bubbleinfo.com

Hymettus is one of the more prominent streets in Leucadia, but there haven’t been any sales there since summer. So two older sales on Hymettus are included, the first closed in July, 2009, and the second was January, 2009:

I hesitated with the first story, but it demonstrates how a life-changing event at the wrong time can be very costly.

San Diego was up 2.7% year-over-year, but catch their remarks.  Even though Shiller admits that pricing has been up since April, he is worried about the downside risks:

Let’s acknowledge the MBS-buying and tax credit, and call it even for the last year?

Bizzle wondered about the all-cash buyers.

Did they cash out at the top, and have been patiently bubble-sitting?  Out-of-towners?  Generational money shift (inheritance, before or after death)? or move-up or down?

In the previous post, some of the examples were marked as cash buyers by the listing agent, but their tax rolls haven’t been updated yet (Rancho Costero, Via Conquistador, Valerio Trail, and Lynwood).

But we can check out the others, and add a few that weren’t previously sold at the peak.

OUT-OF-TOWNERS (2) The buyers of Camino del Orchidia and Meadows Del Mar showed no previous history owning or selling in San Diego County, so let’s assume that they are out-of-towners (not first-timers).

MOVE-DOWNERS (1) The buyers who paid $1,130,000 for Skyline moved from Solana Beach.  They had paid $1,300,000 for a house on the east-side of Pacific in 2000, and sold it last month for $2,100,000, using the same agent from Skyline – nice package deal.  Their loan was around $800,000, so they transferred their equity to Carlsbad and were able to lose the payment.

Here are other homes purchased recently by all-cash buyers:

782 Sparta, Encinitas, 92024

5 br/4.5 ba 3,454 sf

YB: 2002

Monthly fees = $261

SP: $910,000  9/02 new

SP: $1,435,000  6/09

MT: 178 days

One-story former model home on 3/4-acre lot in Leucadia.  These all-cash buyers are long-time owners of a smaller house in Mission Hills that isn’t on the market, and wasn’t refinanced.  They used the Mission Hills address on the tax roll, so they must be planning on keeping it.  Flippers?  No way, we’ll call this one:

GENERATIONAL (1) ………(buying a house for parents or kids?)

*********************************************************************

5258 Greenwillow, San Diego 92130

5 br/5 ba, 3,496sf

YB: 1999

Monthly fees = $133

SP: $751,000  7/98 new

SP: $1,325,000  6/09

MT: 87 days

These sellers had listed for $1.595 million and came down pretty quick, so their $1.2 loan might have been a motivator.  The cash buyer has a Scottsdale address, and it looks to be in the Troon area, so he has/had some dough.  Buyers don’t always put their future address on their tax questionaire, so we’re not sure if this is an out-of-towner coming to join us permanently, or a

SECOND HOME (1)

****************************************************************************

4616 Wellston, San Diego 92130

5 br/3.5 ba 3,909sf

YB: 1992

Monthly fees: $178

SP: $684,500  6/92

SP: $1,590,000  7/09

MT: 36 days

This cash buyer had just purchased another slightly smaller house (200sf) in Carmel Valley in January, 2007 for $1,280,000…..all-cash, and hasn’t refinanced.  We’ll call this a

MOVE UP (#1)

******************************************************************************

5833 Meadows Del Mar, San Diego 92130

5 br/5 ba, 5,942 sf

YB: 2004

Monthly fees = $437

SP: Custom built by seller

SP: $2,558,500  7/09

MT: 55 days

The seller’s $2.4 million loan may have played a part in this one too, because  the 60 ft.- wide lots don’t seem to bother folks in Meadows Del Mar.  The buyer had purchased his previous residence in 2003, and a rental in 2004, both in Carmel Valley, and didn’t refinance either to buy, so we’ll call this a

MOVE UP (#2)

*****************************************************************************

There are a variety of cash buyers, and reasons for buying.  Where does the money come from?  We can only make a case for one of the seven above that it came from their previous residence, but there were probably some real estate-related investments that led to some of the equity used – just not other houses sold right around here.

Here are some same-house sales in Carlsbad, Encinitas, and Carmel Valley:

4120 Skyline, Carlsbad 92008

3 br/2 ba, 1,725sf

YB: 1958

SP: $1,410,000  11/06

SP: $1,130,000  6/09

MT: 439 days

This is the house on the splittable 0.72-acre lot on the corner of Tamarack and Skyline, the top of the hill in Old Carlsbad with sweeping ocean views.   The 2006 buyer had financed $1,128,000, so losing the entire down payment of $280,000 (and then some) turned out to be a better option than to continue making those payments.  In the MLS remarks: Lot split almost completed

*************************************************************************

2804 Rancho Costero, Carlsbad 92009

5 br/4.5 ba, 3,743sf

YB: 2000

Monthly fees = $361

SP: $1,320,000 5/04

SP: $1,101,000 7/09

MT: 10 days

These sellers might be second-guessing themselves (or agent), they only listed for $1,100,000 and got a thousand dollars over LP right away.

**********************************************************************

2997 Via Conquistador, Carlsbad 92009

5 br/4.5 ba, 4,453sf

YB: 2000

Monthly fees = $296

SP: $1,175,000 12/07 REO

SP: $1,000,000 7/09

MT: 29 days

If these sellers from Arizona (second home?) would have only paid list price when they bought it ($1.1M) instead of $75,000 over……..

*********************************************************************

510 Camino de Orchidia, Encinitas, 92024

5 br/4 ba, 4,915sf

YB: 2005  Monthly fees: $362

SP: $2,300,000  12/05

LP: $1,299,000  5/09

SP: $1,325,000  6/09

MT: 3 days

The buyer probably feels like they “stole one from the bank” here.

*************************************************************************

572 Lynwood, Encinitas, 92024

5 br/5.5 ba 5,177sf

YB: 2004

Monthly fees = $535

SP: $1,800,000  1/05

SP: $1,725,000  7/09

MT: 27 days

Big ocean view from the top of the hill in Encinitas Ranch, but after Orchidia’s closing I think they’d have a hard time reproducing this sales price.

***********************************************************************

5448 Valerio Trail, San Diego, 92130

5 br/4.5 ba 3,922sf

YB: 2003

Monthly fees = $289

SP: $1,825,000  7/05

SP: $1,515,000  7/09

MT: 923 days

Seller had listed for $1,995,000 in 2006, but once he got the list price under $1,600,000, it only took another 60 days to find the buyer.

*****************************************************************************

5468 Meadows Del Mar, San Diego, 92130

5 br/5.5 ba 6,762sf

YB: 2003

SP: $3,300,000  7/06

SP: $3,300,000  6/09

MT: 157 days

According to the MLS remarks, the seller had put in $300,000+ into this double-gate guarded home.  He should feel pretty good though, two others have closed since June 1st, for $2,400,000 and $2,558,375, and there are 11 active listing and one pending currently.

*********************************************************************

The Meadows buyer used a $2,300,000 down payment, and the Via Conquistador buyer financed conventionally (it just closed, tax roll not changed yet).  

ALL of the other buyers paid cash.

In July, 2007, I sold the house at 10503 Abalone Landing Terrace in 92130 for $1,199,000, which was the full list price at the time.

Zillow has a follow-up program for properties logged under your name, and they send regular updates.

Yesterday they noted that their zestimate of value was $1,093,500, an increase of 1% over last month.  The overall decline since it sold was a relatively strong -8.8%, which seemed about right to me.  Carmel Valley has only seen about a 10% dip in values, at least so far. (click on image for better clarity):

For those buyers who are waiting for the big collapse, know that there are other buyers out there who are willing to pay more – it’s the sellers who are holding out.  I talk to other CV listing agents just about every day, and the stories are amazing.  I called on one that’s listed in the $1,300,000s, thinking that the max value was around $1,100,000, and had proof.  But the agent told me that they had two offers this month in the 1,200,000s, and the sellers turned them down!

The Case-Shiller index for March is out today, and San Diego came in ninth out of the top 20 cities for year-over-year decline:

But those numbers are for March, and are based on a three-month moving average – is there any break in the trend? Here is the chart of number of detached sales, and average $/sf for Carlsbad-to-Carmel Valley for the period April 15th to May 15th:

The 12% decline in average PPSF since last year was the biggest Y-O-Y negative change on the chart, so it doesn’t look like the Case-Shiller numbers will be letting up anytime soon.

Let’s examine the Case-Shiller Index methodology with the March sales in Carlsbad.

They only use SFRs, so the condos, mobiles, and multi-families are omitted, which is good.

Last month there were 43 MLS sales in Carlsbad, but only 20 of them would count towards the Case-Shiller Index.

The 23 that wouldn’t count:

11 – REOs

9 – Previous sale was brand new

2 – Recent sale was brand new

1 - No previous record

23 – Total

Here is the breakdown of the remaining 20 March sales:

The Case-Shiller method uses an algorithm for downweighting the older sales, which, if I’m reading it right, adjusts the data based on how far away each sale is from the first. It gives a lot of weight to the short sales and other highly motivated sellers, and discounts the how the long-timers did, but if all they want to do is measure off-peak pricing, it’s probably as good as any.

I like things simple, so I’ll just say that Carlsbad is around 2003 pricing.

At the panel discussion the other night, the methodology of the Case-Shiller Index was questioned.

Do they include every repeat sale they find, or just the recent ones?

Because the long-time owners, ones who paid $33,000 in the 1960s, and are now selling for $700,000, could really skew the index.  Thankfully, the folks at CSI have published their methodology:

http://www2.standardandpoors.com/spf/pdf/index/SP_CS_Home_Price_Indices_Methodology_Web.pdf

They exclude properties that were resold within six months, though the REOs being held longer than 6 months are going to be included.  The “purchase price” recorded by the banks at the trustee sale, in almost all cases, will be quite a bit higher than the final sales price – their purchase price was based on appraisals almost a year prior to the eventaul REO sale.

The CSI also excludes those sales which they can’t find a previous purchase price, which will eliminate many of the long-time owners, and they also exclude new homes that were resold too.

The CSI also assigns ‘weights’ based on time between sales, but they said that 85% to 90% are unweighted.  If they are downweighting the older ’sales pairs’, there has to be some extra emphasis in the index on the more recent pairs. 

Wouldn’t that make the index somewhat biased to the negative?

Rob Dawg mentioned yesterday that we should question the cost-per-sf metric, and it, like the median sales price, leaves plenty to be desired.

I think we all agree that reviewing same-house sales gives us the best look at pricing trends and related market conditions.

In January there were 37 houses on the MLS that closed in Carlsbad – here are the 12 that had previously sold since 2004:

Although it would appear that two-thirds of the long-time owners/sellers did fine, four of them had hit the housing ATM. One was an REO, and three were short sales.

Six REOs plus seven short sales equals 13 of 37, or 35% of all sales that were bank-involved.

The average change in value was -20%.

Harrison looks/smells suspicious, the previous sale was 101% financed, and it had sold previously for $565,000 in 2003. I saw it, and the house was barely standing on a bigger lot – either it was fraud, or the underwriter and appraiser were, well, how do I say it, ‘pushing the envelope’?.

We’ve had particular interest in the short sale on Grivetta in Aviara.

The listing agent inputted the listing onto the MLS at an ultra-low price, but he already had his own deal put together.  He told me that the buyer saw him pounding the sign in the front yard, and bought it on the spot.  In the remarks he noted that “back up offer only” and that offers submitted would have to be “site unseen only”.

But with a short sale, anything can happen.  Either the bank can hold out for more money, and/or enough offers get sent in that the listing agent finally submits them all.  Not sure which happened here, but the buyer’s agent was also added as the second listing agent:

934 Grivetta, Carlsbad 92011

5 br/4 ba, 3,492sf

YB: 1999

$550,000  LP 10/15/08

$682,000  SP  12/11/08 

$195/sf

HOA = $79/mo.

Whatever caused the price to go that much higher – it’s good to see that the market prevailed.

How is the rest of Carlsbad doing this month? Are sellers drastically discounting their LPs to get out, or is it more leisurely? Are other sellers opting to go low with their list price, and try to bid up (in bold below)?

There have been 19 detached homes close escrow in December so far:

* REOs (3)
** Short Sales (2)

Difference between avg list price and avg sales price: -12%

Of the four sellers who bought in 2003, two sold for more, two for less.

Of the six sellers who purchased since 2004, one sold for more, five for less.

************************************************************

If you can get the list price right, and find a buyer within 30 days, you get fairly close to what you’re asking. If you price higher, it takes longer, and the drop is typically bigger.

My rule-of-thumb is that you’ll get within 5% of your LP if you sell in the first 30 days, and then at least 10% off for longer than 30 days – how does it apply here?
(DOM from previous recent listings included)

Properties that went pending in 30 days or less, and the difference between LP & SP:
+24%, +14%, -1%, -3%, -5%, -6%, -8%, -14%

median = -5% off list price

Properties that went pending after 30 days on market, and the difference between LP & SP:
-11%, -11%, -13%,-16%,-17%,-18%, -19%, -20% -20%,-20%, -23%
(bold are those at 100+ days on market)

median -18% off

************************************************************
Another rule-of-thumb for medium-priced homes is that – in the buyers’ eyes – they are going down about $1,000 per day once they’re on the open market.

Sellers are bold and optimistic the first 30 days. But after that, they start looking around for what else, or who else, to blame besides their price. If you are looking for a big discount off the list price, your chances are better, later.