Friday, May 25th, 2007 at 1:35 PM
Coffee Bet Update
On September 16, 2006, I detailed my prediction about superior properties retaining their value better than inferior properties, and it drew a slew of comments.
Robert Cote said,
"I’ll buy you that $4 cup of coffee if you can find anything that isn’t off at least 10% from the peak this time next year."
The next day I named three neighborhoods in Carlsbad that I would use as measuring sticks:
1. Terramar
2. Olde Carlsbad
3. La Costa Oaks, Davidson’s Starboard tract.
Terramar and Olde Carlsbad were safe bets, because they are both filled with long-time owners with plenty of equity – less chance of those financially-distressed moves.
Davidson tracts have done well throughout North County – they build upscale, stylish homes that look better than most tracts, and they get most of the awards each year. The problem I could face is downward pressure from home sales in the other La Costa Oaks tracts – which could suck down the Davidson homes with them.
How are they doing?
There are three models at Starboard: 3,739 sf, 4,000 sf, and 4,337 sf (A quirky coincidence that Centex also built a 4,337sf model in La Costa Oaks too, so I want to be careful to only compare the Davdison-built comps).
First let’s list the sales around September:
3,739 sf model
7/5/06 $1,144,500
7/28/06 $930,000
8/7/06 $1,085,000
10/20/06 $1,275,000
11/8/06 $1,161,500
Average $1,119,200 Median $1,144,500
4,000 sf model
7/5/06 $1,298,000
8/7/06 $1,172,000
Average $1,235,000
4,337 sf model
9/27/06 $1,250,000
Generally, sales of all three models would have to be in the $1,100,000 to $1,200,000 range in September 2007 for me to win.
This bet will likely be hampered by fewer comps in the coming months, but there are some ‘brewing’ to keep an eye on:
Active listings:
3,739 sf model $1,200,000 22 DOM
4,000 sf model $1,239,000 34 DOM
4,000 sf model $1,250,000 125 DOM
Pendings
3,743 sf model $1,200,000 12 DOM
4,000 sf model $1,229,000 96 DOM
4,000 sf model $1,249,000 53 DOM
Solds
4,337 sf model $1,024,000 4/18/07
3,743 sf model $1,200,000 5/15/07
This is where it gets tricky in any tract neighborhood – where you tend to be married to the comps because they are so similar in location and features. Will that one low sale bring down the rest? You can guess that the appraisers who are working on the three pending sales are raising an eyebrow, and are using others in La Costa Oaks but outside Starboard to help justify the sales price.
Two notes on the recent sales. The seller who dumped at $1,024,000 still sold for more than he paid for it, which is a big problem in any tract where there has been a big run-up. The early purchasers can submarine those who bought later. The second sale was the model home that was mentioned here as a Davidson sweetheart deal that the buyer bought in February for $1,050,000 – and has now flipped for a $150,000 increase!
Everyone is looking for $1.2-something, can they all hold out? Will the three in escrow get close, or did they have to dump to find a buyer?
My cup of coffee is teetering….
Posted on Friday, May 25th, 2007 at 1:35 PM in Uncategorized | 18 Comments » | 
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Still a fair bet and a close one as it was meant to be. In case you got the wrong impression, I apologize for the tone of my previous comment. It was intended to be friendly mid competition remark about the unfolding nature of the market. For the record some of those pendings that didn’t close last month on schedule will probably show up this month as their financing is finally secured and whatever buyer imposed conditions are met. So the drop in closings is not just fewer sales but stretched out sales so don’t read too much into it until data emerges from the noise. Jim was correct to point out what I failed to reitterate, monthly small data sets are extremely noisy.
Robert Coté | May 25th, 2007 at 6:12 pmDon’t worry, you’d have to be a lot more obnoxious to tick me off – I love this bet because I’ve taken so much flak here from others (read lakesideseller) yet I still have a chance of winning.
If I do, it’ll be Jamaican Blue Mountain please. Or if we upgrade to an adult beverage, I’ll drive, OK?
Jim the Realtor | May 25th, 2007 at 6:58 pmPS to Woodrow – I’m still laughing out loud at your ‘lakesideseller’. I never got the difference between Poway and Lakeside, if you look at a map it sure looks similar to me.
Poway fans erupt now please. Besides the heralded schools, is there much of a difference? It is hot as hatties out there in the summer.
Jim the Realtor | May 25th, 2007 at 7:00 pmWow, what if there are -no- sales Sept ’07? Is the price $0 or infinite?
Robert Coté | May 25th, 2007 at 7:57 pmI’ll lay out all the comps from July 1 to Sept. 16th, and we’ll put it to a vote here of blog readers as to who wins.
If I lose, party at my house for the participants (my wife is going to hate me for this one, I always told her I wanted to have a blog party).
If I win, party at your house?
Jim the Realtor | May 25th, 2007 at 8:44 pmYou really want to drive to Camarillo? Sure, we got us an outlet mall and are Oxnard adjacent but still?
Yes, we are finally entering the "entertainment ready" phase of home improvement although my wife is clearly talking to yours. I am concerned about "peak" and ending prices on a technical level. As mentioned many times there is a lot of noise. I’d no more like to win with noise than lose.
Robert Coté | May 25th, 2007 at 9:43 pmPoway sure has a lot of raging soccer moms in SUV’s taking cuts every where. Maybe that is just the dog-eat-dog So Cal attitude in the last 10 years that I have avoided.
More importantly will the Iceman beat RJ tomorrow? I hope so!
South-West Stan | May 25th, 2007 at 11:28 pmA blog party at your house, Jim? Heh, I might be convinced to fly down from San Jose for that…
greenlander | May 26th, 2007 at 1:18 amGreenlander, long time, no hear! You were the first to comment on my prediction, remember?
"Jim, the city you live in is probably in the top five "housing bubble" cities.
If the aggregate market drop from peak-to-trough is only 33% in San Diago, I’ll fly down there and buy you a beer.
I suspect you’ll see a 50% in nominal terms at the trough in San Diego.
However, I admit I’m a super-bear.
"
No trough yet, but if you fly, I’ll buy the beer!
Jim the Realtor | May 26th, 2007 at 2:34 amParty? Why don’t you have that party in your car – if you can keep it out of the pool, wise-guy.
wifey | May 26th, 2007 at 2:36 amYou don’t want to have a party? Afraid someone might discover that shoe collection, Imelda?
Jim the Realtor | May 26th, 2007 at 2:37 amLOL!
CA renter | May 26th, 2007 at 8:25 amSorry for the delay in posting, I’ve been on vacation in Spain and Portuglar. Of course, the focus of my trip was on surveying the European housing bubble, not on picking up chicks with blue eyes and dark hair…
greenlander | May 26th, 2007 at 1:45 pmSorry for the delay in posting, I’ve been on vacation in Spain and Portuglal. Of course, the focus of my trip was on surveying the European housing bubble, not on picking up chicks with blue eyes and dark hair…
greenlander | May 26th, 2007 at 1:46 pmHey Jim…love reading your blog!
jean | May 27th, 2007 at 2:10 amI know you aren’t a huge fan of the east country (Poway)but…can you follow what is happening in the Santa Luz, 4S, Penasquitos area? Lots of your readers are in that area!
Jim
bob w/o a job | May 27th, 2007 at 3:05 amI think your bet is a slam dunk to win! I dont think you can find anything in Carlsbad that is down by 10% since the end of last Summer. The housing market all around me in South Carlsbad is down by 5% at the most for anything that I’ve seen.
My geographically correct title is USDCseller:"Unincorporated San Diego County Seller".
The school says Poway. The post office says Lakeside. The fire department says to go get screwed.
You are right: Poway summers suck. But the schools, trails, hills, and 20,000 open acres of preserve and hills are worth it. Went row boating on Lake Poway yesterday – what a gorgeous day. Love running at the Blue Sky Reserve with its old oak trees, and running that trail up 1.5 miles to Ramona (great run). Love seeing all those people ride their horses around town.
Poway only allowed 45 building permits per year. All that open space, and they would not let a single developer touch it. Their budget is solid, and with a history of running a surplus, are well positioned to lower their budget for the housing downturn. A well run city.
Of course, Carlsbad is wonderful too. I would love living in Carlsbad, I bet.
Nonetheless, Poway prices dropped 35% in the last downturn, and there were short sales and foreclosures in all neighborhoods. I know coastal Encinitas was hit hard too: lots of short sales and 30-40% price drops.
Schahrzad Berkland | May 27th, 2007 at 3:52 amthis is cool site
funnyman | April 2nd, 2008 at 12:41 pm