way too many disgruntled people here

[SD Realtor]

fat and lazy – I said other SD Realtor because I am not the same sdrealtor you are currently debating with in this thread. Thank you for correcting me because the listing they have is the 2/2.5 floorplan. What my point was however, was to display the quick fall in pricing for these homes.

SD Realtor

[New_Renter]

sdrealtor,
Sorry that grouping you in with the general Realtor population offended you. I have been reading Piggington for quite some time, but this thread is the first that got me fired up enough to post. I have found your posts quite interesting and well-reasoned, and thank you for sharing the data you have as it is helpful. At the end of the day this is really all just opinion based on what data we have available, and our own individual experiences. I too have a masters, co-founded and sold a technology company, and have this (weird) fascination with RE. I’m targeting our next purchase around the $1.5M area, so I’m looking for today’s $2M property to get down to that area. I’m thinking that nominal declines of 30% in this bear market (for lack of a better term) will probably be pretty close to the mark. I just don’t think it will take 5-6 more years to get there. But nobody really knows, do they? Obviously, some people aren’t worried about it and are making a personal decision that’s right for them. For me renting makes a lot of sense right now, IMO, it is a good value and low-risk strategy vs. purchasing right now.

[sdrealtor]

New Renter,
No problem, I wasnt offended and dont take things like this personally. To me its mostly about learning, exchanging ideas and entertainment around here. The market you are looking in is a whole different ball of wax. A decline from $2M to 1.5M wouldnt shock me either. Here’s what you are more likely to run into. In the nice coastal areas (like DM for example) you are just getting started with nice homes around $2M today. I know as I’ve been looking in DM in that range. The really good stuff starts closer to $3M. So even if prices drop from $2M to $1.5M, the problem will be finding something you like. Ultimately, finding a tear down and building a custom home might be a better option. I have a couple escrows right now on $1.5 to $2M spec homes that I found for my clients after 3 and 5 years searches before they ever went on the market. If you really want something nice, which I’m sure you do, I would recommend that you never stop looking. You never know when you will find exactly what you are looking for and if you do, it might be so perfect that you will end up pulling the trigger sooner than you thought.

Personally, I have about 15 to 20 years to find what I am looking in a very limited four block radius. Where there is at most 1 or 2 sales a year. I need to find a tear down to do what I want. I even know the builder that will be building my home when I am ready. When i find the right location, I will be pulling the trigger no when it comes up.

[Coronita]

FLU, Again you are debating yourself. The decline isnt starting in CV. It started 18 months ago. Last year prices declined quite significantly between Winter and Spring. This year prices in Late Spring are flat from prices in the Winter. This wasnt the case last year. There probably arent enough data points for a real solid statisical analysis but that is what I am seeing along the NC coast. Once he get into August, demand should slow down and prices will suffer. I have never said anything different. BTW, under $700K there are 3 active lstings and 4 pendings

 

I think I was smoking crack when I was replying to you yesterday. I've reread what you said and see your point 🙂 Sorry about that. 

[Raybyrnes]

JWM

Most of the accountants that I know are not typically following their wiives around. I guess they are better at it than you.

Let’s face it. Your posts make an effort at you somehow being knowlegable of Real Estate. have you sold real estate. NO Have you been in the appraisal side. No Have you been on the lender side NO. I don’t know maybe you are a good accountant but that doesn’t mean you know anything about real estate. Additionally if you left Chi town in 04 you don’t have nearly enough time in the San Diego area to step up like you are some kind of expert.

As I have stated in numerous posts I am renting. If my wife and I were both working I would buy something I was comfortable with. I would be less inclined to wory about the timing of my purchase. There has rarely been a period of time when people buying houses did so becasue they were timeing markets. The majority of people buy because they have families, are looking for particular school systems, and can afford to buy. Ask them ten years after they bought and they will tell you people thoght they were paying a premium.

Why don’t you take a look at OFHEO and take a look at California and the historical price increases. There was a period from I believe 1990 to 1996 where there were declines but this was due to job losses in the area and a Change in teh ta codes in terms of write offs. While I would cheerlead for a decline in prices because it would advantage me the reality is that I don’t foresee the declines most here are suggesting in the areas that I would consider buying. La jolla, Del Mar, Encinitas, Carlsbad, Carmel Valley, Mt soledad. So rather than hope and be disgruntled I will focus on creating revenue and doubling my income to make up for the high prices. This I can control. The housing market I can not.

[JWM in SD]

“Most of the accountants that I know are not typically following their wiives around. I guess they are better at it than you.”

You can never resist the urge to get personal can you? My wife is an active duty member of the Navy because they paid for her pharmacy education which was quite expensive. She had no choice in where she was stationed. So are you suggesting that I should have divorced her so as not to have to leave Chicago. You know what Screw You Raybyrnes.

Second, I don’t have to be involved in the real estate industry to understand what’s going on. That didn’t stop Rich Toscano from starting this blog now did it?

In flames, everytime you freaking moron.

[Raybyrnes]

I love it. Keep getting pissed. I find it comical. You need to loosen up. People can have different opinions. 2 people can get to the San Diego Zoo and travel on different streets.

I provided primary data that can be looked up by going to OFTHEO. While real estate on a National level has been an average investment, real estate in California has been an excellent long term investment. Now a contrarian can argue that ultimately California is no different than the rest of the country and their will come a time where there will be a regression to the mean but I do not believe this is the case.

Before the declines of the 90 their was a plateua period. even if one were to argue the cyclical nature of real estae you would have to argue using data that the next phase is a period of plateau. Not up nor down. That is what the data suggests.

[JWM in SD]

Once again, you are ignoring the exogenous factors involved in this past cycle: EXCESS LIQUIDITY!!

That was not present during the last run up and bust in the early nineties. It really is different this time. Toscano addressed this very factor in the KPBS interview that is linked here. Go Watch It.

[Raybyrnes]

I have actually listened to Rich as he made a presentation to a class I took. I think you are going to see government interevention with respect to bad loans. Additonally the majority of the problemed loans are still coming back to job losses divorce etc. It has not been resets that are creating the majority NOD’s.

Additionlly % rates have remained low. Unemployment data is low. These are driving factors. They are not signaling a turn for the worst.

Builders and developers used option when they were buying land. They ahve walked away form many of their deals. Supply side economics suggests that they can prop up prices by reducing inventories. This is what they are doing. This type of fuding arragement was not around during the last downturn.

[no_such_reality]

When people compare current stats with the peak bubble sales and appreciation years they are overstating the decline.

SDR, on those CV stats, do they have 1990-1996?

Overall, in five years, I think we’ll all step back and agree what the trend was. In the mean time, looking at monthly sales, watching the 40 monthly sales is like watching the gyrations of a stock on intraday trading. I stock can be cleanly up or down and an individual day, week and month can all drive you nuts as it retests highs and lows.

In the meantime, if I look at CV on Redfin, I several 4/3s ranging from high 900s to 1.3m at this price level, noise is +/- $100K. When this listing comes back with the same volume of homes and all those 9s are now 8s, we’ll know the market as moved.

[JWM in SD]

“Additonally the majority of the problemed loans are still coming back to job losses divorce etc. It has not been resets that are creating the majority NOD’s.”

Yes, it is due to EPDs or early payement defaults which is even more concerning when you think about it. The resets are on their way though. Look at the reset graphs that were posted here. The first big wave hits in later 2007.

“Additionlly % rates have remained low. Unemployment data is low. These are driving factors. They are not signaling a turn for the worst.”

Historically low, but higher than during the crazy period between 02 and 06. Once again, we have lots of NODs when rates are low. What does that tell you?? Jobs were lost but replaced with low paying service jobs. Rich stated this explicitly in the recent KPBS interview. The Fed has warned more than once on raising rates to stave off inflation. Don’t think they wont’ raise them.

“Builders and developers used option when they were buying land. They ahve walked away form many of their deals. Supply side economics suggests that they can prop up prices by reducing inventories. This is what they are doing. This type of fuding arragement was not around during the last downturn.”

Builders build. That is what they do. Supply side economics?? Don’t make me laugh, seriously. I gues they will hold onto that inventory at inflated prices while they burn cash building and have to pay their people?? You are talking to someone with years of experience in manufacturing. Holding inventory is bad. Trust me on that one. The builders are undercutting flippers and offering incentives to get their homes to sell. Have not seen the articles about builders getting sued by recent customers because they lowered the prices?? I believe it was lennar.

You need to do better than Raybyrnes. Once again, in flames.

I’m done, I have other things to do than to respond to your ill-informed posts.

[Raybyrnes]

Builders build. That is what they do. Supply side economics?? Don’t make me laugh, seriously. I gues they will hold onto that inventory at inflated prices while they burn cash building and have to pay their people?? You are talking to someone with years of experience in manufacturing. Holding inventory is bad. Trust me on that one. The builders are undercutting flippers and offering incentives to get their homes to sell. Have not seen the articles about builders getting sued by recent customers because they lowered the prices?? I believe it was lennar.

You are talking about something completely different than what I am referring too. I am not referring to built out inventories. I am referring to land options that they are simply walking away from. Del Sur and San Elijo Hills. This was actually referred to in todays Union Tribune. It was actually a decent article. Unusual for the Union Trib.

As for the Fed raising rates, I would think that they would. I look at the costs of food and gas and there is inflation. I also think back to around 2002 when the fed raised from 8.5 to 8.75 ultimately getting to 9 and the stock market surged in light of these raises. I feel like we are going through this all over again.

In light of short term rates long term rates are still low. Inverted yield curve(already know sign of recession) but nin light of interest rates they ahve gone down. If rates reset and are low and the governemtnsteps in to assist many borrowers hurt by the reset you might not see a crash. Additionally we are going to be entering into an election year and GOP is going to have people looking at 401K going up, home ownership going up econoimic prosperity to sidetrack the discussion of the war. Don’t be surprised if gloom and doom does not come.

[JWM in SD]

Sorry, but I don’t understand how anything you’ve just said is going to prevent housing prices from declining. Does any other poster understand what this guy is saying? You seem to be using the arguments for a housing decline as agruments against it. Bizarro world, I swear.

Like I said, I’m done responding to you anymore, you just don’t want to get it.

[sdrealtor]

NSR,
The mls only goes back to around 1996. Another potential problem is ZIP Code changes. I’m not sure but I think there was a ZIP code change in the CV area in the mid 90’s which would further complicate things.

Anyone around her been in CV more than 10 years? If so, have there been any ZIP code changes in that area?

[Raybyrnes]

Simple. Developers did not purchase the land but rather purchased the option to buy the land. Rather than pay 100 million to a land owner they might have paid 4 million for the right to buy at a specific price.

Rather than increase inventory in let’s say Del sur they have elected not to exercie their rights to buy that land. Instead of creating an additonal 1000 units of housing they elect postpone plans to build. their cost to walk away from the project is simply the cost of the option. They do not carry the same risk as had they bougth the land outright. Additionally they now have effectively reduced the amount of hiomes that will be built out in the short run.

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