You’ve probably been able to follow where the blog is going – the all-out battle for product.
If you’re a realtor and can’t figure out how to bring fresh inventory to your buyers, what good are you? Anybody can monitor redfin or sdlookup, can you duke it out in the streets? Are you fighting to win, or just trying to hang on?
The video library is growing, and we’ll preview snippets all along the way:
Just a psycho-babble note for the record:
RISMEDIA, November 18, 2009—Aided by the home buyer tax credit, the outlook for housing and the economy appears headed for a sustainable recovery, according to the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said the projections are enhanced by a tax credit expansion to more home buyers through the middle of 2010. “Given the success of the first-time buyer tax credit to date, and the need for qualified buyers to continue to absorb inventory that will include additional foreclosures over the coming year, we are hopeful about the impact of the expanded tax credit because it will stabilize home prices,” he said. “In fact, the credit is working better than first projected – it now looks like we’ll have 2.3 to 2.4 million first-time buyers this year.”
“We’ve seen a steady downtrend in housing inventory for well over a year and home prices appear to be in the early stages of stabilizing. With the expansion of the tax credit to additional buyers through the middle of next year, and no major unforeseen events impacting the economy, home prices should rise between 3 and 5% in 2010, but with wide geographic differences,” Yun said. He expects growth in the U.S. gross domestic product to be at a pace of 2.5% in the current quarter, with GDP up 2.8% in 2010.
The unemployment rate is close to peaking and is projected to ease to 9.5% by the end of next year.
“The size of the U.S. budget deficit is a concern going forward, and carries the risk of higher inflation. At this point, that risk appears to be restrained,” Yun said. Inflation, as measured by the Consumer Price Index, is seen contracting 0.4% this year, then rising 1.6% in 2010. Inflation-adjusted disposable personal income is estimated to grow 0.4% this year and 1.2% next year.
Is Yun smoking obamacrack?
Hmm….who to believe….the NAR or Meredith Whitney?
$568k on the courthouse steps sounds great. Will it get there and how long do I have to get the tier of cashiers checks together?
Regards the NAR:
¿Que es mas macho? ¿Laurence Yun o Meridith Whitney?
Meridith Whitney es muy macho.
We need more Jim the Realtors and less Yun the shill’s.
Rob, I can cover you and be can down there today (if it goes – probably wont).
I know this area and I think sale at 750K+ is easy, but Jim can confirm or refute.
So, at 586K I am in for half (+ labour!) You will have three days to produce your half.
The question is, what is you max bid? I think anything under 635K is pretty safe. Jim???
There are not enough rich doctors and lawyers to fill these McMansion tract home neighborhoods.
Who to believe? Jim the Realtor or Wikipedia?!?!
“Aviara’s real estate market has remained the only zip code within San Diego county to go unscathed during the housing crisis.”
http://en.wikipedia.org/wiki/Aviara,_California
I know that neighborhood and I like it. HOA fees are a bit high but that is Aviara. What will it feel like when one pays $850K for a home and the house next door or across the street is rented out?
Dang it, they cancelled the trustee sale scheduled for today on the $586,000 house.
I haven’t seen much commentary on the new $800,000 price limit for the tax credit. I think that is huge.
That limit, combined with FHA financing tapping out in the 700’s and 20% down conventional tapping out in the 800’s, is going to create a huge squishdown this winter/spring. Everyone over $900k better expect a huge price cut if they want to sell.
Yeah, I figured it would be postponed.
I was serious if Dawg was, so keep us in mind Jim.
Rob Dawg, I left off my sarcasm tags 😉
You know merideth whitney seems to know her stuff.I believe what she says about the possibility of a double dip recession.
It is funny how many people are bullish right now.They are pimping their investments constantly on cnbc.Gold is in a major bubble as well as other commodities.I think some of the hard hit areas have some great real estate investment opportunities.
W.C. Varones,
That 800K cap is a nothingburger. People able to spend 800K on a house are going to bump up against the income cap anyway (150K phased to 175K).
Besides, with the suggestion that you don’t spend less than 5X your income which would be very rich. What are you going to eat in your house?
The only possibility for that to make sense is if interest rates get down to the 1% to 2% range, something I don’t see for at least another 10 years, maybe never.
Chuck
I don’t see how commodities are in a bubble. They got decimated a little over a year ago and are still in recovery. Couple that with the dollar’s slide (commodities aren’t local 😉 ) and you get the prices we have today.
Genius,
You did forget one important part: we’ve got substantial global overhang. Prices are always supply relative to demand. Just like houses, it doesn’t matter what someone paid last year or the year before, it’s what you’ve got to sell based on how many are willing to buy.
Chuck
Early this spring Merideth Whitney said on CNBC that “this housing market strength is ONE BIG HEAD FAKE”.
Remember that during the downturn in the 90’s from the ultimate peak to trough there were 6 upticks in the market while ultimately going lower….SIX…we just had our first, not our last.
I was fined living in Avaira by the HOA for having “insufficient wood chips in my garden beds” in my back yard.
Bare dirt was not allowed to be visible in garden bed areas they stated. I was to appear before their tribunal in person to testify to the situation. I blew it off after I had a visit from a “Board” member who climbed out of her 2 door Mercedes in her tennis skirt and muttered something to me at my doorstep while she was chewing gum while she informed me of the infractions and fines to be levied.
It was my back yard. Who climbed my fence to witness woodchips missing? Hey, I own a black lab, they eat everything, you cannot woodchip ANYTHING when you own a lab. HOA’s suck!
Chcuk–I think people also look at what it would cost to build (of you could). I challange the typical person to build a house like that for under $200/sf (including the cost of the dirt)
Chuck, the new income limit is $250K per couple. So high $700s is the sweet spot at 3x income, conforming loan with Fed-subsidized 30-year-fixed, plus $8k credit.
You’d think only people with big incomes would be buying in that range, but anything that gets priced inside the FHA range is getting snapped up anywhere south of Carlsbad.
I am serious. There is a dividing line around $700k-$900k. Anything under that gets snapped up with Fed funny money, and anything over that isn’t selling at all.
Sorry–I was in a hurry-That was supposed to read Chuck, and If you could–The point is that I often consider the “Cost Approach” to justify residential real estate pricing (as well as the obvious “Market Approach”).
Local Boy,
Replacement cost approach historically been a price ceiling, since after purchasing the land and building it yourself, why would you pay someone else more for a lesser house?
During the bubble, the concept of “getting in”, and “not missing the boat” both drew demand forward as well as the conceptual framework of replacement value (since you would have to factor in “missed appreciation” aka opportunity cost into the replacement cost). In an era of falling prices, it’s a ceiling, not a floor.
I don’t disagree that average pricing should be about $200/sq ft, but rather getting the answer right for the wrong reason doesn’t seem good enough for me. It’s going to hover near replacement cost because of good demand vs. tight supply. At least for the foreseeable future.
A friend of mine is building a house in Newport. It’s a luxury property with a full basement and 6K sq ft with all the accoutrements. Build cost is somewhere near 150/sq ft including architectural drawings, studies, and financing, but not including land. Land prices vary widely based on supply and demand.
Again, I agree with you, but for different reasons.
Chuck
W.C.
I wasn’t aware of the income cap raise on the new flipper’s credit. That’s good to know; I think I can actually take advantage of it this time… woot!
Is SD FHA limits 625, or 729? I saw that 2010 FHA limits are locked at the same as last year, so it will maintain some semblance of normalcy. For those who have 150K+ to put down and need to buy a home, it seems like a suitable time to do so.
Chuck
Chuck,
San Diego FHA loan limit is $697,000. Add to that the 3.5% down payment and you get a price of about $725,000 that people can buy with near-zero down.
Any liveable SFR under $725,000 in the coastal areas disappears immediately.
My preference would be to buy something at $725,000 with near-zero down so I retain the option to walk away if Zimbabwe Ben doesn’t succeed in creating hyperinflation.
But I’ve got a lot of confidence in Zimbabwe Ben’s ability to create hyperinflation, so I’d also buy with a real 20% down payment of my own money up to about $800,000 if I could find anything nice.
A high level exec at a top 3 public builder quoted me $60/sf hard cost for their homes…and that was their luxury product (riverside trac price was $35/sf)!!! Absolutely amazing.
Thus trac replacement value is very low!!!! well below the $200/sf concept including land.
custom is a different story
I’ll tell my insurance agent to lower my replacement value to $140K-
I agree with W.C., as long as the Fannie/Freddie/FHA loan limits are at $697,500, there will be natural flooring around $800,000-$900,000.
It comes down to how much value can you get for $800,000 in your selected area? For many in Carmel Valley they’d be happy with a newer 2,500sf house with smaller yard, in Carlsbad it’ll get you at least 3,300sf, and in Vista you’ll get as big of house as you need on at least a half-acre.
In 2005 I represented the sellers of a 3,000sf house on an acre at the top of the hill in Vista that closed for $1,065,000.
The same house just sold again last month for $520,000.
In 2001 it had sold for $612,000.
Some great values in Vista these days.
Interesting, the TS was canceled, not postponed.
That probably means something was resolved… no?
There are two other NODs, but the likelihood of foreclosure just went way down.
Oh well.
10-4 on the foreclosure, their short sale must be proceeding instead.
I don’t trust any of the banks to cancel or postpone trustee sales just because they have a short sale pending, in most cases the foreclosure department doesn’t know what the short-sale department is working on.
But if they cancel, they have to start the foreclosure process from the beginning, so they must be confident of a resolution being at hand.
Loan mod that will buy the homedebtor another 9 months on the back of the taxpayer.
Doughboy,
Your HOA story gives me nightmares about busybody neighbors who need jobs / hobbies.
JK
Says Chuck “A friend of mine is building a house in Newport. It’s a luxury property with a full basement and 6K sq ft with all the accoutrements. Build cost is somewhere near 150/sq ft including architectural drawings, studies, and financing, but not including land.”
Let us know how this turns out! The only way you can get to that cost is if it’s 2 stories over that basement, the basement is counted in that sq ft, and “luxury” means cheap vinyl windows, cottage cheese stucco, asphalt shingles, and carpet everywhere. I’ve seen TWO in Newport project their costs to be sub-$200/ft. They went way, way, way, WAY over that.
So, the cost to build a home is between $35/sq ft and more than $200/sq ft, according to the comments here. That certainly clears that up…not.