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garysears
ParticipantI took a couple pictures of the signs if anyone is interested. Someone finally picked up the broken pieces, but the broken signs advertise more accurately than the realtors probably intended. This sort of thing is common in this neighborhood, as is vandalism of parked cars on the street. This is not really the place most people really want to spend a quarter a million bucks to live.
This second picture shows something that must be fairly typical in many places. Realtors don’t seem to want to continue to refill the little boxes with new flyers. My guess is they realize how unlikely a sale is. It certainly shows lack of interest on their part. You can get a pizza flyer though!
http://tinypic.com/view.php?pic=6ce99mr
http://tinypic.com/view.php?pic=52cha9eParticipantSince posting a few days ago I also noticed on the MLS that there is a foreclosure just up the street from these condos at 745 E Bradley Ave. While walking around the complex I saw 2 other units that looked bank owned. The only unit I saw listed on the MLS is #41. Units 51 and 45 had lock boxes on the door. Several months ago I saw for sale signs on the corner. I guess no one was able to sell and they got foreclosed.
List Price: $175,000
Address: 745 E BRADLEY AVE 41 92021
MLS #: 078015909
Original List Price: $230,000
Complex: Bradley Condos
Listed on: 2/25/2007Historical home sale price: $250,000
Prior sale date: Aug 24, 2004Historical home sale price (2): $45,500
Prior sale date (2): Jan 12, 1996I see that someone made out quite nicely by selling at the peak on this one! It is especially nice if you consider they probably leveraged the initial 45K considerably.
#45
Historical home sale price: $268,000
Prior sale date: Jan 13, 2005Historical home sale price (2): $53,615
Prior sale date (2): Feb 9, 1999This is also quite a good deal for the 1999 buyer. I can’t believe someone paid $268K for that in ’05. I think #41 might likely sell for under $175K. If so, that represents quite a drop from the ’05 price of $268K for a similar condo in the same complex with the same square footage. If #45 sells for 175K that is a 45% drop already! Of course the lender probably has a little more into #45 than does the lender for #41.
#51
Historical home sale price: $102,559
Prior sale date: Jun 26, 2007Historical home sale price (2): $87,500
Prior sale date (2): Mar 1, 2002Historical home sale price (3): $38,000
Prior sale date (3): Mar 14, 2000This one is a 1 bd / 568 sf condo. I didn’t know it was sold until I went to Trulia.com. But the sale price gives me hope that I might get a 2bd/2ba in El Cajon for under $150K. I note that the $175K price on the MLS for #41 does not seem real firm. I think they might even take $150K right now for it. There are several other condos in El Cajon on the MLS with the low side of the range in the 170-180Ks.
ParticipantSince posting a few days ago I also noticed on the MLS that there is a foreclosure just up the street from these condos at 745 E Bradley Ave. While walking around the complex I saw 2 other units that looked bank owned. The only unit I saw listed on the MLS is #41. Units 51 and 45 had lock boxes on the door. Several months ago I saw for sale signs on the corner. I guess no one was able to sell and they got foreclosed.
List Price: $175,000
Address: 745 E BRADLEY AVE 41 92021
MLS #: 078015909
Original List Price: $230,000
Complex: Bradley Condos
Listed on: 2/25/2007Historical home sale price: $250,000
Prior sale date: Aug 24, 2004Historical home sale price (2): $45,500
Prior sale date (2): Jan 12, 1996I see that someone made out quite nicely by selling at the peak on this one! It is especially nice if you consider they probably leveraged the initial 45K considerably.
#45
Historical home sale price: $268,000
Prior sale date: Jan 13, 2005Historical home sale price (2): $53,615
Prior sale date (2): Feb 9, 1999This is also quite a good deal for the 1999 buyer. I can’t believe someone paid $268K for that in ’05. I think #41 might likely sell for under $175K. If so, that represents quite a drop from the ’05 price of $268K for a similar condo in the same complex with the same square footage. If #45 sells for 175K that is a 45% drop already! Of course the lender probably has a little more into #45 than does the lender for #41.
#51
Historical home sale price: $102,559
Prior sale date: Jun 26, 2007Historical home sale price (2): $87,500
Prior sale date (2): Mar 1, 2002Historical home sale price (3): $38,000
Prior sale date (3): Mar 14, 2000This one is a 1 bd / 568 sf condo. I didn’t know it was sold until I went to Trulia.com. But the sale price gives me hope that I might get a 2bd/2ba in El Cajon for under $150K. I note that the $175K price on the MLS for #41 does not seem real firm. I think they might even take $150K right now for it. There are several other condos in El Cajon on the MLS with the low side of the range in the 170-180Ks.
ParticipantI rent at Coral Garden Apts at 425 E Bradley, just about a hundred yards down the street. I pay 1010.00 per month but that includes a one car garage. I have seen other 2 bed/2ba units can advertised for 900-950 per month I think. I don’t know specifically what the 465 E bradley condos are renting for. The 900-1000 range is a good estimate.
ParticipantI rent at Coral Garden Apts at 425 E Bradley, just about a hundred yards down the street. I pay 1010.00 per month but that includes a one car garage. I have seen other 2 bed/2ba units can advertised for 900-950 per month I think. I don’t know specifically what the 465 E bradley condos are renting for. The 900-1000 range is a good estimate.
ParticipantI wanted to add that I calculated a 22.12 annual rate of return for Unit #2 between 1996-2006 (had the original buyer kept it). SO maybe -25% per year would not be a bad thing for a few years. If you start with a rounded off 40K value in 1996 and use a 6% compounded annual rate you get a present value of about 76K. I know that 1996 was a low year for real estate and maybe it is not a good base year for a comparison. However, if that was the bottom of the last bust it makes me wonder. A value of 76K today is probably a little low if the median household income for San Diego is in the upper 60Ks. Then again, I wonder what the median income was in 1996…
I keep thinking that I can’t see paying over 100K for an El Cajon 900 sf 2bd/2ba condo. But I also know that means I will probably never own a place out here. I guess it will never be 2002 again. Or will it?
ParticipantI wanted to add that I calculated a 22.12 annual rate of return for Unit #2 between 1996-2006 (had the original buyer kept it). SO maybe -25% per year would not be a bad thing for a few years. If you start with a rounded off 40K value in 1996 and use a 6% compounded annual rate you get a present value of about 76K. I know that 1996 was a low year for real estate and maybe it is not a good base year for a comparison. However, if that was the bottom of the last bust it makes me wonder. A value of 76K today is probably a little low if the median household income for San Diego is in the upper 60Ks. Then again, I wonder what the median income was in 1996…
I keep thinking that I can’t see paying over 100K for an El Cajon 900 sf 2bd/2ba condo. But I also know that means I will probably never own a place out here. I guess it will never be 2002 again. Or will it?
March 17, 2007 at 5:37 PM in reply to: A.H. LENDERS: how many people in San Diego will be fired? #47915ParticipantI guess I don’t understand how that price jumped so high with the announcement. LEND traded almost as high as 14 during the day. I understand the 2.7 billion is almost the entire loan portfolio of the company. How can there be earnings in the future of the company to justify the jump? Is this just day trader speculation or can someone explain this?
Also, I understand the sale was in order to meet margin calls. I’m not sure what that means exactly but I assume it means they aren’t out of the woods yet.
ParticipantLostcat,
I would love to short a subprime lender that is in trouble (actually buy puts) but I’m too late I think. There have been several big collapses already that I should have been in on but didn’t have the money ready. As far as I know, if you want to short WMC, you have to short GE as a company, which I don’t know about. Are there any remaining sole or mostly subprime lenders you can buy puts on directly?
Participantno_such_reality,
Based on what you presented, it does sound like the long term fixed rate interest only loans come at a premium that doesn’t make sense for normal investment returns. Of course there is always a higher rate where you break even. The question becomes: what is a reasonable expectation for an investment return over time?
What about ARMs? Can you see any case where getting an ARM might make sense? The problem is you have to be able to predict future rates with an ARM to see what your break even point is.
I know the rationale is that if the rates now are at historic lows, then the common man would predict it to be likely for rates to correct back higher towards more “normal” historic rates. That is especially true over the time frame we are talking about.
But then again, I realize that I am not as motivated or educated or experienced as the many wealthy investors who prefer ARMs as an “investment tool” and devote their time to figuring out how best to accumulate wealth.
The common man inside me screams that ARMs only make sense in an environment of lowering interest rates. Yes, the fixed rate loans come at a premium because you are paying the bank to assume the interest rate risk. I suspect the “knowledgable” investors who use ARMs probably take them with more indepth knowledge of the broader economy that allows them to feel comfortable taking on the interst rate risk personally.
I applied the “common man” theory to San Diego real estate back in 2003 when I almost bought a condo in Pt Loma. I decided not to gamble and keep renting. I kept thinking that I was likely the bigger sucker who would be left holding the bag, locking in someone else’s real estate winnings. I didn’t want to be the last one looking for a chair when the music stopped. Even though it turns out I would have made some money had I timed it right, I don’t regret it.
My conservative nature will probably keep my from ever doing the interest only or ARM thing. I guess that lack of risk taking will keep me from ever being wealthy as well.
ParticipantI’m not an investment expert, nor do I own any property. However, I do see how leverage is the way to build wealth quickly and how this book makes sense in some cases. Actually, this is probably how many many wealthy people got that way.
It’s all about the CASH FLOW. I can see how maximimizing the flow maximizes the leverage. The main point is the property MUST cash flow to cover whatever carrying costs you have. Otherwise there is no extra money to leverage.
The other main point is we are not considering a single property. If you are only buying 1 property you might as well pay off the debt if the property isn’t appreciating quickly. However, the goal is to buy more and more and more properties.
I don’t see how cash flowing opportunities could be currently possible for new investors at today’s prices for SFR properties in SOCAL. It IS possible for some types of properties in other areas though. The day when residential properties in SOCAL can cashflow for wealth building investors (after a 20 percent down payment), the market will probably be “back to fundamentals”. I’m sure this had to have been the case at one time even in SOCAL. Otherwise we are all indeed too late and permanently missed the gravy train.
I think it is a matter of perspective and goals whether you are “saving” more money by building equity by paying off a loan or “wasting” money by only making interest payments and investing the difference.
I think the reality is the “interest only” investor will not have a high interest paying investment that makes up the difference “lost” to the “loan payoff” investor. However, that “reduced” amount of money saved is not locked up in the mortgage. The goal is to save money until an additional 20 percent down payment can be made to purchase another leveraged cash flowing property. Once the $300 dollars you invest every month adds up with interest to make 20 percent for a new property, you buy it. Now those 2 properties are working together providing more cash flow than the one property. And now 2 properties are appreciating (someday again) with leverage vice one.
If you choose to pay down the loan, that $410 you “saved” every month is still locked up in equity. Granted, you can always cash out refinance, but that would be defeating the point. We are talking about a difference in goals. Some people want to be debt free. Others want to be wealthy. If your property doesn’t cash flow in SOCAL and you can’t get a higher rate of return elsewhere than your mortgage rate, paying off the loan is probably the way to go.
So it does make sense to me to never build equity with payments, but to build cash flow, and let equity build over time with appreciation.
That being said I’m emotionally solidly in the “debt free living” camp when it comes to my eventual home purchase one day. I would view my own home as shelter vice an investment. A poor decision? Perhaps. I haven’t ruled out leveraged wealth building through real estate. Those opportunities will have to get eashier to find though.
I’m still working on that first down payment.
Participant“Coyote” must be Spanish for “Complete”.
ParticipantI’m a government employee and I pay SS tax. I don’t know anyone who doesn’t. Of course I’m not holding out hope that I will ever see any of that money again.
ParticipantSo let me rephrase…
A bunch of people got forclosed on. That would be 7X the previous year. But don’t worry it is only because…
“the main culprit is the loss of home price appreciation and in some areas … at least mild declines in home prices,” … “Less appreciation equals fewer options to get out of a financial pinch.”
The dreaded soft landing strikes again!!! But don’t blame the buyers for getting upside down on the loan. Who could have predicted home prices might not continue to increase at 30% per year?
Clearly, 1 or 2 years of having to make minimum payment option payments is way longer than anyone should have to go without refinancing or selling at a huge profit.
It is the accursed glut of inventory! As we all know, home appreciation has always been the only practical way people have afforded homes.
And don’t worry about those so called “toxic loans”…
“LePage said he has yet to see evidence of a “huge correlation” between nontraditional loans and foreclosure in the area”
even though…
As of November, 67.1 percent of the loans granted in San Diego County — including home purchases and refinances — were interest-only and negative ammortization loans
and…
“We’re probably more vulnerable than other areas because our housing is so expensive,” Gin said. “Those nonconventional loans were probably the only way some people could have gotten into the market.”
but don’t worry…
Few experts believe the residential real-estate market or the San Diego economy is anywhere near a repeat of the 1990s trouble, but there continue to be signs of weakness.
Clearly you can’t be an expert if you believe the market is in trouble.
The experts do not anticipate serious problems…
because of the strength of the San Diego economy.
After all a whole 1 in 3 buyers don’t need to rely on creative financing. So we are in good shape.
There is no reason to panic unless…
“rates pop up a percentage point or more. We could see some serious trouble.”
[end sarcasm]
What?
I guess the economy is so strong 2 out of 3 buyers screwing themselves is OK.
If the rates are near all-time lows today, what are the odds they don’t rise a whole percentage point before home appreciation begins again?
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