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North County Jim
ParticipantMy wife and I experienced the joy of viewing model homes today. We looked at the Meridian and Mariner’s Landing developments in San Elijo Hills, both built by Pulte and priced in the 700 and 800’s.
The Pulte people were very accomodating and they were anything but pushy. My main line of inquiry was how long before their buildout was complete. They plan to be out by November 2006. The most interesting thing offered by the salesman was to understand that all of the sold buttons on their lot map were not final. “They still have to qualify”, we were told.
The most significant piece of information for readers here is the fact that they have cut prices. I come to this conclusion based on two sources of information.
The first is their web page. The starting prices on their pricing sheet were anywhere from 2-11% below the starting prices on their web page.
The second source is the sales prices from their earlier phase at Meridian (I chose Meridian because upgrades like granite and stainless are standard). Previous sales (I found data for a total of 35 sales) averaged $250/sq ft with a low of $223 and a high of $287. Two completed but unsold homes are being offered through an agent at $218 and $220/sq ft (search the MLS for listings on Orion Way). We can all do the math. These are discounted 12% from the previously sold inventory.
If I’m missing something here, let me know.
I’ll also relate this tale of a speculator in the neighborhood. There is already a For Sale sign on a house that closed back in October. The owner of this house got a deal (relatively speaking) at $743,000 ($226/sq ft). He’s now trying to flip it for $859,000 ($261/sq ft). Is he aware that the builder is trying to unload two larger homes for $74,000 less?
We left our name with the salespeople and told them we were tied up in a lease until October. I’m curious whether we’ll hear from them before they complete their buildout.
ParticipantHere’s an update on the New York speculator. The house is back on the market as a “new” listing. Here’s a progression of his asking prices since I first encountered him in October.
First asking price: $759-789k
After I spoke with him: $749-789k
New asking price: $725-775kStill too high IMO. Outside the increasingly unlikely “miracle offer” he mentioned, I don’t think he’ll even get a nibble until he’s below $700k.
If anyone’s interested, the MLS # is 066002128.
ParticipantThe worst case we ran into was a speculator from New York. We were given his number by the contact from Craig’s List. Before speaking with him, I checked the particulars on the house from publicly available stuff at the county website (selling price, property taxes, etc.). He paid $647k in October 04. His asking price for rent was $2,200.
He was trying to rent out a one-year-old house in the new Hidden Trails subdivision of Escondido. He wanted to rent it out on a month-to-month while also listing it for sale (asking price of $760-790k; I should add that there appeared to be no improvements to the house other than those put in by the developer). I told him we weren’t interested in that arrangement. I also told him he needed to lower his selling price if he wanted to sell the property. His response: “I can’t. If I do, I won’t make a profit.”
He called a half hour later and suggested that we see the house. We did check it out and it was very nice (3,100 sf on a big lot; decent amenities). I called him back and told him we liked it but we still couldn’t rent a house while it was being sold. He offered to take it off the market for 6 months for us but he would also raise the rent $200/month. He also disclosed that his monthly nut on the place was ~$3,900. I took him at his word.
We ended up renting another place and when I spoke with him, he had a lot of questions about the market. I told him it had softened with the October YOY median resale price in the county only up about 2%. I also suggested that he take a trip out to San Diego so he could drive around north county and witness the amount of new home construction that was occurring. He mumbled something about holding out for the “miracle offer”.
A week or two later, I noted that he had dropped his asking price by $10k. Not enough IMO. The listing has since disappeared. I haven’t seen a sale show up yet on the county web site so I assume he found a renter.
How many others are out there like this guy?
ParticipantOur recent experience tells me that rents are certainly not going up. We recently sold our house in Escondido and needed to find a rental house in the Escondido-San Marcos area. We found that we were in a position to negotiate down the rent in almost every case.
I should add that the most amazing thing about the process was that every house we looked at, the owner would be cash-flow negative on a monthly basis, some severely negative.
I witnessed several situations where the owners / speculators are – in all likelihood – going to get creamed.
If anyone’s interested in the sordid details, I’ll post additional information.
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