Are apartment prices falling downtown? (San Diego, Escondido: for sale, real estate, apartments)

[Roo2]

I've been doing a lot of research on this site (many thanks to all the people like Sassberto who take time to post answers!) I'm a female baby boomer who loves walking, can't afford/don't want to have a car, and I dream of spending my twilight years in downtown San Diego.

Thanks to lower real estate prices I'm encouraged to hope that I can afford this. Would $150K be enough to buy a tiny apartment anywhere downtown? I've seen one or two on the listings for about that, but they look like high-rises, which probably means high maintenance costs. And anyway, funky and bohemian is more my style. Would I find what I'm looking for in Little Italy or the East Village? I love being in a neighborhood with lots of life going on, (and supermarkets/library near by) but I draw the line at drive-by shootings..! What I'm trying to say is that I believe I could still cope with being an Urban Pioneer, even though I am almost into Little Old Lady territory!

Hillcrest also looks good, but probably too expensive for me?

I'd appreciate any insight you can give me!

[NYSD1995]

150k won't go too far downtown, but I found one or two properties with a quick search.

San Diego Condos For Sale — Trulia.com

I think you'll have more options in the older areas around downtown, although I would be concerned about who your neighbors will be in this price range.

[kettlepot]

Regarding the direction of prices, while everything is local, and who knows, Downtown may keep falling, by the usual metrics San Diego county as a whole has now reached fair value or even slightly below according Mark Zandi who did a presentation to the National Association of Homebuilders that was shown on CSPAN. And he was no pollyanna. He had the interior of California all throughout the Central Valley as still overpriced and ripe for further declines. Even he was a bit surprised when he found that coastal CA, SD, Orange, LA counties were all in the green rather than the red. That doesn't mean prices won't continue to fall and allow you to scoop up a bargain, but it does mean, the big declines are probably over.

As for crime, Downtown is a mix of empty-nesters, bohemian bourgeoisie (aka Bobos in the new parlance), and homeless bohemians (aka Hobos in the old parlance). Don't worry, it doesn't have the demographics to support drive-by shootings.

However, East Village will have plenty of meth head homeless on certain blocks, so you would definitely be an urban pioneer in certain areas. Because of the current real estate situation, building has pretty much stopped Downtown and won't be resuming for probably 5 years at least. While I expect East Village to be an area that will improve in time, there will be plenty of years where you will see no change. But hey, someone has to be first, and it's to your credit that you are willing.

Looking at Sassberto's list of condos for sale, and your interest in a neighborhood with street activity and a grocery store nearby, you are describing neighborhoods like Hillcrest, University Heights, Normal Heights, North Park and South Park.

Hillcrest is not now, nor ever will be within your price range.

University Heights might have something on occasion. There's is a modest main street on Park Boulevard, between El Cajon Boulevard, and Adams Avenue, and you could walk or bike to Hillcrest across the Vermont Street Bridge. Keep your eyes peeled.

Normal Heights appears to have a few things in your price range. You will be looking at a converted apartment, but Normal Heights along Adams Avenue has several coffee shops, a grocery store, restaurants, plus some down market businesses that have seen better days. The area tends to be a bit transitory in nature as renters come and go. At the moment, Normal Heights seems pretty static. You wouldn't be part of a vanguard who could get in cheap and early. You would just be someone who has gotten in cheap and stayed.

North Park has some interesting things going on around 30th and University Avenue. It hasn't quite taken hold yet, and as a consequence there might be some condo bargains to be had. There were some earlier this year when a new condo building was auctioned off, unit by unit. These would be actual new construction condo bargains as opposed to apartment renovations. You will definitely be a pioneer there, but you actually might benefit from getting in on the ground floor. Basically, the area has potential, but it still might fall flat. No reward without taking a risk.

South Park - Funky and Bohemian, but there are no new construction condos, only a few apartment conversions. Plus there aren't any actual listings in the area on Sass's map. It may fall into the Hillcrest range of being permanently outside of your price range.

Still, if you could expand your price range even a little bit, a few more appealing options might show up in all of these neighborhoods.

[Roo2]

Thank you, thank you, thank you so much ... exactly the kind of information I was searching for! Very grateful!

And interesting to know San Diego county may now be at fair market value. I'd better hurry. (Does anyone know of any objective (not written by real estate agents) blogs/web sites that track this kind of thing on an ongoing basis?)

[edwardius]

Originally Posted by kettlepot

Regarding the direction of prices, while everything is local, and who knows, Downtown may keep falling, by the usual metrics San Diego county as a whole has now reached fair value or even slightly below according Mark Zandi who did a presentation to the National Association of Homebuilders that was shown on CSPAN. And he was no pollyanna. He had the interior of California all throughout the Central Valley as still overpriced and ripe for further declines. Even he was a bit surprised when he found that coastal CA, SD, Orange, LA counties were all in the green rather than the red. That doesn't mean prices won't continue to fall and allow you to scoop up a bargain, but it does mean, the big declines are probably over.

Attached is a graph of historical housing prices levels in SD, graphing the federal government's OFHEO Housing Price Index.

Southern California OFHEO Home Price Appreciation Tracker

If you don't know what that index is, you can read about it below. Basically it is measuring repeat sales of the same group of homes over time. The federal government collects this information as part of its duties to regulate Freddie Mac and Fannie Mae.

Office of Federal Housing Enterprise Oversight

As you look at the data, what you will notice is that housing prices have momentum. The best predictor of how prices are going to change next month is how they moved this month. So unlike the stockmarket you can actually use this information to help time the housing market. Basically you don't want to buy until prices have stopped falling.

The other thing you notice is that prices can and do overshoot in both directions. Lastly on an inflation adjusted basis, it still doesn't look like housing prices in SD are actually yet cheap.

[esmith143]

First, a useful site

Redfin - Unsupported Browser.

Almost nothing in your price range downtown. Note that you'd almost certainly pay $300/month or more in association fees in addition to your mortgage.

There are many condos under 150k on North Park, but that area is not quite as desirable or walkable.

As for the talk about prices as a whole reaching fair value ... that's a misleading statement that ignores the fact that San Diego housing market is extremely inhomogeneous. At one extreme, you have Encanto and Logan Heights back to 2002 pricing. At the other extreme, areas like Carlsbad and Carmel Valley are very resilient and they still go for 30-40% above 2002 pricing.

On top of that, condos live in a world of their own. Condos and detached houses are different unrelated markets. A median detached house may be fairly valued or undervalued or overvalued, but that tells you nothing about valuations of downtown condos.

In my opinion, low-end houses in San Diego could be faily valued or slightly undervalued - if not for the fact that 1) we're entering a severe recession, nationwide unemployment rate is at a 14-year high, 2) the pool of prospective buyers is drained by excesses of 2004-2007. High-end houses are considerably overvalued. Prices will continue to fall across the board throughout 2009 and we may see some stabilization in early 2010.

[Roo2]

Thank you so much. Very interesting links. Hadn't thought about momentum being predictive. And esmith, I hadn't realized that a low-end house might actually be a cheaper option -- as you say: different, unrelated markets. In areas like Manhattan apartments are the only way in at the lowest level, but San Diego seems to have developed on a different kind of timetable -- apartments built more recently. (And didn't know about Redfin -- better interface than Trulia -- gives you the name of the suburb and a better map!)

One more question, if you could: The triangle bounded by the Escondido Freeway, John J Montgomery Freeway and Martin Luther King Freeway -- what is that suburb called? Is that East Village? There seem to be affordable houses there! And not far from the water -- it must gentrify eventually?

[kettlepot]

Originally Posted by Roo2

One more question, if you could: The triangle bounded by the Escondido Freeway, John J Montgomery Freeway and Martin Luther King Freeway -- what is that suburb called? Is that East Village? There seem to be affordable houses there! And not far from the water -- it must gentrify eventually?

That areas is known as Fairmont Park which is a section of City Heights.

Mid-City Neighborhood | Neighborhood Maps (http://www.sandiego.gov/neighborhoodmaps/midcity.shtml - broken link)

And for anyone else reading this, the freeways the OP is referring to are the 94, 15, and 805, with the cross of the 805 and 15 forming the northern tip of the triangle, and 94 forming the base. No one ever refers to freeways by their names in San Diego; it's always by the number.

As for when it will gentrify? Next century? Maybe?

[esmith143]

Originally Posted by kettlepot

That areas is known as Fairmont Park which is a section of City Heights.

Mid-City Neighborhood | Neighborhood Maps (http://www.sandiego.gov/neighborhoodmaps/midcity.shtml - broken link)

And for anyone else reading this, the freeways the OP is referring to are the 94, 15, and 805, with the cross of the 805 and 15 forming the northern tip of the triangle, and 94 forming the base. No one ever refers to freeways by their names in San Diego; it's always by the number.

As for when it will gentrify? Next century? Maybe?

Actually the OP is referring to the triangle of 94, 15, and 5. (John J Montgomery is 5, 805 is Inland Freeway). Like you said, no one refers to freeways by their names in San Diego, thus the confusion. The area in question is called Logan Heights. It is a poor Hispanic neighborhood. Will it ever gentrify? I can't really say.

Low-end housing is cheap for a reason. If I were single, I'd be more comfortable in a North Park condo than in a Logan Heights house for the same money.

[Roo2]

Oops! You can tell I'm from out of town!
Thanks for that useful link, kettlepot. And esmith, I'll keep your last two sentences in mind.