[an]

bigmoneysalsa, I agree w/ you completely. The mobility factor is HUGE. especially to the younger generation. Statistically, people in my generation tend to change job every 3 years. That’s much shorter than previous generations. Since my generation are the typical candidate buyer for the starter homes, it does affect the premium in the big way for the starter home.

[an]

The first number I gave include none of that. The 2nd number, where I take tax deduction into consideration, I also add in 1.5% tax rate, which is much higher than the typical 1% tax rate in Mira Mesa. So that additional .5% can go toward insurance and such. You’re right, there’s no HOA or MR in this area. That’s the big plus for me.

I’m only using 100% LTV ratio to keep the calculation fair and simple. the 5.5% is assuming you can put down 20%. But if you calculate with the 20% down, then you have to add in the opportunity loss as well, which add complexity to the calculation. It’s not meaningful since we’re just doing rough estimate.

[an]

The two things I consider as fundamental are rent vs buy and income vs buy. If it reach equality in term of monthly payment on a 30 years fixed w/ 0% down to make the calculation more fair and monthly rent of a similar house, I consider that close or at fundamental. income vs buy is just used to compare a whole area. But since RE is local, you have to get down to each individual house level and see if a particular house is far or close from fundamental. Also, income vs buy will tell you what you can truly afford, but that doesn’t tell you much about how over priced a particular house is.

Here’s an example: A 1200sq-ft house on a 6000+sq-ft lot in Mira Mesa is being sold by the bank, asking $375k-$400k. If you work out the number, that would put P+I around $1900/month. A similar sized place would rent for around $1600-$1700/month. a 2bed/2bath apartment near there would rent for around $1400-$1500. So I would say it’s about 10-15% from fundamental. If you take in tax deduction, then it’s about at fundamental.
Then you have a 1500sq-ft $540k house, still in Mira Mesa. The rent of a similar house is around $1800/month. But the monthly payment of the mortgage would be around $2400/month. That’s more than 20% over monthly rent. Bottom line is, RE is even more local than just Zip Code. Every house is different and you have to do your calculation individually.
Another way to calculate to see where the fundamental is to calculate the monthly payment of a similar house around 1996-1998, add on 3-5% inflation each year, then you get a monthly payment for 2007. That’s your fundamental. This will take care of the rate difference. Who knows what the rates will be in the future. The best you can do is calculate the rate now and the price now.

[an]

SDUSD is not as good as PUSD. That’s a known fact. However, that area of Mira Mesa, kids will be going to Scripps High School, so that does soften the blow. In the portion of Mira Mesa, there are a lot of small development. I wouldn’t buy the detach condo ones, but the larger SFR w/ a yard on the west side of Black Mt. Rd. is pretty decent to me. Personally, everywhere will be susceptible to huge price decline. Mira Mesa has been decline the most so far, so I’m not sure if it’s more susceptible to future steep decline compare to others.

I grew up in Mira Mesa and went to Mira Mesa High School. End up going to UCSD and now work in Sorrento Valley. So, I don’t think it’s that bad. MMHS and Scripps HS are actually one of the top HS in SDUSD. So it’s not so bad. We constantly have budget issue since we tend to get better test scores, so they don’t think we need as much money.

Anyways, the reason I say MM and PQ are good starter area because they were & will be quite reasonably priced. However, a 2000sq-ft house in the mid 300k at this interest rate is a little hard to believe. I worked out the numbers and w/ a $350k loan, your monthly payment would be $1987/month. If you take tax write off into consideration, you’re looking at more like $1600/month. If you use 20% down, your monthly payment would be $1600/month. $1300/month if you take tax write off into consideration. That’s substantially cheaper than renting a similar place. I use 5.5% interest for my calculation. Considering renting a 2 bedroom apartment range from $1200-1500/month, I’d highly doubt it’ll get that cheap unless interest rise substantially. Then all bets are off. If we see 12-15% interest again, we can might as well be in the $100k range.

It’s really up to you price range. If you’re looking in MM, that means you can’t afford better areas like CV, RB, Scripps, etc. For the price range MM is in, MM is my top choice and I am looking in MM. I prefer west & north end of MM though. South east MM is quite ghetto. If you can afford those more expensive area, then I would suggest you buy in those areas since they are better than MM.

[an]

That’s very interesting. I thought the whole point of a short sale is to save your credit. If that’s not the case, then why would anyone do a short sale? I would just live free rent until I get evicted.

[an]

Another question would be, how many sales fell out of escrow because of the sub-prime fiasco that happened a few weeks ago. Sale are not final until funds are secure. I guess we’ll see the full extent of the sub-prime problem by April/May number.

[an]

yes, they updated their site again. I don’t like the new design. Seems much more cluttered than before. The map function still works for me though.

[an]

Personally, I think price will move in the opposite direction of rates until the monthly payment is at the fundamental. So, if rates goes way up, price would have to go way down. Personally, I would much rather have super high rates and super low price rather than the other way around. This way, any additional payment will make a larger dent in the principal and you can write off more interest for taxes. That’s a win win for me. There’s no way price will stay the same if rate shoots up. Same reason as price wouldn’t stay the same if rates go way down.

[an]

4 more days to go. We’ll see how this will play out in 1 month. Wow, so exciting. It’s like watching a train wreck in slow mo.

[an]

Great site. *bookmarked*. I can’t stop watching :-).

[an]

They are sold out last I checked. I saw one plan 1 or 2 listed as a foreclosure sale. Resale are still asking builder’s price at this point. Which mean, 450-475k for plan 1,2 and mid 500k for plan 3,4.

[an]

I’ve been through all the models in 4s Ranch around that size. Personally, I like maybeck the least since the garage is in the alley, which mean no drive way. That’s horrible if you have guests. I like K. Hov. Evergreen the best. The only builder w/ nice double french front door. The floor plan also feel much more open than the rest.

[an]

SD Realtor, are you saying the starting bid of those houses are still way to high or do they have a reserve price that’s way too high?

[an]

I agree, it’s a very high risk trade. Hence, the high return. I’m trying to confirm my theory regarding trade like this. If you look at both LEND and NEW, after a major drop day, both bounced back around 40-50% or more. It seems like there’s a lot of bottom fishing that occur after a major drop.

[an]

Whoever bought LEND yesterday and kept it till today have just made 50% in one day.

[Author]

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