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(former)FormerSanDiegan
Participant[img_assist|nid=934|title=Energy efficieny, sand (dirt?) hills, neighborhood vibe|desc=I especially love the energy efficiency (lots of hot water), the lovely view of the sand (dirt?) hills and the vibrant neighborhood feel in the pictures linked from this advertisement. All for a mere 650K. Please take your ads somewhere else.|link=node|align=left|width=400|height=295]
ParticipantTexas ?
So, lots of renters are moving to San Diego from Texas ? I thought they were all moving out of San Diego to Texas (Austin, Dallas) to buy houses.
ParticipantIf rents hold up …
The decline in home prices would inded be muted a bit.
So, instead of dropping 25-35% perhaps the decline is muted to 10-20%.However, a 16% increase in rent for SFR seems a bit high !
Since there is no additional data in the article I suspect that this is a statistical glitch or perhaps a noisy one-month number. Better to look over longer-temr averages.
Either way, rents for all units (incl. apartments) are increasing slightly faster than overall inflation. If the 16% holds up, and continues to go up at 4-5% per year it would decrease the amount of $ that home prices would have to fall to come back into equilibrium (assuming that somehow wages catch up !).ParticipantFollowing PS advice ? Maybe.
Two days ago you suggested that everybody refinance into a higher interest rate in the thread “Why don’t all exotic loan borrowers refinance now?”
Quote:
“If everyone with a teaser intro rate, an I/O loan, ARM, would apply for a 30 year fixed rate loan, we would not see the massive foreclosures discussed here.Why doesn’t everyone just refinance?” End quote
ALL teaser rates I/Os and ARM in the last 4 years are considerably below the current 30-year rate.
Maybe SOME of these people are sensible and following your advice (at least the ones that are capable of refinancing at the higher rate). So, sometimes people in their right mind would refinance into a higher rate if it lower’s their risk and exposure to changing rates.
ParticipantWhy Sell ?
With a 4.75% loan of less than 200K, you are living in Long Beach at Oklahoma City prices. If you like where you live, why on earth would you sell ?
Sure you could sell and pocket $275 k or so and nearly cover your rent at today’s prices. OR you could hold on and in 11 years be paying less for housing than your gardener.
ParticipantSell or keep ?
woodpack : There are several more considerations for keeping your property versus selling that have not yet been pointed out. IMHO the following are the most important considerations.
1. Did you previously line in the property as a primary resicence ? If so, and if you can sell at the point where you lived in it 2 of the past 5 years, you will owe no capital gains (except for depreciation recapture).
2. Consider all the costs of selling versus projected loss in value / gain in rental rates. The costs of selling should include :
a. Broker commisions. Assume 5-6% in this environment.
b. Capital gains taxes. Assume 15% of the gain, after selling costs
c. Depreciation recapture. This is 25% of the amount you claimed in depreciation over the time the property was rented.
c. Cost for repairs, termite, etc. Amount ???? AT least 1% of the price.Depends on the property.
d. Vacancy. Consider lost rent for at least 3-6 months required to sell the property. What matters is the difference in the vacancy between tenants (e.g. 1 month) versus vacancy while selling. At current CAP rates in SD this might be about 2% of the property value over 6 months.
e. Home values decreasing. Assume that you will have to sell at least 2-3% below April/May 2006 prices.3. If you add these costs up, you’ll come up with the costs of selling. Compare this to anticipated decrease in home value and gradual increase in rent (at the inflation rate) over the next few years.
4. Most importantly : Consider your current cash flow and the relative value of the home with respect to your overall net worth. If the property is cash-flow positive, it will be easier to hold on to psychologically when home prices continue to decrease. If it is cash flow negative, it is more difficult to hold on to a depreciating asset.
ParticipantAnother rental data point.
Sold our primary residence in SD in 2005, but still have a SFR held as a rental in West Clairemont/Bay Park area. As of this spring this SFR rented (quickly) for 100% of our current carrying costs (minus repairs/maintenance, of course). It is positive cash flow after taxes.
We bought with 20% down in 3Q 2002 for ~340K.So for central coastal SD I would look for a downside in the range of 3Q 2002 prices, plus whatever rental increases happen between now and the bottom of the market.
My guess: 19% decrease in value (35% for the price difference between now and 3Q 2002, minus 16% increase in rents over the next 4 years).
ParticipantThanks ! I had seen and focused on on the outmigration since that what really matters for housing prices, but hadn’t seen that the overall numbers which are what matters for overall housing (particularly rentals).
ParticipantI’d like to know where the data are that show that the population of SD is decreasing ?
Perhaps you interpret that the net outmigration to other states equals population decline. It does not. Population decline occurs when total outmigration (between states and internationally) exceeds birth rate.
ParticipantApples Oranges Noise and Statistics.
The business wire article cites the median price of existing resale single family homes, which actually increased in May.
The NBC article on the above referenced thread says that the AVERAGE price of a home decreased by $15k in May.
(which includes condos and presumably new homes).These comparisons are like comparing the circumference of an apple to the diameter of an orange. Note the difference between mean and median (statistics).
I have been tracking the median price of existing SFR’s in Central SD since shortly after purchasing in 1996.
Month-to-month fluctuation in the 3-5% range for Central SD county and the county on the whole for either YOY changes or month-to-month changes are the norm.This is what people who work with statistics call “noise”
Both articles are citing levels that are “within the noise” of the signal they are measuring and are misleading.
Looking over the longer term the trend is clear. Prices have been flat for the last year plus and are poised to decay based on existing inventory and seasonal factors over the next 6 months, followed by … (see voiceofsandiego.org) -
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