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Casanova wondered if producing this blog is a full-time job.

No, it’s still part-time, and just a reflection of what I do everyday – without bulldozing my client’s rights to privacy.  I love to work, and get after it early every day.

Yesterday Mike B. and I were on the road by 6:00am, looking at several fixers with plans to be back in time for the radio show with Rich.

So when you see these clips, know that it’s all in a day’s work for me.  I can help you too: 

For those who haven’t participated in today’s market conditions, this will give you a taste. First you got out and look at the houses that has been picked over by everyone else, and determined to be way overpriced.

Then you track the new listings, and rush over to them the first day or two on the market.

The ”quality buys” get action immediately – in fact, if there isn’t other interest, you might want to ask yourself why. This listed Thursday (but they were trying to get $1,000,000+ last summer):

You don’t see too often -  two quiet acres in the Rancho Santa Fe Covenant under $1,000,000.  There were more defects to this property than were disclosed publicly:

If you are picky about what you’re going to buy, and will only offer on quality properties that are priced attractively, then you need to have an effective bidding-war strategy. 

Practice on this one!

Leave your guess on what the sales price will be in the comment section.  The closest guesser will receive dinner for two at the oceanfront Marine Room down the street!

Here is the link to our previous full tour of the property.

Reader tj and the bear asked:

Do you perceive a difference in the relative value of ocean view and/or proximate RRE post-2000 vs. pre-2000? I can’t shake the feeling that even though everything went up, the premium on coast properties went through the roof and has remained comparatively higher overall than it had been.

The long answer:

The market around here ramped up in 1997 when they enacted the “2 out of 5 year” property tax exclusion.  The thought of making up to $500,000 tax-free for just living in a house super-charged the marketplace – and greed took over.  People saw and heard the stories of others moving every two years and banking big money, and they wanted their piece too.  By 2004-2005, when anyone could get a loan, the market was thrown into a full tilt boogie.

The result was a disregard for long-term consequences.  For about ten years (1997-2007), anyone who got in trouble through divorce, job-loss, etc. could just sell and start over.  People thought they couldn’t lose – how much could it change in two years?

The music stopped in mid-2007, and we found out.

I think the market has done a 180-degree turn over the last three years.  Those who own the prime coastal properties appreciate them now more than ever, and are holding them.  Buyers have decided that only the best will do, and are very reluctant to compromise. They are investing big money too – San Diego County detached and attached MLS sales between June 1 and Sept. 30th:

For comparison, the NSD County Coastal sales between June 1 and Sept. 30th:

The number of all-cash purchases is unprecedented – sure, many of those in SD County are flippers, but in the La Jolla-to-Carlsbad corridor we don’t see that many flippers buying off the MLS. To invest that much capital, the cash buys have to be bought by purchasers who are planning on staying a while – a healthy sign for the market.

I think the demand today is as pure as ever – the non-cash buyers must legitimately qualify for a mortgage, which hasn’t been the case since I’ve been in the business (1984).  They are able to do most of their own research, and are more knowledgeable than ever about home values.  Plus, they are being extremely picky and patient – a real turnaround from the frenzy years when people would compromise, just to get in the game.

So, yes I would agree that premium coastal properties are holding their value better, and can be summed up as a “flight to quality”.  But there has to be more to it than that, for so much cash to be pouring in. Can it just be investors looking for a better annual yield? Maybe, but I think the bulk of the premium properties are owner-occupiers.

I think the battle between the so-called haves and havenots is fully engaged.

I’ll see if I can find some good comparables to illustrate the differences between this boom/bust and others, but in the past the price declines have only been around 50% of the previous boom increases. 

 We could use some good old-fashioned market clearing – maybe this is a start?

JimG brought it up, and our friend Effective Demand has charted the increase in Bank of America foreclosure activity for Southern California – recently their number of auctions has spiked:

More auctions, more short sales, more REOs, let’s GO! 

Freddie Mac also announced today:

McLean, VA – Freddie Mac (NYSE:FRE) and New Vista today announced plans to auction hundreds of HomeSteps® REO homes to individual homebuyers in Las Vegas on April 24, 2010 and in California’s Inland Empire on April 25, 2010 in support of the federal Neighborhood Stabilization Program (NSP) and to help more first time homebuyers and owner occupants purchase these homes. HomeSteps is the real estate sales unit of Freddie Mac and markets a nationwide selection of Freddie Mac-owned homes.

Under the 2009 Neighborhood Stabilization Program, homebuyers are eligible for closing costs and down payment assistance when they buy foreclosed or abandoned homes in designated communities that were hit hard by the housing downturn. This federal assistance combined with the federal tax credit will provide the buyer with significant financial advantage in purchasing HomeSteps homes.

“Freddie Mac’s first-time homebuyer auctions in Las Vegas and in California’s Inland Empire builds on our long-standing effort to use our REO inventory to foster new opportunities for new homeowners and shows another way Freddie Mac is working to achieve the Obama Administration’s goals of stabilizing and reviving impacted communities,” said Ingrid Beckles, Senior Vice President, Default Asset Management at Freddie Mac.

“Together with today’s low mortgage rates, these April auctions will enable Las Vegas and Inland Empire families to take advantage of the unique convergence of opportunities that make HomeSteps homes exceptionally attractive values,” said Chris Bowden, vice president of HomeSteps. “Working with New Vista underscores Freddie Mac’s commitment to manage its REO inventory in a way that helps stabilize communities, fosters homeownership opportunities, and responsibly safeguards tax dollars.”

“Owner-occupants are the key to revitalizing and strengthening neighborhoods that have been hard hit by the economy,” said Jim Park, CEO of New Vista. “Working with Freddie Mac, New Vista has created a one day homebuyer event that gives first time and owner occupant buyers an exclusive opportunity to purchase HomeSteps homes. These unique events will help turn hundreds of foreclosed properties into homes for many deserving families.”

New Vista will hold open houses on April 10 and April 17 – 18 in Las Vegas and the Inland Empire so interested buyers can tour the HomeSteps homes before the April 24 and 25 auctions. Potential buyers can also find property descriptions at auction.com/.

Any house west of the I-5 freeway in our prime North SD County Coastal region, priced within range of Fannie/Freddie/FHA financing, is likely to find a large audience.  Here’s an example:

The first minute of this video was taken yesterday during our usual broker open house session on Wednesday mornings, and the remainder was shot today.

MLS Listings of Detached Homes in Carmel Valley, 92130:

ACTIVES:  111 

$1,778,211 average list price,  $399/sf,  132 Avg. Days on Mkt.

(25% of those homes on market more than 6 months)

PENDINGS:  63 

$1,163,104 average list price,  $336/sf,  76 Avg. DOM

(41 pending, 22 contingent)

DEC. 09 SOLDS:  47 

$1,032,650 average sales price,  $331/sf,

75 DOM,  96% SP:LP

DEC. 08 SOLDS:  20

$1,092,245 average sales price,  $346/sf

46 DOM,  95% SP:LP

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In areas like CV, I think you can count the contingents as ‘likely-to-close-someday’, because the low inventory and quick sales are causing buyers to hang in longer, and pay more if needed - just to buy something, and conclude the hunt:  

There have been 16 houses listed over $1,000,000 that have gone pending this month in Carmel Valley. In 2009, there were 121 closings over $1,000,000, averaging $338/sf.

The new year is barreling down on us, and before you know it we’ll be in the ‘spring-kick’ season. How is it looking so far?

I want to update the previous stat check from a week ago – it wasn’t balanced due to fewer business days/more weekends.  Let’s compare the first 15 days of January, that way every year will have two weekends included, instead of the previous Jan. 1-11 comparison.

We can refer to the 2003-2007 period as the ‘steroids era’ of mortgage lending, and consider those stats hyped up.  All years are included below:

January 1-15

You can see a historic timeline just in these numbers. In 1997, Bush passed the $500,000 tax exclusion for couples who owner-occupied for two-out-of-five years, and by 1999, the specuvestors were flipping houses. They lost some steam after 2001 because the thrill was gone after the second move, and buyers were drying up, right in line with the usual 10-year real estate cycle – in fact, a downturn was overdue.

About then there was an audible gasp from the Calabasas area, and the next thing you know CFC was flooding the streets with neg-am mortgages – and by 2003 the market took off like a rocket. So let’s call the 2003-2007 period the ‘steroids era’ of mortgage lending, and not use those numbers for comparison.

Instead, let’s look at the 1999-2002 era as at least being more normal than any year since (but in reality we haven’t had a normal year around these parts since 1985!). In 1999, the flipper tax exclusion helped to boost sales, plus the interest-only mortgages were the loan du jour – and both are still available today. In addition, we have much lower rates, and higher loan limits today, so let’s at least call the 2010 market, ‘semi-juiced’, and compare to the 1999-2002 era which had some juice to it too:

So we’re not quite back to turn-of-the-decade numbers, but there is a slight resemblance with the number of sales. Could we call it ‘close-enough’, just because the ultra-low inventory is impeding sales? What are other factors? The number of sales should be higher once the late-reporters wrap up, that usually adds 10%. Currently there are multiple offers on every decent-priced listing today, and if it weren’t for the graft and corruption among agents, there would be more sales at higher prices, probably at least 70-90 sales for this period. But the price has to be right – look at the disparity between active and pending listings in North SD County Coastal:

1,124 Actives: LP=$680/sf, 121 DOM

289 Pendings: LP=$375/sf (x 95% = $356/sf SP), 71 DOM

There shouldn’t be any fear of additional foreclosures, in fact; the more, the better. They are the best chance of finding more reasonably-priced homes that you can buy!