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ParticipantI’m having a deja vu day. First it was the “Clairemont flipper” thread and now it’s this. As I recall, sdrealtor brought this to our attention some months ago and we discussed it then. At the time we were looking at 6 and 7 month supplies in the ‘burbs and more in the outlying areaa like Alpine and Valley Center.
I think it’s a good topic to keep track of and update.
ParticipantIsn’t this the same property/thread we were discussing a couple weeks ago?
ParticipantWhat a great way for a realty agent or property owner to get away with saying things about their property that aren’t true without having to worry about being sued for it!!! Log in under an alias and say whatever you want. I can see agents talking trash about their competitors’ listings.
I guess you could say I’m a glass-half-empty kind of person.
Some of the comments made in the MLS listings are about specific improvements or features. The rest is marketing – I ignore that part, don’t even read it.
August 5, 2006 at 8:11 AM in reply to: Danger of Stated income loans, 75% of borrowers face payment shock at least 50% #30784ParticipantMy wife’s best friend is a consumer loan officer at one of the credit unions. She sees it all. According to her (and I’ve heard this from other bankers) there are lots of seniors who might appear to have money but actually have massive debt. They’re not hoping to have enough money to last – they’re hoping to have enough credit to last.
ParticipantIf we’re looking at asset bubbles there are lots of examples of reversion to the mean and not one example of the new paradigm. With that kind of track record I believe the burden of proof is on the bull side of this argument, not the bear side. The bears have something to point to as a demonstration of how it can work and how it has happened in the past; the bulls don’t.
Just looking at the reversal of the markets over the last 12 months, I’d say the uber-bulls are running on empty right about now. Their primary argument before was “It won’t happen this time because it hasn’t happened this time”, a rather circular argument in that it could only be true until it wasn’t.
ParticipantI was approached a few years ago to appraise that site for a lender that was contemplating financing the project. It took me all of about 2 hours to figure out that at the then prevailing retail prices of the resulting units the project was a long shot. Once I passed that information along to this bank they withdrew.
The combination of site engineering necessary to max out the density, the shape of the lot, vehicular ingress/egress, the prevailaing price structure (at the time) and the number of hurdles the developers faced at the time were going to cost big bucks in pre-development and holding costs. It takes a long time to resolve these problems, and time is money in the development game.
Obviously this developer has stuck with it and they did find a lender (and an appraiser) who came to a more optimistic conclusion. The prices have come up enough to economically justify the development at some point, so to that extent I was wrong about the feasibility. But as for the holding costs and engineering and risks they were taking it looks like I was right. Had it taken them 2 years less to do this they would have made out okay. But the tale of the red tape has turned out to be a killer. I wouldn’t want to be in their shoes now.
ParticipantIt is the rate of change that is so alarming to me.
ParticipantHere’s a quote from the article in today’s Union-Tribune:
“This is an important trend to watch, but doesn’t strike us as ominous,” DataQuick President Marshall Prentice said in a news release. “The increase was a statistical certainty, because the number of defaults had fallen to such extreme lows. We would have to see defaults roughly double from today’s level before they would begin to impact home values much.”
As the number of NODs increases, so will the percentage of foreclosures rise among those NODs. Once again, it’s not the raw numbers that matter so much as it is the trend. The trend was going in one direction and now it has reversed course.
ParticipantThe finishes have more effect on prices and profits than does the extra square footage.
ParticipantI see examples of fraudulent occupancy reported on an occasional (but not constant) basis. In fact, one thing underwriters are now doing is asking/requiring appraisers to report if they suspect occupancy fraud on the properties they’re appraising.
Just a couple weeks ago I reviewed an appraisal that is located next door to a property for which I had reviewed another appraisal a couple months ago. Both appraisals were performed during the same week, for the same property owner, and both reported owner occupancy. The mailing address for that property owner is in Seattle. Now it’s obvious that the way occupancy is defined by the banks this borrower was attempting loan fraud on at least one of these loan applications, if not both.
ParticipantThere’s a reason that almost nothing gets built during the slow times, and that’s because there isn’t a profit to be made. At that point, properties are literally selling for less than the cost (including a profit margin of any type) to build. Most development occurs during boom years.
There are a number of markets in the U.S. where you can (still) buy an existing home for much less than the cost to replace it. It may be trite but it’s also true: cost does not equal value.
ParticipantIt doesn’t take any longer to get from E. Escondido to I-15 than from E. Poway to I-15 or from E. Chula Vista to I-805. I don’t see anything wrong with this project’s location other than its access is the same road that 75% of traffic into Valley Center uses.
Frankly, I could never understand how Hidden Valley got the prices they got. Between this project and Seven Oakes I reckon HV is going to take a beating over the long haul. That’s obviously one project where homes will sell for less than their developers claim it cost to build them.
ParticipantThe numbers I used may seem arbitrary but I can promise I didn’t pull them out of thin air. I saw lots of examples of pricing compression while it was occurring, and we did actual market analyses covering the easier zip areas to confirm. The bottom end held better than the middle and upper ends. The upper end held a little better than the middle, which took it the worst.
And if you think about it this would make some sense. The bottom end holds a bit better because those buyers are coming from both directions – buyers entering the market and buyers moving down after struggling with the move ups. The upper end holds a little better because rich people are not as affected by employment trends. The middle gets nailed because those buyers include the merchant class and the middle manager types that are always very susceptible to employment trends. That’s also why the middle markets exploded in number during this run-up.
ParticipantShe’s mad because you sold?
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