Sunday, September 9th, 2007 at 2:14 PM
Coffee Bet Voting
It was last September 16th that the "coffee bet" was made. Robert said he’d buy me a cup of coffee if I could find any area that didn’t have a 10% decline in the ensuing 12 months.
I named three areas that I thought would be possible winners in Carlsbad: Olde Carlsbad, Terramar, and the Davidson tract in La Costa Oaks. I also agreed to put it to the vote of the readers who the eventual winner would be.
Today let’s examine the area known as Olde Carlsbad, generally the area between between the I-5 freeway and El Camino Real, and bounded by the two lagoons – all in zip code 92008.
I searched both the tax rolls and the MLS looking for houses that had sold in 2006 and resold in the summer of 2007, and found only one, on Knowles. It was already mentioned here as the goofy reverse auction – the owner paid $652,000 on July 5th, and has it up for sale currently for $675,000 and is knocking off $5,000 every Sunday until sold, starting today.
But there were others who had resold within 2-3 years, and we’ll use all of them as evidence for your vote. If anyone knows of others, I’ll be happy to add them – I’m not cherry-picking these, they are all I could find that have closed since July, 2007:
1309 Knowles
$610,000 6/29/06
$652,000 7/5/07
DOM: 144
OLP: 720,000
*********************
3205 Sandy
$630,000 2/9/05
$660,000 8/8/07
DOM: 30
OLP: $689,000
**********************
3997 Alder
$655,000 6/3/05
$735,000 8/29/07
DOM:169
OLP: $815,000
**********************
3335 Valley
$779,000 12/28/04
$775,000 7/2/07
DOM: 43
OLP: $819,000
**********************
3306 Donna
$817,500 5/18/04
$835,000 8/15/07
DOM: 350
OLP: $985,500
**********************
4079 Skyline
$1,140,000 7/13/04
$1,250,000 7/13/07
DOM: 291
OLP: $1,990,000
***********************
DOM = Days on Market, OLP = Original List Price. You can tell the market isn’t supporting the wild and crazy list prices, but buyers are paying about what they have been over the last few years – at least for now.
What do you think?
Was Robert just a little early with his call, or will prices hold up in the superior areas? The fact that there aren’t more recent homebuyers reselling is a key factor – will it last?
Posted on Sunday, September 9th, 2007 at 2:14 PM in Uncategorized | 12 Comments » | 
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I think Robert was just a bit early. With the seizure in the credit markets this past month, and the concommitant slowdown in mortgage lending, I think we are just beginning to see the broader effects of the housing bubble deflation kicking in. Additionally, the worst is yet to come in terms of mortgage resets… and the low end of the market could drag the high end down. Price drops will begin to accelerate in earnest soon (though we may not hear about it for a couple more months). Just wait… for 2008.
redys | September 9th, 2007 at 5:58 pmJim,
I think you won your cup of coffee. San Diego prices are down maybe about 10% from peak (per Case-Shiller index), but that masks substantial differences between neighborhoods. There are neighborhoods where prices are flat, and there are those that took pretty heavy hits. When all this will be over, I have a feeling that everyone will be able to declare victory: the ultra-bears will cherry-pick a few properties at 50% off as evidence of a "total rout", and the ultra-bulls will point out a few properties that held up well as evidence of a "soft landing". The truth, as always, will be more nuanced.
Anyways, since your bet was that "some areas will hold up until September 2007", I think Robert owes you a cup of coffee.
Daniel | September 9th, 2007 at 5:59 pmActually, it’s hard to say who wins the coffee bet, because we don’t know how much these 2004 places might have sold for in September 2006. Many believe that this was the actual price peak.
How much annual appreciation was there between 2004 and 2006? If a place was $817K in the middle of 2004, and there was 10% annual appreciation, it would have listed for about $898K in 2005, and $987K in 2006. Assuming 15% appreciation between ’04 and ’05, and 5% appreciation between ’05 and ’06 yields a similar number for ’06.
So, seeing it sold at $835 in 2007 would put it at a lot lower than just 10% below 2006 prices. Correct me if my math is wrong.
Simone | September 9th, 2007 at 9:44 pmI still think the price declines are hidden in the inventory.
It would be interesting to see homes that sold in Q3 2005 through Q3 2006 and are now listed again…but not selling. How many are REOs, (soon-to-be foreclosures), etc.
The ones that sold for the around the same price are the ones people were *able* (and willing) to sell. Are we able to see peak sales vs. active/pending/withdrawn/expired listings for those same homes in late 2006-current?
Otherwise, Jim wins the bet.
CA renter | September 9th, 2007 at 11:28 pmThe peak in Carlsbad was summer of 2004. While there may have been some higher sales in 2005 around town, there wasn’t an overall rising trend after July 2004.
I’ll add some unsold houses too, but guessing that the evidence will be scattershot.
Jim the Realtor | September 9th, 2007 at 11:51 pmI think Robert is just early and fast, but that’s the nature of the beast. I’d award you the coffee bet.
No_Such_Reality | September 10th, 2007 at 1:02 amI’m with the majority. JtR is winning. There’s still 7 days left however.
Explains: I expected the drop in sales. I expected the rise in REOS. I didn’t expect the banks to be so sanguine. I didn’t expect the dearth of comparables.
Somehow I don’t imagine a Realtor getting a free cup of coffee, no matter how expensive, can fell like a win.
Robert Coté | September 10th, 2007 at 1:09 amI’m hoping if I can pull off the trifecta I might get a couple of donuts as a bonus – I haven’t seen a title or escrow rep in months!
Jim the Realtor | September 10th, 2007 at 2:35 amI think JtR wins the bet, but with one caveat in addition to the above-mentioned wishing price/selling price disparity: Look at how low the volume is! In three areas, there are only 6 properties that meet the criteria. Wow. Given what is happening in the mortgage markets, and the fact that a 20% down conforming home is $521K, there is a reckoning coming.
That Skyline property is my favorite. $35K profit after (exactly) 3 years (net of 6% commissions), and a whopping 37% off wishing price. I wonder how many of the 291 nights it was on the market that they stewed over the insulting offer price.
incessant_din | September 10th, 2007 at 4:38 amSpeaking of seven days left, I’ll need every one of them in La Costa Oaks. There are two pending there that if one or both close, it’ll make a difference.
Jim the Realtor | September 10th, 2007 at 5:11 amThat house on Knowles has been terminally for sale – in fact there is a new "for sale" sign in the front yard, looks like FSBO with a Sharpie hand written phone number.
Speaking of Olde Carlsbad Jim, what do you think of the new construction homes on the NE corner of Carlsbad Village and Highland? Don’t you think the intersection traffic lights negate the ocean view?
And what’s the deal with those condos s-l-o-w-l-y going up at the NE corner of Jefferson and Las Flores? Nothing like having I-5 for your backyard. Seems like I caught a glimpse on the sign once that they will be asking over a million for them.
Laurie R
LR | September 10th, 2007 at 7:18 pmNot sure if you know that I sold the lot on the corner of CVD and Highland to that guy – he bought the one next door too so he could get the seven houses on there.
As far as I know they haven’t sold one yet, but they’ve been trying for about six months. Prices are now all the same, $1.295 million, for 3,342sf to 3,494sf backing up to Carlsbad Village Dr. – one of the busiest streets in town. They have to be feeling it, the listings have been active since June 2006, and nothing.
The Las Flores condos can be yours for $1.3 to $1.5 million, but the listing expired and no one has bothered to relist. Maybe waiting for it to complete? They must have been hoping to collect some deposits, not sure if they did.
Jim the Realtor | September 10th, 2007 at 7:47 pm