Tuesday, March 25th, 2008 at 1:48 PM
Non-Owner Occupied
"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.
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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.
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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.
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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.
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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".
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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!
Posted on Tuesday, March 25th, 2008 at 1:48 PM in Thinking of Buying?, Thinking of Selling? | 14 Comments » | 
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Hey, new paint, carpet, and tile for only $1.2 million above the last SP? That’s a steal!
I shouldn’t tease. Aren’t those Carlsbad homes the ones without floors?
The Blur | March 25th, 2008 at 4:58 pmThose Latigo Row properties (the one next door is also for sale) are so over-priced. They are rather boring houses at those prices; and it isn’t like the whole acre is useful.
I was talking to my wife yesterday and we thought it interesting that people have no problem "getting" the positive aspects of treating a home like a stock (I made money doing nothing…) but really don’t seem to "get" that the downside is also quite similar (I lost some money when that stock tanked). I am assuming it is the size of the loss that is causing this disconnect.
It really appears to be a stalemate right now; buyers are waiting for prices to drop and sellers are in denial and are holding firm on their price. Such a situation can go bad really fast…
It seems the longer that sellers wait to adjust, the more buyers will hold off. Once it starts going down, the buyers will have the upper hand so much that they are going to dictate the deal. I really think sellers need to adjust downward in smaller chunks as soon as possible to avoid the ‘bust through the floor’ outcome.
Anybody, such as JtR, know if this is a true model or does it not work that way?
Keith Rettig | March 25th, 2008 at 5:39 pmExcellent sleuthing Jim. Luciernaga is interesting. A six month flip using the formula that worked so well 2000-2005. Too bad it is 2008. At first I thought your "older couple" idea was a plan but $700/mo in taxes isn’t a retirement expense to be taken lightly. That leaves the one time transfer buyer. That might work.
The last two; Latigo Row and Lorraine have a tougher hill to climb. The prices represent the presumption that buyers are still purchasing appreciation potential. The sellers have to realistically look at these types with buyer’s eyes. How much is that house worth if you assume no appreciation for at least several years? That is not a pretty picture for the seller.
Rob Dawg | March 25th, 2008 at 5:48 pmJim,
What do you tell potential clients that make it clear from the beginning that they want to fish for a high price in todays market?
Do you turn down a listing??????????????? Or let it troll?
Todd | March 25th, 2008 at 5:56 pmTodd,
"Do you turn down a listing??????????????? Or let it troll?"
If I was an agent I’d always want whatever product/property sells the fastest so I can focus my time on the next property. 10 small sales would equal 1 large sale but would likely be more consistent over time. Plus the more properties you can sell the more contacts you’d make. Which ideally would bring in more sales/listings.
shadash | March 25th, 2008 at 7:24 pmThe one on Lorraine better have something more than new carpet tile and paint for $1.2M increase since ’04, Maybe they became the "Encinitas Emperor’s Club" to put some of the 6 bedrooms to use on the revenue side ….
Smithers | March 25th, 2008 at 8:52 pmKeith,
The model has to include some sdjustment for how ‘cool’ the house is, due to the emotional factor. If a buyer sees a house that not only suits their needs but also lights an emotional fire under them, they will likely pay whatever it takes to get it. Sellers could capitalize on that by tricking out their house before putting it on the market.
However, 99 out of 100 sellers have a normal or run-down house, so yes, the first one out wins.
Sellers should lower often, and in decent-sized chunks, like 5%. Those who do, should be in escrow within 30-45 days. But how many will? I’d guess less than 10%.
If the NAR was going to do some good, they’d reprint this as a mantra and spend millions advertising it, first to the agents, then to the sellers.
Jim the Realtor | March 25th, 2008 at 9:13 pmTodd,
Good question – I don’t mind trolling if the house is unique, and there aren’t obvious comps to the contrary. How nice the sellers are plays a role, and if they agree that my investment of time and money will be minimal.
There is a blog reader here who wanted my opinion of value of his house a couple of weeks ago, and I told him $699,000. They listed with another agent for $799,000, and it went pending 11 days later. All of the comps pointed to $699,000 or lower, yet his was a former model that looked real sharp – boom, lucky sale.
Jim the Realtor | March 25th, 2008 at 9:26 pmRegarding the Luciernaga house…it also backs up to Alga — a very busy street right over your back wall.
We looked at that when it was listed the last time, as it wasn’t a bad buy for the given market, but when we saw them trying to fix’n'flip, we LOL’d! You’d think flippers would be more in-tune with the market. Silly assumption, I guess.
Still wondering why flippers think people want to pay them for the flipper-special "fix-ups" (Pergraniteel). That will go out of style faster than orange shag carpet, as it will leave bad memories of the Great Housing Market Crash. As a buyer, I’m discounting whatever it takes to rip the stuff out.
CA renter | March 26th, 2008 at 12:24 amKeith, when I lived up north in Silicon Valley we had a boom/bust about once every 10 years. As the busts got worse, what happened was that all the "elective sellers" (anyone who didn’t *have* to sell) either dug in their heels on price or took their houses off the market. The result was a market with lots of buyer-dictated deals, but a selection that consisted mostly of unspectacular and poorly-maintained houses. The impression we got during our househunt last year was exactly that: good houses with stubborn sellers and bad houses with very soft prices.
GeneK | March 26th, 2008 at 2:54 pmRegarding Keith Rettig’s comment about people not "getting it" regarding house losses, I can attest to this first hand. My own college-educated professional pre-senility parents don’t get it. For years they’ve pestered me about buying despite me repeatedly pointing out specific examples of houses in the area depreciating $100Ks. Last time my mother pondered what I was saying, hesitated, and asked "so say you buy a house for $800K and it goes down to $600K, where does that $200K come from?" I was astonished and explained to her that you would need to write a check for a quarter million dollars to sell the house. The next day she asked the very same question again!
jrc | March 26th, 2008 at 4:19 pmjrc – thanks for the chuckle. This reminds me of when my 57 year old mom said 5 months ago that she felt that no smoking rules in bars were crazy because the essence of a bar was smoking and that non-smokers such as myself just shouldn’t go to bars if we didn’t want the smoke.
GeneK – that is what I fear; stubborn seller for the good house I want. But I am figuring that some expensive foreclosures are coming down the pike…
It is rather telling that people treated their houses like investments rather than homes when the market was going up; but sudden feeled entitled to the profit they missed out on when the market is going down. Ah, might have just answered my own question there…entitlement is an interesting emotion; very resistent to logic.
Keith Rettig | March 26th, 2008 at 5:48 pmKeith, my impression on viewing foreclosed houses last year was that they were probably quite nice at one time. It was what prompted me to ask a while back whether it was common for people to deliberately destroy their homes before the banks took them. Now that people don’t have to declare the money the banks write off in their foreclosures as taxable income, I wouldn’t be surprised to see foreclosed homes looking even worse this year than last.
GeneK | March 26th, 2008 at 7:47 pmI 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.
With the exception of high school, Carlsbad schools in San Marcos school district are very good (you probably know that). This particular house is assigned to La Costa Meadows Elementary (2005-06 API 894) and San Elijo Middle (2005-06 API 845).
If you’re a parent, there are far worse ways of spending 700k, e.g.
http://www.lennar.com/CA/SanDiego/CrestviewAtSkyRanch/Residence3.html
SD Scientist | March 26th, 2008 at 8:43 pm