SD prices post fires

[Bugs]

The ratio of available inventory to sales in the 92067 zip areas prior to the fires was way excessive, like 14 months worth of inventory. Now it’s just excessive. Assuming that none of the 66 homes were to be rebuilt and all of those owners just went out and bought new homes the inventory would drop by 50% but you’d still have 7+ months of inventory sitting there, as well as a huge jump in readily buildable lots.

In the long run the prices in those areas are relational to the lesser areas throughout the county. The $3million home in RSF is judged by the market to be 600% better than the $500k home in Mira Mesa. If the MM home ends up dropping to $400k the RSF home isn’t going to somehow magically become 750% better just because it’s RSF. In fact, based on what I saw during the last bust, the spread on the RSF homes is more likely to compress to 500% x MM than stay at 600%.

About the only way I could see it would make sense (strictly from an economic standpoint) to buy now would be if you thought the market would bottom out in the next 2 years and the overall price declines in that area didn’t exceed 10% or even 15%. The idea of walking away from your entire downpayment – at least for awhile – is worthy of some consideration.

FWIW, I applaud the fact that you spent some time considering the ethical ramifications. There are lots of people in this world who would view this strictly in terms of the opportunities involved. And in my view our society is the worse for that.

[Bugs]

The ratio of available inventory to sales in the 92067 zip areas prior to the fires was way excessive, like 14 months worth of inventory. Now it’s just excessive. Assuming that none of the 66 homes were to be rebuilt and all of those owners just went out and bought new homes the inventory would drop by 50% but you’d still have 7+ months of inventory sitting there, as well as a huge jump in readily buildable lots.

In the long run the prices in those areas are relational to the lesser areas throughout the county. The $3million home in RSF is judged by the market to be 600% better than the $500k home in Mira Mesa. If the MM home ends up dropping to $400k the RSF home isn’t going to somehow magically become 750% better just because it’s RSF. In fact, based on what I saw during the last bust, the spread on the RSF homes is more likely to compress to 500% x MM than stay at 600%.

About the only way I could see it would make sense (strictly from an economic standpoint) to buy now would be if you thought the market would bottom out in the next 2 years and the overall price declines in that area didn’t exceed 10% or even 15%. The idea of walking away from your entire downpayment – at least for awhile – is worthy of some consideration.

FWIW, I applaud the fact that you spent some time considering the ethical ramifications. There are lots of people in this world who would view this strictly in terms of the opportunities involved. And in my view our society is the worse for that.

[Bugs]

The ratio of available inventory to sales in the 92067 zip areas prior to the fires was way excessive, like 14 months worth of inventory. Now it’s just excessive. Assuming that none of the 66 homes were to be rebuilt and all of those owners just went out and bought new homes the inventory would drop by 50% but you’d still have 7+ months of inventory sitting there, as well as a huge jump in readily buildable lots.

In the long run the prices in those areas are relational to the lesser areas throughout the county. The $3million home in RSF is judged by the market to be 600% better than the $500k home in Mira Mesa. If the MM home ends up dropping to $400k the RSF home isn’t going to somehow magically become 750% better just because it’s RSF. In fact, based on what I saw during the last bust, the spread on the RSF homes is more likely to compress to 500% x MM than stay at 600%.

About the only way I could see it would make sense (strictly from an economic standpoint) to buy now would be if you thought the market would bottom out in the next 2 years and the overall price declines in that area didn’t exceed 10% or even 15%. The idea of walking away from your entire downpayment – at least for awhile – is worthy of some consideration.

FWIW, I applaud the fact that you spent some time considering the ethical ramifications. There are lots of people in this world who would view this strictly in terms of the opportunities involved. And in my view our society is the worse for that.

[NotCranky]

“Well, we all march to the beat of our own drummers.”

Can’t argue with that one.

“but yea, at first I can pay just over 20% down at the top of my range and 50% down on the low end. Indeed, there are a couple of houses we like on the low end.”

I am glad you are waiting. I am glad Alex is waiting too.I think if it wasn’t for us piggs, and his getting priced out, he would have screwed himself.

Please send your agent flowers and my condolences.

[NotCranky]

“Well, we all march to the beat of our own drummers.”

Can’t argue with that one.

“but yea, at first I can pay just over 20% down at the top of my range and 50% down on the low end. Indeed, there are a couple of houses we like on the low end.”

I am glad you are waiting. I am glad Alex is waiting too.I think if it wasn’t for us piggs, and his getting priced out, he would have screwed himself.

Please send your agent flowers and my condolences.

[NotCranky]

“Well, we all march to the beat of our own drummers.”

Can’t argue with that one.

“but yea, at first I can pay just over 20% down at the top of my range and 50% down on the low end. Indeed, there are a couple of houses we like on the low end.”

I am glad you are waiting. I am glad Alex is waiting too.I think if it wasn’t for us piggs, and his getting priced out, he would have screwed himself.

Please send your agent flowers and my condolences.

[NotCranky]

“Well, we all march to the beat of our own drummers.”

Can’t argue with that one.

“but yea, at first I can pay just over 20% down at the top of my range and 50% down on the low end. Indeed, there are a couple of houses we like on the low end.”

I am glad you are waiting. I am glad Alex is waiting too.I think if it wasn’t for us piggs, and his getting priced out, he would have screwed himself.

Please send your agent flowers and my condolences.

[bsrsharma]

Don't you agree that a 3.5M house is a luxury Item and people should pay cash for that?

Yes; I personally would never buy anything above conforming limit unless I bring enough cash to reduce the loan to about $500K or so. Now, there may be some special circumstances like need to shelter large income from taxation (i.e. tax writeoffs) or need for cash for working capital if you are in a business (using lower rate mortgage as a business loan). But if raptorduck is certain of his cashflow, he may be smart in borrowing at low rate and buying an attractively priced asset that is definitely going to hold its value and payback with cheap $ later. I would consider RSF/La Jolla/Beaverly Hills etc., to be in that category. You are basically shorting US $ in the long run (30 years), which is a very good bet to take knowing what we know now about the coming entitlement tsunami and how it is practically going to destroy $ as we know it.

[bsrsharma]

Don't you agree that a 3.5M house is a luxury Item and people should pay cash for that?

Yes; I personally would never buy anything above conforming limit unless I bring enough cash to reduce the loan to about $500K or so. Now, there may be some special circumstances like need to shelter large income from taxation (i.e. tax writeoffs) or need for cash for working capital if you are in a business (using lower rate mortgage as a business loan). But if raptorduck is certain of his cashflow, he may be smart in borrowing at low rate and buying an attractively priced asset that is definitely going to hold its value and payback with cheap $ later. I would consider RSF/La Jolla/Beaverly Hills etc., to be in that category. You are basically shorting US $ in the long run (30 years), which is a very good bet to take knowing what we know now about the coming entitlement tsunami and how it is practically going to destroy $ as we know it.

[bsrsharma]

Don't you agree that a 3.5M house is a luxury Item and people should pay cash for that?

Yes; I personally would never buy anything above conforming limit unless I bring enough cash to reduce the loan to about $500K or so. Now, there may be some special circumstances like need to shelter large income from taxation (i.e. tax writeoffs) or need for cash for working capital if you are in a business (using lower rate mortgage as a business loan). But if raptorduck is certain of his cashflow, he may be smart in borrowing at low rate and buying an attractively priced asset that is definitely going to hold its value and payback with cheap $ later. I would consider RSF/La Jolla/Beaverly Hills etc., to be in that category. You are basically shorting US $ in the long run (30 years), which is a very good bet to take knowing what we know now about the coming entitlement tsunami and how it is practically going to destroy $ as we know it.

[bsrsharma]

Don't you agree that a 3.5M house is a luxury Item and people should pay cash for that?

Yes; I personally would never buy anything above conforming limit unless I bring enough cash to reduce the loan to about $500K or so. Now, there may be some special circumstances like need to shelter large income from taxation (i.e. tax writeoffs) or need for cash for working capital if you are in a business (using lower rate mortgage as a business loan). But if raptorduck is certain of his cashflow, he may be smart in borrowing at low rate and buying an attractively priced asset that is definitely going to hold its value and payback with cheap $ later. I would consider RSF/La Jolla/Beaverly Hills etc., to be in that category. You are basically shorting US $ in the long run (30 years), which is a very good bet to take knowing what we know now about the coming entitlement tsunami and how it is practically going to destroy $ as we know it.

[hipmatt]

Prices are falling everywhere in socal, fires or not. Inventory is rising. The 1500 homes that burned will be rebuilt. The lots still exist, the mortgages remain.

Bulls will use anything to their advantage to create mania about rising prices, even a natural disaster. If natural disasters are so good for housing and economies, maybe we should take a look at how New Orleans is doing.

Those who own homes in SD that are facing rate resets, and dwindling equity will be forced to sell, or foreclose. I just don’t see a fire changing the really bad market dynamics of the housing market. I’m also getting tired of people with elitist views about their favorite SD neighborhood and how these areas won’t suffer a housing problem like the rest of socal, the other bubble areas, and all of SD county. I guess only time will tell.

[hipmatt]

Prices are falling everywhere in socal, fires or not. Inventory is rising. The 1500 homes that burned will be rebuilt. The lots still exist, the mortgages remain.

Bulls will use anything to their advantage to create mania about rising prices, even a natural disaster. If natural disasters are so good for housing and economies, maybe we should take a look at how New Orleans is doing.

Those who own homes in SD that are facing rate resets, and dwindling equity will be forced to sell, or foreclose. I just don’t see a fire changing the really bad market dynamics of the housing market. I’m also getting tired of people with elitist views about their favorite SD neighborhood and how these areas won’t suffer a housing problem like the rest of socal, the other bubble areas, and all of SD county. I guess only time will tell.

[hipmatt]

Prices are falling everywhere in socal, fires or not. Inventory is rising. The 1500 homes that burned will be rebuilt. The lots still exist, the mortgages remain.

Bulls will use anything to their advantage to create mania about rising prices, even a natural disaster. If natural disasters are so good for housing and economies, maybe we should take a look at how New Orleans is doing.

Those who own homes in SD that are facing rate resets, and dwindling equity will be forced to sell, or foreclose. I just don’t see a fire changing the really bad market dynamics of the housing market. I’m also getting tired of people with elitist views about their favorite SD neighborhood and how these areas won’t suffer a housing problem like the rest of socal, the other bubble areas, and all of SD county. I guess only time will tell.

[hipmatt]

Prices are falling everywhere in socal, fires or not. Inventory is rising. The 1500 homes that burned will be rebuilt. The lots still exist, the mortgages remain.

Bulls will use anything to their advantage to create mania about rising prices, even a natural disaster. If natural disasters are so good for housing and economies, maybe we should take a look at how New Orleans is doing.

Those who own homes in SD that are facing rate resets, and dwindling equity will be forced to sell, or foreclose. I just don’t see a fire changing the really bad market dynamics of the housing market. I’m also getting tired of people with elitist views about their favorite SD neighborhood and how these areas won’t suffer a housing problem like the rest of socal, the other bubble areas, and all of SD county. I guess only time will tell.

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