Part of the buyers’ frustration these days is due to seeing so many properties of lower quality.
Elective sellers who are too proud to sell for below-peak prices are holding off, and as a result, the inventory is full of houses that people don’t mind losing – fixers, bad locations, functionally obsolescent, dumps, etc.
Hey Jim – I’ve been hearing a lot about sellers who’d rather wait it out rather than sell low, but you said this place is bank owned. Are *banks* too prideful to sell low?
The banks sell for retail, and are enjoying an open field currently.
There are only 21 detached homes for sale under $600,000 in Encinitas, and 8 of those are detached condos.
True, that place is a dump… but it’s like an interesting story I used to hear when I lived in post 1991 Eastern Germany.
Back during GDR (DDR Ostdeutschland) times, the crappy little Trabant East German car made with pressboard and a 2 cycle engine that smelled like tarfarts had an interesting pricing schema. You could buy a new one for 4K Marks, but a used one was 6K Marks. I asked why. The ossie shrugged his shoulders and said: “Sofort lieferbar” (immediately deliverable). The new ones, you were on a waiting list for 2 years.
That’s why crappy foreclosures are selling for more than a maintained short sale. Or, at least as best a reason as I can tell.
Chuck
And these certainly are adding to the misery:
http://sandiego.craigslist.org/nsd/apa/2662193415.html
http://sandiego.craigslist.org/nsd/apa/2670046728.html
These two rentals are in the same neighborhood. Since these homes were built in the 70’s, if they haven’t had any major upgrading or repairs (electrical, plumbing, roof) then they will need it in the very near future. Therefore, why buy this house at this price when you can rent the equivalent for much,much less? After all, these rentals are in much better shape and when something goes wrong, just pick up the phone and call the landlord.
Because it’s not ‘much. much less.’
If you put 20% down, the PITI is less than those rental rates.
I think the rental analysis prevents one from buying at the 500K level. Even at the high end of 110X. San Diego has always had a premium so that could take it into the 400’s …but not the 500’s.
Regarding this particular house there are some things going for it that you could give a premium to- quiet, no fees, looks like decent bones, and one could build some equity if they know how to DIY.
Well, you do get the best school district and it’s not Oceanside…it’s Encinitas.
How much does the school district thing come into play in term of pricing and buyer interest/disinterest? (with the buyers you’ve worked with)
I put the list price, 20% down payment, and a 4.5% interest rate into a mortgage calculator, and I got a monthly PITI payment of $2,814. The rental rate on those link is $2,750 and $2,950, so the monthly rate is right in the middle. Which is pretty amazing, though I guess if you’re buying you have to do all that work.
If you BUY the house, at the end of the mortgage you will own it AND the “rent” never goes up. The problem is of course for the first few years (until inflation works its magic for hard asset owners) you will be the person painting it and fixing the roof.
How patient are you? Can you handle delayed gratification?
Ah, yes, shame on me for running my mouth first…err, fingers…instead of the numbers.
However, the point I failed to make was given the age of the house and the amount of work that needs to go into upgrading and updating (basically correcting the DIY) that adds to the monthly rent which would push it away from being cash flow positive. Looking at the two rentals above, the interior of one looks great (newer appliances, floors, etc.) and the other is pretty spartan but in good shape. However, with this particular listing, it would require…30K? to make it livable or rent-able. Then, you would need to factor in a reserve to address the big ticket items that will need repairing in the near future.
In the end, it would be cash flow positive and a good pickup if it were to sell in the lower 500’s.