SD housing market nightmare (San Diego, Highland: rental, refinance, loans)

[futbol]

Originally Posted by 1AngryTaxPayer

In the 80s when interest rates were double digit houses still sold like crazy near the beach. There is this thing called refi. Oh and write offs.

With a typical 30 year mortgage I bet there isn't anyone out there that didn't refi to lower rates when it became available.

I worked with a guy who was still paying 14%+ interest on a house he bought in the '70's. He surprised me during one conversation with this info.

I told him that interest rates had come down to just over 7% (this was around ~'93) and that he could refi and save tens of thousands of $$$. His response was: "Oh, that must be why I keep getting all those letters in the mail telling me to do that."

Instead of being angry over all the wasted interest he had paid over the years, he was very happy. I guess he was a glass half full kind of person. He was a super nice person and a hard worker, but not financially savvy.

[StarsNStripes]

Originally Posted by USDefault

Quite true. We toured some properties in Del Cerro a few years ago. Utter garbage cluttered the market, and the prices were laughable. Nothing has changed. Most of these listings are total gut jobs, and they have multiple problems that need fixing (electrical, plumbing, HVAC).

The only way you win at this game is to not play. Invest your money, get paid every month and every quarter, and do whatever you can to get monthly housing costs tightly controlled.

Our friends bought a fixer in del cerro a few years ago, put a lot of work into it then sold it at a nice profit. You can't be a lazy person and succeed at that endeavor. Del cerro is one of those neighborhoods that has ALOT of older homeowners who sit in their houses and let them just deteriorate and look awful. They cling to prop 13, but refuse to spend a few bucks on anything to improve their house (and the neighborhood at large) because they don't care.

[MarciaMarshaMarcia]

Originally Posted by futbol

I worked with a guy who was still paying 14%+ interest on a house he bought in the '70's. He surprised me during one conversation with this info.

I told him that interest rates had come down to just over 7% (this was around ~'93) and that he could refi and save tens of thousands of $$$. His response was: "Oh, that must be why I keep getting all those letters in the mail telling me to do that."

Instead of being angry over all the wasted interest he had paid over the years, he was very happy. I guess he was a glass half full kind of person. He was a super nice person and a hard worker, but not financially savvy.

Our first home in San Diego during the fabulous Reagan Era carried a 13.5% mortgage...but we got past that. You do what you have to do..,

[JohnAlt]

Originally Posted by 1AngryTaxPayer

In the 80s when interest rates were double digit houses still sold like crazy near the beach. There is this thing called refi. Oh and write offs.

With a typical 30 year mortgage I bet there isn't anyone out there that didn't refi to lower rates when it became available.

The boom would have been much bigger with 3% rather than 10% interest rates.

Not sure what you point is about refying. Someone getting a mortgage these days will likely never be able to refi because interest rates are at historical lows now.

[1AngryTaxPayer]

Originally Posted by JohnAlt

The boom would have been much bigger with 3% rather than 10% interest rates.

Not sure what you point is about refying. Someone getting a mortgage these days will likely never be able to refi because interest rates are at historical lows now.

You stated that home sales are dependent on interest rates. If there are no new houses how is that possible? They will sell at whatever interest rates are available because that is the only housing stock near the beach. They will sell at 30% rates if that is what is available just like back in the 80s.



There is barely any land that is undeveloped anywhere near the beach. They are cramming some new condos in mission valley but for San Diego beach areas that is about it. Unless the airport gets moved or Pendleton becomes available people will choose from older housing stock. Even Eastlake is pushing twenty years old.

[metoque]

Who cares what the interest rates are if the principal is lower. At the end of the day, it comes down to monthly payments for folks, and I'd MUCH rather have a high interest rate mortgage with a lower principal vs a low interest mortgage with a higher principal. It always makes me laugh when people say "You need to hurry and buy before interest rates go back up"...that's the opposite of what people need to do.

[djxpress]

Originally Posted by Sassberto

most of the houses we are looking at (Del Cerro / San Carlos) in the 600-700k range are garbage and should be condemned.... Finally a good one comes up, and it's got 8 offers and is sold in 3 days. So frustrating when you are just trying to get a house for your family and you are competing with every flipper, cash investor, and yuppie in the county,. Someone just take my money!!

As an owner in La Mesa right across the 125 from San Carlos, I'm glad the housing market is this hot.

Last year when I bought my house in Sept. 2014, I spent 3 months looking at about 100 listings from Oceanside to Rancho Bernardo to Eastlake, and everywhere in between. I finally found a house that had been on the market for a couple days, and put in an offer. There were other offers, one that was $5k more than mine. But luckily mine was accepted due to having gone through the loan underwriting process upfront (I could close in 2 weeks if needed).

When I refinanced earlier this year, my appraisal came back at the same price I paid for the house, which kind of blew my mind. I'm in one of those areas where there are a lot of older homeowners that finally sell when they end up moving to assisted living/nursing homes. Then young families/couples move in and upgrade. There are a few flips in my area, but they're very nice, and they help raise the property value.

So as an first time home owner (owned a condo before), I'm glad the housing market is heating up!

[ucctgg]

Originally Posted by metoque

Who cares what the interest rates are if the principal is lower. At the end of the day, it comes down to monthly payments for folks, and I'd MUCH rather have a high interest rate mortgage with a lower principal vs a low interest mortgage with a higher principal. It always makes me laugh when people say "You need to hurry and buy before interest rates go back up"...that's the opposite of what people need to do.

You're assuming a higher interest rate translate into a lower price for the house.
Is that necessarily true?

[msgsing]

We are beginning to see condos in our complex sell in less than a week whereas in the past it was many weeks or months. Even starting to receive phone calls from random people wanting to know if we want to sell. Kinda like the atmosphere back around 2005.


With prices up there are less of the investor vultures out there looking for bargains to turn into rentals. Also seeing some retired folks cashing out and moving to lower cost of living states especially Texas.

[sfosyd]

Still it doesn't at all feel like 2005:

Rents are rapidly rising too. There are no liar loans. It is only in select markets like coastal California, as well as places like Portland, which is also a desirable place to live and does not have the jobs, much like SD. Lots of people can and do work remotely and are attracted to places like SD and Portland.

Many markets across the US have not recovered from the bust, just look at Vegas, still a huge percentage of underwater homeowners and many across the country. In 2005, it was a nationwide bubble. Not even close to that this time.

Be thankful your not in the Bay Area! Housing is a blood sport up there!