Sub-2001 sold price in Del Mar

[no_such_reality]

It went into escrow in less than 1 week and most likely will close above $1.3M.

For a minor point, 2002 & 2001 where 5 and 6 years ago.

Inflation from then to now puts the July 2001 sale at about $1.250M in current dollars and the October 2002 sales at about $1.285M in current dollars.

At $1.3M sale today, is basically a wash with inflation to the 2002 sale.

At $1.3M today, it represents about a less than 1% above inflation from 2001. At $1.4M represents about 2% above inflation from either 2001 or 2002.

Since most of SD showed 13% above inflation compounded returns, that Del Mar sale even at $1.4M is looking pretty anemic IMHO. Still, Del Mar is holding it’s double-plus from the bottom, we’ll see how many of the less desireable areas do.

[TheBreeze]

I’m confused. They couldn’t sell the house for $1 million at the trustee sale but were able to sell it for $1.3-$1.4 million at a later date. How does that work?

[no_such_reality]

They couldn’t sell the house for $1 million at the trustee sale but were able to sell it for $1.3-$1.4 million at a later date. How does that work?

I’d guess one of three reasons:

1. The market was really soft in January. At least now, we have an illusion of a spring pop.

2. There may have been a small 2nd or other suborbinate lien attached that got wiped out by the 1st going foreclosure. The junior lien holder didn’t step up to cover the million in an effort to save their smaller loss.

3. $1.05M is about 22% below $1.3M, that’s a little lean for REO flip. Sure, $300,000 looks like a lot on paper, but at that level of leverage, a percent here, percent there, and you’re back under water before you know it.

[Cow_tipping]

No_such_reality on April 23, 2007 – 11:09pm. Wrote:-
At $1.3M sale today, is basically a wash with inflation to the 2002 sale.

At $1.3M today, it represents about a less than 1% above inflation from 2001. At $1.4M represents about 2% above inflation from either 2001 or 2002.

Inflation from 01 is nearly 0. That is reflected in the interest rates for loans at 5-6. Interest rates are essentially Inflation + 5% really. That is one reason why mortgage companies push adjustables and what not. If the rate of inflation goes up a fixed rate lender is shafted. An ARM lender will just pass on that extra cost to the owner … ha … owner … borrower.
Inflation is negative without oil and utilities and construction materials taken into count. Rememeber what things used to cost in 01-02. What did a VCR or a DVD player cost. What did food and essentials cost.
basically we have used a lot of fuel, a lot of wood and a lot of other building supplies to drive up cost of living from 01 to now. The rest of the things you need for life are lower than 01.
Cool.
Cow_tipping.

[(former)FormerSanDiegan]

“Inflation from 01 is nearly 0. ”

No way. I have to call BS on this one.
Saying that inflation is negative with oil, utilities, and construction materials taken into account is not only incorrect, it is equivalent to saying that your girlfriend is in great physical shape … except for those extra 40 pounds.

Virtually every commodity in the world is more expensive now than in 2001: corn, meat, metals, …

Wages are up significantly since 2001, affecting the cost of services which are a huge part of our economy.

OK, VCRs are cheaper, but who wants one ?

[Cow_tipping]

01 to now wages are not up. In fact they are down.
But yea those extra pesky 40 lbs … I get that analogy.
You also are dealing with a sticky on the way down scenario for most of industrial raw materials. wood, steel etc. Corn has a new demand situation with ethanol as its driving force.
We also are in a housing market that isn’t certain the gig is up. So we will have to wait and see truly where it ends up.
That house buiders labor force and REIT has gotten fat and we’ll soon see that disappear with the wage levels taking another hit. Inflation may have been a factor 01-02-03 but after that its not only down, its pretty much wiped out the gains from 01-02. Look at rents and look and costs of essentials and always they exclude energy because that is influenced by too many externals. I will also exclude the part of energy that is added on to transportation costs of those essentials. And wait for 06 or better yet 07 numbers to come out after housing has taken the hit we all know is comming. Like I said, we have built needless houses spent fuel dragging things here to there and heloced those houses out the wazoo, and bought needless hummers and and pumped up the market for everything. Wait and see how it unfurls.
Cool.
Cow_tipping.

[(former)FormerSanDiegan]

Inflation insight FWIW . . .

San Diego Median rent in 2000: 763 (1999 dollars)
San Diego Median rent in 2005: 1103 (2005 dollars)
45% rent increase is not zero inflation

San Diego Median Family Income in 2000: 53,060 (1999 dollars)
San Diego Median Family Income in 2005: 67,925 (2005 dollars)
Can salaries go up 28% in 5 years with zero inflation ?

What about food ? Unless you are on that Chicken and coffee -only diet those have also gone up considerably.

[img_assist|nid=3227|title=inflation components|desc=|link=node|align=left|width=466|height=349]

[img_assist|nid=3228|title=inflation components|desc=|link=node|align=left|width=466|height=349]

[(former)FormerSanDiegan]

In God We Trust. Everyone Else Bring Data.

[Cow_tipping]

SD may be … In 2002 I paid 650 for an apartment in Charlotte NC. By 2005 it was under 500.
Houses have gone up and I dont know why from 2000 to 05 your rents have gone up. Maybe you had the same thing that happened in Charlotte ~2000. What we refer to as the .com migration at BofA where I work. They lost 1000’s of people to .coms in CA and other cities that had lots of them. Maybe SD lost population through end 2000 driving down rents. That return of population will have pushed rents back up sharply till the house boom reversed that trend.
In charlotte 98-2002 rents and house prices went down. 02 rents recovered rapidly followed by a construction boom that saw house prices roughly stagnate but they sucked the wind out of the rents and by 05 rents were pathetic.
You may have somehting locally going on there. Here is the true measure as used by financial institutions. Inflation + 5% is interest on long term loans. The last 5 years that long term interest has been ~6%. Inflation is well well well under 2%. Inflation is a count of a lot of things. Rent in your town does not make inflation if the rest of the country is losing population to your town. Like what happened in the .com era. The SF area saw rents sky rocket while many other areas saw rents crash and burn. That will figure in national inflation statistic as a 0 event or a very very minimal amount. Ironically the cost of china made electronic junk is a bigger factor than rents in SD rising. Cos a VCR dropping to 1/2 its price followed by tapes and all other electronic nic nac’s definetly counts for the whole country and it might account for 5% of a family’s monthly expense and that has dropped in 1/2. Again national average is what counts in CPI.
Cool.
Cow_tipping.

[Cow_tipping]

These graphs are all too small to read the numbers on the axis.
Cool.
Cow_tipping.

[Cow_tipping]

Percentage change 12 months SAAR 3
ended in December mos. ended
in March
2000 2001 2002 2003 2004 2005 2006 2007

All items 3.4 1.6 2.4 1.9 3.3 3.4 2.5 4.7
Food and beverages 2.8 2.8 1.5 3.5 2.6 2.3 2.2 7.4
Housing 4.3 2.9 2.4 2.2 3.0 4.0 3.3 3.5
Apparel -1.8 -3.2 -1.8 -2.1 -.2 -1.1 .9 -.9
Transportation 4.1 -3.8 3.8 .3 6.5 4.8 1.6 8.3
Medical care 4.2 4.7 5.0 3.7 4.2 4.3 3.6 5.6
Recreation 1.7 1.5 1.1 1.1 .7 1.1 1.0 .1
Education and
communication 1.3 3.2 2.2 1.6 1.5 2.4 2.3 2.7
Other goods
and services 4.2 4.5 3.3 1.5 2.5 3.1 3.0 4.7

Special indexes
Energy 14.2 -13.0 10.7 6.9 16.6 17.1 2.9 22.9
Energy
commodities 15.7 -24.5 23.7 6.9 26.7 16.7 6.1 30.9
Energy
services 12.7 -1.5 .4 6.9 6.8 17.6 -.6 13.8
All items less
energy 2.6 2.8 1.8 1.5 2.2 2.2 2.5 2.9
Food 2.8 2.8 1.5 3.6 2.7 2.3 2.1 7.3
All items less
food and energy 2.6 2.7 1.9 1.1 2.2 2.2 2.6 2.3

I got that from http://www.bls.gov/news.release/cpi.nr0.htm
The items less energy is what is used for most statistics.
I would like to see what component of the rest was transportation because it damn well costs more to ship the VCR from Chineese port to US port and then truck it to your house. But no one keeps track of that. In any case I expect it to be significant and I expect the inflation in the past few years to be wiped out.
BTW, you are comparing a rental in SD in 2000 to possibly some thing in 2005 when the McMansion number has skyrocketed and those are rentals now. The real comparison is on idential items. Your old apartment in 2000 vs that same one in 2006. Its like the NAR’s median home price claim. Median price can sit right there but be totally different houses. one may be shack built in the 60’s and another may be a McMansion built 2006.
Cool.
Cow_tipping.

[surveyor]

different markets

In charlotte 98-2002 rents and house prices went down. 02 rents recovered rapidly followed by a construction boom that saw house prices roughly stagnate but they sucked the wind out of the rents and by 05 rents were pathetic.

Hmmm proof that different real estate markets do not move in the same direction…

Cow, I believe since the discussion was about a Del Mar house, that all comments regarding inflation has been referring to San Diego’s core inflation rate, which has been above the national inflation rate for the last few years. Of course North Carolina will not have the same statistics. (did you live in San Diego recently? things are pretty expensive here).

[(former)FormerSanDiegan]

Cow_tipping –

The inflation components I plotted above are National Numbers not San Diego. Prices are up nationwide.

“01 to now wages are not up. In fact they are down.” This is not correct.

U.S. Median Family Income in 2000: 50,046
….. in 2005: 55832
That’s a 11.5% increase (nominal dollars)

U.S. Median Rent in 2000: 602
…. in 2005 : 728
Thats a 21% increase (nominal dollars)

“Inflation may have been a factor 01-02-03 but after that its not only down, its pretty much wiped out the gains from 01-02. ”

On the contrary, core inflation was declining from 01-03 and increasing thereafter. On average it’s about the same for the period from 01-03 as 04-06.

I think surveyor is on to something… Maybe the problem is that something special is happening in North Carolina that affects your perspective ?

NC had below average wage growth in 2000-2005
NC Median family income in 2000: 46,335
…. in 2005: 49,339

Only 6.5% wage growth in North Carolina in that period. This lagged the US by nearly a factor of two. If you believe the inflation numbers of about 1.5-2% during that period, that’s negative wage growth in real dollars in North Carolina. Ouch….

Now, I understand your perspective. But, nationwide, inflation is real and is not zero.

[Cow_tipping]

I was talking about inflation on a national scale with its relation to interest rates.
Local inflation is influenced by several things, but interest rates are set on national numbers because the bond market is national. Also I believe excluding food and energy is what they use for most other CPI calculations.
Not just excluding energy.
Cool.
Cow_tipping.

[no_such_reality]

I was talking about inflation on a national scale with its relation to interest rates.

I thought the bond market and mortgage got primarily driven by the Treasury market. The treasury market is typical driven by inflation with the 10/30 years being inflation plus 3%.

Overall, for generic prices of commodities whether food, cars, housing, entertainment, etc, have seen a fairly consistant 2%+/- since 2000.

[Author]

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