Sellers chasing but always a bit higher than real market price

[jimmyle]

The seller for this house reduces the price 9 times since march. Had he/she priced it more aggressively in the beginning the house would have been sold at $600K or slightly more. I hope sellers wake up and get get serious.

http://www.sdlookup.com/MLS-076018158-11587_Prairie_Shadow_Pt_San_Diego_CA_92126

[jimmyle]

One more thing, this house was purchased for $715K in the summer of 2004. If it is sold at $600K, that is a 16% decrease. Assuming inflation is 8% for the last 3 years. The real reduction is closer to 25%. Buying a house like this is unthinkable for me just a year ago. But now I think I might be able to buy it in a year or two if prices keep going down at this rate.

Should I buy something like this next year at around $550K if our combined income is $140K, and have $75K in cash? Also my brother will let me borrow $30K if needed.

[an]

jimmyle, I’ve been watching this house and many others chase the market down as well. It not surprising to me anymore. I still see plenty others coming on the market with wishful pricing. Personally, at today’s rate of @ around 6.25% for a 30 year fixed, I wouldn’t buy this house for more than $450k. This house can probably fetch around $2400/month in rent, & @ $450k and interest rate of 6.25%, you’re looking at around $2400/month for just interest.

Of course, this calculation wouldn’t hold if interest rate goes up. That’s the question you have to ask yourself Jimmy, do you think rates will go up? If you say yes, then the future price will go that much lower. Just an example of how much lower: for apple to apple comparison, IF fundamental is $2400/month in interest, and if rates goes up to 8.25%, price would have to drop to around $350k to maintain the same monthly payment.

Don’t catch a falling knife if you don’t have to. Based on your income and the $ you have to down for the house, you’d have to get a jumbo loan. Lets assume a jumbo rate is @ 8.25%, can you afford a $3400/month payment and still live comfortably?

Here’s another house in Mira Mesa with similar square footage & lot size: 9219 Pebblestone Ln, 92126. It’s a short sale that chase the market down from $625,000-$675,000 in June of this year and it’s asking for $545,000 to $555,000 now.

[SD Realtor]

Well put AN….Jimmy our favorite property on Penara is still out there at 465-515k and is a short sale….Hang in there and be patient. It is getting there…it will just take awhile.

SD Realtor

[bsrsharma]

You should snap it up @ about $300K in a year or two.

[an]

“You should snap it up @ about $300K in a year or two.”
That’s such an open ended statement. $300k would be considered expensive to me if rates goes up to 10%.

[Running Bear]

Jimmyle,

I wouldn’t focus so much on the home prices as the inventory numbers. As long as inventory is high and growing we will not see a price increase but a price decline. You will know when we are getting close to the bottom when the inventory begins to get cleared out. But don’t think once we hit the bottom we will see a reversal straight back up. Housing prices will stay low for years. All the things that fueled the double digit price gains of the last boom are gone.

As for interest rates, if they continue to go higher and with financing more difficult it will only put more downward pressure on prices. Just remember what got us here in the first place, low interest rates and creative financing. We already know the creative financing element is now gone so if the interest rate component also gets negative, will just add more fuel to the downward pressure. Keep your powder dry.

my2cents

[bsrsharma]

$300k would be considered expensive to me if rates goes up to 10%.

75K down payment

225K Mortgage @ 10% = 22.5K per year , about $2000 p.m.

Should be affordable at family income of $140K per year.

{Anyway, I was commenting on the expected price when prices stabilize.} 

 

[Author]

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