[gn]

>> I see it all dropping to 1/2 the peak and the builders still making $$$ hand over fist

You are absolutely right. You confirmed my suspicion, that, home builders will continue to build b/c it’s still possible to be profitable.

[gn]

Is “2-year” the typical window for buy-back clauses ?

I heard that there is also a window during which the buyer of the loan can “force a buy-back” unconditionally.

Is this true ? If so, what is the window for that ?

[gn]

If you decide to go to law school, consider following scenarios:

1. You land a good job as an attorney with reasonable hours & good salary (so you can provide for your family and pay off that $100k loan).

2. You land a job with a so-so salary ($70k) & 60 hours a week.

3. You have to work insane hours & the pay is not that good. You realize why so many attorneys are not satisfied with their jobs.

Unless you graduate at the top of the class at USD, the probability of scenario #1 is very small. Most likely, you’ll get scenario #2 or #3. And I have a feeling that you will not be happy with #2 or #3.

[gn]

Bugs is right. At the close of escrow, that house was probably worth $1.2M.

What is “double escrow” ? Is it when the house is sold
twice on the same day ? How does it work ?

[gn]

no_such_reality,

I should have used http://www.sdlookup.com instead of Zillow.

You are right. It was purchased in July 2004 for about $1M.
Looks like someone refinanced.

[gn]

Yes, it’s true that the builders are selling well.
Now, is it because:

1. The demand for homes is high.

2. Or, this is a reflection of the “pricing strategy”. That is, even in a market where there are few buyers, if you lower the price aggressively, you’ll be able to sell.

IMO, it’s reason #2. For every new home that is
sold, a re-sale is NOT sold. The builders are simply
stealing sales away from the re-sale market.

The problems with all those homes owned by speculators
using exotic mortgages haven’t gone away. In other words,
what’s good for the builders is bad for the market.

This is very bad news for the speculators. Which means
we are definitely not at the bottom.

[gn]

>> a year ago you can’t get a 3,500 sqft home in 4S Ranch for less than $1 million

If this is the price in early 2006, how much did
a 3,500 sf home in 4S Ranch went for at the peak
of the market in San Diego ?

Thanks.

[gn]

There is more speculations in the Inland Empire. Why ?

There is more land in the IE for builders to build new homes. And speculators prefer new constructions. With new constructions, the purchase price is set at the time that the contract is signed. While prices were going up, the speculator get the appreciation while the home is being built (6 months), without incurring any carrying cost.

This results in more surplus homes in the IE. Thus, more severe price declines.

[gn]

It’s important to differentiate between 2 different things:

1. The underlying “fuel” for the market. The rising prices were primarily the result of “easy credit” & lower interest rates. Of these 2 factors, “easy credit” is a more dominant factor.

Institutional investors are shying away from mortgage-backed securities, because foreclosure rates are going up. So, the easy credit is going away. This trend is not reversing anytime soon (the pendulum is swinging).

This means: going forward, the size of the mortgage loans will be based on incomes.

2. Home buyer confidence: this tends to fluctuate and show
up in real estate activities. I think this plays a minor factor because: it doesn’t matter how confident a buyer feels, he can only buy with what the lender is willing to lend him.

Many people mistakenly interpret the pickup in sale activities as signs that the market has turned around. But the reality is that the fundamentals are just not there to support current prices.

[gn]

I agree with sdcellar and PerryChase. Here’s another reason to be patient.

I believe we are now just seeing the tip of the iceberg with regard to foreclosure activities in the $1M+ homes.

A large percentage of these buyers bought with 100% financing and/or exotic mortgages. Many resale homes in CV have high asking prices because the owners cannot lower the price without being “under water”.

Unless one must have a brand new home in CV, in the next 2 years, we’ll see a raft of REOs on the market.

[gn]

HB,

Now that the lenders are tightening credit standards, the pool of buyers in San Diego that can purchase $1M homes is shrinking. I think the “Plan 1” in Derby Hill will fall into your price range by the end of 2007.

Going forward, the size of the mortgage loans will
be based on incomes. Where as, in the past, any John Doe
who makes $30k can get a $800k loan

The question is: why would one buy at the end of 2007 ?
IMO, this correction has a long way to go before we
get to the bottom.

[gn]

For those who have been to Del Sur. I’d like to ask you a few questions:

– How “dense” is it compared to 4S Ranch ?
– Most SF homes in 4S Ranch has a decent size yard (in my opinion). Are the yards in Del Sur much smaller ?
– When BobbyD said “… those folks are so arrogant”, were you refering to the sale people ?

Thanks very much,
GN

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