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Old 06-19-2010, 12:00 PM
 
5 posts, read 6,358 times
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Default San Diego Prices - Predictions

We are considering buying a house in north SD for between 1M-1.5M. Our feeling is the market is artificially high due to recent government intervention and we are best to rent for 12-24 months to let things setting into a normal equilibrium.

What trends have you seen in the market for the last 60 days?

What do you expect over the next 12-24 months?


Thanks for your feedback.
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Old 06-19-2010, 01:22 PM
 
Location: Shadowridge. Vista
204 posts, read 362,641 times
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There's govt intervention in the 1 -1.5 million dollar range? I have noticed that in the lower index of homes but not the more expensive homes. I have seen there is more downward pressure on higher priced homes right now but largely because people in the higher income brackets usually have more reserves like higher incomes, savings accounts, credit cards etc. to burn through so their resetting appears to have been delayed. I don't think it's a huge amount either, certainly not double digit decreases.
As for the lower side of the market (the middle income bracket), prices seem to be increasing ever so slightly from a year ago. I have heard of some more resetting going on, but it doesn't appear to be affecting the prices much or at all.
For now, I'm cautiously optimistic.
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Old 06-19-2010, 01:57 PM
 
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I understand your point about government intervention being stronger on lower end of the market. That said, there has been a lot of propping up of the market generally and I am assuming that has upward pressure at all price levels, ex. Treasury lowering long-term interest rates, foreclosure prevention measures, allowing banks to build shadow inventory by not enforcing proper accounting rules, etc. My concern is that these measures are only temporary and eventually the market will be forced to reconcile with market fundamentals that continue to be out of whack, ex. rent vs. purchase price ratio, income vs. purchase price ratio, etc. But then again, you never know how long they can keep supporting the market and I don't want to be a renter forever.
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Old 06-19-2010, 07:12 PM
 
Location: Shadowridge. Vista
204 posts, read 362,641 times
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I have heard that the foreclosure prevention methods have not be very successful because a lot of the banks have not been cooperative. Certainly the lower interest rates and the shadow inventory do keep prices more stable but I can't help but wonder if they will weather the storm. The have so far.
In a different real estate market, the income vs purchase price ratio would be valid but in the San Diego market, it doesn't appear so. It appears San Diegans will always pay more per income to live in beautiful San Diego.
In the end, buying a house is a long term investment. The days of the 2 year flip are over and people have to start treating their houses like homes and start keeping them longer. I tried to wait out the market as long as I possiblly could but in the end, you're right, you can't wait forever. Long term, the value of the house will go up and down but you have to remember that you haven't lost anything until you sell.
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Old 06-19-2010, 09:00 PM
 
Location: Encinitas
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My take on it is, if you're buying a house to live in for a long time, then buy. If you're buying an investment that you want to go up in value then sell for more than you bought it for, I wouldn't buy. The time to do that was 2000 or so through about 2007. Not sure we'll ever see that kind of growth again, not that we should. It was insane, and we saw what happened. Crash
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Old 06-19-2010, 09:14 PM
 
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It will definitely happen again, you just can't count on it happening within any specific time frame. But there are always booms and crashes ... it's just one big endless cycle.

On the high end right now it really just comes down to the particular property in question and the motivations of the seller. Some people want to sell but don't have to, and many will stick to their high asking prices and just hope someone comes along and pays it. Others are upside down and simply can't come down on their price. Others do need to sell at some point in the near future, but they have more cash in the bank, etc. so they can hold out longer before lowering their price. And then you have those that are in trouble and need to sell, and their property is priced accordingly.

You can see this very clearly in places like RSF. You have sales happening right now at $350 a sq/ft, 550+ a sq/ft and everywhere inbetween depending on the motivation of the seller. There are definitely deals to be had in the high end market as there are plenty of highly motivated sellers out there.
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Old 06-20-2010, 05:03 AM
 
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Depends on how familar you with the area. I would HIGHLY, HIGHLY, HIGHLY encourage you to rent in area you would consider buying. Try before buy

I know so many relo folks who moved here and realized that they don't like the school, commute, neighborhood, etc after they signed a 600K mortgage. House now depreciated, perhaps underwater now and they are stuck.
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Old 06-20-2010, 05:21 AM
 
140 posts, read 258,669 times
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listen, no way in heck are we gonna see the crazy appreciation that we have seen during the go-go, no-doc mortgage housing bubble boom times.

There is still alot of distressed inventory in San Diego area. Also alot of crappy foreclosure houses. Recent data on "appreciation" in San Diego has been skewed by recent expiration of purchase tax credit. Also lots of low end homes and foreclosures and statistical skewing.

Do you believe we're anywhere close to full employment? This is key factor in housing appreciation.

The government (via GSEs) are still propping up the mortgage market. High percentage of purchases rely on Fannie/Freddie. These entitiies are in very bad shape.

Lots of wildcards out there though. What happens if inflation kicks in like the late 70s and 18+% interest rates, 30 yr fixed highly correlated to 10yr Treasuries. Then again they say fixed assets are good to hold in a inflationary or perhaps hyperinflationary scenario. Is economy gonna stagnate and will we continue to see some deflation? Will China quits buying treasuries? Will US experiences EU like debt crisis...only worse (we are all hosed in that scenario). Where's the save haven? Gold as at a all time high now, in nominal not real terms. Note during the late 70s inflation adjusted value of gold was actually $2000/oz in today's dollars. . My head is spinning.

I reloed out here nearly 5 years ago, rented for nearly 4 years. Bought a very nice new house in Carlsbad, in Carlsbad school district. So far holding it's own, based on comps up in value, but I'm not basing my retirement on it. Very happy so far, great town.
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