[Steve Beebo]

5-10% growth? Hasn’t Microsoft’s stock price dropped by 50% since January of 2000?

sdr – 15 cent per share basis? That means you bought in around 1986 or so. Who heard of Microsoft in the mid-80’s, unless you were an employee? I sure didn’t, and I lived in Washington state until 1987. If you really did buy at 15 cents I have to congratulate you, but that’s kind of incredible.

[Steve Beebo]

I bought some Microsoft in the mid-1990’s for around $5-6, and I sold it way too early, at less than $20 a few years later. I wish I would have kept it until it got up to the mid to high 50’s. But now it’s back to $30.

sdr – you should have sold at $57-58 in the late 1990’s, bought AOL, re-sold it two years later, and bought Google – you could be a billionaire now.

[Steve Beebo]

sdrealtor – $170,000 gain in two months? I don't know about that. In one year, maybe.

 

From 1990 to 1998 Microsoft was spectacular, but not too great since then:

http://download.microsoft.com/download/d/a/7/da7e8eca-4410-4475-a211-03327408b655/msftpricehist.xls

[Steve Beebo]

It might be a good idea, but only if they don’t run their credit cards right back to $25,000 again.

[Steve Beebo]

I don’t believe that this will happen, but if resale median prices drop 7% in both 2007 and 2008, making a three year drop of around 20%, then the number of foreclosures will be astronomical, and the market could take 10 years to recover.

[Steve Beebo]

It could happen with some lenders. But every lender is so different. I’ve heard anecdotally that certain banks are much more willing to negotiate in short sales right now, and some don’t seem to want to negotiate at all, even if it would be in their best interest to do so.

Don’t assume that banks will know how to manage their inventory of REOs. I remember from 1991 to 1995, that some banks were very poor managers of their new “assets”. Some didn’t have the right people in place to deal with their foreclosures. There was one bank called Northeast Savings, (no longer in business), that had a huge inventory of REOs in Southern California that they couldn’t unload. They ended up doing bulk sales to investor groups at something like 50 cents on the dollar.

[Steve Beebo]

SD Realtor:

You make good points about the number of expired, cancelled, and withdrawn listings. I'm sure it's not easy to get anything sold right now.  I do still think that median prices of resale homes, while not perfect, are the best judge of the market.   Also, since there is a 2-3 month lag in reporting the statistic, I will concede that things have gotten slightly worse in the last three months.

But CNN Money says that prices in San Diego will only go down 3.3% in 2007, and 1.2% in 2008.   There are a lot of homeowners, (including me), that will be very happy if that's as bad as it gets.   I'm not as pessimistic about prices as most on this forum, but I'm not quite as optimistic as CNN. 

http://money.cnn.com/popups/2006/fortune/invguide_realestate/4.html

[Steve Beebo]

BikeRider –

To do an appraisal in an area and time when prices are falling is not difficult at all. I think it’s easier than appraising is a rapidly increasing market. You have to consider the prices of current active listings, and make sure you don’t value a property to their level, no matter what properties closed at 2, 4, or 6 months ago.

Whether prices go down 2%, 6%, or 10% in this area over the next year isn’t my concern – I’m just reporting what I find in the current market. It’s up to the lender how much they want to lend. If they think, say, that prices will go down 5% in an area over the next year, you wouldn’t think they would make 100% loans – but there are still a lot of 100% loans being done right now.

[Steve Beebo]

23109VC –

What is the age and size of the house you’re in? The reason I am asking is that I did an appraisal on a new house a couple of days ago, in a development called Stratton Point at French Valley. It may be a little farther out than your location, but this was a new house of 3300 s.f., that’s selling for about $430,000, with $10,000 in builder concessions. This tract has been open for over a year, and of 103 homes planned, 51 have been released for sale, with 36 closed or in escrow.

I would agree with Powayseller that prices in Murrietta / Temecula are likely to fall more than San Diego County. It seems like there are an awful lot of resales of newer homes on the market right now, and I would guess that the rate of foreclosures there will be a lot higher than SD County. For someone like you that’s currently renting, I can’t see buying there now or in the new future.

The positive things I see there are that there is still a ton of commercial and retail construction, so population and retail job growth, (although not high-paying), may continue to increase. Also, builders have slowed down home construction considerably to match the slow demand.

[Steve Beebo]

In a few years buying a duplex may be a great idea.

Another way to set yourself up for retirement is to keep paying down the mortgage on your existing home, keep your low property tax basis from the mid-1990’s, and have no house or rent payment when you’re retired.

[Steve Beebo]

sdcellar – I do agree that a decline is underway, and is going to continue for at least the next year, and probably longer, it’s just that I do not see the majority of homes as having already lost 10/15/20% in value that some have claimed recently on this forum.

What I am seeing is that there are large variations in price changes over the last year, depending on neighborhood and price range. There are a lot of homes, and a lot of areas, that have seen little or no declines at all up to this point. There are other homes and submarkets that have lost 20% in value.

The worst areas I have seen recently are San Elijo Hills and 4S Ranch, where entire areas of homes bought in 2004 or 2005 have lost $100,000 or more in value in the past year, and some condominiums, either conversions, or older condos in areas in which there are a lot of competing conversions. Some of these properties have lost 20% or more in value. But I have also seen condos that have lost no value up to this point.

My point in starting this thread was to show that the average size of home sales has not really changed at all in the past several years, and to also offer my opinion that the drop in median home prices of approximately 5% in the past year mirrors what I am seeing, on average.

sdrealtor – Here is a list of homes that sold in the past several years, and all resold this month for higher prices. Enjoy!!

1646 Tennis Match Encinitas 6-03 499K 12-06 627K

1117 Lemon El Cajon 10-04 310K 12-06 389K

4503 Sierra Morena Carlsbad 7-03 440K 12-06 509K

2876 Vista Acedra Carlsbad 1-04 800K 12-06 905K

9276 Birch Spring Valley 11-04 475K 12-06 640K

6151 Veemac La Mesa 6-04 398K 12-06 REO 410K

2407 Sweet Sage Chula Vista 3-05 726K 12-06 820K

1586 Piedmont Chula Vista 3-04 455K 12-06 540K

717 Esla Chula Vista 4-04 530K 12-06 595K

2524 Camino Narciso Chula Vista 4-04 720K 12-06 775K

Granted, these homeowners probably made little or no profit after selling costs – I’m just trying to demonstrate that not all homes have already had drastic price drops.

[Steve Beebo]

Jim –

Yes, I was referring to the house at 1721 Tara Way – have you seen the inside of this one?

For other peoples’ info, this house was purchased new 7-05 for $861,000, with 100% combined financing. It was originally listed for sale by the lender 2.5 months ago for $770,000, reduced now to $696,000. So the lender is going to lose a minimum of $200,000. I would think it would sell for close to the current list price based on other very recent sales in the area, but there are no takers yet.

[Steve Beebo]

Powayseller –

If you don’t think I’m correct, let me know why you think so. You are an intelligent person, so I will at least read what you say and give it thoughtful consideration. But don’t say that the median prices as reported are lagging by one to two years, because that is incorrect.

Median resale prices as reported in the newspaper every month are lagging, but only by 2-3 months. The UT reports the figure for the previous month’s closed sales. It’s now the middle of December, so these sales are from closings in November. Let’s say the average close date is November 15. But the sale that closed Nov. 15 probably went into escrow about 45 days ago on average, say on Oct. 1. So the median price that is reported this week, on average, went into escrow on October 1, which is 2.5 months ago. That is the only lag in the statistic. The UT compares the November figure to last month, and to last November.

sdrealtor – For the umpteenth time, you have revealed your lack of class, and your general lack of real estate knowledge. You think there is a $13,000 difference between a typical home of 2025 s.f. and a home of 1981 s.f.? (First of all, 2025 minus 1981 is 44, not 43, but I’ll let that slide. Also, the current median resale price of $540,000 divided by 2025 s.f. is $267 per s.f., not $300 per s.f. as you claim. I’ll even let that slide.) But Momma must have scooped you an extra helping of DUMB last night at the supper table.

Consider a typical median priced home of $540,000, with a typical size of +/- 2000 s.f., in a typical San Diego neighborhood, let’s say in Clairemont, or San Carlos, or Mira Mesa. Let’s say you are trying to evaluate what this house is worth, compared to a nearly identical house across the street that is 44 s.f. smaller or larger. Are you going to conclude that the house across the street is worth $11,748 more or less? (44 s.f. x $267) If you are, you are even more ignorant than I thought. Remember, the figure of $267 per s.f. includes the lot value, Einstein, which might be $250,000 to $350,000. The lot value is the same for an identical lot – it makes no difference if the house is 1700 s.f. or 2500 s.f. A knowledgable realtor, appraiser, or lay person is going to know that the only difference between these two homes is 44 s.f. times the depreciated current value of the living area size, probably in the range of $50 to $70 per s.f. of living area, depending on whether this is a newer or older home. So the difference in value between these two homes is going to be around $2500, not $13,000.

And sdrealtor, I would think that even you would have realized that the average or median size of resale homes in San Diego County goes up a little bit every year, for three main reasons:

1.) Thousands of homeowners add onto their homes every year, and none are made smaller.

2.) Every year, hundreds and hundreds of smaller houses are torn down to make way for very large houses.

3.) New homes built in San Diego County are larger than 2000 s.f. on average, and although new homes are not counted in the resale home prices, every year thousands of newer homes are added to the list of resale homes as they resell for their first time. Some of these homes were built in 1985, some in 1995, and some in 2005, but on average, they are larger than 2000 s.f.

So the average size of a resale house goes up slightly every year. If you don’t believe me, check with the Assessor’s office, or even with the real estate agent in the adjacent cubicle.

[Steve Beebo]

The listing was withdrawn from the MLS 11-13-06, with a last price of $740,000. The listing indicates that the property is temporarily off the market, but the agent may still be willing to show the property to interested parties.

[Steve Beebo]

sdr –

If, as I think you believe, that the major price decreases for typical homes are still to occur, I really don’t see how in good conscience you can let any of your non “very high end clients” trade up at all. I can see you having them trade down to a lesser-priced home, or having them sell their properties and renting for a few years. But if they trade up, then in your mind aren’t you dooming them to lose more money?

If they own a $500,000 property that declines 20% they lose $100,000, but in an $800,000 home they could lose $160,000. Where are the morals and ethics, and what about the fiduciary duty to your clients?

[Author]

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