bubbleinfo.com

The Dawg asked about getting fire insurance for canyon-front properties, and it’s not easy these days. The house I sold on Nightshade (in picture) was a standard 1997 tract house that backed to a small, contained canyon – you can see the houses across the way.  Yet just because it was on a canyon, the insurance carriers that the buyer called wouldn’t touch it.  Instead, he ended up going through my favorite insurance broker, and she was able to get Travelers to insure this house for only $982 per year.

But if you are in an extremely high risk area, you need a miracle, or you can insure with AIG.  I say extremely, because the house on Mesa Norte was NOT in a ‘very high fire hazard zone’, nor in a ‘wildland area that may contain substantial forest fire risk’.  But with a mile or so of dedicated open space behind it, the majority of the insurance companies wouldn’t insure after consulting their own maps and satellite photos.

AIG is the company in San Diego that has their own fire trucks, and were featured in many news stories last October for saving some houses in Rancho Santa Fe.  They aren’t cheap though, they are about double the cost of other carriers, plus they insist on handling all of the client’s other insurance needs too. 

Of course, there’s always the California Fair Plan:

http://www.insurance.ca.gov/0100-consumers/0060-information-guides/0040-residential/california-fair-plan.cfm

Currently the MLS is showing 64 detached sales for the first quarter of 2008 – there were 114 in 1Q07, a drop of 44% (though there will be more added to this year’s count over the next couple of weeks). There were 22 of the 64, or 34%, that had previously sold since 2004 – how did they do? Here is a summary:

If you throw out the three high and low numbers to avoid skweing, the average and median losses end up about the same at -9%.

One of the best ways to measure the price trend is to examine houses that have sold again since the peak.  Here are a few of the same-house sales from the last 30 days around Carmel Valley (OLP = original list price):

7631 McGonigle

4 br/3 ba, 2,797 sf

$925,000  SP 9/04

$824,800  OLP 2/08

$800,000  SP 3/08

-14%  REO

It looked like a mortgage broker had bought this one in 2004, but things didn’t work out.  Back to the bank it went.

YB: 2003  HOA = $56 MR = $173

*************************************************************

3688 Torrey View

4 br/3.5 ba 2,541 sf

$1,045,000  SP 4/06

$950,000  LP 1/08

$868,000  SP 3/08

-17%

The seller obtained a loan of $800,000 when purchased in 2006, so something drastic must have happened in the meantime.  You don’t see a house too often that’s only been on the market 24 days that sells for 9% less than list price.  The agent represented both buyer and seller, so maybe there was a commission deal in there, but to drop $82,000 on price and end up with close to nothing seems unusual in such a short time on the market.

YB: 1999  HOA = $160, MR = $71

************************************************************

4918 Sterling Grove

5 br/4 ba, 3,476 sf

$995,000 SP 4/04

$1,195,000 OLP 1/08

$1,175,000 SP 3/08

+18%

Move-in ready on a culdesac – this one helps illustrate how prices jumped in CV from early-2004 to peak.

YB: 1999  HOA = $47, MR = $104

************************************************************

5840 Blazing Star Lane

5 br/4 ba, 2,961 sf

$1,213,000  SP 5/07

$1,350,000  OLP 1/08

$1,250,000  SP 3/08

+3%

This price may seem reasonable when compared to the two active listings on the street – another view home is listed for $1,595,000, and a non-view same model has been listed for almost a year for around $1.2 million.  When houses a block away are selling in the $700,000s and $800,000s, this seems like a big premium for a canyon view – maybe they were comparing to Derby Hill?  Listing agent was happy to add that this was a cash transaction.

YB: 2007  HOA = $210, MR = $385

*************************************************************

4754 Sunset Heights

5 br/4.5 ba, 3,922 sf

$962,000 SP 8/04 (new)

$1.199 to 1.399M OLP 2/08

$1,250,000 SP 3/08

+30%

Even though this sold for 30% more thanit did in 2004, it was a short sale.  Some of the refi dough must have been used to build a 100ft stream/waterfall that they call the ‘Niagara Falls of CV’:

YB: 2004  HOA = $106, MR = $104

**************************************************************

6515 Cmto. Stella

4 br/4.5 ba, 4,879sf

$2,035,000 SP 7/05

$1,499,000 OLP 1/08

$1,625,000 SP 2/08

-20% REO

We’ve covered this one, 15 offers, sold 8% over list price, etc.

YB: 2005, HOA = $372, MR = $164

**************************************************************

6473 Mesa Norte

5 br/5.5 ba, 5,417 sf

$2,275,000 SP 11/05

$1,899,000 LP  1/08

$1,775,000 SP 3/08

-22% REO

Every comp nearby except Stella was $1,950,000 or higher, and by the time the bank cleaned it up nice, it was a deal at $327/sf, though getting insurance for a canyon-front home these days is quite a challenge.  I represented the buyers, who are blog readers – thank you!

********************************************************************

14181 Caminito Vistana

5 br/4.5 ba 4,429sf

$2,350,000 SP 4/05

$2,275,000 OLP 2/08

$2,100,000 SP 3/08

-11%

Another one in a hurry – drops $175,000 after ponly seven days on the market.  The buyer used a down payment of over 50%, so that probably encouraged the sellers to make the deal.

YB: 2002 HOA = $400, MR = $386

*****************************************************************

More evidence scattered around – though it seems like the sellers are scooting closer to the exits.

I received this email, and was wondering if anyone went to the meeting last night?

Hey Jim,

Love following your blog – have done so for a while and weighed in several times in the past.  Do you have any take on the La Costa Valley middle school property issue?

On the one side, there is this letter from the superintendent:

 http://www.sduhsd.k12.ca.us/pdfs/2008/Superintendent/Superintendents%20Message%20Concerning%20La%20Costa%20Valley%20Flyer.pdf

On the other, there is this side of the issue presented by some concerned residents.

To: mail@friendsofnorthcounty.org

Subject: Coming to La Costa Valley Apartment and Low Income Housing???

Could LOW INCOME HOUSING, COMMERCIAL CENTERS, APARTMENTS or INDUSTRIAL PARKS be coming to your La Costa Valley neighborhood?
Find out why the answer could be YES.
Become informed about the vacant property in the heart of La Costa Valley.
Neighborhood meeting:
Wednesday, March 26 at 7:00 pm
Coastline Community Church
2215 Calle Barcelona
Mark your calendar and bring your neighbors!

Become informed about the vacant property in the heart of La Costa Valley.Mark your calendar and bring your neighbors!

Just wondering if you had any contacts, information, or otherwise to give me a better sense of the reality of this issue?

Thanks

“Traffic is up” – you’ve seen the hype, you may have seen it on the street, but is it anything special? We saw yesterday that, compared to last year, the closed sales so far this month are sparse. Here is how the SD County detached monthly pendings have fared over the last five years, as “the spring selling season” begins:

This month’s numbers (revised since this morning) are better than last year, but all of the previous years have closed escrow. If another 271 go pending between the 27th and the 31st, which was the same as last year, then the total would be 1,999. However, if 20% fall-out of escrow, the total closed will be around 1,600 – fewer than last year.

There are currently 12,713 active listings of detached homes – can buyers look beyond all the excess inventory, and not let it affect their decision-making? At this stage of the game, buyers are so used to seeing sellers loitering on the market for months and years, I think they have grown impervious to them. “Buy the best, and forget the rest”, is a nice idea, but will the out-of-touch sellers eventually undermine the market with price reductions? Theoretically they should, especially those who are over-encumbered. But I think it’s a seasonal thing – they might figure it out in the fourth quarter of each year, after one more selling season goes unfulfilled.

We know that there is usually a rush of closings the last few days of every month. This month? Some areas are going to need an avalanche to catch up with last year – though you can probably add 20% to 30% to this month’s totals to account for those closing in the next four business days, and late-reporters. Here are the March 2007 closings, and those already closed this month:

In November we felt an inflection point hit the market, and since then we’ve seen Fed rate drops, loan-limit increases, and more false hype – it looks like we could use another inflection point, more than anything.

"The following is wild speculation but I am getting "vibes" that pretty much every active investor who bought 2005-2007 is planning on testing the market this spring. It’s almost like they don’t want to talk about it and want to get out before talking about it."  Rob Dawg, resident soothsayer

A check of new listings owned by non-owner-occupants who purchased their property since 2003, produced the following:

3296 Rancho Carrizo, CBD

3 br/2.5 ba, 1,970 sf

$655,000  SP 6/04

$599,000  LP  3/08

YB: 2002, HOA = $80, MR = $178

Short sale

If this rents for around $2,500 per month, the pain isn’t that bad on this one – only a couple of thousand dollars per month.  That’s just a flesh wound today.

********************************************************************* 

2814 Luciernaga, CBD

4 br/2 ba  2,122 sf

$537,000  SP 7/07

$699,000  LP 3/08

YB:1978, HOA & MR = 0

Total remodel

I hope somebody told him that he’s in the San Marcos school district when he bought this – though with the one-story floor plan there could be some older folks that might go for this, especially with no fees.

**********************************************************************

1262 Newland, CBD

5 br/4.5 ba, 3,494 sf

$1,500,000 OLP 1/07

$899-995,888  LP 3/08

YB: 2006 HOA = $50 MR = 0

7 for sale

Our old friend on the corner of Highland and Carlsbad Village has seen the future, and doesn’t like it!  No matter what the price is, you still have to back to a major thoroughfare.

****************************************************************

512 Latigo Row, ENC

4 br/4.5 ba, 5,012 sf

$1,625,000  SP 11/03

$2,095,000  LP 3/08

YB: 2000, HOA = $50, MR = $70

Agent-owned

This has been on and off the market since March, 2007, and no price change since July.  Last closed sale in Knightsbridge was in August. 

*******************************************************************

1574 Lorraine, ENC

6 br/3.5 ba, 3,438 sf

$1,540,000  SP 4/04

$2,750,000  LP  3/08

YB:1978 HOA & MR = 0

Zoned duplex – vacation rents

From the remarks: "many recent upgrades throughout this home including carpet, tile and paint ensure you will enjoy the summer months that are fast approaching".

************************************************************

Even though some investors are smelling the coffee and getting realistic about price, not all of them are – heck, some of them AREN’T GOING TO GIVE THEM AWAY!

Though there has been an uptick in market activity, and the government believes they are doing things that might make a difference, there is one looming problem – resetting adjustable-rate mortgages.

It looks like we’re only in the second or third inning, and this chart doesn’t factor in the folks with fixed-rate loans who will walk away.

A few people have asked about the radio show.

Kris and I have discussed it at length, and searched for the possible negatives – what is the worst that could happen?  There weren’t many that came to mind, until I thought about what might happen if another agent called in on a live broadcast, and wanted to get into it.  It is hard to tolerate some of the antics by other agents.

Here are a couple of examples that happened on Saturday within an hour of each other.

Fred, an agent, called about a house I have listed that offers a 2.5% commission.  He wondered if he could get a 3% commission, and I said no, it’s offered at 2.5 %.  He persisted, mentioning that the market is tougher these days.  I suggested that he should do what’s best for his buyer, and show them the house to see if they like it, rather than selecting homes to show based on commission rate.

His next comment send me through the roof. He asked, "Does your office mostly do five-percenters these days, or six-percenters?"  When I mentioned that he was conspiring to fix prices, which is illegal, and that I was going to call his broker, he said "Go ahead, she is the one that told us to ask about commissions."

The second incident started innocently enough two weeks ago when an agent listed her own house for $100,000 less than a model-match I had listed around the corner.  I did what an listing agent should do, I called my seller and told her that we needed to lower our price right away, which we did by $50,000.  But my client was ticked enough that she called the other agent to inquire about her low price.  The agent said she just wanted to unload it, which she did, and it went pending within seven days.

On Friday I listed another house nearby for $100,000 less than the agent’s house.  It was an aggressive price due to a job relocation, but the house was smaller, in an inferior location, and others around it weren’t selling for 5% to 10% more.  If you’re the listing agent, and the sellers tell you they really want to move, what do you do?  You don’t list it for the same price as others who aren’t selling, you have to go less.

So what does the same agent do?  Instead of calling me to complain about my low list price, she calls my other seller back to complain about me, and that I’m giving this new listing away.

Because this business is so unregulated, agents think they can say and do anything they want.  If one of the knuckleheads were to call the live radio broadcast and try to take me on, it would get ugly in a hurry.  While it might cause some entertainment for some listeners, for others it might be a real turnoff, and Kris and I don’t want to risk it turning into a freak show.  So we’re not going to continue.  But I do plan to do more videos!