Forum Replies Created
-
AuthorPosts
-
blahblahblah
ParticipantFWIW, I know someone that bought a 2000sf sfh in Bird Rock a couple of blocks from the ocean for ~$350K in 1994. I can’t remember the exact number but it was mid-3s. It had an ocean view from the second story but it also had some “economic obsolescence” as they used to say. All in all an “okay” house but nothing great.
May 15, 2007 at 12:31 PM in reply to: “…The forecast was so shocking that I hesitated to print it.” #52906ParticipantA lot of people during the run-up had trouble figuring out San Diego because is bucked all the trends so I just want to know why 30% is all of a sudden the magical number.
A 30% decrease roughly corresponds to a 50% increase, e.g. 400K * 1.5 = 600K. 600K * 0.7 = 420K. The 50% increase is about what we saw between 2002 and the peak, and my guess is that we’re heading back to 2002 real prices within 5 years.
Again, my guess of 30% decline is in real value; nominal values will be a different story and dependent of course on inflation.
May 14, 2007 at 9:01 PM in reply to: DR Horton Slashes prices $100k in Murrieta, Menifee, Wildomar and more in … #52846ParticipantSounds like your friend has done it right. If they enjoy the area they should be very happy there. That’s pretty close to $100/sf — not bad! Hopefully we’ll be seeing some deep discounting closer to SD in the next couple of years…
ParticipantRemember that homes are not stocks; very few people get emotionally attached to pieces of paper or blips on their computer screen, but a house is a home. There are buyers who made a lot of cash on previous homes that just want to have a nice place to live and raise a family. There are also buyers that just inherited a few hundred grand and want to buy a home. They’re not idiots for buying now, just as someone who didn’t buy in 2003 wasn’t an idiot either. Everyone is in a different situation and no one has a crystal ball.
But yeah, they’re probably going down 30% in real value over the next five years between inflation and small nominal YOY declines, so I doubt I’ll be buying for a while…
ParticipantLooks like $228K plus sales costs – a potential $250K loss.
D’OH! Damn that’s serious.
ParticipantWhile I agree with you CONCHO mostly, the fact is there area a significant amount of wealthy people just to the south of us that love San Diego as a vacation town and a weekend destination. They will continue to be a factor in the market. Maybe not a big one but in certain areas they will be, no doubt.
Two problems with this argument — one, the dollar isn’t losing relative to the peso, it’s losing relative to the Euro. Two, the number of Mexican citizens who are going to fork out money for a vacation home in San Diego is very small. You’re basically talking about the old Spanish money families, the factory owners or the drug kingpins. And they’re gonna be shopping in La Jolla and Del Mar in neighborhoods that are out of reach of most of us anyway. There have been quite a few businessmen from TJ buying homes in Chula Vista and the South Bay and commuting to work — I suspect that trend is going to continue. But a dollar still buys about the same number of pesos as it used to. The same’s not true for the Euro…
ParticipantThis has been discussed here many times in many different threads. Unless we are invaded by hordes of Europeans, this will have a very minimal effect (if any). Remember that Europeans still have to work jobs to pay their mortgages, and that their jobs are back home in Europe. If they move to the states they’ll be paid in dollars and will be in the same boat as the rest of us. A few might move here and bring a bigger down payment because their Euros have swollen in dollar terms, but that’s a one-time-only effect.
ParticipantPatience Alex, this is gonna take time. Also don’t forget that there is still a lot of quasi-legal monkey business going on in the form of seller kickbacks. These kickbacks distort the sales price data, making it appear as though housing prices aren’t falling when in fact they really are. And of course there are still bad loans being made and bad appraisals being done to “make the numbers work” as they say in the biz. Someone much smarter than me once said that “markets can stay irrational longer than you can stay solvent”. It’s not going to crash overnight. My prediction is a 2-3% decline YOY for a loooong time, combined with dollar devaluation. People watching nominal values won’t think things have fallen that much but the real dollar figures will be on the order of a 25-30% discount from todays prices.
ParticipantHousing prices are falling all over Southern California; sellers are kicking cash back to the buyers in many sales. That’s not recorded at the county and is a hidden bias that you can’t see. Also, new homes are giving more upgrades for the same cost — again it’s effectively a price drop not reflected in the sales price. I think you’re seeing a gradual awakening of the public to the fact that homes (for most of us) are things to live in, not speculative investments. This sentiment is going to grow and grow and it will help prices slowly come down over the next few years. Dollars are going to become worth less and less over the same time, so the average home might still be $400K or so. I don’t think people here are disgruntled, we just like watching the market and discussing what’s going on. It’s fun!
ParticipantDo you think that Downtown will become a good place for retired people?
It’s a good place for homeless people. You could call them retired since they’re not really working anymore. Sort of like how we call fry cooks assembly line workers now.
ParticipantThose are asking rents. Temecula is FB central. Actual rents may vary.
ParticipantAlso, do not forget the opportunity cost of the lost down payment. For example, 20% of 400K is 80K which will return $4K in interest when invested in no-risk 6-month CDs in the first year alone; that number grows of course as the interest compounds. This can offset some of the tax break (the interest is taxable) and effectively lowers the current rent. Shares or bonds could return even more of course. My guess is that the true cost of the property assuming a normal lending environment (20% down, 6.5% interest) is more like $330K and maybe less.
ParticipantThis will probably end up being recorded as a $595K sale. What won’t be shown in the county record is the $40K in buyer kickbacks/cash back that they’ll have to agree to to unload it. This will allow them to save face and tell their friends that they sold the home for $600K and are big real estate geniuses. They will then take their proceeds and leverage them into a $1M home somewhere. This thing is nowhere near unwinding yet, it’s gonna take time folks…
Also, by my reckoning that beauty is $450sf at $550K. Must be those great South Park schools…
ParticipantCash back is for suckers and broke people.
Exactly, which is why lots of Southern Californians take advantage of it.
-
AuthorPosts
