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bearishgurl
Participant[quote=thejard]I have a hard time justifying some of the prices in Chula (west 91910, 91911) that I see they are going for compared to just a year ago. Maybe we missed the boat?
In fact, we took our savings and plunked it into debt. But, because I really want to own I keep obsessing about this!
How did they get such a price on this one?
http://www.zillow.com/homedetails/331-1st-Ave-Chula-Vista-CA-91910/17105110_zpid/or this one?
http://www.zillow.com/homedetails/177-Shasta-St-Chula-Vista-CA-91910/17105487_zpid/or?
http://www.zillow.com/homedetails/253-K-St-Chula-Vista-CA-91911/17108770_zpid/Are they cash buyers? FHA?
I just feel very deflated when it comes to me trying to get into something. Is it different this time? Or will there be a dip sometime in the next 5 years?
Spending that kind of money on something terrifies me lol; I’ve been driving the same car for 14 years now, so spending more than a $1k on a single thing scares me![/quote]
thejard, I’ll look at your links in a bit but I just want to remind you that 91910 and 91911 are “coastal” (bayfront). Chula’s more recently annexed-in zip codes of 91913, 91914 and 91915 are “inland” and thus up to 10 degrees hotter or colder at all times of day, depending on season. Temperature alone is a BIG ENOUGH DIFFERENCE to affect the pricing in the well-established areas of Chula Vista as you are seeing. And, for the most part, there is little to zero HOA dues in SFR subdivisions within these zip codes and no MR (except for Sunbow and parts of RDR, in which the lower-priced bonds may be already or nearly paid off).
Oh, and btw, thejard, my vehicle is 21 years old and I just got back from another 2500-mile (RT) road trip with it and it ran like a top, even at elevations exceeding 10K feet!
Participant[quote=Rich Toscano][quote=The-Shoveler]I am not saying that home prices are not silly right now but I will say they are not and have not been building near enough homes.
[/quote]Inventory is indeed low, but that’s a function of how many people want to sell and how many want to buy at any given time, not necessarily of how much new building is taking place, or of overall housing supply. For example, inventory was very low during the bubble, despite lots of new construction/rapid expansion of housing supply, and then it was very high in the bust despite zero new construction.
It may be true that new building isn’t keeping up with population growth (I don’t know one way or the other, offhand), but current level of inventory for sale isn’t really a good indicator of that, is my point. To determine this you’d have to look at population growth compared to housing supply… SANDAG probably has that info. Might be interesting to look into.
PS my take on whether prices are “silly” -> http://piggington.com/shambling_towards_affordability_midyear_2015
Summary: yeah, they seem kind of silly, but it’s hard to get an exact read on that, and they were a lot sillier during the bubble.[/quote]
There’s no law mandating builders “keep up with population growth” in any particular jurisdiction. In fact, the opposite is true in many west coast jurisdictions within the states of CA and WA. Many (coastal) cities and counties in these states have disallowed permits for tract subdivision for at least the last 30 years or even as far back as since the city was formed.
Those cities are among the best-planned in the nation and have among the best quality of life for their residents today.
More residents does NOT EQUAL better, folks.
Obviously, SD County was not one of the above jurisdictions (whose leaders were more astute and concerned for impacts to their local environment). SD County’s (and a good portion of its brethren cities’) elected officials have consistently sold their constituents’ quality of life out to Big Development since 1986/87 at every available opportunity.
Participant[quote=poorgradstudent][quote=The-Shoveler]I am not saying that home prices are not silly right now but I will say they are not and have not been building near enough homes.
I was hearing that resale inventory (below 800K in price) is down about 28% from last year and it was even low then.[/quote]
Yeah, it seems like all the building that is happening is in the 2000+ sq ft range. I’ll admit I don’t know areas like Santee, Chula Vista and San Marcos that well, which may have building activity that is more in line with starter homes.
It sort of feels like builders just want young families to buy condos for their first home :P[/quote]
I don’t know about SM or Santee (both “inland” cities) but, as far as I know, Chula Vista, a “coastal” (bayfront) city, doesn’t have any building going on, unless it is a very small spec/infill project. Builders don’t get to decide what 1st time buyers and/or “young families” get to buy in SD County. There are plenty of SFRs currently available in at least a dozen zip codes in metro/south/east county (and likely in a dozen-plus zip codes in north county) which meet the criteria of a “starter home” (for 1st timers/young families) and priced under $400K.
And no, these SFR’s generally aren’t anywhere near “new” or “newer.” I honestly don’t understand why millenials tend to shy away from older homes in SD County. They certainly don’t in LA County (where there has been next to zero SFR tracts built in the last 25 years) or the SF Bay Area (where there has been next to zero new SFR tracts built in the last 15-20 years, depending on micro area). It doesn’t make sense.
Yes, a “newer” (<15 yrs old) condo can be had for under $400K in SD County today (even well under $400K) but with that purchase, the buyer typically has 12-25 more miles driving distance to work centers (one way, amounting to $200+ month higher gas/maintenance expense for daily commuters) and HOA dues and Mello Roos tacked onto its property tax bill. PITI + HOA dues + MR amounts to several hundred dollars more per month than a comparably-sized (older) SFR would cost them in PITI alone. For that extra $500 - $750 per month, the new homebuyer of a (dated) older home can make incremental improvements to it, selecting top-notch materials to their own taste, ESPECIALLY if they can DIY some of those improvements! And in the months they don't want to spend money on improvements, they have the flexibility not to.
Not so with monthly HOA/MR (whether the buyer actually uses the community facilities or not).
What's the point of buying a condo with no yard and a single garage or carport when a FTB can get a nice backyard AND double-car garage for the same price or less than a comparable-sized condo (but NOT "newer") and not grow out of their home immediately when kids are born and are not allowed to play anywhere close to their condo's front door (so they can be supervised by a parent or other caregiver working in the home)?
SD millenial-homebuyers' sense of entitlement for newer construction doesn't make sense to me. Their housing choices in SD County are cutting off their noses to spite their faces.
Participant[quote=deadzone][quote=bearishgurl][quote=deadzone][quote=bearishgurl]deadzone, you must be aware that most longtime property owners whose properties are along the CA coast don’t have to sell and have never been in a position to be forced to sell!
They can hang indefinitely into their nineties (with a property mgr who is paid or unpaid). If their heirs don’t want to deal with tenants and don’t want to occupy any of the properties when they pass, THEY are free to put them on the market.
In the well-established areas, there are still a lot of “vacant” homes with furniture or the owner(s) storage inside, either which haven’t been occupied in more than a decade or are used by relatives when they come to SD for a visit. The owners are charged the baseline for utilities and their taxes are next to nothing so THEY DON’T CARE if they EVER have any rental income from it because they have very, very little carrying costs.
[/quote]That’s your argument for why SD real estate cannot go down? You could say the same thing about any city, has nothing to do with prices. There are greater market forces that are driving real estate nationally, San Diego is being buoyed by these same forces.[/quote]No, deadzone. Actually, SD (and the rest of coastal CA) is NOT “buoyed by the same forces” as the rest of the nation. Not by a long shot.
You’re not taking into account the effects of Prop 13 and its progeny (Props 58 and 193). These sections (still on CA’s books at this late date) are a HUGE disincentive to list property for sale . . . EVER . . . whether residential or commercial. It’s cheap and lucrative to keep it all in the family . . . for generations!
The “Prop 13 phenomenon” keeps inventory chronically low throughout the state which has the effect of keeping priced pumped up. And it’s not “artificial.” It’s the law!
The only areas Prop 13 really doesn’t affect greatly are those areas which were originally built since 2000, and thus the affected owners are paying market rate (or near market-rate) property taxes. Very few of these newer tracts are within 5 miles of the ocean … nearly all are 6-150 miles from the ocean.
There is absolutely no comparison to the residential market along the CA coast versus any out-of-state market … even along the east coast. None at all. It is truly different … both this time and at all other times.[/quote]
What does any of this have to do with your contention that there is an unlimited supply of buyers willing to shell out all cash?[/quote]
It’s not the same argument, deadzone. This particular “argument” supports my assertion that chronic limited inventory all over the state keeps CA RE prices from cratering and will continue to do so as long as Props 13, 58 and 193 remain on its books. And yes, listing inventory is also extremely limited in CA towns with <15K population. I know because I've been doing cursory checks online for about 18 months in different (rural) zip codes that I was exploring for retirement purposes.
Participant[quote=deadzone][quote=bearishgurl]deadzone, you must be aware that most longtime property owners whose properties are along the CA coast don’t have to sell and have never been in a position to be forced to sell!
They can hang indefinitely into their nineties (with a property mgr who is paid or unpaid). If their heirs don’t want to deal with tenants and don’t want to occupy any of the properties when they pass, THEY are free to put them on the market.
In the well-established areas, there are still a lot of “vacant” homes with furniture or the owner(s) storage inside, either which haven’t been occupied in more than a decade or are used by relatives when they come to SD for a visit. The owners are charged the baseline for utilities and their taxes are next to nothing so THEY DON’T CARE if they EVER have any rental income from it because they have very, very little carrying costs.
[/quote]That’s your argument for why SD real estate cannot go down? You could say the same thing about any city, has nothing to do with prices. There are greater market forces that are driving real estate nationally, San Diego is being buoyed by these same forces.[/quote]No, deadzone. Actually, SD (and the rest of coastal CA) is NOT “buoyed by the same forces” as the rest of the nation. Not by a long shot.
You’re not taking into account the effects of Prop 13 and its progeny (Props 58 and 193). These sections (still on CA’s books at this late date) are a HUGE disincentive to list property for sale . . . EVER . . . whether residential or commercial. It’s cheap and lucrative to keep it all in the family . . . for generations!
The “Prop 13 phenomenon” keeps inventory chronically low throughout the state which has the effect of keeping priced pumped up. And it’s not “artificial.” It’s the law!
The only areas Prop 13 really doesn’t affect greatly are those areas which were originally built since 2000, and thus the affected owners are paying market rate (or near market-rate) property taxes. Very few of these newer tracts are within 5 miles of the ocean … nearly all are 6-150 miles from the ocean.
There is absolutely no comparison to the residential market along the CA coast versus any out-of-state market … even along the east coast. None at all. It is truly different … both this time and at all other times.
Participant[quote=FlyerInHi]. . . People should save their money during their good earning years and payoff houses, build investments, etc because there is no guarantee of ever improving career prospects.[/quote]
Excellent advice, FIH, but I doubt many will take it, no matter WHO the audience is that you’re suggesting this to :=(
It involves foregoing of major consumption, which is too painful for the masses to implement.
Participant[quote=spdrun]I have to say that you’re wrong. Maybe for SFH properties, but condos built in the 60s through 90s also fell hard.[/quote]That’s because of too many units in one complex which were rented causing would-be buyers difficulty in obtaining financing.
The older condo complexes in SD County appeal to 1st time buyers who don’t want to pay Mello Roos and (usually) first-time individual investors for the same reason. Both of these types of buyers typically need mortgage financing as they don’t have the funds to pay all cash.
It’s different in LA County. Since there are few to zero newer condo complexes there (newer than about ’86 to ’92, depending on city), investors of all stripes (including many thousands of foreign investors) typically purchase older condo units for all cash and then go in and do a light rehab (if needed) after COE and before advertising them them for rent. Typical upgrades are bathroom tile, new countertops in kitchen/baths, laminate flooring and wood-look window blinds … stuff that is easy to clean and appeals to everyone.
Participant[quote=spdrun]Yet the 2008-2012 crash happened despite those owners.[/quote]
spd, in SD County, the “crash” was mainly centered in NEW HOUSING TRACTS which were built since 2000. NONE of these tracts were near the coast. The long established areas were hit very haphazardly, mostly by recent buyers who took out exotic purchase money mortgages or HELOCs during the “free-money-giveaway-to-anyone-who-could-fog-mirror” years.
The vast majority of the long-established owners didn’t see fit to join the party because they DIDN’T NEED TO and KNEW BETTER. They DIDN’T WANT TO place their high-equity and free-and-clear properties in danger of foreclosure.
flyer’s comment of “survival of the fittest” is an apt description of what really went on in CA coastal counties during the “go-go” years. Yes, I am referring to the 79-year old widower who owns 6 homes, lives in one and rents out the other five (which he and his son manage and are all situated within one mile of his residence). All of these homes are single family residences currently worth $325K to $425K and he also owns three commercial parking lots in Chula Vista and San Diego (East Village) all managed by ACE. He laughs all the way to the bank 2-3 times a month in his 1999 Olds Delta 98 and then has coffee with his (remaining) friends and buddies from SUHS Class of ’54 at his favorite diner in National City.
There’s a LOT of these people ALL OVER SD County and you would never know it because they aren’t CONSPICUOUS CONSUMERS and have never resided in LJ, DM, PL or RSF. They are your kid’s retired 4th grade teacher and that retired beat cop from down the block.
You just have no freaking idea, spdrun…..most people don’t.
Participantdeadzone, you must be aware that most longtime property owners whose properties are along the CA coast don’t have to sell and have never been in a position to be forced to sell!
They can hang indefinitely into their nineties (with a property mgr who is paid or unpaid). If their heirs don’t want to deal with tenants and don’t want to occupy any of the properties when they pass, THEY are free to put them on the market.
In the well-established areas, there are still a lot of “vacant” homes with furniture or the owner(s) storage inside, either which haven’t been occupied in more than a decade or are used by relatives when they come to SD for a visit. The owners are charged the baseline for utilities and their taxes are next to nothing so THEY DON’T CARE if they EVER have any rental income from it because they have very, very little carrying costs.
If you’re waiting for coastal CA RE to crash (so you can make purchase(s) yourself?) you may be waiting a lo-o-o-ong time, IMO.
Participant[quote=deadzone][quote=bearishgurl][quote=deadzone]You are naïve if you think these majority cash buyers are going to keep coming out of the woodworks forever. Perhaps their money source(s) could dry up as housing becomes less appealing (which it already is at current prices) or the economy turns south. If/when interest rates rise, investors will flee real estate like yesterday’s news.[/quote]deadzone, if SD County residential property begins to become “less appealing” to end users, this will happen in inland areas (over 15 miles from the coast). It may never happen in close in and coastal areas, IMO, especially those areas on the west side of I-5.
As far as investors, I don’t believe they will flee ANY areas of the county including inland areas or low income areas (or both). Mortgage interest rates have nothing to do with it as the vast majority pay all cash for residential properties. If a flipper purchased a property in an inland (and/or low income area where there are far less all-cash end-user buyers) with the intent to flip it and mtg interest rates rise so quickly that they can’t easily flip it to an end user, they will simply rent it out until a seller’s market presents itself again.
No harm done. Everyone needs a place to live.[/quote]
bg you are obviously ignorant of basic economics. The reason people are paying cash for properties is due to the simple fact that there is nothing else to invest their money into given zero interest rate policies since 2009. If interest rates go up, the investing landscape changes entirely.[/quote]That “landscape” doesn’t change overnight, deadzone. Are we talking about a jumbo CD being paid 2.5% instead of <1% here? What if the initial rate hikes tank the economy and the rates end up going back down (the Federal Funds rate maybe not going all the way back to "0%" but down to 1%)?
If one can pay $340K for a "flipper" SFR and flip it in 60 days to where it is "worth" $475K (in a "0%" rate environment) but is unable to make this profit in a 1-2% environment, then they can just rent it for at $2K to $2400 per month and wait for another day to put it back on the market. The rate of return on a $340K investment + $60K added to it in materials and labor for a total of $400K invested equals rental income of $26,400 yr or 6-7% (not including vacancies).
I can tell you that that is CERTAINLY better than what banks would pay and is a relatively "safe" investment (like bank deposits). The only drawback is that rental property is much more labor intensive than having bank deposits. And most other passive investments are riskier than owning investment RE, imho.
I don't see banks raising their interest rates on deposits above 4% for a long, long time, if ever.
ParticipantThat’s all well and good, rockingtime, but that comes with the caveat of knowing exactly when to “exit.”
I wish you luck :=)
Participant[quote=ltsdd]I doubt very much that this layoff at Q will have any detectable impact on the housing market in SD.[/quote]I agree but not for the reason JTR mentioned of affected homeowners being able to avail themselves of loan modifications and/or squatting indefinitely, like what happened in the past.
Participant[quote=deadzone]You are naïve if you think these majority cash buyers are going to keep coming out of the woodworks forever. Perhaps their money source(s) could dry up as housing becomes less appealing (which it already is at current prices) or the economy turns south. If/when interest rates rise, investors will flee real estate like yesterday’s news.[/quote]deadzone, if SD County residential property begins to become “less appealing” to end users, this will happen in inland areas (over 15 miles from the coast). It may never happen in close in and coastal areas, IMO, especially those areas on the west side of I-5.
As far as investors, I don’t believe they will flee ANY areas of the county including inland areas or low income areas (or both). Mortgage interest rates have nothing to do with it as the vast majority pay all cash for residential properties. If a flipper purchased a property in an inland (and/or low income area where there are far less all-cash end-user buyers) with the intent to flip it and mtg interest rates rise so quickly that they can’t easily flip it to an end user, they will simply rent it out until a seller’s market presents itself again.
No harm done. Everyone needs a place to live.
Participant[quote=Gata]Housing market is due for a correction, prices are unsustainable when work is moving to other States/countries. A friend of mine who is a QCT senior engineer is scouting for a home in ATX as a result of this layoff. He is Mr. SD. QCT is hiring in TX, and opening a new design center. I believe many layoffs will come from SD, and hiring will occur in lower cost areas (such as India, ATX).[/quote]
Good luck to your friend, Gata and I hope he has a nice life in TX. I mean that … sincerely.
But you should be aware that IT DOESN’T MATTER how many homes in SD County are vacated and sold (or foreclosed upon) by QC employees/homeowners who have been laid off. They will quickly be resold and life will go on. There are plenty of buyers out there ready to pounce when a new listing comes out in their area of choice.
SD housing (esp vacant housing which is move-in ready) sells very quickly will continue to do so, and will not languish on the market, IMO.
The exception would be if a fairly new housing tract (<10 yrs old) which was situated close to QC (or other local company conducting mass layoffs) was primarily occupied by worker bees affected by current layoffs being conducted. That situation could create a (temporary) glut in that micro market due to too many homes of the same floorplan entering the market at once (the current owners all bought new construction in the year of the same hiring spree/time frame). But this inventory would likely still be absorbed, even if it took a few months longer than usual.
In the well-established areas of the county, a large percentage (50%+?) of single family homes (SFR's) at all price points are typically purchased with all cash and a lesser portion are purchased with 50%+ cash. And the majority of the balance of the long-owned SFRs in these areas which haven't been listed in decades are paid off, as well. So, in SD's most established areas, it doesn’t matter which local companies are currently hiring or laying off because the vast majority of homeowners there are NOT W-2 employees and never will be.
I don’t think ANY area in SD County is due for a correction. I believe that some micro-areas of the county are still a bit undervalued.
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