Summer 2012 SD Housing Price Top

[sdrealtor]

[quote=CA renter]One should care about the reason because it determines whether or not the increase is sustainable.

We didn’t overpay at the time, either. There were other people who wanted to buy it at a higher price and were ticked off that we locked it in. That didn’t just come from the listing agent, either, we knew some of the people who wanted to buy it.[/quote]

Nice nonsensical response. The house was on the market and didn’t have multiple offers the first week. End of story on that but lets get to the real question. Is 10% appreciation in a year not significant. If not, what is? And please stop with the subterfuge

[CA renter]

[quote=bearishgurl]CAR, I know you won’t be selling any year soon, but I think you might be surprised if you were to obtain a current appraisal. Quality remodeling is actually WORTH something in areas which are more than 15 years old (not sure if yours is). It seems the vast majority of today’s buyers want “turnkey” property and are willing to pay for that. Hence the continued (irrationally exuberant) interest in *new construction tracts* by the younger cohort of Gen X, as well as Gen Y. This appears to be true, no matter WHERE these new tracts are located (i.e. adjacent to fmr landfill, out in lizardland, in boxed-in warm inland area, etc).

Truly, you have the best of all worlds … location, lot size and extensive updating! It doesn’t get any better than that![/quote]

Yes, we really do have the best of all worlds because we have the best house, lot, and location we could ever have wanted. Yes, it’s an older house, which is exactly what we wanted, too.

That being said, if we were to sell our house today, we’d lose a very significant amount of money because of the addition/upgrades on the house. We knew this going in, and made a conscious decision to go ahead because we did the work so the house could better accomodate our family and our needs. We never planned on recouping any of our money, so it just wasn’t an issue for us. We turned a house that would just barely accomodate us into something we absolutely love living in, every single day.

Unless the market is going up, there are **very few** upgrades that will return anywhere near 100% of one’s money. For us, we’d **maybe** get 10% back on our money.

It doesn’t matter though. If everything goes as planned, it will be our kids’ problem, not ours. 🙂

[CA renter]

[quote=sdrealtor][quote=CA renter]One should care about the reason because it determines whether or not the increase is sustainable.

We didn’t overpay at the time, either. There were other people who wanted to buy it at a higher price and were ticked off that we locked it in. That didn’t just come from the listing agent, either, we knew some of the people who wanted to buy it.[/quote]

Nice nonsensical response. The house was on the market and didn’t have multiple offers the first week. End of story on that but lets get to the real question. Is 10% appreciation in a year not significant. If not, what is? And please stop with the subterfuge[/quote]

What subterfuge?

No, the house was not “on the market.” We negotiated the sale prior to it being listed in the MLS. I negotiated directly with the seller. The agent wanted to put it on the MLS to see if they could get any higher bids when the appraisal came in low, but they never cancelled the deal with us. I know for a fact that there were other well-qualified buyers who were willing to pay a higher price (after we had already locked it in), but we made our offer very easy for the sellers to accept for different reasons.

As for the 10% increase in price, it’s not significant when one takes into consideration the inventory, interest rates, and seasonality. That is a normal price movement in many years, even with seasonality alone. It is just temporary noise in the overall movement of prices in the housing market. It is not sustainable and will disappear (and more) just as quickly as it came, IMHO.

BTW, I said ~10% increase. It could easily be less than 10%, and the market is already softening as we speak.

[sdrealtor]

Well there we have it. Appraisal came in low so by your own definition you over paid. Agent put it on the MLS to get better offers and there weren’t any better offers (there is more to an offer than just price). 10% increase in a year not significant-tell that to your investment portfolio or anyone’s 401k. 10% fluctuations are normal seasonality-tell that to Rich’s graph. Not sustainable and will just disappear-tell that to your awful track record predicting price movements in the market.

Market softening already? Really? You know this how? There are 2 houses for sale in my hood and one is essentially unsaleable. The inventory has never been lower around here for decent houses even in 2003/2004.

You didn’t make a single point. Try again

BTW after a good house sells and prices rise its very common for people to come out of the wood work and say they wanted the house and would have paid more. Where were their better offers when it mattered?

[CA renter]

[quote=sdrealtor]Well there we have it. Appraisal came in low so by your own definition you over paid. Agent put it on the MLS to get better offers and there weren’t any better offers (there is more to an offer than just price). 10% increase in a year not significant-tell that to your investment portfolio or anyone’s 401k. 10% fluctuations are normal seasonality-tell that to Rich’s graph. Not sustainable and will just disappear-tell that to your awful track record predicting price movements in the market.

Market softening already? Really? You know this how? There are 2 houses for sale in my hood and one is essentially unsaleable. The inventory has never been lower around here for decent houses even in 2003/2004.

You didn’t make a single point. Try again

BTW after a good house sells and prices rise its very common for people to come out of the wood work and say they wanted the house and would have paid more. Where were their better offers when it mattered?[/quote]

Apparently it wasn’t clear in my previous post, but we did NOT pay what they wanted. We paid the appraised value — and that was OUR appraisal. The sellers also had it appraised in order to counter our appraisal, and their appraisal came out $50K higher than ours. We know for a fact that they could have gotten the higher price, but like you said, there are other elements of an offer that may be more important than offer price alone. We were able to close very quickly and relieved them of the need to do some expensive repair work that was needed in order for other buyers to finance it. We also had no contingencies outside of an inspection contingency (with shortened duration) and appraisal contingency.

Also, in case I hadn’t made it clear enough, the house was never on the market. Even when they put the pics in the MLS (and they did this to play games with us because we refused to pay more than our appraised value), it was already under contract. They never cancelled our contract. There were other parties who wanted to buy it (neighbors whom we know, for example), but it was never available for sale. We had knowledge about the upcoming sale and locked it in prior to it ever being on the open market.

Not only that, but after we had completed the work on the house, we had another appraisal done when we were thinking about cashing out some of the equity. That was done this spring during the “spring selling season.” That appraisal came in only $25K higher than the seller’s appraisal, and that was AFTER an extensive remodel. Needless to say, that would mean that the property has increased by far less than 10% since we bought it.

BTW, you had originally asked how much I thought the price had increased over our purchase price, not how much it increased over the seller’s appraised value, nor the price that they could have easily gotten if the house was ever on the market. I said that it might have increased ~10% (likely less) from our purchase price, which was LOW.

Let me put this another way…if the house were put on the open market for 30 days when we bought it vs. 30 days on the open market today, if they collected offers during the 30-day period and took the highest offer, I think that today’s price would maybe be 4% higher than when we bought it.

And yes, the market is slowing. My timing is almost always early, by my trend forcasts have (at least up to this point) been right.

[Coronita]

I don’t think appraisals are that valuable as a gauge for how much a house can sell for. I’ve seen appraisals on the same home all over the map…Using my own home as an example.

[sdrealtor]

Exactly! Appraisals are often way low. I have a house in escrow that the appraisal came back at the sales price on. I got a copy and it was a joke. The appraiser used a comp that was 1100 sq ft and the house is 2000 sq ft. The appraiser used a comp 1 mile away that was 15 years older and $25000 higher than mine instead of 3 sales 2 blocks away that we’re 10 years newer but $125k higher. He under appraised the house by about $50,000 but no matter. It appraised for sales price which is what my clients needed. My client got a great deal on a short sale.

As for your spring selling season appraisal it was based on winter comps which had dipped not current comps which are much different. I know the comps are now about 50k higher for my house than they were in March.

But the reality to CARs situation is that her house is worth a significant amount more than she paid. On everyone but her planet, that is known as significant appreciation. Also the market is far from slowing. I just checked her immediate area and while there are 5 or 6 homes on the market (not a large amount) they are well overpriced. Anything priced at market has offers

[Ren]

[quote=bearishgurl]It seems the vast majority of today’s buyers want “turnkey” property and are willing to pay for that. Hence the continued (irrationally exuberant) interest in *new construction tracts* by the younger cohort of Gen X, as well as Gen Y. This appears to be true, no matter WHERE these new tracts are located (i.e. adjacent to fmr landfill, out in lizardland, in boxed-in warm inland area, etc).
[/quote]

BG, you are aware this is insulting, right? Every single time you post it (which is annoyingly often)? Yes, some like newer or upgraded properties and are willing to pay for them, but you spit this out like it’s the definition of stupidity – when it’s really just a preference. You prefer not to pay HOA, but some of us like HOAs, we can afford it, and we think it’s worth it. Others can easily afford MR and like the newer ammenities they provide. I wouldn’t personally pay them, but I understand that others think differently and independently of Ren and BG. You think it’s irrational to buy a new house on a less than desirable lot? I think it’s irrational to buy a functionally obsolete house just because the lot is 2ksf bigger and I can paint the exterior purple. I’d rather have a walk-in closet and not have to look at my neighbor’s purple house.

For another example, some of us prefer buying cars new, because we like warranties, and many years of trouble-free operation, and knowing it’s had regular oil changes, and new car smell, and not finding someone else’s french fries under the seat. That may be a wrong choice for you, but it’s the right one for me.

[bearishgurl]

[quote=Ren]…I think it’s irrational to buy a functionally obsolete house just because the lot is 2ksf bigger and I can paint the exterior purple. I’d rather have a walk-in closet and not have to look at my neighbor’s purple house…[/quote]

Ren . . . so many misconceptions here.

Yes, I DO believe that the majority of younger homebuyers gravitate to new construction after viewing just 0-3 resales. They view the “functionally obsolete” resales which may have been longtime rentals or owned by an octogenarian or someone’s estate where the homeowner lived there for 40-60 yrs, don’t like what they see and then make a beeline out to a new construction site! They typically don’t want to wait for a suitable resale property to come on the market and/or lose interest quickly in the current resale listings because they can’t see past the avocado green carpeting and linoleum. The vast majority of RE listings today in SD County’s most sought-after areas are NOT “functionally obsolete.” Most have had new HVAC, repaired plumbing, updated electrical, new windows, new roof, new stucco, etc, etc.

In the SD suburbs (i.e. Chula, EC, LM, etc), the lots aren’t just 2K bigger in the older homes, Ren. They avg 3-4K bigger (nearly twice as big)! The size of the new construction lots in the same price range of a nearby older home (using $350-$450K here) typically have 3500-4500 sf (substandard) lots.

I can tell you that in my immediate area of about 100+ 60-65 yr old homes, there are at least 20-25 walk-in closets (some were added by an owner). Have you ever been to Coronado, Ren? MOST of the homes there (which were NOT gut/rebuilds) have walk-in closets. In two neighborhoods there, the closets are bigger than a bedroom and have an 8×8 ft built in chest of drawers in the middle of the closet (w/drawers on 2-3 sides, incl jewelry/sock drawers)! These closets have racks on all four sides! These houses are ALL more than 75 yrs old! On a smaller scale, some houses in North Park and South Park (SD) have walk-in closets. Many, many tract homes in Pt Loma which are 55+ yrs old have walls and walls of cabinets throughout the homes including in the dining room, family room, hallway and bedrooms and also built-in dressers and china cabinets. Yes, they were originally built this way! Older tracts like this can also be found in College Area and Del Cerro.

You won’t be able see any of this if your first house-shopping stop is out in lizardland at the new construction site.

And I’ve never seen a purple house in SD. Out of the 250 60+ yo homes around me (no HOAs), I know of ONE bright green one! The rest are light, muted colors and earth tones. And HOAs DO exist in older neighborhoods as well.

Perhaps the REAL reason for the knee-jerk preference for new construction in this demographic is builder-assisted financing. I can’t imagine that it is completely about schools, since there are many GREAT schools in non-MR attendance areas. The “builder-assist” may very well eliminate the need for a percentage of the downpayment wherein the buyer won’t be subject to PMI underwriting or PMI. But the costly (often VERY costly) MR encumbrance is NOT a fair tradeoff for this buyer assistance, IMHO.

[spdrun]

BG, you are aware this is insulting, right? Every single time you post it (which is annoyingly often)? Yes, some like newer or upgraded properties and are willing to pay for them, but you spit this out like it’s the definition of stupidity – when it’s really just a preference. You prefer not to pay HOA, but some of us like HOAs, we can afford it, and we think it’s worth

I for one agree with BG. Unless it’s a condo building in a city, where there’s common infrastructure to maintain, an HOA is a useless parasitic entity. I for one wouldn’t care less if I lived in the ‘burbs and my neighbors painted their house neon fluorescent orange, and neither would anyone else, so long as it’s kept in good repair. There might be some snickering in the background, but that would be about it.

PS – BG reminds me of an NYC lady (in a good way), speaking her mind and not caring who whines about her opinions. Perhaps she was from the right coast in a past life.

[Ren]

[quote=spdrun]
…an HOA is a useless parasitic entity.
[/quote]

This topic has been beaten to death in other threads. All that really matters to me is that I’ve lived in both, from one extreme to the other, and I prefer HOAs.

[quote]
I for one wouldn’t care less if I lived in the ‘burbs and my neighbors painted their house neon fluorescent orange, and neither would anyone else, so long as it’s kept in good repair.
[/quote]

You’re assuming everyone else thinks like you. I don’t want my neighbor’s house to be neon fluorescent orange, and I’ll return the favor by not putting a chain link fence around my front yard. Most people are this considerate without an HOA, but many aren’t.

[Ren]

[quote=bearishgurl]
Ren . . . so many misconceptions here.
[/quote]

Generalizations to try to make a point. I didn’t think you’d get it, BG, and you didn’t disappoint me.

No one without severe brain damage passes on a house because of bad carpeting. That kind of assumption is what makes your posts so insulting. People pass on a house because the kitchen would barely fit a card table, or because the low ceilings make them feel like they’re in a coal mine. Before you go quoting statistics about how many thousands of older homes have larger kitchens and high ceilings, don’t bother, because all that matters is that tiny kitchens and low ceilings are negatives for houses that DO have them. If I can get a beautiful layout with a smaller lot (when I don’t need a larger lot to begin with!) and those happen to be in a newer home, then that’s the home I’ll choose. The newness is almost beside the point – I like older houses, but more often than not, there are serious layout issues and it’s easier to find newer houses with layouts that someone actually thought through. You don’t share my opinion, and that doesn’t bother me. Why it bothers you is the big mystery here.

To each his own. Is that clearer? Just because someone doesn’t agree with your definition of a good piece of property doesn’t make them stupid, and I’m sick of you insinuating that it does.

[bearishgurl]

[quote=Ren] . . . To each his own. Is that clearer? Just because someone doesn’t agree with your definition of a good piece of property doesn’t make them stupid, and I’m sick of you insinuating that it does.[/quote]

No one is calling anyone “stupid,” here, Ren. Perhaps you have a “chip” on your shoulder.

The houses you are describing with small kitchens and substandard (less than 8′) ceilings (listings that you viewed or perhaps you rented them??) are obviously longtime rentals and/or lower-end homes (under about $350K). Both of these things can be fixed. A substandard lot encumbered by $4K of MR annually cannot be fixed.

For the record, I am not against HOA’s. I realize condo complexes need them. They also serve a purpose on SFR tracts IF their dues are less than $500 annually. These types of assns keep up appearances on the tract and minimally intrude on each owners property rights. I DO feel that neighborhood stability and resalability is threatened, however, if the dues on an SFR tract are more than $100 mo and/or if there is more than one HOA encumbering the same tract.

Ren, I would be curious if you have ever viewed older homes which are (currently) priced $450K to $850K. If you had, you would find they don’t have “tiny kitchens” and “substandard ceilings” unless they are 0-4 bl from the ocean (it’s not likely any of these are available anymore).

The best pieces of property (investment-wise) are always in the best locations. The location, “, ” doctrine has never changed. These properties, if situated in CA coastal counties, are almost always older (unless it is a more recent infill “spec” home). No one can fix this. It will always be so.

[bearishgurl]

Back to the OP.

I’m hoping prices keep firming up everywhere and lift all boats. I’m doing improvements little by little and am in hopes I can get the price I need in two years. If not, my improvements will no doubt fetch a higher monthly rent.

I’ve stopped caring about the “shadow” inventory trickle … even though we all know this and (the mostly unsuccessful) “loan mods” are enabling FB’s to stay in “their” homes for “free” or “on the cheap.” If the slow “trickle” by the Big Banks and others keeps prices firmed up and helps future potential sellers like me move on down the road, that is all I care about.

The local inventory can go down to zip, for all I care. If it does, this is less competition for those who actually want/need to sell.

[sdrealtor]

Ren
What some posters fail to understand is that many of todays first time buyers have great jobs with higher incomes and great upward mobility but often lack two key things – time and large down payments. They want newer turnkey houses because they can easily serivce the debt but dont have $30 to $50K lying around for remodeling. They work long hard hours during the week and want to enjoy their weekends with their young children not spend them fixing paint, drywall, roofs, plumbing and electrical issues. They havent gone through multiple home remodelling projects and dont have time or interest in learning the ins n outs of doing them. Turnkey fits their financial position and lifestyle. For buyers like that its the right way to go.

FWIW, Mello Roos actually helped prevent overbuilding in my neighborhood. The developers were forced to set aside land for a school (that wasnt actually needed anytime soon and is being landbanked for the longterm) and to use a modest MR bonds to finance the purchase. The developers would have loved to build another couple hundred homes there but couldnt. Without MR there would have been no mechanism for the land to be purchased and the developers would have most likely just been able to add more density here.

[Author]

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