pricing. Here’s what I found. Approx 50% sold below low end. 75% sold at or below 25 percentile. 90% sold at or below middle of the range. Sales at or near the top of the range were neglible. I’m sure its worse now. Range pricing as an effective pricing tool died in mid-2005

[ocrenter]

update on this tract of homes in San Marcos

xx7 Via Del Caballo (2358sqft) was unable to find a buyer at $519,000. It went to auction 7/20/06. I don’t know how long it takes for a REO to appear as a MLS listing, or maybe it was sold at auction. we’ll see.

xx1 Via Del Caballo (2445sqft) never came on the market. It is going to auction 8/17/06.

most homes in this tract are down to $520-550,000 asking price. we’ll see if these two homses about are going to make things interesting.

[ocrenter]

two more properties in the same community coming on line for foreclosure.

xx4 Via Del Caballo (2358sqft)
purchase price $446,000 3/04 (zero down)
purchase price $585,000 9/04 (zero down)

xx7 Camino Verde (2172 sqft)
purchase price $364,500 12/02
HELOC $70,000 9/03
refinance $448,000 9/05

so that’s 4 properties either just gone thru auction or just received their NOD in 1 small gated community. and on top of these there are 14 homes for sale. There’s at least one other property in the pipeline for foreclosure. In 4-6 months there will be at least 5 REO’s in this property. serious price drops will have to be necessary at that time.

[ocrenter]

“Those looking for a dramtaic crash to 500K have been sadly disappointed.” sdrealtor, 6/06.

San Marcos currently has a 1 year supply of homes for sale, now we got 4 foreclosures in one single community. I’m now looking at these properties going down into low $400,000’s mid to late next year.

[JES]

Couple points:

-I have been in that neighborhood numerous times and it is a fairly nice, gated community east and adjacent to Cal State.

-There is a Sprinter train station being built a couple hundred yards north of that neighborhood, at LaMore and Barham Ln. Possible reason for the # of homes for sale. We’re talking diesel trains, every 15 minutes all day long, and traffic from the station and students.

-The university has plans to build nearby as well, but I don’t know exactly where. It could be that a dorm will be built directly behind the neighborhood, who knows. Would have to look at the Cal State master plan for that.

-Look at the neighborhood to the west of this, Silvercrest by Centex (sold out) off of Shelley Dr. Actually go drive it…there are 12+ homes for sale on just the first 2 streets and all are reduced and none pending (last I checked). Edgewater Dr. is one of the roads in there.

[sdrealtor]

OCR,
I stand by my comments on 6/6 but dont disagree that we could get into the mid 400’s by the end of next year. However, there have been closed sales of $547K, $560K, $589K and $597K since my post on 6/6/06.

There are now 13 homes in the MLS, one priced at $520K to $545K after that the others are all clustered between the mid $500’s and mid $600’s. There are 2 in escrow at asking prices of $540K (a short sale that went quick in 2 days) and $585K. Sure there is a lot of inventory, but we just dont know how many of the owners NEED to sell. Clealry the four in trouble NEED to.

BTW, That neighborhood has always struggled for resales even in the boom market and isnt representative of the entire market. That area is full of people that couldnt afford to buy what/where they wanted but stretched to go there because they were new/relatively new homes. That will likely be one of the very ugly areas.

[speaker]

SD realtor is the devil!!!! he posted on 6/6/06!!!1

aaaaiiiiiiieeeeeeeeee!!!!!!!!!

“End of line.”

[sdrealtor]

Just was through this tract and remembered this thread from last Summer. When we last left prices were in the mid 500’s and ocrenter said “So in the next few months there’s going to be 3 homes going thru foreclosure in that tract alone. I can’t imagine prices continuing to hold up following that.” I have to admit that I thought this neighborhood would struggle mightily also and that prices would be down around $500K by now.

Lets see what happened in nearly 1 year in this less than prime cookie cutter tract neighborhood. Since the first of this year there was 1 sale under $500K but it was for the smallest plan which we didnt even see on the market last Spring. The homes that were selling for $550K to $575K last Summer are well…selling for $550K to $575K. In fact, four have closed in 2007. There are also 2 more in escrow and 1 on the market. Kinda shocking to me as I expected an area like this to struggle far more than it has. The impact of the distressed properties/foreclosures has been nil.

SDiablo

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