[an]

I don’t think price have gone up the way you describe. The data I’m about to show is from zillow and their 5 year chart which is what they called the Zindex. I’m not sure how they calculate it, but however they did it, it’s the same calculation for their 2001 # as their 2006 #, so that variable can be removed. You can go as far back as 10 years.
Solana Beach
Current – $1.02M
2001 ~ $400k
% increase – 150%
$ increase – $602k

Poway
Current – $631k
2001 ~ $290k
% increase – 118%
$ increase – $341k

Rancho Santa Fe
Current – $2.47M
2001 ~ $1.1M
% increase – 125%
$ increase – $1.37M

San Marcos
Current – $536k
2001 ~ $235k
% increase – 130%
$ increase – $301k

Carlsbad
Current – $668k
2001 ~ $300k
% increase – 122%
$ increase – $368k

Del Mar
Current – $1.17M
2001 ~ $500k
% increase – 153%
$ increase – $617k

Santee
Current – $463k
2001 ~ $190k
% increase – 146%
$ increase – $273k

You can go look at other cities as well, but throughout San Diego County, all the cities I looked at had increase between 120-160%. I don’t see any correlation between price and % increase either. So I’m not quite sure where you get those $300k-$400k price increase from. Please tell us how you compute it, it might explain the discrepancies. From what I understand from reading their description, Zillow used data from all home sold. Since they all are >120%, I think 50% drop still would not affect people who bought in 2001 and not refi to take cash out. a 50% drop will still mean 10-30% increase in 5 years. That’s 2-6% appreciation every year for 5 years. We’re not even talking about how people already start calling 2001 price too high back then. If we take a different base, like 1997-1998, that would mean a 50% drop still mean amazing return on investment.

[an]

Everyone has their own level of tolerance for commute time. I used to live in Oceanside and commute to scripps poway, scripps ranch, and now Sorrento Valley. I can’t stand waisting over 30 min one way just to get to work or get home. Now, it takes me 5-10 min to get to work. It makes like so much better. So for me, anywhere north of the 56 if you work in Sorrento Valley is too much since getting home would take you over 30 minute easily.

[an]

I too have been following that development since they first started. That model started out in the mid 500s, around 560k or so. Then they raised it to 580k. I went there a couple of weeks ago and talked to one of the agent. I asked her if there’s and incentives right now. She mentioned the typical like 6 month HOA, etc. I then pressed on if there’s any negotiation in price. She then asked me when can I closed, once I told her I can closed w/in 30 days, she say there are some deal available right now. I guess she was referring to these. Also, the listing price now for those are around 530-540k I think.

I like that area and that size home as a starter home. However, I would not pay much more than 350-400k for them either. We’ll see how far and how fast this house of cards crumble.

[an]

If that’s your price range, then Wateridge circle complex that I’m staying at is out of your range then. The smallest 1400sq-ft tend to rent for around 1800-1900. But do check out the 2 on the western end of Mira Mesa. They’re the cheapest you can get and still be close to Sorrento Valley (within 10 min drive).

[an]

sdrealtor, that’s a very good site. I think typically, schools that are more diverse tend to have lower total score, if you look closer at the number for each race, you’ll see that even from school that have mid 700 API score, the asian / white kids tend to get around 800 and above. One big exception is Preuss School UCSD. That school, the majority are not white and their total API is 861. That school only accept low income students. It just come to show that with the right environment, most people can succeed, regardless of race or socio-economic circumstances.

[an]

I’m not sure what your price range is, but I’m renting in Sorrento Valley. It takes me 5-10 min to get to work. I also work in Sorrento Valley. They don’t have condo in Sorrento Valley, but there’s a townhouse complex on the corner of Lusk and wateridge circle. You can also check out Summerset village in Mira Mesa. It’s at the western end of Mira Mesa, right next to Camino Santa Fe, so it’s 1 block away from Sorrento Valley. There’s also a condo complex on the corner of Camino Santa Fe and Calle Cristabal. I’m not sure if it’s considered Mira Mesa or Sorrento Valley, but either way, it’s 1-2 block from the border line anyways.

[an]

I agree, rent will go up and up. But tax write offs will go down and down. So that will add complexity to the comparison. Then you should then consider, if you’re a very good tenant, paying early every month, do your own minor repairs instead of bugging the landlord, keeping the place looking good, they might not raise the rent for many years. These are some variables that can affect some of the assumptions about the future of rent and cost of buying. Who knows, maybe we can go in a great depression and rent will drop or real estate price can copy Japan’s movement and drop for 18 years straight. It’s hard enough to estimate what will happen in the next year or 2, much less 10 years down the road.

[an]

Why add extra variables like down payment and principal to this comparison. It would only give more room for error. How about we compare a $600k house/th/condo using I/O loan and 0 down.
On a $600k IO loan, the monthly interest would be around 3400 in the first 5-6 years of ownership.
$3400 Interest
+$625 Tax
—–
$4025 Before tax saving.
$2656 after tax saving.
+$200 HOA
+$100 Insurance
+$100 Repair, etc. (low estimate)
—–
$3056 After said and done.
$2350 Rent average.
—–
$700 Overpaid per month = 30% more than rent
With $700/month saving, if you invest it and get 7%, in 10 years, you’ll have $121k, @ 8.5%, you’ll have $132k, @ 10%, you’ll have $144k.

That mean your house has to increase by 20-25% over the next 10 years in order for you to break even.

[an]

-duplicate post-

[an]

This is why I think median price is pretty useless in term of the current situation. Like many have said, median price is a lagging indicator. Lets say you’re buying a house and you figured you can buy a 500k house. The house that was 500k last year is now 450k and the house 550k last year is 500k, would you buy a 450k house or would you still buy a 500k house? I’m pretty sure most will still buy that 500k house. That’s one of the reason why median doesn’t really tell you the whole story. Also, if you have less people buying in the low end compare to last year and more people buying in the high end, even if price drop 30-40% in real term, median price can still be going up.

If you take one data point of 1% drop, then I would say no, that’s not a trend. But if you take data from the last 10 years, showing y-o-y price going up at double digit and the last year, y-o-y price winding down to 0 and last month being the first negative y-o-y, I think that’s a pretty good trend right there. If you don’t think that’s the trend that it’s moving back to the historical moving average, then can you give me an example of an asset class where it move well beyond its moving average and does not return back to the moving average? Be it short sharp drop or long slow drop eroded by inflation.

[an]

I also love the quote, “In God I trust, everyone else, bring data”. So Alan, if you believe you’re not lying, show us your data.

[an]

Mr. Gin,
What difference does it make if you know what my real name is? Will you go hunt me down and beat me up? My whole post was basically saying that you’re a smart man and simply looking at the data, I’m sure you know what’s happening in San Diego RE. So yes, that’s why I basically said you must be lying. If you’re not lying, then, I apologize and have to assume that you’re not as smart as I thought you were.

I’m pretty sure you mentioned that RE only drop during a situation where there’s job loss. Well, how do you explain price dropping below the 2005 level and there’s no job less yet. Also, can you explain your view on the many jobs related to RE. Will they not lose their jobs if sales # continue to decline at this pace?

[an]

Personally, I don’t like to put a % in my goal of when I’ll buy my home. I know that RE move much more slowly, it flat lined for 2 years before turning down. I would assume it would take 2 years of flat line at the bottom before it turn back up. So for me, I would be when y-o-y price start turning positive again. I rather be a little late and buy after it rise 5% rather than buy early and then find out it’s still falling.

[an]

Unless you’re planning to move to a new rental unit, I don’t think it’ll affect you that much even if you’re on a 1 yr lease rather than 2 yrs. I think that most smart landlord knows that good tenants are hard to find, and when they got one, they would rather either keep rents the same or bump it just a little. They don’t want to upset you and force you to leave. If you leave, they almost have 1 month of no rent. If you’re talking about $2k/month rent, that’s almost like losing $200/month in rent. Also, they’ll be risking getting a not so good tenant. So, I’m not too worried. Also, if you look at it, rent of SFR is still much cheaper $/sq-ft compare to apartments. But rents are based solely on income, so rent can only rise so much before they top out, or our income will rise along with it.

My personal experience is that yes, I’ve been to open house for rental that have 5-6 couples chasing after it. I end up getting a 1600+sq-ft townhouse that’s 5 minute from work for both me and my wife at around $1.3/sq-ft in Sorrento Valley. Other units around me rent for around $1.35-$1.4/sq-ft and mine was listed for $1.5/sq-ft. So, good deal can still be had if you bargain and have the credit score, cash to back up your bargain.

[an]

I completely agree that he’s lying. He’s definitely not stupid. He has a PhD in economic and is a professor at USD. So I’m sure he knows what’s going on. He has a vested interest so he keep on spinning, just like DL and LAY.

[Author]

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