Forum Replies Created
-
AuthorPosts
-
September 6, 2007 at 3:59 AM in reply to: San Diego Inventories flat year over year . . . other southwest/Calif. markets all higher. Why? Is SD near a bottom? #83532
SD Realtor
ParticipantThanks DaC –
Agreed… it will be interesting to see how it all plays out.
SD Realtor
ParticipantLostcat I have noticed some deterioration of the thread so I thought I would post a comment hoping to bring it back to your thoughts.
I think that Shiloh’s post about Japan was VERY useful. Personally I have always thought that things would bottom out in 2010-2011 with at least a nice reduction of downside risk in the 09 timeframe. However I am getting more paranoid by the potential for intervention of some sorts that IMO will flatten out the slope of the decline. This adds a serious wild card that to me could indeed produce a long slow decline… one of many many years, 5 extra years? 10 extra years? I doubt it but I am starting to rethink things at least a little bit. For sure I do not see a V shaped sequence of events. I REALLY want the left side of the V to happen quicker but my fear is that it will not do that. Especially in the areas that I want to live in.
With that said I don’t think you need to be as concerned finding the bottom or which side of the recovery you end up on. What you really want to do is limit or reduce the downside of the purchase; thus minimize the depreciation potential.
Using factors such as sales volume will help to identify some degree of stability. When we get to the point where sales volumes at least match the yoy numbers for several months in a row then that will be helpful. In tandem with that, hopefully a consistent level of inventory will also need to be watched. Another ingredient will indeed be the number of distressed or potentially distressed properties that are in the queue.
Bugs said it best… looking for a year or a time to indicate the bottom is not essential. We all hope that 08 or 09 would be near the bottom like you said, but the real proof will be the indicators.
SD Realtor
ParticipantCounselor one thing that I have been hearing is that investors may be queried to allow more substantial modification of existing service agreements in order to provide greater leeway to rewrite existing loans. In essence the investors are being given an ultimatum to take a lower return or lose the entire nut. I am not sure if this is a reliable piece of information I was given or not. Didn’t know if you had heard different.
SD Realtor
ParticipantYou can transfer that basis once and only once and the property you purchase must be of lesser value then the property you sold.
SD Realtor
ParticipantDaniel is correct. LIBOR is absolutely the most common but I am sure there are others as well. Also the reset rate is not just to the index, as additional margin may be added to the index. The calculation of the monthly payment also may vary. Again it all really depends on the loan. The payment may adjust every 6 months, or once per year, or it may adjust each payment… again it all depends.
Talk about a horror story.
SD Realtor
ParticipantGolfproz that is good to see. Inland Empire is not my domain by any means but I believe in a years time another 22% drop is not out of the question. As areas that are closer proximity to L.A. start to fall off, the outlying regions will experience even more price pressure. Also correct me if I am wrong but the foreclosure rate in the IE is way up there as well isn’t it?
SD Realtor
ParticipantLenders all have their own criteria when it comes to giving you an owner occupied rate on a loan for condo complexes. Remember an owner occupied rate will always be better then an second home or investment property rate. So yes if you buy into a complex with a low owner occupancy rate, then chances are the lender will not give you the owner occupied rate on your loan. The criteria varies. Mortgage brokers are better at answering this then I am, but usually the lenders like to see at least a 66% owner occupancy in the complex. Like I said, it can vary with the part of town, the complex, the lender, etc…
SD Realtor
ParticipantHi wagd…
I think real estate is a good addition to a diversified portfolio. Given the situation you described it would absolutely make sense to keep on the course of letting this depreciation cycle run through the motions prior to purchase. I do agree that downtown will show some good investment potential once the bottom (or at least once we get close the bottom) is reached. For the higher end units downtown the only downside is HOA fees. Discovery for instance charges close to 600 a month for HOA. Definitely non trivial.
Do you have to wait for a positive cash flow situation? Well again, even in a diversified portfolio I think you want either an appreciating asset or an income generating asset. Buying anything right now in San Diego would neither produce income or be an appreciating asset. Sticking the money in a CD would at least dribble you out a little bit of income.
With that said, I would hold off until one of the two criteria is met. There are also more sophisticated ways to invest regarding real estate, REITs and consortiums and such that will return income. Again, I am not professing to know much about them, nor am I a financial professional advocating them. Ray Lucia advocates non tradeable REITs as one of his buckets…
Anyways to be honest, if it were me, I would keep the cash liquid and hang on a few more years and then purchase the property. Again, even if it doesn’t cash flow it has much better appreciation potential.
SD Realtor
Participantwant a good deal – Those that are particularly astute rental property owners treat the investment very seriously and do much more then focus on the numbers. By that I mean they spend more time finding markets that are conducive for their investment to appreciate AND pencil out, they move in and out of those markets appropriately. These are people who bought in communities like Phoenix for instance several years ago and sold in 04, or bought in Austin in 02 and have recently sold. These are the same people who may have bought in places like North Carolina or Seattle in 04/05 and will be selling in the near future.
I am a landlord but these are properties I used to own and have never sold. I treat them like IRA’s as well and there are possibilities that relatives on either side of the family may use them in the future. They are both slightly negative cash flow wise but I am much more content with my steady tenants who care for the properties. I did purchase a condo in Mission Valley a few years back primarly as a rental but with a possibility of a relative moving in and that was recently sold.
I guess what I am saying is that if you really are considering purchasing a rental then you may want to consider finding more robust markets then San Diego, or buy a primary residence, live in it awhile and then move out and make it a rental.
SD Realtor
ParticipantIMO I believe Otay and Eastlake in general will lead the charge… correction, continue to lead the charge in detached home depreciation for resale homes as well as foreclosure. This area has all the ingredients needed for the recipe… it was thoroughly built out, it was chocked full of buyers financing with 100% and/or reset financing, it has a high degree of speculation (flippers etc..). I am not positive but I think it is leading SD County in foreclosures right now at least for detached homes. (Purely a speculative statement)
SD Realtor
Participantwant a good deal – Yes keeping track of the number of pendings that fall out would be a good idea… seems like Rustico already volunteered me for it… Well he owed me one but I will have to decline.
While it is a useful stat I think that tracking the overall sales volumes will be good enough. As long as they continue to show about a 20% yoy decline per month then we are still sailing along through the downtrend.
BSR –
Yes it is possible but again manual. One can go ahead and set an MLS search up with a minimum price value and then an off market date range for previously sold properties. Do this for enough months and you can see a trend if any trend is evident but this will only be for the properties that sold. It would not factor in properties that did not sell.
You can also set up a manual search to find out how many properties were on the market for all solds, expireds, cancelleds, and withdrawns and search for an original list date in any range but again, way manual…
I think that someone could make some good money creating a better GUI for the MLS to allow a more robust search mechanism for compiling data. The one they have now is pitiful…
Larry – Since you want a 1.3-1.8M home you are my new best friend…
Rustico Rustico Rustico… You better be putting me on your payroll soon. Once the recession hits and I loose my engineering job I will hope you will employ me somehow…
******
As I said, there is no doubt the credit crunch will provide a new plateau so to speak but it is way to early IMO to make assessments on the overall effect. I think the past few weeks were a bit of an overreaction. I expect things to loosen up but not alot… then I expect another round of contraction with the next wave of bad news…. this could be a recurring effect over the next few years… Between the crunch, foreclosures, arm resets, psychology, it is hard to tell which factor is most responsible at any given time. That is why I think sales volume will be most reliable. At some point I think sales volume will level off and then median price will come down more appreciably then it has…
Just a guess…
SD Realtor
ParticipantI don’t think a single data sample is worth anything at all. Show me enough data so that a true trend can be identified or a gap movement. This is clearly evident in the short sale monitor where the trend clearly identifies the number of short sales to be growing as a ratio of the total MLS listings in San Diego.
I am not saying that the credit crunch cannot or will not have an effect. Obviously they will.
I could say today was the hottest day ever in San Diego but it would carry more gravity if I had a list of temperatures over recent history.
Also there are currently 1239 properties pending in San Diego County over 520k as a listed price for the minimum list price.
SD Realtor
ParticipantBreeze I am very familiar with Lucera. This entire complex was a conversion that was completed back in 04 I believe. I had some clients who tried to sell last year in the low 400’s and they were living in denial and refused to go lower then that. I hesitate to think where they are at in life now.
The units are okay. One thing that is kind of funny is that when you look on the MLS there are different sq ft ranges for the 2/2 models, you see 848, and some 925 but I believe ALL of them are 848. The tracks are right below the complex and I believe there are plans to put a trolley station in right there as well. Don’t quote me on that. Due diligence is the key. Interior wise the units are okay, the granite counters and stainless steel appliances that are all 3 years old now. Kitchens are a little thin, there is a small dining area and there are no laundry rooms. The standard layout has a stack right off the dining area if I remember right in what most likely used to be a hall closet. The “amenities” are nothing great, yes there is a pool, no it is not huge. Location wise the complex is right there at Nobel near the 5. Parking wise most all of the units have detached garages for parking.
It will be interesting to see how low they go. The lowest price I see is unit 1203 at 319k (7130) and then 7180 unit 5312 for 325. Since they will be short sales it will be up to the lender. I doubt they would take 259 but it never hurts to ask.
Craigs is not bad for rental figures, I found it to be more accurate then people have portrayed it to be but I guess that is me. I always advise any future landlords to take a 5-10% margin into account for safety. If this is a home not a rental for you I would pass as the entire complex has a very apartment type feeling.
ParticipantCashflow I hear ya… there are parts of Poway that have been darn sticky… there are some large swaths of it though that have come down… Just hang in there and be patient… you may have to wait a bit longer for Green Valley but if you got the time it will get there…
tg I have about very few hours per week when kids are down, and I am not doing some kind of work related to engineering or real estate so I gotta take what I can get… luckily I got a comrade to ride with me so it worked out…hey a trip to the hospital may have done you good… nothing wrong with nurses right? (my apologies to all the female posters for being lewd)
Hopefully next spring, (actually I think summer) will be a realization by the masses that this is for real and getting out by pricing right will be mandatory. Depends on how this credit crunch things go and such but I really don’t see how it cannot happen…
SD Realtor
-
AuthorPosts
