LoonyQT
Posts:894
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| 08/27/2008 2:31 PM |
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OK, there's lots of doom-n-gloom in the press and on this site (admittedly, I tend to dish out numbers that support the bubble is still bursting opinion).
I was reading jpsoto's post on the S&L crisis board regarding "tours" needing to be organized because of all the people looking at downtown condos and I reflected on my being "out there" as a potential buyer as well. All I can say is that I toured a La Costa Greens community over the weekend, and the salesperson was trying hard to make a sale (apparently, she could see the desperation to become a "homeowner" in my face, lol). As I was walking out with sales price sheet in hand (prices start around 711k), she made a last ditch effort to get my attention by saying "you can take $100k off the list prices". Things that make you go hmmm...
HOWEVER, I am definitely seeing more buyers, and legitimate ones at that, touring new homes and making offers on aggressively priced properties, especially attractive ones. There is definitely more activity now than l've seen over the last year and competition for prime properties/biding wars seem more common. Is it just the end of summer and some pent-up buyers taking the plunge? I would guess that some nifty charts will show some increases in July/August for volume of sales, and perhaps even dollar volume. Anyone have any pretty recent charts?
Also, where are those charts from the 90's that show a little market pick-up during one summer before the real plunge in sales prices during the last cycle?
(still waiting to see if my "highest & best" offer at a whol lot over original "agressive" asking price on a property in the styx gets accepted or if a more desperate knife catcher gets it),
LQT |
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Brian
Posts:2210
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| 08/27/2008 2:43 PM |
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It's the "on sale" effect.
Do you think that the stuff at Nordstrom Rack is worth buying, even on sale? Its worth is only in relation to the previous prices at the main store. If nobody bought the discounted stuff, it would go right into the trash.
Do you think that the stuff you bought during last Thanksgiving was a good deal? Only until this upcoming Thanksgiving.
Builders are having a big sale right now.
http://www.latimes.com/business/la-fi-realblog24-2008aug24,0,1000236.story |
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LoonyQT
Posts:894
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| 08/27/2008 2:53 PM |
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Thanks for the article, Brian - did you read the "green lien" proposal? If it passes, potential buyers get to pay backlogged water bills that kept neighborhoods from being blighted by dead landscaping. wow. gosh, why don't they just levy that against tax-payers, too.
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jspoto
Posts:217
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| 08/27/2008 2:54 PM |
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| loony - a little off topic, but I thought you would have commented on the victorian design of the house I showed. I wish there were more houses/neighborhoods like that here.... |
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LoonyQT
Posts:894
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| 08/27/2008 2:55 PM |
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| jsp - I missed this victorian property... post here? |
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restless
Posts:12
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| 08/27/2008 3:06 PM |
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I have been looking and went through the process of putting in offers on two properties. Both homes had multiple offers, the second being a foreclosure which had a total of 15 offers submitted during the first weekend. I have been waiting for a while for the market to decline and decided now was a good time to enter.
Trying to guess the bottom often times results in watching value go by. There are still a number of properties that are overpriced, but in general the tone in this forum seems to be I can't afford the nicest areas in one of the most expensive areas in the country so that means no one can. The reality is the bubble bursting has resulted in a number of areas becoming affordable. I work with a lot of people that have a lot of money at their disposal and they have been accumulating properties that come on the market. From my experiences there is a pick up in the market occurring whether that be a sign of market beginning to stabilize or a short term up tick is anyones guess |
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BigTrace
Posts:194
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| 08/27/2008 3:08 PM |
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I think watching the inventory numbers is key. Again, more demand than supply will spell prices going up, more supply than demand goes the other way. I think the bulk of the foreclosure mess still hasn't really hit home yet and the banks are taking their time in releasing their properties because a flood would cause an over abundance of supply which would drive the prices down some more.
I do think their is a flurry of people out there looking to buy, but few of them have all the necessary approvals to be approved on a loan. One thing I learned early on, most really good deals never see the market which is one reason to have the services of a great realtor. I also think there are lots of looky-loos right now. Some are just dreaming of a place, some are serious, some are just getting decorating tips. I always like to look at land value + construction cost = approximate value. A builder can build a 2000 sqft. home of pretty decent quality for around $170/ft. +/- depending on the permit issues. That's $340k plus whatever the land is valued at. If it is around $150k, then the place should be around 500 - 550k depending on area and what the builder got for profit. If you can buy a place cheaper than you can build it yourself, then it may be worth a second look. If it is way over valued, move on.
I think the newer places are seeing more action because they need little work and are turn-key. Home equity lines are a b**ch right now so no-one wants to do any work until much later down the road. Older places (I think) will take much more of a hit because of this.. |
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jspoto
Posts:217
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| 08/27/2008 3:11 PM |
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| loony - go to: http://100norwood.shutterfly.com |
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kelly564
Posts:59
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| 08/27/2008 3:34 PM |
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| I've been watching certain properties and as soon as the seller lowers the price to give the "sale" allusion that Brian speaks of, the home goes pending within a week or so. It's unbelievable to me. It makes you wonder if the market will really go down in these areas or not, because the on sale ones are selling. |
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tpc
Posts:498
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| 08/27/2008 3:53 PM |
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[quote]I think watching the inventory numbers is key. Again, more demand than supply will spell prices going up, more supply than demand goes the other way.[/quote]
BIG-BINGO. If you buy before the inventory level reaches the 6-8 month level, you will have paid too much. Can it really be that simple?????? YEP. |
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showboat
Posts:67
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| 08/27/2008 4:10 PM |
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| What level are we at now tpc? Where are you monitoring that stat at? |
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restless
Posts:12
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| 08/27/2008 4:16 PM |
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| It is hard to judge what the true inventory is given the number of short sales on the market. I would not consider those to be true inventory given the 20% success rate. |
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Brian
Posts:2210
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| 08/27/2008 4:31 PM |
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Why would short sales not be part of inventory? Either they sell now, or they become REOs that will sell later. Either way, they are properties that will eventually move at distress prices.
Like this one:
510_1st_Ave_305_San_Diego_CA_92101 |
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UnsureBuyer
Posts:211
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restless
Posts:12
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| 08/27/2008 4:38 PM |
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Posted By Brian on 08/27/2008 4:31 PM Why would short sales not be part of inventory? Either they sell now, or they become REOs that will sell later. Either way, they are properties that will eventually move at distress prices. Like this one:
510_1st_Ave_305_San_Diego_CA_92101
When they become foreclosures then I will view them as inventory currently the success rate on them is about 20% when a single lender is involved and less when multiple lenders are involved as the second on homes pretty much gets nothing when they sell. |
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rentingman
Posts:280
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| 08/27/2008 4:42 PM |
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Kelly
There are and probably will always be buyers. They will look for the least expensive unit so when the seller drops the price the unit sells. Of course in a declining market they can regret their decision within a month. A good example is Gaslamp Citysquare, Unit 6191; 777 sq ft; foreclosure, sold for $350K about June. That was $50K less than any other 1 bedroom had sold for in this building. There are now three units listed at $299. The bank that lowers to $275 will be the first to sell. You need to pay attention to what is coming down the road not just what is in front of you.
TPC
I would also pay attention to delinquent taxes and NOD before buying. Even if eventory falls below 6 months on the MLS you might be in for a surprise a few months later. |
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BGinRB
Posts:67
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| 08/27/2008 5:22 PM |
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| The prices are clearly on the move again, and they are moving down. I revisited Lake Rancho Viejo in Follbrook after 6 months and there are 4-5years old ~2000sf places for ~$150/sqft. That is 20-25% drop from earlier this year. There are buyers at this price level, but this is not even near the bottom. |
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Goingup?
Posts:150
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| 08/27/2008 7:19 PM |
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The housing bubble was a good thing for downtown. Construction costs for condos have exploded in the last 4 years with most material up 300%. The fact downtown got overbuilt is a good thing as far as current buyers are concerned. If we didn't have creative financing causing a bubble all those condos would have never been built when construction costs were down. If Bosa were to consider building Electra at today's construciton prices he'd be considered insane. Just add 40% to his current prices and you'd have an idea of where he'd need to be selling those condos to turn a profit. There are at least 5K units downtown that would never have been built. As for the current owners, price appreciation took a short term hit, but demographics and construction costs will take care of that soon enough. But for those considering moving downtown, this bubble was the greatest thing ever. Without it, prices would be much higher than they are now (downtown is growing, and fast). My thinking is the bubble created a window of opportunity for those considering moving downtown that will last for maybe 1 more year (Saphire, Bayside and Vantage point are still coming on line). After that demand will start to exceed supplly and with construciton costs up so high there will be zero inventory coming on line until prices rise at least in the 40% range. When that happens is anyone's guess, but the day is coming. Those cheap units at Aqua Vista selling for 300K will move 20% when the forclosures dry up, and then move up another 40% before any new investory comes on line. My prediction is you won't see another building like Aqua Vista getting built unil that 300K unit today is worth 480K again. The Marina district will be golden, as there is only one lot left to build on and Bosa bought that for a futune during the bubble so his building costs are going to be VERY high.
As for the real estate prices having to go back to historical norms that would only be true if everything else remained constant. Look at Manhattan or La Jolla. When land starts to become scarce prices jump above the norm and pretty much stay there forever. As building costs soar it's very simplistic to believe codo prices wil fall just because they are currently above some historical earnings trend line.
As for income trends and who's going to be able to afford these codos, in case no ones noticed the middle class and upper class are doing fine. It's the lower end that's been destroyed. Real incomes for college grads has been up over 7% a year for over a decade now, while it's been flat for those in less skilled areas. I only see this trend continuing. |
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LoonyQT
Posts:894
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| 08/27/2008 7:41 PM |
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ummmmmm - Goingup? I'm not sure I agree with your "middle class and upper class doing fine comment".
Does someone have a population breakdown of household income for San Diego county? I would bet that over 150k represents about 15% of the population, yet the top 25% of homes are all well over a million dollars. |
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UnsureBuyer
Posts:211
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| 08/27/2008 8:14 PM |
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San Diego, CA
Median Family Income: $69,099
Total Families: 684,841
Families Earning under $25,000 annually: 96,798
Families Earning $25,000-$49,999 Annually: 145,756
Families Earning $50,000-$74,999 Annually: 128,822
Families Earning $75,000-$99,999 Annually: 98,262
Families Earning $100,000-$199,999 Annually: 168,367
Families Earning $200,000+ Annually: 46,836
in a chart, that would look like this:
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