Prices are moving up rapidly on the lower-end of each market.
People complain that there is no inventory, but part of the reason is that sellers are pricing much higher. Buyers in the mid-to-higher-end of each market will get a smaller house or yard, but those on the lower-end are quickly getting priced out altogether.
Here are the number of detached homes sold in the last 12 months, and the number of active listings today:
| Town and Price Point | #Closed last 12 mo. | #ACT Listings |
| Oceanside Under $300K | ||
| Carlsbad Under $600K | ||
| Encinitas Under $700K | ||
| Carmel Vly Under $900K | ||
| La Jolla Under $1.1M |
Where it stops nobody knows, but you can expect the bidding-war intensity to be extremely hot on the lower-ends of each market.
A 600 to 700k mortgage is very affordable for a family making 10k per month. Sounds like alot to us old fogies, but it’s a low number for an educated young couple. If the plan is to lock in low housing costs and then pay it to zero, now’s a good time.
@BootyJuice
“A 600 to 700k mortgage is very affordable for a family making 10k per month.”
It’s not as simple as that. That 10k/month may sound reasonable, but more than likely it is for a dual income household. However, after you factor in daycare bills ($1400/mo for under 2 year olds), couple of car payments, rising gas, rising health care premiums (if you have health care), and rising grocery bills then that 10k/month isn’t quite enough to support the 600k to 700k mortgage.
Oh yeah, I forgot some other things like….you know…saving for retirement, college tuition for kids, maybe a vacation.
Sorry for sounding snarky, but your casual remark has touched on a sore subject for me.
I raised 3 kids and put ’em through college. Expenses. I get it. 🙂
@Some Guy
I think you are sadly mistaken, San Diego like many cities is a very diverse city. Factor in the higher quality of living vs OC, LA, Bay area, and international buyers flocking to SD…There is no shortage of money.
There are too many dual earners that are in bio tech, technology, medical devices…throw in doctors and lawyers…you have a fairly significant number of households who are at $300k+
For those who have regular jobs ($25/hour city avg wage) they are being pushed further and further out. It used to be south of 8, now with the all revitalization in North park, University Heights..They are pushed to the 94 and northern areas of escondido, Oceanside, temecula, murietta…
You don’t need to save. You just use the equity of your house to fund those things as prices keep rising.
“It’s not as simple as that. That 10k/month may sound reasonable, but more than likely it is for a dual income household.”
With 10K a month, that leaves about 6000-6500 dollars a month (at today’s interest rates) for everything else after paying the PITI mortgage on the house. Lots of dual income families in San Diego make it less than that total, and that’s before they pay their mortgage or rent. This is also before I calculate any tax break said mortgage will give these homeowners. Are you trying to tell me that 6000-6500 a month is not enough money to live on in San Diego?
Jim,
What is your take on homes in the $1M-$1.2M range in CV? Is it a good time to buy now or wait 3-4 months?
@socalbuyer
I’m not mistaken at all. You simply missed the point entirely. I was refuting Booty’s comment about 10k being sufficient to support a 600-700k. What you are saying is not unreasonable. It is, however, irrelevant to the original post.
In addition to there being tons of money flowingand having many households with $300k+…@someguy bootys and byrk are correct, 10k month is more than enough to qualify for 700k of home. Banks are easing up on Dti ratios 45% +,
Unless you got 2 SL600s in the garage you will easily qualify.
@Byrk
“Are you trying to tell me that 6000-6500 a month is not enough money to live on in San Diego?”
No and nowhere did I imply that either. I am however only refuting Booty’s point about 10k being able to support a 600k – 700k mortgage. Because…..once again…..it is not as simple as “I make $X dollars/month therefore I can carry a mortgage of 6 – 7x my monthly salary.”
Your math sounds a little fuzzy, but I going to assume a down-payment in your equation…say 10 – 20%? If so, then how do you come up with that down payment when you take into account all the other monthly expenses I listed previously? Those monthly costs that I mentioned before (gas, groceries, daycare, etc.) are highly volatile and have tendency to go upwards more often than not. Also, let’s not forget the other glorious monthly fees like Mello-Ruse and HOAs which are very common throughout San Diego county. Those monthly costs combined can be anywhere from $200 to $600. That is a lot of buying power in a low rate environment.
So, let me re-iterate my point in the simplest of terms:
after closer inspection, 10k/mo doesn’t go as far as one would hope.
@byrk
Desperation has set in and people will do anything to qualify…7/1 arm IO is back…giving tremendous leverage, especially since it going for 2.125% interstate rate. Additionally there is no shock payment in that calculation.
Thus if you make 10k, lets assume 45% dti on a 7/1 arm IO and have ok credit and 10-20% down, you can qualify for a lot more…thus factoring in 10k…and rent vs buy…its a no brainer.
Assume the $10k is net income (after tax and work retirement savings)? Because $10k gross with a $3k mortgage is quite a lot for a family with kids.
Would be interesting to know income distribution of people buying in NCCSD or at least for different price points and what % of equity.
Jim,
What is your take on homes in the $1M-$1.2M range in CV? Is it a good time to buy now or wait 3-4 months?
I will come back to that question later today, with evidence!!
These levels of leverage are extremely dangerous should the market turn south, but only if you’re forced to sell. Remember the phrase “buy now and be priced in forever”? 😉
My monthly calculations were based on a 600k to 700k mortgage which would equal an even more expensive house if I included a down payment. I used a 3.5 interest rate 1.25 per year in taxes and figured 2k in insurance. If your after tax income is 10k per month that leaves 6000 to 6500 a month for expenses after a mortgage. That is easily affordable for anybody.
Sooooo much debt…
If intrest rates go up some people are going to be in big trouble.
“It is only when the tide goes out that you can see who is swimming naked.”
Warren Buffet
Personally Im sitting on the sidelines waiting for the crazies to get blindsided. Maybe this time the Fed safety net won’t be enabled.
If, and, but , why, artificial all terms questioning the bull market.
Interest rates have been low for years. what is going to make it change?
There are opportunities out there at any given time.
I trust the real estate market a lot more than wall street that’s for sure.
@BYRK
“If your after tax income is 10k per month that leaves 6000 to 6500 a month for expenses after a mortgage.”
Well, yeah, AFTER tax income of 10k per month will fetch you a 600 – 700k mortgage quite easily. My failing was interpreting Booty’s comment as BEFORE tax income.
“Interest rates have been low for years.”
Past performance is necessarily indicative of future results?!? LOL!