My prediction: low rates and My prediction: low rates and low inventory are offset by a 2nd covid wave and recession, prices end year up 2% year over year.
I am still a long term bull: rents, income, population growth, very low new construction all point to long term gains. I also believe low rates will continue even after the recession ends. So I could see 2021 being a 8 to 14% gain year.
The wave of refis and people whose mortgages have 25 years left at 4% saving $500 a month by replacing it with a 30 year at 3% will further reduce the desire of people to sell.
The majority of new SFH construction now in San Diego is in the Otay or Escondido areas, very distant locations.
Moving over to this new Moving over to this new thread its update time. In addition to data based updates I will try to conitnue with an anecdote from the field.
New listings dropped back down to the low level of 2 weeks ago. Not good news for homebuyers.
Pendings dropped also but not nearly as much and its was another net loss of -7 homes on the market. That makes four connsecutive weeks of falling inventory around my 3 zips.
New homes getting listed are seeing hundreds if not over a 1000 views on Zillow day one. I saw a house listed in South Carlsbad 92009 get around 1500 views the first 24 hours. Its like shooting fish in a barrel for sellers out there now.
So what isnt changing? Price reductions are minimal and closings are still sluggish from a COVID hangover due to RE shut down in Late March to mid April but should start passing soon.
As I predicted this week my long awaited UT article came out with a headline screaming sales were down over 40% y-o-y! Im sure some folks stopped there to rejoice. It was just irresponsible click bait as anyone who read the article was treated to the truth. Inventory is way down, multples offers abound and prices are trending up.
Here’s an anecdote from the field. Clients looking in 4S had nothing new to look at last weekend while they have had 2 or 3 each of the past few weeks. There was one sitting on the market overpriced that we were waiting to get reduced. It was priced well above 4 nicer homes that sold with multiple offers. This week it got reduced to the top end of the range of those 4 homes. That was still too high but they had no competition. Those 4 will all close above asking and higher than this one as they should but not much higher. It ended up with 3 offers and should close about $50K above what it should relative to those 4 and the comps. The agent was an grizzled old vet like I have become and was willing to talk openly with me. He knew it was high and knew he was taking advantage of the situation. The house had some real unfixable flaws that would impact it more in a down market. Cant say Im sad my clients didnt get it as I wouldnt want to be listing agent on it in a tougher market. I always prefer my clients get the better homes even if they are slightly more as they hold their value better in down markets. You never know what the market will be like when you are selling. It is good to have a better house with less flaws if its not a great market. Think of that as downside protection.
And gzz? Im gonna go against you and say 5%+ y-o-y. I have a sense based upon what Ive seen go into escrow. And there are still tons of buyers chasing homes out there.
Thanks for the report SDR. My Thanks for the report SDR. My forecast assumes the 2nd wave of Covid gets worse and causes further economic damage. I certainly hope I am wrong, and I’ve been too bearish thus far.
I looked at some downtown buildings for the first time in a while, and noticed a fair number of listings are still at or a little below peak 05 to 07 prices.
That’s interesting as my zip 92107 has been above those prices for quite a while. Here’s one listed well below the 2005 price:
Downtown has gotten a steady Downtown has gotten a steady flow of new units. OB not so much. Downtown never boomed like other areas in SD and has always lagged in appreciation
New listings dropped back down a couple but basically unchanged and nowhere near what we need. More bad news for homebuyers.
Pendings popped up a bunch! A staggering net loss of -17 homes on the market. That makes five connsecutive weeks of falling inventory around my 3 zips and its getting worse.
Price reductionms minimal and mostly adjusting overpriced listing closer to market.
Closed sales bumped up around 60% over last week. Its the end of the month which usually leads to a bump but moreso the data pouring in from the rapid recovery we’ve seen the last 60 days.
Rates are hitting new lows almost daily and people want more space. Market is firing on all cylinders and my prediction of 5%+ y-o-y when we get to 12/31 is looking pessimistic.
Good news from the field is I got my clients in escrow on a beautiful home by identifying what I beleive to be a pricing flaw in the market between 4S Ranch and Del Sur. Used that to negotiate on both price and terms to my clients advantage in a way that I believe will pay off well in the long run. Only time will prove me right or wrong but I really like my odds.
One side note. Its has been nice to see more and more visits and posts by old timers on the forums the last week or so. The exorcism of all political ranting, all the time seems to be bearing green shoots. Keep at it!
See ya next week….
spj
4 years ago
The short term increase in The short term increase in value for detached homes seems to reflect:
– Stable or growth of high income roles in the region giving confidence and ability to move away from density
– Generally constrained supply as others have explored extensively
– Exceptionally constrained supply of homes containing granny flats or the ability to build them for adult children taking in their aging parents
The short term flat condo prices seems to reflect:
– Significant losses of low and middle income roles in the region. Anecdotally, my HOA has several units that are pandemic-length-of-time behind on their dues and the last time this happened was the 2008 recession. I think this is an important indicator to watch.
– Slowing of expansion by VRBO owners due to pandemic. Anecdotally, a multi-VRBO owner I know has used the pandemic to renovate his properties instead of expanding
I’m hopeful with the city’s proposed plan to build so much new housing, but long term I think there just isn’t enough land to support the detached demand which will lead to continued skyrocketing prices.
What this post reflects is What this post reflects is someone that’s already been kicked off this blog twice who should Just leave. You’ve been kicked off twice. Have some dignity Brian and just go away
spj wrote:The short term [quote=spj]The short term increase in value for detached homes seems to reflect:
– Stable or growth of high income roles in the region giving confidence and ability to move away from density
– Generally constrained supply as others have explored extensively
– Exceptionally constrained supply of homes containing granny flats or the ability to build them for adult children taking in their aging parents
The short term flat condo prices seems to reflect:
– Significant losses of low and middle income roles in the region. Anecdotally, my HOA has several units that are pandemic-length-of-time behind on their dues and the last time this happened was the 2008 recession. I think this is an important indicator to watch.
– Slowing of expansion by VRBO owners due to pandemic. Anecdotally, a multi-VRBO owner I know has used the pandemic to renovate his properties instead of expanding
I’m hopeful with the city’s proposed plan to build so much new housing, but long term I think there just isn’t enough land to support the detached demand which will lead to continued skyrocketing prices.[/quote]
Really BrianSD/FlyerInHi… Just two weeks from the second time ban…and you’re already trying to angle this into a city/high density housing versus suburbia slapfest again????
This post adds NOTHING to the data that is being posted. This post is nothing more than a regurgitation of all the opinionated city/hi density housing versus suburban housing slapfest in a failed subtle attempt to reenter this blog unnoticed. There’s no data, no sampling from the real world from actual housing sales/closes/etc, just the same anecdotal bullshit pulled out of one’s ass to support an agenda for combative and argumentative purposes only.
Nice 5 hour old handle, btw 🙂
For a moment, it was a nice two weeks because we started seeing a bunch of old timers posting good information again. Just look at the loan rate thread and all the people that started to trickle back.
All you old piggs that participated in this betting pool… I win. I said less than 3 weeks. You didn’t believe me. You all owe me lunch after covid 🙂
Agree with SPJ except the Agree with SPJ except the point about granny flat zoning. State is mandating allowing granny flats on all single family zones.
SD city has already passed the required reg, and any straggler suburbs that try to stop it are going to get hit with huge attorney fee bills on top of damages and injunctions. The state law is not ambiguous.
The YIMBY/renter/developer/construction union block is in the driver seat in Sacremento after about 50 years of anti-density/environmentalist domination. Fortunately for the latter, construction costs are very high still and that’s the big brake on development in SD. Skilled labor is expensive, from the construction to the design/legal/finance, so is losing the rental value of the potential tear down for years.
Some lots simply can’t have ADUs because of physical configuration issues, but I’d guess about 75% of lots over 5000sf you could add a granny flat or tiny house. The value gain however is minimal because you lose your nice back yard. You really need a flat 8000+ SF lot to have a 2nd unit and a nice back yard that’s bigger than a dog run.
In 92106/7, no examples of building of 2nd houses in the back yards of family zones where 2nd units are now allowed because of state mandate, however there’s a gradual trend on alley lots to replace the old 2-car garage with a nice new one with a 2/1 apartment on top. By gradual I mean about 10 a year between the two zips with 48k combined population.
The building of 2nd homes on lots that only had one is almost entirely on lots that were zoned for many decades as multifamily. One of the more common ways this happens is to declare the small existing 1-story home the granny flat and build a new 2-story one. Maybe about 6 of these happen a year. Even when multiple units are allowed by zoning, the granny flat regulation makes calling one of the units a ADU cheaper and easier to approve.
Ive got 11,000 sq ft pie Ive got 11,000 sq ft pie shaped lot with most of it in the back. It has a configuration that would not only accomadate a nice 2BR ADU but also splitting my backyard such that the existing house and the ADU could have nice private yards with sepoarate private access to each (one to right of house and one to left). Back when I bought this place I specifically bought it because of the lot. I was thinking pool that never got built not ADU so I cant take credit for having that much foresight. But in the immortal words of Sir-Mix-A-Lot….Baby Got Back!!
spj
4 years ago
Apologies,
I didn’t intend to Apologies,
I didn’t intend to restart an old controversial comment thread. I seem to have similar opinions to whomever Brian is, but I promise I am someone different who has come to these conclusions independently. Moving forward I will try to refrain from posting without data.
I’m loving the new ADU I’m loving the new ADU regulation. Time to sell condo and far flung areas and buy SFR with big lots with 1031. If only those one come on the market in the SW part of MM. there isn’t even 1 for sale right now.
an wrote:I’m loving the new [quote=an]I’m loving the new ADU regulation. Time to sell condo and far flung areas and buy SFR with big lots with 1031. If only those one come on the market in the SW part of MM. there isn’t even 1 for sale right now.[/quote]
Agree there is quite an opportunity. You can turn a sfr into a triplex. Just need the right spot to do it. Not sure I’d want that on my primary unless it was all family living there. It does redefine the multi generational living opportunity. Outside of space biggest issue is cost as they aren’t cheap to build.
sdrealtor wrote:Agree there [quote=sdrealtor]Agree there is quite an opportunity. You can turn a sfr into a triplex. Just need the right spot to do it. Not sure I’d want that on my primary unless it was all family living there. It does redefine the multi generational living opportunity. Outside of space biggest issue is cost as they aren’t cheap to build.[/quote]
Yep, the key is finding the right spot. Luckily, as a small time investor, I only need a few SFR. I agree that I wouldn’t do this to my primary residence, but would be great as an investment. Although the cost isn’t cheap, it’s still much cheaper than buying a 1/1 condo AND you don’t have to deal w/ HOA.
That was my thought exactly. That was my thought exactly. Great minds think alike. I figure I can build a very nice 2br/1 1/2 bath 1000 sq ft adu in my backyard for around $250k. A 1 br condo around here goes for $350ish with higher taxes and HOA. I’d only rent it to a friend or have family there with long term plan to live in it myself and rent out the main house. So I’d make it really nice
That doesn’t sound like too That doesn’t sound like too profitable a plan when you consider the value of your time, construction disruptions, and the decreased value of the main house which now shares a lot with an ADU.
A 2 on 1 for 1.3m will also be harder to sell than a SFH for 1.0m. The number of people who want to be landlords on the side just isn’t very high.
If there were a lot of profit in putting in 2nd units where zoning allowed them, you’d see flippers doing it. But I can’t think of a single instance of the many flips I’ve seen in 92106/7 where an ADU was added.
These two zips have long had mostly SFH areas zoned for multiple units. Conversion to multiple units usually involves a tear down rather than an addition.
When I talked to a developer about my underbuilt lot, he said it would be simpler to just tear down the existing house than work around it. The water and sewer hookups for example were fine for one house but not for 3 or 4.
One point in favor of ADUs is the various vacation rental rules tend to treat ADUs better than condos.
You’re only thinking in terms You’re only thinking in terms of your area and your situation. I’m exhausted after long day but I’ll update this later and explain why it could be bigly profitable and or advantageous
As I mentioned I think you As I mentioned I think you are looking at this through your eyes only.
1. This is more of an income play than an appreciation
2. Its a fallacy to view the main house as being depreciated. You dont sell them separately you would sell the package and the package would be more valuable.
Here are some examples. I’ll use my situation as I think about it all the time. Figure I spend $250K to add 2Br 1/2ba guest house.
I could rent it out all day for at least $2200/month right now. Thats about a 10 cap rate. A 1/1 around here is $350K minimum plus HOA plus higher taxes and rents around $1800. Much better return on this.
If I was closer to beach I could do vacation rentals. A client on a large lot built similar luxury unit down by beach over his garage at similar expense. He can get $400+ a night. Thats a 30 cap rate at 50% occupancy and likely much higher.
One of my kids could move into it and have their own space as a young adult in a beautiful community they grew up in but could not afford. Could give them reduced or free rent.
If i had elderly parents it would cost at least $350K and probably more for a condo they could live in. Higher taxes and HOA also. Here they can live out back independently for much less. People moving from most of the country to be near kids/grandkids have a tough time affording a nice place out here in a nice area. Most could afford to pay to have a nice ADU built and have a great place near family.
I could rent it out and pay it off in about 10 years with rental income. Then I could move into it (which is why Id build it really nice) and rent out the main house. Rent on my house is currently $4500 to 5000 and should be higher in 10+ years. I could live pretty nicely on $5K rental income plus $3K social security with no expenses and not have to touch any of my other investments.
My clients with the unit of the garage built it for themselves long term. They could live in it and rent out main house for close to $10K a month. Pretty sweet life and income as both will be paid off.
In 10 years one of my kids could move into paid off main house with low tax basis with their family. Grandpa would love to be out back and watch grandkids grow up. When Im gone Grandma could move in or they could rent it for income.
In about 20 years if Im still around, Im gonna need some help. Could use it as a caregivers unit and exchange rent for help.
These are just a few scenarios and there are many more. There is currently huge demand for homes with an ADU because the income can help you afford a nicer place than you could afford otherwise, could generate income on an asset you can keep close tabs on or its a great place for family/friends. A home with a nice ADU particularly one where both still had nice private outdoor space would be extremely valuable and moreso than the sum of its parts.
BTW beach was beautiful yesterday. Water warmed up nicely too.
Now back to our regularly Now back to our regularly scheduled program. Update time!
New listings dropped down by 4 and this is 3rd consecutive week new listings have dropped. These are the times when being a buyer sucks more than ever.
Pendings maintained at last weeks level! A staggering net loss of -21 homes on the market. That makes six consecutive weeks of falling inventory around my 3 zips and its getting worse. There are more pending SFR’s than actives which means under 1 months inventory.
Price reductions still minimal and mostly adjusting overpriced listing closer to market.
Closed sales same as last week. Again its the data pouring in from the market post shutdown.
Rates are hitting more new lows almost daily. People clamoring for more space.
I dont know that market could be hotter. My prediction of 5%+ y-o-y when we get to 12/31 is a dead mortal lock!
Anecdotally looking into 4S Ranch and Del Sur virtually nothing coming on market in the $1Mish 4BR 2600 sq ft plus range. The homes we wrote offers on a month or so ago are now closing. One closed $75K over asking. The other was a vacant home that closed $7K over with a 14 day all cash offer. Probably could have gotten a little more but they took quick, easy and guaranteed. Got my eyes on 6 others that we lost on and will report as they close.
One more anecdote. Had clients who were mostly urban dwellers the last 20 years moving every 5 years os around 8 corridor and then spent last 5 in the Pacific NW in a downtown high rise in a large city. They are street savy, liberal, loved being in a city and well into retirement. No longer felt safe walking the streets outside their home at night with protests and police free zones. Back to North County they come! In escrow on a nice townhome back where they started 30 years ago. Looking forward to a nice safe, sunny suburban home to ride out their golden years. Cant get back fast enough.
Repeating what I said last week this forum continues to come back to life with oldtimers checking back in and sticking around. Sometimes its as easy as removing a little growth to bring the patient back to life. Hope it stays that way and continues.
gzz,
Im happy with the pace gzz,
Im happy with the pace of things here especially the pace of life. Slow and steady wins the race. No need for a major corporate campus with all the work from homers I suspect we will see a steady flow from the people of the north. Stadium complex is likely gonna be SDSU West which is a great use of it too. The Sports Arena on the other hand is ripe for a complete reimaging.
Ive always felt that we are subject to the ups and downs of economic cycles here but long term we only have one way to go:)
sdr, I concur with your sdr, I concur with your numbers. The rent for my area is also around $1700 for a 1/1 and ~$2200 for a 2/2. Although, the number doesn’t seem to be a home run when you only add 1 ADU and do it on your primary. But it is a home run IMHO if you do 2 ADU (ADU + junior ADU) and rent all 3 out. Here’s an example, a small 3/2 1100 sq-ft with a yard large enough to do 2 ADU in my area is probably around $700k. PITI on it would be ~$3500/month. Rent on it would only be ~$2800/month. However, if you spend ~400k for a 2/2 and a 1/1 ADU, your PITI would be ~$6k/month. However, your rent would be $2800 + $2200 + $1700 = $6700/month. So, you went from negative cashflow of ~$700/month to positive cashflow of about $700/month. That’s not too shabby for a super hot market with great tenant pool. The estimated build cost for the ADU should be a bit lower if you use rental grade and use the preapproved ADU plans from the county with the reduced fees.
It will be very interesting It will be very interesting to watch the whole ADU trend to play out. Either way its all about the long term income not the short term appreciation with them. Thats why flippers dont build them.
Im waiting for Carlsbad to create incentives like Encinitas and SD before I start a real plan. Would also prefer that someone in my neighborhood go first with the HOA also:)
an wrote:sdr, I concur with [quote=an]sdr, I concur with your numbers. The rent for my area is also around $1700 for a 1/1 and ~$2200 for a 2/2. Although, the number doesn’t seem to be a home run when you only add 1 ADU and do it on your primary. But it is a home run IMHO if you do 2 ADU (ADU + junior ADU) and rent all 3 out. Here’s an example, a small 3/2 1100 sq-ft with a yard large enough to do 2 ADU in my area is probably around $700k. PITI on it would be ~$3500/month. Rent on it would only be ~$2800/month. However, if you spend ~400k for a 2/2 and a 1/1 ADU, your PITI would be ~$6k/month. However, your rent would be $2800 + $2200 + $1700 = $6700/month. So, you went from negative cashflow of ~$700/month to positive cashflow of about $700/month. That’s not too shabby for a super hot market with great tenant pool. The estimated build cost for the ADU should be a bit lower if you use rental grade and use the preapproved ADU plans from the county with the reduced fees.[/quote]
wait what? 1/1 is now $1700? damnit…..
My 1/1’s are $1550 .. And my 2/1 is $1750..
No wonder no one is giving me any grief.
Can I buying one of many of those vacant office buildings in Sorrento Valley and convert it in something like an 8- plexer?
Just wait, I think you’ll be Just wait, I think you’ll be able to in 10 years. They’re redoing the community plan right now. They’re talking about rezoning both sorrento and Miramar to mix used in some area.
So the best house we looked So the best house we looked in 4S just closed. The house was nice but when you were there the location on a cul de sac with park and views across from it felt kinda magical. I told my clients it would get a slew of offers. It was listed at $1.099M and I told them it would probably close around $1.2M. It garnered 18 offers. It just closed for $1.2M today. saw that one coming.
Interesting note from the field is that in the last 4 weeks there has one new 4BR listings in 4S under 1.2M and its was just listed at 1.197M. That place heated up real fast and now there is nothing to buy there
sdr, I remember touring those sdr, I remember touring those models when they were new and IMHO, that’s the best development w/in all of 4S. I definitely have a thing for double entry doors but the floor plan definitely feels a lot bigger than the sq-ft.
New listings popped up by 5 which is back to more typical levels we have been seeing.
Pendings dropped by 4 also as there is less and less to buy.
Net-net another loss of -12 homes of inventory on the market. That makes seven consecutive weeks of falling inventory around my 3 zips.
There are more pending SFR’s than actives. Inventory is now around 0.8 months.
Price reductions still minimal.
Closed sales dropped a little but still above April through June weekly numbers.
Rates at historic lows. I contacted a lender to refi and they are slow playing me as I suspect they are buried.
A hot market is the new normal this Summer.
Anecdotally looking into 4S Ranch and Del Sur still nothing coming on market in the $1Mish 4BR 2600+ sq ft plus range. The homes we wrote offers on a month or so ago continue closing. This one just closed. Nice house with tiny backyard and not much privacy. Had a multiple offers and closed $65K over asking.
And another we flat out rejected in PHR barely in 92130 zip code. Nice house but detached condo with no real property and the noise from the 56 was deafening to us. My opinion was house should not sell for any more than $1.05M based upon comps and location. It closed for $1.13M.
I always tell clients if someone wants to pay that much its fine. I just dont want it to be you or one of my clients. There’s always another house and people deserve to live in a nice home when paying these prices.
This is what sizzling looks like. The first two and the others we missed out on had an average of 10 offers. That means there are plenty of “losers” still out there as well as more buyers entering the market daily.
Update time! Gonna be brief Update time! Gonna be brief tonight. Big celebration tomorrow to prepare.
New listings popped up by 10 to a number more typically seen in May during peak listing season. This time of year we traditionally see much lower numbers as folks are vacationing. Another example that the local RE world has been turned on its ear.
Pendings back up 4 and these counts continue to be very strong since June 1st
Net-net another loss of -6 homes of inventory on the market. If not for a surge in new listings the decline would have been even larger as high pendings continue well into Summer. That makes eight consecutive weeks of falling inventory around my 3 zips.
There are still more pending SFR’s than actives. Inventory is still around 0.8 months.
Price reductions still minimal.
Closed sales level still well above April through June weekly numbers.
It still feels a little early to say this but it kinda feels like there has been a fundamental shift to higher price levels that are here to stay. Only time will tell but the persistence and strength of the market strikes me with a sense of permanance. Only time will tell.
SDR, Unfortunately SD City SDR, Unfortunately SD City and statewide data are not as bonkers as north county. Still quite healthy though. I read a few days ago most of California is at a 2-3 month inventory.
Also, 10 year below 0.6% and silver at $23.23 an oz!
It would be odd if NC didn’t outperform right now. Economic stress is more in the low end purchase plus rental market. Those are less important in SDR’s territory than most areas.
If you’d like to suggest a If you’d like to suggest a second as submarket I’d be happy to track it also. I know you follow yours but maybe something like North Park, Hillcrest, Normal Heights, University Heights etc might be interesting. Ideas? Anyone?
gzz wrote:SDR, Unfortunately [quote=gzz]SDR, Unfortunately SD City and statewide data are not as bonkers as north county. Still quite healthy though. I read a few days ago most of California is at a 2-3 month inventory.
Also, 10 year below 0.6% and silver at $23.23 an oz!
It would be odd if NC didn’t outperform right now. Economic stress is more in the low end purchase plus rental market. Those are less important in SDR’s territory than most areas.[/quote]
Just an fyi attached market not as strong as detached market here also. Urban not as strong as suburban.
What the data Ive seen up here represents is another data point verifying the ditching of the doorman for the cul de sac
For my area, w/in SD City, For my area, w/in SD City, SFR current active is 16, pending is 33, and closed w/in the last 30 days is 28. Pretty insane stats IMHO.
sdrealtor wrote:Not [quote=sdrealtor]Not surprising. It’s both suburban and relatively affordable in MM[/quote]
I can’t believe we’re here saying $725-750k for a small 3/2-4/2 1100-1300 sq-ft house is relatively affordable. I’m not complaining, just sad for those kids who are just starting out.
Don’t they still start in low Don’t they still start in low to mid 600’s?Also when I was starting out over 20 years ago a great rate was 7.125% on a five year fixed arm. The biggest obstacle now is the down payment more than ever
Glad to hear that one just Glad to hear that one just like that must’ve worked out well. Sounds similar to up by me in that location and lot are more important than the house in many if not most cases
Update time again! Gonna be Update time again! Gonna be brief again.
Last weeks new listings were an aberration and they dropped almost in half this week from 39 to 21. Not only back to where they were but the lowest count since end of March when i started tracking and we were in shut down mode. Its vacation season so not completely a surprise. I got away for a few days last week and know others who did also.
Pendings fell by 10 to lowest number since May. There simply is very littel to buy and it had to hit the pendings eventually.
Net-net another loss of -14 homes of inventory on the market. That makes nine consecutive weeks of falling inventory around my 3 zips.
There are still more pending SFR’s than actives. Inventory is still around 0.7 months.
Price reductions still minimal.
Closed sales were level and still well above April through June weekly numbers. The lack of inventory should show up in these figures in a few weeks too.
In my zip (92009) there are 35 actives and 73 pendings so less than 1/2 month inventory. I dont know that it ever got this low in 04.
In 92107, the hottest part of In 92107, the hottest part of the market is the high end of the condos (above $600,000) and the low end of the SFH (under $1.25m). The bottom and top of the market however is also doing fine.
Nationwide mortgage purchase applications are up 21% over the same week of 2019.
From an article in May 2020:
“The current spread between 10-year Treasuries and 30-year mortgages is about 260 basis points. Typically it’s about 180 basis points, Fratantoni said at a virtual event the organization sponsored.”
At the moment it remains about 260 points, 3.2% versus 0.57%.
Article from this month that includes a 5-year spread chart:
Note that the past few months have been the only time in the past 5 years it has been persistently above 2%.
While it is likely in my view to go back down, the foreclosure ban, extreme distress in commercial mortgages, and the sudden Covid forbearance quite plausibly could cause the high spread to persist. And there’s no urgency for lenders to reduce their profits with demand so high right now.
More likely in the next few months, the Fed will shift its purchases to GSEs to get the spread back to normal amounts, and continue to keep Treasury rates at record lows.
Housing is the easiest part of the economy to goose, and it needs goosing. Thus, I think we’ll see the national average rates below 3% soon, and 2.375% 0-point 30 years from the discount lenders to the best customers.
Aaahhhh Summer! Late July/Early August…traditionally one of the sleepiest markets each year. Time to sneak in one last vacation before the kids head back to school. What no vacations? Kids not going back to school? So whats that done to the market????? Kabooooommm!!!
New listings back to 31 which is 10 more than last weeks low number but very much in line with what we have been seeing since mid-June.
Pendings? Up by 20! Easily the highest count of the year. Must be those young families rushing to get settled before end of Summer? NOPE 36 were priced $1.25M or higher! 40% were over $1.5M and the strength continues all the way up the price spectrum.
Net-net an astounding loss of -24 homes of inventory on the market. That makes ten consecutive weeks of falling inventory around my 3 zips.
Just to reset this data is for Encinitas 92024 and S Carlsbad 92009/92011. On average there were 2 houses that went pending every day between $1.5M and $2M and 1 house each day over $2M. This is unbeleivable strength and lest you think it is purely low interest rate driven? My clients closed a jumbo loan last week they were well qualified for and it was brutally tough underwriting for rates not near the low conventional numbers we are seeing. There has gotten be some serious cash changing hands in this market.
Which brings us to serious cash locally. Last week after having been pretty range bound between $50 and $80/share for the last decade our largest private sector employer QCOM’s approx 13,000 San Diego employees are sitting at $110/share with analyst price targets as high as $140.
I remember arguing with old timers 10 years ago that SD had fundamentally changed. They would roll out the “its never different this time” tropes. Well they are all gone now and SD has fundamentally changed economically. Its no longer a sleepy beach town over reliant on the military and tourism as it was 20 years ago. Its an economy driven by high tech, life/health sciences with military tech on top of military personel and tourism. The shift to working from home will only drive others to relocate here for its quality of life vis a vis other high end job markets.
Need more proof? This is being built in Encinitas.
This is not a resort for millionaires its a resort for those with eight, nine and even ten figures net worths. Thats billionaires folks. Rooms at this brands other hotels around the world start around $2000 a night. Dont know that they will go that high here but I would not expect to see average nightly rates below $1,000.
I said it before 10 years ago and I’ll say it again. This place I call home is changing and changing fast. It feels like we are taking the next leg up with a new floor being laid. Now dont get me wrong, there are always cycles with bumps in the road. Prices could and should swing back down a bit at some point but my feeling long term remains. We’ve taken another step up the high end market ladder in the US and in the World.
Oh yeah, just to be complete. Closed sales up to 36 which is 5 more than last week and at the highest levels this year. Price reductions less frequent with sellers digging their heels in and often being rewarded for it.
In my zip (92009) there are 37 actives and 79 pendings so well under a 1/2 month inventory. End of the month last week so we had lots go from pending to sold so total pendings not up that much.
This market has been chewing bubblegum and kicking ass but it just ran out of bubble gum. Who knows what is next? Until next week….
Also want to clarify one Also want to clarify one other thing after hearing from a client. What i am reporting on are detached homes in a mid high end to high end market. The attached market is quite different around me and presents lots of great opportunities to live in nice newer homes at far more affordable prices enjoying the same schools, amenities and overall quality of life. Its mostly the detached home market that is soaring out of reach for most and that is what I am reporting on now. Ultimately I believe that will impact the attached market more but for now its still attainable for most.
Aaahhhh Summer! Late July/Early August…traditionally one of the sleepiest markets each year. Time to sneak in one last vacation before the kids head back to school. What no vacations? Kids not going back to school? So whats that done to the market????? Kabooooommm!!!
New listings back to 31 which is 10 more than last weeks low number but very much in line with what we have been seeing since mid-June.
Pendings? Up by 20! Easily the highest count of the year. Must be those young families rushing to get settled before end of Summer? NOPE 36 were priced $1.25M or higher! 40% were over $1.5M and the strength continues all the way up the price spectrum.
Net-net an astounding loss of -24 homes of inventory on the market. That makes ten consecutive weeks of falling inventory around my 3 zips.
Just to reset this data is for Encinitas 92024 and S Carlsbad 92009/92011. On average there were 2 houses that went pending every day between $1.5M and $2M and 1 house each day over $2M. This is unbeleivable strength and lest you think it is purely low interest rate driven? My clients closed a jumbo loan last week they were well qualified for and it was brutally tough underwriting for rates not near the low conventional numbers we are seeing. There has gotten be some serious cash changing hands in this market.
Which brings us to serious cash locally. Last week after having been pretty range bound between $50 and $80/share for the last decade our largest private sector employer QCOM’s approx 13,000 San Diego employees are sitting at $110/share with analyst price targets as high as $140.
I remember arguing with old timers 10 years ago that SD had fundamentally changed. They would roll out the “its never different this time” tropes. Well they are all gone now and SD has fundamentally changed economically. Its no longer a sleepy beach town over reliant on the military and tourism as it was 20 years ago. Its an economy driven by high tech, life/health sciences with military tech on top of military personel and tourism. The shift to working from home will only drive others to relocate here for its quality of life vis a vis other high end job markets.
Need more proof? This is being built in Encinitas.
This is not a resort for millionaires its a resort for those with eight, nine and even ten figures net worths. Thats billionaires folks. Rooms at this brands other hotels around the world start around $2000 a night. Dont know that they will go that high here but I would not expect to see average nightly rates below $1,000.
I said it before 10 years ago and I’ll say it again. This place I call home is changing and changing fast. It feels like we are taking the next leg up with a new floor being laid. Now dont get me wrong, there are always cycles with bumps in the road. Prices could and should swing back down a bit at some point but my feeling long term remains. We’ve taken another step up the high end market ladder in the US and in the World.
Oh yeah, just to be complete. Closed sales up to 36 which is 5 more than last week and at the highest levels this year. Price reductions less frequent with sellers digging their heels in and often being rewarded for it.
In my zip (92009) there are 37 actives and 79 pendings so well under a 1/2 month inventory. End of the month last week so we had lots go from pending to sold so total pendings not up that much.
This market has been chewing bubblegum and kicking ass but it just ran out of bubble gum. Who knows what is next? Until next week….[/quote]
In Qualcomm, AMD, Tim Apple, Microsoft, Pfizer, Moderna,UPS, FedEx, Costco we trust…. I think I missed a few others that blew numbers out of the water and are all at 52 week highs despite the covid recession that everyone predicted….:)
This has been an insane month for tech and biotech earnings….Cha-ching
For RE around here also. I For RE around here also. I know not everywhere in SD is like here nor is attached or urban real estate as hot as detached and suburban. But to some degree we are interconnected over the long term and I just view the changes here as an indicator of what is going on +/- a bit around SD County
Still open to adding another area to follow if anyone would like to suggest one as a good belleweather
On the flip side, any On the flip side, any noticeable fall out from the 700+ jobs Intuit cut a little over a month ago? I heard engineering jobs were a good portion of that cut and I imagine some of those employees live along the 56 neighborhoods.
Good question and I havent Good question and I havent seen it yet. Having recently had a client who bought in that area I have a firm grasp of what is going on there and wrote about it upthread. 4S Ranch couldnt be hotter, Del Sur is very strong and Torrey Highlands is blazing with little to nothing coming on the market the last few months. I wouldnt expect much if any impact.
FWIW I think my clients beat the market a bit. Got one of the few values available and were able to negotiate some very favorable terms as we avoided a multple offer situation that we had been running into on every other one they were interested in.
Ok lets focus in a bit. Ok lets focus in a bit. Detached or attached?
Also I think City Heights is a bit behind those two in gentrification. Id suggest North Park and South Park only but if I was gonna expand it would likely be plus University Heights and Normal heights rather than CH.
Update: took a look and its a bit more complicated as I pull the data by zips and the South park zip spans a pretty broad spectrum from South Park (very gentrified) to Golden Hill (quite a bit behind) to Chollas View/Webster (another discussion). I think its best to track a mostly homogenous area so I’ll propose North Park, University Heights and Normal Heights which while not completely homogenous is close enough. How does that sound?
Wow City Heights Wow City Heights gentrification is now priced in. No deals there like even 2 years ago, last time I looked there. Maybe multifamily.
92107: active inventory is 1.2x July closed sales.
Rates: We haven’t broke the Covid-panic all time low of March 9, but the 10 year has never spent so long below 0.6% in US history. Refis meanwhile have ticked down a bit. Put the softening demand for rifis together with lower 10Y rates, nationwide average mortgage rates may drop another 0.2% the next week or two.
Update time and Im gonna Update time and Im gonna change something up. I ran numbers yesterday so I have the data but for continuity and to add a metro suburban category Im gonna move this over to the main forums under housing market. Hopefully this will help get more discussion and contributions going.
Andrew32 wrote:On the flip [quote=Andrew32]On the flip side, any noticeable fall out from the 700+ jobs Intuit cut a little over a month ago? I heard engineering jobs were a good portion of that cut and I imagine some of those employees live along the 56 neighborhoods.
My understanding was San Diego intuit location was not nearly impacted as other locations. San Diego location is mostly Turbo Tax group, and cuts mainly came from the QuickBooks and small biz groups which are more based out of Mountain View and North Carolina?. everyone still needs to do their taxes and in a lot of ways it’s a lot more complicated then it ever was. I think what they mostly did in SD was freeze hiring and suspend open recs.
On the flip side, I think Medtronics is running night and day shifts making ventillators. I see a bunch of mobile guys just got hired by biotech companies and they are paying them way more than I could afford to pay them… Several of these companies I think also do covid related testing. Not sure why they need mobile guys but oh well
My company let a lot of engineers go. On my team, 7 mobile engineers we let go found a job in less than 2 weeks, some saw a 20% pay bump. And no, I wasn’t paying them low.
SDR, your redfin links make SDR, your redfin links make me think we should boycott them for obnoxiously lowballing our properties.
The Albert Ave property you linked to Redfin says is worth 65k less than the price it just sold for. If that isn’t the market price, what is?
All of my properties are severely underestimated. Two of them are off by more than 30%. My two bedroom condo with an ocean view is “Redfin Estimated” as worth less than 1 bedrooms in the same building without views have recently sold for.
I think they do this as an underhanded way to get people to register for their site.
Zillow tends to err downward too, but not to this absurd degree of saying 2-bedroom condos are worth less than 2019/2020 of 1-bedrooms in the same building.
Redfin estimates are based Redfin estimates are based upon listing prices and then sales prices. These properties should adjust soon. Really who cares what these numbers say any way. We aren’t selling. A bank appraiser would never use then. They are there for entertainment only
I haven’t looked for a while I haven’t looked for a while but Redfin consistently overestimates my house by about $150k (based on my own estimate which could of course be wrong). Interestingly, zillow consistently underestimates it by about the same amount… so we have a $300k spread between the two. That should be enough to tell you how useful these estimates are…
Rich, sounds like there’s an Rich, sounds like there’s an element of your house that is hard to value. Perhaps a huge lot that is mostly unusable steep canyon.
Zillow is quite good for condos and single family in OB.
It does a bad job with smaller multifamily properties, failing to give them a premium for larger lots and valuing them as if they were single houses, but two 2/1s by the beach are more valuable than one 4/2.
And thank you both for being And thank you both for being part of the restoration of order here. Check out the active forum topics. Nearly all RE related. What a quick transformation:)
sdrealtor wrote:Redfin [quote=sdrealtor]Redfin estimates are based upon listing prices and then sales prices. These properties should adjust soon. Really who cares what these numbers say any way. We aren’t selling. A bank appraiser would never use then. They are there for entertainment only[/quote]
And just like that the estimate is back in line. It takes them a week or so to adjust
I’m not sure I understand but I’m not sure I understand but PHR seemed to have become really popular in recent times in 92130. Not sure why. Is it just newer and closer to the new amenities in PHR or is it closer to the newer middle and high school or both? I don’t know.
I would guess newer and I would guess newer and schools. The floorplans tend be more functional for todays living. The older homes offer larger lots on average but in CV they still are squeezed (very few large lots) so many decide they would rather have the newer home. Anecdotally many of the more recent immigrant families prefer not to have to deal with contractors either. They tend to worry more about getting taken advantage of.
FWIW prices up by me seem to have gone bonkers and are catching up to CV quickly. Model match to mine just closed at a price that is a good 15% above prices one year ago.
SDR, I wish I could say SDR, I wish I could say 92106/7 were also bonkers. In 92107 inventory is also very low, about 1 month. But no sales that are clearly higher than early 2020 prices. 92016 inventory is a normal 2-3 months.
The pace of sales is very strong, but new listings are almost keeping pace, except at the low end. Right now there is only one SFH in 92107 listed under $1 million out of 21 listings.
Part of this may be the gradual digestion of the Upper Voltaire project of 28 new construction townhouses in the 640-730k range.
That’s about 6 months’ worth of organic condo inventory hitting the market all at once. And they are big and nice enough they overlap with the lower end of the SFH market. Only 1 of the 28 units hasn’t been sold yet. Here’s pictures of the last unit:
I wonder if “Upper Voltaire” is an intentional pun on Upper Volta, the former name of the West African country Burkina Faso. The maps my elementary school had circa 1990 still had the old name on them.
I like the design. Almost like Streamline Moderne, like the OB Post Office on Santa Monica Ave, built in the early 60s.
I like the kitchen in those I like the kitchen in those more than the rest of the home. Lots of angled walls seem like it would be a challenge to furnish. But they are new and people love new so they will all sell fairly quickly
My prediction: low rates and
My prediction: low rates and low inventory are offset by a 2nd covid wave and recession, prices end year up 2% year over year.
I am still a long term bull: rents, income, population growth, very low new construction all point to long term gains. I also believe low rates will continue even after the recession ends. So I could see 2021 being a 8 to 14% gain year.
The wave of refis and people whose mortgages have 25 years left at 4% saving $500 a month by replacing it with a 30 year at 3% will further reduce the desire of people to sell.
The majority of new SFH construction now in San Diego is in the Otay or Escondido areas, very distant locations.
Moving over to this new
Moving over to this new thread its update time. In addition to data based updates I will try to conitnue with an anecdote from the field.
New listings dropped back down to the low level of 2 weeks ago. Not good news for homebuyers.
Pendings dropped also but not nearly as much and its was another net loss of -7 homes on the market. That makes four connsecutive weeks of falling inventory around my 3 zips.
New homes getting listed are seeing hundreds if not over a 1000 views on Zillow day one. I saw a house listed in South Carlsbad 92009 get around 1500 views the first 24 hours. Its like shooting fish in a barrel for sellers out there now.
So what isnt changing? Price reductions are minimal and closings are still sluggish from a COVID hangover due to RE shut down in Late March to mid April but should start passing soon.
As I predicted this week my long awaited UT article came out with a headline screaming sales were down over 40% y-o-y! Im sure some folks stopped there to rejoice. It was just irresponsible click bait as anyone who read the article was treated to the truth. Inventory is way down, multples offers abound and prices are trending up.
Here’s an anecdote from the field. Clients looking in 4S had nothing new to look at last weekend while they have had 2 or 3 each of the past few weeks. There was one sitting on the market overpriced that we were waiting to get reduced. It was priced well above 4 nicer homes that sold with multiple offers. This week it got reduced to the top end of the range of those 4 homes. That was still too high but they had no competition. Those 4 will all close above asking and higher than this one as they should but not much higher. It ended up with 3 offers and should close about $50K above what it should relative to those 4 and the comps. The agent was an grizzled old vet like I have become and was willing to talk openly with me. He knew it was high and knew he was taking advantage of the situation. The house had some real unfixable flaws that would impact it more in a down market. Cant say Im sad my clients didnt get it as I wouldnt want to be listing agent on it in a tougher market. I always prefer my clients get the better homes even if they are slightly more as they hold their value better in down markets. You never know what the market will be like when you are selling. It is good to have a better house with less flaws if its not a great market. Think of that as downside protection.
And gzz? Im gonna go against you and say 5%+ y-o-y. I have a sense based upon what Ive seen go into escrow. And there are still tons of buyers chasing homes out there.
See ya next week…
Thanks for the report SDR. My
Thanks for the report SDR. My forecast assumes the 2nd wave of Covid gets worse and causes further economic damage. I certainly hope I am wrong, and I’ve been too bearish thus far.
I looked at some downtown buildings for the first time in a while, and noticed a fair number of listings are still at or a little below peak 05 to 07 prices.
That’s interesting as my zip 92107 has been above those prices for quite a while. Here’s one listed well below the 2005 price:
https://www.sdlookup.com/MLS-200023923-200-Harbor-Dr-2903-San-Diego-CA-92101
HOAs seem a lot higher in many buildings than I remember. Still a bargain compared to NYC HOAs.
I’d guess the explanation is the prior bubble inflated downtown more than other areas, and also supply not being as constrained.
Some NYC HOA examples picked completely at random and selling for around 1 million even:
$7500 a month, but 4-bedrooms in UES:
https://www.zillow.com/homedetails/190-E-72nd-St-APT-33D-New-York-NY-10021/244789545_zpid/
$2500/mo, 1 bedroom
https://www.zillow.com/homedetails/784-Park-Ave-11E-New-York-NY-10021/244731467_zpid/
$1800/mo, 1 bed UWS
https://www.zillow.com/homedetails/50-W-67th-St-3E-New-York-NY-10023/119987258_zpid/
$550/mo, 1 bed LES (but price is $1800/sf)
https://www.zillow.com/homedetails/253-E-7th-St-APT-2-New-York-NY-10009/2081439372_zpid/
1400/mo, 1 bed, tribeca:
https://www.zillow.com/homedetails/275-Greenwich-St-APT-9J-New-York-NY-10007/2107564846_zpid/
With monthly charges so high, you can see why at one point co-ops would sell for $1.
Downtown has gotten a steady
Downtown has gotten a steady flow of new units. OB not so much. Downtown never boomed like other areas in SD and has always lagged in appreciation
I owe y’all an update!
New
I owe y’all an update!
New listings dropped back down a couple but basically unchanged and nowhere near what we need. More bad news for homebuyers.
Pendings popped up a bunch! A staggering net loss of -17 homes on the market. That makes five connsecutive weeks of falling inventory around my 3 zips and its getting worse.
Price reductionms minimal and mostly adjusting overpriced listing closer to market.
Closed sales bumped up around 60% over last week. Its the end of the month which usually leads to a bump but moreso the data pouring in from the rapid recovery we’ve seen the last 60 days.
Rates are hitting new lows almost daily and people want more space. Market is firing on all cylinders and my prediction of 5%+ y-o-y when we get to 12/31 is looking pessimistic.
Good news from the field is I got my clients in escrow on a beautiful home by identifying what I beleive to be a pricing flaw in the market between 4S Ranch and Del Sur. Used that to negotiate on both price and terms to my clients advantage in a way that I believe will pay off well in the long run. Only time will prove me right or wrong but I really like my odds.
One side note. Its has been nice to see more and more visits and posts by old timers on the forums the last week or so. The exorcism of all political ranting, all the time seems to be bearing green shoots. Keep at it!
See ya next week….
The short term increase in
The short term increase in value for detached homes seems to reflect:
– Stable or growth of high income roles in the region giving confidence and ability to move away from density
– Generally constrained supply as others have explored extensively
– Exceptionally constrained supply of homes containing granny flats or the ability to build them for adult children taking in their aging parents
The short term flat condo prices seems to reflect:
– Significant losses of low and middle income roles in the region. Anecdotally, my HOA has several units that are pandemic-length-of-time behind on their dues and the last time this happened was the 2008 recession. I think this is an important indicator to watch.
– Slowing of expansion by VRBO owners due to pandemic. Anecdotally, a multi-VRBO owner I know has used the pandemic to renovate his properties instead of expanding
I’m hopeful with the city’s proposed plan to build so much new housing, but long term I think there just isn’t enough land to support the detached demand which will lead to continued skyrocketing prices.
What this post reflects is
What this post reflects is someone that’s already been kicked off this blog twice who should Just leave. You’ve been kicked off twice. Have some dignity Brian and just go away
spj wrote:The short term
[quote=spj]The short term increase in value for detached homes seems to reflect:
– Stable or growth of high income roles in the region giving confidence and ability to move away from density
– Generally constrained supply as others have explored extensively
– Exceptionally constrained supply of homes containing granny flats or the ability to build them for adult children taking in their aging parents
The short term flat condo prices seems to reflect:
– Significant losses of low and middle income roles in the region. Anecdotally, my HOA has several units that are pandemic-length-of-time behind on their dues and the last time this happened was the 2008 recession. I think this is an important indicator to watch.
– Slowing of expansion by VRBO owners due to pandemic. Anecdotally, a multi-VRBO owner I know has used the pandemic to renovate his properties instead of expanding
I’m hopeful with the city’s proposed plan to build so much new housing, but long term I think there just isn’t enough land to support the detached demand which will lead to continued skyrocketing prices.[/quote]
Really BrianSD/FlyerInHi… Just two weeks from the second time ban…and you’re already trying to angle this into a city/high density housing versus suburbia slapfest again????
This post adds NOTHING to the data that is being posted. This post is nothing more than a regurgitation of all the opinionated city/hi density housing versus suburban housing slapfest in a failed subtle attempt to reenter this blog unnoticed. There’s no data, no sampling from the real world from actual housing sales/closes/etc, just the same anecdotal bullshit pulled out of one’s ass to support an agenda for combative and argumentative purposes only.
Nice 5 hour old handle, btw 🙂
For a moment, it was a nice two weeks because we started seeing a bunch of old timers posting good information again. Just look at the loan rate thread and all the people that started to trickle back.
All you old piggs that participated in this betting pool… I win. I said less than 3 weeks. You didn’t believe me. You all owe me lunch after covid 🙂
PayPal sent
PayPal sent
Agree with SPJ except the
Agree with SPJ except the point about granny flat zoning. State is mandating allowing granny flats on all single family zones.
SD city has already passed the required reg, and any straggler suburbs that try to stop it are going to get hit with huge attorney fee bills on top of damages and injunctions. The state law is not ambiguous.
The YIMBY/renter/developer/construction union block is in the driver seat in Sacremento after about 50 years of anti-density/environmentalist domination. Fortunately for the latter, construction costs are very high still and that’s the big brake on development in SD. Skilled labor is expensive, from the construction to the design/legal/finance, so is losing the rental value of the potential tear down for years.
Some lots simply can’t have ADUs because of physical configuration issues, but I’d guess about 75% of lots over 5000sf you could add a granny flat or tiny house. The value gain however is minimal because you lose your nice back yard. You really need a flat 8000+ SF lot to have a 2nd unit and a nice back yard that’s bigger than a dog run.
In 92106/7, no examples of building of 2nd houses in the back yards of family zones where 2nd units are now allowed because of state mandate, however there’s a gradual trend on alley lots to replace the old 2-car garage with a nice new one with a 2/1 apartment on top. By gradual I mean about 10 a year between the two zips with 48k combined population.
The building of 2nd homes on lots that only had one is almost entirely on lots that were zoned for many decades as multifamily. One of the more common ways this happens is to declare the small existing 1-story home the granny flat and build a new 2-story one. Maybe about 6 of these happen a year. Even when multiple units are allowed by zoning, the granny flat regulation makes calling one of the units a ADU cheaper and easier to approve.
Ive got 11,000 sq ft pie
Ive got 11,000 sq ft pie shaped lot with most of it in the back. It has a configuration that would not only accomadate a nice 2BR ADU but also splitting my backyard such that the existing house and the ADU could have nice private yards with sepoarate private access to each (one to right of house and one to left). Back when I bought this place I specifically bought it because of the lot. I was thinking pool that never got built not ADU so I cant take credit for having that much foresight. But in the immortal words of Sir-Mix-A-Lot….Baby Got Back!!
Apologies,
I didn’t intend to
Apologies,
I didn’t intend to restart an old controversial comment thread. I seem to have similar opinions to whomever Brian is, but I promise I am someone different who has come to these conclusions independently. Moving forward I will try to refrain from posting without data.
Again, sorry for the disturbance.
SPJ
Please stop apologizing and
Please stop apologizing and just go away
I’m loving the new ADU
I’m loving the new ADU regulation. Time to sell condo and far flung areas and buy SFR with big lots with 1031. If only those one come on the market in the SW part of MM. there isn’t even 1 for sale right now.
an wrote:I’m loving the new
[quote=an]I’m loving the new ADU regulation. Time to sell condo and far flung areas and buy SFR with big lots with 1031. If only those one come on the market in the SW part of MM. there isn’t even 1 for sale right now.[/quote]
Agree there is quite an opportunity. You can turn a sfr into a triplex. Just need the right spot to do it. Not sure I’d want that on my primary unless it was all family living there. It does redefine the multi generational living opportunity. Outside of space biggest issue is cost as they aren’t cheap to build.
sdrealtor wrote:Agree there
[quote=sdrealtor]Agree there is quite an opportunity. You can turn a sfr into a triplex. Just need the right spot to do it. Not sure I’d want that on my primary unless it was all family living there. It does redefine the multi generational living opportunity. Outside of space biggest issue is cost as they aren’t cheap to build.[/quote]
Yep, the key is finding the right spot. Luckily, as a small time investor, I only need a few SFR. I agree that I wouldn’t do this to my primary residence, but would be great as an investment. Although the cost isn’t cheap, it’s still much cheaper than buying a 1/1 condo AND you don’t have to deal w/ HOA.
That was my thought exactly.
That was my thought exactly. Great minds think alike. I figure I can build a very nice 2br/1 1/2 bath 1000 sq ft adu in my backyard for around $250k. A 1 br condo around here goes for $350ish with higher taxes and HOA. I’d only rent it to a friend or have family there with long term plan to live in it myself and rent out the main house. So I’d make it really nice
That doesn’t sound like too
That doesn’t sound like too profitable a plan when you consider the value of your time, construction disruptions, and the decreased value of the main house which now shares a lot with an ADU.
A 2 on 1 for 1.3m will also be harder to sell than a SFH for 1.0m. The number of people who want to be landlords on the side just isn’t very high.
If there were a lot of profit in putting in 2nd units where zoning allowed them, you’d see flippers doing it. But I can’t think of a single instance of the many flips I’ve seen in 92106/7 where an ADU was added.
These two zips have long had mostly SFH areas zoned for multiple units. Conversion to multiple units usually involves a tear down rather than an addition.
When I talked to a developer about my underbuilt lot, he said it would be simpler to just tear down the existing house than work around it. The water and sewer hookups for example were fine for one house but not for 3 or 4.
One point in favor of ADUs is the various vacation rental rules tend to treat ADUs better than condos.
You’re only thinking in terms
You’re only thinking in terms of your area and your situation. I’m exhausted after long day but I’ll update this later and explain why it could be bigly profitable and or advantageous
SDR, sure the first house
SDR, sure the first house with an ADU in a large area that doesn’t have any could get a decent premium.
As I mentioned I think you
As I mentioned I think you are looking at this through your eyes only.
1. This is more of an income play than an appreciation
2. Its a fallacy to view the main house as being depreciated. You dont sell them separately you would sell the package and the package would be more valuable.
Here are some examples. I’ll use my situation as I think about it all the time. Figure I spend $250K to add 2Br 1/2ba guest house.
I could rent it out all day for at least $2200/month right now. Thats about a 10 cap rate. A 1/1 around here is $350K minimum plus HOA plus higher taxes and rents around $1800. Much better return on this.
If I was closer to beach I could do vacation rentals. A client on a large lot built similar luxury unit down by beach over his garage at similar expense. He can get $400+ a night. Thats a 30 cap rate at 50% occupancy and likely much higher.
One of my kids could move into it and have their own space as a young adult in a beautiful community they grew up in but could not afford. Could give them reduced or free rent.
If i had elderly parents it would cost at least $350K and probably more for a condo they could live in. Higher taxes and HOA also. Here they can live out back independently for much less. People moving from most of the country to be near kids/grandkids have a tough time affording a nice place out here in a nice area. Most could afford to pay to have a nice ADU built and have a great place near family.
I could rent it out and pay it off in about 10 years with rental income. Then I could move into it (which is why Id build it really nice) and rent out the main house. Rent on my house is currently $4500 to 5000 and should be higher in 10+ years. I could live pretty nicely on $5K rental income plus $3K social security with no expenses and not have to touch any of my other investments.
My clients with the unit of the garage built it for themselves long term. They could live in it and rent out main house for close to $10K a month. Pretty sweet life and income as both will be paid off.
In 10 years one of my kids could move into paid off main house with low tax basis with their family. Grandpa would love to be out back and watch grandkids grow up. When Im gone Grandma could move in or they could rent it for income.
In about 20 years if Im still around, Im gonna need some help. Could use it as a caregivers unit and exchange rent for help.
These are just a few scenarios and there are many more. There is currently huge demand for homes with an ADU because the income can help you afford a nicer place than you could afford otherwise, could generate income on an asset you can keep close tabs on or its a great place for family/friends. A home with a nice ADU particularly one where both still had nice private outdoor space would be extremely valuable and moreso than the sum of its parts.
BTW beach was beautiful yesterday. Water warmed up nicely too.
Now back to our regularly
Now back to our regularly scheduled program. Update time!
New listings dropped down by 4 and this is 3rd consecutive week new listings have dropped. These are the times when being a buyer sucks more than ever.
Pendings maintained at last weeks level! A staggering net loss of -21 homes on the market. That makes six consecutive weeks of falling inventory around my 3 zips and its getting worse. There are more pending SFR’s than actives which means under 1 months inventory.
Price reductions still minimal and mostly adjusting overpriced listing closer to market.
Closed sales same as last week. Again its the data pouring in from the market post shutdown.
Rates are hitting more new lows almost daily. People clamoring for more space.
I dont know that market could be hotter. My prediction of 5%+ y-o-y when we get to 12/31 is a dead mortal lock!
Anecdotally looking into 4S Ranch and Del Sur virtually nothing coming on market in the $1Mish 4BR 2600 sq ft plus range. The homes we wrote offers on a month or so ago are now closing. One closed $75K over asking. The other was a vacant home that closed $7K over with a 14 day all cash offer. Probably could have gotten a little more but they took quick, easy and guaranteed. Got my eyes on 6 others that we lost on and will report as they close.
One more anecdote. Had clients who were mostly urban dwellers the last 20 years moving every 5 years os around 8 corridor and then spent last 5 in the Pacific NW in a downtown high rise in a large city. They are street savy, liberal, loved being in a city and well into retirement. No longer felt safe walking the streets outside their home at night with protests and police free zones. Back to North County they come! In escrow on a nice townhome back where they started 30 years ago. Looking forward to a nice safe, sunny suburban home to ride out their golden years. Cant get back fast enough.
Repeating what I said last week this forum continues to come back to life with oldtimers checking back in and sticking around. Sometimes its as easy as removing a little growth to bring the patient back to life. Hope it stays that way and continues.
See ya next week….
SDR, San Diego has greatly
SDR, San Diego has greatly underperformed Seattle and the Bay Area the past decade, and LA to a lesser extent.
We’ve never been such a great relative value compared to other Western markets since perhaps the 1990s.
The next step I’d like to see is for us to use our two giant well-located stadium properties to attract a major corporate campus.
Seattle just passed a special income tax targeting Amazon, while NYC chased them out of their Brooklyn HQ2 plan.
gzz,
Im happy with the pace
gzz,
Im happy with the pace of things here especially the pace of life. Slow and steady wins the race. No need for a major corporate campus with all the work from homers I suspect we will see a steady flow from the people of the north. Stadium complex is likely gonna be SDSU West which is a great use of it too. The Sports Arena on the other hand is ripe for a complete reimaging.
Ive always felt that we are subject to the ups and downs of economic cycles here but long term we only have one way to go:)
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sdr, I concur with your
sdr, I concur with your numbers. The rent for my area is also around $1700 for a 1/1 and ~$2200 for a 2/2. Although, the number doesn’t seem to be a home run when you only add 1 ADU and do it on your primary. But it is a home run IMHO if you do 2 ADU (ADU + junior ADU) and rent all 3 out. Here’s an example, a small 3/2 1100 sq-ft with a yard large enough to do 2 ADU in my area is probably around $700k. PITI on it would be ~$3500/month. Rent on it would only be ~$2800/month. However, if you spend ~400k for a 2/2 and a 1/1 ADU, your PITI would be ~$6k/month. However, your rent would be $2800 + $2200 + $1700 = $6700/month. So, you went from negative cashflow of ~$700/month to positive cashflow of about $700/month. That’s not too shabby for a super hot market with great tenant pool. The estimated build cost for the ADU should be a bit lower if you use rental grade and use the preapproved ADU plans from the county with the reduced fees.
It will be very interesting
It will be very interesting to watch the whole ADU trend to play out. Either way its all about the long term income not the short term appreciation with them. Thats why flippers dont build them.
Im waiting for Carlsbad to create incentives like Encinitas and SD before I start a real plan. Would also prefer that someone in my neighborhood go first with the HOA also:)
100% agree. It’s about long
100% agree. It’s about long term income.
Lack of HOA is one of the key reason I’m looking in my area. I can’t imagine trying to do the whole ADU thing with HOA.
They can’t stop me but I just
They can’t stop me but I just want someone else to suss out any pitfalls
an wrote:sdr, I concur with
[quote=an]sdr, I concur with your numbers. The rent for my area is also around $1700 for a 1/1 and ~$2200 for a 2/2. Although, the number doesn’t seem to be a home run when you only add 1 ADU and do it on your primary. But it is a home run IMHO if you do 2 ADU (ADU + junior ADU) and rent all 3 out. Here’s an example, a small 3/2 1100 sq-ft with a yard large enough to do 2 ADU in my area is probably around $700k. PITI on it would be ~$3500/month. Rent on it would only be ~$2800/month. However, if you spend ~400k for a 2/2 and a 1/1 ADU, your PITI would be ~$6k/month. However, your rent would be $2800 + $2200 + $1700 = $6700/month. So, you went from negative cashflow of ~$700/month to positive cashflow of about $700/month. That’s not too shabby for a super hot market with great tenant pool. The estimated build cost for the ADU should be a bit lower if you use rental grade and use the preapproved ADU plans from the county with the reduced fees.[/quote]
wait what? 1/1 is now $1700? damnit…..
My 1/1’s are $1550 .. And my 2/1 is $1750..
No wonder no one is giving me any grief.
Can I buying one of many of those vacant office buildings in Sorrento Valley and convert it in something like an 8- plexer?
Just wait, I think you’ll be
Just wait, I think you’ll be able to in 10 years. They’re redoing the community plan right now. They’re talking about rezoning both sorrento and Miramar to mix used in some area.
So the best house we looked
So the best house we looked in 4S just closed. The house was nice but when you were there the location on a cul de sac with park and views across from it felt kinda magical. I told my clients it would get a slew of offers. It was listed at $1.099M and I told them it would probably close around $1.2M. It garnered 18 offers. It just closed for $1.2M today. saw that one coming.
https://www.zillow.com/homes/17233-Golden-Wagon-San-Diego,-CA,-92127_rb/81963029_zpid/
Interesting note from the field is that in the last 4 weeks there has one new 4BR listings in 4S under 1.2M and its was just listed at 1.197M. That place heated up real fast and now there is nothing to buy there
sdr, I remember touring those
sdr, I remember touring those models when they were new and IMHO, that’s the best development w/in all of 4S. I definitely have a thing for double entry doors but the floor plan definitely feels a lot bigger than the sq-ft.
Update time!
New listings
Update time!
New listings popped up by 5 which is back to more typical levels we have been seeing.
Pendings dropped by 4 also as there is less and less to buy.
Net-net another loss of -12 homes of inventory on the market. That makes seven consecutive weeks of falling inventory around my 3 zips.
There are more pending SFR’s than actives. Inventory is now around 0.8 months.
Price reductions still minimal.
Closed sales dropped a little but still above April through June weekly numbers.
Rates at historic lows. I contacted a lender to refi and they are slow playing me as I suspect they are buried.
A hot market is the new normal this Summer.
Anecdotally looking into 4S Ranch and Del Sur still nothing coming on market in the $1Mish 4BR 2600+ sq ft plus range. The homes we wrote offers on a month or so ago continue closing. This one just closed. Nice house with tiny backyard and not much privacy. Had a multiple offers and closed $65K over asking.
https://www.redfin.com/CA/San-Diego/17143-Albert-Ave-92127/home/17205030
Here’s another in Torrey Meadows. Nice house with nice yard listed at $1.075M. It just closed $55K above asking at $1.13M
https://www.redfin.com/CA/San-Diego/13365-Cooper-Greens-Way-92129/home/40520526
And another we flat out rejected in PHR barely in 92130 zip code. Nice house but detached condo with no real property and the noise from the 56 was deafening to us. My opinion was house should not sell for any more than $1.05M based upon comps and location. It closed for $1.13M.
https://www.redfin.com/CA/San-Diego/6608-Lancea-Ct-92130/home/45445470
I always tell clients if someone wants to pay that much its fine. I just dont want it to be you or one of my clients. There’s always another house and people deserve to live in a nice home when paying these prices.
This is what sizzling looks like. The first two and the others we missed out on had an average of 10 offers. That means there are plenty of “losers” still out there as well as more buyers entering the market daily.
Update time! Gonna be brief
Update time! Gonna be brief tonight. Big celebration tomorrow to prepare.
New listings popped up by 10 to a number more typically seen in May during peak listing season. This time of year we traditionally see much lower numbers as folks are vacationing. Another example that the local RE world has been turned on its ear.
Pendings back up 4 and these counts continue to be very strong since June 1st
Net-net another loss of -6 homes of inventory on the market. If not for a surge in new listings the decline would have been even larger as high pendings continue well into Summer. That makes eight consecutive weeks of falling inventory around my 3 zips.
There are still more pending SFR’s than actives. Inventory is still around 0.8 months.
Price reductions still minimal.
Closed sales level still well above April through June weekly numbers.
It still feels a little early to say this but it kinda feels like there has been a fundamental shift to higher price levels that are here to stay. Only time will tell but the persistence and strength of the market strikes me with a sense of permanance. Only time will tell.
SDR, Unfortunately SD City
SDR, Unfortunately SD City and statewide data are not as bonkers as north county. Still quite healthy though. I read a few days ago most of California is at a 2-3 month inventory.
Also, 10 year below 0.6% and silver at $23.23 an oz!
It would be odd if NC didn’t outperform right now. Economic stress is more in the low end purchase plus rental market. Those are less important in SDR’s territory than most areas.
If you’d like to suggest a
If you’d like to suggest a second as submarket I’d be happy to track it also. I know you follow yours but maybe something like North Park, Hillcrest, Normal Heights, University Heights etc might be interesting. Ideas? Anyone?
gzz wrote:SDR, Unfortunately
[quote=gzz]SDR, Unfortunately SD City and statewide data are not as bonkers as north county. Still quite healthy though. I read a few days ago most of California is at a 2-3 month inventory.
Also, 10 year below 0.6% and silver at $23.23 an oz!
It would be odd if NC didn’t outperform right now. Economic stress is more in the low end purchase plus rental market. Those are less important in SDR’s territory than most areas.[/quote]
Just an fyi attached market not as strong as detached market here also. Urban not as strong as suburban.
What the data Ive seen up here represents is another data point verifying the ditching of the doorman for the cul de sac
For my area, w/in SD City,
For my area, w/in SD City, SFR current active is 16, pending is 33, and closed w/in the last 30 days is 28. Pretty insane stats IMHO.
Not surprising. It’s both
Not surprising. It’s both suburban and relatively affordable in MM
sdrealtor wrote:Not
[quote=sdrealtor]Not surprising. It’s both suburban and relatively affordable in MM[/quote]
I can’t believe we’re here saying $725-750k for a small 3/2-4/2 1100-1300 sq-ft house is relatively affordable. I’m not complaining, just sad for those kids who are just starting out.
Don’t they still start in low
Don’t they still start in low to mid 600’s?Also when I was starting out over 20 years ago a great rate was 7.125% on a five year fixed arm. The biggest obstacle now is the down payment more than ever
Mid 600s is available only if
Mid 600s is available only if you don’t have a view, on the east side of MM, and have not been upgraded.
If you have a view and are on the west side, it’ll start in the low 700s now. I would have never guessed we’re here 15 years ago.
Glad to hear that one just
Glad to hear that one just like that must’ve worked out well. Sounds similar to up by me in that location and lot are more important than the house in many if not most cases
Update time again! Gonna be
Update time again! Gonna be brief again.
Last weeks new listings were an aberration and they dropped almost in half this week from 39 to 21. Not only back to where they were but the lowest count since end of March when i started tracking and we were in shut down mode. Its vacation season so not completely a surprise. I got away for a few days last week and know others who did also.
Pendings fell by 10 to lowest number since May. There simply is very littel to buy and it had to hit the pendings eventually.
Net-net another loss of -14 homes of inventory on the market. That makes nine consecutive weeks of falling inventory around my 3 zips.
There are still more pending SFR’s than actives. Inventory is still around 0.7 months.
Price reductions still minimal.
Closed sales were level and still well above April through June weekly numbers. The lack of inventory should show up in these figures in a few weeks too.
In my zip (92009) there are 35 actives and 73 pendings so less than 1/2 month inventory. I dont know that it ever got this low in 04.
Is there a public source for
Is there a public source for pendings by zip code?
Redfin
Redfin
In 92107, the hottest part of
In 92107, the hottest part of the market is the high end of the condos (above $600,000) and the low end of the SFH (under $1.25m). The bottom and top of the market however is also doing fine.
Nationwide mortgage purchase applications are up 21% over the same week of 2019.
From an article in May 2020:
“The current spread between 10-year Treasuries and 30-year mortgages is about 260 basis points. Typically it’s about 180 basis points, Fratantoni said at a virtual event the organization sponsored.”
At the moment it remains about 260 points, 3.2% versus 0.57%.
Article from this month that includes a 5-year spread chart:
https://eyeonhousing.org/2020/07/treasury-mortgage-spread-stays-constant-in-june/
Note that the past few months have been the only time in the past 5 years it has been persistently above 2%.
While it is likely in my view to go back down, the foreclosure ban, extreme distress in commercial mortgages, and the sudden Covid forbearance quite plausibly could cause the high spread to persist. And there’s no urgency for lenders to reduce their profits with demand so high right now.
More likely in the next few months, the Fed will shift its purchases to GSEs to get the spread back to normal amounts, and continue to keep Treasury rates at record lows.
Housing is the easiest part of the economy to goose, and it needs goosing. Thus, I think we’ll see the national average rates below 3% soon, and 2.375% 0-point 30 years from the discount lenders to the best customers.
Update time!
Aaahhhh Summer!
Update time!
Aaahhhh Summer! Late July/Early August…traditionally one of the sleepiest markets each year. Time to sneak in one last vacation before the kids head back to school. What no vacations? Kids not going back to school? So whats that done to the market????? Kabooooommm!!!
New listings back to 31 which is 10 more than last weeks low number but very much in line with what we have been seeing since mid-June.
Pendings? Up by 20! Easily the highest count of the year. Must be those young families rushing to get settled before end of Summer? NOPE 36 were priced $1.25M or higher! 40% were over $1.5M and the strength continues all the way up the price spectrum.
Net-net an astounding loss of -24 homes of inventory on the market. That makes ten consecutive weeks of falling inventory around my 3 zips.
Just to reset this data is for Encinitas 92024 and S Carlsbad 92009/92011. On average there were 2 houses that went pending every day between $1.5M and $2M and 1 house each day over $2M. This is unbeleivable strength and lest you think it is purely low interest rate driven? My clients closed a jumbo loan last week they were well qualified for and it was brutally tough underwriting for rates not near the low conventional numbers we are seeing. There has gotten be some serious cash changing hands in this market.
Which brings us to serious cash locally. Last week after having been pretty range bound between $50 and $80/share for the last decade our largest private sector employer QCOM’s approx 13,000 San Diego employees are sitting at $110/share with analyst price targets as high as $140.
I remember arguing with old timers 10 years ago that SD had fundamentally changed. They would roll out the “its never different this time” tropes. Well they are all gone now and SD has fundamentally changed economically. Its no longer a sleepy beach town over reliant on the military and tourism as it was 20 years ago. Its an economy driven by high tech, life/health sciences with military tech on top of military personel and tourism. The shift to working from home will only drive others to relocate here for its quality of life vis a vis other high end job markets.
Need more proof? This is being built in Encinitas.
https://www.alilahotels.com/about-alila/upcoming-developments/alila-marea
This is not a resort for millionaires its a resort for those with eight, nine and even ten figures net worths. Thats billionaires folks. Rooms at this brands other hotels around the world start around $2000 a night. Dont know that they will go that high here but I would not expect to see average nightly rates below $1,000.
I said it before 10 years ago and I’ll say it again. This place I call home is changing and changing fast. It feels like we are taking the next leg up with a new floor being laid. Now dont get me wrong, there are always cycles with bumps in the road. Prices could and should swing back down a bit at some point but my feeling long term remains. We’ve taken another step up the high end market ladder in the US and in the World.
Oh yeah, just to be complete. Closed sales up to 36 which is 5 more than last week and at the highest levels this year. Price reductions less frequent with sellers digging their heels in and often being rewarded for it.
In my zip (92009) there are 37 actives and 79 pendings so well under a 1/2 month inventory. End of the month last week so we had lots go from pending to sold so total pendings not up that much.
This market has been chewing bubblegum and kicking ass but it just ran out of bubble gum. Who knows what is next? Until next week….
Also want to clarify one
Also want to clarify one other thing after hearing from a client. What i am reporting on are detached homes in a mid high end to high end market. The attached market is quite different around me and presents lots of great opportunities to live in nice newer homes at far more affordable prices enjoying the same schools, amenities and overall quality of life. Its mostly the detached home market that is soaring out of reach for most and that is what I am reporting on now. Ultimately I believe that will impact the attached market more but for now its still attainable for most.
sdrealtor wrote:Update
[quote=sdrealtor]Update time!
Aaahhhh Summer! Late July/Early August…traditionally one of the sleepiest markets each year. Time to sneak in one last vacation before the kids head back to school. What no vacations? Kids not going back to school? So whats that done to the market????? Kabooooommm!!!
New listings back to 31 which is 10 more than last weeks low number but very much in line with what we have been seeing since mid-June.
Pendings? Up by 20! Easily the highest count of the year. Must be those young families rushing to get settled before end of Summer? NOPE 36 were priced $1.25M or higher! 40% were over $1.5M and the strength continues all the way up the price spectrum.
Net-net an astounding loss of -24 homes of inventory on the market. That makes ten consecutive weeks of falling inventory around my 3 zips.
Just to reset this data is for Encinitas 92024 and S Carlsbad 92009/92011. On average there were 2 houses that went pending every day between $1.5M and $2M and 1 house each day over $2M. This is unbeleivable strength and lest you think it is purely low interest rate driven? My clients closed a jumbo loan last week they were well qualified for and it was brutally tough underwriting for rates not near the low conventional numbers we are seeing. There has gotten be some serious cash changing hands in this market.
Which brings us to serious cash locally. Last week after having been pretty range bound between $50 and $80/share for the last decade our largest private sector employer QCOM’s approx 13,000 San Diego employees are sitting at $110/share with analyst price targets as high as $140.
I remember arguing with old timers 10 years ago that SD had fundamentally changed. They would roll out the “its never different this time” tropes. Well they are all gone now and SD has fundamentally changed economically. Its no longer a sleepy beach town over reliant on the military and tourism as it was 20 years ago. Its an economy driven by high tech, life/health sciences with military tech on top of military personel and tourism. The shift to working from home will only drive others to relocate here for its quality of life vis a vis other high end job markets.
Need more proof? This is being built in Encinitas.
https://www.alilahotels.com/about-alila/upcoming-developments/alila-marea
This is not a resort for millionaires its a resort for those with eight, nine and even ten figures net worths. Thats billionaires folks. Rooms at this brands other hotels around the world start around $2000 a night. Dont know that they will go that high here but I would not expect to see average nightly rates below $1,000.
I said it before 10 years ago and I’ll say it again. This place I call home is changing and changing fast. It feels like we are taking the next leg up with a new floor being laid. Now dont get me wrong, there are always cycles with bumps in the road. Prices could and should swing back down a bit at some point but my feeling long term remains. We’ve taken another step up the high end market ladder in the US and in the World.
Oh yeah, just to be complete. Closed sales up to 36 which is 5 more than last week and at the highest levels this year. Price reductions less frequent with sellers digging their heels in and often being rewarded for it.
In my zip (92009) there are 37 actives and 79 pendings so well under a 1/2 month inventory. End of the month last week so we had lots go from pending to sold so total pendings not up that much.
This market has been chewing bubblegum and kicking ass but it just ran out of bubble gum. Who knows what is next? Until next week….[/quote]
In Qualcomm, AMD, Tim Apple, Microsoft, Pfizer, Moderna,UPS, FedEx, Costco we trust…. I think I missed a few others that blew numbers out of the water and are all at 52 week highs despite the covid recession that everyone predicted….:)
This has been an insane month for tech and biotech earnings….Cha-ching
For RE around here also. I
For RE around here also. I know not everywhere in SD is like here nor is attached or urban real estate as hot as detached and suburban. But to some degree we are interconnected over the long term and I just view the changes here as an indicator of what is going on +/- a bit around SD County
Still open to adding another area to follow if anyone would like to suggest one as a good belleweather
On the flip side, any
On the flip side, any noticeable fall out from the 700+ jobs Intuit cut a little over a month ago? I heard engineering jobs were a good portion of that cut and I imagine some of those employees live along the 56 neighborhoods.
https://money.usnews.com/investing/news/articles/2020-06-22/intuit-lays-off-715-staff-plans-revamp-of-certain-sectors
Good question and I havent
Good question and I havent seen it yet. Having recently had a client who bought in that area I have a firm grasp of what is going on there and wrote about it upthread. 4S Ranch couldnt be hotter, Del Sur is very strong and Torrey Highlands is blazing with little to nothing coming on the market the last few months. I wouldnt expect much if any impact.
FWIW I think my clients beat the market a bit. Got one of the few values available and were able to negotiate some very favorable terms as we avoided a multple offer situation that we had been running into on every other one they were interested in.
Pretty far from your area,
Pretty far from your area, but the other part of SD that interests me is North Park, South Park, and City Heights.
If the new trend is shiny new distant burbs, not gentrification of older semi-suburban areas, they may do poorly.
Ok lets focus in a bit.
Ok lets focus in a bit. Detached or attached?
Also I think City Heights is a bit behind those two in gentrification. Id suggest North Park and South Park only but if I was gonna expand it would likely be plus University Heights and Normal heights rather than CH.
Update: took a look and its a bit more complicated as I pull the data by zips and the South park zip spans a pretty broad spectrum from South Park (very gentrified) to Golden Hill (quite a bit behind) to Chollas View/Webster (another discussion). I think its best to track a mostly homogenous area so I’ll propose North Park, University Heights and Normal Heights which while not completely homogenous is close enough. How does that sound?
Wow City Heights
Wow City Heights gentrification is now priced in. No deals there like even 2 years ago, last time I looked there. Maybe multifamily.
92107: active inventory is 1.2x July closed sales.
Rates: We haven’t broke the Covid-panic all time low of March 9, but the 10 year has never spent so long below 0.6% in US history. Refis meanwhile have ticked down a bit. Put the softening demand for rifis together with lower 10Y rates, nationwide average mortgage rates may drop another 0.2% the next week or two.
Update time and Im gonna
Update time and Im gonna change something up. I ran numbers yesterday so I have the data but for continuity and to add a metro suburban category Im gonna move this over to the main forums under housing market. Hopefully this will help get more discussion and contributions going.
Andrew32 wrote:On the flip
[quote=Andrew32]On the flip side, any noticeable fall out from the 700+ jobs Intuit cut a little over a month ago? I heard engineering jobs were a good portion of that cut and I imagine some of those employees live along the 56 neighborhoods.
https://money.usnews.com/investing/news/articles/2020-06-22/intuit-lays-off-715-staff-plans-revamp-of-certain-sectors%5B/quote%5D
My understanding was San Diego intuit location was not nearly impacted as other locations. San Diego location is mostly Turbo Tax group, and cuts mainly came from the QuickBooks and small biz groups which are more based out of Mountain View and North Carolina?. everyone still needs to do their taxes and in a lot of ways it’s a lot more complicated then it ever was. I think what they mostly did in SD was freeze hiring and suspend open recs.
On the flip side, I think Medtronics is running night and day shifts making ventillators. I see a bunch of mobile guys just got hired by biotech companies and they are paying them way more than I could afford to pay them… Several of these companies I think also do covid related testing. Not sure why they need mobile guys but oh well
My company let a lot of engineers go. On my team, 7 mobile engineers we let go found a job in less than 2 weeks, some saw a 20% pay bump. And no, I wasn’t paying them low.
SDR, your redfin links make
SDR, your redfin links make me think we should boycott them for obnoxiously lowballing our properties.
The Albert Ave property you linked to Redfin says is worth 65k less than the price it just sold for. If that isn’t the market price, what is?
All of my properties are severely underestimated. Two of them are off by more than 30%. My two bedroom condo with an ocean view is “Redfin Estimated” as worth less than 1 bedrooms in the same building without views have recently sold for.
I think they do this as an underhanded way to get people to register for their site.
Zillow tends to err downward too, but not to this absurd degree of saying 2-bedroom condos are worth less than 2019/2020 of 1-bedrooms in the same building.
Redfin estimates are based
Redfin estimates are based upon listing prices and then sales prices. These properties should adjust soon. Really who cares what these numbers say any way. We aren’t selling. A bank appraiser would never use then. They are there for entertainment only
I haven’t looked for a while
I haven’t looked for a while but Redfin consistently overestimates my house by about $150k (based on my own estimate which could of course be wrong). Interestingly, zillow consistently underestimates it by about the same amount… so we have a $300k spread between the two. That should be enough to tell you how useful these estimates are…
Rich, sounds like there’s an
Rich, sounds like there’s an element of your house that is hard to value. Perhaps a huge lot that is mostly unusable steep canyon.
Zillow is quite good for condos and single family in OB.
It does a bad job with smaller multifamily properties, failing to give them a premium for larger lots and valuing them as if they were single houses, but two 2/1s by the beach are more valuable than one 4/2.
Good guess, I am on a steep
Good guess, I am on a steep canyon (with a sidelong mission bay view to further confuse things)…
And thank you both for being
And thank you both for being part of the restoration of order here. Check out the active forum topics. Nearly all RE related. What a quick transformation:)
sdrealtor wrote:Redfin
[quote=sdrealtor]Redfin estimates are based upon listing prices and then sales prices. These properties should adjust soon. Really who cares what these numbers say any way. We aren’t selling. A bank appraiser would never use then. They are there for entertainment only[/quote]
And just like that the estimate is back in line. It takes them a week or so to adjust
https://www.redfin.com/CA/San-Diego/17143-Albert-Ave-92127/home/17205030
I’m not sure I understand but
I’m not sure I understand but PHR seemed to have become really popular in recent times in 92130. Not sure why. Is it just newer and closer to the new amenities in PHR or is it closer to the newer middle and high school or both? I don’t know.
I would guess newer and
I would guess newer and schools. The floorplans tend be more functional for todays living. The older homes offer larger lots on average but in CV they still are squeezed (very few large lots) so many decide they would rather have the newer home. Anecdotally many of the more recent immigrant families prefer not to have to deal with contractors either. They tend to worry more about getting taken advantage of.
FWIW prices up by me seem to have gone bonkers and are catching up to CV quickly. Model match to mine just closed at a price that is a good 15% above prices one year ago.
SDR, I wish I could say
SDR, I wish I could say 92106/7 were also bonkers. In 92107 inventory is also very low, about 1 month. But no sales that are clearly higher than early 2020 prices. 92016 inventory is a normal 2-3 months.
The pace of sales is very strong, but new listings are almost keeping pace, except at the low end. Right now there is only one SFH in 92107 listed under $1 million out of 21 listings.
Part of this may be the gradual digestion of the Upper Voltaire project of 28 new construction townhouses in the 640-730k range.
That’s about 6 months’ worth of organic condo inventory hitting the market all at once. And they are big and nice enough they overlap with the lower end of the SFH market. Only 1 of the 28 units hasn’t been sold yet. Here’s pictures of the last unit:
https://www.sdlookup.com/Pictures-190033617
I wonder if “Upper Voltaire” is an intentional pun on Upper Volta, the former name of the West African country Burkina Faso. The maps my elementary school had circa 1990 still had the old name on them.
I like the design. Almost like Streamline Moderne, like the OB Post Office on Santa Monica Ave, built in the early 60s.
I like the kitchen in those
I like the kitchen in those more than the rest of the home. Lots of angled walls seem like it would be a challenge to furnish. But they are new and people love new so they will all sell fairly quickly