- This topic has 51 replies, 17 voices, and was last updated 17 years, 8 months ago by sdrealtor.
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January 23, 2007 at 11:27 AM #8259January 23, 2007 at 12:03 PM #43995renterclintParticipant
James,
Those are some great questions. I personally haven’t heard the answers as of yet.
On a side note, have you noticed the overall tone of the threads of this website are turning a little less bearish lately? Maybe it’s just me. Sometimes I miss the over-the-top super-bear commentary of Powayseller. I found the content from a couple months ago to be more encouraging for us wannabe homeowners.
I personally am slowly coming to the conclusion that maybe the “downturn” is beginning to turn in the direction of flat prices for many years until incomes catch up a little. For my own situation, I would need houses to come down a good 30% before I can afford one. I’m really beginning to doubt that is going to happen (even with the increased short sales SD Realtor has been posting).
I say all this understanding that the real estate market is a sluggish animal, and the price declines we’ve experienced so far developed very quickly relatively speaking.
I look forward to the January data as well.
January 23, 2007 at 12:11 PM #43996ibjamesParticipantThank you!
I too am looking for the doom and gloom posts, they were what I came to this website for! 🙂
I really hope that the decline isn’t slowing down. I still think it’s early to really see if the slop is really going to hit the fan. I hope this summer has very large increases in inventory and it’s all over the media.
I can’t help but think the media covering the market tanking would only help, since it’ll put more people on the fence. I too need a nice decline in prices so I don’t have to end up taking an exotic loan. That would probably never happen, I would just rent for a few more years, then move.. 🙁
Like I’ve said in many posts before, it’s hard to believe my wife and I are even having this problem sometimes. We make a pretty good income.
January 23, 2007 at 12:28 PM #439974plexownerParticipantPatience, grasshopper!
You’ll get your 30% drop (and then some, IMO) but you may have to wait until 2009 – 2011.
I don’t do as much gloom and doom posting as I used to because it all seems so obvious to me that it has become boring. I figure the people who can’t see it for themselves aren’t going to be swayed in their opinion and they will get what they deserve.
~
2007-08 will be hard on San Diego’s market because of interest rates resetting on over $1 trillion in ARM mortgages nationally (very high % of local mtgs are ARMs) and 3000 condos coming online downtown in an already saturated market. Maybe another 8-15% drop in prices each year due to supply exceeding demand?
On top of declining prices we will have over 10% monetary debasement each year (current rate is 11.5%) so real purchasing power (ie, inflation adjusted value) of real estate could drop on the order of 30-50% before we get into 2009.
Is that gloomy and doomy enough for you?
January 23, 2007 at 12:47 PM #44002LostCatParticipantfeeling the same..
Yeah, I am not sure what is going on, but there is a different feel in the air. I still think Condo’s in SD are done. Way over priced. My sister works for a major lender in So Cal. I asked her yesterday how things looked. She simply responded with this… “One word”, “SCARY”. IN other discussions with her, she explained to me that her company will not provide lending to folks trying to purchase a condo in Downtown SD, otherwise known as the Red Zone, unless they have 20% down and have excellent credit (700+ FICO).
On a side note, however, she did mention that San Diego SFH is a little more stable, but not much.
I used to be on the same page where I thought everything was going to fold. Now I believe that some areas are going to get slammed, while other areas come out of it okay. Just be careful where you buy and what you buy. It’s going back to a normal market where good sells and bad sits.
January 23, 2007 at 12:47 PM #44003renterclintParticipantYep! I hear what you’re saying about your income (& exotic loan or move options).
I’m a professional & make a fair amount over the SD median income. I grew up here, moved away, and now I’m back (w/wife & kids in tow) with a decent career & a little $$ from selling my out-of-state home for a decent gain. Yet I still can’t touch anything in the areas I want to live with conventional financing.
I ran into a nice, seemingly intelligent woman at my younger son’s preschool a few months ago. We started talking about housing, and she gradually divulged that she & her husband are in a neg-am & can only afford the minimum pmt each month. They have some equity (bought 3yrs ago), and looked into selling only to be surprised by a $25,000 “pre-payment” penalty they would have to pay not only if they refinanced, but if the SOLD THE HOUSE! This isn’t some weird fly-by-night mtg broker, but Downey Savings. So they are basically forced to keep their house & suicide loan, and slowly burn up their equity praying things will turn out okay somehow.
Now – whenever a get the urge to jump into the market w/ an exotic loan, I think of this poor woman.
To be honest, I am bitter. The bankers w/ all their cheap $$ have ruined my hometown’s housing market. In two years, if things don’t look different, I’ll be moving as well.
January 23, 2007 at 12:47 PM #44004PerryChaseParticipantIf you’re waiting for an opportunity to buy, you’ll feel like it’s water torture.
Put any thought of buying out of your mind for 5 years. In the mean time, rent, watch the market and enjoy yourself.
The previous peak in SD was 1989. It was a slow downward and sideways then slow upward correction (back to 1989 prices) until 1997. Expect this current correction to last at least that long.
People are not going to “give away” their over-priced houses without some resistance. You need a least 5-years for the vagaries of life to “wear-out” the sellers. Builders will continue to sell houses at “market prices” and that will put downward pressure on the resale market. Just got an email from Casero in Del Sur. Prices there are now down to the high $500k, down $100k from previous phases.
You need a lot of patience. Try to get rid of the emotional need to own a house. Watch and enjoy people stress out and slave away to pay for their homes. Take a nice vacation every year and feel thankful that you’re not slaving away to pay for a stucco albatross.
January 23, 2007 at 12:52 PM #44005PerryChaseParticipant4plexowner is right.
Whatever you do, don’t get sucked into believing that the market has stabilized and that now is the time to buy.
January 23, 2007 at 1:16 PM #44009ibjamesParticipantThanks guys,
I love hearing the stats, and as stated before, I wouldn’t buy, I would move. It’s nice to come here though and really get a nice nudge once in a while that you aren’t crazy, and all the people around you that keep talking about housing like it’s a gold mine are in fact the ones that are crazy. My wife are enjoying the rate our savings is growing though.
I guess it’s because I’m having problems with my current rental, the furnace keeps shutting off and we wake up and it’s 50 degrees in the house. Even when it’s working it only heats half of the house due to no duct work and crappy insulation. (cute old little house) It is going to be worked on again..
Time to invest in some small electric heaters, but my utility bill was 140 last month which is a big increase 🙁 Any suggestions on good efficient elec. heaters? Or another alternative? Wood burning stove next to the couch? (not sure if landlord would appreciate that) 😉
And yes… I AM a cheapskate!!
January 23, 2007 at 1:16 PM #44010renterclintParticipantPC,
I really think you’re right, but 5yrs is a long time to be a renter. I personally can not break free of the home-owner psychology. I guess it’s the whole watching your kids grow up in the same stable environment thing. Our landlord has just decided to put our very nice North Cty Coastal rental on the market, so guess who gets to move in a couple weeks. My wife is less than thrilled. Very fortunately, we found another rental in the same school district. Rentals in this district do not pop up very often, so I feel blessed at timing!
Anyway, eventually we’ll choose home-ownership over sunshine, and it is very unlikely that we will hold out 5 years. Especially if we’re forced to move out of the next rental too.
But I love the “Stucco Albatross” comment!!
January 23, 2007 at 2:26 PM #44013BugsParticipantMost of the movement in prices will come during relatively brief periods at different times of the year; not at a steady and constant rate throughout the year. There will be these brief 6 and 8 week periods during different times of the year, like before and after the spring selling season and maybe just prior to the holidays. The rest of the time the pricing will appear to be stable, even if the pricing is lower than the previous plateau.
These periods of movement are so brief and the volumes involved include so much diversity among the housing stock that it’s hard to track the movement in real time.
Think of it this way; if an area or market segment loses a total of 10% of its value during a single year, the majority of the movement probably happened in 3% or 4% chunks during different times of the year. Taken by themselves they aren’t much, but over time they add up.
You guys just need to be patient – time is definitely on your side, and when that changes you’ll be among the first to see it because you’ll be looking for it.
January 23, 2007 at 2:34 PM #44014no_such_realityParticipantDoom & Gloom. I see everybody is trying to manage their expectations for when the “right” time to buy will be. But frankly, I think you’re all overly pessimistic on it.
I think buying opportunities that are competitive against renting will materialize in as little as 18-24 months. I expect the January/February months to be ball-busters for sellers. Owning is about living expense, not only gross capital purchase.
The deals are made at the margins. The “right” buying time for just the people in this thread will be spread over 36 months or more. The short sales and REO properties are already showing up in MLS and done deals which are quickly blowing holes in the comps.
Many will be trapped in their homes because they can afford the payment but can’t forward the capital loss. Still, in SD, OC & LA, even more have been comfortably in their homes for years and while refinancing has tapped cash out for many, in 2005, only 1 in 9 refinances withdrew money. I’d wager many are serial refi-ers which account for the bulk of earlier cash-outs. Evidence of this are articles like the LA-Times piece on guy in the IE with a exotic and no job finally getting forced to move.
The relative lack of refi-ers compared to owners means there will be plenty of willing sellers. Those sellers will be able to afford selling, still make a profit and move up when a better home for them becomes available at an acceptable price.
I’m seeing more and more REO’s like in this thread. Not only is it taking a 15-20+% hit on the peak buy, but that’s at MLS list price which is looking like a pipe dream. As these types of property transactions accelerate and grow, REOs will go lower and lower. That will drive comps lower and lower.
Will pricing go lower after that? Maybe, probably, but time is money. Money is money. What you need to know is few key things:
What are purchase prices where you want to live (or accept living)?
What are comparable rents for where you want to live (or accept living)?
What expense for housing are you comfortable with having?
What is your tolerance for keeping a property as a rental?
I say (or accept living) because I find it rather odd that people will tolerate renting in hell but only buying in prime RE and vice versa. Similarly, this may be that you want to live down on Coronado but will accept North Coast.
Where they intersect is your buying point. Sure, maybe you could wait 5 years and get it 10% less nominal and 15% less real over two years from now, but maybe you’ll also be three years into having it paid off with essentially the same payment and already moving out into a better place with renters taking over this one covering the payment for you. Maybe not.
If you wait for absolute bottom only, you’ll wait a long time.
January 23, 2007 at 3:05 PM #44015blahblahblahParticipantI personally can not break free of the home-owner psychology. I guess it’s the whole watching your kids grow up in the same stable environment thing.
The stable environment comes from the parents, not the box that the parents live in. You should be able to stay in the same neighborhood while your kids are in school even if you have to rent some different places. It could even be fun for your family if you have a positive outlook.
The “renters are losers” meme is designed to program you to be a good little mortgage/property-tax paying, Home Depot/Lowe’s purchasing consumatron. Most of these “homeowners” aren’t going to own their homes when they kick the bucket anyway, they’ll die owing a balance.
It’s just like Pahluniak wrote in “Fight Club”; you are not your house. You are not your car.
Home equity loans are the new credit cards and Duh-mericans are hooked. Don’t expect that to change anytime soon…
January 23, 2007 at 4:17 PM #44021surveyorParticipanthousing cachet
I agree that home is where you live, not what you have, but there is a historical reason why Americans have that respect of home ownership. Home ownership has always been synonymous with freedom and success. Real estate (properly used) has historically been the best avenue to financial success.
America’s use of home ownership and land ownership was one of its reasons for being the successful nation it has become. A person who owns real estate had a bigger stake in it and therefore took care of it accordingly. So there is a reason why there is respect for home-ownership.
disclaimer: no i am not saying to buy in san diego.
January 23, 2007 at 4:26 PM #44022sdduuuudeParticipantMeeeeoooowww
Boing
Wheeeeeeeeeeeeeeeeeeee -
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