Sell vs Rent in RPQ

[scaredyclassic]

Unless…that’s not true

[CA renter]

Scaredy, how do you see the market as we go forward?

[The-Shoveler]

I don’t know what Scaredy’s take is but my view is mostly stable to more or less normal market from here. (IMO it would take the lenders and the builders to go crazy again to really get a big downturn going, 10% that can happen anytime, 30% now that takes something unusual).

But I think the point that a 700K home is not usually a good rental is valid as well.

So maybe it does boil down to “are you planning to move back?”

[CA renter]

[quote=The-Shoveler]I don’t know what Scaredy’s take is but my view is mostly stable to more or less normal market from here. (IMO it would take the lenders and the builders to go crazy again to really get a big downturn going, 10% that can happen anytime, 30% now that takes something unusual).

But I think the point that a 700K home is not usually a good rental is valid as well.

So maybe it does boil down to “are you planning to move back?”[/quote]

Irrespective of interest rates? What about if/when the investors get out of the market? That could increase aggregate supply and decrease demand at the same time.

[scaredyclassic]

I have no more predictions.

Only doubt.

And feeling aged.

Last kid started 7th grade. That’s the beginning of the end.

I shudder to think what I was doing in 7th grade!!!

[The-Shoveler]

I know I am mostly alone in this (well maybe a few others), but I have absolute faith in the feds ability to control interest rates.

And I believe the fed is most concerned about two things, pensions and jobs, both of which are directly and indirectly (property tax) effected by the housing market.

I think they really do want to see some much needed wage inflation catch up on the lower end workers (they are going to great length to accomplish this IMO).

Anyway IMHO.

One last thing I would add, I believe we are about to relive the 80’s. the pump is primed.

[Anonymous]

[quote=CA renter][quote=The-Shoveler]I don’t know what Scaredy’s take is but my view is mostly stable to more or less normal market from here. (IMO it would take the lenders and the builders to go crazy again to really get a big downturn going, 10% that can happen anytime, 30% now that takes something unusual).

But I think the point that a 700K home is not usually a good rental is valid as well.

So maybe it does boil down to “are you planning to move back?”[/quote]

Irrespective of interest rates? What about if/when the investors get out of the market? That could increase aggregate supply and decrease demand at the same time.[/quote]

Apparently that is already starting to happen if you read Diana Olicks column about San Diego real estate on CNBC today

[CA renter]

[quote=deadzone][quote=CA renter][quote=The-Shoveler]I don’t know what Scaredy’s take is but my view is mostly stable to more or less normal market from here. (IMO it would take the lenders and the builders to go crazy again to really get a big downturn going, 10% that can happen anytime, 30% now that takes something unusual).

But I think the point that a 700K home is not usually a good rental is valid as well.

So maybe it does boil down to “are you planning to move back?”[/quote]

Irrespective of interest rates? What about if/when the investors get out of the market? That could increase aggregate supply and decrease demand at the same time.[/quote]

Apparently that is already starting to happen if you read Diana Olicks column about San Diego real estate on CNBC today[/quote]

Yes, there are a number of sources out there who are witnessing the investors backing off, or even selling. The areas I watch in SD and LA counties have all seen a dramatic rise in inventory, along with a slowdown in sales. Other areas are supposedly seeing the same thing, based on the stories of others who are watching this.

Of course, even with the rise in inventory, it’s only coming off extremely low levels, so we’re not in a place where people need to panic. But if the trajectory continues, we’ll start to see more “normal” inventory levels. And if interest rates rise at the same time? I think the damage can be as devastating as in 2008 because there has been at least as much speculative activity this time around. Even though the leverage isn’t the same (as far as we know…leverage can be hidden in these deals), I think the motives of buyers and sellers is the same as during the bubble…and it’s all driven by the Fed’s confiscatory (from savers and “safe” investors) policies.

[CA renter]

[quote=scaredyclassic]I have no more predictions.

Only doubt.

And feeling aged.

Last kid started 7th grade. That’s the beginning of the end.

I shudder to think what I was doing in 7th grade!!![/quote]

That’s sad. 🙁

Nothing marks time like watching one’s children grow up.

Nonetheless, I’m quite sure your son will continue to be awesome. At least you have one out the door in good shape, so there’s a precedent.

[exsdgal]

[quote=CA renter]
Irrespective of interest rates? What about if/when the investors get out of the market? That could increase aggregate supply and decrease demand at the same time.[/quote]

Afaik PQ did not have much investor activity relating to SFH during the downturn. There were good pricing on the condo’s and not as many for single family residences. The few that did crop up required a fair amount of slab/foundation repairs.

Just considering one qualification – school district, I think PQ has some unique characteristics. 1) mostly low/zero mello-roos 2) good schools 3) great proximity to different work centers 4) ability to find decent sized lot homes sometimes w/ views 5) year around temperature

Folks who want to be in CV / Del Sur / 4S / Santa Luz will go for such places. If I were in the market for a primary residence in Poway Unified district I would give serious consideration to PQ. Just for a simple reason that a comparable 700-800K PQ lot home will cost 1mil+ in the new developments w/o counting the mello-roos/hoa etal.

[CA renter]

[quote=exsdgal][quote=CA renter]
Irrespective of interest rates? What about if/when the investors get out of the market? That could increase aggregate supply and decrease demand at the same time.[/quote]

Afaik PQ did not have much investor activity relating to SFH during the downturn. There were good pricing on the condo’s and not as many for single family residences. The few that did crop up required a fair amount of slab/foundation repairs.

Just considering one qualification – school district, I think PQ has some unique characteristics. 1) mostly low/zero mello-roos 2) good schools 3) great proximity to different work centers 4) ability to find decent sized lot homes sometimes w/ views 5) year around temperature

Folks who want to be in CV / Del Sur / 4S / Santa Luz will go for such places. If I were in the market for a primary residence in Poway Unified district I would give serious consideration to PQ. Just for a simple reason that a comparable 700-800K PQ lot home will cost 1mil+ in the new developments w/o counting the mello-roos/hoa etal.[/quote]

Absolutely, there is no question that some areas saw more speculative activity than others. But aggregate inventory levels do affect prices of the more stable areas, too. And while many people who buy in the areas you’ve listed have some money, there are still plenty of people who rely on mortgages in order to buy. Interest rates will still affect them as much as they’ll affect people buying lower-priced homes.

[spdrun]

I think the damage can be as devastating as in 2008 because there has been at least as much speculative activity this time around.

For every specuvestor “damaged,” there will be another who sees an opportunity. Here’s to opportunity!!!

[exsdgal]

[quote=CA renter]
Absolutely, there is no question that some areas saw more speculative activity than others. But aggregate inventory levels do affect prices of the more stable areas, too. And while many people who buy in the areas you’ve listed have some money, there are still plenty of people who rely on mortgages in order to buy. Interest rates will still affect them as much as they’ll affect people buying lower-priced homes.[/quote]

I strongly believe home prices tend to be localized, and each region attracts buyers looking for a specific basic requirement – schools, beaches, walkability, transportation, etc. Likewise the aggregate inventory affects local house pricing at varying degrees. Speaking specifically about PQ, during the recent downturn the price decline was modest. One of the reasons could be the homes are mostly owner occupied and rarely come up for sale. I presume this scenario will likely continue for another 20 odd years, when the current owners begin to think about retirement.

Past performance is not an indicator…. but I expect prices to remain flat in PQ for the foreseeable future. Again with the lending policies currently in effect, I imagine anyone in the market will make a reasonable downpayment to complete the transaction, and hence avoid significant defaults like in the past.

As a final note, long time ago when considering our house purchase we made a casual remark about having to pay 6 1/2% interest, and one of my in-laws in her sweet Scottish accent commented ‘Dad and I paid 18% as our mortgage’. Suffice to say that was the last we spoke and ended up purchasing a house valued 6x our household income. Interest rates do have an effect, and eventually buyer/seller will prioritize their requirements and adapt. e.g. smaller home, different area, postponing purchase, converting to rental etc.

[Anonymous]

if/when interest rates go up, PQ will get hammered just like everywhere else.

[CA renter]

[quote=exsdgal]

As a final note, long time ago when considering our house purchase we made a casual remark about having to pay 6 1/2% interest, and one of my in-laws in her sweet Scottish accent commented ‘Dad and I paid 18% as our mortgage’. Suffice to say that was the last we spoke and ended up purchasing a house valued 6x our household income. Interest rates do have an effect, and eventually buyer/seller will prioritize their requirements and adapt. e.g. smaller home, different area, postponing purchase, converting to rental etc.[/quote]

…lowering prices. 😉

[Author]

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