Wednesday, August 6th, 2008 at 7:14 PM
Pricing Extrapolation
When looking at some of the hardest-hit zip codes (Oceanside and North Vista), there is quite a difference between this year and last:
Detached Actives/Pendings in the First Week of August
| Zip Code | 2007 A/P | 2008 A/P |
| 92054 | 238/29 | 173/56 |
| 92056 | 297/43 | 263/91 |
| 92057 | 403/49 | 319/152 |
| 92084 | 287/29 | 257/61 |
The number of active listings are down, and there is a remarkable improvement in the number of pendings in every zip code. The REO market has been on fire too, with virually every listing getting multiple offers, selling quickly, and most going over list price.
As you’ll see below, those areas are approaching 2002 pricing on average. If we are reverting to 2002 pricing, how do other areas compare to their July ’02 stats?:
July Detached Closings
| Town or Area | July ’02 Sales and $/sf | July ’08 Sales and $/sf |
| N. Carlsbad | 47/$239 | 20/$299 |
| S. Carlsbad | 89/$228 | 53/$316 |
| Encinitas | 58/$298 | 29/$408 |
| La Jolla | 37/$502 | 18/$810 |
| W. Ocnside | 46/$250 | 21/$228 |
| SE Ocnside | 57/$188 | 42/$209 |
| NE Ocnside | 75/$179 | 62/$195 |
| Poway | 66/$236 | 34/$303 |
| RSF | 19/$370 | 11/$516 |
| N. Vista | 47/$191 | 44/$192 |
| West RB | 15/$194 | 34/$264 |
| Carmel Vly | 56/$264 | 46/$365 |
It’s not be a perfect comparison, but if Oceanside and N. Vista can show improvement in spite of the odds (no subprime/EZ qual loans, etc.) it would be reasonable to expect other areas could firm up around their 2002 stats. Judge your favorite area based on the differences in both pricing and number of sales.
Notes: N. Carlsbad is 92008 and 92010 and S. Carlsbad is 92009 and 92011 (they split into four zips after 2002). Carlsbad, West RB, and Carmel Valley have had a lot of homes built since 2002 as well, try to factor that into the equation.
Posted on Wednesday, August 6th, 2008 at 7:14 PM in Actives/Pendings | 17 Comments » | 
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Wow,
It’s almost as if there’s no recession. Excellent, let’s raise rates so I can get a better savings account rate. I need more interest.
Chuck Ponzi
Chuck Ponzi | August 6th, 2008 at 9:16 pmIt’ll be interesting to see what happens in the next couple o’ months!
joe renter | August 6th, 2008 at 9:41 pmWhere are the Solana Beach stats!? You always ignore us folks. C’mon — lowest prop tax in the county. SB – whoop whoop!
BAM | August 6th, 2008 at 10:42 pmI’ve always felt that this market will reach equilibrium around 2002 prices. Nothing scientific, just a gut feeling. Personally, I’d be happy to buy at mid-2002 levels, and it seems so are others. O-side and North Vista have reached that price point, and sales are up. C-bad and others have not, and sales are pathetic.
simone | August 6th, 2008 at 11:45 pmWow, I feel pretty good. I just had my offer accepted on a short sale in south carlsbad for about $227/sqft. I cant see it going much lower but who knows in this market.
hg | August 6th, 2008 at 11:53 pmPrices were already out of hand by 2002 so I think they’ll go significantly lower. I’ve been getting my ass handed to me in stocks lately though, so I advise caution when following my predictions.
Genius | August 7th, 2008 at 12:09 amIf you think prices are going to equilibrate back to 2002 levels, pop over to SD scientist’s blog and see how overpriced various neighborhoods are.
Dwip | August 7th, 2008 at 12:51 amLa Jolla sure ain’t waving any white flags… yet.
JMS | August 7th, 2008 at 12:52 amI was living up north in 2002. Prices had hit their dotcom peaks from the late 90′s to mid-2001, stalled along with the rest of the economy after 9-11 and Iraq until Greenspan dropped the Fed rate to 1% and the subprime "teaser loans" started to take off in 2003.
What probably would have happened without 9-11, Iraq and the subprime loans is a 15-20% drop from 2001 prices similar to what happened in the early 90′s after the defense boom ended and in the early 80′s after the first chip boom ended, followed by 2-5 years of rising at the rate of inflation until "the next big thing" happened to start the economy going again. Instead we got a phoney housing boom before post- dotcom home prices had time to find their real bottom, and the main candidates for the next economic boom (telecom and biotech) both withered as all the potential VC money went to fund real estate scams, the war and to tank up peoples’ SUVs.
So just to stick my neck out, I’d say bottom is 2001 prices minus 20% plus 3%/yr from 2003-2008, which works out to roughly 2001 prices minus 5%. Where does that end up for SD County?
GeneK | August 7th, 2008 at 1:23 amOh, and I have no freakin’ idea what "the next big thing" is going to be or when it’s going to come along. I already bet on biotech and telecom this decade and just barely got back what I put in. I don’t see anything new on the horizon now. It certainly isn’t going to be residential housing…
GeneK | August 7th, 2008 at 1:27 amJim,
Westparker | August 7th, 2008 at 1:35 amHere’s the question, will investors be as willing to jump on million dollar properties as they are on the cheap stuff. Historically, these are harder to rent or flip. My bet, for the record is that these fall further than the cheap areas because there won’t be as much investor appetite.
I would be happy if the bottom is mid 2002 for 92011. However, if we take another 3-5 years to reach that bottom then I am better off buying yesterday and save me 5 years of renting!
housebuyer | August 7th, 2008 at 2:20 amGreat post and info, Jim.
Rents will always provide the absolute floor, and that seems to be what Oceanside/Vista are bumping into now.
Without foreclosures greasing the wheels, nicer areas could take years to fall in price.
Mercutio.Mont | August 7th, 2008 at 4:42 amhg–
What was the asking price of your short sale?
What is Zillow’s estimate? Zillow’s price range?
Did you simply put in your offer or did you provide any kind of explanation with the offer?
I ask because I missed out on a short sale offer and am just about ready to make another (on a different house) and I want to have as much arsenal as possible when I do so.
Keith Rettig | August 7th, 2008 at 2:40 pmKeith-
I had an advantage because I was renting the short sale house and had a relationship with the seller, who happened to be a real estate agent (but not the listing agent). Having the seller advocate for you seems to really help, because in short sales they have an inside track and can push your offer hard. In this case the seller was really involved in the process and pushed my offer hard.
I came in right in the middle of the range the bank had claimed they would consider, which is definitely below market. I have tried to buy several short sales with no luck, and I think this time I was just really lucky. Short sales seem to almost never pan out.
Although I am not crazy about this approach, I think about the only way to be successful in a short sale is to use the listing agent as your agent. You will develop a relationship with them and they will really advocate for you. Otherwise they are not motivated to push your offer harder than others, and, lets face it, realtors who are getting double commission will work their asses off to make sure that deal goes through. I dont know what kind of games go on in the whole short sale process, but I have noticed those who are successful tend to use the listing agent as their agent. Just my opinion.
hg | August 7th, 2008 at 3:51 pmJim, Can you post the average size/ average price of the pendings in 92057? Why such a huge outperformance in pendings in that zip, is that where more of the cheaper REO’s are located?
mattKnik | August 7th, 2008 at 4:13 pmYes I’m going to dissect some of these later today. I’d guess that 3 out of 4 foreclosures in Oceanside are in the 92057 zip, including virtually all of those under $200,000.
Jim the Realtor | August 7th, 2008 at 4:16 pm