[gn]

I think what you are seeing is the bottom half of the market in San Diego and much of Southern California basically becoming an unmitigated disaster. The top half of the market not as much.

On the way up, it was subprime & Alt-A loans that enable entry level buyers to bid up the prices of low-end houses. This enabled "move-up" buyers to bid up the prices of more expensive houses.

Now, the opposite is happening. The restrictions of sub-prime loans prevented entry level buyers to enter the market. This causes trouble in the low-end of the market first (we are currently seeing this).

Eventually, the effect will ripple up to the more expensive areas. In real estate, everything is connected.

[gn]

The reason that banks don’t want to rent out REOs:

The rental income is much lower than the interests that banks can earn on the money being tied to the house.

Think about it, if you were to go out & buy a house today & rent it out. The rental income would not be enough to cover the mortgage & taxes. You would have a large negative cashflow every month.

Why would banks want to put themselves in that position ?

[gn]

The reason that banks don’t want to rent out REOs:

The rental income is much lower than the interests that banks can earn on the money being tied to the house.

Think about it, if you were to go out & buy a house today & rent it out. The rental income would not be enough to cover the mortgage & taxes. You would have a large negative cashflow every month.

Why would banks want to put themselves in that position ?

[gn]

If you were looking in person you might be able to take a look at the materials and workmanship involved in setting the windows and doors

I think I can look at a window & tell whether it's a high quality window. But, its setting ? Can you elaborate ?

[gn]

If you were looking in person you might be able to take a look at the materials and workmanship involved in setting the windows and doors

I think I can look at a window & tell whether it's a high quality window. But, its setting ? Can you elaborate ?

[gn]

Since it’s mostly about supply & demand (or must-sell suplly & demand), I would disregard the data on DOM.

The data on DOM is marginally helpful & not worth the trouble of reading it.

The key thing to watch for is the growth/reduction of must-sell supply.

[gn]

Since it’s mostly about supply & demand (or must-sell suplly & demand), I would disregard the data on DOM.

The data on DOM is marginally helpful & not worth the trouble of reading it.

The key thing to watch for is the growth/reduction of must-sell supply.

[gn]

Rustico,

Thanks for replying.

Quality construction usually a more dense feel to it if you can get a good sense for that and then that is half the battle

What do you mean by "dense feel" ?

Specifically, what makes a custom construction better than a tract house (sorry, if this is a naive question) ?

 

[gn]

Rustico,

Thanks for replying.

Quality construction usually a more dense feel to it if you can get a good sense for that and then that is half the battle

What do you mean by "dense feel" ?

Specifically, what makes a custom construction better than a tract house (sorry, if this is a naive question) ?

 

[gn]

A year ago this is what I was hoping for, now that is has come down I am a little greedy for more but if it comes down another 50k on both examples above I doubt I'll be able to hold off.A year ago this is what I was hoping for, now that is has come down I am a little greedy for more but if it comes down another 50k on both examples above I doubt I'll be able to hold off.

Temeculaguy, I don't think that you are being greedy. It's about loss avoidance. If there's a house whose value/price is inline with rents, but if I think that the price will continue to go down significantly, it would be irresponsible of me to buy it. That's b/c I have a responsibility toward my family to make good financial decisions.

While I think S.D. has a year or two to unwind, here in the outskirts it is in full swing and the rent to buy numbers get closer every day

I agree that Temecula will reach the "bottom" before SD. But I think that it's Temecula that has 2 years to unwind. For SD, it's at least 3 years.

 

[gn]

A year ago this is what I was hoping for, now that is has come down I am a little greedy for more but if it comes down another 50k on both examples above I doubt I'll be able to hold off.A year ago this is what I was hoping for, now that is has come down I am a little greedy for more but if it comes down another 50k on both examples above I doubt I'll be able to hold off.

Temeculaguy, I don't think that you are being greedy. It's about loss avoidance. If there's a house whose value/price is inline with rents, but if I think that the price will continue to go down significantly, it would be irresponsible of me to buy it. That's b/c I have a responsibility toward my family to make good financial decisions.

While I think S.D. has a year or two to unwind, here in the outskirts it is in full swing and the rent to buy numbers get closer every day

I agree that Temecula will reach the "bottom" before SD. But I think that it's Temecula that has 2 years to unwind. For SD, it's at least 3 years.

 

[gn]

But when homes become corporate owned, you'll see 1-2 months free rent with move-in.

PerryChase,

Are you saying that lenders will become landlords/property managers ?

Or that investors will buy REOs in bulk & become property managers ?

[gn]

But when homes become corporate owned, you'll see 1-2 months free rent with move-in.

PerryChase,

Are you saying that lenders will become landlords/property managers ?

Or that investors will buy REOs in bulk & become property managers ?

[gn]

If that was just 15 miles south I'd probably be over there today looking at it and offering 350k because that is now inline with rent almost

temeculaguy,

Since, there is so much speculation in Temecula, I suspect that home prices there will reach levels where owning is less expensive than renting. So, when prices are inline with rent, you may want to delay pulling the trigger.

 

[gn]

If that was just 15 miles south I'd probably be over there today looking at it and offering 350k because that is now inline with rent almost

temeculaguy,

Since, there is so much speculation in Temecula, I suspect that home prices there will reach levels where owning is less expensive than renting. So, when prices are inline with rent, you may want to delay pulling the trigger.

 

[Author]

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