The San Diego Case-Shiller Index dropped for the third month in a row, and is now almost 1% below where it was in June. It’s not a surprise to hear that we have tougher sledding in the off-season (see above).
We will probably lose another 1% or 2% between now and Spring, 2019, which would put the index back to about where it was in February.
What happens in next year’s selling season will be the real test.
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The previous peak was 250.34 in November, 2005.
One realtor in my area in SF Bay Area is already touting “Buyers spring 2019 is the market you have been waiting for”. Claims he has a ton of listings signed and ready to go this spring. I agree with you that sellers will still overshoot and buyers will stay on sidelines. This realtor doesn’t read your blog obviously. But I still think sellers will blink first because of outside factors in a falling economy and prices will dump.
If only the superior homes are selling for retail, and buyers stay away from the rest, then our price measuring will be strong – but on fewer sales.
If we’ve run out of retail buyers, and only those sellers willing to discount are selling, then our price measuring could drop – but we’d have fewer sales.
Either way, sales will plummet.
The vast majority of sellers aren’t motivated enough to dump on price – they won’t sell for today’s prices. But if buyers insist, we could have a real standoff where sales drop 20% or more.
It won’t be the type of standoff where buyers find houses they like and don’t buy them, just because of the price. It will be more invisible, where we have buyers unable to find anything close to being worth it, and we’ll look up in May and notice that not much has sold.
Lots of the nicer houses can rent for serious positive cash flow. Instead of “cashing out” lots of conservative long time owners can choose to take $2000 or even $3000 per month instead of a one time payday. That’s a lot of RV gas and National Park entrance fees and airplane tickets and lanai reservations, etc.
My ghetto is littered with these types of empties. Dad died. Mom can’t live alone and moves to assisted living. House stands idle. Doesn’t cost much under Prop 13 and even their old mortgage is a rounding error.
Consider SFR rental management as the new realty cash flow product. 2/3rds of one months rent to install tenants and do this often. Besides, you have the inside track for future buyers.
Good idea, thanks!
The inside track for future sellers too.
I think you’ll have two rental markets, vacation and monthly depending on local regulations and if the location will support vacation rentals.
Agree – two different markets and both increasingly valuable as selling becomes harder.
If the house is paid off or close, it is irresistible to rent vs dump just to sell (and pay taxes).
And for us Prop 13 protected let the kids inherit with the stepped up basis.
Let me tell you an insider point to get into the rental business. As the agent you pull the credit and vet the applicants. That way the owner will be protected from any discrimination accusations. Merely being accused wipes out years of profit for any sloppy do it yourselfer.
That way the owner will be protected from any discrimination accusations.
The #1 reason why I don’t want to be a landlord.
I had it happen already. Three college kids turned in a rental application for a 2-br home. I told them we had other applicants and were looking for fewer people. Within an hour, their attorney called me, and threatened to sue me for discrimination if I didn’t rent it to them immediately. So we did, very reluctantly.