Days on market vs. price expectation

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Submitted by moneymaker on May 15, 2015 - 10:03am

How many days on market today suggests unreasonable price expectation by seller? I'm thinking 45 or more. Should have made this a poll but got to leave here soon, seems like a lot of houses are lingering when there is low inventory.

Submitted by Coronita on May 18, 2015 - 11:03am.

rockingtime wrote:
gzz wrote:
I

San Diego has a large number of well-paying jobs, is a favored place for the wealthy to vacation, have second homes, and retire, and has basically run out of nice locations to develop.

I also think it is only a matter of time before mainland Chinese buyers start branching out from their favored UTC-centered buying habits into other areas of San Diego.

All the above are facts not fiction.
A lot of people told me the same thing in 2007 when I was exploring real estate in san diego. Per them becaus eof above stated facts, real estate in SD would never go down.

I was not convinced though and finally bought in 2011 :-)

Well then. Since you are looking to upgrade...why haven't you sold your existing home and just rent if you are so sure prices are going to go down significantly enough? If you are looking to upgrade, and you think prices have peaked, now would be a great time to sell, right? After all, even if prices do fall and you can get a better house later, holding onto your existing primary won't help because that will go down too.

Submitted by fun4vnay2 on May 18, 2015 - 12:12pm.

I am not looking to upgrade but looking for some investment property. Hence looking at real estate in SD.
I realized I am bit late to the party and current valuations wont give me + cash flow in SD.

Submitted by spdrun on May 18, 2015 - 12:31pm.

There are properties in the area that will come close, if not cash flow.

e.g., a 2/1.5 condo went contingent last month at $200k. HOA about $250/mo. Landlord insurance, about $15/mo. Taxes about $200/mo.

Market rent is $1600/mo and it's in an easy area to rent. That's close to 7% pro forma. Catch was that there was an existing tenant there at $1300/mo, but if one had some patience, they could do well.

Submitted by Coronita on May 18, 2015 - 12:58pm.

But if you feel home prices are going to come down significantly, why not sell and rent?

Submitted by fun4vnay2 on May 18, 2015 - 1:33pm.

Good question,
I personally feel my house price have peaked out. It would be insane if it goes up any more but you can never underestimate the power of absurdity.

Not selling as I want to rent it out with good + cash flow and move into another house...

Still evaluating things..
I have chunk of cash and I'd like to leverage it somewhere else other than stock..

Right now, the market is very hot for sellers in the areas I'm looking at.
I have been proven wrong many times n thus trying to hedge my bet...

Submitted by fun4vnay2 on May 18, 2015 - 1:34pm.

spdrun wrote:
There are properties in the area that will come close, if not cash flow.

e.g., a 2/1.5 condo went contingent last month at $200k. HOA about $250/mo. Landlord insurance, about $15/mo. Taxes about $200/mo.

Market rent is $1600/mo and it's in an easy area to rent. That's close to 7% pro forma. Catch was that there was an existing tenant there at $1300/mo, but if one had some patience, they could do well.


Thanks spdrun, If you have any more like this or a good contact, please PM me.

Submitted by The-Shoveler on May 18, 2015 - 1:41pm.

At the risk of jumping into the fray, I think it very unlikely lower end home prices will crash significantly (say more than 15-20%).

I also agree with flu, the pressure will be on making loans more available to the lower income/mid-income levels.

There is already a lot of talk on how they can do this.

High end I am not so sure but that seems unlikely to me to get hit much either.

Also if your looking to buy rental properties, YOUR part of the reason it is unlikely to fall much in price.

Submitted by Coronita on May 18, 2015 - 1:43pm.

rockingtime wrote:
Good question,
I personally feel my house price have peaked out. It would be insane if it goes up any more but you can never underestimate the power of absurdity.

Not selling as I want to rent it out with good + cash flow and move into another house...

Still evaluating things..
I have chunk of cash and I'd like to leverage it somewhere else other than stock..

Right now, the market is very hot for sellers in the areas I'm looking at.
I have been proven wrong many times n thus trying to hedge my bet...

Well then its good your pragmatic and honest about this. That's the point. As logical as we want to think home prices will fall (and fall hard as many of you think will happen) no one here is willing to bet their house on it(both figuratively and literally) because even has their doubts. And no one here on this blog appears to be confident enough in their doomsdays opinion to wager their primary home and rent.

I'll believe it when I see people here starting to make that wager. Despite all the doomsayers of a manor correction I have yet to see an example of people putting their money where their opinion is.

Submitted by The-Shoveler on May 18, 2015 - 1:48pm.

There is a lot more worry on why we are NOT building enough homes, than there is on prices being too high.

That is where the pressure will be applied IMO (generating more home building) and how to get it going.

Submitted by fun4vnay2 on May 18, 2015 - 2:01pm.

Major correct would need some major event to unfold it..
don't see it coming, can think of few though
1) water crisis pushing people out ?
2) qcom lays off few K people in san diego ?
3) fed raises the interest rates in next couple of years ?

Submitted by Coronita on May 18, 2015 - 2:08pm.

The-Shoveler wrote:
There is a lot more worry on why we are NOT building enough homes, than there is on prices being too high.

That is where the pressure will be applied IMO (generating more home building) and how to get it going.

Just this weekend there was this home we were entertaining in my area. 1 day after open house, 4 offers with 24hrs and no backups accepted.

Some have suggested its going to be more like Irvine and Arcadia RE prices moving forward in Carmel V. I am beginning to think that is the case. Between $1-1.5m homes that sold here recently, 1 out of 3 were purchased by Asian households.

Submitted by an on May 18, 2015 - 2:06pm.

rockingtime wrote:
Major correct would need some major event to unfold it..
don't see it coming, can think of few though
1) water crisis pushing people out ?
2) qcom lays off few K people in san diego ?
3) fed raises the interest rates in next couple of years ?

1) Water crisis is here and I don't see it pushing people out. It would just cause more brown lawn.
2) QCOM have been laying off and spinning off the last year or so. The RE prices have been going the other way.
3) We've talked about this before. There have never been strong data to prove rising rates cause price to fall.

Submitted by fun4vnay2 on May 18, 2015 - 2:08pm.

I agree with point #1.
Point#2, qcom has not yet done big lay off in sd so far. They have been doing small lay offs for years

Point#3: This is a wild card. We can be in japan like situation where rates are permanently low

Submitted by an on May 18, 2015 - 2:08pm.

flu wrote:
The-Shoveler wrote:
There is a lot more worry on why we are NOT building enough homes, than there is on prices being too high.

That is where the pressure will be applied IMO (generating more home building) and how to get it going.

Just this weekend there was this home we were entertaining in my area. 1 day after open house, 4 offers with 24hrs and no backups accepted.


A couple of months ago, I was considering this house in my hood. They didn't even host an open house yet, we saw it w/in a few days of it hitting the market and it already have an offer with no appraisal contingency. End up selling for ~10% above ask price.

Submitted by Coronita on May 18, 2015 - 2:13pm.

AN wrote:
flu wrote:
The-Shoveler wrote:
There is a lot more worry on why we are NOT building enough homes, than there is on prices being too high.

That is where the pressure will be applied IMO (generating more home building) and how to get it going.

Just this weekend there was this home we were entertaining in my area. 1 day after open house, 4 offers with 24hrs and no backups accepted.


A couple of months ago, I was considering this house in my hood. They didn't even host an open house yet, we saw it w/in a few days of it hitting the market and it already have an offer with no appraisal contingency. End up selling for ~10% above ask price.

It's not even summertime yet!!!! I guess in order for me to figure out what it will take for re prices to settle down, I am trying to understand what it took for Vancouver BC real estate prices to settle down as a worst case scenario. So far it seems like Vancouver BC is still crazy. That's why maybe now is the time to gsmblr a bit. At least in my neck of the woods.

I was actually surprised by the 1 in 3 stats. I didn't think it was anywhere near that so soon.

Submitted by an on May 18, 2015 - 2:12pm.

rockingtime wrote:
I agree with point #1.
Point#2, qcom has not yet done big lay off in sd so far. They have been doing small lay offs for years

Point#3: This is a wild card. We can be in japan like situation where rates are permanently low


They've already cut almost everybody that's not QCT/QTL/Corp R&D/ESG. There's not enough people left to have a major lay off, unless you see them shutting down their chip or licensing business, which I don't see happening. So, I don't foresee a major 5k+ people layoff coming any time soon. If there are layoffs, I do see small layoffs like what they've been doing.

As for rates, again I don't see any data to prove rate causes housing price to move in one direction or another.

Submitted by an on May 18, 2015 - 2:14pm.

flu wrote:

I was actually surprised by the 1 in 3 stats. I didn't think it was anywhere near that so soon.

What 1 in 3 stats?

Submitted by Coronita on May 18, 2015 - 2:18pm.

AN wrote:
flu wrote:

I was actually surprised by the 1 in 3 stats. I didn't think it was anywhere near that so soon.

What 1 in 3 stats?

1 out of 3 homes purchased between $1-1.5m homes in my hood have been by Asian households.. I hope this doesn't snowball quickly into Cupertino. Well at least not until I get my other foot in.

Submitted by an on May 18, 2015 - 2:19pm.

flu wrote:
AN wrote:
flu wrote:

I was actually surprised by the 1 in 3 stats. I didn't think it was anywhere near that so soon.

What 1 in 3 stats?

1 out of 3 homes purchased between $1-1.5m homes in my hood have been by Asian households..

Not surprised. Your hood still have a way to go to get to the same level as my hood :-). Not sure if you want your hood to get here though.

Submitted by Coronita on May 18, 2015 - 2:23pm.

AN wrote:
flu wrote:
AN wrote:
flu wrote:

I was actually surprised by the 1 in 3 stats. I didn't think it was anywhere near that so soon.

What 1 in 3 stats?

1 out of 3 homes purchased between $1-1.5m homes in my hood have been by Asian households..

Not surprised. Your hood still have a way to go to get to the same level as my hood :-). Not sure if you want your hood to get here though.

Financially, yes (just not right now until my other foot is inside). Socially, it will suck. Maybe now is a good time to open an after school enrichment school in Carmel V though.

Submitted by an on May 18, 2015 - 2:57pm.

flu wrote:
Financially, yes (just not right now until my other foot is inside). Socially, it will suck. Maybe now is a good time to open an after school enrichment school in Carmel V though.
Why would it suck socially? I see it as a positive all around.

Submitted by fun4vnay2 on May 18, 2015 - 3:44pm.

If they want to contain cost, they'd need to reduce their headcount in SD and increase # in low cost places like India/China
They can still keep their chip biz running with few k less engineers in sd.

A simple engineer in SD is no less/more than an engineer in China/India although a lot of folks here may argue against it

Submitted by an on May 18, 2015 - 4:07pm.

rockingtime wrote:
If they want to contain cost, they'd need to reduce their headcount in SD and increase # in low cost places like India/China
They can still keep their chip biz running with few k less engineers in sd.

A simple engineer in SD is no less/more than an engineer in China/India although a lot of folks here may argue against it

You area aware that they'are building a bunch of new buildings in Sorrento Valley, right? I don't expect them to abandon those buildings. They also also have a few more in planning stages (they already acquired the land). So, I don't foresee them drastically reducing head count indefinitely.

There's no point in arguing about quality of engineers. Fact is, engineers from India/China and getting more and more expensive every year. That's not even talking about additional over head cost associated with shipping projects over there. There are things that engineers in India and China do well and there are things that you need local engineers to do. Engineers are not as easily replaceable as you make it out to be. QCOM might be the big dog now, but I see Illumina expanding like crazy. Not to mention all the banks that are setting up shops in UTC. Then there are many other biotech companies in Sorrento Valley.

Submitted by spdrun on May 18, 2015 - 4:13pm.

rockingtime: what major event ignited the run up in prices during 2013? I honestly don't think there was one. Interest rates didn't change that much due to QE3, and foreclosures/shorts didn't run out at once.

Purely herd behavior, which can work in both directions. At least at the lower end, the sheep are now being a bit more judicious before buying.

AN: agreed. Have you actually tried to work with engineers who don't speak the language well long-distance, and where their middleman overstates their qualifications? US-based engineers aren't going anywhere fast.

Submitted by fun4vnay2 on May 18, 2015 - 4:24pm.

One of day job is to price manpower here vs other places.
We usually give 2 reqs for a single req in san diego.
This is for engineering jobs and we have been doing pretty good with this model so far.
India/China is not cheap but good thing about these countries are: They have millions of engineers graduating every year. An young engineer with couple of years exp make an old engineer who is 10+ exp and bloated salary completely obsolete.

What you need is good mid level mgmt to manage and maintain the task/process flow along with clear directions.
Write code or testing is not rocket science and one does not get better with time which can command higher salary

If you are on cutting edge technology, then its even more level playing field between experienced or noob..

Submitted by an on May 18, 2015 - 4:53pm.

rockingtime wrote:
One of day job is to price manpower here vs other places.
We usually give 2 reqs for a single req in san diego.
This is for engineering jobs and we have been doing pretty good with this model so far.
India/China is not cheap but good thing about these countries are: They have millions of engineers graduating every year. An young engineer with couple of years exp make an old engineer who is 10+ exp and bloated salary completely obsolete.

What you need is good mid level mgmt to manage and maintain the task/process flow along with clear directions.
Write code or testing is not rocket science and one does not get better with time which can command higher salary

If you are on cutting edge technology, then its even more level playing field between experienced or noob..

To use flu's words... "If you say so..."

Submitted by an on May 18, 2015 - 4:56pm.

spdrun wrote:
AN: agreed. Have you actually tried to work with engineers who don't speak the language well long-distance, and where their middleman overstates their qualifications? US-based engineers aren't going anywhere fast.
Yes, which is why I don't think Engineering jobs in US are going anywhere soon. I have no problem with having a branch in India and China. But the best experiences are the ones where each region control the entire project. Having to deal with engineers across the pond suck when there's a huge language barrier.

Submitted by Coronita on May 18, 2015 - 5:47pm.

rockingtime wrote:
If they want to contain cost, they'd need to reduce their headcount in SD and increase # in low cost places like India/China
They can still keep their chip biz running with few k less engineers in sd.

A simple engineer in SD is no less/more than an engineer in China/India although a lot of folks here may argue against it

The said focused group that are buying in said area I mentioned aren't aren't necessarily the local enginerd worker bees salary workerbees. In fact, if we haven't already been priced out, a lot of us are going to get priced out really soon if this trend continues...

The bulk these 1:3 make up the 0.1% wealthy overseas, or if they are enginerd types, they are kids of parents overseas with sufficient cash reserves. To put the that in perspective... 0.1% of 1 billion people is still 1 million people...And when the economy does turn south overseas, those folks are going to have a pretty big target on their back...So I'm wondering if this trend is a flight to safety for them.

That's why I'm considering the worst case scenario wrto what may happen to RE prices in certain areas/demographics, similar to what sort of happened in Vancouver, pockets in NorCal, and pockets in L.A. Up until recently, San Diego was under the radar so to speak. I'm not so sure now. I will say one thing though. I doubt these people will be looking in the low end. Maybe, North County is their definition of low end. Prices won't go up forever. Where it stops though, that's to be determined. And I'm not so sure it has anything to do with what us worker bees make here. It will be interesting to see what happens when interest rates go up. Though, I have some suspicion it won't do that much in this group.

Submitted by Coronita on May 18, 2015 - 5:17pm.

spdrun wrote:
There are properties in the area that will come close, if not cash flow.

e.g., a 2/1.5 condo went contingent last month at $200k. HOA about $250/mo. Landlord insurance, about $15/mo. Taxes about $200/mo.

Market rent is $1600/mo and it's in an easy area to rent. That's close to 7% pro forma. Catch was that there was an existing tenant there at $1300/mo, but if one had some patience, they could do well.

Are you talking about the one in Santee?

*If so, asking price was 210 to 219k.
*Hoa is $300/month not 250
*Rent is $1500/month
*All comps are around $240-250k

Most importantly, this one came on the market day one as contingent, so it was never an open market sale.

Submitted by spdrun on May 18, 2015 - 5:36pm.

Nope. ;)

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