Saturday, December 27th, 2008 at 7:37 AM
Cherry Pickin’
Here is a review of homes that have gone pending in the last ten days – we don’t know if they’ll close, and if so, at what price.
Wouldn’t you think that finding a buyer this month would be challenging, given:
1. Four inches of rain this month (most since 1984).
2. Tighter mortgage underwriting, fewer programs, higher jumbo rates.
3. Raging unemployment
4. Worst economic news of our lifetime – recession/depression news daily.
We don’t know the sales prices of these, so let’s put pricing aside for now and just consider what is being offered, and how long they’ve been on the market.
Could the agents have noted them pending just to give the occupants a Christmas reprieve? The new MLS reports the name of the buyer’s agent, and all but Jason are marked as being sold by agents from different companies - which probably indicates they are legitimate sales, and not just on a holiday break.
Carlsbad
Whitecap MLS#080060285
3 br/2.5 ba, 1,700sf
YB: 1988 - 4,476sf lot - $100/mo fees
OLP: $640,000 8/28/08
LP: $600,000 11/22/08
Pending Date: 12/17/08
DOM = 111
Last two sales on street were both in July – $560,000 for 1,675sf with no view, and $660,000 for 1,766sf with ocean view (and freeway noise). Original owners.
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Highland MLS#080070885
3 br/2.5 ba, 2,551sf
YB:1961
17,850sf lot (no monthly fees)
LP: $989,000 10/16/08
Pending date: 12/19/08
DOM = 65
Due-west view looking directly at power plant and smokestack. Looks like original owners on tax rolls, interior photos reflect same.
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Corte Rosado MLS#080070319
6 br/5.5 ba + granny flat 5,203sf
YB: 2001 - 25,000sf lot - $178/mo fees
OLP: $1,995,000 10/13/08
LP: $1,750,000 11/7/08
Pending Date 12/24/08
DOM = 72
The Ranch is Carlsbad has some of the best real estate in town, but no recent momentum. The only two sales this year have been $1,150,000 and $1,475,000, and another is pending, listed at $1,187,500. Original owners.
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Encinitas
E. Jason MLS#080080463
3 br/2 ba, 1,062sf duplex
YB: 1959 – 6,969sf lot – no fees
OLP: $775,000 12/1/07
LP: $549,000-$599,000 12/1/08
Pending date: 12/23/08
DOM = 203
Off Vulcan and only about 100 yards east of the railroad tracks in Leucadia, this location would be considered ‘less-than-premium’. The immediate neighbors around you are nothing fancy, mostly apartment-style homes, and it’s a long walk to the beach. Could be a 1031 exchange? Seller paid $199,000 in 1991.
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Spanish Bay MLS#080077499
4 br/3.5 ba, 4,579sf
YB: 2003
10,128sf lot, $510/mo fees
LP: $1,995,000 11/15/08
Pending date: 12/17/08
DOM = 32
Former model home with ocean and golf views. The seller paid $2,100,000 in July, 2005, so not much of a discount for buying at the peak. The agent called it the best home and lot in Encinitas Ranch, but all I know is that I hit it with a golf ball a few years back.
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West RB (92127)
Rancho Catalina Trail MLS#080062449
4 br/3.5 ba, 3,975sf
YB:2005
27,007sf lot – $715/mo. fees
LP: $1,050,000 – $1,200,000
Pending date: 12/18/08
DOM = 102
Seller is original owner who paid $1,191,500 in February, 2005. For an area that has been in every bubblesitter’s sights as the next to fall, and for being under the power lines, she did pretty good – if it closes.
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7442 Rancho Cabrillo Trail MLS#080066755
5 br/5.5 ba, 5,118sf
YB: 2005 – 22,651sf lot – $821/mo. fees
OLP: $2,120,000 6/9/07
LP: $1,249,000 – $1,399,000
SP: $1,249,000 12/23/08
DOM = 423
This short sale did just close this week, and noteworthy because it’s probably the worst location in the Mirasol tract, right next to the creaking gate with no view. The agent called it highly upgraded, but I remember it as dark and needing work - and you can see the contractor’s truck in the driveway. Seller had paid $1,451,000 in May, 2005.
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Carmel Valley
Foxhound MLS#080082171
4 br/4 ba, 3,609sf
YB: 2000
8,476sf lot, $196/mo. fees
LP: 1,045,000 – $1,145,888 12/10/08
Pending Date 12/17/08
DOM = 7
Even though this backs right up to busy Carmel Mountain Rd., it blew off the market the first week. Another original owner – paid $641,000 in 2000 and didn’t refi out a penny. There have been very few decent 3,000+ sq. ft. homes in Carmel Valley sell under $1 million this year, and this one will probably close above $1.1 million.
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Pearlman MLS#080064011
4 br/5.5 ba 4,346sf
YB: 1998 – 8,450sf lot – 0 fees
OLP: $1,350,000 6/2/08
LP: $1,185,000 12/15/08
Pending date: 12/18/08
DOM = 169
Decent house for a foreclosure (former owner paid $1.45M in Jan.’06) but on a busy corner, with cars traveling 25-35 miles an hour. One block from elementary school.
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Jordan Ridge MLS#080064141
4 br/4 ba, 3,358sf
YB: 1994 – 7,156sf lot – $103/mo fees
OLP:$1,125,000 9/15/08
LP: $1,079,000 – $1,124,876
Pending date: 12/23/08
DOM = 99
Standard CV offering, yet not much give on price – pending on December 23rd!
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Wyngate MLS#080068068
4 br/4.5 ba, 4,008sf
YB: 1997 – 10,454sf lot – $158/mo. fees
OLP: $1,775,000 10/3/08
LP: $1,699,000 10/31/08
Pending date: 12/18/08
DOM = 77
Original owner (named Pardee) selling a premium location at end of culdesac with views of Fairbanks and a lot of extras.
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It’ll be easy to call these ‘knife-catchers’ and dismiss them as having very little significance, but I only include them because of the time of year and the negative environment.
Here’s a link to a map, the balloons don’t stick to the exact house, but are close:
Posted on Saturday, December 27th, 2008 at 7:37 AM in Local Flavor | 29 Comments » | 
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Everyone in this group is a knife catcher. Every single one of them. Some may be motivated by what they perceive to be a great deal in a neighborhood that can only go up, some may feel they have to buy home now for personal or business reasons. Reasons may differ. Affects will be the same across the board.
As for the time of the year, I would say that’s insignificant given the small sample here. Couldn’t you pick a dozen homes to profile any December? As for the environment, as I acknowledged above, some people have to buy, some people may be buying into the “ok, we’ve hit bottom now” hype. One thing I am sure of, every single one of these buyers will, one year from today, wish they had the cash they’ve lost in their “investment”.
Jim, please follow up on this post and let us know what they close for. Thanks.
ice weasel | December 27th, 2008 at 8:44 amDon’t apologize for the data. It is what it is. It would be stupid to ignore these permanently high plateau prices just as it would to dismiss 50% off closings as outliers.
As a favor to us amateurs; Jim could you whip up a quick neighborhood map? When you say RSF or RSF adjacent or near the back gate or CV I can follow but when you say Mirasol you lose me.
Rob Dawg | December 27th, 2008 at 9:23 amCherry picking? Yes. Knife catchers? Yes. But I think this is a very relevant population here (assuming they close, and at prices reasonably close to list.)
Right now, the Mob is still saying what a great time it is to buy, and people are still believing it. I think the “perfect” time to buy is when the Mob has their head in their hands, talking about how awful real estate is and how it’ll never again see growth. All the hack RE agents will be shaken out, flippers will be gone, and examples like the ones above will be almost impossible to find.
The population (buyers) above is of statistical relevance to contrarians like myself because it shows the market still has a ways to drop. Jim, I would also be interested in a follow-up if possible.
The Blur | December 27th, 2008 at 9:28 amI live (rent) on Whitecap near the first home in the same type of house. We are a family of three and our next home will be larger. The home listed above would require 30-40 k in remodeling. Rent for this home would be $2300-2500. Mortgage with 20% down (120k) would be $2575 at 5%. This does not include HOAs, taxes, gardening (included in our rent), closing costs, etc. A household income of 150-200 k supports this price but I could not see myself buying this house or the one we currently rent at the list price.
Timeye | December 27th, 2008 at 11:19 amwhat Jim points out here is there are still plenty of buyers out there overpaying, regardless of even recently established lower comps.
at the end of the day, you can have two similar homes that close within couple of weeks of each other but the spread in the pricing may be well north of $100k. this is what happens in a declining market. there are deals, but you got to be a smart buyer to get those deals, other wise, you just end up being a typical knife catcher circa 2007 despite waiting to purchase in 2008.
for example, 7442 Rancho Cabrillo Trail at 5100 sqft sold for $1.25 million in December.
but Jim just sold a similar home in the adjacent comparable community at 14629 Arroyo Hondo at 4650 sqft for $1.05 million in October.
$200,000 difference for 450 sqft difference? my personal feeling is by the time the home is over 4500 sqft, extra 3-400 sqft are really meaningless. so has the area appreciated by $200k over the last 2 months? nope. this simply goes back to buyer intelligence and how much homework they did.
ocrenter | December 27th, 2008 at 11:42 am….and who their agent was…..
(couldn’t resist that one, thanks for the lob OC!)
Arroyo Hondo came complete with model-home furniture too – a nice convenience for the right buyer.
Jim the Realtor | December 27th, 2008 at 11:51 amChris Thornberg was on CNBC the other day and he mentioned RE prices will come down another 25% or so. I tend to agree with that prediction.
If we are at 2003 price levels now and will retrace to 2001 levels, then 25% makes sense. Especially when the neg am re-sets apex in March of 2010 and the foreclosures begin to escalate.
With unemployment heading toward 10% and wages stagnant, house prices will need to come down to meet affordability levels.
IMHO, the time to start looking at RE will be the fall or winter of 2010.
Turnack | December 27th, 2008 at 11:53 amEveryone is entitled to their opinion.
But you should consider that the neg-ams recast problem may not happen. Waiving the re-casts is all the banks/government has to do, and poof, no payment shock.
There are probably neg-am homeowners defaulting today that think there is no hope. I wish the powers that be would address this soon.
P.S. I did send in our suggestions, including waiving the recasts, to the Obama team.
Jim the Realtor | December 27th, 2008 at 12:17 pm“…With (1)unemployment heading toward 10% and (2)wages stagnant, house prices will need to come down to meet affordability levels.”
Turnack, you need to add number three; “and (3)banks not throwing money at everyone regardless of their ability to repay!”
Downturn | December 27th, 2008 at 12:25 pmI don’t see this clearing up in the next 6 months.
I live right next to the university in San Marcos. I just drove my block, the 2 REOs on my street have effectively put my neighbors 200k underwater. Almost every single family for 10 houses up and down the street: 30-40, young kids in diapers or starting kindergarden, mostly dual income, almost exclusively professionals. Many are openly discussing walking away from their homes. Their credit is sterling, and they have the income to pay a very nice rental for many years.
Chris | December 27th, 2008 at 2:00 pmI don’t get the whole underwater phenomenon, if you bought a home you could afford then it shouldn’t matter what the current value is. I sold in 04′ 2 homes and bought one a year ago at 50% off peak price, some will say I was a knife catcher but so far the value is what I paid no more as I put considerable sweat equity in the place.But I certailey didn’t buy it and then cry because the one down street is now cheaper!
Paid off homeowner | December 27th, 2008 at 2:56 pmI included a map at the bottom of the post. The markers aren’t exactly on top of the house, but are at least on the street.
Jim the Realtor | December 27th, 2008 at 3:56 pmPaid off homeowner,
>>..I sold in 04? 2 homes and bought one a year ago at 50% off peak price, some will say I was a knife catcher but so far the value is what I paid no more as I put considerable sweat equity in the place.But I certainly didn’t buy it and then cry because the one down street is now cheaper!..<<
Good job! It appears that you are way in the money after your 04 huge profit taking and then big discount buy back a year ago. You are simply playing with house money.
But, for those who bought with their own money and crdit, being 200k-500k underwater is an entirely different story.
George8 | December 27th, 2008 at 4:20 pmLook, every single person who buys a new automobile is a knife catcher. But no one cares because people don’t buy cars as a store of value or an investment. They buy them to use.
The people buying houses today, especially the higher end may care as much about losing on a house as they do a new car. They don’t.
This may be a good sign as it says that people aren’t thinking of buying a house as an investment anymore. Those who wan’t a ferrari will pay what they cost. Those who can’t afford it won’t. The number of ferraris that sell and for how much will depend upon how many can afford them.
Average Joe | December 27th, 2008 at 4:35 pm“The people buying houses today, especially the higher end may care as much about losing on a house as they do a new car. They don’t.”
I have no intention of ever losing $200k on a house and not caring about it. But I really hope this buyers’ sentiment. I’ll just rent until they’re ready to sell and pay ‘em Blue Book for their high-end house.
The Blur | December 27th, 2008 at 5:23 pmWe have already kissed capitalism bye bye and indeed those in need are praying for a U.S. Govt mulligan. Can I have some tarp money for a stock I lost $ on?
I for one think it’s a bunch of bull sh&t and people (those who sold and are now renting) should not be punished for being fiscally intelligent.
Kind of like people who believe that Nancy Pelosi’s idea of giving borrowers a 3% mortgage with $22k down is a great idea. Where do people come up with this garbage. These people will continue to default as their ability to stay employed will be put to a severe stress test in the coming years.
All the Govt is doing is making our $’s worth (less), deficit is spiralling out of control and future generations will be left with a tax bill from hell. Rampant stagflation (70′s style) is on it’s way!
I say let the homeowner and corporation fail today and let’s be done with this. No more life preservers.
Sorry to disagree with you Jim but NO WAY should the neg am re-casts be frozen in place. While painful for some, the entire country will learn a lesson as Bill & Mary’s housing payment goes from $1500 to $3200 and the bank has to take the home back.
American’s will be forced to live within their means and turn into a saving nation, as opposed to a consuming nation we currently are.
Turnack | December 27th, 2008 at 5:23 pmGeorge it was my money I owned those 2 homes for 10 and 15 years and was upside down on one in the early 90s bust,I worked hard saved money paid down my principal but I would never buy a home that I could not rent close to the payment! The buyers who bought at the bubble peak must be some truly dumb folks,when the prices equal rent then the market will stabilize as it always has done so.RE is a long term investment,the problem today is people want instant wealth and are afraid to look far ahead and bust their a@@ to get ahaid.
Paid off homeowner | December 27th, 2008 at 5:25 pmIMHO, these sales (along with what I’m seeing when looking at homes) are proof that the bubble is alive and well. There are still plenty of “investors” and flippers out there who are all betting on the same side of the market (real estate only goes up!!!…in the long run). Far fewer people are sitting on bearish side. What, outside of govt intervention, is the impetus for a rebound in the RE market?
People still have the bubble mentality and believe the market will have a “V-shaped” recovery and housing will make them wealthy.
As one who said prices will revert to pre-2001 levels (inflation-adjusted), I also added the caveat that things could go much lower IF we had a severe recession/depression and the credit markets unwind. We still do NOT have tight credit, IMHO, it’s just a bit tighter than a few years ago.
Ask yourself…do you feel better off than you did in 2001? Consider how the government deficits have grown, as well as peoples’ debt burdens. Have incomes increased enough to cover these gaps???? Do you feel your job, retirement, healthcare plans, etc. are more secure now, or less so? All of this will play a role in how much people are willing to sacrifice for a house.
CA renter | December 27th, 2008 at 8:51 pmIt is funny that Blur mentioned “the Mob is still saying what a great time it is to buy”. Judging from people that I know, there are now more people sitting on the fence than those who dare to catch the falling knife.
temecula_guy | December 27th, 2008 at 10:37 pmI don’t think the market will have a V-shaped recovery, but I do think that we have done the majority of quick/sharp dropping already. What awaits us is the long flat L-shaped curve. Price is determined by the supply and the demand, but the govt can control both of them. Stop waiting for the tighter credit: not going to happen with helicopter Ben. Stop waiting for the neg am reset caused foreclosure surge: not going to happen with Obama administration.
That said, I don’t follow NC San Diego real estate closely, so my observation is biased toward Temecula market. Losing $200K is definitely impossible there because the price is relatively low. Besides, mortgage is cheaper than 2B/3B apartment rent now with interest rate at 5%. So I don’t plan to act as an economist and predict the nation’s future, I only know that now it is cheaper to own than to rent.
By the way, home prices dropped 30% in the Great Depression. We are getting there already. While some of you quoted 10% unemployment, that means 90% employment. Besides, unlike Great Depression, the dollar is no longer tied to the gold. In a word of fiat money, Fed is printing a trillion dollar here and a trillion dollar there. The world economy is in a bad shape, therefore the money has no other place to go (unlike Japan in 1990s where the carry-trade was invented). I just can’t believe that the money does not show up somewhere some day. Stagflation is bad. But most of you are just preparing yourself for further deflation and are ignoring the potential of spiral inflation.
temecula_guy | December 27th, 2008 at 11:04 pmTG,
Now that you’ve bought, you’re an inflationist.
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FWIW, I agree that the really big drops have already happened for the most part **in the lower-priced areas.**
For those of us waiting for the mid/higher-mid areas, things haven’t fallen nearly enough to motivate us long-time fence sitters to buy.
Being keenly aware of the potential for inflation, we always have a finger on the buying trigger…but right now, the trend looks like deflation first around here.
I cannot stress enough that different areas are in very different phases of the cycle.
Hope you are enjoying your new home, TG!
CA renter | December 28th, 2008 at 12:13 amI’m NOT TG on piggington, if that’s what you meant. I have not bought a house yet, but I will buy at any minute given that I think price now favors buyer over renter.
temecula_guy | December 28th, 2008 at 8:32 amWhat I’ve seen on RE forums is that the hardest thing to come by is patience. Of course, RE hacks keep screaming the “best time to buy, if you don’t buy now you will regret it” mantra. Heck, there was even a NYT article not long time ago doing the same. The said thing is that they were doing it during the bubble and they were wrong, they were doing it last summer and they were wrong, yet quite a lot of people still believe it. They want to believe it, because they don’t have the patience to wait, they must have a house now!
A whole bunch of people who are buying now will be underwater in a year. The whole “it doesn’t matter if you are underwater” argument does not hold water. Yeah, if you are there, well deal with it, but I bet it matters to all those people who can’t refinance to the current super low rates because they have no equity. And I’m sure matters to those who want or need to sell but can’t. A couple hundred thousands dollars over 3 decades do matter. It’s money you could have invested or put in your retirement fund.
ToadB | December 28th, 2008 at 9:49 amWell, be fair. It’s a drag to be forever renting. Sometimes it’s nice just to be able to put down roots. But that said, I’d still advise my best friend to wait on buying a house. Someone above expressed a thought similar to the idea that it’s OK to be underwater on a house because you don’t necessarily get one to be an investment, but rather as a place to live. However in the modern world there are way too many things that can make it so you suddenly have to move. Loss of job, divorce, change in family situation, etc. You won’t necessarily have the option of living in it for many years.
Dwip | December 28th, 2008 at 11:56 amIt seems everyone on this blog feels that every home, in every neighborhood, in every city in the US is set to fall 25%. That seems to be a very obtuse view of an industry that is hyper-local. I do not live there, but what about West Solana Beach as an example? Prices are up — way up — from 2005-2008. East of the 5, not so much…I try to get my head around the doom and gloom you guys post here, but sometimes it just seems it’s popular on this site to have a blanket negative view.
Jim, I’d love to hear your thoughts on this. You seem to be less negative in tone lately. Do you think we are on the horizontal line of the L-shaped downturn, or the bottom of the U? I can’t imagine this is a V-shaped one, so I won’t include it as an option.
I’ve never in my life known the So Cal real estate market to follow price per sq. foot model. Never. Or a rent/cash flow vs. buy model for that matter *in some particular areas with views, good schools, etc.*. All you guys/ladies posting replies — you really think that’s where the So Cal RE market is headed? This isn’t Des Moines, Iowa.
Jim – I continue to follow your blog daily and am thankful for what you provide!
BAM | December 28th, 2008 at 12:30 pmI’m NOT TG on piggington, if that’s what you meant.
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Whoops! Yep, that’s what I thought. Sorry about that!
CA renter | December 28th, 2008 at 5:54 pmKnife catching? More like piano catching.
CVman | December 29th, 2008 at 1:55 pmI’ve never in my life known the So Cal real estate market to follow price per sq. foot model. Never….All you guys/ladies posting replies — you really think that’s where the So Cal RE market is headed? This isn’t Des Moines, Iowa.
Well, just for my own personal view, I don’t think the factors setting house prices here are much different than in Des Moines or any other place. They are supply, demand, and the distribution of income.
All three factors are important. If supply is less than demand, prices get bid up. Those price increases halt once people simply run out of income to buy at the bid-up price. That’s what happened at the bubble peak, a process fueled by a boost to the bid-up prices from “fake” income via weirdo loans or, sometimes, lying on mortgage applications.
So yes, that’s exactly where the So Cal RE market is headed. If you’re in the upper third of San Diego income, but the bid-up prices mean that you can’t afford a house in the upper third of the market, then you don’t buy one, which means that prices in that tier eventually come down. Or (and I’m not saying I don’t feel sorry for these people) you buy an upper-third property anyway since you think that’s what you should be buying based on your income, and end up losing it when you find you can’t actually afford it.
Let’s not uncritically buy into the constant media assertions that unsupportably high house prices are good for this country. Basically, a bunch of people bet a bunch of money that housing would continue to skyrocket. They lost that bet. Perhaps that’s doom and gloom for people who made the unwise bets, but for everyone else it’s just a return to normalcy.
Dwip | December 29th, 2008 at 6:25 pmWhy would you reuse someone else’s moniker?
That seems intentionally designed to confuse and to leech off their reputation.
Bozo The Clown | December 29th, 2008 at 7:00 pm