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Brian
Posts:4665
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| 03/22/2008 10:06 AM |
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I'm beginning to see losses in the high end Downtown SD.
People previously said "Never! The rich will never sell, they will keep their properties off the market rathern than sell at a loss."
We will see. My bet is that 2009 is when we see large losses on the high-end market.
Here's a million dollar condo Downtown taking a hair cut. I know The Grande well and I wouldn't even pay 2004 prices for those condos.
http://www.sdlookup.com/Property-D5021301-1199_Pacific_Hwy_2101_San_Diego_CA_92101#17281
Please post the interesting high-end losses that you see.
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Brian
Posts:4665
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Brian
Posts:4665
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stella
Posts:503
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| 03/25/2008 1:35 PM |
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| Love that view. The high end hasn't been crushed like the apartment conversions have but the values are down. I'd guess at least 10%. |
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Brian
Posts:4665
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| 04/23/2008 1:25 PM |
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Look at #2802 at The Grande.
I wonder why the owner is not holding for the "long term" as Goingup? says we should. What happened to the millions is profits the flippers made?
This homedebtor has already invested his down-payment, his transaction costs, and 3 years of "pride of ownership" and "ownership premiums." Why would he want to get out now after having invested so much? Does he know something we don't?
http://www.sdlookup.com/MLS-086025693-1199_Pacific_Hwy_2802_San_Diego_CA_92101
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Goingup?
Posts:183
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| 04/23/2008 3:58 PM |
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Oh, the horror. It's only UP 25% from 2004 prices. This during the greatest real estate collapse in the history of our planet (excuse me if I exagerate just a little...I'm learning from you).
The poor flipper. He probably rented the unit in the meantime to some sucker and collected their money along with a few hundred K profit on the sale.
BTW, flipping condos for cash is still alive and well. It's just the location that has changed. I bought two condo in the Philippines (pre-construction) two years ago that have doubled in price and their completion date is still one year away. Not as much money (150K each), but hey, money is money (plus another 30% on the dollar drop I should add). |
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Brian
Posts:4665
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| 04/23/2008 10:23 PM |
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Posted By Goingup? on 04/23/2008 3:58 PM The poor flipper. He probably rented the unit in the meantime to some sucker and collected their money along with a few hundred K profit on the sale. div> The current owner bought on 04/15/2005 for $925,000. He's selling for $$996,500. He defaulted on last year's taxes in the amont $11,256.59. Where the is "few hundred K profit on the sale" coming from?
http://www.sdlookup.com/Property-DAF0CF15-1199_Pacific_Hwy_2802_San_Diego_CA_92101 |
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Brian
Posts:4665
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| 07/20/2008 9:16 AM |
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I know, I know, Acqua Vista sucks and in no way represents to rest of the market. Yeah, yeah, yeah, the building you live in is better. You LOVE it; and that's what's important.
Penthouse
Purchased: 12/23/2004 $2,100,000
Now asking: $1,180,000
I guess the owner doesn't LOVE it enough to hang on.
425_W_Beech_St_1705_San_Diego_CA_92101
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Goingup?
Posts:183
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| 07/20/2008 10:07 AM |
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http://www.sdcondo.com/trends.html
Resale units downtown have dropped 30% in the last year (492 to 349) and average sales for the month have moved from around 30 to around 50.
I think the only reason prices haven't started moving up downtown yet is the all those new units that came on line that Lew doesn't include in those numbers.
I haven't run the numbers, but I'm guessing about 2000 units came on line in the last year or so (Smart Corner, The Mark, Electra, Icon, Aria, Alta, ect). Tough to know exactly how much of that inventory remains, but clearly that is what held prices down.
But in spite of all that new inventory coming on line resale units still dropped significantly in the last year.
Since all construction after 2005 got shut down, the last of the units still being built will come on line in the next year. Vantage Point and Bayside are the only two majors ones yet to come on line. Compare that to what showed up the last 18 months.
After that new construction will all but disappear for at least 4 years at the earliest (takes at least that long from the start up stage to the finished stage for major projects).
Because of rising construction costs, no new Developers will even consider building downtown again until prices rise in the 40% range. So if you think that is 10 years off then plan on no new construction for at least that long.
In the meantime demographics will simply overwhelm downtown. Downtown needs at least 1000-1500 new units a year just to keep pace with growth.
I have no idea where the market will be next year, or where the economy will be (as an eternal optimist I always guess better). But in 5 years only one of two things can happen. Either everyone decides urban living isn't what it's cracked up to be and starts leaving or prices have to rise significantly.
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Brian
Posts:4665
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| 07/20/2008 11:54 AM |
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Most of the sales are happening at the low end.
If you eliminate developer sales, since May 15, according to SDlookup, there has been only 9 resales at the high-end (out of about 100), over $1 million.
I expect the foreclosure to take over the market and, this fall, the developers will continue to cut prices causing flippers to lose their shirts. Time will tell.
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Attachment: High End Sales.pdf
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wilson
Posts:1712
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| 07/20/2008 12:20 PM |
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So from the the pdf shows 8 of 9 properties selling at higher values when they were purchased. I guess you just disproved "losses at the high end downtown."
Oh, I know you can twist aroundthe logic to illustrate a point, but the figures don't lie. Prices have been very sticky on the high end. |
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Brian
Posts:4665
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| 07/20/2008 2:46 PM |
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1) If you count the transactions costs (and not even including carrying costs) only 5 out of 9 had any significant gains.
2) I want some time to elapse to see what was up with the Electra #1106 flip. We have yet to discover if is was a related party sale, or a cash back transaction, or some other thing like that. Also keep in mind that Electra pre-construction prices are back from 2004.
3) All the sales with gains were purchased in 2003 or earlier. The Park Place #1803 transaction was closed in 2003 but the pricing was pre-construction from a couple of years earlier.
4) Yes, the high-end condos are more sticky because richer folks have more wherewithal. Let's see how long they can stay solvent in the face of a prolonged downturn.
I'm willing to submit my predictions to the test of time. We shall see.
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jackjack
Posts:168
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| 07/20/2008 3:02 PM |
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Posted By Goingup? on 07/20/2008 10:07 AM
http://www.sdcondo.com/trends.html
Resale units downtown have dropped 30% in the last year (492 to 349) and average sales for the month have moved from around 30 to around 50.
I think the only reason prices haven't started moving up downtown yet is the all those new units that came on line that Lew doesn't include in those numbers.
I haven't run the numbers, but I'm guessing about 2000 units came on line in the last year or so (Smart Corner, The Mark, Electra, Icon, Aria, Alta, ect). Tough to know exactly how much of that inventory remains, but clearly that is what held prices down.
But in spite of all that new inventory coming on line resale units still dropped significantly in the last year.
Since all construction after 2005 got shut down, the last of the units still being built will come on line in the next year. Vantage Point and Bayside are the only two majors ones yet to come on line. Compare that to what showed up the last 18 months.
After that new construction will all but disappear for at least 4 years at the earliest (takes at least that long from the start up stage to the finished stage for major projects).
Because of rising construction costs, no new Developers will even consider building downtown again until prices rise in the 40% range. So if you think that is 10 years off then plan on no new construction for at least that long.
In the meantime demographics will simply overwhelm downtown. Downtown needs at least 1000-1500 new units a year just to keep pace with growth.
I have no idea where the market will be next year, or where the economy will be (as an eternal optimist I always guess better). But in 5 years only one of two things can happen. Either everyone decides urban living isn't what it's cracked up to be and starts leaving or prices have to rise significantly.
Goingup, with all due respect your logic is misguided. You assume the downturn is only a downtown thing. That is not the case. The real estate dowturn is County wide, and nationwide for that matter. The downturn will last a few more years.
The fact that downtown expects more supply to come "on line", as you say, makes the numbers worse, and more prone to a foreclosure backlash. My take on the downtown market is that it is still "new" and still "hip" to live downtown. Other worn out and tired areas of SD County have been hit far worse and have not had the increase in supply that downtown has. When the dust settles, and downtown there is no more new building buzz downtown, I think it will get slammed. It has to. I do think that downtown will see more of a lag (time delay) in its experience of the foreclosure melee - but, like all other areas of SD County, it will feel the foreclosure assault. We'll probably see around $250 per square foot for your garden variety buildings pretty soon. |
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wilson
Posts:1712
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| 07/20/2008 3:21 PM |
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Brian,
Your logic is astounding!!!!! You post recent closed sales with 8 of 9 units having gains in a post for "losses at the high end in downtown" and your response is that only 5 of 9 had significant gains when throwing in transaction costs????? I think you need to do a little more critical thinking here. How you draw your bear conclusions from positive siatistics makes absolutely no sense: simply rationalizations to support your preconceived conclusions. At least try to pick and choose the info you post to support your arguments. Even slanted info is more credible than posting info that absolutely contradicts your thesis.
I also think the high end will come down, but that is just opinion. Better to state that as opnion or wait for better data than to spin an obvious incorrect conclusion from the data.
By the way, the one unit of the 9 was a full-price offfer. Could it be that that person could have received a better offer if he had not underpriced his unit?
Please try for quality rather than quantity of posts. |
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glass steagall II
Posts:37
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| 07/21/2008 7:06 AM |
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Electra (aka Goingup?) wrote on 03/03/2008 12:01 PM:
The dollar's slide is clearly a factor, but a small one. Two years ago the euro sat at .85 to a dollar, and oil was at 30. In the last two years the euro rose about 30% while oil jumped 300%.
As for housing, since no one on this forum agrees with me I'll stay out of it. But Ben Stein's colume today is clearly on the bear's side. That's totally out of line with him, he usually thinks everything is rosy in the world.
I wish Goingup/Electra would keep his word.
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Brian
Posts:4665
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| 07/21/2008 12:43 PM |
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I wouldn't be surprised if Goingup had and investment property at Electra.
Time will tell..... |
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rentingman
Posts:713
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| 07/21/2008 12:49 PM |
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Going up can you please let me know the source of your conclusion that DT needs 1,500 new units per year to keep up with growth? The last I read SD county has been a net exporter of people for about the last five years. Going into a consumer recession where the type of jobs SD has created (Leisure, Hospotaility, Retail, etc) are no longer going to be created why will 1,500 additional units per year be needed downtown?
One item you did not discuss at all was pending NOD. Do you expect all of these to cure? What do you think will happen to prices when 20 pending NOD at Gaslamp Citysqaure and 20 pending NOD at 350 West Ash St come on the market? I also believe there are 20 or more pending NOD at Treo and La Vita. What will happen when they become REO?
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Brian
Posts:4665
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| 07/21/2008 1:53 PM |
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Tourism is a big driver of the Downtown economy.
The Airport Authority just released projections for the fall. They expect traffic to be down 8% due to high jet fuel costs.
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Brian
Posts:4665
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Brian
Posts:4665
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| 08/03/2008 10:31 PM |
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Posted By Brian on 07/20/2008 9:16 AM I know, I know, Acqua Vista sucks and in no way represents to rest of the market. Yeah, yeah, yeah, the building you live in is better. You LOVE it; and that's what's important. Penthouse Purchased: 12/23/2004 $2,100,000 Now asking: $1,180,000 I guess the owner doesn't LOVE it enough to hang on.
425_W_Beech_St_1705_San_Diego_CA_92101
Price drop on the penthouse at Acqua Vista
List Price: $1,130,000
MLS#: 080050210 |
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