Jinx wondered if pricing was going to be flat for a while, and I think it’ll depend on the area in question. Some neighborhoods may look like they are going up in value, and others down.
The low-inventory conditions makes it harder to track the actual trends – either there aren’t enough comps to support a case either way, or the few comps are masking the real story. Plus the shadow inventory of defaulters is haunting the market – will there be a flood of REOs one day, or not?
Let’s highlight a few areas where buyers should proceed with caution.
The mid-Carlsbad market has shadow inventory of a different nature – new product waiting in the wings. Currently there are 150-200 homes underway around the Poinsettia/El Camino Real area, plus Robertson Ranch will add over 1,000 homes once it is built out – that’s a lot of Mello-Roos!
Two weeks in a row with a surfboard in a Porsche – will that be the new ice-cream truck? A bubbleinfo t-shirt to the first person to name that band!
Rockapella.
The Internet ruined trivia contests.
We took a look at the colrich homes on el camino (the ones with the 3 story plan). I think only 1 of the plans has 3 stories, but they are pretty small (well, for our family of 6 anyway). There is an RV storage in the community, but not part of it.
I got an email that Mirasol by William Lyons in La Costa Greens will start in the 700’s. I thought that seemed kind of high since the smallest floor plan is 1900 sq ft, and then they jump up to floor plans that are 3000 sq ft+. Grand opening is Feb 27th. I thought they said the models would be open then too, but that seems like a lot of work to do in just 2 weeks?
For us we are staying away from the new homes for now. Mello roos are too high.
Thanks for addressing my question 🙂 We just can’t seem to decide whether to rent or buy. The solution may be to rent with an open lease so we can “jump” if we ever find the right house.
We refuse to buy a house with mello roos. Just the principle of it bothers me.
3 stories?
Is the house square footage bigger than the lot square footage? That’s gotta be a new record on the Misery Index.
“We just can’t seem to decide whether to rent or buy. ”
I would say if you’re unsure, just rent – open lease or not. If you find the perfect home at the perfect price just after you sign the lease, you’ll be happy to pay the penalty for breaking it. I’m always leery of month-to-month leases anyway – much higher likelihood the rug will get pulled from underneath.
Total monthly fees + SM schools all but kill LCG for me. (SM schools are okay, but when neighboring Bressi and LCO have Carlsbad and San Dieguito respectively, it’s an uphill battle.) Some nice big homes there, though. Will $700’s do the trick?
The Blur,
Not all LCG homes are SM schools. Mirasol & solterra (the 3 story floor plan), trieste for sure are Carlsbad schools.
WV Varones,
The 3 story floor plan is 1989 sq ft I think? Lot sizes are small, but not that small.
“A bubbleinfo t-shirt to the first person to name that band!” (JtR)
Not gonna guess, Jim! Re: yesterday’s email to you: I’m just waiting for the next group you feature. Remember to crank it up! My daughter tells me one day I’ll get a ticket from the local cops as I play them way too loud. You and I should have a “worst singing voice contest”, but my kids will tell you it will be no contest…
And those three-story homes? Just four words: What were they thinking?
Jim – It is my understanding that WL bought the Mirasol lots for the low $300’s each…so lets call it $325k on average.
They build for about $60/sf all in here so lets call it $100/sf with hard/soft costs or $275k for an average 2,750/sf home.
Add $325 dirt + $275k finish = $600k plus 25% profit + cost of sale ($150k) for an average sale of $750k and it is a successful project.
I would personally cringe on paying 43% of finished value for my dirt(30% is much more comfortable in this uncertain value environment), however, finished lots in a good location like this are few/far between so a big builder will do fine.
WC,
Here ya go!
http://www.zillow.com/homedetails/3424-Bearpin-Gap-Ln-Las-Vegas-NV-89129/66846031_zpid/
Maximizing space on the fringes… of a desert!!!
I honestly don’t think any potential buyer in San Diego would regret renting for a year. I thought I was going to buy at the end of 2010, but this looks like it may drag out for years. Even if you sign a 1-year lease, you’ll probably be far better off looking around at this time next year.
-Erica
Thanks Erica. That’s what everyone keeps telling me, that prices aren’t going back up any time soon so we may as well rent in a good school district and save our money. That just brings up another question…What do we do with our down payment money in the meantime? Interest is so low in CDs and money markets, but the stock market is too risky…Ideas?
The best fdic (up to 250kmax per bank) insured bank rates are stuck at 2% and below for instantly available savings. To get 2% there are only a few online banks available to all state residents and you will find them at http://www.depositaccounts.com/, but its fairly easy to do.
I had a 3 stories (plus basement!) twin house back east. It was about 1800sf. Who needs a gym if your bedroom is on the 3rd floor and the laundry is in the basement.
But it was a century old house – so none of the current features like separate living room and family room. (One room served both purposes.) Oh – and it was a 4 br, 1ba… That’s just how they built houses in 1890.
I do NOT miss those stairs.
Why even look for 1.5% or 2% yields? You’re going to give up half of that in federal and state income tax anyway, so it’s just about 0% either way (thank you Ben Bernanke — he loves to see old people eating Alpo as their savings doesn’t yield anything).
I’d say keep enough cash on hand for emergencies and a few months’ expenses (and your down payment if you’re planning to buy in the next couple years). Anything more than that should be in stocks, gold, and lead.
Classic. You usually have to be driving around Torrey Pines to see the surfboard in a convertible porsche (bmw’s too). I get a good giggle anytime I see this on the road. Oh well, at least the bald guy behind the wheel doesn’t have to fret with hairspray. I’m not sure these sightings say much about the housing market, but it does indicate that sd county has its share of tools.
What’s wrong with taking your board to the beach in a convertible? That’s one of the things I like about having one…
Haters. There’s nothing wrong with a surfboard in a convertible.
2020 is now looking like it may be a good time to buy a house. I’m sure someone will find a way to kick the can about a decade down the road. In the mean time, enjoy a nice coastal rental with all the frills and half the payments. And no mellow ruse.
W.C. Varones,
Did you really buy a house, as mentioned in a previous post?
CA renter,
Yes, I bit the bullet. Probably 1 – 2 years early and 10% – 20% too high, but that g.d. Zimbabwe Ben scared me into it.
Thought process here:
http://wcvarones.blogspot.com/2010/01/how-i-learned-to-stop-worrying-and-love.html
No hating on the surfboard here, but I am a bit jealous–been in Dallas since Sunday while the surf is 5-8 and good with 80+ weather!!!
good work WC – We sold 2 years ago and have been renting…but now the Mrs. is getting anxious. Would prefer to rent for another 2 here in north county but may have to jump in for the cheap money if we can match it up with a ‘good’ deal….
I know JTR says something about Happy Wife, Happy Mortgage Payment or the such…
What brand and model of video camera do you use to tape these? Thanks, James
tj & the bear-If somebody actually paid only $119k for that, they got a great deal. At that price and current low interest rates, it’s a great apartment replacement. The mortgage payment for that, even including taxes and insurance, is almost certainly less than the cost of a one bedroom apartment in the same area. Provided they had the 3.5% down for a FHA loan (about $4,000 or so), that’s the type of place that somebody like a married couple who both work at Walmart could afford.
WC, I agree that the gov will stop at nothing to keep housing inflated. And even when their efforts stop, inflation will come. I think my time is coming soon, too.
Congrats!
Yes, like James I also want to know make and model of video camera you use… excellent picture quality and sound reproduction.
Very nice.
Chuck
@ W.C. Varones
With relatives in Zimbabwe, when they started the printing presses Gold DIamonds etc held their full value (In US$ or RSA Rands) and were portable. Residential property on the other hand INCREASED in value (could be exchanged like gold or diamonds on the black market for harder currency’s).
I dont think the full effect of “Helicopter/Zimbabwe Ben’s”printing exercises have yet been felt by the U.S. economy, in times of high inflation hard assets rule.
Jinx,
When you find out where to park your money let us know. I’m beginning to think getting into a low DP inexpensive REO rental in a place that has already ‘hit’ bottom is the key to cash flow for the entry level landlord wannabees. I just don’t know how much the rents will get pushed down.
3 clicks – My suggestion is to buy a rental with very managable debt levels during this down market of 50% or less. Yes it takes more cash, so perhaps partner with someone you trust and hold for the long run.
Everyone who got into trouble was over leveraged. If you bought real estate today, all cash you would generate cash flow with a yield in excess of most alternatives. You would mitigate your foreclosure risk. And you would have the power to undercut other landlords to keep you home rented (think how long it takes to make up 90 days of lost rent vs staying full and charging $100/mo below market).
Being a former REIT guy I was bred on 50% LTV so that our break even occupancy was less than 50%…never came close to missing a payment on over $1B of real estate.
When the market gets good and heated into the next bubble, THEN, leverage up, pull the cash out, and swing for the fences…not now.
Now is the time to generate high single digit yields in a low/unleveraged manner.
One cash flow investor’s humble opinion faithfully submitted.
Geotpf, 3424 Bearpin Gap was indeed sold for $119k. Great deal until you see that 3428 Bearpin Gap (2br/2.5ba) was sold for $73,500 last May.
Folks looking for a place to park cash should seriously look at tax liens. That’s what I did during 2006-2007 before it became attractive to buy properties outright. No, you won’t have instant access to the money but getting 12+% returns on money secured by real property just can’t be beat.
Wow nobody’s guessed the Band.
insideout
http://www.insideout-acappella.com/
😀 good stuff Jim!
IRE – where did you buy the tax liens? Obviously CA doesn’t do tax liens, just tax sales. We’ve dabbled in AZ but it is very competitive and the yields got bid down to the mid single digits on any real estate you would want to own. AZ does a reverse bid based on the yield at the auction till they reach the high price/low yield.
We didn’t feel like venturing any further from home base (CA) as the real estate due diligence risk was too great and too expensive for the size of the tax lien/investments (very few over $10k).
Glad it worked well for you.
The tax liens I purchased were in Nevada and Florida. Florida works just like Arizona. It is competitive and the yields do get bid down, but I’ve been successful by being persistent and finding things that other people overlooked. There’s certainly enough to choose from – 90,000+ in Dade County alone.
Nevada sells liens on defaulted Special Improvement District fees (their equivalent of Mello Roos, but they separate it out from regular property tax – no liens are sold on the regular property tax). Once the payments go into default, they sell the entire amount of the 20-year assessment. You have to be physically present at the sale. They use a lottery system and pay fixed 12% interest. The upside is you know you are going to get something good (all nice properties in Mello Roos-like developments) and a good return, the drawback is you might go to the sale and wind up not getting anything if your number isn’t called.
Denny,
Insideout is similar, but the band in the video is Rockapella:
http://www.youtube.com/user/RockapellaDotCom
We know Scott, the leader, and highly recommend if you ever get a chance to see/hear them. They play live around the world.
I have failed myself =(
I shall look into rockapella then!