CV effect on SD RE

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Submitted by gzz on March 18, 2020 - 11:13pm

1. Rent is the last thing people pay late. Credit cards, utilities, student loans are all lower priority. People who are 1 paycheck away from disaster and don’t qualify for UI are not a major share of the rental market.

2. Relative value suffers. The 6% returns on rentals doesn’t look so great when catching the bottom of the stock market could be a 50% return.

3. If the crisis gets substantially worse, we’ll print our way out. Nominal housing prices will go up fast, our mortgages will remain fixed. This won’t lead to higher rates, since the big print will be aimed at buying long-date treasuries and GSE bonds.

Submitted by gzz on March 18, 2020 - 11:15pm.

Balancing these factors together, SD RE is one of the better places to have your money.

Submitted by FlyerInHi on March 19, 2020 - 1:10am.

Real estate is not easy to get out of, so there’s not much choice but I stick with it.
It helps a lot to buy at the right time so you weather the recessions.

Submitted by The-Shoveler on March 19, 2020 - 5:13am.

If these drastic measures continue beyond 2 months or so IMO we would be looking at a 75-80% drop in stock markets, public pension failures, maybe 25-50% drop in RE depending on location.

Anyway we will all be wondering if it was worth it IMO.

Submitted by Coronita on March 19, 2020 - 10:28am.

I don't know , but I'd say property that people are using for an Airbnb/vrbo is pretty much screwed in the short term.

Basically, this virus is most likely going to last until July/August. That is most of this summer. San Diego is about to announce a stay-at-home order like SF. People aren't going to come here to vacation. This summer will be a write-off. And it could last longer because psychologically people are already thinking about a second wave of the virus.

Some of the homes were bought by companies an individuals or companies to try to run a hotel out of a home specifically built for residential usage and were counting on high hotel like room price to pay for an otherwise high mortgage for an expensive home that probably can't pencil out normally as a residential rental. Can't say I feel sorry for them. In some neighborhoods, they were a source of a lot of problems.

Submitted by sdduuuude on March 19, 2020 - 10:24am.

Does anyone have any sense of whether or not real-estate deals have been entering escrow this week ?

I spoke with a couple of general contractors and they are continuing to work.

Construction is not shut down in SF.

Submitted by Coronita on March 19, 2020 - 10:26am.

sdduuuude wrote:
Does anyone have any sense of whether or not real-estate deals have been entering escrow this week ?

I spoke with a couple of general contractors and they are continuing to work.

Construction is not shut down in SF.

Someone I know closed a sales but that was already pending. Redfin sent out a letter saying no open houses, by appt only and only small groups.

What Hobbie posted was also interesting. I wonder how many UCSD, SDSU, USD students are going to walk away from their leases.

Submitted by FlyerInHi on March 19, 2020 - 12:19pm.

Coronita wrote:
I don't know , but I'd say property that people are using for an Airbnb/vrbo is pretty much screwed in the short term.

Especially in areas like Pacific Beach where the properties would not pencil out unless they were used as a short term rentals.

Submitted by TheBrianNarrative on March 19, 2020 - 11:43am.

sdduuuude wrote:
Does anyone have any sense of whether or not real-estate deals have been entering escrow this week ?

I spoke with a couple of general contractors and they are continuing to work.

Construction is not shut down in SF.

Yes, I was told so far so good though it is slowing down both on new escrows and new listings. In a market I watch 10 houses between one and 3 million went into escrow this week. The two major remodels going on down the street haven’t skipped a beat

Submitted by TheBrianNarrative on March 19, 2020 - 12:36pm.

FlyerInHi wrote:
Coronita wrote:
I don't know , but I'd say property that people are using for an Airbnb/vrbo is pretty much screwed in the short term.

Especially in areas like Pacific Beach where the properties would not pencil out unless they were used as a short term rentals.

those properties tend to be under very very long-term ownership they will be fine for the most part. Come summer the folks from Arizona will still come to escape the heat. The beach will always be desirable long-term. Barren deserts offering only dying industries are at much higher risk

Submitted by FlyerInHi on March 19, 2020 - 12:45pm.

If they are under long term ownership that means the owners are not that leveraged. They will be fine.
But recently lots of transactions in PB were preconditioned on the airbnb model. We shall see...

Submitted by gzz on March 19, 2020 - 1:33pm.

Duuuude,

92107 pendings and closings are at their normal pace.

Closings make sense, hard to back out at the last minute.

But the number of listings that go to “pending” sale you’d think would take a hit. Not yet.

Submitted by TheBrianNarrative on March 19, 2020 - 2:24pm.

FlyerInHi wrote:
If they are under long term ownership that means the owners are not that leveraged. They will be fine.
But recently lots of transactions in PB were preconditioned on the airbnb model. We shall see...

And you know this how? Please bring actual data not more empty words

Submitted by FlyerInHi on March 19, 2020 - 2:32pm.

And what’s your data?
What’s your data on AZ visitors to SD? Don’t ask unless you put up first.

Submitted by TheBrianNarrative on March 19, 2020 - 5:28pm.

FlyerInHi wrote:
And what’s your data?
What’s your data on AZ visitors to SD? Don’t ask unless you put up first.

Seriously? If you Google Arizona visitors to SD you get countless hits. I know a few dozen people including family that are coming no matter what. No one in their right mind would dispute that San Diego gets major tourism from AZ in Summer. San Diego had over 35m visitors in 2019. Industry statistics say about 15% of that comes from Arizona mostly over the summer. that’s most of over 5 million visitors.

You brought up something that has no basis in common sense, common knowledge or reality it’s purely hearsay. If not made up by you. Prove it dumbass

Submitted by FlyerInHi on March 19, 2020 - 11:47pm.

It’s well known that beach valuations are based on short term rental in PB.
If the locks down last long enough, the money will evaporate. Not good for people with large mortgages.

Airbnb: Summer Rentals in San Diego County Generated $122 Million
https://timesofsandiego.com/business/201...

Submitted by TheBrianNarrative on March 19, 2020 - 11:55pm.

Actually mostly Mission Beach but your still making stuff up. If you don’t know the difference between that and Pacific beach it’s just one more example that you don’t know what you’re talking about. it is not well known that valuations in PV are based on short term rentals. You’re just wrong. Furthermore people will return to the beach as soon as the lockdown ends. Why wouldn’t they? You also have no idea how many of those properties are highly mortgaged. I have several friends who own properties down there or who have parents that do. Long time locals that have on these properties for decades free and clear.

Keep making stuff up. I just watched the former CEO of one of the larger casino operating companies in Vegas talking about the dire situation out there. your complete lack of respect for diversification is about to come home to roost. We will let Anxiously await your fictional updates so in the meantime why don’t you share some fictional photos of your picnicking.

Submitted by FlyerInHi on March 20, 2020 - 10:34am.

Ha! I said people who are long time owners with low leverage will be fine. Not so much for people with big mortgages who depend on short term rentals. You know, people in expensive markets who try to goose their returns with leverage.

I know very well the risks of investing. That’s why I always insist on knowing when recessions occur and buying as near the bottom as possible. You’re the one who ridiculed the idea of timing investments around recessions.

You’re not the boss and you don’t get to make demands. Why don’t you update us on your “friend” at the beach who’s charging $500 per night?

Submitted by FlyerInHi on March 20, 2020 - 10:34am.

Ha! I said people who are long time owners with low leverage will be fine. Not so much for people with big mortgages who depend on short term rentals. You know, people in expensive markets who try to goose their returns with leverage.

I know very well the risks of investing. That’s why I always insist on knowing when recessions occur and buying as near the bottom as possible. You’re the one who ridiculed the idea of timing investments around recessions.

You’re not the boss and you don’t get to make demands. Why don’t you update us on your “friend” at the beach who’s charging $500 per night?

Submitted by TheBrianNarrative on March 20, 2020 - 10:44am.

No you said "especially in PB" when you know absolutely nothing about it. Areas like the beach will eventually come back because they depend upon nothing but natural resources which aren’t going away. Areas like Las vegas will get crushed as they fall out of favor. Oh and my friend is doing just fine. He lives in a $3 million house that he paid 1 million for and it’s just about paid off. he has an amazing rental unit that he paid cash to build and while he may miss some rent in the short term it will come back and he’s just fine. Someday he will move into thatSmaller rental unit and rent out the main house but he’s under no pressure to do anything. Please keep us posted on your rentals performance and we anxiously await photos of your picnics

Submitted by FlyerInHi on March 20, 2020 - 11:04am.

Good for your “friend” at the beach. I believe in mitigating risk and having low leverage. You’re the one who wants to use leverage to boost returns. And you’re the one who, barely weeks ago, ridiculed anticipating the current recession.

I never bragged about my returns, not in dollar terms or percentages. You’re the one who posted your own portfolio performance as “rebuttal” to a general market comment. Why don’t you give us another update, please.

Submitted by TheBrianNarrative on March 20, 2020 - 3:37pm.

FlyerInHi wrote:
Good for your “friend” at the beach. I believe in mitigating risk and having low leverage. You’re the one who wants to use leverage to boost returns. And you’re the one who, barely weeks ago, ridiculed anticipating the current recession.

I never bragged about my returns, not in dollar terms or percentages. You’re the one who posted your own portfolio performance as “rebuttal” to a general market comment. Why don’t you give us another update, please.

100% wrong Brian. Weeks ago I wasn’t even posting here. Probably haven’t posted on this site in well over 10 years. I hope Rich Returns you rightfully to oblivion

Submitted by FlyerInHi on March 24, 2020 - 12:10pm.

There is you bragging about your portfolio.

https://www.piggington.com/interest_rate...

TheBrianNarrative wrote:
spdrun wrote:
Oh my! The market is only down 9% since peak, not 12%. The real amusement will begin when profit numbers start feeling the pinch of disrupted supply chains, of people not flying, of people not going out as much... Give it a few months. The real fun will begin just in time for a long summer, and it will be fresh in people's minds come November.

Did someone say down?

Down?: Down?Down?: Down?

Submitted by FlyerInHi on March 24, 2020 - 12:14pm.

I’m not feeling confident about SD real estate right now.

The reason people are here is because of jobs. What happens when people realize they can work from home anywhere?

How much down at the next bottom? 20%? 40%?

Submitted by FlyerInHi on March 24, 2020 - 12:59pm.

Well, it’s clear that certain markets will be affected more than others. But remember, those that fall most also recover stronger. The key is to identify the bottom.

Maybe the Coronavirus will show the potential of telecommuting and the Internet’s promise of location independence will finally come about.

Submitted by FlyerInHi on March 24, 2020 - 1:49pm.

Thanks for the link.
Interesting article. It shows what many parts of the economy and country had not fully recovered from the 2008 recession. Now this. Not good at all.

Submitted by FlyerInHi on March 25, 2020 - 12:22pm.

I am now wondering if there will be another housing crash after the 2008 housing crash.
That would indeed be unprecedented to have back to back crashes of the same asset class.
How long are people’s memories?

The Never-Ending Foreclosure
How can the country survive the next economic crash if millions of families still haven't recovered from the last one?

https://www.theatlantic.com/business/arc...

Some nine million families lost their homes to foreclosure or short sale between 2006 and 2014. But many lost more than that: They lost their momentum, too. Families like the Santillans had been moving up a ladder towards the American Dream, and fell off into a deep pit. They’re still at the bottom of the ladder a decade later, trying to get back to where they had been.

Submitted by pluto on March 25, 2020 - 8:34pm.

Its interesting to know what will happen. If we do print away, I dont know how we can avoid hyper inflation.

I do think that San Diego will be in a short term pinch. I see a lot of people moving out of SD. Tourism is the second largest industry locally. I dont see that rebounding fast enough to support rentals. I do see about half of the 12k Airbnb coming online for long term. Either way rents and the mortgage rates will pressure home prices to come inline with one another.

Rent wont be paid by most of the people. I think the May 31st will give people just enough time to move.

Submitted by pluto on March 25, 2020 - 8:39pm.

It's not, it's being called housing bubble 2.0. Housing never fully corrected. It's the debt bubble that re-inflated the housing bubble along with other assets that people use leverage for.

Submitted by Coronita on March 25, 2020 - 9:31pm.

At least in CA....

1.Can't afford the rent? There's a moratorium on that.

2. Can't afford the mortgage? There's a moratorium on that.

4. Can't afford your income taxes? Hmm. There's a deferral of that until July

5. Can't afford the property tax? Hmm. There's probably going to be a moratorium on that too.

6. Still want to sell during this period? Ok... Who's going to sell it and who's going to take clients to see it? LOL

https://www.car.org/aboutus/mediacenter/...

https://www.carcovidupdates.org/stay-at-...

Quote:


The real estate industry is not exempt from this prohibition except as needed to maintain “continuity of operation … of … construction, including housing construction.” Therefore, REALTORS® should cease doing all face-to-face marketing or sales activities, including showings, listing appointments, open houses and property inspections. Clients and other consumers are also subject to these orders and should not be visiting properties or conducting other business in person.

Property management and repair work, which generally involves maintaining sanitary and safety conditions is permissible. Additionally, many other aspects of the real estate industry can continue to occur without in-person contact, including documentation and signing, and in many circumstances, closings. Other activities may also be managed remotely, though there may be some difficulties.”

Impact on MLS Statuses, Showing Instructions and DOM

In light of the Governor’s order on March 19, 2020, it would be appropriate for the MLS listing status to be changed by the listing agent to hold or withdraw— but if the listing agreement is still in effect, one would not select cancelled.

Also, it would be reasonable under the circumstances, if so desired, for an MLS in its discretion to alter its usual showing instructions and/or DOM approach, either by taking a unilateral approach systematically in the MLS or simply to offer participants the option to alter their status designation into a field that suspends the clock, ex: hold or the like in one’s system. An MLS could also decide to make no changes to its offerings because it's a given that all California listings are subject to this same order of March 19, 2020, such that those active during this time would be assessed in the same light.

If an MLS does alter or suspend the DOM, keep in mind, however, portals like Zillow, Realtor.com and others that also calculate their own DOM might not be changing their DOM calculations. That raises the concern of having two differing, publicly available DOM sources, possibly causing the buying public to lose confidence in the MLS reporting and/or creating potential liability situations for agents for inaccurate reporting. Thus, if an MLS does decide to pause the DOM calculations, best practice would be to keep measuring things both ways so that future evaluation of this current marketplace will be possible. When this is all over, it will still be important to keep an accurate tracking of what happened, so even if the DOM clock stops, the CDOM clock should keep going so the total picture is still there.

Also, the following Inman article may be of interest regarding what some other MLSs are doing: https://www.inman.com/2020/03/19/we-talk...

Based on that which is set forth above, the MLS has various options to consider depending on what works best locally and within the fields and functionality of its system.

Disclosure of Potential COVID 19 Exposure

What to do if an agent learns that a visitor to the property, including potentially another agent, tested positive to COVID 19 — is disclosure required or recommended?

This information would be material to anyone at risk for potential exposure but raises the question of whether it’s a property concern or a people concern. Is the concern that the property site itself might have been or is contaminated? Or is the risk of having been around a particular person? And was this person on or offsite from the property?

Legally, known material conditions related to the property should be disclosed. Per the CDC, it’s possible the virus can spread from contact with infected surfaces or objects on a property, meaning a person could get COVID-19 by touching a surface or object that has the virus on it and then touching their own mouth, nose, or possibly their eyes, but this is not thought to be the main way the virus spreads. However, the more relevant aspect to potential exposure pertains to the timing of contact with the property and the infected person and any others who came for a period thereafter. This is not purely or a per-se property condition. But to be on the safe side, a disclosure could be made. Disclosing through the MLS would not be the most effective way to communicate this information because (a) no further showings should be ongoing under the order of March 19, 2020, and (b) the concern at issue is backward-oriented and person-focused (and not a permanent property condition) for those potential visitors and/or agents identifiable from lockbox or other records as having been at the property during that time period with the exposed person. Notice could then be given in a targeted way.

The world is being put on hold for the next few months, possibly until the end of the year. Next year will be interesting when things slowly return to normal. The low mortgage rate lever is already being pulled. I wouldn't be surprised to see another lever pulled: relaxing lending standards to otherwise credit-unworthy people.

When 9/11 occurred and the dot.bomb imploded, did home prices crater right after, or did they crater after irresponsible lending ran its course for a few years?

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