[sdcellar]

sdcellar

You’re an idiot. Mello-Roos is typically not tax deductible, so the marginal tax benefit in the original example completely disappears.

Purchase price: $800,000
Down Payment: $400,000
Loan Amount: $400,000
Interest Rate: 6.5%
Tax Rate: 1.0%
Mello-Roos Rate: 0.5%
Fed Tax Rate: 25%
State Tax Rate: 8%

Interest Payment: $2,166.67
Property Tax: $1,000.00
(Originally stated) Tax Benefit: $1,045.00
Revised Tax Benefit: $935

and Chrispy, I’ve been meaning to mention that it’s situations like your landlord that piss me off. Thanks for the perfect example.

[sdcellar]

Yeah, I agree with all of the above as well, but wonder what the margins are for the projects here in San Diego.

Difficult to tell from the national numbers, but for whatever reason I suspect the margins aren’t as high as you’d think (although they must be higher, mustn’t they?)

Getting local figures for national builders seems difficult. Maybe if we could get figures for more local builders (like Davidson and I don’t know who else)?

I don’t think Davidson is a public company though…

[sdcellar]

PS, it’s possible that this earlier article makes the same mistake. Take that as a compliment!

To get to the end of this, I tried to track down something that actually came from Cagan’s mouth or pen and one of the things I found was an October 28, 2005 paper he wrote. I’d say I put little credibility in what Cagan has to say whether he means “at risk” or “expected”.

Are There Foreclosures in Your Future?
In the hot coastal and cyclical areas, foreclosures are now few, and have a small impact on market conditions. Are foreclosures likely to return soon to these markets in large numbers? While there may be local exceptions, on an overall basis the answer is “no” for two reasons.

…..

Therefore, I do not expect foreclosures in significant numbers for years.

If you’re interested

I no longer care what Cagan meant.

[sdcellar]

Expected and risk do not mean the same thing at all. Take a look at the now unfortunately cross-posted Critique the analysis, not the person.

sdrebear chose to post the definition of “expect” and if you read both definitions, you’ll see that risk and expectations are very different things.

You see the word certain in the definition for expect, whereas you’ll find nothing like this in the definition of risk. Sure, expectations aren’t always met, but they do imply a much higher degree of realization of the stated outcome.

and lamoneyguy, you are correct, PS never said certainly and I was mistaken to state that (sorry PS!). I think we do agree about the difference in the level of certainty between risk and expectations however.

It’s interesting to note that Cagen never used the word expect in his article with regard to the number of defaults because he likely understands the important distinction between the two.

I’m not trying to nit, and I’m not trying to pick on anyone, but I understand where people are coming from on this issue. I, and I’m sure many others, read it as ~1.5 million loans will default because of the word “expect”. Had the title read “risk”, it probably would have been taken as anywhere from 146,000 to 500,000 or so.

[sdcellar]

sdrebear

Actually, you expect to be stopped at three traffic lights. You are at risk of being stopped at all ten. Think about it next time your running late and the lights don’t go your way.

awww…. Somebody posted the same thing. Oh well…

[sdcellar]

Main Entry: risk
Pronunciation: ‘risk
Function: noun
Etymology: French risque, from Italian risco
1 : possibility of loss or injury : PERIL
2 : someone or something that creates or suggests a hazard
3 a : the chance of loss or the perils to the subject matter of an insurance contract; also : the degree of probability of such loss b : a person or thing that is a specified hazard to an insurer “a poor risk for insurance” c : an insurance hazard from a specified cause or source “war risk”
4 : the chance that an investment (as a stock or commodity) will lose value

Possibility, chance, degree of probability. Nowhere does it say certainty.

[sdcellar]

I like all you guys, but that would not be a worthwhile exercise.

[sdcellar]

Rents never go down…

Actually, I don’t think that has been or will necessarily continue to be the case, either here in San Diego or elsewhere.

Following this thread, I can see that apartment rents are on the rise. But, with the current condo glut, I wouldn’t be tremendously surprised to see a reversal as large numbers of these unsold condos get returned to rental market inventory. I think you’ll see the same thing with homes that people can’t afford (I certainly am now).

While the owning over the long haul theory certainly has merit, it happily ignores the issue of buying overpriced assets. Waiting can be a very prudent decision and could definitely mean the difference between a house being worth significantly more than you paid for it and probably significantly more.

Also, I don’t think anybody that might be in the market for a home right now would be saying thanks to Proposition 13.

[sdcellar]

They’ll show you the options before you sign a contract, you just have to ask the sales associate. I’m sure some are tougher about it than others, but I’m sure you can get it if you insist.

I’m not surprised they refused you at the design center though.

Also, the options they’ll show you are strictly for builder options, which is pretty much anything you can do or add to the house with the notable exception of flooring, window coverings, and most landscaping. They’re not trying to do anything devious by keeping those separate, it’s more a matter of too many choices. I’m sure you could get prices for those as well before signing a contract (or at least make it a contingency).

[sdcellar]

I’ve read several comments regarding the increases in rents and all I can say is it must have been _great_ before. We’ve been actively looking and we’ve seen plenty of nice 3- or 4-bedroom houses for $2000-$2500 a month. If you have to live in a “million dollar home” you can for $3000 a month.

[sdcellar]

Everything I’m tracking is SFH. To me, the reduction in condos is a given.

Regarding the $20k increase by Centex, I’d say that’s a clever move, but it’s clearly a psychological play. Even when prices are going down, they want to try to create the illusion of urgency. I expect they’ll be reducing prices around October 16th…

As far as Carmel Valley is concerned, I think what you’re seeing is that developments that are nearing completion are doing the best they can to hold prices (and instead offer steep incentives). Part of this probably has to do with the appearances they want to maintain with all those who bought in earlier phases. Don’t kid yourself that CV isn’t overpriced as well. $900k and higher for 2500-2700 square feet is a hefty premium for the illusion of coastal proximity. It ain’t Del Mar. (and no offense intended to those who live there, it’s nice, just has it’s place on the location food chain and the newer stuff is farther inland. I wouldn’t mind living there if the price was right). 4S is more like $700k-$850k and larger homes (as low as $606 if you include the smallest SFH), so it’s all relative.

And all of them have more to come down…

[sdcellar]

Buyers who hire agents should also be looking around on their own also.

Absolutely, especially with this new fangled internet stuff.

Even though we were working with an agent for the last house we bought, we were the ones who actually found the property. It wasn’t a matter of steering us clear of FSBOs, we were just pretty picky, so looking on our own just helped the cause.

[sdcellar]

And, oh yeah, I still wouldn’t call these “Deals”. They’re comin’ down more…

[sdcellar]

Developers in 4S Ranch seem to be dropping their prices pretty rapidly.

Fieldstone just started selling Pienza which appear to be the exact same homes as SilverCrest which just finished selling this summer (barely). They’re priced $100,000 less.

John Laing dropped the prices of their Silhouettes between $40 and $60K depending on the model since they first opened in April or so. They built the first nine and these two have been sitting around ever since the opening.

They’ve pretty much completely stopped building any more of those while they try to finish Rosemary Lane. These five have been reduced and been around a while. Better hurry, some close last month!

Brand new developments from K. Hovnanian (Evergreen), William Lyon (Maybeck), and Buie Communities (Chanteclair) all offer more square footage and lower prices than what was available last year and early 2006.

Most all of them are likely offering some incentives as well, but the trend seems to be actually lowering the prices.

[sdcellar]

I’ll defer to the realtors on this, but I think dropping your price in a consistent manner like this is a bad idea.

If I were interested in the place, why wouldn’t I just wait another week (and another, and another…)

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