Jeff Pasquino
Footballguy
Check out my sig then.excellent discussion fellas - love talking RE with people who know what they're talking about.
Check out my sig then.excellent discussion fellas - love talking RE with people who know what they're talking about.
Me and my dad moved from South County to Arnold, Mo to get out of the whole suburb/city mentality. 5 years later, and Arnold too was claimed by the cityites. Dad moved 30 miles further south to Bonne Terre hoping to get away from everything. Time will tell if they'll spread further.Sucks, don't it?Construction still booming on NW side (IL) where I live. Folks in StL sick of overpaying for 1/2 the house they'd get over here for an extra 20 minute drive. Used to live on the fringes of civilization and now I'm the little guy in the middle of suburban sprawl.St. Louis has slowed down considerably. The pendulum has swung more towards the middle now, actually favoring buyers more. Good thing, because I'm starting to get sick of the mom n' pop real estate places that are popping up everywhere in my area.
If you're looking to move to St. Louis, it's looking pretty favorable for you. Lots of homes for sale, very saturated market, and lots of realtors looking for business. My mom's trying to sell her house and she's had to whack $6k off the listing price because the damn thing just won't sell. Too many tire-kickers. Never seen it before in my life.
as i said above, the market hasn't given anything back yet. it is 25% up YOY from 2005. i just wouldn't expect it personally.Not yet. Again, what is the % the Phoenix market is giving back if you say prices are falling to mid 2004 levels? Erasing 2005 gains entirely is quite a decline, and not at all what you were predicting months ago.According to this article, Phoenix led the nation in 2005 growth at 38%:But you aren't seeing a reversion to 2003 pricing levels for the market as a whole.I agree 100%. What % of a discount is that, if we erase the gains of late 2004 and the entirety of '05?People need to take the number they think they "deserve" and get back in line with reality, which in all likelihood is a number closer to early to mid 2004 levels.
Are you saying that the Phoenix market is now giving back that 38.4% 2005 gain? If so, god help those poor souls who invested in ARMs at 2005 prices. Bankruptcy law in Phoenix is going to be very profitable in 2008.However, from the fourth quarter of 2005 to the first quarter of 2006, median prices nationwide fell from $225,300 to $217,900, a drop of 3.3 percent. It's the second consecutive quarter that prices showed a sequential decline; in the fourth quarter of 2005, prices fell 1 percent from the third quarter.
Many major metro areas showed slight declines, including Washington D.C. (down 2.4 percent), Los Angeles (down 0.8 percent) and Chicago (down 0.8 percent).
And some smaller metro areas fell precipitously, including Danville, Illinois (down 17.7 percent) and Akron, Ohio (11.5 percent) .
For the 12-month period, the leading gainer was Phoenix, where prices were up 38.4 percent from a year earlier.
are you intentionally trying to be stupid?If this is accurate (cut and pasted from a blog), and Phoenix is giving back 61%, WOW.Real Estate Snapshot
Here is a quick snapshot of some high level statistics on home prices for San Francisco, San Diego, and Phoenix (data is provided by the MLS).
San Francisco home prices rose by 18% from 6/2004 to 6/2005
San Diego home prices rose by < 1% from 6/2004 to 6/2005
Phoenix home prices rose by 61% from 6/2004 to 6/2005
i think the market will be fine long term as the fundamentals for AZ are there. as i have stated before, if interest rates go above 8.50% that will be a big concern as will and major shock to the economy (i.e. terrorist attack). if population growth slows in AZ that would be a major concern. however, none of this is happening (with the exception of interest rates slowly creeping up).I'm not saying you do, and I seriously respect your opinions on this. I just think that when you have skin in the game, you tend to unconciously believe the things that are most favorable to your position. People who own Alexander don't think Hutchinson was that important. People who own Sirius Radio think that they're going to bounce back. People who work in real estate tend to think the market's going to be fine. It's just how things work.I really don't have much of an incentive to artificially inflate my opinion of the R/E market here...I don't think anyone here will be buying any land from our group.I respect bagger's opinion on this, but I generally try to take anyone's opinion on a market with a grain of salt when they're invested in it.
I didn't say it wasn't a buyer's market now (I actually said it was). However it is not a major issue (i.e. sign of a downturn). Considering the inventory is in between 6-7 months by your definition it is in between a stable market and a buyer's market.So what are you disagreeing with then?Disagree with you on that one.
Classic definition of a stable market == 6 months of inventory. <6, seller's market. >6, buyer's market (give or take 1-2 months).
Since the last time we discussed our hot markets, San Diego's inventory has continued to rise (now setting a new record every week), sales are decreasing, and price reductions are everywhere. We're going negative YOY when the June #'s come out, foreclosures are way up, and 2007 and 2008 are huge re-fi years for ARM holders.ALL of the signs in San Diego point to a collapse. I can't think of any market fundamental that supports even 2004 prices, much less the ridiculous 2005 run-up.are you intentionally trying to be stupid?If this is accurate (cut and pasted from a blog), and Phoenix is giving back 61%, WOW.Real Estate Snapshot
Here is a quick snapshot of some high level statistics on home prices for San Francisco, San Diego, and Phoenix (data is provided by the MLS).
San Francisco home prices rose by 18% from 6/2004 to 6/2005
San Diego home prices rose by < 1% from 6/2004 to 6/2005
Phoenix home prices rose by 61% from 6/2004 to 6/2005
The portion I was disagreeing with was the "less than 1 year of inventory is very strong" statement.Not sure what this has to do with REITs. REITs are commercial or apartment real estate. We're talking residential construction here. That's fine if you "don't want to buy it" but the facts are that we have 44k of inventory and our sales pace is 6,500 homes per month. That is what all homebuilders and land developers use to estimate if there is softness or strength in a market. While 44k sounds bad, inventory are still less than a year, which is still very strong.
WSJ: How is the housing market?
Mr. Heebner: A significant decline in prices is coming. A huge buildup of inventories is taking place, and then we're going to see a major [retrenchment] in hot markets in California, Arizona, Florida and up the East Coast. These markets could fall 50% from their peaks.
WSJ: What has you so concerned?
Mr. Heebner: I'm worried that more people will default on their mortgages. Risky mortgages such as interest-only and pay-option adjustable-rate mortgages require no principal amortization and in some cases payment of only a fraction of the interest due, have been widely used in the last two years. Some people got 100% financing for their homes. It made the tech bubble look like a picnic. When housing is going up rapidly and you can buy far more than your income can support, some people are eager to make big profits by extending themselves financially.
As housing prices fall more people will be under water, and these people are just going to walk away from their homes. They are going to say, 'I'm outta here.' You're going to see increasing foreclosures over the next several years. As [home] prices come down, it will create a difficult environment for home builders.
WSJ: What data have you most worried?
Mr. Heebner: We're seeing a huge increase in inventories of unsold homes. The role of incentives in selling a home is increasing so the weakness doesn't show up immediately in list prices. Large price declines will follow in inflated markets.
Long term fundamentals are strong. What has caused the excess inventory was a temporary phenomenon due to speculators trying to flip. As we get through this inventory we will shift back to a stable/seller's market again.I don't disagree that there is a short term buyer's market occurring right now. I see it. However, it is a phenomenon that is not due to long term fundamentals, but rather a one time shock of people trying to capitalize on one of the hottest housing markets in 2005.The portion I was disagreeing with was the "less than 1 year of inventory is very strong" statement.Not sure what this has to do with REITs. REITs are commercial or apartment real estate. We're talking residential construction here. That's fine if you "don't want to buy it" but the facts are that we have 44k of inventory and our sales pace is 6,500 homes per month. That is what all homebuilders and land developers use to estimate if there is softness or strength in a market. While 44k sounds bad, inventory are still less than a year, which is still very strong.
Why can't those ARM holders re-fi now when rates are still under 7%?SD may be in for a big correction...I am not sure. However there will always be a demand for living near the beach so I can see people with equity from Temecula, etc. filling into the core urban centers mitigating a "bloodbath". People may very well go underwater, but if they have positioned themselves correctly and can hold onto their home for 5-10 years they will see extremely strong gains again over the long term.Since the last time we discussed our hot markets, San Diego's inventory has continued to rise (now setting a new record every week), sales are decreasing, and price reductions are everywhere. We're going negative YOY when the June #'s come out, foreclosures are way up, and 2007 and 2008 are huge re-fi years for ARM holders.ALL of the signs in San Diego point to a collapse. I can't think of any market fundamental that supports even 2004 prices, much less the ridiculous 2005 run-up.are you intentionally trying to be stupid?If this is accurate (cut and pasted from a blog), and Phoenix is giving back 61%, WOW.Real Estate Snapshot
Here is a quick snapshot of some high level statistics on home prices for San Francisco, San Diego, and Phoenix (data is provided by the MLS).
San Francisco home prices rose by 18% from 6/2004 to 6/2005
San Diego home prices rose by < 1% from 6/2004 to 6/2005
Phoenix home prices rose by 61% from 6/2004 to 6/2005
I'm even more bearish re: RE than I was months ago. Its going to be a bloodbath in San Diego. Maybe Phoenix can survive - since I don't follow that market I defer to your opinions. But I'm skeptical, to say the least.
Happy 4th - I'm guessing you'll be seeing tons of fake ta-ta's today. Outside of LA, Phoenix is the plastic ta-ta capital of the world.
Congrats, when did this happen? Pics?My biggest concern right now in Phoenix is trying to sell my fiance's condo and my condo ASAP to capitalize on this temporary soft spot moving into a bigger home.
Second Quarter 2006: San Diego Housing Market - single family detached and attached homes: June home sales were 2,947, down 33% from June 2005. The second quarter sales were 8,822 homes sold down 30% from the second quarter last year. As a matter of fact our second quarter sales were slightly below the fourth quarter of 2005. Who would have thought that the peak April, May and June months would have lower sales than the winter/holiday months of October, November and December. That provides a very good picture of what has happened to the demand for housing. The inventory on July 1 stood at 22,049, up from 20,635 a month earlier. For the past few months we have been adding inventory at a rate of about 1,500 homes per month. The growth has been caused by the decline in demand having homes stay on the market longer, causing new listings to stack on top of the unsold listings. One of the major issues for our market is what does the future demand look like, and only time will tell. I did a rough check on July to date (July 9) to see where it stands, I debated about putting this in this writing because the numbers are scary and they will close somewhat by the end of the month. I decided to put it in so that we can see the mountain ahead to maintain some level of reasonable demand. The first 9 days of July have 303 homes sold for an average price of $559,577 and an average size of 1781 sq ft; the first 9 days of July 2005 had sales of 933 and an average price of $629,168 and an average size of 1749 sq ft. Last July's 933 sales represented 25% of the month's sales, if that were to hold this year, well suffice it to say that would be a disaster. I think this July will stay in the 30% to 35% down from last year region and that would put July sales at about 2,700 homes sold, keeping us a path to about 30,000 home sold for the year, down about 30% from last year.
Junes' average price was $638,380 up 3% from last year. However, this increase is explained by the fact that the over $1 million sales represent 10% of June total sales where they were only 8.5% of last Junes' sales. When you break down the sales into price & sq ft segments you see a completely price flat market. However, there are neighborhoods already showing price declines of the 4% to 5% region and I expect to see this show up in the overall county statistics. Markets can not sustain 30% declines in demand over a period of time and not have price erosion. Here is a trend to consider; sales in the fourth quarter of 2005 was down 10% from prior year, sales of the first quarter 2006 was down 20% from prior year and the second quarter of 2006 was down 30% from last year third quarter of 2006 ???, anybody's guess. Another issue that will impact price pressures is that about 30% of our listings are vacant and heaven help the Fed continue to raise interest rates. Help comes in the form of something that will increase demand or reduce inventory.
A lot of people in this country can -- depends on location.who can buy a house at 1500 a month?
No hating on my fellow San Diego homeowners, but with inventory at record highs and sales continuing to decline, it's going to be a long, long, long winter.Maybe Mrs. GunZ will get her condo after all.By Lori Weisberg and Emmet Pierce
UNION-TRIBUNE STAFF WRITERS
11:10 a.m. July 12, 2006
SAN DIEGO – San Diego County's housing market continued to lose steam in June, with median home prices posting their first year-over-year decline in a decade and sales dropping for the 24th straight month.
New housing stats released Wednesday by DataQuick Information Systems provide renewed evidence of a softening market, but hardly one that's destined to crash, said housing analyst John Karevoll.
“To me, this is just part of a plateauing of prices,” said Karevoll, of DataQuick. “Between now and the fall, I'd say half the months will be slightly positive and half slightly negative, but I really don't read the drama in these numbers that most people will.”
Last month's median home price dropped to $488,000, a 1 percent decline from a year earlier and a 6 percent decrease from last November's peak of $518,000.
The median is the price at which half of all homes sold for more and half for less.
The median price for single-family homes, which represent a significant share of the housing market, reached $565,000, down slightly from May's record price of $569,500, but up nearly 2 percent over a year ago June.
Meanwhile, sales increased slightly from May but were down 24 percent from June of 2005.
Yet another indicator of the county's flattening market is the growing supply of homes for sale. As of Wednesday, there are 22,460 homes on the market, according to Sandicor, the multiple listing service subscribed to by area real estate offices.
The numbers should come as little surprise to home sellers, who have watched their properties sit for months on the market while they lowered their asking prices in hope of getting offers. Similarly, builders are seeing sales slow. In response, they are dropping prices and offering generous incentives, noted industry insider Peter Dennehy.
“Across the region, prices are coming down, incentives are rampant, and sellers are adjusting to longer times on the market,” said Dennehy of Sullivan Group Real Estate Advisors.
The segment of the housing market showing the biggest correction is new homes, which saw an 8 percent price decline, influenced, in part, by dropping prices for condo conversions.
San Diego real estate agent Calvin Goad said the region is experiencing a normal cycle of price fluctuations.
“The prices are coming down right now, but it is a good time for the buyer to jump into the market,” he said. “San Diego historically does take a small drop in price, but then the market levels.”
Todd Fleischmann, 26, moved from Escondido to Portland, Ore., in January to take a new job. He has yet to sell his Escondido condominium, but he recently lowered the price from $361,5000 to $338,000.
“It has been a disappointment but it is what it is,” he said of the cooling housing market. “I am more concerned with selling my property than trying to get top dollar.”
People who own property in SD and can hold onto it will always be in good shape in the long run. I will feel the same way about Phoenix and its 'burbs. The market is correcting itself after unrealistic gains in 2004-2005, and only investors holding properties that they cannot rent/afford should be overly concerned.Why can't those ARM holders re-fi now when rates are still under 7%?
SD may be in for a big correction...I am not sure. However there will always be a demand for living near the beach so I can see people with equity from Temecula, etc. filling into the core urban centers mitigating a "bloodbath". People may very well go underwater, but if they have positioned themselves correctly and can hold onto their home for 5-10 years they will see extremely strong gains again over the long term.
Quite honestly, I expect Phoenix's YOY #s to drop from 25% gain just because the buyer's market hasn't fully been priced into the market. It would not shock me at all if the majority or all of that gain is wiped. But again, unless you are a quick flip investor, I am not sure what the issue is if you have your job and can make the payments.
keep making that money PN. my dad's a life long RE broker/appraiser so I know all about the ups and down of RE cycles.Still going pretty decent here in Seattle
Anecdotal update: one of the five houses in my subdivision just reduced their asking price from $385k to $345k. Still too high for the current market, IMO.Baltimore metro: inventory in May (haven't seen June numbers yet) was double that of May 2005 and median selling price was down $10,000 from a year ago. My small subdivision of about 85 homes has five on the market, one since before Christmas, no sales since the first one was listed. IMO, all five sellers have unrealistic asking prices; it's like everybody still thinks you can slap any price you want on your house and you'll get it.
And my biggest builder (I'm in floorcovering) is getting ready for substantial layoffs because of soft demand.
People who own RE in almost any decent sized city in America will "be in good shape in the long run". The issue for many of us is the relative short term. If a significant correction is on the horizon, it's extremely stupid to buy now, watch your property decline 30% over the next 2-3 years, only to watch it rebound and eventually gain equity 10 years from now. In this scenerio, it's much smarter to wait for somewhat of a significant decline, and then enter the market with a much lower cost of entry. Knowing when to buy is key. People will tell you that you can't time the RE market, but in reality the RE market is all about timing.People who own property in SD and can hold onto it will always be in good shape in the long run. I will feel the same way about Phoenix and its 'burbs. The market is correcting itself after unrealistic gains in 2004-2005, and only investors holding properties that they cannot rent/afford should be overly concerned.Why can't those ARM holders re-fi now when rates are still under 7%?
SD may be in for a big correction...I am not sure. However there will always be a demand for living near the beach so I can see people with equity from Temecula, etc. filling into the core urban centers mitigating a "bloodbath". People may very well go underwater, but if they have positioned themselves correctly and can hold onto their home for 5-10 years they will see extremely strong gains again over the long term.
Quite honestly, I expect Phoenix's YOY #s to drop from 25% gain just because the buyer's market hasn't fully been priced into the market. It would not shock me at all if the majority or all of that gain is wiped. But again, unless you are a quick flip investor, I am not sure what the issue is if you have your job and can make the payments.
Is it your experience that people who can afford 20% down are taking out IO and neg Am loans? These people are going to have the cash to come to the table when their 3/1 resets and they are underwater on their house?Link to any sort of hard data on this?The goverment should regulate these lenders and companies of exotic loans because for many people once the interest only period is up they are going to be royally screwed and may lose there homes in foreclosure. Which would not be good.
Ah...my house is 6 years old. 3000 sq feet, 5-6 bedroom, 4 full baths, 2 car garage, finished basement and our payment is $1,353 and that is a fixed 30 year and we live in a nice neighborhood.Colorado Springs is a nice place to livewho can buy a house at 1500 a month?
Not sure why you are happy. Let's run the numbers.1 year ago:YOY median prices in San Diego fall for the first time since 1996:
No hating on my fellow San Diego homeowners, but with inventory at record highs and sales continuing to decline, it's going to be a long, long, long winter.Maybe Mrs. GunZ will get her condo after all.By Lori Weisberg and Emmet Pierce
Last month's median home price dropped to $488,000, a 1 percent decline from a year earlier and a 6 percent decrease from last November's peak of $518,000.
I think a 29% drop from peak is just the beginning. Plus, I'd rather buy with a lower puchase price and higher interest rate, rather than the other way around. Interest rates can be refied in the future, not many banks willing to cut the principle.Not sure why you are happy. Let's run the numbers.1 year ago:YOY median prices in San Diego fall for the first time since 1996:
No hating on my fellow San Diego homeowners, but with inventory at record highs and sales continuing to decline, it's going to be a long, long, long winter.Maybe Mrs. GunZ will get her condo after all.By Lori Weisberg and Emmet Pierce
Last month's median home price dropped to $488,000, a 1 percent decline from a year earlier and a 6 percent decrease from last November's peak of $518,000.
30 Year Rate - 5.25
Price - $493k
Monthly Payment - $2722
November 2005:
30 Year Rate - 5.75
Price - $518k
Monthly Payment - $3023
Now:
30 Year Rate - 6.4
Price - $488k
Monthly Payment - $3052
Now, if the rates stay the same and prices continue to go down, you might be OK. The problem is that matching the monthly payment from 1 year ago at 6.4%, the prices need to go down to $435k, which is another 11%. Maybe that will happen, but you will still continue chasing that because the rates will probably continue to rise. For example, at 7%, the price needs to be @ $410k, at 8%, the price needs to be @ $370 or a 29% drop from the peak. Unfortunately, since rates have gone up almost 1.5% in around 1 year, 8% isn't that far from today's rates as one might think.
By the way for full disclosure, I just sold my house outside of DC in June (closed with $$$ in hand) for a cheaper place, but much nicer, in NC and we had to come down in price, but I am glad we did. There are even more homes in my area on the market and they are not moving at all. I just thank god that my wife is a great decorator and the house looked like a model otherwise I would be sweating my ### off worrying about selling a house with my new closing only a month away.
Funny thing is that the market in my area was decent right up until April. Then everything ground to a halt. We had so many potential offers that fell through because the other people couldn't sell there house first and we would not take a contingent offer because we had such good traffic.
Interesting, until recently you heard NOTHING but excellent things about San Diego. Now, nothing but negative things, they have become recognized country wide as having one of the, if not, THE worst traffic around.When I came down from NYC to Austin to check out buying a house, my wife and I stayed at a Bed and Breakfast and met another couple, who were from SD. They told me they were doing the same thing and really has become to dislike SD mainly with so many people moving there and the traffic becoming unbearable.YOY median prices in San Diego fall for the first time since 1996:
No hating on my fellow San Diego homeowners, but with inventory at record highs and sales continuing to decline, it's going to be a long, long, long winter.Maybe Mrs. GunZ will get her condo after all.By Lori Weisberg and Emmet Pierce
UNION-TRIBUNE STAFF WRITERS
11:10 a.m. July 12, 2006
SAN DIEGO – San Diego County's housing market continued to lose steam in June, with median home prices posting their first year-over-year decline in a decade and sales dropping for the 24th straight month.
New housing stats released Wednesday by DataQuick Information Systems provide renewed evidence of a softening market, but hardly one that's destined to crash, said housing analyst John Karevoll.
“To me, this is just part of a plateauing of prices,” said Karevoll, of DataQuick. “Between now and the fall, I'd say half the months will be slightly positive and half slightly negative, but I really don't read the drama in these numbers that most people will.”
Last month's median home price dropped to $488,000, a 1 percent decline from a year earlier and a 6 percent decrease from last November's peak of $518,000.
The median is the price at which half of all homes sold for more and half for less.
The median price for single-family homes, which represent a significant share of the housing market, reached $565,000, down slightly from May's record price of $569,500, but up nearly 2 percent over a year ago June.
Meanwhile, sales increased slightly from May but were down 24 percent from June of 2005.
Yet another indicator of the county's flattening market is the growing supply of homes for sale. As of Wednesday, there are 22,460 homes on the market, according to Sandicor, the multiple listing service subscribed to by area real estate offices.
The numbers should come as little surprise to home sellers, who have watched their properties sit for months on the market while they lowered their asking prices in hope of getting offers. Similarly, builders are seeing sales slow. In response, they are dropping prices and offering generous incentives, noted industry insider Peter Dennehy.
“Across the region, prices are coming down, incentives are rampant, and sellers are adjusting to longer times on the market,” said Dennehy of Sullivan Group Real Estate Advisors.
The segment of the housing market showing the biggest correction is new homes, which saw an 8 percent price decline, influenced, in part, by dropping prices for condo conversions.
San Diego real estate agent Calvin Goad said the region is experiencing a normal cycle of price fluctuations.
“The prices are coming down right now, but it is a good time for the buyer to jump into the market,” he said. “San Diego historically does take a small drop in price, but then the market levels.”
Todd Fleischmann, 26, moved from Escondido to Portland, Ore., in January to take a new job. He has yet to sell his Escondido condominium, but he recently lowered the price from $361,5000 to $338,000.
“It has been a disappointment but it is what it is,” he said of the cooling housing market. “I am more concerned with selling my property than trying to get top dollar.”
Sold the house Tuesday. We sold it ourselves for $322k back in April, took $320 this time, plus paid 5% commission (paid 3% to buyer's agent when we did FSBO). I am happy to have it sold -- the nicer, reasonably priced properties are still selling, though slowly (for example, we're an end of group with a new kitchen). The run-of-the-mill properties are just sitting, because nobody will drop their price, so buyers just wait for a nice property to come on the market and end up settling on a price that's just about what the run-of-the-mill people are asking.I'm dying in Baltimore. We sold our house ourselves back in April -- and then two weeks before our scheduled June 15 settlement, the buyers cancelled. Instead of moving from DC to Baltimore and quitting her job to stay home with the kids, the wife decided she wanted a divorce instead.
Since we're settling on our new place July 31 no matter what, we hired a realtor this time around in hopes of a quick sale. After a month on the market we are hurting and will probably reduce the price this week.
In our nice townhouse community, where houses were selling within days of hitting the market as recently as April, things are dead. Only two houses have sold in the last three weeks. I will say that inventory is not climbing, however. Seems like a standoff between sellers and buyers -- nobody wants to be the last buyer to pay full price before the market drops and no seller wants to be the first to get less than the last person to sell.
If someone makes me an offer, I'll be that first seller. I don't want to chase a falling market and I don't need to squeeze every last dime out of the house (which has appreciated about 2.5 times since we bought it in 99). I just want to get the thing sold.
You'll be renting your entire life if you're waiting for housing prices to drop more than 30%. If by some chance they do drop that much I guarantee you won't have a job at that time. So you won't even be able to buy and take advantage of your great "foresight". Do you understand this concept of basic economics?I think a 29% drop from peak is just the beginning.
If rent remains less than half of the mortgage for the same property, I will rent the rest of my life. I'll be shocked if the median price of San Diego housing isn't down 30% in 3 years. A 30% drop would still leave those who bought in 1998 and 1999 with 50% gains over 10 years, which is phenomenal.You'll be renting your entire life if you're waiting for housing prices to drop more than 30%. If by some chance they do drop that much I guarantee you won't have a job at that time. So you won't even be able to buy and take advantage of your great "foresight". Do you understand this concept of basic economics?I think a 29% drop from peak is just the beginning.
That's 4% a year compounded. I wouldn't call an investment that is barely beating inflation "phenomenal". When you look at the numbers that way do you see why a 30% drop in RE prices is not possible without a severe recession?If you rent your entire life do you understand that when you retire you will not have any assets while people that bought RE will have paid off an asset worth hundreds of thousands of dollars?50% gains over 10 years, which is phenomenal
Fair points. As liberal as I am on this board, I'm pretty conservative financially. I come from humble beginnings and don't have a safety net to fall back on, and my father worked two jobs for awhile during my childhood so that my family could get by. That's one part of his life I hope not to emulate.I understand risk/reward, but when home prices-to-incomes are as out of whack as they are in San Diego, I don't believe now is the time to be gambling on housing in my area. It's a suckers bet, IMO. My wife and I aren't big money makers, but our household income is more than double the average SD household income, and we can't afford a 2/2 condo in a decent area without going IO. To me, that screams that something is wrong, and all of my research has supported that position.Tommy, I'm not arguing this particular point with you, but if you're that scared of failing you'll probably never succeed. How old are you? Way I figured it, if I guessed wrong, got myself in over my head, and I declare bankruptcy, I was 23 - I had plenty of time left. If I got lucky, I shorten my retirement timeline by about 15 years in 3. It was worth the possibility of failing.If rent remains less than half of the mortgage for the same property, I will rent the rest of my life. I'll be shocked if the median price of San Diego housing isn't down 30% in 3 years. A 30% drop would still leave those who bought in 1998 and 1999 with 50% gains over 10 years, which is phenomenal.You'll be renting your entire life if you're waiting for housing prices to drop more than 30%. If by some chance they do drop that much I guarantee you won't have a job at that time. So you won't even be able to buy and take advantage of your great "foresight". Do you understand this concept of basic economics?I think a 29% drop from peak is just the beginning.
4% a year beats the historic rate of return on RE. And under this scenerio, RE would be above the historic rate for 10 straight years.Yes, I believe that is phenomenal.That's 4% a year compounded. I wouldn't call an investment that is barely beating inflation "phenomenal". When you look at the numbers that way do you see why a 30% drop in RE prices is not possible without a severe recession?50% gains over 10 years, which is phenomenal
If you rent your entire life do you understand that when you retire you will not have any assets while people that bought RE will have paid off an asset worth hundreds of thousands of dollars?
It's going to be a really wild ride out west folks.Condo Prices See Significant Drop
By KELLY BENNETT Voice Staff Writer
Friday, July 14, 2006 | While the news that home prices finally went negative year-on-year last month grabbed plenty of attention this week, a new report shows that the price dip has been even more exaggerated for condos and townhomes.
When compared with June 2005, median prices dropped $20,000 in the county last month for single-family attached homes, a category that includes condos, condo-conversions and townhomes. That’s a 5.2 percent drop over the year. The prices also decreased by 2.4 percent from May to June and 5.7 percent from the beginning of the year, according to HomeDex, a resource compiled by Dr. Robert Brown, professor of economics at California State University, San Marcos.
As usual, those in the industry are divided over what the numbers mean, with some predicting a calming of the market and others seeing a potential crisis. Many real estate professionals and analysts view the change as the attached housing market starting to return to normal after the escalating prices of the last few years. Others aren't so optimistic.
Realtor Jim Klinge, who has been in the realty business for 22 years, said the current conditions are unlike anything he’s seen before.
"It’s anything but normal, if you ask me," Klinge said.
John Karevoll, a housing analyst with DataQuick Information Services, said the market is returning to normal.
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"I don’t think things are as grim as some say they are," he said.
Chris Thornberg, an Anderson Forecast analyst at the University of California, Los Angeles, said the housing market is in uncharted territory. Thornberg attributes the "everything’s fine" response from the realty industry to the "bunker mode" mentality that comes in circumstances like these.
"People are loathe to realize losses in homes," Thornberg said. "They don’t want to talk about it, to think about it."
Thornberg said that these numbers aren’t evidence of a soft landing.
"The industry has been really blase," he said. "This cooling off of the market is very, very hard and very, very fast -- more than we’ve seen before."
The people most impacted by these shifting prices in condos and townhouses are those who purchased condos over the past two years and did so by stretching their budgets, said Gary London, president of London Group Realty Advisors in San Diego. Those buyers are typically first-time buyers, London said.
“So, by definition, they would be starting out their run on the housing ladder, house-poor,” London said.
“But my sense is that will represent a relatively small portion of the market,” he added.
The lower prices have also had an impact on the rate of production undertaken by San Diego builders and developers.
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“We’re beginning to take a pause from that heated market,” said Paul Tryon, CEO of the Building Industry Association in San Diego. “It’s a repose, a rest.”
In the market heyday in recent years, builders held back on production of detached homes, but overcompensated and "got a bit crazy" in the condo market, said Alan Gin, professor of economics at the University of San Diego's Burnham-Moores Center for Real Estate.
“They were counting on condos being new starter homes,” Gin said. But, he thinks the changing prices will lead first-time homebuyers to wait until prices drop low enough for them to afford a detached home.
That reluctance to jump into the market will reduce the demand, and will thus reduce the prices, even further, Gin said.
While marked decreases in the median prices of single-family attached homes were noticed in all areas of San Diego in June, South County experienced the largest differential, with decreases of 11.3 percent from the same month last year, 12.6 percent from January and 7 percent from last month. That’s a year-on-year price drop of more than $40,000.
Those decreases are hitting home for several of Chula Vista Realtor Dawn Lewis’s clients, four of whom are what Lewis calls "short sales." These are people whose initial home loans were for a higher price than their homes are currently worth. She said most of her clients in this position are getting out of the condos any way they can, even if they don’t walk away with any cash.
"They think it’s better to cut their losses now than to wait to see what happens later," she said.
Lewis said she’s even willing to take less on commission if it means finding these often desperate clients a way out.
Sellers have noticed the drop in prices but they also recognize that prices are still just out of reach for many potential homebuyers. Builder incentives and price reductions, often about $20,000, accompany nearly every condo sale in the current market and have taken the place of upgrades and gimmicks that used to help sellers close a deal, said Peter Dennehy, senior vice president for Sullivan Group Real Estate Advisors.
“People are saying now, we need more help making our monthly payments than we need granite countertops, flatscreen TVs and that sort of thing,” Dennehy said.
And those price reductions are encouraging first-time buyers, he said, though he warns against people buying condos as an investment, hoping to make money. However, he expects a strengthening of the market in the long term.
"The first thing I ask people is why do they want to buy a condo," Dennehy said. "If someone is wanting to live downtown and doesn’t want to pay rent, then I would say, 'Absolutely, now is the time to buy.'"
Chris Redfearn, an analyst with the University of Southern California’s Lusk Center for Real Estate, agrees with that synopsis. San Diego, especially downtown, will benefit from the aggressive underwriting and investing in condos, he said.
“If they’re built, people will live there,” he said. “With the construction of the ballpark and the people moving in there, you’re going to get a vibrant community. The original investors may get hammered. But ultimately, downtown is going to become a great place.”
Darren Moore is a 34-year-old condo-owner living in La Vita, a condo building at Beech and Cedar streets in Little Italy. He bought his condo for $459,000 in February 2005. It has appreciated to $702,000. He doesn’t put too much weight in the appreciation, though. Ultimately, he thinks real estate should be about finding a place to live, not about making an investment speculation.
"Everyone's got the 'now' perspective," he said. "But in the end, this is San Diego. It's the place to be."
Huh?It's probably cost you a few hundred large to be right for the last two years, Tommy. Enjoy it. Now could very well be your time to say "I told you so."
Nah, I was too late for the run up. It was 2004 before I had any chance of getting into the market. 2004 was too late in SD.Smartest guy on these boards is the Rover. He cashed out at the peak, moved up your way, and made a bundle. He'll be able to move back to Diego in 5 years and buy his old house for 1/2 price.Not getting in before the run-up.Aw, nevermind. I like you. I'm just flipping you hell.Huh?It's probably cost you a few hundred large to be right for the last two years, Tommy. Enjoy it. Now could very well be your time to say "I told you so."