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ParticipantI agree. I think it’s completely unproductive.
ParticipantI would tend to agree with the different price ranges reacting differently, but would add something else to that train of thought. During our last 2 RE recessions, the averages not only overshot the point of equilibrium, but the different pricing strata compressed. In the mid ’90s, the difference between a $200k home and a $300k home was a lot more than what we would find right now between a $600k home and a $900k home. That’s because (except for the primo areas like RSF and La Jolla) the higher the price range, the greater the decline.
If anything, I’d say the price range most susceptible to the biggest hits are the $800k – $1,500k homes. Think about it: if a $500k home declines back to $250k, the step up from that would be the $325k home that used to be $700k. And the step up from that would be the $400k home that used to be $900,000. The $75k increments may not seem like a lot right now, but in a market that is completely dependent on local wages it would represent a $500/month increase in mortgage payment on an 8% mortgage. That’s almost 10% of the net for an $80,000 annual household income.
ParticipantDon’t they have a big manufacturing plant in TN?
ParticipantWithin this particular 4-year span a 4% spread (among those reported) doesn’t seem significant. Since you have the search mode wired, what was it back in 1998 and 1999?
ParticipantSuffice it to say there are options as to who to use.
ParticipantI think we have several realtors on this board who could get this property sold.
ParticipantThe simple answer is that demand is declining faster than prices are. The investors have basically withdrawn because there are no short term gains to be made. Bear in mind, this 25% of buyers largely drove the price increases, and their absence removes the support for the price distortion.
Anytime you remove 25% of the demand its going to take a while for the prices to equalize to the lower level of demand.
July 30, 2006 at 5:09 PM in reply to: 2 Lenders with REOs on same street: a new type of competition #30102ParticipantLending institutions are not in the business of managing rental properties. When they foreclose the clock starts ticking and they have to sell the asset off. If a market segment racks up enough REOs (banking jargon for “Real Estate Owned”) they absolutely do drive the pricing trend for the remaining sales because they represent the alternative and they are the competition. When two lenders compete against each other the one with the shortest fuse will get discounted the most because there are no options for them.
ParticipantSomeone who’s in their 20s or 30s can easily make some big salary increases while their career path is still in its earlier stages. Those are personal trajectories that help them catch up with their more established peers. A sales rep having a good year can have those kinds of increases.
When those careers start stabilizing and the promotions are slower in coming their prospects for salary increases are more closely tied to the fortunes of their company and their industry. I know of no industry whose fortunes are increasing to the tune of 30% in the next couple years.
If 70% of all mortgages involve these exotic loans, what percentage of those buyers are still in the earlier stages of their careers? It can’t be anywhere close to half of them. Bear in mind, it probably doesn’t even take 5% of all recent buyers suffering a foreclosure or short sale to cause the entire pricing structure to collapse. All the action occurs on the margins.
ParticipantI’m pretty sure the fed never intended the markets to get this distorted. So yeah, I’d say their controls have limitations.
ParticipantI don’t think you guys would be so outraged if not for the dollar amount of the commissions here. You’d probably have no trouble paying the full commission on a $100,000 home. These commission structures came into being back when the dollar amounts weren’t so high.
ParticipantTo be honest, I never did understand the pricing over there to begin with. Another area I think is destined to get hammered are the new subdivisions they’re building over at the back gate of Camp Pendleton. If you are who you shop with, these buyers are paying $1mil to shop with the gangsters that live in the older subdivisions off of Vandegrift.
ParticipantHow many $100K annual wage earners in SD can save $80,000?
Anyways, $360,000 (at 6.75%) is a lot different than $600,000. Back when houses really were selling at $360,000 the interest rates were higher.
ParticipantCommercial rental rates are a little tricky. In order for a retail unit to generate more rent, the business that occupies that unit has to generate more revenue.
Poway’s retail district along Poway Road has a lot of variation in age and appeal, and as a result has a sizable variation in rental rates. For the best properties (relatively recent construction, nice appeal) the rental rates have not quite doubled over the last 10 years. For the industrial properties to the south along Scripps Poway Parkway, the industrial rents haven’t even gone up by 50%. Each of these market segments marches to a different beat.
I think that the big retail mega centers like Trolley Square in Santee, Vista’s Townsite Center, and the ones in San Marcos are eventually going to run into a brick wall on rents and occupancy ratios because the retail business just isn’t going to increase enough to economically justify the renewals or exercise of options. Especially as retail spending related to houses decreases and as fewer people dine out 7 days a week.
One other thing to remember is that when a new retail center comes to town it often scavenges tenants from the older properties. This has happened big time in Santee, and Oceanside; and to lesser extents in San Marcos, Escondido and Poway.
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