4S Ranch Update

User Forum Topic
Submitted by SD Realtor on February 11, 2007 - 9:05pm

This is scary indeed.

Was up at 4S today showing a very nice couple some homes. They knew the area very well. We visited Pienza, Silhouette, Evergreen, and one other, it has a Jane in it, Sarah Jane or something like that. The traffic at every sales office was heavy... not brisk, not well done... heavy. Furthermore these developments are now squeezing things by only offering 6-8 homes in the current phase, (which by the way will not be completed until late q3/early q4 timeframe). I had not been to any of the sales offices in 4S since October and they were virtually empty. Similarly the couple I was with also had been in the sales offices a few months back and they two were surprised at the traffic.

Please understand, this post is meant as a simple data point, for one day out of the year. I am not saying there are not alot of foreclosures, nor am I trying to convince anyone to buy now, or tell us how much you do or do not like 4S. I am just saying that it was very very busy today. Most of the buyers seemed to be families or young couples looking to buy a home to start a family.

The salespeople I spoke to each said that the traffic has been like this the past few weeks. The incentives are all down to 20k if you used the preferred lenders. (at least at these 4 developments)

Submitted by juice (not verified) on February 11, 2007 - 10:45pm.

Just a few thoughts here. I am asking myself, "What has changed from November to now," and I'm left with only one answer, time. Nobody wanted to buy a home, or look at one, back in November, and most were probably looking forward to a sure Spring bounce. They are looking now because they think they can get in before the bounce, and they don't want to miss builder incentives that may go away if there is one. It made sense to wait through the holidays, but now they are getting anxious and starting to look.

Submitted by hipmatt on February 11, 2007 - 10:58pm.

OMG, I better buy now or I'll get priced out of the market, then what?

Submitted by Ranjan on February 11, 2007 - 11:07pm.

Hello SD Realtor,

Just a quick question for you.

Whatever sales that you have seen or executed thus far in 2007, what's the general trend as far accepted offers go?

Were accepted offers always 5-10% below the list price?
We are actively looking for a home and hence the questions.

Thanks

Submitted by JWM in SD on February 11, 2007 - 11:21pm.

The only bounce will be the inventory levels and the foreclosure rates. Come on people, don't fall for this crap...you know better.

Submitted by outtamojo on February 11, 2007 - 11:36pm.

Traffic usually picks up after the Superbowl. My wife and I actually visited 4S last week - seeemd like an ok neighborhood but the homes were too big for our tastes. We have 2 kids and were wondering how we were ever going to keep those 3500 sq. feet monstrosities clean. Any bargains on the other side of 15 w/out mello-roos and HOAs?

Submitted by SD Realtor on February 12, 2007 - 1:58am.

Ranjan -

Two listings that I have sold so far in 07 have been in the 92114 zip code and 92119 respectively. 92114 went at list price with a 3% credit back to the buyer, 92119 went at about 5% below list price. Both were not the greatest homes in the world. We will open escrow on another 92114 home that will close at 1% below list with another 3% credit. Again this home is not in the greatest part of town. I think that the part of town you are looking in will help dictate your strategy. One client I have has submitted 4 offers in the past 3 weeks, all of them well below list price, at least 10% and NONE of the Sellers even responded with a counter. Personally I submitted a lowball in Scripps 2 weeks back that was only a 2% below list price and they did not respond. So where you are looking really will dictate the strategy. If you are looking at a unique type of property that may have been on the market for a long long time then you have more leverage. If you are looking for a family home in a good school district then your leverage may not be so great. Again, let me know the zips you are looking for and I can be more helpful.

SD Realtor

Submitted by SD Realtor on February 12, 2007 - 2:06am.

Guys -

Please read my post again, I am not saying anything other then there was heavy traffic at these specific locations. I am not saying this is a bounce, nor am I saying go buy now or don't go buy now. It is very easy to sit in front of a computer and type based on what you read or your own emotions. It is another thing to be out in the field with buyers or representing sellers, or going to sales offices. I always enjoy Perry's posts cuz that cat visits more San Diego developments then the any of us here. It is quite obvious foreclosure rates will rise. However all of the posters who were crowing about 25k levels of inventory this spring are auspiciously silent. Personally I have no clue where things are going to go. I want and hope they will go down. A smart person, who posts on this site, told me the market will move with or without you. This is true in all markets, especially real estate. You can say don't fall for this crap but this is not crap. This is happening. I "think" this is a cyclical rally, (perhaps in response to people lowering prices, or to people waiting out last years decline) and will continue through spring and hopefully peter out as summer sets in. We'll see...

SD Realtor

Submitted by masayako on February 12, 2007 - 2:31am.

SD Realtor,

I can confirm what you saw at 4S ranch. My wife and I visited Evergreen and Maybeck on past Saturday at around 4:00pm.

Both places are packed with about 7-8 peopls in the sales office checking out pricing and talking to the sales agents actively. There are constantly people coming in & out of the model homes. By the way, 'Residence 3' at Evergreen looks sharp to me (but the MR & HOA is a killer at 4S). Just my 2 cents.

I am not convinced that this is the bottom. Either way, $800k on a small lot is still not my cup of tea. I'm not a big fan of becoming a mortgage slave of such big loan.

Masayako

Submitted by ocrenter on February 12, 2007 - 8:23am.

Guys, guys, guys, did you check out the prices? 3,000 sqft homes starting from the low $700,000! 3,600 sqft run you to low $800,000. Yes these are still high, but they are significantly down from just 6 month to a year ago. Remember, a year ago you can't get a 3,500 sqft home in 4S Ranch for less than $1 million. 6 months ago we just started seeing 3,000 sqft homes fall to the $800,000 line.

These builders are undercutting folks that bought just 6-12 months ago by $200,000! of course there's traffic!

Here's a good example: http://bubbletracking.blogspot.com/2006/...

the flipper that purchased this 3,700sqft gem bought it in June of '06 for $1.1 million. Yes guys, that's $1.1 million! If I remember right, Evergreen is selling their largest model, ~3,600 sqft for $850,000.

This is good news guys!

Submitted by PD on February 12, 2007 - 8:27am.

I've posted before that I think we are going to see a bit of an uptick. Downward trends frequently have little teeth on them (that are going to bite the buyers). The unknown right now is exactly how the subprime events from last week are going to affect the market.

Submitted by Ranjan on February 12, 2007 - 8:37am.

Hi SD Realtor,

Thanks for your reply.
I am looking at some houses in 92129 zip code. ( Rancho PQ).
There is nothing unique about the properties I am looking at. Simple attached homes( 2-unit Condo), around 1700 sqft each and one of them has quite a large yard but not in great shape.
The area and community is very desirable and closer to my work. One of the houses in listed @499k and the other is @ 525k(one with bigger yard).

What should be a resonable offer to put in these cases?

Thanks

Submitted by recordsclerk on February 12, 2007 - 9:28am.

I was at Evergreen last month. It wasn't busy, but there were other perspective buyers and people like me just window shopping. Evergreen in 4S in very nice. Probably the best value for homes over 3000sq ft. It is still over priced and the MR, HOA are very high. This is one of the places I would like to buy someday. The lot is very small. Ivy Gate in 4S ranch has larger lots, but the prices are in the 1.4-1.8 million range. If prices come down 30-50%, I would seriously think about purchasing an Ivy Gate home. Ivy Gate has a lower HOA and Tax rate of 1.4%.

Submitted by JJGittes on February 12, 2007 - 10:14am.

What is the Mello Roos and HOA in the lower ($600-800k) priced 4S neighborhoods? Has anyone heard of builders 'incentivising' away MR in any of the 4s neighborhoods?

Submitted by barnaby33 on February 12, 2007 - 10:27am.

Please read my post again, I am not saying anything other then there was heavy traffic at these specific locations. I am not saying this is a bounce, nor am I saying go buy now or don't go buy now.

SD R, I for one believe you. I have been suspiciously silent because I haven't had much to say. Hey I was even planning to have a party when inventory hit 25k. I guess I'll just have to keep the Mexican finger traps and party hats packed up a little longer, drat.

Josh

Submitted by an on February 12, 2007 - 12:14pm.

I was also at Evergreen in 4S Ranch last Saturday. There was a steady flow of people. I talked to the sales lady and they had a new phase release that day and they have 2 plan 1 left. I had the price sheet form the last release and it seems like plan 3 price stayed the same. However, plan 1 now is 10-20k cheaper with bigger lot.

Submitted by CAwireman on February 12, 2007 - 2:18pm.

SD R,

Thanks for the temperature check. Too bad people are reading things into it that aren't there.

Ocrenter - your comments are well appreciated. From $1.1MM to $700K - $800K is a huge change, and could easily rally sales.

Its good to hear the sentiments of those currently in the market for a home.

But, I'll continue to wait on the sidelines for some number of years. Thanks all.

Submitted by no_such_reality on February 12, 2007 - 2:38pm.

Actually, there a lot of good info here. As SD R and AN point out, traffic appears up at 4S, as OC renter points out, 4S courtesy of the builder has already peeled off ~25% from their pricing.

The bottom may be coming up faster than we'd thought. The resales in 4S will get tanked by new sales. More house, more yard, and 25% less money. Ouch, glad I'm not competing with that to sell my place.

Submitted by PerryChase on February 12, 2007 - 2:49pm.

In case you guys haven't seen Rich's chart yet, the last townturn lasted 6 years. I wouldn't buy anything until we're 5 years into a buyers' market.

http://piggington.com/january_housing_da...

As OCrenter pointed out, prices are down... and developers are undercutting resales. You don't see that if you're reading about market trends. Look at resale listings over time, compare them to builders's new units and you'll see that definite down trend.

Submitted by ibjames on February 12, 2007 - 2:51pm.

Are you sure you guys weren't just observing each other going in and out? :D

Submitted by no_such_reality on February 12, 2007 - 3:05pm.

It lasted six years because prices where less distorted and hence more sticky on the down side. It took about four or five of those years to get price back to reality. Another year or two for the people to realize that prices actually swung to the point were it was cheaper buying that renting.

This time, things will be different. In 15 years, we'll be able to look back and see the clear trend down, but with prices being so over extended and volatile, our dead cat bounces may be rather long mini-rallies extending the duration out a decade or we may plummet like a rock with the builders leading the way with new homes and REOs being the hammer driving resales down.

We know today's price, we know inflation from peak until now, we have an idea of today's income, but more concrete numbers may be 3, 6, or 12 months away. We can guess at inflation until next January, incomes is more in the air,

Submitted by gn on February 12, 2007 - 3:39pm.

>> a year ago you can't get a 3,500 sqft home in 4S Ranch for less than $1 million

If this is the price in early 2006, how much did
a 3,500 sf home in 4S Ranch went for at the peak
of the market in San Diego ?

Thanks.

Submitted by lulu on February 12, 2007 - 4:45pm.

I was Del Sur a couple of weeks ago and the place was packed! I'm also at Open Houses every weekend faithfully as my husband and I have been searching for the right home (and great deal!) for quite some time now. We're personally starting to get a little scared - the new home developments are busy again, the open houses are busy again, homes seem to be selling much faster.
I was like many on this site several months back and very much in agreement that seller's needed to face the truth and accept the the bubble had burst. As much as I'd love to see prices continue to fall, I'm just not convinced anymore.
Perhaps its time for those of us on the sidelines to face that the market may have actually bottomed?
I know many of you won't like this post, but hey, I'm a realist, that's what brought me to this site months ago.

Submitted by gn on February 12, 2007 - 5:23pm.

Yes, it's true that the builders are selling well.
Now, is it because:

1. The demand for homes is high.

2. Or, this is a reflection of the "pricing strategy". That is, even in a market where there are few buyers, if you lower the price aggressively, you'll be able to sell.

IMO, it's reason #2. For every new home that is
sold, a re-sale is NOT sold. The builders are simply
stealing sales away from the re-sale market.

The problems with all those homes owned by speculators
using exotic mortgages haven't gone away. In other words,
what's good for the builders is bad for the market.

This is very bad news for the speculators. Which means
we are definitely not at the bottom.

Submitted by JWM in SD on February 12, 2007 - 6:46pm.

1 Trillion or so in resets coming in 07. No, it has not even come close to reaching a bottom. The subprimes are collapsing at the rate of a couple per week...20 since December alone. This will strangle the money flow to the FBs. Don't fall for the hype people. We are turning the corner as we speak.

Submitted by blahblahblah on February 12, 2007 - 6:56pm.

1 Trillion or so in resets coming in 07. No, it has not even come close to reaching a bottom. The subprimes are collapsing at the rate of a couple per week...20 since December alone.

Thinking about the carnage on its way to the SD housing market brings to mind that great scene from "Ghostbusters":

Peter Venkman: This city is headed for a disaster of biblical proportions.

Mayor: What do you mean, "biblical"?

Dr Ray Stantz: What he means is Old Testament, Mr. Mayor, real wrath-of-God type stuff.

Dr. Peter Venkman: Exactly.

Dr Ray Stantz: Fire and brimstone coming down from the skies. Rivers and seas boiling.

Dr. Egon Spengler: Forty years of darkness. Earthquakes, volcanoes...

Winston Zeddemore: The dead rising from the grave.

Dr. Peter Venkman: Human sacrifice, dogs and cats living together - mass hysteria.

I can hardly wait. I love a good disaster film as much as the next guy. And we've all got front-row seats!

Submitted by SD Realtor on February 12, 2007 - 6:58pm.

Lots of good posts on this thread. For what it is worth my humble two cents is along the lines of what Perry and others highlighted. Secular trends occur over many many years and are filled with cyclical runs. I definitely do not think that this, or the low point of summer 2006 were the bottom of this secular trend. By the same token this cyclical run may last a month, a year, who knows? Again though, the secular trend will take several years to run it's course... So if you have time to wait, then wait. I think there were/are alot of people out there who mistakenly thought that okay, the market tumbled hard in 06 and will tumble hard in 07. In fact I was one of them. I don't see that now but maybe come August things will be different.

Life is all about adjustments right?

SD Realtor

Submitted by an on February 12, 2007 - 7:04pm.

To me, this feels like a classic dead cat bounce. When you follow the information too closely, you'll think these dead cat bounces are the bottom. Only hind site is 20/20. We'll just have to wait and see but I expect the spring might bounce some more, recovering some of last fall's loses. Then this fall, it'll fall even further and resume the decline.

Submitted by PD on February 12, 2007 - 7:41pm.

Any price increases are temporary. My husband bought JDSU when it seemed to be a "good deal" after it started to tank in 2000. We weren't the only suckers...er... knife catchers.

Submitted by Raybyrnes on February 12, 2007 - 7:55pm.

Coast to Coast. Friend is a Managing Director for a Century 21 overseeeing 200 agents in the New York Area. She said that November and December were very slow but January has been an extremely busy month. She is working in the Long Island area wwith home values ranging from 500 K to 3 million+. Could be a dead cat bounce but very interesting to hear this is happing on the coasts.

Submitted by Duck on February 12, 2007 - 7:55pm.

Maybe a dead cat bounce, but I'm seeing other "upscale developments" experiencing the same things in North County Coastal.

Same with resale in closed out newer developments. Listings/Pendings were 10/1 last summer in my newer development. Currently 2/1. Many sellers have given up and will wait it out. Loan resets, defaults, etc are for subprime borrowers and subprime properties and those areas will feel it more than the move up areas where buyers brought their equity with them.

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