This plots the same SD affordability ratio (in red) and the Freddie Mac average 30-year mortgage rate for June (in blue) on the same graph.Ā
I don’t know if it means anything, other than to recognize that this is the first time since 1980 thatĀ BOTH factorsĀ areĀ near their lows at the same time.Ā Sellers, in particular, should take heed.
Jim Klinge
Klinge Realty Group
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Trustindex verifies that the original source of the review is Google. We sold a home with Jim and Donna and from beginning to end they were consummate professionals. Their initial walk through the property resulted in a list of items to be repaired or updated. They supplied a list of vendors and job quotes to do the repairs and updates. We originally wanted to sell āas isā and just get it over with. They gave us a selling price for āas isā and options for doing a few updates/repairs to doing it all with the selling price for each option. We agreed to do all they suggested and we sold for the exact price they predicted. For every dollar spent we got back more than $2 back in the selling price. And they got that price in a rising interest rate environment! Donna and Jim are extremely detailed and guide you through ever aspect of the sale. There were no surprises thanks to their guidance. We couldnāt be more pleased with their representation. Thank you Donna and Jim, Jerry and MaryTrustindex verifies that the original source of the review is Google. We have known Jim & Donna Klinge for over a dozen years, having met them in Carlsbad where our children went to the same school. As long time North County residents, it was a no- brainer for us to have the Klinges be our eyes and ears for San Diego real estate in general and North County in particular. As my military career caused our family to move all over the country and overseas to Asia, Europe and the Pacific, we trusted Jim and Donna to help keep our house in Carlsbad rented with reliable and respectful tenants for over 10 years. Naturally, when the time came to sell our beloved Carlsbad home to pursue a rural lifestyle in retirement out of California, we could think of no better team to represent us than Jim and Donna. They immediately went to work to update our house built in 2004 to current-day standards and trends ā in 2 short months they transformed it into a literal modern-day masterpiece. We trusted their judgement implicitly and followed 100% of their recommended changes. When our house finally came on the market, there was a blizzard of serious interest, we had multiple offers by the third day and it sold in just 5 days after a frenzied bidding war for 20% above our asking price! The investment we made in upgrades recommended by Jim and Donna yielded a 4-fold return, in the process setting a new high water mark for a house sold in our community. In our view, there are no better real estate professionals in all of San Diego than Jim and Donna Klinge. Buying or selling, you must run and beg Jim and Donna Klinge to represent you! Our family will never forget Jim, Donna, and their whole team at Compass ā we are forever grateful to them.Trustindex verifies that the original source of the review is Google. WeI had the pleasure of working with Klinge Realty Group to sell our home in Carmel Valley, and I cannot recommend them highly enough! Jim and Donna demonstrated exceptional professionalism, offering expert guidance on market conditions and pricing strategy, which resulted in a quick and successful sale. Communication was prompt and we were well-informed throughout the entire process. For anyone looking for a dedicated and knowledgeable real estate team, look no further! ---Trustindex verifies that the original source of the review is Google. Donna and Jim Klinge of Klinge Realty Group have our highest possible recommendation. From Donna and Jimās first visit to our house through closing their advice and counsel was candid and honest in all dealings. They kept us fully informed throughout the process. The house sold less than three days after listing with a two-week closing. My wife and I have sold several houses during our lives. This was by far the best experience. Klinge Reality is a premium service realtor. You canāt make a better choice for someone to sell your home fast and for top dollar.Trustindex verifies that the original source of the review is Google. Donna and Jim provided exceptional support and professionalism throughout the entire process. We couldn't have been happier with their efforts. They made our house shine, and thanks to their expertise, it sold above the listing price in the very first weekend! Truly a fantastic experience from start to finish.Trustindex verifies that the original source of the review is Google. This year has been difficult on our family, mainly due to having to sell our home. Thankfully we knew God had a plan for us and working with the Klinge team was a key part of it. It was an obvious decision to work with them again after such an amazing experience when purchasing the same home we needed to sell. The challenge was, how will we do this in so little time with so much going on? Jim and Donna held our hand every step of the way. Whenever an unexpected issue arose they found and provided a solution. Never once did we feel pressured to make a decision and the Klinges were always reassuring after providing the information that the decision was ours to make. Despite the curve balls, they never panicked and exemplified the ācan doā attitude, making us feel optimistic and taken care of. Their expertise and professionalism was superb. But of all the reasons to work with the Klinges, the most impactful and valuable is their compassion and genuine care for their clients. We pray that we can one day purchase our forever home and you better believe that Jim and Donna will be representing us - as long as they will have us of course. Thank you again Klinge team! Your execution, experience, and care are unmatched.Trustindex verifies that the original source of the review is Google. Jim and Donna were fantastic! Jim understanding my needs, recommending potential places, pointing out the pros and cons of each property was invaluable. Then when the offer was accepted Donnaās organized guidance through the inspections, paperwork etc made the whole process seem effortless. So grateful that I had them on my side!Trustindex verifies that the original source of the review is Google. We first found Jim through his blog at bubbleinfo.com, which really showcased his knowledge of SoCal real estate. Since then we've done three transactions with Jim and Donna, and they are an incredible full service agency, with Jim's deep market insight and Donna's deft contract and project management. We trust them implicitly in their analysis and strategy, which is based on years of experience. They're always available and on top of things, and we strongly recommend them to anyone.Trustindex verifies that the original source of the review is Google. The Good The Klinge Realty Group operates like a finely tuned machine, with a very personal touch. We contacted them on a Sunday and they were talking to us about our family and our needs on our living room couch the following day. They carefully listened to us and worked with us to identify the best and quickest path to listing within 2 weeks to take advantage of the low inventory conditions in our South Carlsbad neighborhood. They knew our tract specifically and had many previous sales there over the years - they came prepared with a thorough analysis of comparative sales and recommended a pricing strategy that they felt confident would yield offers the first weekend on the market. The Great Over the next two weeks Donna coordinated a range of vendors who she knew from experience could get the preparation to list work we needed done on time and with high quality. Our light tune-up involved excellent experiences with their stagers, landscapers, contractors, electricians, and plumbers. Throughout this period Donna's daily communication was clear, concise, and responsive. Any time we had questions Donna picked up the phone or texted immediately - but almost always, she answered our questions before we even knew we had them. The Outstanding We had a tricky situation with a shared fence that could have delayed our escrow. Donna used superb mediation skills to negotiate the terms of replacement and was personally on site with the fence contractor to make sure everything went smoothly. The fence looks great and escrow closed on time. The Truly Exceptional Our house came on the market on a Wednesday and between then and Monday morning Jim was personally at all three open houses. He was in constant communication explaining potential buyer reaction and strength. As he predicted offers began to come in on Saturday and each one was incrementally higher than the last. At the end we had 5 offers, 4 of which were over list, and the final accepted offer was $100,000 over list. In addition to being over list it included rent back terms that met our needs. The Recommendation For all of these reasons we would strongly recommend The Klinge Team to anyone wanting to sell in North County Coastal San Diego. I had been reading Jim's bubbleinfo.com blog for 15 years and knew when the time came to sell that he would be our first call. Jim Klinge is not your standard realtor. He is keenly aware of market conditions and sales strategies. And, works his tail off - though not as hard as Donna . At this point he's gone from realtor to friend and I plan to have him over to grill and chill at our new place to talk real estate, but also just about life and raising kids in San Diego. He's more interested in relationships than his sales numbers - and that's why his sales numbers are so high. We have already recommended the Klinge's to some close friends and another successful sale is on deck right around the corner...Trustindex verifies that the original source of the review is Google. We recently had the pleasure of working with Jim and Donna from Klinge Realty Group to sell our house, and we couldn't be more satisfied with the experience. From the initial meeting, they listened attentively to our needs and provided invaluable guidance on specific improvements to get our home market ready. Their responsiveness throughout the entire process was truly impressive. Anytime we had questions or concerns, they were quick to address them, ensuring we felt comfortable and informed every step of the way. What stood out the most was their team and extensive network of tradespeople, which made addressing any necessary repairs or updates seamless and stress-free. Thanks to their expertise and dedication, our house sold quickly and at a great price. We highly recommend Jim and Donna to anyone looking to buy or sell a home. They are a fantastic team who truly care about their clients and deliver exceptional results.Load more
Good morning to all of you geniuses.I still think areas along the coast are way overpriced.Seems like most of the activity is in the lower price range.People are looking for bargains.
Where is the “affordability” index coming from? Actual affordability (in terms of price to income) is not yet close to “normal”, or whatever the historical average would be. What is this index based on?
one issue to remember is just how many homes were sold in 2004 to 2006. The # of homes sold just in San Diego county averaged 50,000 per year. In those 3 years, that would have been 150,000 folks that sold at the peak. How many of those same owners actually bought immediately after they sold?
If 60% purchased immediately, that means 40% of those home owners kept their windfall and rented. That translates to 60,000 people with a lot of down payment. After 5 years of renting and CD rate at less than 3%, a lot of them are itching to get back to home ownership.
Nick,
It’s the same line from Friday’s Harvard study.
Their data is linked at bottom of this post:
https://www.bubbleinfo.com/2009/06/sd-priceincome/
Jim, you’re turning into CR and I like it! š
My realtor told me she is combing through obituaries looking for business.Is this common business practice?I am really offended by her ways.She said if she doesn’t sell a home this month she was going to quit the business.
Hey Jim. Long time fan, first time commenter…
It has struck me for awhile that people are for some reason or another much too hung up on *NOMINAL* mortgage rates. Where the focus should be is on *REAL* mortgage rates (i.e., nominal rates minus CPI). Plot that and you’ll be surprised… as low as rates may now seem, they’ve actually very rarely been so high on a nominal basis. Do the same analysis, but instead use Mish’s “Case-Shiller adjusted CPI” and it’ll freak you out.
Have a good one and can’t tell you enough how much I appreciate your blog.
BZ
ocrenter,
Yes, that’s also an interesting question, although IMHO I’d suggest that less than 5% cashed out and rented (if even that much). Most that did cash out moved out of state to retire on their windfall elsewhere.
You simply couldn’t have anywhere close to 40% cashing out and sitting without it dramatically affecting both the sale & rental markets at the time.
With the banks able to borrow new money from the Fed at less than 1%, mortgage rates really ought to be in about the 3% range. With all of this gov’t intervention, how about finding a way to get funds to borrowers in in the 1-3% range–talk about stimuating things!
Local Boy,
The problem is the term, not the rate. The Fed is lending short, so if the banks lent that money for mortgages it would also be short (i.e., ARMs). Too much risk to borrow short and lend long, which will become all too apparent as rates creep up on the GSEs.
So, why aren’t they that low on ARMs? Primarily because the banks know that borrowers would be unlikely to withstand a sudden upward move in rates -and- the banks don’t want to own any more property, so the margin & fees (as well as qualifications and down) have to reflect that.
Jim,
Do you happen to have historical affordability numbers specifically for the tonier areas — RSF, La Jolla, etc.?
Rates are really spurring demand but buyers don’t really have much pricing power.
FYI, I generated a San Diego version of the trustee sale charts using ForeclosureRadar, you can really see the very heavy investor activity happening. At the very least investors think there is an opportunity to make some money buying wholesale (trustee) and selling retail (MLS):
http://effectivedemand.blogspot.com/2009/06/san-diego-trustee-sales-june-2009.html
TJ,
I suspect you’re right. I’d guess less than 5% (as a SWAG) actually “cashed out” with the ability and intent to purchase again.
Many people who “cashed out” went and blew it on junk. For most people, money burns a hole in their pocket.
Chuck Ponzi
ocrenter, Chuck,
I’ve put the question of bubble-seller disposition to CR; perhaps he can dig up something interesting.
CR’s response:
TJ and The Bear, I can’t think of a good source for that type of data. The answer in 2004 and 2005 is very few homeowners sold and moved to renting – because the number of renters was declining and the number of homeowners rising. I think that started to change in 2006.
A slew, and by that I mean thousands upon thousands who sold during the bubble bought back east and now live in bigger and newer homes with no or very little mortgage. How many from SD don’t know. The whole state had sellers who did this.
Tens of thousands or more.
I just wish there were more than a dribble of sales on the high end so the median price curve meant anything. If you are not an investor (and I use that term loosely cause I think people falling over themselves to buy rental pads in near vacant exurbs will be in a world of hurt soon) would you buy the homes being sold to live in?
I am continually learning something new watching this bubble deflate.
JimB,
Yeah, and that’s not good for sales going forward, since (1) they aren’t coming back and (2) the people that bought their homes were mostly “temporary” homeowners using toxic mortgages. Homeownership peaked at over 69% during the bubble and has already reverted back to 2000 levels (and still declining).
CR’s chart: U.S. Homeownership Rate
The other factor here is S.California economy. I wish I could say I see employment here getting better when the recovery starts.
But I’m not sure SD will do anything other than stay flat. Companies won’t touch this place with a ten foot pole and the new blood (young folks)is moving out..
The city had better do something and do it right now.
CR posted on ocrenter’s question…
http://www.calculatedriskblog.com/2009/06/how-many-homeowners-sold-to-rent-at.html
The city had better do something and do it right now.
Secede from California? š
ocrenter,
Another factor to consider in your hypothetical is how many of those sales were by flippers or simply new construction? I imagine there were probably quite a few. In other words, there probably weren’t 150,000 family’s looking for houses after each sale.
On the flip side, how may people who bought during the bubble are now living rent free in a home that the bank won’t foreclose upon? If they didn’t put much down (and how many put more down than the equity they’ve already lost?!?) and they still have their job(s), they could be in a position to do a buy and bail.
One thing that I think will come out of this, in the not too distant future, will be a more detailed micro view of housing at different strata. This will be especially important in larger areas like San Diego and Los Angeles, where there are such variations from one neighborhood to the next. Reputable realtors can give some insight, but how many realtors have the time to do this for more than a few specialized areas. As more and more people do their house hunting online, the statistics available there will get better and better. That could help us someday to avoid the irrational exuberance that lead to the bubble. There are too many numbers thrown around that lend little insight. Who cares what the average income is for a city or neighborhood if it’s not going to be broken down into renters and owners?! I’m hoping that there will be readily available sources for this type of useful(!) information in the not too distant future. It could help put to rest the meme of “Buy now or be priced out forever!”
Ocrenter,
What happened to your blog? I used to read it everyday.
Conversely from JimB’s point of the outbounders, many incoming buyers in the 2005-present era are from more-expensive towns (LA, OC, Bay Area, NYC, etc.) who see SD prices as reasonable, as compared to what they’re used to seeing.
Does anyone have any historical numbers on migration into or out of San Diego? Can’t just use population, as that would involve standard growth.
JimB has a good point; on top of everything else, you always have to keep in mind how bad of a business climate California is, and how many of the jobs which are disappearing now are never coming back. Using the median prices (instead of the median sales prices, which are not very useful because of the skew of sales), we’ve still got another 25% to go before we get to historical norms… but historical norms were established when California was a vibrant, growing, feasible place to have businesses and industry, and without an enormous deficit problem our grossly incompetent “leaders” cannot seem to even acknowledge, much less address. I personally wouldn’t be surprised to see California drop well below historical norms in the next decade, as the state struggles to find the tough-love necessary to repair it.
Careful, Nick, such logic could get you labeled a “permabear”. š
I think Ronald McMansion has a great point. During the latter part of the bubble a whole lot of sales activity was flippers finding a greater fool flipper. And a lot of those flippers were holding more than 1 house at a time. The ones that saw the handwriting on the wall and sold off before 2007 probably made a mint.
Those that made a mint would be rare creatures indeed, since someone had to be holding those houses when the music stopped.
Agree jtr and you would know better than I. Will say that for outbounders are a huge group. UHals number one destination is Dallas tx.
I don’t think as many are moving in as out.
“The answer in 2004 and 2005 is very few homeowners sold and moved to renting – because the number of renters was declining and the number of homeowners rising. I think that started to change in 2006.”
it is hard to make an assumption based on these numbers. here’s why:
let’s take 100 people, 50 are renters and 50 are homeowners.
the 50 renters are given a chance to buy homes with 1% teaser rates, 30 of them took up the offer.
that would bring the renter population to just 20 people and the homeowner population to 80 people. But that didn’t happen.
instead, the the renter population went to 30 people and the homeowner population went to 70 people. reason is of the 30 homeowners that sold, 10 became renters while 20 bought again.
so just because overall the renter population declined does not mean there was not a sizable population of new “temporary renters” that cashed out and waited at the side line.
oh, just read CR’s post:
“To answer ocrenters question (somewhat), the number of renters increased by about 1.6million in the 2004 to 2006 period. A large number of those renters could have been homeowners who decided to sell and rent. We just don’t have the data …”
so renter population actually increased in 04 to 06.
so we now have this other possibility. owners sold and simply could not or did not want to return to the marketplace. new first time buyers decided to delay their purchase. end result: two population that would have owned deciding to rent instead, thereby increasing the rental pool.
“I donāt think as many are moving in as out.”
I don’t know if that’s true, even now. I seem to recall something about illegal immigration more than making up for the outflow of educated, skilled, and legal workers. That would also jive with the rental statistics, since you’d expect most people working near minimum wage would not be able to purchase a house in SD (especially if they are sending most of their income out of the country anyway). That could be another factor in the rental market.
Not as low as tommorrow!
#24 – JTR Comment-
Jim has a very good point–We live in Carlsbad and it seems like half the folks we meet that have relocated have came from LA and The Bay Area–these folks see North OCunty Coastal as cheap–We have came across two who have sold in LA and bought Cash in No County.
local boy, as a former OCer, we definately saw the north county coastal area as just that when we first moved here.
luckily we rented and started to think like the locals and our mentality changed.