bubbleinfo.com

From Eric at the nctimes.com:

As the national housing market continued to languish, San Diego County values rose 10.8 percent in March compared with 12 months earlier, as a smaller number of buyers chased deals on the most expensive homes, according to the latest update of Standard & Poor’s Case-Shiller Home Price Index.

Since house prices bottomed out in March 2009, the county’s prices have taken a Super Ball-like rebound. Much of that bounce came from a frenzied market of investors and first-time homebuyers looking to buy the cheapest homes, while more expensive homes languished.

But the activity in March flipped that trend on its head: Homes priced under $311,200 fell 0.5 percent, the first monthly drop since May, though still up 11.3 percent since the previous March. Meanwhile, homes priced above $465,686 rose 2.9 percent in March from February, up 7.7 percent from the previous year.

The number of sales recorded in the index fell to 3,192, the seventh consecutive monthly decline, off a third since its last high, in August.

“I think buyers come into the market looking for a great deal, and realize that there are very few,” said Carlsbad real estate Jim Klinge in an e-mail. “The ’steals’ tend to be extremely elusive due to multiple offers and agent shenanigans, and as a result, the buyers’ focus shifts to making a quality buy that fits most of their needs well.”

The latest Case-Shiller/S&P report, the index measuring same-house sales, has the March numbers out today. They noted, “San Diego, in particular, has stood out with 11 consecutive months of increasing home prices.”

http://www.standardandpoors.com/spf/docs/case-shiller/CSHomePrice_Release_052506.pdf

San Diego was the only town in their top 20 that had all positives:

According to the MLS, year-over-year SD detached sales were lower in April, but there could have been many that dragged into May to catch the state tax-credit:

If the banks/servicers keep the extend-pretend tour alive by postponing the vast majority of trustee sales, will the streak continue? Buyers are increasingly frustrated by the lack of quality inventory, and what appears to be relative stability in pricing.

Will buyers concede? It might depend on how the media portrays the May sales numbers. The tax credits haven’t caused Y-O-Y sales to improve during the May 1-15 period, though the late-reporters might make it a close race:

It was in March, 2009 that the stock market rebounded, and real estate did the same as mortgage rates dipped under 5% – reflected in the May, 2009 closings. Where do we go from here?

As we saw in the last video, people are out buying houses!  Are they reading articles like this one today in the U-T and figuring now’s the time?

San Diego County’s housing market was the strongest in the nation in February, the widely watched Standard & Poor’s/Case-Shiller Home Price Index reported Tuesday.

The price index for San Diego was up 0.6 percent from January, the only market out of 20 surveyed nationally with an increase. The index locally was up 7.6 percent from February 2009, second only to San Francisco.

Those who have a deep desire to buy will shrug off the overly-negative blogs and gravitate to glowing reports in the mainstream media.  People want to buy, and they tend to focus on news that supports that decision.

Here’s more:

Alan Gin, an economist at the University of San Diego, was at a loss to explain San Diego’s Case-Shiller numbers.

“It’s very unusual that every other market is down,” Gin said, noting that the unemployment rate of 11 percent here is worse than the national average.

The Case-Shiller figures indicated that prices were up in the top and bottom thirds of the local market but down in the middle, priced between $308,000 and $461,500. Gin speculated that’s because there are relatively few bottom-end sellers to buy mid-level move-ups.

To the layman, Alan is a familar authority because he gets quoted every month, right or wrong.  When he can’t explain the appearance of a stronger market, people want to read it as good news too.  As he notes, the local unemployment hasn’t slowed down the real estate market, and even with the Fed out of the MBS business the mortgage rates are holding - if they just stay in the 5% to 6% range, we should be alright.

Sellers will have to get off their high horse and lower their unrealistic list-prices as the spring/summer market unwinds, but if there are still enough buyers with cash and jobs, there doesn’t appear to be any other obvious bad news coming our way to stop them from buying. 

It would take a major unforeseen event to rattle the market over the next few months, because the reports keep coming out positive.  Your not going to see any real estate companies or financial institutions  issuing any report to the contrary – most everyone is talking it up now. Tread carefully.

From the L.A. Times:

Karl E. Case, a professor at Wellesley College and co-creator of the index, said the improvements were a sign that the economic recovery was beginning to help consumers gain confidence.

“What people are seeing in the stock market, and what people are feeling, is the beginning of a real recovery,” Case said. “Now that the economy is starting to come back, I think the psychology has changed.”

But David M. Blitzer, chairman of the Index Committee at Standard & Poor’s, characterized the report as “mixed,” with 12 cities posting increases on a seasonally adjusted basis. When left unadjusted for seasonal variations, the 20-city index fell 0.4%.  Economists surveyed by Bloomberg had expected the index to fall in January.

Richard Green, director of the USC Lusk Center for Real Estate, said Southern California is showing gains because it was one of the earliest markets to get hit and is rebounding before other areas.

“We fell first, we fell deeply and we didn’t overbuild the way other parts of the country did,” he said. “And if you look at the long-term horizon, the amount of housing built relative to population was less than other places, and it is still really hard to build new houses here.”

That means the chances of recovering sooner are good, he said.

Others were not as optimistic.

“If you look at the last two big real estate bubbles in the late 80s and 70s, you didn’t see the market rebound for five years,” said Christopher Thornberg, principal of Beacon Economics. “It’s amazing to me that people can look at a rebounding market after the largest bubble ever and possibly think this could be sustainable.”

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Click here for interview with Robert Shiller – he says the chances of a double-dip are about 50/50.

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?)

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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)

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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)

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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)

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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

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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.

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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……..

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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.

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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.

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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.

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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.

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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.