[Steve Beebo]

San Elijo Hills is definitely a bad market right now. Resale houses in newer tracts, where the builder still has inventory to sell next year, are going to get hammered vs. established areas without new housing available.

[Steve Beebo]

Chrispy and VRudny –

The price of any one particular house in Del Mar did not go down by 30% in the past year. You can’t use a small sample size in one zip code to gauge how prices have done in the past year.

If you don’t agree with me, you’re going to have to explain how condos in Del Mar went up 83% in the past year, SFRs in Poway went up 18%, and SFRs in Solana Beach went up 58%. I think Powayseller can concur that prices did not really go up in Poway in the past year. Those numbers are all off the same Dataquick chart.

I don’t think that median prices in one zip code over 12 months is even that accurate – there still isn’t a large enough sample size to be statistically accurate. Median prices for all of the SFRs in the County is really the only accurate statistic.

[Steve Beebo]

If you think prices are going to drop – why would you do a lease option instead of just a lease? It makes no sense to me. When a lease option is done, don’t the parties typically agree on a purchase price upfront, that can later be exercised or not at the option of the buyer?

[Steve Beebo]

sdrealtor –

What I read is that overall home prices are off by 2.5% in the past 12 months. The Dataquick sales data shows East County median prices up slightly, Central SD down slightly, and North County prices flat since last year.

Month to month sales can vary a lot – but if you want to measure everything in the future off of one month, (11-05) go ahead, but it’s not going to be terribly accurate. In my opinion, the best way to measure the overall market is to report the median price of all of the SFR sales in a calendar year, and compare against the median price of all sales from another calendar year.

Also, when the UT lumps condos in with SFRs as they did in their on-line article, I would guess that all of the condo coversions are depressing the median price slightly when comparing against prior years.

[Steve Beebo]

At the time the first loan is made, they care about everything having to do with the borrower. After the first loan is made, whether or not a homeowner obtains a second loan isn’t their business. They may prefer that another loan isn’t made, so that the owner may have more equity and less chance of bailing out, but they can’t do anything about it.

[Steve Beebo]

The low inventory mark was in the Spring of 2004, but that in no way means that point was the top of the resale market. In almost all areas, prices were substantially higher in the summer of 2005 than they were in the summer of 2004, even though there were less cases of multiple offers on listings. Although the inventory did go from 3K, to 6k, to 12k, the 12k was still a fairly low inventory level, and prices continued to climb even as inventory went from extremely low, to low, to normal levels.

There are some areas that have seen fairly large price declines over the past 6-9 months, including some new home communities with lots of homes left to build, but many areas have held fairly steady up until now.

This is my prediction: The low point in the market will be sometime in 2008, and the median SFR price in the County, which has held mostly steady over the past year, will drop no more than 15%, and possibly by only 10%, then stay level for 3 years, then regain the loss over the following three years. That means 10 years with no overall gain, not even keeping up with inflation. Houses will be for living in, not for investment – those days are long gone.

For condos, I think the median resale price will drop more than SFRs, but only because of the thousands of conversion which have hit the market, and which continue to hit the market. Just take a drive around places like North Park, University Heights, Hillcrest, Escondido, and El Cajon. They are still trying to sell them everywhere, and they’re going to really hit the median price, because they are almost all selling below the existing median condo price. Many established condos which were not conversions may not drop by more than SFR prices, but the median price will be less.

[Steve Beebo]

I don’t think the owner of the first mortgage cares that much if there is additonal financing added later. First of all, they can’t do anything about it, and they’re probably not going to know about it anyway. And some, (that’s some – I’m not saying most), some people who take out second mortgages may use it for home improvement, or landscaping and pools on new houses, which may (that’s may) increase the value of the property.

[Steve Beebo]

I think everyone can agree that prices in SD are going thru a downward trend – the difference of opinion is how much will prices drop from their peak.

In my opinion, prices aren’t going to drop as much as most people on this forum believe. In fact, I don’t think there are going to be that many people who time the market correctly, selling at or near the peak, who will wait 2-5 years, and buy at a low enough level to have justified renting for several years. Let’s face it, if you sell your house now, you’ve already missed the peak. Most neighborhoods seem to have peaked in the summer to fall of 2005.

Let’s say you sold in the summer of 2004. You may have missed out on a lot of appreciation over the 12 months up to the summer of 2005. Some areas jumped 15%-plus during that time. If prices drop 20-25% from the summer of 2005 until the bottom of the market, and you did miss out on the additional appreciation, you really may not have made that great of a move, considering an 8% cost to sell your house, and the cost of renting and moving. On the other hand, if you sold your house at or near the top of the market in your area, you’ll probably have made a good move, even if prices don’t take a huge dive.

I’m not criticizing anyone in particular who sold in 2004. My wife and I sold an investment property in 2004, and paid the capital gains – and looking back we’re glad we did.

[Steve Beebo]

“Stephen G. Bishop” and Bill Rose, who resigned his appraiser trainee license twice, have the same address.

http://bishopfoundation.tripod.com/

Record 27 First Name Last Name MI Full Name
William Rose J WILLIAM J. ROSE
Xana Group, LLP 858-344-8475
1338 Knoxville Street San Diego CA 92110 San Diego
App. Type Lic. Lev. Lic. Num. Lic. Status Date Issued Date
Initial AT 024353 Resigned 01/09/2004 01/08/2006

There is a web site called Appraisers Forum,

http://appraisersforum.com

that is used by real appraisers, and this person is regarded as the biggest joke of all time to ever post on the site.

[Steve Beebo]

Bugs is correct in that from this point forward, WaMu will be getting, on average, poor quality appraisals and also poor quality reviews of appraisals.

They did have very good appraisal reviewers who knew their individual markets very well – but that’s gone now. In the short run, this move will save them some money by paying low fees for less than average quality appraisals, but in the long term, it can only cost them money as the quality of their loan portfolio will suffer.

[Steve Beebo]

“A $5000 sale was quickly followed by a $10,000 transfer of the same property, and in three months a price of $50,000 was reached.”

Those people back in the 1880’s were real idiots, weren’t they? I think if my house had gone up in value by 10 times in just three months, I would have sold. I guess we’re just a lot smarter now.

[Steve Beebo]

I’m no expert in shorting stocks, or even in the stock market. I have a brother who has an Edward Jones office, and he has handled mutual funds for me for 15+ years that have done great – I won’t pull any money out of stock mutual funds. But shorting homebuilder stocks doesn’t sound like a good idea right now – maybe it would have been a great idea 6-12 months ago. I think the market has most likely already factored in the problems they will have in the next couple of years.

[Steve Beebo]

I’m not suggesting that Washington Mutual is going to fail, but they sure are going to have to restate their earnings at some point in the future, because not all of the income they are counting will actually be received:

http://www.energybulletin.net/19420.html

“At the end of 2003, 1% of Washington Mutual’s (WaMu’s) option ARM (adjustable rate mortgage) loans were in negative amortization (the borrowers were borrowing more money each month, not even paying enough to pay the monthly interest charge in full). At the end of 2005, 47% of WaMu’s option ARM’s were in negative amortization (55% by value of the loans).

WaMu is booking these negative amortization payments as earnings. In prior times, loans where borrowers were making less than the interest payments would be classified as non-performing loans. In January-March, 2005, WaMu booked $25 million in earnings from negative amortization payments. In the same period in 2006, WaMu booked $203 million in earnings from these payments. These borrowers are increasing their mortgage balances as property values have started falling, so the default risk on these loans is extremely high.”

[Steve Beebo]

TP:

The property you referenced on Amberly – it looks like a little bit of a fixer-upper to me – but if you went inside it you would know better. It was listed as a trustees’ sale, with “lots of potential”. It seems that the agent / sellers were absolute idiots when they tried to list it at $600,000, or even anywhere in the 500’s. The one that sold recently at $515,000 on the same street was the same two bedroom model, and it looks to me from the pictures on the MLS that it had a lot more market appeal.

The sale price at $415,000 looks to be well below the current market value. This property is in the San Carlos / Del Cerro area, and there are recent sales and pending sales in the inferior and nearby Allied Gardens area in the mid 400’s.

Is it possible that there was something seriosly wrong with the property? There are some properties nearby with cracked slab problems, especially on Margerum Ave.

[Steve Beebo]

PerryChase – well said.

As far as jobs losses go, I would expect at least 1/3 of real estate agents, loan officers, appraisers, escrow company employees, home inspectors, etc. will be doing some other job in the next two years – there just isn’t enough work for everybody in these fields with the real estate slowdown. I have no idea what they will be doing, though.

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