ownhomeinSD
Posts:1068
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JAP
Posts:119
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| 02/01/2010 11:41 AM |
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San Diego is one of America's most undervalued cities?
HA! That is the most absolutely ridiculous statement I've ever heard. |
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Pharmboy
Posts:59
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| 02/01/2010 5:21 PM |
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Wow, I guess it could be true...if you are a foreign investor.
What person could say a city with median home price twice that of the national average (Kiplinger.com), in a city/state with huge deficit, could still be undervalued? Especially considering that prices have inflated 3x in the past decade till 2006, yet only deflated 50% since.
Guess I'll change my feeling after I buy a house, if I can afford one. |
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wilson
Posts:1700
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| 02/01/2010 8:29 PM |
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| MSN has a link to a Forbes list that show SD/Carlsbad as metro area with biggest price drops in last 3 months. Lists median price as $800k plus. I wonder if that is skewed by Carlsbad? Maybe the truth is somewhere between most undervalued and not. The SD/Carlsbad info as biggest drop sounds way out of whack to me. |
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DT.SD
Posts:319
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| 02/02/2010 10:10 AM |
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"Especially considering that prices have inflated 3x in the past decade till 2006, yet only deflated 50% since."
That actually sounds like a pretty good deal to me. So over the 14 years a $200k house would have increased to $600k by 2006 and then decreased back to $300k in 2009. The rate of return over those 14 years would only be about 3.2%. That’s less than even the national average. Also, 1996 was the very bottom of the last bust…
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Brian
Posts:4648
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| 02/02/2010 10:33 AM |
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DT.SD, in your hypothetical example, what you think of the buyers who bought for $600,000 or refinanced at that amount?
I believe the people who got mortgages at the peak will nearly ALL have to purge their debts somehow. Downtown will be interesting to watch as most of the condos were sold during the boom.
Of course, time will tell... |
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Brian
Posts:4648
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| 02/02/2010 10:41 AM |
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There was a blogger (ocrenter) who argued that one should buy only at 50% off of peak or Year 2000 prices. I agree with that rule of thumb. For some "desirable" properties, I'm willing to allow a little nominal appreciation.
For the places that were not even built in Year 2000, then you have to discount to the PPSF prevalent at that time.
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ElPato
Posts:573
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| 02/02/2010 12:18 PM |
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>> It is undervalued by 17.3%!
I think it depends on the neighborhood. For example this place is fairly valued, maybe even undervalued. This is not a great neighborhood, however.
But this place is no bargain at all.
My guess, the lower end stuff is probably done falling - it will get squished down a bit more, but basically it will stay flat.
The mid to upper end stuff still has a lot of room to fall. As Brian put it, do you have the staying power to hold on? Only time will tell.
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Brian
Posts:4648
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| 02/02/2010 12:42 PM |
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Yes, ElPato. Economists call any increase from the through a recovery....
But to a lay person who owes $600,000 on a $300,000 property, the recovery is very far off. By the time prices recover to $600,000, that person might have $1,000,000 "invested" into the property if (and only a big IF) she's able to hold on.
Only time will tell.... |
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ownhomeinSD
Posts:1068
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| 02/02/2010 1:05 PM |
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"Only time will tell.... "
Yes, I agree. Early last year, same words were posted many times here. One year late, what was told by the time? |
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DT.SD
Posts:319
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| 02/02/2010 1:24 PM |
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Posted By ownhomeinSD on 02/02/2010 1:05 PM
"Only time will tell.... "
Yes, I agree. Early last year, same words were posted many times here. One year late, what was told by the time?
So far, time has told the exact opposite of what was predicted by some and precisely what was predicted by others… Time will continue to tell… |
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Brian
Posts:4648
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| 02/02/2010 2:18 PM |
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I look at Downtown SD and most of the listings are sellers running out of wherewithal and REOs. There are virtually no organic sales except sales from developers.
So, time has yet to have spoken. Not by a long shot.
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jpinpb
Posts:4530
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| 02/02/2010 3:26 PM |
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Posted By Brian on 02/02/2010 2:18 PM
There are virtually no organic sales
That can be said about many parts of San Diego. I still see a lot of short sales and REOs and a few flippers who bought on the steps, still selling for considerably lower than peak. |
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Eugene
Posts:747
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| 02/02/2010 3:35 PM |
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There are virtually no organic sales except sales from developers.
Maybe that's because few organic sellers want to sell 17.3% below fair value? |
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jpinpb
Posts:4530
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| 02/02/2010 4:11 PM |
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| If we are 17% below fair market value, then why don't they raise the price? What I'm seeing is the few higher priced properties languishing and seems the demand to buy those overpriced homes does not exist in this market at this time. |
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Brian
Posts:4648
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| 02/02/2010 6:50 PM |
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Posted By Eugene on 02/02/2010 3:35 PM
Maybe that's because few organic sellers want to sell 17.3% below fair value?
I think it's because they don't have the money to bring to escrow.... They are tapped out and out of staying power.
They are willing to sell alright... as short sales. And when the short sales don't pan out (which they rarely do), the properties become foreclosures.
The market will not recover until there are organic sales by sellers who can come out whole. That's what a normal real estate market is all about.. And when that happens, the market will stagnate for a while.
When you see all sellers jump ship and abandoning all they have "invested", you know that the market is some way from stabilizing.
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creative_cpa
Posts:834
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| 02/02/2010 8:18 PM |
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That article reminds me of those TV ads to buy gemstones. They guaranteed that they would appraise at twice the offered selling price. The real problem is that the word "value" is absolutely meaningless in the real estate context. Therefore the terms "overvalued" and "undervalued" are also meaningless.
By the way, did you know there is a legal definition for "fair market value"?
[i]The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. [/i] |
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creative_cpa
Posts:834
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| 02/02/2010 8:52 PM |
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Posted By ownhomeinSD on 02/02/2010 1:05 PM
"Only time will tell.... "
Yes, I agree. Early last year, same words were posted many times here. One year late, what was told by the time?
Well, time told us that in the last 90 days, 66 people in your zipcode of 92126 filed for bankruptcy. Time also told us that in California, bankruptcy filings have increased from 1.9 per 1,000 in 2007 to 5.4 per 1,000 in 2009. When someone is about to be foreclosed, the last tool at their disposal is to file for bankruptcy, It stays the foreclosure for about 4 more months. |
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Jack**
Posts:215
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| 02/02/2010 9:13 PM |
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| Having moved here from one of the top 10 overvalued cities I can clearly state the overvalue was directly related to families in the metro area moving out of the city to a more peaceful area. The locals loved out-of-town money because it drove the prices up to the point of ridiculous for what you got. I don't understand SD position unless they are expecting interest earners to come here instead of wage earners. |
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ownhomeinSD
Posts:1068
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| 02/02/2010 10:26 PM |
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| Let's check other counties. |
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