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The $20k increase is probably planned to coincide with a reduction in mortgage interest, so (they think) the payment will remain the same. The only hitch is that they still need a buyer.

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I look at the financing terms as an enabler of the problem, not necessarily the root cause of the problem itself. Were it not so, the bubble would have demonstrated itself EVERYWHERE the financing is available, which is everywhere.

As I see it, the root cause was the widespread perception of RE as a can’t-lose/high-return investment. That perception has been toppled from it’s tower and it’s going to take a miracle from on high to recreate it.

If there are no short term gains to be had and the pricing isn’t skyrocketing fast enough to create that irrational fear of losing out, buyers have no incentive to kill themselves to get in. We have a ton of inventory right now – proof positive that we were never really in danger of running out – with still more inventory in various stages of development.

So no, I don’t think most buyers are going to be so motivated to be a homeowner that they’ll sign on to pay 50% of their income for their housing (on an ARM) into perpetuity, knowing that there is no short term advantage to do so. I don’t think the banks are going to reverse course on tightening their lending requirements, interest rate notwithstanding, when they’re already taking some losses.

Lowering interest rates might mitigate the number of crisis transactions, but it ain’t going to change people’s minds about how sure a thing investing in RE is right now.

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Lowering the rates didn’t do a thing for Japan’s market, except maybe extend the length of time it took to correct.

Stabilizing the interest rate won’t do anything (locally) for the people who are both fully extended and are facing an ARM reset. It isn’t going to bring an infusion of job or wage increases, and it won’t restore the misconception among the gambling class that RE always goes up and never goes down.

This last aspect is the one that’s most telling. A buyer has no incentive to bet everything on a purchase unless they’re confident the short term pain is going to have an outsized long term gain. Without that kind of upside they’ll avoid the risk.

The current buyer psychology is already in motion. In my opinion, the only thing that could make it reverse course right now is….nothing.

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I posted before I looked.

There is an expired listing that said this home has been remodeled and was formerly a student rental.

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The rent almost certainly tags it as having occupancy other than a single family. It could either be a student rental or a group home of some sort.

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I’ve said this before: I don’t think SEH is actually a bad place to live, and for what you get the prices there are lot better than in La Costa Oaks on the other side of the hill. I just happen to think that DH is a better buy for some people.

I wouldn’t say that any part of San Marcos could be called a high crime area, although there are some older neighborhoods that probably won’t appeal to would-be tract home buyers.

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The appraiser I used to share office space with bought in DH and did quite well there before he retired and took his equity to Oregon. His theory (in 1999, when he bought) was that residential neighborhoods near the University would do a little better than those located elsewhere because of the added attraction to the professors and management staff. He always thought SEH was just a big boondoggle.

Another area worth considering are the areas in San Marcos north of Hwy-78. Same builders, same homes, same people. If you like DH you’ll like these areas just as well.

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You could substitute just about any occupation with the above reference to real estate licensees and the statement would still be just as true.

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Discovery Hills has much easier access to the freeway and local shopping. I’d rather live there than San Elijo.

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I’m not saying that market won’t be touched and I’m also not saying that it’s going to take the same beating as some of these new home subdivisions. I think it will decline, just not as much as some of the lower price ranges. More than 10% but probably not 50%.

The thing about Fairbanks during the last bust is that it was a peripheral market of Rancho Santa Fe at the time. A wannabe. It hadn’t been fully built out and the neighborhoods hadn’t matured and stabilized. It was all new money. That’s why (in my opinion) those prices proved softer than RSF proper. I’d say the same thing this time for Santaluz and the high dollar projects in Carmel Valley.

While we’re on the subject, I’ve lived in Carlsbad for a long time and I like it here, but I am under no illusions about Carlsbad. Carlsbad is a wannabe at this point; it is no Del Mar or Solana Beach. In my opinion there will be some larger than average declines here this time around.

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Supposedly this guy’s threats and violence were what the reporter and guy being intereviewed were talking about when the wife started her assault. Then when the reporter had the nerve to ask her about it is when the husband came rolling up and made things worse.

True to form, both the husband and wife pled “Not Guilty” at their arraignment. Whereas a reasonable and rational adult would at least feign contrition and take responsibility for thier misconduct, these two are hoping to win on a technicality. I’m sure the attorneys are looking for a way to throw out the videotape.

I hope the courts find them guilty and then throw the book at them.

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I do remember and I (and others) have said it before on this board. The coastal areas and the areas close to employment will do better than the inland areas and the areas away from employment. La Jolla is both coastal and close, so price declines won’t be nearly as severe.

Add to that the fact that La Jolla and Del Mar are specifically noted worldwide as destinations for the rich; they are not solely dependent on local employment or local businesses for buyers. Places like National City and La Mesa and Poway and Carlsbad are more directly tied to local economic conditions.

La Jolla and Del Mar are not completely connected to the local scene but they also are not completely disconnected. There will still be at least some price declines, they just won’t be as bad.

As for places like National City and Logan Heights, in comparison to other areas in the region the properties in these areas are even more overpriced for what their buyers get. The wild card in those areas – in my opinion – is how large a percentage of the buyers are 1st generation immigrants. I don’t know but I suspect that many of them would have been talked into taking on one of these toxic loans. Those buyers who are capable of hanging in there through a decline will do so because the attitudes of the latino immigrants are HEAVILY biased toward property ownership. I’m just not sure how well they’ll do as a group in terms of wages and employment during an economic downturn.

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I’m a lot more interested in closed sales than in individual listings. At this point, a listing represents somebody’s dream. Some of those dreams will come true but most of them won’t.

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It went into escrow on 09/13/2006.

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What has really floored me is the amnounts of money the subdivision developers have been charging for their options and upgrades. When compared to the base finishes, the additional costs of these upgrades to the developer are but a fraction of what they were charging. Now I don’t mind if a developer makes a reasonable profit on options, but when I see someone buying a 3,500 SqFt tract home and paying $100k in upgrades and it’s all interior trim and stuff I just shudder.

Five years now the spread between base and maxxed homes in the same neighborhood is going to be probably but maybe 10% of the increased purchase costs on the maxxed homes.

Don’t get carried away with upgrades and options – it doesn’t pay.

Peace,
I’m not quite getting what you’re saying about appraisals being about sqft. Can you give me an example?

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