Forum Replies Created
-
AuthorPosts
-
Daniel
ParticipantSorry, I don’t have detailed info about the inventory. I am familiar with the development and I scan the MLS for builder and flipper units, but haven’t set foot there in about a year.
All floor plans are very similar, and about the same size. Don’t be fooled by the 2-bdr, 3-bdr, and 4-bdr designations. A bedroom can become an office can become a loft if a wall is knocked down or a closet added. That’s pretty much all the difference among various units. I think the largest floorplan is only about 5% larger than the smallest (they average about 1,500 sq ft).
In any case, Airoso is part of the Pacific Highlands Ranch master planned community north of 56. Further north-east, you have Del Sur, and then 4S Ranch even further away. All these projects have a mix of housing, from rentals and townhomes at the low end, up to tightly packed McMansions at the high end.
I personally am looking for SFHs in the 2,000-2,500 sq ft range, but am keeping an eye on the entire market, just in case.
ParticipantPerryChase,
You may want to go back to one of the older topics (called “CME housing futures”, I think). There are a couple of dozens posts and some links there that should answer some of your questions.
ParticipantTickets,
Thanks. Your insights are much appreciated. I do indeed know of a couple of local places that do mortgage modeling, but I’m thinking that this may not be the best of times to jump into that particular field.
Anyways, I’ll follow up on some of your leads and suggestions.
Thanks again,
DanielParticipantThornberg wrote a few very good papers about this very issue. The answer is no, builders can’t build according to the demand of the market. Due do zoning regulations, permitting process, NIMBY opposition, etc, the builders end up building many more high-end houses than the market needs, and substantially less entry-level housing. Usually the builders are blamed for this (“those fat capitalist pigs!”), but it’s rarely their fault. Local regulations are a huge barrier to building more high-density and low-cost housing.
My position in a nutshell is: “builders are my friends, and NIMBYs are my enemies”.
ParticipantYou may be right with the $400K estimate. I now remember that they also have fairly substantial HOA and Mello-Roos fees, so that should be compensated by a lower price as well.
ParticipantYeah, I saw that, too. Factoring in the broker fee, they sell it for about $485K. That’s not too bad. I consider about $450K to be a fair price for those units (but I’m not as bearish as most on this forum).
ParticipantAfter the deduction, I’m sure. Condo prices didn’t already drop THAT much, did they? 🙂
ParticipantDiego asked…
“Are you factoring in the opportunity cost of the 20% down payment?”
I very much doubt it. Opportunity cost is something most people have trouble factoring in. I know people who bought their houses 10 years ago, have tiny mortgages, and point to their mortgage payments as proof that it is cheaper to buy than to rent.
ParticipantI see. That make sense. Actually, this is not good news for me. I would like builders to build, not “manage inventory”. Oh, well, I guess we’ll see if they can soften the blow by holding projects.
ParticipantSdrealtor,
I must say I’m not too surprised. The low end of the market (condos) is actually closer to turn cash-flow positive than the rest of the market. This is because condos are more volatile, get hit harder, and everyone nowadays hates them.
Also, rental demand is quite good at the low end, but not so much at the high end. Good luck turning cash-flow positive on a $800K property! The gross rental yield could be as high as 6% on a condo, but it is almost certainly below 4% on an expensive property.
Daniel
ParticipantSdrealtor,
Thanks for the info, but without the specifics it may do more harm than good. I’m already thinking “where the hell could this development be?”. By the way, 15% is a lot. Are you sure it’s not $15K? Developments I follow in Carmel Valley ask for $5K-$15K deposits, which works out to 1%-2% of the total purchase (rather tiny percentages, I think, no wonder people walk).
Also, $120M sounds like a lot. That’s like 200 units. Where in the world is this? A tower downtown?
ParticipantTickets,
Speaking of jacks of all trades, I have a quick off-topic question: assuming that you are located in San Diego, I would like to ask if you know local financial companies that are looking for quants.
I’m a scientist (statistics, computer modeling, math), but I have to admit that I enjoy financial models much more than molecular ones. I find myself opening books on financial calculus and derivatives way more often than I should. I also moonlight as a portfolio manager for my extended family.
I have scientist friends who went to the “dark side”, but they are all either on Wall Street or at hedge funds in Connecticut. I know nobody in the business around here, and I can’t move out of SD for family reasons.
I’m not really looking to switch careers right now, but I would like to start gathering contacts in case I decide to make a move in the future. Let me know if you can recommend any good places.
Thanks,
DanielPS: if any true scientist happens to read this, I must say that I truly apologize for my errant ways.
Participant“How many of these people are buying second homes in San Diego, and propping us real estate values here?”
I have no clue. By the way, I must say that the 100,000 figure was a surprise for me, too. I thought it would be more like 20,000, so it looks like I was wrong by about a factor of 5…
ParticipantI agree. The formal definition of a RE “buyer’s market” is where supply outstrips demand (at current prices, at least), thus leading to lower prices in the future. In the stock market, the equivalent term is a “bear market”.
But calling a RE falling market a “buyer’s market” is a very unfortunate choice of words, because it implies in the mind of the audience that “it is a market good for buyers”. Nothing can be further from the truth.
Ironically, the stock market names have the opposite meaning. If a “bull” is a buyer, and a “bear” is a seller, then a rising market is called a “buyer’s market”, and a falling market is called a “seller’s market” in stocks.
-
AuthorPosts
