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April 26, 2007 at 5:20 PM in reply to: **RING THE BELL** Offically over 20,000 for sale in San Diego County!!! #51245April 26, 2007 at 3:07 PM in reply to: **RING THE BELL** Offically over 20,000 for sale in San Diego County!!! #51234BugsParticipant
Asianautica’s numbers pretty much bear this out, although median prices is kind of a blunt tool. My point is that a 30% spread during good times won’t become a 100% spread (or more) just because times are hard.
There is no real haven from a broad specturm price correction trend. Everything is connected and what we’ve been looking at is not just a temporary blip.
April 26, 2007 at 1:29 PM in reply to: **RING THE BELL** Offically over 20,000 for sale in San Diego County!!! #51226BugsParticipantHere’s why it’s going to spread everywhere – substitution. The amount of the sale price is a reflection of how much the buyer will pay for that set of attributes, and the way most buyers come to that decision is based on what their alternatives are.
If the house in Scripps or Kensington sells for 30% above the same house in Escondido, it’s because those buyers are willing to pay the 30% more for that location. Conversely, the Escondido buyers are willing to make the drive to save the 30%. The premium might vary somewhat depending on overall demand (less during good times, more during hard times), but these two markets are never disconnected from each other.
Scripps has never been worth 100% more than Escondido. The bust-in-progress isn’t going to change that and put Scripps into uncharted territory. That location will still be worth a premium, but in the end it will be quantified in terms of a percentage, not in absolute $100,000 increments. It will never be a market where Esco sells for $400k and Scripps continues to sell for $900k.
One other thing to remember: if an appraiser can’t find enough recent sales data in a neighborhood, they simply expand their geographic radius. Because of that, no neighborhood can exist in a vacuum, desireable or not.
April 26, 2007 at 10:44 AM in reply to: **RING THE BELL** Offically over 20,000 for sale in San Diego County!!! #51208BugsParticipantIf you were to graph the pricing trends and put them up on a map, I think you’d see the trends are progressing from the outskirts to the center. By that, I mean that – all other factors being comparable – the areas located farther from employment are showing more losses than the areas close to the metro areas. Commute time to work is a huge factor for most people.
I would anticipate an area like Scripps to be among the last areas to show significant decline and among the first areas to recover. Valley Center, Ramona and Alpine will be among the areas that lead the decline.
However, unless this correction gets cut short for some reason, the prime areas will still end up – proportionately speaking – priced relative to the outlying areas. Must sell transactions occur all across the economic spectrum. If the same house in Scripps is currently 30% more than it would be in Escondido it’ll eventually settle a little higher proportionately, but it won’t be 50% higher. Let alone 100%.
April 26, 2007 at 10:32 AM in reply to: 4S Ranch – (3000+sq/ft update) Pienza / Evergreen / Maybeck #51206BugsParticipantOne more thing – about the sales agents comments on sale prices, the final price of the sale may (or may not) come in as stated, but that doesn’t mean that said sale price doesn’t include options, upgrades, incentives, cash back or other card tricks that weren’t going on 2 years ago.
I’ve seen how much a builder charges for upgrades and options when the market will bear it. That’s how an advertised price of $700k for a model ended up going out the door for $900k by the time it was all done. Analyzing those sales always included me asking for the price breakdown from the sales staff so that I could see and adjust for the differences in options and upgrades among the sales.
I wouldn’t interpret that agent’s comments as being indicative of the entire story.
April 26, 2007 at 10:25 AM in reply to: 4S Ranch – (3000+sq/ft update) Pienza / Evergreen / Maybeck #51205BugsParticipantAs I watch these builders ratchet their prices down, I can’t help but laugh a little.
Remember that one of the arguments our permabull friends used to make about the New Paradigm/Soft Landing/New Reality was that costs had gone up and the prices simply couldn’t decline past costs? I do. Apparently these builders can reduce costs and stay in business, and the reason for that is because costs had almost nothing to do with the extent to which the prices increased. Everyone in the process, from the materials suppliers to the agents were pullling in outsized profits as result of the demand and the market psychology.
Yes, it costs more to build here than in most areas of the Midwest; but except for the government fees and possibly the workman’s comp insurance the difference is only about 15%. Not 300% like the bulls would have us believe.
From the land to the selling agent’s commission, there’s gas all through the pipeline that can be purged to get us back to $300k tract houses if that’s where the demand (and the mortgage interest rates) ends up.
April 26, 2007 at 12:41 AM in reply to: Tech is BACK!….Housing downfall might be limited in San Diego afterall. #51168BugsParticipantI imagine the number of 6-figure jobs being added in tech is but a drop in the bucket compared to the jobs being dumped in the RE business. There is no way is tech making up for the lost RE jobs.
BugsParticipantI don’t want to see ANYONE here show this fool any pity. Guys like him are part of the problem, and right now it’s looking like we’re all going to be paying towards fixing that problem.
If he doesn’t feel the full consequences of his mistakes he is destined to repeat them again. Look at Casey Serin – that guy is still trying to figure out how to avoid getting a job.
BugsParticipantBy the time a house is completed the builder is in the must-sell category, same as the banks and probate and others. Thay can’t just hang out for 6 months and hope things turn around.
BugsParticipantI guess that is possible. I can’t imagine a lender allowing that to go on too long though. It’s a competitive business and you don’t win by giving money away.
BugsParticipantI don’t care what the bulls think of me. They have their own problems to worry about right now. Trying to recast our image in a more positive light by coming up with feel-good labels in place of their perjoratives is a waste of time. I don’t need to tell myself that I’m okay; and if I’m not okay, telling myself that I am won’t make it so.
BugsParticipantThere are still some holdouts who think this slowdown is the creation of the media and that better times are but a few short months away. The NAR pays David Leahrah a lot of money for being their advocate; some of it is bound to pay off.
BugsParticipantI don’t know the answer to this one. It could just be a mistake. Sometimes the data provider doesn’t catch changes in the public record, sometimes the County doesn’t make the changes in a timely manner.
Every once in a while the MLS shos a property as being sold but it doesn’t show up that way in the public records until a couple months later. Those late entries show the (earlier) correct date. That’s one reason appraisers use more than one data source. For instance, I use 3 different data providers for my public records data here in San Diego County, not counting the other sales and rental data sources I use.
BugsParticipantAll other factors being similar, the condos lose value first, and stay down longer than conventional houses do. There’s just more demand for the house.
BugsParticipantI think the lender is going to lose their ass on this one. If the property was exposed to the market by two agents and after reasonable exposure came up with an offer, what makes a lender think they’re going to do any better by:
– spending the money to foreclose
– spending the money to secure the house and maintain it
– spending the money on a new broker, only to have them slap a “FORECLOSURE SALE” tag on it in the MLS.
Time is not on their side, and meanshile they have an unperforming asset on their books.
There’s no way the lender’s going net more out of this deal by taking it back and they’re high if they think otherwise. They should have signed off and moved on. They might have had a chance collecting on the deficiency under a short sale; burying that borrower by another $100k merely guarantees they’ll never see a dime out of him.
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