Yesterday’s article in the U-T suggested that home prices in SD County were rising because the median sales price in 1Q10 had risen 14.7% year-over year.
Are prices rising?
There will always be occasional lucky sales, and a few lowballs that succeed. To identify a solid trend, the best place to look is in tract neighborhoods, and compare model-matches:
Great info–I am not surprised that it has not increase in CV (and other upper/middle areas), but I am surprised that it has held so well. Where the numbers are coming from are from lower end places like Escondido (and probably O-side). For example, in the flower streets of Escondido (easy to comp and lots of activity), we made SEVERAL offers on REO starters (3/1 1000sf) that were priced well under $150’s, some as low as $130’s about a year ago–now you rarely see anything listing under $200 (if you do they are completely trashed). Many now list toward $250K, and they are closing in that $200-250K range. That is nearly a 40% increase and they are not having any trouble with appraisals! How are similar areas of O-Side doing–Back Gate?
Keep in mind that Sellers are factoring in a discount. Everybody expects the LP to come down and Buyers will only be satisfied if they’ve gotten the price reduced.
And what’s with the all the denial? Things are getting better and prices are going up. If people can buy now they should, rates hit a low for the year today. We’re back below 5% now.
I think Oceanside is doing the same thing, but I only have one continual measure – I am on auto-notification for detached REOs under $200,000.
A year ago there were several per week, now I might see one per week, and have gone for long stretches with none coming up.
Here are detached stats for Jan thru April in Oceanside:
2009
$0-200K – 99 sales, $146/sf
$2-300K – 161 sales, $182/sf
2010
$0-200K – 30 sales, $167/sf
$2-300K – 114 sales, $200/sf
Might just be due to lack of inventory?
“It’s a yellow… it’s a yellow…”
ha ha ha
The exuberance on list prices already wearing thin with me. Seeing it spread to REO listings is really pushing me over the edge. It’s like the banks expect their next bail out from buyers who’ve been responsible and have lived within their means. We should be willing to donate some of our saved up cash and our ability to pay to helping out the banking system.
I ran some 92027 (Escondido) stats: 3/09-5/09 vs 3/10-5/10. for 2009 62% of total sales were under $200K (many under $150K), in 2010 only 16% have been under $200K (3 under $150K) PSF is +18%.
Hi Jim! Long time no talk. I hope you are well.
You do not give +/- $ for inside condition on those tract homes; why? Is it because those neighborhoods aren’t so old that there is a huge difference between ‘original’ and ‘remodeled’? Or is their no upwards valuation in capital improvements right now? Or is it because of that pricepoint specifically (bigger appetite for $800-$900k w/o remodel than anything above $1.1 regardless of condition?)?
I love the idea of buying scrapers, remodeling and selling homes for a living (which I argue is NOT the same as a flip but, PLEASE posters, let’s save that for another thread)…I would do it in a heartbeat, but the numbers just don’t seem to pan out (in that $800-$1.2 range)…I’ve been tracking this since 2008!
Thanks for your insight on any or all of the above, Jim!
BAM!
I wouldn’t have any idea how to determine what has actually happened to the “value” of our home in the past three years. Online searches have turned up no more than three or four listings since 2007 that are similar to us WRT location, lot size, home size, view, single story, etc. Most of them don’t seem to have ever sold, and have disappeared and then reappeared as “new listings” a few months later several times.
Lots of BPO requests in Derby Hill as of late Jim, some folks maybe be slightly overleveraged if you could imagine….
And what’s with the all the denial? Things are getting better and prices are going up.
A perfect example of cognitive dissonance.
And what’s with the all the denial? Things are getting better and prices are going up. If people can buy now they should, rates hit a low for the year today. We’re back below 5% now.
Mozart | May 13th, 2010 at 9:13 am
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I don’t think anyone is surprised that prices are holding steady or going up. When you consider the fact that **trillions of dollars** have been spent to buy down mortgage and Treasury rates and offer incentives to overpay for housing (tax credits of various sorts, and govt programs to buy up houses)…not to mention all the bank debt guarantees and readjustments of mark-to-market requirements and various “lending facilities” and zero percent interest rates, etc. (enabling them to forestall the foreclosure process)… and the “policy of keeping homes off the market” (as per Barney Frank)…well, it would be crazy to think all of that wouldn’t affect prices.
Some of us would argue that this is exactly why we should NOT buy right now. If the market is so weak that all of these tactics are required just to barely keep things afloat, why would we want to buy?
Personally, I hope and pray for higher interest rates and NO buyer incentives. It’s when rates are screaming high and money is tight that I prefer to enter the housing market.
Trump always preaches that he’d like to buy with “high interest rates and low prices rather than low interest rates and high prices”…
I’ts coming, just remain patient…or focus on the Trustee sales over the next 12 months to find a home. That’s what we’re doing.
“A perfect example of cognitive dissonance.”
Says the blogger who thought the stock market movement from March 09 was just a “bear market rally”…
Yes, and look at Trump’s rollercoaster of a track record!
#12 clearfund-
“Trump always preaches that he’d like to buy with “high interest rates and low prices rather than low interest rates and high prices”…”
What I seek is low interest rates and low prices rather than high interest rates and low prices.
“Says the blogger who thought the stock market movement from March 09 was just a “bear market rally”…”
How long is long enough? Or as that very famous economist suggested, “In the long-run we’re all dead.”
I know a guy would tell you that he’s still down 40-50% because the market has not recovered, and that’s some 10 years later. When did the NASDAQ Composite peak? 2000? He purchased on the way up, but he went all in on the way down. I hope it’s clear that if you are down 40-50% after 10 years, things are not good.
There are similar examples with housing. I know people who purchased in Vegas near the peak, and I estimate they are down 60-70%. One explained, with hand waiving gestures, that there was no way to lose. How long will it take prices in Vegas to recover to peak levels? Hopefully, at least for those who own in Vegas, it’ll take less time than the NASDAQ composite.
No doubt about it, if you had cash and went into the market in March 2009, you’ve done well, but I am not sure how many people went from cash to equity in March 2009. This is almost like suggesting that if you sold stock and purchased a home in 1999, then you’ve done well. And if you sold that home in 2005 and held cash until March 2009 and went back in the stock market, you’ve done very well. I am sure there is at least one person who did this. How much was just plain luck?
The thing about Trump is that he always uses somebody else`s money. And he never mentions how he got started by his father and his father`s money.
JP2 – cant disagree with anything you said. I do however take umbrage with those who so readily dismiss anything that doesnt conform with their worlview as a “blip” or “bull market trap” or “dead cat bounce”. In my mind, to say it is so with the near conviction of the truth of the matter is, well, arrogant.
The fact of the matter is this could be the bottom, and it could be a govt fueled DCB, but to blindly assume it is one, but not the other is foolish. And this gets back to the “long enough timeline” part of your statement.
I know someone who was “near certain” that the bottom of the LA housing market was just a “dead cat bounce”, so they passed on the 1996 prices, because we were “nowhere close to the bottom”.
This person is still renting in 2010. Think that one is gonna turn out well for them?
Orb-
“I know someone who was “near certain” that the bottom of the LA housing market was just a “dead cat bounce”, so they passed on the 1996 prices, because we were “nowhere close to the bottom”.”
This is a classic problem, and directly ties into the whole issue of time and bubbles.
There are two basic strategies to profit:
1. Buy low and sell high.
2. Buy high and sell higher.
I don’t fault anyone who avoids buying high to sell higher, even if prices do go higher.
Great analysis in the video Jim. As fair as can be.
“I don’t fault anyone who avoids buying high to sell higher, even if prices do go higher.”
Thats something my brother should have listened to out on the east coast. He didnt buy in 2002 because people were telling him it was a bubble, and assumed, it must burst soon. Yet, he & his wife watched in terror as prices rose, 2003, 2004, 2005, 2006.
Prices did start falling then, but only by about 10%. This was a full 30-40% higher than the price he passed on in 2002. Now, prices are rising once again.
It amazes me to think, he could have bought in a bubble, sell even at the trough, and walk out with hundreds of thousands in cash in his pocket. Instead, he paid probably close to 200K in rent, and very likely has been priced out of his favorite market forever.
Takua- I think you misread what I wrote, but in any event, if your brother would have purchased in 2006, at the peak, then he would have a large loss.
As far as the “he paid probably close to 200K in rent” we don’t know how much he would have paid in an ownership position. What if he would have paid $210k? In such case he’s $10k better off to rent.
“and very likely has been priced out of his favorite market forever.”
The alternate statement is that renting just keeps getting cheaper and cheaper.
During the big rise in the housing market, owners were positively leveraged [=positive yield spread], and if inflation becomes an issue, then those who owe or hold hard assets will make out well. Those who owe and hold hard assets, such as holding a home that’s fully leveraged, will make out very well.
When you can rent for 5 cents on the dollar, why buy?
Takua-The fall hasn’t been consistant from location to location. Las Vegas, as mentioned above, fell a whole lot. The Inland Empire as well-the house I bought in Riverside (to live in, not to flip) was purchased for $400k in 2005 but cost me $150k a year ago. On the other hand, there are places that are down maybe 10% from peak.
Says the blogger who thought the stock market movement from March 09 was just a “bear market rally”…
It was (since it’s very likely over). So what was your point?
Thanks for this video Jim. I’ll probably moving back to SD in 1-2 years and this type of video analysis helps me tremendously. I also agree with your last statement about the summer.
I’m glad I found this great blog!