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SD Realtor, your criteria also fit sabre springs & Carmel Mt. area. Is that too far north for you? Anyways, do you think those 2 area will hold up as well as old scripps?

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If those wealthy foreigners are buying to live, they won’t be buying average white collar area like Carmel Valley and bellow. They would be buying in Laguna Beach, RSF, etc area. If they’re buying to rent out, it doesn’t matter how cheap it is compare to houses in their country, they would have to compare it to rent of the area they’re buying in. So, my point is, area where houses are under $1-2M are not affected by wealthy foreigners. They have better places to invest their money than housing.

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Do believe me however when I tell you the last downcycle lasted from 1990-1997 and the proceding runup wasn’t anything like the one we are coming off of.

That’s exactly what worries me with the idea of soft landing that some people are suggesting. If there’s a crash, we’ll see the same cycle length. If we have a slow soft landing, it might take one or two decades for inflation to catch up. Personally, I’d rather have crash and rally than flatness for decades.

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Fed fund rate maybe be heading up, but that’s no guarantee that mortgage rate will follow. We can very well see an inverse yield curve instead of a flatten yield curve. I mean, short term rate has been on the rise the last couple of years and long term rate went no where. Doesn’t inverse yield curve lead to a recession? If so, then isn’t the recession some are predicting will be lead/follow by inverse yield curve? This might affect those ARM loans but won’t move 30 year fixed rate much if at all. Just my guess.

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Wow, $175k? Are you serious? That would be back to pre-1990 price. Unless rates go up above 10%, I don’t see that happening. Mortgage on such loan would be 1/2 that of the cost to rent an apartment in Mira Mesa.

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I agree w/ SD Realtor, some people get it and some don’t.

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Here’s CNN’s article on the same topic.

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Wow, Del Mar seems to be just as bad as RSF Covenant. Really defeat the idea of buying a shack w/ some land & ocean view and rebuild it to be your dream home.

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Here’s something I just found out from khov.com, K Hovnanian website. They’re build new homes at 791 Kirkwall Drive
San Marcos, California. The size range from 2152 sq-ft to 2761 sq-ft. The shocker is the price start from $485k for the smallest model and $530k for the largest model. That’s $225/sq-ft for the smallest model to $191/sq-ft. That some very stiff competition from the builder.

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Something similar to this idea has been done. Here’s an article of the result. It’s surprising to say the least.
Article

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Very good post bug. Also, if you noticed, it’s 4.5% IO loan, so basically, it’s renting for 10 years at $1900/month with an option to buy @ $500k price.

I totally agree with you that kids much rather have their parents home with them more than living in some fancy house. I know many people who their parents work very hard to give them the fancy cars and buy nice houses for them to live in. But they’d trade all that in a heart beat to have their parents home more with them. Their parents basically missed out all their childhood.

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PerryChase, good catch on the opportunity cost of the down payment. $100k is quit a bit of money. @ 5% return from a saving account, you’re already looking @ $415/month. @ 10%, that number grows to $830/month. But I don’t think even that will get the rent # bellow the $1900 4Sbuyers2002 came up with. Rent for that size house in 4S I think is around $3k/month.

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Congrats 4Sbuyer2002 on being at the right place at the right time and taking advantage of the situation. I doubt we’ll ever see 4.5% interest rate again. Some of us are not as fortunate. I graduated w/ my BS in 2002-2003, which was a horrible time and it was hard enough to find a job, much less make a long term commitment like a house. Now that people like myself finally saved some money to start thinking of a house, it’s no longer at the level it was in 2004. Where we go from here is anybody guess, but my bet is on returning to fundamental. It did many times before, this time won’t be any different.

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Just come to show that no one can predict the future, no mater how certain it look at the time. The only certain thing is that price will come back to fundamental. That’s as far as anyone can claim. Anything else is just a wild guess. Be it flat to slow decline and have inflation eat away the price or hyper inflation which essentially give people income to afford the current price or major price drop. It can be anywhere in between as well. We’ll just have to wait and see. The only faith I have is in the fundamental, not prediction.

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SD R, I totally agree, you have to do your due diligence before even consider buying an auctioned house since things will be moving very fast at that moment. I actually visited the house in Mira Mesa thats on that list, the house is vacant and unlocked. So I just decided to walk through it to get a feel of it. It’s definitely run down and potential mold issue. But the starting bid is low enough that if you add in the cost of restoration, it would still be a decent deal.

I’m planning to go and see the whole process. I bet if the reserve is not met, the house won’t be sold, but if the lender suck it up and sell it at that price, then it would definitely be a decent deal. Bottom line, do your home work and set your max bid before the bidding start so you won’t get caught up in a bidding war. I’m planning to bid the starting bid on the house in MM. If it doesn’t meet reserve or get outbid, no harm no foul and I get to see the whole process. I’m sure there will be more to come in the next several years.

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