OCRenter sends his well wishes for a happy new year:
For those in Jim’s readership that do not know me, a quick introduction. I’m OCRenter, a former blogger that ran the now dormant “Bubble Markets Inventory Tracking” blog. The blog lasted a little over 3 years from late 2005 to early 2009, initially tracking inventory of homes for sale, then progressing to uncovering mortgage fraud stories and documenting knife catchers. The blog was a refuge for the “lifetime renters” that were “forever shut out of homeownership.”
Real estate cheerleaders labeled the blog “permabear.” But remember, there’s nothing the price can’t fix. A year ago, this “permabear” became one of those “homedebtors.”
Home shopping circa late 2008-2009 was in essence buying in the midst of chaos. But chaos also meant opportunities. Jim has seen the house, and he agreed that it was a fantastic opportunity. The house was purchased during the credit freeze, and some say its price point was to be never replicated again.
But it has, over and over in many fine neighborhoods across the land. I may not be blogging, but I continue to track home closings. And boy have I seen some fantastic deals that were made this past year. In fact, within my neighborhood, I’ve seen purchases of similar homes within a couple of months of each other that differed by $500-600k in price.
So how do you make sure you end up on the right end of these bipolar price points?
Adherence to the principle of “the price point of one.” This simply means although the general $/sqft in your target neighborhoods may be $300/sqft, you stick to your price point +/- 5-10%. Because quite frankly, screw the general $/sqft of the neighborhood, you just need that one house to hit your goal.
Find the price point that is reasonable and stick to it, and open yourself to multiple strategies. Realize that if an opportunity comes up within 10% of your price point, it may very well be worth your while to jump even though you may suffer from a minor knife catching scar.
My general feel for 2010 is continued chaos, with the general pricing staying relatively the same as last year. Flexibility remains the most important virtue when it comes to taking advantage of the ongoing chaos in the marketplace. Don’t corner yourself to one street, one neighborhood, or one zipcode (yes, this is directed at 92130). Don’t marry yourself to the idea that you got to have a new home, or an old one. Be open to possibilities, with limits, of course.
Lastly, I am a firm believer in Karma. And ’tis the season to take advantage of a contractor (a non-Jim the Realtor certified one that is). A lot of these guys were making money hand over fist during the boom years. What I’ve seen so far is everything from inside and out, follow the “50% off from peak year pricing” principle.
Happy Hunting and Happy New Year,
OCRenter
Happy New Year to you too, OCRenter!
Guess you need to change your handle now — OCOwner (or OCDebtor)?
Really enjoyed your blog, and like you I’ve since bought once I found the right house. And you’re definitely right about prices being volatile, it’s most obvious when you look at identical floor plans and see the big variation in prices (sometimes contrary to unit quality). Like the stock market, the price of a house changes up and down faster than the underlying value.
A very Happy New Year to you and your family, OCRenter!
I look forward to the day that I can put your advice to work. Here’s hoping for increased inventory and price discovery in 2010.
Hey OCR – nice to hear from you again. Happy New Year. Best wishes to you. We miss your blog.
BMIT was awesome. I hope you’re enjoying your purchase.
Hey OCR, great to see you posting on the front page. Once again you’ve posted some solid and realistic advice. I’m may be a bear now but when the time comes, I’ll jump and I won’t look back because I know I’ll have done everything I can to cover myself. For the right place at the right price a little scar isn’t so bad, especially if you’re like me and just want to live in the house not play the real estate is an investment game.
Happy new year to all.
That is very good advice. I think the starter end is good to go when it comes to pricing, there may be some volatility, but it will probably be minor. I live in a “starter” neighborhood and we’ve had plenty of sales to end-user owners. Houses that used to be rentals have owners in them now. Personally, I think buying in mid-range to upper is a dicier proposition. I’m a potential move-up buyer and the numbers don’t pencil for me yet. Mid-range in my neck of the woods needs to drop another $100k to $150k before they start looking doable.
Land prices for usable lots are still not dropping as much I’d hoped. The big chunks owned by major developers might be, but not good lots in developed neighborhoods.
Hey, OCInvestor. How’s it hangin’?
Add, don’t be afraid of interest rates. In this market the monthly nut is maxed out. Any jump in rates will only lower price. A jump in rates will also free up a lot of inventory from resets and recasts going up.
Hey OCRenter! I loved your BMIT blog. I stumbled upon it when I was googling info on SEH, and your blog led me to Jim and his blog. Was sad to see it go-
As a 2006 – 2009 reader of your blog – Thanks!. . .your blog, and the now defunct HousingPanic, (and of course Jim the Realtor) gave me the information I needed to also buy in April 2009. I bought a downtown SD condo directly from a developer, and got a great “Macy’s Sale price.”
Agree, that prices this year will be all over the board, and may still decline a bit. My own condo could likely be had for 5% less than what I paid, but it was what I wanted, where I wanted, at the price I could afford with cash. I plan to stay for 10 – 15 years or more.
My advice – look high, look low, and look a lot. . .I saw at least 40 places before making a decision – don’t be rushed into anything!
Hello OCR (and Jim), thank you for the update, and for your clear thinking. I have always wondered what was up with you now that you blog is gone. Sage advice. Have a wonderful 2010 and most of all – ENJOY YOUR HOUSE!
-BAM
OCRenter-
Wish you would come back with your site.
Always enjoyed your information.
Am another reader who was led to the JTR site via BMIT; thanks! Hope to join you in home-debtorship in 2010. I’ll keep hunting for that one that hits the mark.
Happy New Year to all!
OC Renter–Thanks for posting and as usual your post contains useful info. There are so many unrealistic sellers out there still. One on my street is next door to a house that sold for $709,000 in Feb of 09. Both houses are similar although this area is custom homes. The next door house went on the market at $1, 300,00 after the sale. He has come down $100,000 but it has languished for almost 11 months with no takers. No logic to this kind of thing at all. So good to hear from you.
Great to hear from you, OCRenter. I always enjoyed BMIT, and was sorry to see it go, although glad for the reason (that you found a good place). Wishing you a great new decade!
In many cases it may not be that sellers are unrealistic. They may need a certain price to clear their debt in the property. Of course, it is not the buyer’s responsibility to overpay, but gov. policies, etc are all encouraging this “delay and pray” approach, rather than price discovery via short sales, foreclosure, etc.
That did not come out quite right. I meant to say that sellers may be aware on some level that they are asking for too much, but they just cannot lower their asking price without having to bring cash to the closing.
OCR, thanks for running a great site. I used to read that on a daily basis. Best wishes for the new year.
Knifecatcher! 😉
I’m kidding. If the price makes sense it’s time to buy. Unfortunately (or fortunately depending on how you look at it) the numbers haven’t worked out for me yet. Renting is still cheap compared to buying in the areas I’m looking at.
Happy New Year, OC Renter! Good to hear from you, and good to know you are enjoying your home.
We also hope to join you in the next couple of years. If we could find a house at a 2001 price, we’d jump on it, too.
Here’s hoping you enjoy many more decades in your family home. 🙂
Great input OCrenter.
I would like to add as a resident of the south OC, that an “invisible threat” that is greater than “shadow inventory” is lingering. NLR or neighborhood leverage ratio’s are facing the day of reckoning.
In my tract we have 108 homes out of 272 that have loans over 750K, and most of the residents have both variable rate mortgages and incomes.
All 108 would be underwater if they had to sell today. Most have World/Wachovia, Indymac, Wamu, and CW loans, many have Heloc’s.
The neighborhood location and good school district( perception in everything) is keeping strategic defaults under wraps for now.
There is lots of rumblings (hush, hush talk) about some neighbors getting together to arrange “sale back” arrangements and other “creative ways” to keep the “OC image” (sarcasm).
The great “squish down” has not even started over here yet, but at some point rates/recasts will have an epic impact on highly leveraged neighbors such as mine.
thanks for all of the well wishes.
agree with MarkinSD, there’s no need to rush, the worse thing one can do is buy into the frenzy and fear that they missed the bottom and rush into a decision they regret. late last year after the neighborhood had a string of sales at high prices, suddenly several new listings came on the market, essentially drowning homeowners who thought they can “catch the wave.” all of these guys either withdrew after a couple of months or still linger on. this is a long drawn out battle btw the buyers vs the homeowners, no doubt about it.
Every now and then OCRenter pops up in the comments here and it’s good to see. What was great about BMIT was how he wore the same shoes as his readers – he was easy to identify with and the content was great.
I enjoy bubbleinfo just as much. Great content and perspective. Thank you both.
http://voiceofsandiego.org/toscano/article_0e2765d8-f7eb-11de-9cb4-001cc4c002e0.html
Lastly, I am a firm believer in Karma. A lot of these guys were making money hand over fist during the boom years. What I’ve seen so far is everything from inside and out, follow the “50% off from peak year pricing” principle.
When the boom was going on, my husband and I desperately needed a contractor. We had found dry rot underneath some wood siding. Months went by and many would not call us back. Some would say if it doesn’t bring them a certain amount of money forget it and they would not even look at the project. Most disconcerting were the ones who quoted a basic set price for a job on the phone, then show up and raise it a thousand because they liked your neighborhood and you could probably afford it.
I said at the time, this boom will not last and they will be begging for jobs. And I said guess what, they will never enter our home.
Well, the time is here. The letters to the editors in local newspapers complaining about no jobs tells me karma has struck.
Which is not to say all deserve the situation. I am sure there were some in my area but they were just too busy to let us know.
Miss your blog. Spent the holidays on the Central Coast of Ca. There is a 3 unit condo, one block from the ocean, built 3 years ago, terrific ocean views.
In Jan. 2009, it was listed for $1,300,000.
In Dec., 2009, it was listed for $795,000.
No takers.
The coming year will be turbulent, but will present some opportunities, for those who are flexible.
Best of luck to all potential homeowners in 2010.
OC Renter, how great it is to hear from you! I read your blog every day, I missed you so much when you stopped writing. I actually thought you may have gotten your self into trouble covering the scams that you were forced to stop writing. I never did purchase, decided we really couldn’t afford to be knife catchers. Hugs and best wishes, Working Mom.
OCRenter,
I miss your blog. Please consider writing one again and allowing free access to it
Best wishes,
JK