Tuesday, March 24th, 2009 at 2:42 PM
Back to ‘Irrational’
On the other end of the spectrum from Carmel Valley is the lower-end market west of I-5, which has been red-hot. Check out this tear-down on a 25,000sf lot on Eolus that listed for $599,000:
Posted on Tuesday, March 24th, 2009 at 2:42 PM in Jim TV | 27 Comments » | 
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Isn’t there some realtor code of ethics or decency about not locking other realtors out by holding on to the lock box key for an hour? Kind of a DB move to lock everyone else out. Of course, I could ask if you knocked first before hopping the fence like a top notch entry man…
Former RB Resident | March 24th, 2009 at 3:46 pmThere’s no problem with that house that can’t be solved with a wrecking ball and some other associated demolition equipment.
greenlander | March 24th, 2009 at 3:59 pma top notch entry man…
You don’t mind if I add that to my resume, do you?
When I first came by I figured it was a realtor showing because of the car being a Jag and MLS listings strewn about the interior. I went to take more photos of my listing in Encinitas Ranch, and came back – and they were still there. I went around back first, heard them talking, went back and knocked, and when I got no answer I started taping.
How did you like his surly attitude? Typical.
Jim the Realtor | March 24th, 2009 at 4:31 pmBack in 2005 when I was selling my house a realtor and his clients misplaced the key preventing three other buyers from seeing it. By some strange coincidence the key and an offer showed up later that evening. They ended up getting the house but I get the last laugh as the place has lost 35% of its value since then.
JE | March 24th, 2009 at 4:35 pmOff-topic, but Rich just posted some great graphs over at his site about the current state of the housing market.
Rich’s Data
greenlander | March 24th, 2009 at 5:17 pmYou’re getting old Jim: six months ago you didn’t need to put that camera down and slink over the fence in Chula Vista–you just hopped over with a running start!
lgs | March 24th, 2009 at 7:12 pmSix months? Chula Vista was February 15th – who’s getting old? Besides, a top-notch entry man varies his approach……
Jim the Realtor | March 24th, 2009 at 7:22 pmEveryone should click on Rich’s Data above.
An exhaustive study on the history of buying/income vs. rents – a must-read for anyone thinking of buying.
Jim the Realtor | March 24th, 2009 at 7:27 pmRich’s data is great, but… the game has changed, perhaps permanently. Decades of traded-up equity have evaporated and aren’t coming back anytime soon, so prices have to revert to the high-end of more traditional income multiples, i.e., 3-to-4 vs. the old 6-to-8. Watch out below.
tj and the bear | March 24th, 2009 at 7:52 pmOnly the last bubble’s worth of equity has disappeared.
The historical ratio between home prices and household incomes, as well as that between rents and home prices, has been relatively constant since WWII. San Diego simply is, and has always been, a higher than median place to buy in.
BTW, Rich was using per capita incomes. Household incomes (which is where the 3x national ratio comes from) are significantly higher. He could’ve done the ratios that way too, and wound up with roughly the same result. San Diego has historically been at about a 4x household income mutliplier for housing. It’s one reason San Diego (and, for that matter, all of So Cal) have a much higher proportion of renters vs. owners (historically, So Cal is evenly split, about a 50/50 owner/renter ratio. Compare that to the midwest, which is typically 65/35 – and where you have always been able to get a place for 3x or less average household income).
SDEngineer | March 24th, 2009 at 8:03 pmAgreed TJ, the game has changed – his data is showing that this is the most reasonable moment in decades, yet where are we?
Although, since the Fed announced last week that they were going to buy treasuries, the real estate market around here has been cooking.
Oside mold farm? Sold, full price
Baroque? Sold, full price (-$5,000 for costs)
Seafarer? Sold, full price (RR tracks house)
Olivenhain @ $1.6? Nine offers, well over list.
Even Pacific Highlands Ranch in CV had two on Aster Meadows go pending around $1.1 to $1.2 million, and these were less-than-spectacular 3,622sf tract houses stacked on 5,000sf lots.
We’ll see how long it lasts, but for now it’s hot.
Jim the Realtor | March 24th, 2009 at 8:11 pmFor those who say whoever buys this is a knife catcher, how can you say that?
Say it goes for list: $600,000
Rebuild 3k sq. feet home (or take to studs and remodel): $400,000
You think you’d have a house worth less than $1,100,000 or better at the end of the day? In that school district? That close to the ocean? On that size of a lot? We looked for 8 mos. for anything in Leucadia to come up under a million — tear down, scraper, new — anything on a decent lot…nothing ever came up in that area during that time (that wasn’t sitting literally on top of the 5).
I wish this came up when we were looking.
BAM | March 24th, 2009 at 8:31 pmOnly the last bubble’s worth of equity has disappeared.
Ummmm… no. Check out historical homeowner’s equity, charts of which CR posts every so often.
http://www.calculatedriskblog.com/2008/12/fed-household-percent-equity-cliff.html
Even as national home prices doubled nationwide homeowner’s equity declined. That’s right, declined. People were extracting equity faster than it was building.
As CR also noted in that post… Approximately 31% of households do not have a mortgage. So the 50+ million households with mortgages have far less equity than 44.7%.
I realized years ago that when — not if — home values returned to pre-bubble values homeowner’s equity would effectively disappear altogether.
It’s even worse than the numbers (excluding free-and-clear homes) suggest, since they only represent the average. People aren’t average; some are very prudent whereas too many aren’t, plus California is heavily over-represented on the latter front.
Yes, San Diego county will always be a pricier locale, but at a much lower level than present.
p.s.: Oh, and that’s when I’ll have Jim looking around for me.
tj and the bear | March 24th, 2009 at 9:31 pmWe’ll see how long it lasts, but for now it’s hot.
Houses are selling, stocks are rising, the smell of freshly printed dollars permeates the air. Ahhh, springtime!
This too shall pass. In the meantime, make hay while the sun shines!
p.s.: I *LOVE* San Diego. Too bad I’m stuck in L.A. for now.
tj and the bear | March 24th, 2009 at 9:36 pmYep, I wanted that one for $400-$450K. Back in the pre-bubble days, you’d be able to pick that up in the $200k-$300k range. We’re not willing to pay a bubble premium, but others certainly are willing to pay that and more.
We found this one while driving around the neighborhood the other week, and there was another house nearby that just listed that day for $649K, IIRC. It was on a smaller flag lot (~10K sf), a small 3/2 that was basically in original condition. Absolutely nothing to write home about. When we pulled up to that other house, there were three other parties checking it out. It sold that day, and I’m assuming it went for full price, if not over.
If the property is priced right, there are multiple bids the first day its listed. As Jim has stated over and over…if you’re not getting any action, you’re not priced right. The market is HOT right now.
The bubble is not over. Not by a long shot.
CA renter | March 24th, 2009 at 11:32 pmWhy did you spend 5 minutes wandering around a tear down house? The value of that property is land. Would have been far more useful to see more about the lot and view.
Bar Leucadian | March 25th, 2009 at 12:30 amSorry, they had the gate locked going out to the back forty, and it was looking into the sun.
Did you start your blog yet?
Jim the Realtor | March 25th, 2009 at 6:45 amSold.I will offer 199k.
arizonadude | March 25th, 2009 at 6:54 amI’ll expect a royalty from the use of the entry man moniker.
What jerks: “You know I can’t stop you from looking around if you’re a realtor”. Assuming by “stopping you” they didn’t include locking the front door and ignoring you. Given the number of women in the industry, how many of them would have been able to hop that fence?
Regarding the market and “game changing”, has it? Or has it returned to normal? My family owns about 20 rental units, mostly in Escondido, and has for nearly 20 years. Yes, they have gone up in value, but the real value is the income stream as the older members of the family hit retirement. Its a little like an annuity. You pay the mortgage for 20 years, and then you get rental income in retirement. I’ve been trying to get into that as well, both in SD and where I live now. The numbers haven’t worked? Why? Because insetead of long term investors, you get short term speculators. Buy, wait, extract cash and/or flip. Sure its a great deal while the market goes up, but don’t be caught with the hot potato. These schmos hyper-inflated the lower end and crowded out the long term investors who know how to do math.
Former RB Resident | March 25th, 2009 at 7:14 amThe bubble is not over. Not by a long shot.
Echo bubble?
tj and the bear | March 25th, 2009 at 7:23 amLeucadia is a really nice place
Todd | March 25th, 2009 at 7:54 amThat just seems sad. All that stuff growing around that house, and you could hear the birds singing on the video. Someone will wreck the house, wreck everything growing in the yard, and plant a yard full of concrete. Bee-yew-tiful, beautiful concrete.
E | March 25th, 2009 at 10:24 amThat just seems sad. All that stuff growing around that house, and you could hear the birds singing on the video. Someone will wreck the house, wreck everything growing in the yard, and plant a yard full of concrete. Bee-yew-tiful, beautiful concrete.
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I was just coming back to post something along these lines, and there was your post.
The people who locked Jim out of the house looked an awful lot like spec builders to me. I’m guessing they’re going to split the lot and build two nasty-looking, oversized boxes on what once was a beautiful lot that would have made a nice home for a family.
I’m getting tired of competing with these idiots who trash older neighborhoods by tearing down nice, old homes and building ugly mega-boxes in their place — with the requisite granite countertops, of course! Then, they expect families who’ve been priced out by these same specuvestors to pony up the cash so they can ride off into the sunset with their loot. Sorry, it’s just frustrating to watch.
CA renter | March 25th, 2009 at 1:28 pmCA Renter,
Most of those older homes are horribly designed and horrendously ugly. Most anything built in So Cal (and much of No Cal!) between 1940 and 2000 had design taste almost as bad as some of the boxes Jim has shown here. If only CA had stuck to it’s earlier roots, of Spanish/Santa Barbara style.
Aztec | March 25th, 2009 at 4:53 pmMost anything built in So Cal (and much of No Cal!) between 1940 and 2000 had design taste almost as bad as some of the boxes Jim has shown here. If only CA had stuck to it’s earlier roots, of Spanish/Santa Barbara style.
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LOL! Beauty is in the eye of the beholder, I suppose. While I agree that the **real** Santa Barbara style is gorgeous, the modern, fake “Santa Barbara” stuff is hideous.
Though it’s probably a reflection of my growing up in those 1940s-1960s era homes in L.A., I like them a whole lot more than the ugly, two-story boxes that are being put up everywhere now. Those older homes were better constructed, even though many were thrown up quickly after WWII. They had nice, large living rooms and practical layouts.
Today’s homes seem to be designed by people who never really cook, entertain, or do laundry for a large family. Very impractical, and the square footage is taken up by ridiculously large hallways and dead space. Even though many of today’s homes are over 3,000 sf, they often have living rooms that are **smaller** than my old sub-1,300 sf house, and no more bedrooms than that same house, and I’m not exaggerating! Lots of wasted space all because they have to justify the price on large square-footage (even if it’s uselese) because the lot is so tiny. Don’t even get me started on the HOAs and Mello-Roos scams!
CA renter | March 26th, 2009 at 1:08 amAztec, those older houses are only ugly now because styles change and people go along with the herd. I have to laugh every time I watch House Hunters and see the buyers who won’t even consider a house that doesn’t have granite counter tops and stainless steel. 40 yrs ago those same buyers would have said exactly the same thing about formica and avocado green. They are just herd lemmings without an individual thought in their heads. The house in this video was a nice house once. It’s just been beaten up, probably beyond repair. The yard is a gardener’s paradise, but is sure to be covered by a 3000 foot megasprawl to fit in with today’s avocado green and harvest gold.
E | March 26th, 2009 at 4:23 amDONT TEAR IT DOWN. I’m sick of people tearing down old, cool houses with some actual character and flair in favor of some assembled-overnight affair that doesn’t match the original character of the neighborhood. Just invest a little into cleaning it up, and it will be better than any new house you can build with today’s money and cheap-o Chinese-sourced materials.
And if those guys are speculators, c’mon, they can easily squeeze 5 houses on that lot. 5,000 sq. ft. subdivisions with a 4,500 sq. ft. McMansion in each corner. Now THAT’S the American Dream!
KP
KP Springfield | March 26th, 2009 at 11:17 pm