short sale in encinitas ranch – good value?

[Eugene]

The original statement to which I responded: “I don’t believe the average Joe Blow lives in Encinitas.”

In order to qualify for an interest-only mortgage for a house on Brae Mar Court in 2003, you had to make around 90k. Less if you had a down payment (say, this was your second house) or if you opted for a neg-am loan. A household with two schoolteachers, or one police officer and one clerk, could make that much. Income numbers for 92024 agree with that. Encinitas is above average, but it’s populated by considerable numbers of Joe Blows. It has to compete with other upper-middle-class suburbs and it is not as insulated from overall SoCal RE market as, say, Rancho Santa Fe. And Joe Blow’s purchasing power has been suffering lately (6.5% jumbo IO loans instead of 4.5%, problems with 100% CLTV loans, etc.)

Rising ARM interest rates and disappearance of creative financing have successfully priced out $90k/year households from the area. You seem to be implying that poorer households will be squeezed out of the city and well to do people will take over their properties, turning Encinitas into next Rancho Santa Fe. I disagree. The number of well to do people and the number of attractive properties are fairly constant. Encinitas is not the most attractive place in San Diego County. Instead the market will keep sinking as a whole, until two schoolteachers can afford a 4br in Encinitas again. (Even if they have to get an IO loan and spend 50% of their income on housing)

I expect the return to 2003 affordability levels in most areas. Even at 680k, 645 Brae Mar Ct would be far less affordable to residents of Encinitas today than it was in 2003. Incomes are up 10% (maybe), jumbo fixed interest rates are up 20-25%, and jumbo ARM interest rates are up 50%. The fact that there are 5 knife catchers bidding on this property? For me, not an argument to buy.

[Eugene]

The original statement to which I responded: “I don’t believe the average Joe Blow lives in Encinitas.”

In order to qualify for an interest-only mortgage for a house on Brae Mar Court in 2003, you had to make around 90k. Less if you had a down payment (say, this was your second house) or if you opted for a neg-am loan. A household with two schoolteachers, or one police officer and one clerk, could make that much. Income numbers for 92024 agree with that. Encinitas is above average, but it’s populated by considerable numbers of Joe Blows. It has to compete with other upper-middle-class suburbs and it is not as insulated from overall SoCal RE market as, say, Rancho Santa Fe. And Joe Blow’s purchasing power has been suffering lately (6.5% jumbo IO loans instead of 4.5%, problems with 100% CLTV loans, etc.)

Rising ARM interest rates and disappearance of creative financing have successfully priced out $90k/year households from the area. You seem to be implying that poorer households will be squeezed out of the city and well to do people will take over their properties, turning Encinitas into next Rancho Santa Fe. I disagree. The number of well to do people and the number of attractive properties are fairly constant. Encinitas is not the most attractive place in San Diego County. Instead the market will keep sinking as a whole, until two schoolteachers can afford a 4br in Encinitas again. (Even if they have to get an IO loan and spend 50% of their income on housing)

I expect the return to 2003 affordability levels in most areas. Even at 680k, 645 Brae Mar Ct would be far less affordable to residents of Encinitas today than it was in 2003. Incomes are up 10% (maybe), jumbo fixed interest rates are up 20-25%, and jumbo ARM interest rates are up 50%. The fact that there are 5 knife catchers bidding on this property? For me, not an argument to buy.

[Eugene]

The original statement to which I responded: “I don’t believe the average Joe Blow lives in Encinitas.”

In order to qualify for an interest-only mortgage for a house on Brae Mar Court in 2003, you had to make around 90k. Less if you had a down payment (say, this was your second house) or if you opted for a neg-am loan. A household with two schoolteachers, or one police officer and one clerk, could make that much. Income numbers for 92024 agree with that. Encinitas is above average, but it’s populated by considerable numbers of Joe Blows. It has to compete with other upper-middle-class suburbs and it is not as insulated from overall SoCal RE market as, say, Rancho Santa Fe. And Joe Blow’s purchasing power has been suffering lately (6.5% jumbo IO loans instead of 4.5%, problems with 100% CLTV loans, etc.)

Rising ARM interest rates and disappearance of creative financing have successfully priced out $90k/year households from the area. You seem to be implying that poorer households will be squeezed out of the city and well to do people will take over their properties, turning Encinitas into next Rancho Santa Fe. I disagree. The number of well to do people and the number of attractive properties are fairly constant. Encinitas is not the most attractive place in San Diego County. Instead the market will keep sinking as a whole, until two schoolteachers can afford a 4br in Encinitas again. (Even if they have to get an IO loan and spend 50% of their income on housing)

I expect the return to 2003 affordability levels in most areas. Even at 680k, 645 Brae Mar Ct would be far less affordable to residents of Encinitas today than it was in 2003. Incomes are up 10% (maybe), jumbo fixed interest rates are up 20-25%, and jumbo ARM interest rates are up 50%. The fact that there are 5 knife catchers bidding on this property? For me, not an argument to buy.

[Eugene]

The original statement to which I responded: “I don’t believe the average Joe Blow lives in Encinitas.”

In order to qualify for an interest-only mortgage for a house on Brae Mar Court in 2003, you had to make around 90k. Less if you had a down payment (say, this was your second house) or if you opted for a neg-am loan. A household with two schoolteachers, or one police officer and one clerk, could make that much. Income numbers for 92024 agree with that. Encinitas is above average, but it’s populated by considerable numbers of Joe Blows. It has to compete with other upper-middle-class suburbs and it is not as insulated from overall SoCal RE market as, say, Rancho Santa Fe. And Joe Blow’s purchasing power has been suffering lately (6.5% jumbo IO loans instead of 4.5%, problems with 100% CLTV loans, etc.)

Rising ARM interest rates and disappearance of creative financing have successfully priced out $90k/year households from the area. You seem to be implying that poorer households will be squeezed out of the city and well to do people will take over their properties, turning Encinitas into next Rancho Santa Fe. I disagree. The number of well to do people and the number of attractive properties are fairly constant. Encinitas is not the most attractive place in San Diego County. Instead the market will keep sinking as a whole, until two schoolteachers can afford a 4br in Encinitas again. (Even if they have to get an IO loan and spend 50% of their income on housing)

I expect the return to 2003 affordability levels in most areas. Even at 680k, 645 Brae Mar Ct would be far less affordable to residents of Encinitas today than it was in 2003. Incomes are up 10% (maybe), jumbo fixed interest rates are up 20-25%, and jumbo ARM interest rates are up 50%. The fact that there are 5 knife catchers bidding on this property? For me, not an argument to buy.

[SD Realtor]

So I will try one last time to put my point across. Seems as if I said, I am failing miserably.

1 – I am not advocating to buy now. Nor am I saying this is a good deal or is not a good deal.

2 – That the uneven distribution of wealth will not only continue, but depreciation cycles like this will benefit those with wealth more then those without wealth.

3 – That of these same people with wealth may indeed not share the same criteria to buy a home that you or I do. They may wait, they may not wait. Like you, it doesn’t matter to me what they do. I don’t base my purchase criteria on other peoples actions.

4 – That bubbles are not created by wealthy people buying properties and/or catching knives.

5 – That tighter lending standards will indeed lead to a healthier market, but will be more beneficial to those with wealth then those without it or those at a median income level.

6 – That because of all of the above, people with wealth are better positioned to re-enter the real estate market and will thus do so at an earlier point then more prudent buyers. Thus they (the wealthier) will more then likely have more to choose from and will get the best cracks.

7 – That what was affordable to some in 2003 is LESS affordable or shall I say affordable to less people today and even less in the future.

Is this a little bit more clear?

[SD Realtor]

So I will try one last time to put my point across. Seems as if I said, I am failing miserably.

1 – I am not advocating to buy now. Nor am I saying this is a good deal or is not a good deal.

2 – That the uneven distribution of wealth will not only continue, but depreciation cycles like this will benefit those with wealth more then those without wealth.

3 – That of these same people with wealth may indeed not share the same criteria to buy a home that you or I do. They may wait, they may not wait. Like you, it doesn’t matter to me what they do. I don’t base my purchase criteria on other peoples actions.

4 – That bubbles are not created by wealthy people buying properties and/or catching knives.

5 – That tighter lending standards will indeed lead to a healthier market, but will be more beneficial to those with wealth then those without it or those at a median income level.

6 – That because of all of the above, people with wealth are better positioned to re-enter the real estate market and will thus do so at an earlier point then more prudent buyers. Thus they (the wealthier) will more then likely have more to choose from and will get the best cracks.

7 – That what was affordable to some in 2003 is LESS affordable or shall I say affordable to less people today and even less in the future.

Is this a little bit more clear?

[SD Realtor]

So I will try one last time to put my point across. Seems as if I said, I am failing miserably.

1 – I am not advocating to buy now. Nor am I saying this is a good deal or is not a good deal.

2 – That the uneven distribution of wealth will not only continue, but depreciation cycles like this will benefit those with wealth more then those without wealth.

3 – That of these same people with wealth may indeed not share the same criteria to buy a home that you or I do. They may wait, they may not wait. Like you, it doesn’t matter to me what they do. I don’t base my purchase criteria on other peoples actions.

4 – That bubbles are not created by wealthy people buying properties and/or catching knives.

5 – That tighter lending standards will indeed lead to a healthier market, but will be more beneficial to those with wealth then those without it or those at a median income level.

6 – That because of all of the above, people with wealth are better positioned to re-enter the real estate market and will thus do so at an earlier point then more prudent buyers. Thus they (the wealthier) will more then likely have more to choose from and will get the best cracks.

7 – That what was affordable to some in 2003 is LESS affordable or shall I say affordable to less people today and even less in the future.

Is this a little bit more clear?

[SD Realtor]

So I will try one last time to put my point across. Seems as if I said, I am failing miserably.

1 – I am not advocating to buy now. Nor am I saying this is a good deal or is not a good deal.

2 – That the uneven distribution of wealth will not only continue, but depreciation cycles like this will benefit those with wealth more then those without wealth.

3 – That of these same people with wealth may indeed not share the same criteria to buy a home that you or I do. They may wait, they may not wait. Like you, it doesn’t matter to me what they do. I don’t base my purchase criteria on other peoples actions.

4 – That bubbles are not created by wealthy people buying properties and/or catching knives.

5 – That tighter lending standards will indeed lead to a healthier market, but will be more beneficial to those with wealth then those without it or those at a median income level.

6 – That because of all of the above, people with wealth are better positioned to re-enter the real estate market and will thus do so at an earlier point then more prudent buyers. Thus they (the wealthier) will more then likely have more to choose from and will get the best cracks.

7 – That what was affordable to some in 2003 is LESS affordable or shall I say affordable to less people today and even less in the future.

Is this a little bit more clear?

[SD Realtor]

So I will try one last time to put my point across. Seems as if I said, I am failing miserably.

1 – I am not advocating to buy now. Nor am I saying this is a good deal or is not a good deal.

2 – That the uneven distribution of wealth will not only continue, but depreciation cycles like this will benefit those with wealth more then those without wealth.

3 – That of these same people with wealth may indeed not share the same criteria to buy a home that you or I do. They may wait, they may not wait. Like you, it doesn’t matter to me what they do. I don’t base my purchase criteria on other peoples actions.

4 – That bubbles are not created by wealthy people buying properties and/or catching knives.

5 – That tighter lending standards will indeed lead to a healthier market, but will be more beneficial to those with wealth then those without it or those at a median income level.

6 – That because of all of the above, people with wealth are better positioned to re-enter the real estate market and will thus do so at an earlier point then more prudent buyers. Thus they (the wealthier) will more then likely have more to choose from and will get the best cracks.

7 – That what was affordable to some in 2003 is LESS affordable or shall I say affordable to less people today and even less in the future.

Is this a little bit more clear?

[sdrealtor]

FWIW, I have lived in Encinitas for the last 10 years and the change in the typical resident has been astounding. I have a several friend that have lived here their entire lives and they are even more astounded. Encinitas used to be a very laid back, non-pretentious town. It is still a great place but to a great degree it has been yuppified considerably and will never go back to what it was. In 1997, you couldnt find a place to eat dinner after 9 pm now many options abound. In 1997, you couldn’t find a decent meal unless you drove to Del Mar, now there are numerous fine dining options. Whole Foods is opening in downtown Encinitas. The Forum Shops on the border of Carlsbad and Enicnitas brought high end retail to the area. La Costa Glen brought hundreds of very wealthy seniors to the area. Encinitas Ranch brought a massive planned community with golf/ocean views and thousands of 3,000+ sq ft homes. In 1997, the only homes that big were in Olivenhain. In the beach area, bungalows are now torn down and replaced by luxury custom homes at an alarming rate.

Have you been to Encinitas lately?

[sdrealtor]

FWIW, I have lived in Encinitas for the last 10 years and the change in the typical resident has been astounding. I have a several friend that have lived here their entire lives and they are even more astounded. Encinitas used to be a very laid back, non-pretentious town. It is still a great place but to a great degree it has been yuppified considerably and will never go back to what it was. In 1997, you couldnt find a place to eat dinner after 9 pm now many options abound. In 1997, you couldn’t find a decent meal unless you drove to Del Mar, now there are numerous fine dining options. Whole Foods is opening in downtown Encinitas. The Forum Shops on the border of Carlsbad and Enicnitas brought high end retail to the area. La Costa Glen brought hundreds of very wealthy seniors to the area. Encinitas Ranch brought a massive planned community with golf/ocean views and thousands of 3,000+ sq ft homes. In 1997, the only homes that big were in Olivenhain. In the beach area, bungalows are now torn down and replaced by luxury custom homes at an alarming rate.

Have you been to Encinitas lately?

[sdrealtor]

FWIW, I have lived in Encinitas for the last 10 years and the change in the typical resident has been astounding. I have a several friend that have lived here their entire lives and they are even more astounded. Encinitas used to be a very laid back, non-pretentious town. It is still a great place but to a great degree it has been yuppified considerably and will never go back to what it was. In 1997, you couldnt find a place to eat dinner after 9 pm now many options abound. In 1997, you couldn’t find a decent meal unless you drove to Del Mar, now there are numerous fine dining options. Whole Foods is opening in downtown Encinitas. The Forum Shops on the border of Carlsbad and Enicnitas brought high end retail to the area. La Costa Glen brought hundreds of very wealthy seniors to the area. Encinitas Ranch brought a massive planned community with golf/ocean views and thousands of 3,000+ sq ft homes. In 1997, the only homes that big were in Olivenhain. In the beach area, bungalows are now torn down and replaced by luxury custom homes at an alarming rate.

Have you been to Encinitas lately?

[sdrealtor]

FWIW, I have lived in Encinitas for the last 10 years and the change in the typical resident has been astounding. I have a several friend that have lived here their entire lives and they are even more astounded. Encinitas used to be a very laid back, non-pretentious town. It is still a great place but to a great degree it has been yuppified considerably and will never go back to what it was. In 1997, you couldnt find a place to eat dinner after 9 pm now many options abound. In 1997, you couldn’t find a decent meal unless you drove to Del Mar, now there are numerous fine dining options. Whole Foods is opening in downtown Encinitas. The Forum Shops on the border of Carlsbad and Enicnitas brought high end retail to the area. La Costa Glen brought hundreds of very wealthy seniors to the area. Encinitas Ranch brought a massive planned community with golf/ocean views and thousands of 3,000+ sq ft homes. In 1997, the only homes that big were in Olivenhain. In the beach area, bungalows are now torn down and replaced by luxury custom homes at an alarming rate.

Have you been to Encinitas lately?

[sdrealtor]

FWIW, I have lived in Encinitas for the last 10 years and the change in the typical resident has been astounding. I have a several friend that have lived here their entire lives and they are even more astounded. Encinitas used to be a very laid back, non-pretentious town. It is still a great place but to a great degree it has been yuppified considerably and will never go back to what it was. In 1997, you couldnt find a place to eat dinner after 9 pm now many options abound. In 1997, you couldn’t find a decent meal unless you drove to Del Mar, now there are numerous fine dining options. Whole Foods is opening in downtown Encinitas. The Forum Shops on the border of Carlsbad and Enicnitas brought high end retail to the area. La Costa Glen brought hundreds of very wealthy seniors to the area. Encinitas Ranch brought a massive planned community with golf/ocean views and thousands of 3,000+ sq ft homes. In 1997, the only homes that big were in Olivenhain. In the beach area, bungalows are now torn down and replaced by luxury custom homes at an alarming rate.

Have you been to Encinitas lately?

[Eugene]

…

In California, interest-only loans accounted for 61% of the mortgages taken out to buy homes in the first two months of this year [2005], up from 47% in 2004 and less than 2% in 2002, according to LoanPerformance, a unit of First American Corp. Option ARMs, which can result in negative amortization, accounted for nearly one-third of jumbo mortgages — currently loans above $359,650 — in the fourth quarter of 2004, up from roughly 6% in the first quarter of that year.

[Author]

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