[temeculaguy]

I don’t think they care much about anyone already moved in but lowering advertised prices kills the pipeline deals (people with deposits down, yet haven’t closed escrow). One builder I visited has all but done away with posting prices, all deals are done in private, they don’t give you a price sheet and they are “accepting offers.” Even the salesman stops talking numbers when people walk in the office, like it’s a drug deal going down. At first it looked shady, worse than buying a car but now I get it. Anyone who has a deposit down doesn’t see what their future neighbors are paying, they don’t see the price reduction and they don’t pull out or demand the same discount. Even if I don’t buy there i am going to crash the first few block parties just to see if any fights break out.

[temeculaguy]

I don’t think they care much about anyone already moved in but lowering advertised prices kills the pipeline deals (people with deposits down, yet haven’t closed escrow). One builder I visited has all but done away with posting prices, all deals are done in private, they don’t give you a price sheet and they are “accepting offers.” Even the salesman stops talking numbers when people walk in the office, like it’s a drug deal going down. At first it looked shady, worse than buying a car but now I get it. Anyone who has a deposit down doesn’t see what their future neighbors are paying, they don’t see the price reduction and they don’t pull out or demand the same discount. Even if I don’t buy there i am going to crash the first few block parties just to see if any fights break out.

[temeculaguy]

I don’t think they care much about anyone already moved in but lowering advertised prices kills the pipeline deals (people with deposits down, yet haven’t closed escrow). One builder I visited has all but done away with posting prices, all deals are done in private, they don’t give you a price sheet and they are “accepting offers.” Even the salesman stops talking numbers when people walk in the office, like it’s a drug deal going down. At first it looked shady, worse than buying a car but now I get it. Anyone who has a deposit down doesn’t see what their future neighbors are paying, they don’t see the price reduction and they don’t pull out or demand the same discount. Even if I don’t buy there i am going to crash the first few block parties just to see if any fights break out.

[temeculaguy]

Bugs, I’ve noticed the builders are more inclined to give upgrades and closing costs (only if you use their lender) rather than a price reduction. Are they trying to prop the value or is it because the upgrades don’t really cost them that much because of the mark up and using their lender isn’t always the best deal, tricksies or holding up the comps?

[temeculaguy]

Bugs, I’ve noticed the builders are more inclined to give upgrades and closing costs (only if you use their lender) rather than a price reduction. Are they trying to prop the value or is it because the upgrades don’t really cost them that much because of the mark up and using their lender isn’t always the best deal, tricksies or holding up the comps?

[temeculaguy]

Bugs, I’ve noticed the builders are more inclined to give upgrades and closing costs (only if you use their lender) rather than a price reduction. Are they trying to prop the value or is it because the upgrades don’t really cost them that much because of the mark up and using their lender isn’t always the best deal, tricksies or holding up the comps?

[temeculaguy]

Thanks for the update snail, glad to see that it made sense, since the other listings are in the 450-600 range that is going to sting. I wonder if anyone could actually get a loan even if a bigger fool came along and bought one of the other ones? Would an appraiser ignore the new comp since there is only one or does it become the new benchmark?

[temeculaguy]

Thanks for the update snail, glad to see that it made sense, since the other listings are in the 450-600 range that is going to sting. I wonder if anyone could actually get a loan even if a bigger fool came along and bought one of the other ones? Would an appraiser ignore the new comp since there is only one or does it become the new benchmark?

[temeculaguy]

Thanks for the update snail, glad to see that it made sense, since the other listings are in the 450-600 range that is going to sting. I wonder if anyone could actually get a loan even if a bigger fool came along and bought one of the other ones? Would an appraiser ignore the new comp since there is only one or does it become the new benchmark?

[temeculaguy]

EX-SD, Thanks for the debate, when it’s all said and done the final result will probably end up somewhere in between our two opinions. There will still be Jumbo’s, people with 200k incomes will find them and 417K + a 20% down payment puts the conforming prices at 500k so we may see stuff in the 510-600 range feel the pull toward 500 where things sell.

[temeculaguy]

EX-SD, Thanks for the debate, when it’s all said and done the final result will probably end up somewhere in between our two opinions. There will still be Jumbo’s, people with 200k incomes will find them and 417K + a 20% down payment puts the conforming prices at 500k so we may see stuff in the 510-600 range feel the pull toward 500 where things sell.

[temeculaguy]

EX-SD, Thanks for the debate, when it’s all said and done the final result will probably end up somewhere in between our two opinions. There will still be Jumbo’s, people with 200k incomes will find them and 417K + a 20% down payment puts the conforming prices at 500k so we may see stuff in the 510-600 range feel the pull toward 500 where things sell.

[temeculaguy]

Now see EX-SD that was what I was looking for, your argument behind the statement. This way I can either agree with it, learn from it or punch holes in it, that’s how I roll. In this case I’ll do all three.

I’m with you on all the points about REO’s and arm resets, thats the agree part. I also agree that not buying in any of the bubble markets for a year or two is wise, maybe longer depending on the speed of the unwind.

I see that you are comparing 1985’s RB and Temecula to today so I get your perspective, I was drunk in a fraternity house in San Diego for most of those years and didn’t follow any markets until 1990, that’s the learn part. I’ll give you that perspective but we must analyze the market as it exists today, we can’t value the island of Manhatten based on the $24 purchase price in 1624, it’s a different place now and must be treated somewhat differently.

But the punch holes part is that a house being in California has always meant something and always will, it doesn’t mean the median should be three times what other states are but 50% to double is and will be warranted, we can go on all day about weather, social values, pretty women and the average tooth count, but I don’t want to. You can hate it but most of the planet still wants to be here, albeit for a more reasonable price. Everything between the coasts will only attract people if it is cheaper, if Cali drops to 1985 levels, the middle must follow suit and their 1985 levels which will still be 50% or more cheaper.

Demographics support a higher price (don’t take this as an argument for the current price) It is not 1985, 4-S’s zip code 92127 has a median household income over 80k and twice the national median, it’s college education rate is 250% higher than the national average. Even Temecula’s 92592 has a 75k median income and a 50% higher college education rate than the nation so the demographics support higher R/E support. The national median income is just over 40k and the national median home price is just over 5x that. That provides demographic support for 4-S at 400k at 5x and 560 at 7x, the historical range from boom to bust. And Temecula at 375K at 5x and 535 at 7x, commute and some quality of life issues will take 4-S higher and drive Temecula lower, but these numbers are for the average homes, not the top 10% as far as square footage go. This is why I think the 4-S house in question is safely valued at 500-700k, if the jumbo world never sorts itself out, the 500’s may happen. Temecula will overcorrect more and I think 250-400 will be it’s settle range but 2000 sq ft will be what you get for the bottom of the range prices, not 3700 sq ft for 250, other wise there will be 4 people left in Texas.

Lastly, mortgage lending will not end. Jumbos will pay a higher rate for a while and 0 down, 2/28’s and neg am will vanish, interest only may be a scarce option too. Fundamental 20% down, good credit, good debt ratio buyers will still get loans like they always have and they will still be the dominant pruchasers, sure 20% of the buyers may be eliminated but the other 80% will chug along and the real estate prices will settle in the 5x to 7x income range.

[temeculaguy]

Now see EX-SD that was what I was looking for, your argument behind the statement. This way I can either agree with it, learn from it or punch holes in it, that’s how I roll. In this case I’ll do all three.

I’m with you on all the points about REO’s and arm resets, thats the agree part. I also agree that not buying in any of the bubble markets for a year or two is wise, maybe longer depending on the speed of the unwind.

I see that you are comparing 1985’s RB and Temecula to today so I get your perspective, I was drunk in a fraternity house in San Diego for most of those years and didn’t follow any markets until 1990, that’s the learn part. I’ll give you that perspective but we must analyze the market as it exists today, we can’t value the island of Manhatten based on the $24 purchase price in 1624, it’s a different place now and must be treated somewhat differently.

But the punch holes part is that a house being in California has always meant something and always will, it doesn’t mean the median should be three times what other states are but 50% to double is and will be warranted, we can go on all day about weather, social values, pretty women and the average tooth count, but I don’t want to. You can hate it but most of the planet still wants to be here, albeit for a more reasonable price. Everything between the coasts will only attract people if it is cheaper, if Cali drops to 1985 levels, the middle must follow suit and their 1985 levels which will still be 50% or more cheaper.

Demographics support a higher price (don’t take this as an argument for the current price) It is not 1985, 4-S’s zip code 92127 has a median household income over 80k and twice the national median, it’s college education rate is 250% higher than the national average. Even Temecula’s 92592 has a 75k median income and a 50% higher college education rate than the nation so the demographics support higher R/E support. The national median income is just over 40k and the national median home price is just over 5x that. That provides demographic support for 4-S at 400k at 5x and 560 at 7x, the historical range from boom to bust. And Temecula at 375K at 5x and 535 at 7x, commute and some quality of life issues will take 4-S higher and drive Temecula lower, but these numbers are for the average homes, not the top 10% as far as square footage go. This is why I think the 4-S house in question is safely valued at 500-700k, if the jumbo world never sorts itself out, the 500’s may happen. Temecula will overcorrect more and I think 250-400 will be it’s settle range but 2000 sq ft will be what you get for the bottom of the range prices, not 3700 sq ft for 250, other wise there will be 4 people left in Texas.

Lastly, mortgage lending will not end. Jumbos will pay a higher rate for a while and 0 down, 2/28’s and neg am will vanish, interest only may be a scarce option too. Fundamental 20% down, good credit, good debt ratio buyers will still get loans like they always have and they will still be the dominant pruchasers, sure 20% of the buyers may be eliminated but the other 80% will chug along and the real estate prices will settle in the 5x to 7x income range.

[temeculaguy]

Now see EX-SD that was what I was looking for, your argument behind the statement. This way I can either agree with it, learn from it or punch holes in it, that’s how I roll. In this case I’ll do all three.

I’m with you on all the points about REO’s and arm resets, thats the agree part. I also agree that not buying in any of the bubble markets for a year or two is wise, maybe longer depending on the speed of the unwind.

I see that you are comparing 1985’s RB and Temecula to today so I get your perspective, I was drunk in a fraternity house in San Diego for most of those years and didn’t follow any markets until 1990, that’s the learn part. I’ll give you that perspective but we must analyze the market as it exists today, we can’t value the island of Manhatten based on the $24 purchase price in 1624, it’s a different place now and must be treated somewhat differently.

But the punch holes part is that a house being in California has always meant something and always will, it doesn’t mean the median should be three times what other states are but 50% to double is and will be warranted, we can go on all day about weather, social values, pretty women and the average tooth count, but I don’t want to. You can hate it but most of the planet still wants to be here, albeit for a more reasonable price. Everything between the coasts will only attract people if it is cheaper, if Cali drops to 1985 levels, the middle must follow suit and their 1985 levels which will still be 50% or more cheaper.

Demographics support a higher price (don’t take this as an argument for the current price) It is not 1985, 4-S’s zip code 92127 has a median household income over 80k and twice the national median, it’s college education rate is 250% higher than the national average. Even Temecula’s 92592 has a 75k median income and a 50% higher college education rate than the nation so the demographics support higher R/E support. The national median income is just over 40k and the national median home price is just over 5x that. That provides demographic support for 4-S at 400k at 5x and 560 at 7x, the historical range from boom to bust. And Temecula at 375K at 5x and 535 at 7x, commute and some quality of life issues will take 4-S higher and drive Temecula lower, but these numbers are for the average homes, not the top 10% as far as square footage go. This is why I think the 4-S house in question is safely valued at 500-700k, if the jumbo world never sorts itself out, the 500’s may happen. Temecula will overcorrect more and I think 250-400 will be it’s settle range but 2000 sq ft will be what you get for the bottom of the range prices, not 3700 sq ft for 250, other wise there will be 4 people left in Texas.

Lastly, mortgage lending will not end. Jumbos will pay a higher rate for a while and 0 down, 2/28’s and neg am will vanish, interest only may be a scarce option too. Fundamental 20% down, good credit, good debt ratio buyers will still get loans like they always have and they will still be the dominant pruchasers, sure 20% of the buyers may be eliminated but the other 80% will chug along and the real estate prices will settle in the 5x to 7x income range.

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