wilson
Posts:541
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| 10/06/2008 12:43 AM |
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| After summer season, there is an uptick in downtown listings to just above 500 units. With foreclosures coming on market (see piggington website), number of listings should increase. How long will it be until financial market news puts more people on the sidelines? |
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rentingman
Posts:280
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| 10/06/2008 10:21 AM |
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| We are starting to see the foreclosure listings from the one family in 350 W Ash St. The foreclosure lisitngs from Creative Capital Leasing (mostly Gaslamp City Square) are not on the market yet. The was also a lull in July on NOD cause of the change in the Ca law. This means there should start to be a lot more foreclosure listings coming on the market at the end of the year or early next year. |
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jspoto
Posts:217
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| 10/06/2008 10:21 AM |
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| As i said before - I wish i pulled more money out of the stock market and bought more real estate...Real estate has been my best performing asset this year. How sad that is.... |
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Brian
Posts:2210
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| 10/06/2008 11:04 AM |
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Some people who own real estate just can't accept that paper losses are real losses, in real estate just like in the stock market.
As I said before, there were tons of listings pulled from the market that were barely breaking even. Those listings will be back at owners swallow their pride and run out of wherewithal. There was also an element of wishful thinking where owners thought that the government was somehow going to put a floor on prices.
People bought in San Diego because they used to MAKE money living in San Diego. It's now COSTS a lot of money to live in an expensive market such as San Diego. It's a 180 in mindset that people have not gotten used to yet.
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jspoto
Posts:217
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| 10/06/2008 11:19 AM |
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| in real terms - stock market down 30% YTD - real estate I bought in January - maybe down 5%. You tell me which is better |
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jakob
Posts:473
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| 10/06/2008 11:51 AM |
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Jspoto, I'm surprised as a finance guy you don't account for leverage. If I put 10% down, a 5% drop is a 50% drop of my investment. Half the investment is now gone. Poof. Buying real estate with a loan is just like buying stocks on margin. If I recall correctly, you put 25% down, so your 5% is actually a 20% drop in the investment.
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jpinpb
Posts:1450
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| 10/06/2008 11:57 AM |
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Brian - you say, "Some people who own real estate just can't accept that paper losses are real losses, in real estate just like in the stock market."
The losses don't really count unless they sell, just like the banks are holding on to houses. It's not a loss until it's on their books. The depreciation is there. No denying that. But say 10, 15, 20 years from now things go back up. Say there's even another run on real estate. If you are in a position to hold on that long, things could eventually turn around, no? Real estate is cyclical. Remember way back when Donald Trump was broke on paper or something like that b/c his investments, assets, etc on paper were way down. |
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Brian
Posts:2210
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| 10/06/2008 12:19 PM |
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Plus, with real estate, you have management and negative cash flows as you wait for that future appreciation.
How much is the time spent managing real estate worth to you?
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NCgirl
Posts:206
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| 10/06/2008 12:32 PM |
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| I spend hardly anytime managing. I only have one rental and he never calls. My FIL has several rentals, not much time managing either. If you have negitive cash flow you can take it as a write off if you make less tha 100k as an idividual 150k as a married couple. If you make more than that you can claim the losses when you sell (in my case not for at least 15 years, if ever) |
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jspoto
Posts:217
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| 10/06/2008 1:46 PM |
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| I understand leverage..i was just keeping it simple. I was trying show that the RE market might not be so bad as equities market. If one was to deploy 400k cash in either RE or equities, YTD the RE would have held better... |
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Brian
Posts:2210
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| 10/06/2008 2:38 PM |
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This is the kind of listing I expect to see more of this year.
We are now are 2003 prices but seller are still listing above that level? Why? Because they have no other choice. It's either that or walk.
1480_Broadway_2515_San_Diego_CA_92101
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Goingup?
Posts:150
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| 10/06/2008 4:17 PM |
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There is ton's of wealth in the world, and the US in particuar. The recent oil bubble proved that point. The question is where is the money going to go next. Commodities look dead for a while, stocks have been flat for over a decade, investors are scared to death of fancy "financial instruments" from Wall Street, banks look dangerous, leaving real estate as the only reasonable place to stick money for the next few years.
As long as you can buy for or near cash flow positive it's very hard to get hurt over the course of a few years.
Interest rates should be cheap as soon as the world discovers it's not ending and banks start lending to each other again. This can happen very rapidly, as the LIBOR spread shot from the 1% range to 4% range in just a few weeks. It will go down just as fast.
In the stock market crash of 1929 (the market didn't bottom until 1932) the recovery back to the highs took nearly 30 years. Oil bubbled in the early 70's and didnt' reach similar highs for 30 years.
Yet the market hit new highs just two years after the crash of 1987.
So....what' the bet on the recovery this time around for real estate, commodities, and real estate?
My thinking is the stock market recovers first, followed by real estate, and commodities will take years to hit their prior peaks (Oil will probably take another 30 years to hit a new high).
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Brian
Posts:2210
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| 10/06/2008 5:41 PM |
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Don't be so sure, Goingup.
Look at Japan. Property prices are still below 1989 prices. The Nikkei peaked at about 39,000 in 1989 and it's now at about 10,000.
There's a good chance we'll suffer a lost decade just like Japan. |
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PatentGuy
Posts:7
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| 10/06/2008 6:32 PM |
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This question is probably addressed in another thread, but I would like to ask this group (especially Brian):
If you had to plunk down $400K cash on a condo in downtown SD, either as payment in full, or a downpayment with the rest financed (say up to $1M total), where would you buy? why? I am interested in more than just potential for future gains (or less down-side losses), but also quality of construction, noise, location, floorplans, views, etc.
What is the best building (and floor/view) to buy in downtown SD for up to $1M?
Thanks! |
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ownhomeinSD
Posts:163
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| 10/06/2008 9:04 PM |
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When so many people are crying for loss in their 401k account, my friend just called me for their right decision to buy a house with pool in last Oct because they took money out from their 401k account as downpayment and avoided big loss as other people. Moreover, 7 homes with exact model and year built were sold after then. Three homes with worse conditions sold from Last Dec to this April are about $10k-15k less than their purchase price but those sold in May through Aug are $10k~$30k higher than their purchase price.
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Brian
Posts:2210
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| 10/07/2008 9:41 AM |
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PatentGuy, that's a tough question. The high-end buildings will fall last but they will fall proportionately so it's a matter of when you want to get it and how much HOA you want to pay.
It also depends how long you want to hold. If you can hold for 20 years + then The Grande/Shapphire/Bayside/Breeza are good locations as there eventually (who knows when) will be a nice park by the bay.
The train noise is a problem right now. It depends how sensitive you are.
350 Ash may provide great values are the foreclosures continue to mount.
I can be pretty happy anywhere so to me, it's all about value for the money. I would however stick with the concrete/steel buildings. Don't buy in the wood/stucco buildings.
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PatentGuy
Posts:7
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| 10/07/2008 12:58 PM |
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Thanks, Brian. We are in our mid-late 40s, and eventually want to have a "part-time" place in SD. Not necessarily downtown, although we do stay down there once a year or so (we live in NorCal). We're not in any hurry. All of our after-tax funds are in short-term CDs, money market or Fidelity tax-free munis (paying about 1%!), so we are avoiding the current slaughter on wall street. (Don't ask about my before tax, I was much less intelligent with our former retirement money - but that is 20 years away and shared with the government).
We know the downtown area a bit, but not the individual condo buildings (never been in any of them, just hotels), and there are a lot to choose from. I am trying to get a list of no more than 3-4 buildings to take a close look at next time we visit. If we think prices will continue to fall, we will wait to buy, but it helps in advance to have an idea of which buildings/floors/floorplans/views, etc to target. We can buy any time from now to 3 years from now. The right place is more important than saving $20K (but $100K is another story!).
We prefer quiet - not too close to gas lamp or trains - or otherwise very well insulated. We do not need a ton of space, but we do want at least one BR, no studio. A dedicated parking spot that is secure for cars left unattended weeks or months at a time. Some ocean view would be nice, but is not essential. We do not need an outdoor balcony. Not a homeless encampment (Not smart corner). Laundry in the unit; not downstairs. HOA must be solid. I don't want to hear the neighbors every footstep or fighting with each other. (I guess loud sex is OK). Cortez hill is OK, but you have to walk several blocks down the hill to get to a decent variety of restaurants (although the walk back up is good exercise!).
I agree re concrete steel - for earthquake reasons alone.
Any other thoughts? |
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PatentGuy
Posts:7
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| 10/07/2008 2:03 PM |
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| I should point out - we are also looking up in Temecula (very different from downtown). I am asking similar questions on the piggington site. |
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