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powayseller
ParticipantYOu’ve really got to talk with a CPA to discuss his personal situation, since depreciation, capital gains, his tax rate, etc. all make a difference. The CPA should know about short sales too. Try Michael Gallon, CPA, in El Cajon 619-440-4780. BTW, Michael has no idea that I’ve been referring him on piggington, and I have no benefit from doing so. Call someone else if you want, but as far as I know, we don’t have any tax experts on this forum. (nor construction workers, loan officers, title/escrow personnel, inspectors, etc.)
ParticipantThe median is not useless, but it has its flaws, just like the CPI has serious flaws.
The median is a 1-2 year lagging indicator. What they are saying, I think, is that the median’s downtrend is significant in that it will be reported widely in the news. Americans will finally understand and believe that home prices are falling. This realization ought to change buyer psychology even more, slowing down sales! Sellers will start lowering prices. Yes, the median is widely followed, so its numbers, for better or worse, impact the psychology of the market.
ParticipantAN, you don’t have to defend your decision about your car. sdrealtor has a history of trying to sling mud to throw people off track. Whether it’s congratulating me on my house burning in a fire, dissing your choice of car as not financially sound and trying to question your manhood, looking up my previous house sale and falsely accusing me of lying to my buyers about its square footage, knocking Boston_OC_Renter for his sales success, slamming SD Realtor (the nice one), questioning my ethics for selling a house, the list just goes on and on.
One thing I like about the piggington blog is the high caliber of posters, which keeps the discourse intellectual and civil. People prefer to debate the topics, not the person. Unfortunately, this last post by sdrealtor crossed the line, once again, of civil piggingtonian discourse, so it isn’t even worthy of a response. It’s nobody damn business what kind of car you drive!
Participantsdrealtor, I’ve always been told that Asian men are well built, if you know what I mean, so his car is not a surrogate of anything; as a single guy with a good paying job, he is driving what you and I can only dream about. Well, soon enough the wife and kids will come along and he then will be more concerned about a car with enough room for a baby seat and stroller in the back 🙂
Back to business. I have to agree with AN on this one. I’m not so emotional to think that there is only one house for me. But it is true that when you look at houses, you can pass so many by because they have something wrong with them. It is too old, or the neighborhood has too many junky cars, or the backyard is too small, or you can hear road noise when windows are open (that is the biggest problem in San Diego, since noise travels up and many houses are on busy streets), the houses are too close so the neighbor can see your backyard from his bedroom window, the house is too dark, the previous owners made an addition that is totally tacky and does not flow with the rest of the house, the house is priced higher to compensate for the $20K new tile they just put in for the sale and I hate it and refuse to pay for it (ditto for those cheap cabinets they put in to update the kitchen), the pool takes up the entire backyard and I’d rather have grass for my dog than the pool…So on and on it goes.
There are many homes that will fit the bill, so if you can stay detached, you can get a better deal. If you fall in love with a house, you probably will pay more to get it. With time on your side, you can get a house that meets your criteria and still pay less. That is the magic of high inventory.
ParticipantLarry J., I am working on a real estate forecasting model, but it’s not ready yet. For now, the basic thing I would look for is that prices have stopped dropping and are coming back up. Stay in touch with realtors, because they will be the first to know when demand picks back up. Do not use the median at all. Before we hit bottom, we have a lot of pain and excess to work through; we’ve got several million foreclosures to get off our hands. By the time this housing market stabilizes, it will once again be possible for a 28-yr-old to get a starter home in San Diego.
ParticipantI found out why neighbor #1 is no longer on the MLS. She went pending. Her last list price shows up as $439K – $456K.
It looks to me like Poway is still going strong! Here are the townhouse sales in my neighborhood
#1 pending, 1579 sq ft, $439K – $456K
#2 listed 2/06, 1875 sq ft, was $540K, now $499
#3 listed 8/06, 1875 sq ft, $540K
#4 closed August 06, 1288 sq ft, $420KParticipantbalasr, that’s funny. Realtors are NOT to blame for any of this. Neither are mortgage lenders, appraisers, inspectors, title officers, buyers, or sellers. Money seeks the highest return. MBS investors, seeking higher yields, are the culprits, and they will be the ones stuck with the bad loans.
BUT, from where did the liquidity come in the first place? Japan took back its liquidity in the second quarter of this year. From where did it all come? Where did MBS investors get their money?
In regard to that article, I cannot believe that our government officials and policy makers would try to mislead us in public. They absolutely know what caused this bubble! They are smarter than I am and have access to much more information. However, we have to take with a grain of salt everything the Fed or policy makers say in public; much of their talks and “research” is aimed at making themselves look good, and in keeping the masses drugged with bad information.
In the next paragraph, please realize I have some of that liquidity stuff wrong, because I don’t fully understand it, so please correct me. But the general idea stands. Back to the report. Can you imagine the fallout if their report stated, “We caused this housing bubble with our loose monetary policy. We lowered interest rates below the rate of inflation hoping to jump-start capital spending, but did not realize we would create a housing bubble instead. To make it worse, the Federal Reserve issued so much debt, and flooded so many dollars into the system, that it was just begging for a place to go. Japan’s zero interest rate policy brought $300 bilion into the US, looking for an investment, and it flowed to MBS, making more and more easy credit available to Americans who had NO business every applying for a mortgage, much less getting one. Now millions of Americans are facing foreclosure, and there isn’t a damn thing we can do to help them. Excesses always cleanse themselves, so good luck with your cleansing. Don’t worry, as we will definitely raise your taxes, so you can do your American patriotic duty in bailout out your fellow GSEs, banks, and bankrupt cities. But don’t blame us, because we want you to like us. Please, will you not be too mad? Please, I just want you to say you still are my friend. Pleeeeaaaaase, will you be my friend???…”
Actually,Participantsavingforahouse, that sounds like a promising chart to make, although I don’t know how much of a leading indicator it would be. Anything that adds to inventory, whether it is job loss, divorce, foreclosure, overbuilding, puts downward pressure on prices.
If you were to look at the number of foreclosure in a neighborhood to get a sense of excess inventory, why not take it further and look at unemployment and overbuilding by neighborhood? San Marcos had more overbuilding than Poway, so San Marcos has more downward price pressure than Poway, etc.
I noticed that the lower income areas have more foreclosures.
ParticipantIs it even legal to make 5 simultaneous offers? I thought an offer requires a legal intent to execute, so that would make simultaneous offers illegal.
You could also try making an offer “firm and final, response due in 24 hours”, along with a cover letter stating, “I have 2 other houses I’m considering”. This lets the seller know while you love their house, you’ve got other options, and you will move on those if they try to counter.
Most of all, why are we even talking about offers in 2006? This conversation is for 2009. No matter what price you get today, no matter how lowball, it is still going to be 50% higher than what you would get in 2009, IMO.
ParticipantPerry, I should clarify. I have trouble with an analysis based on gut feeling, i.e. “I have a gut feeling real estate will go down 10% and then start going up next spring”. Yes, psychology is a driver of behavior and asset prices, but unless you have an “in” with the heavenly spirits, you can’t know the future based on your gut feelings.
ParticipantStocks don’t go up or down in a straight line; it’s bumpy. This rally will be short-lived, IMO.
ParticipantSteve, when you use year over year measurements, you have to wait for one entire year to see the trend. Unlike inventory, median price does not have a seasonal component, so there is no reason to look at it year over year. I really think we should look at median prices month over month.
If you graph median prices, wouldn’t you see a downward trend for 8 consecutive months, since November 05? Isn’t that proof enough that the median is going down?
You are an appraiser – what are you seeing? Have you seen homes in Del Mar fall 30%, or do you think the 30% drop is due to fewer high end homes selling?
ParticipantPrice/sq ft works really well when the underlying land cost is equal, for example within a subdivision or condo complex. If lot sizes vary, or location puts a premium on lot size, then $/sq ft loses accuracy.
Participantvrudny, your friends could very well be in over their heads. At 8x income, their ability to ride out bumps depends on how much they put down, and what type of loan they got. An option ARM at 7x income, with $250K down, is a disaster waiting to happen. In the last downturn, Del Mar and Rancho Sante Fe had foreclosures, too.
No area is immune to price drops and foreclosures. Just last week, someone told me that the area around Poway High School, which has some of the most expensive Poway real estate, was full of foreclosures in the early 90’s. He said the area was littered with foreclosures.
We should all expect to see the most high priced areas full of REOs in 5 years. People make the mistake of projecting today into the future. Do you rememher last year, when the media was writing only about housing as a great investment? Hardly anyone mentioned the housing bubble. I didn’t see one story about exotic lending, the danger of option ARMs, the overbuilding. Now the media is full of those stories. By next year, the stories will have shifted to banks in trouble, large number of homeowners in foreclosure, and problems at Fannie Mae. In 3 years, you will realize that 10% – 25% of For Sales signs are distress sales, or owned by the bank, and our inventory should be at 50,000 – 80,000. Maybe even 120,000. We’re going to have 100,000 people with resetting ARMs in the next few years.
From foreclosure.com, here is today’s list of
City….foreclosures…preforeclosures
Poway… 4………..44
Del Mar…..1…….12 (near Beach: Luneta Dr, but the rest are off Del Mar Heights Rd)
Rancho Santa Fe….1……11
La Jolla……..1………30
San Ysidro…..13……..56
Fallbrook……11………63
Lakeside…….13………75
National City..13………76
Carlsbad…….11……..100
San Marcos…..24……..105
Oceanside….. 38……..238
Chula vista….67……..439 -
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