Susie asked about the $8,000 tax credit, and CR was ablaze with 300+ comments yesterday after this article appeared in the N. Y. Times:
http://www.nytimes.com/2009/09/16/business/16home.html?_r=1
Joseph and Chassity Myers are among the two million buyers eligible for the credit this year. The newlyweds heard they could get money from the government for something they were tempted to do anyway.
“It was a no-brainer,” said Mr. Myers, a commercial underwriter. “Owning something is the American family dream.”
The couple bought a two-bedroom condominium here in the spring for $171,000 and amended their 2008 taxes immediately, receiving their windfall by direct deposit a few weeks later.
Their home is now a monument to the government’s generosity. They bought a leather couch, a kitchen table, a bed, television stand, china cabinet, kitchen table, coffee table, grill and patio set.
“We did exactly what the government wanted us to do,” said Ms. Myers, a third grade teacher. “We stimulated the economy.”
Buyers like these above will probably go on to live happily ever after, and good for them. But the $8,000 tax credit is small potatoes in the stimulus world, compared to what’s coming.
The biggest stimulus package in the history of the world is upon us.
It’s name?
“Stealing One From The Bank”
As more bank-owned properties hit the open market, today’s buyers, already frustrated with the lack of inventory, will swarm to new meat – the well-priced REO listings.
Carmel Valley is the best example, because the product line is so similar – it’s the only place in North SD County where all you see are tract homes built in the last 25 years. The CV pricing last month was $327/sf for the 38 detached homes that closed in August, which has been steady.
There are 90 properties on the default list in 92130.
If 30 to 60 of them hit the open market over the next six months at $300/sf to $320/sf, they will IGNITE the marketplace.
Buyers will be scrambling to buy, because they won’t be paying any more than they had planned to pay, even after the overbids, and they’ll have the bragging rights that they ‘stole one from the bank’.
Look at how crazy people are about $8,000 – do you think they’ll be even crazier about stealing one from the bank? Bet on it.
ARE THE REOs COMING?
This morning I received my third REO assignment in the last 2.5 weeks:
1070 Buena Vista Way, Carlsbad
4 br/3 ba, 2,288sf
YB: 1959
Lot = 7,000sf
SP: $800,000 2/06 100% financed
LP: $650,000 short sale that failed
Trustee Sale O-Bid: $535,500 9/14/09
Remarks from last listing: Extremely interesting 2 story home west of I-5 in olde Carlsbad.Approx 2300 sqft. Home features gargoyles, hardwood floors, french doors, vaulted ceilings, dual pane windows, new appliances, ocean view wrought iron, built in storage. Additional detached 600sqft building in back.Walking distance to beaches and ‘The Village’.
The REOs are coming – look for their sales to take off like a rocket. Yesterday we saw that there were 657 bank-owned properties listed as actives, the contingent and pending REOs total 1,584. Do you think buyers will flock to a 2,288sf house west of the I-5 freeway in downtown Carlsbad that has an extra unit for mid-$500,000s, even with the gargoyles? Count on it.
People love bank deals – we don’t need any other stimulus than a pure marketplace!
Does that mean I won’t win the Chargers tickets? Damn those banks.
So you’re saying that the number of houses sold will go up as prices go down?
However you want to call it…
“Steal on from the bank”
or
“Bank sold at a loss”
It’s the same thing. Prices are going down.
Congrats on finally getting a good property, Jim! 🙂
It’s the same thing. Prices are going down.
I didn’t say that, and don’t agree. The banks aren’t going to have to sell CV McMansions at $250/sf to clear out the first wave, there are dozens and possibly hundreds of buyers waiting. All the banks have to worry about is how many buyers will be left for the last wave.
I think there will be plenty of buyers for the quality homes, willing to pay just under today’s prices. Bidding wars will drive prices higher than list, and up to about where the regular retail sales are selling for today.
Banks will still be selling for heavy losses though.
It doesn’t matter to some buyers (like me) what credit was available. I make too much money to qualify, so it’s a moot point.
There’s talk of a 15K flippers credit after this one expires. I guess it will pull more demand from the future.
I hate to see what will happen in another 2 or 3 years when we discover what organic demand will do. Hopefully by then, everyone will be making double their income and we’ll be back in happy days again. Of course, that’s exactly what the economists at the Federal Reserve and Treasury tell us won’t happen. I guess it seems there’s going to be a crash, just the question of when. I’m in favor of getting it over with, of course I’ve been known to rip band-aids off rather than prolong the mental anguish. What do I know? Some people are gluttons for punishment.
Chuck Ponzi
Jim, don’t sell the gargoyles short. Those are TOTALLY a selling point for some folks. Think of the possibilities come October!
Honestly though, I’m more scared by the lavender trim 😉
Seems like a good buy, by the way. I think it’ll go for 575, if you ask me. How is the noise from the freeway? What about schools, are they any good.
View Larger Map
Here are the interior shots from a prior listing: Old listing
Looks like a nice place. What is that building in the back?
Chuck
JtR – Nice gargoyles, at least for Carlsbad. How much extra will the bank fetch for the slots in the turret? (you can use them in the meantime for shooting arrows at the invading hoards of flipper-buyers)
Oh, one other question. Are the hideous paint and the gargoyles a recent addition? The old short sale listing showed a white house (as does google street view). It’s much prettier white than purple.
I’d buy it at 550K as long as the noise from the freeway was reasonable.
Chuck
CV McMansions, Yawn.
Maybe I spent too long living in San Francisco and the East Coast, but I prefer houses with character. Like, frankly, this one that Jim is asdvertising here. Is there a virtual tour or interior pictures anywhere?
The pictures are found on a link up in Chuck Ponzi’s comment #7.
The house actually looks pretty awesome and so does the location! Downtown Carlsbad is one of my favorite places.
The old listing doesn’t have the lavender trim and my question is…how did that get there between the short sale and the trustee sale? Was that a last ditch effort to sell the place?
Is that really a house? It looks like it should have a sign out front for some kind of themepark restaurant. 🙂
If the $15k FTHB proposal passes my kid in college is buying a house. She doesn’t know it yet and we don’t even know whether we are going to tell her.
Regards this house. Some people think it ugly or whatever. My boys and three weeks and $10k would have this puppy standing tall as an English Tudor with personality.
I cannot see any other reason to live in Carmel Valley EXCEPT for the schools.
I use CV for an example because the housing stock is so similar it’s makes it easy to sample quickly.
If you can find a decent house in CV around $300/sf, you should grab it, because it won’t be around long. We’ve seen those 2,800sf homes selling in the $800,000s all year, and as a result the new listings are up in the $900,000s – for newer tract houses on very small lots near the freeway. Selling like hotcakes.
I think you have illustrated people will buy anything up to the FHA maximum. The article I posted about the couple that had no money left but still got an $8,000 tax credit and a $750K home in the bay area (with a FHA loan).
The question is when the FHA goes insolvent sometime next year will the new underwriting criteria keep the $500K – $750K McMansion market going.
Remember the organization buying the homes is the government. The occupants are not using their own money.
Sorry, I see Chuck posted pictures of the house. The purple certainly is disctinctive relative to the white…
The fireplace looks especially nice.
I still think the banks are messing with you.
The question is when the FHA goes insolvent sometime next year will the new underwriting criteria keep the $500K – $750K McMansion market going.
The FHA is never going to go insolvent, it will be backstopped by the treasury if need be. It will likely not change either, because I don’t think there is support on either side of the isle to limit FHA loans.
“Stealing one from the Bank”…the only “man on the street” I’ve heard of doing that is someone walking into a branch location with a gun and a note.
Real estate transactions in today’s environment between buyers and banks are the result of a contractual arrangement based solely on the true market value of the property, since the collapse of the ponzi scheme. Granted, few, very few, get somewhat of a decent deal, but hardly anybody is “stealing” anything. If someone thinks they “stole” one from the bank, put it to the test and try to “fence” that “steal” and 9.5 chances out of 10 they’ll come up short.
“Hopefully by then, everyone will be making double their income and we’ll be back in happy days again.”
Maybe so. For now RE is holding up but private sector wages are heading down.
As an aside, the place to work with the best benefits and salary bar none is now the Federal Government. It used the be government employees joked at their job.
What if one day parents in San Diego tell their kids to do well in school to get a good government job….
The bio disco disaster Jim showed us last month closed: http://www.sdlookup.com/MLS-090045844-17061_Silver_Crest_San_Diego_CA_92127
Jim: If I were you, I’d rather sell a house with gargoyles and a turret than a CV tract home. More chance here of someone really falling in love with the house and overbidding!
The purple can be fixed…the turret…well, that’s just pure awesome. 😉
-Erica
The tax credit does not need to be extended in my opinion. We waste more money and the deficit continues to grow each day.
Soon they will bring back cash for clunkers especially considering the fact next year is an election year. Votes!!!
Jim,
Is that the house on/overlooking I-5 on the left as you cross the bridge over the 5 heading west from the mall to “Olde” Cbad?
The Great American Consumer certainly loves a (perceived) deal. As Jim says, just watch them beat down the doors of REO’s with pens in hand. “Stealing One From the Bank” is the new “Buy Now or be Priced Out Forever”.
I like older houses with character. It kind of looks like a castle or something. This should sell quick and for an above average price for the square footage and neighborhood, IMHO.
I love this house! The 600 sq ft guest house out back would be perfect for my folks. Too bad I’m locked in a lease right now or else I’d be calling you Jim to write an offer. Hope to grab something similar when I look to buy in 2011.
I love the area, but its not the best for schools (someone asked about this earlier). It’s Buena Vista elementary (797 API, only scores a 6 on GreatSchools.net). Valley Middle and Carlsbad high.
Great house and awesome proximity to village and beach. However by looking at the google street view (from #7 above) it really looks out of proportion to every house on that street. I have heard that you don’t normally want to buy the biggest/best house on the block because of comps? By checking Zillow (yes I know it’s not very accurate) it looks like most of the neighbors are in the mid $400’s.
“We did exactly what the government wanted us to do,” said Ms. Myers, a third grade teacher. “We stimulated the economy.”
Stop… me… from… saying… something… not… very… nice… ARGH!!!
p.s.: $300/sf a deal? DOUBLE ARGH!!!
My Mom wants me to buy a house but I don’t want yet. I’ve lived in Cali my whole life but I’m at the point where I’m fed up with this place. You have to either be rich or willing to be house poor for the rest of your life in order to own a house and live here. Or the other option is to live out in the middle of nowhere and fight traffic all the time. I don’t know how many people can do the math and feel good about buying a house here.
I love that house!
Want!
Personally, I think that 8k credit should have been restricted to homes under $350k. Watch them prices drop in hurry to get in under that. Of course, I also think that $350k should be the FHA max too.
Rob Dawg said: “If the $15k FTHB proposal passes my kid in college is buying a house. She doesn’t know it yet and we don’t even know whether we are going to tell her.”
Right with you. Our college kid will be buying a nice little condo in a city his parents like to visit every now and then. Absolutely no reason for him to know he bought it, or where it’s located, for that matter …
Our congress is so full of tools.
Anyone who qualifies for that credit won’t be buying anywhere near the coast, at least not a house in a reasonable area. Give me a home loan at the same interest rate as my auto loan and you will indeed see some stimulation.
BTW – Rents are coming down…
@ Genius, what do you consider ‘near the coast’? Are you talking beachfront or walking distance right?