[pemeliza]

“Dec 29, 1988 Sold (Public Records) $620,000 Jul 09, 2012 Sold (Public Records) $1,085,000 75% more expensive over 24 yrs”

Jazz, this is your argument that prices are still substantially too high in La Jolla?

First, let’s consider the annual appreciation rate of 2.36%. How does that compare to the annual inflation rate over the last 24 years?

Second, let’s look at mortgage rates. The average 30 year fixed rate mortgage the last week of 1988 was 10.76%. Today’s average 30 year fixed interest rate is around 3.5%. Current interest rates are 1/3 of what they were back in 1988.

[pemeliza]

BG may rub some people the wrong way but I believe that there is some truth in what she says.

However … BG you seem to be referring to an era in SD when housing close to downtown SD was much more affordable. When you could buy an old house close in to SD for 150k-200k that had good bones and a great location, that was certainly an attractive proposition for a middle class family. These days that same house is 600-700k and frankly for that kind of money most people are not looking for a “project”. BTW, those same families that bought when prices in SD were dirt cheap are also some of the main benefactors of prop 13 and have ridiculously low property tax bills now compared to what today’s family is looking at.

[pemeliza]

I agree with sdr, make an offer of what you think it is worth and move on to something else if the seller plays hardball. If they don’t want to reduce the price now, they may want to later so it doesn’t hurt to express your interest in the house or they might end up selling it to someone else for what you were willing to pay. If you are going to lowball, then have your agent justify your offering price using comparable sales. I am seeing a good number of houses in this price range selling for substantially under the list price so you have a decent shot at a successful lowball.

[pemeliza]

Definitely a trophy lot and location but priced high per sq. ft. for the zip code. It is a very nice view and seems very far from the I-5 which is rare for a property in bay park with that kind of westerly view. Not much of a flat back yard but it might be possible to enlarge with a deck. The pool is going to be a pain to deal with and is in an odd spot. As far as the house being overpriced, clearly the market agrees with you for now. I wouldn’t hesitate to offer 750k if you think it is worth that to you.

[pemeliza]

“Be smarter than dumb ass sellers.”

That is a bit harsh jazz. We will likely all be “sellers” at some point in our lives.

I don’t see anywhere near as many over priced homes as I once did in my area so I think most serious sellers have gotten the message plenty load and clear that market values have fallen substantially since the peak.

[pemeliza]

Sudden jumps in prices of a few goods end up getting smoothed out in the inflation data. It takes large and sustained (over many months) price increases of many goods to move the needle.

[pemeliza]

“Would buyers and strong sellers continue to have a stand off and all sales happen on the margin w/ week sellers? If strong seller are pushing prices (and not getting it), wouldn’t that mean price on aggregate will continue to fall?”

I think you just explained in a nutshell why inventory and prices continue to fall. We have a thinly traded market where short sales that continuously close for 5-10% lower than the previous comp are tanking prices. Until the short sales clear the system I don’t see things changing much.

p.s. I agree 100% with your comment ltsdd.

[pemeliza]

OP house relisted at 270k

[pemeliza]

We are both guessing at this point, but I think things could change somewhat radically over the next decade or two. For example, one could have made similar predictions as you in 1995 but a decade later in 2005 we were at the top of the biggest housing bubble of all time.

[pemeliza]

OC, I agree with everything you posted except the last paragraph as you are essentially assuming that the demand will stay constant or low enough for the next decade to be satiated by a few nibblers testing the market that are content to get out at nominal prices circa 2 or 3 decades ago.

This certainly isn’t how things played out in so cal during the last downturn, so what you are saying is a variation on “it is different this time”.

[pemeliza]

My answer to the OP question is simple. Prices are at 2001 levels in many if not at this point most of the desirable levels. Prices are even lower than that in the second tier areas.

CAR, I agree that most sellers have decided to wait it out and I would go further than that and say that most sellers have conceded that things are NOT going to get any better soon.

IMHO, the smart money is now taking a 10-20 year time horizon and saying let’s lock in a low rate (assuming they are a strong hand and have enough equity to refinance) and dig in deep to make it through this unfortunate but completely predictable (and necessary) downturn in housing.

Meanwhile the strong hands with a good part of their money in stocks have to be even more confident now that for example the QQQ is at an 11 year high in large part because of apple but qualcomm is doing well again too.

It is one thing for the strong hands to panic and blow out property at late 1980s nominal prices when the DOW has a 6 handle but with a 12 going on a 13 handle I just don’t see the panic in the air.

[pemeliza]

Nice one jp. When we bought back in 09 I said that I was prepared for a 10-20% price drop and I think that has already happened for our house. Thus, we are locked in for at least the next 10-15 years. Good thing we like the house. It is one thing to expect the price drop and see it happen. It is another thing to see the price drop happen and then see that the market is still searching for a bottom.

As one poster said on this board the sentiment is just so negative right now it seems like the opposite extreme of what we saw in 2004. An inverse bubble if you will. I tend to believe that we are entering the over-correction phase of this downturn and those buyers that held out are in a fabulous position to score a deal. This is starting to remind me of the spring of 2009 in the stock market although things are playing out in extreme slow motion by comparison.

[pemeliza]

When I see stuff like this:

http://www.sdlookup.com/MLS-100041970-6857_Citrine_Dr_Carlsbad_CA_92009

I can’t help but to agree with sdr that Carlsbad has been way over built with 4000+ sq. ft. “mansions”.

As far as places like pt. loma and my own neighborhood in mission hills buyers are getting way more bang for the buck than anytime in the last 10 years especially when you consider where interest rates are and the level of upgrades in these houses. Prices really are not that much higher than then were in the late 1980s and interest rates are less than half of what they were then. It has to be a sobering reality for long time owners in san diego who thought that they were going to sell their houses and retire on the proceeds to realize that they may have to bring money to the closing table.

[pemeliza]

Although I am strongly opposed to principle forgiveness, I am in favor of government backed financing for homeowners at today’s interest rates on “existing principles” as long as the borrower can afford the payment under reasonable income ratio assumptions (even if the borrower is underwater).

If the homeowner cannot afford the house at 4% then the solution IMHO is foreclosure.

[pemeliza]

Although I am strongly opposed to principle forgiveness, I am in favor of government backed financing for homeowners at today’s interest rates on “existing principles” as long as the borrower can afford the payment under reasonable income ratio assumptions (even if the borrower is underwater).

If the homeowner cannot afford the house at 4% then the solution IMHO is foreclosure.

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