Holy Poway!

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Submitted by southern5footer on March 8, 2013 - 1:54pm

My husband and I are looking to purchase in Poway and it seems that all the properties we are interested in are pending by the 7th day online. Pretty insane. It does make me wonder about the few properties that are just sitting and collecting time on the MLS.

Once the sell of our house is complete, if we can't find what we want, we might rent for a while.

This market is really interesting.

What are you seeing out there?

Submitted by SD Realtor on March 8, 2013 - 2:08pm.

Poway is very tight as is the rest of the I15 corridor. Anything priced accurately will sell quickly.

Submitted by earlyretirement on March 8, 2013 - 2:11pm.

SD Realtor wrote:
Poway is very tight as is the rest of the I15 corridor. Anything priced accurately will sell quickly.

Yep. I totally agree. Just based on some friends that listed their home and sold in a few days I'd say the market is definitely a seller's market again.

It will be interesting to see what happens in this area over the next 2 or 3 years in the near-term.

Submitted by southern5footer on March 8, 2013 - 2:21pm.

Yea, it will be interesting for sure. We are lucky because we are more than willing to be patient and wait for the right place/time.

I would think as prices keep rising some of the people who were/are sitting under water will start wanting to sell.

Submitted by SD Realtor on March 8, 2013 - 2:33pm.

There is no harm in renting. Just keep expectations realistic. If you are going to rent in order to find conditions that will have a higher level of inventory then that makes sense. If you feel that there will be some substantial price decline then be prepared to wait for a few years at least. While the market will cool down later in the summer as it reaches an equilibrium that will simply slow the rate of appreciation as opposed to cause depreciation. The homes that will depreciate will do so only because they were originally listed at a ridiculous original price. If your plan is to sell, then hold the cash until we hit a point where interest rates rise significantly than that may be a good plan but it also may be quite open ended.

I have heard about the number of underwater homeowner theory, that is there is this vast number of underwater homeowners who will flood the market when they can sell and that this will be the "tsunami" of inventory. I feel this is quite incorrect for many reasons.

My point is that the market will not reverse direction strongly anytime soon for any reason except interest rates. It may not be as hot but it certainly will not reverse, at least not in a meaningful manner.

Submitted by southern5footer on March 8, 2013 - 2:36pm.

I completely agree with your assessment. We would just rent until we find the right place. If it takes a year or four, that is fine. The longer we rent the larger our cash pile gets. Our next home we would like to be our long term home.

Who knows what will really happen for us personally but we're not putting pressure on ourselves to find something fast.

Submitted by SD Realtor on March 8, 2013 - 2:40pm.

That is a sound strategy~

Submitted by paramount on March 8, 2013 - 8:06pm.

Don't fight that battle.

Find plenty of inventory in Temecula. The schools are just as good if not better.

The weather is similar, except Temecula has cleaner air.

You know that house you've always dreamed about? You can have that home in Temecula with one major difference: Temecula is a lot prettier than Poway (it really is...).

Submitted by joec on March 9, 2013 - 2:49pm.

I don't think it's really that easy to know what's the best solution. We are in a global currency devaluation situation and the yen has already devalued 20%. Homes, if anything are a great inflation hedge and you already have a lot of people from China just trying to buy up all hard assets in the US like homes in LA, Bay area, San Diego, etc...

Also, if you have to rent in the area or what not, maybe buying is tons better than renting since at the low rates now, i wouldn't be surprised if you calculated your NON-TAX DEDUCTIBLE mortgage payment maybe already lower than the cost of rent of the same home. I know for a fact that a house i live close to rents for MORE than my mortgage + taxes so you add in tax benefits and the cost to carry it is a joke. Then again, we bought a few years ago so many not at the moment for you, but for sellers recently, this is true.

There was also an article today in the ut saying northrop grumman is moving their drone hq to rancho bernardo I think. That's not going to help prices and inv in the area...

My point is that you just have to do the math and think a bit more. You might be ok waiting 1-4 years, but what if the wait is 10 years? 20 years? I think most of us would probably agree that it's a pain to rent and rents have been going up...a lot. House shopping also eats up a ton of time and is stressful. This is a bad time, but no one knows how long it will last. A ton of folks here bought the last few years already when it wasn't such a sellers market. The thing with house buying is really, you just have to buy once...or only a few times if you move. Once you're done, it's not a concern for a while anymore.

It's never good to rush into anything, but run the numbers and see how it stacks up. Interest rates are also very very low so you aren't getting much from your hoard of cash savings that you probably shouldn't invest, etc...which is getting killed from inflation.

I think FLU was saying his mortgage out in CV was closer to 2k/month. You can't rent any SFH for that price really, not in CV or in Poway probably.

People keep saying watch out for interest rates to go up and everything will collapse, but I sorta don't think this will happen. You'll simply have a standstill since anyone who needs to refinance already has mostly done so. People buying now also had to put more than 20% down so they already have equity and can wait it out. Loans have been very hard to get and people who can get them are doing well. Even at 10% unemployment, you have 90% employment. Bay area, Los Angeles, QCOM is killing it driving prices higher...Stocks are also at all time highs making people wealthier.

If worst gets to worst, I think you'll have more creative solutions where your buyer would just assume your loan through some outside contract or creative financing, etc...I think this was done in the late 70s/early 80s so I don't buy people claiming utter collapse if rates go up...

With the whole world devaluing their currency, you may be in for a very very long wait as well.

Also, if rates do go up, most people would just keep their places and rent it out since it cash flows out and just not sell. Lack of inventory (like now) equals higher prices again leading to what we have now.

I think sometimes, it's wishful thinking to see a plunge in prices from people who haven't bought yet, but really just do the math to see if it actually makes sense. It might not if your rent cost is high and you value your time and are sick of looking.

All these housing bear forums are more quiet now because all the bears have bought recently...Even Rich here.

Submitted by gzz on March 10, 2013 - 2:24pm.

You should just buy now. In a year prices will be 10% higher, you will lose the mort int deduction, and be paying an extra 50,000 for the typical poway house.

Also moving is a huge hassle, doing it twice is even worse.

Instead of saving for a downpayment, get a 95% LTV loan and pay it down as fast as you can. When you hit 80%, you can either refi or cancel mortgage ins.

Submitted by spdrun on March 10, 2013 - 2:43pm.

If southern5footer is new to the area, why not just buy SOMETHING? One can always "change their mind" about owner-occupying what they bought, rent it out, and use it to supplement rental income. There are still some 2-bedroom units out there that will cash flow.

Submitted by southern5footer on March 11, 2013 - 4:26pm.

Hi Everyone,

I'm going to respond to the comments above.

- Temecula isn't a viable option for us (although I do think it is lovely.) My husband works in Sorrento Valley and I work downtown. Poway is about as far north as we are willing to go, plus we have family there.

- I agree that the buy instead of rent equation is an interesting one and definitely worth considering. We have run a bunch of different financial senerios and will re-access when our condo sells (it is listed and we are reviewing offers in a matter of days.)

- We aren't new to the area. My husband is from SD and I've been here over 15 years.

Submitted by spdrun on March 11, 2013 - 4:31pm.

Why not rent the condo out to some chump, and use the income to supplement your rent locally?

If you bought 15 years ago, can't you also refi it and pull some cash out, since property values are above 1990s levels?

Submitted by southern5footer on March 11, 2013 - 5:07pm.

We only bought 3 years ago. We are still turning a profit but nothing huge.

Submitted by spdrun on March 11, 2013 - 5:12pm.

Why not keep the condo, then?

Submitted by SD Realtor on March 11, 2013 - 7:29pm.

Converting an owner occupied property is a preferred way to accumulate real estate assets over a long period of time. I always encourage potential sellers to consider holding onto propety they own and covert it to a rental as opposed to selling and then buying. Owner occupied financing is the absolute lowest rate as well. If it is not feasible then I understand. Additionally if your only source of a downpayment is the equity in the property I understand that as well. It may serve you well to sit down and pencil things out before you move forward with accepting an offer. Run some sample scenarios over the next year or two to see if you can get away with holding the property and being able to come up with the downpayment for another home. If not then I understand. If you have already done all that and made the decision, consider this response moot. Once you sell it, it is gone.

Submitted by Mayze on March 12, 2013 - 7:19am.

Is there any way to keep the capital gains tax exemption on a primary if you convert? Or is this just another cost?

Submitted by SD Realtor on March 12, 2013 - 7:49am.

Cap gains exemption is very clear. You must have occupied it 2 of the last 5 years. However losing a cap gains exemption in exchange for the tax benefits of income property is a fair trade. I would not let that stop me.

Submitted by spdrun on March 12, 2013 - 9:37am.

The way to do it is clear, just not legal. Keep "living" in the unit...

Submitted by SD Realtor on March 12, 2013 - 10:18am.

No the way to do it is to do what is best for you. For most people including myself, breaking the law or risking an audit is not the preferred way to make money.

Submitted by southern5footer on March 12, 2013 - 10:24am.

Because all the cash we are willing/able to invest in real estate is tied up in that house.

Submitted by spdrun on March 12, 2013 - 10:31am.

No the way to do it is to do what is best for you. For most people including myself, breaking the law or risking an audit is not the preferred way to make money.

If you picked up mail there regularly and rented another place, who would be the wiser?

Submitted by SD Realtor on March 12, 2013 - 10:35am.

I understand southern5. For some people it works, and for others it does not.

Submitted by SD Realtor on March 12, 2013 - 10:37am.

I do not debate the ease of breaking laws or tax codes, nor do I give advice to do so. If it works for you great. If it works for others great. It doesn't work for me nor would I advise people to do it.

Submitted by spdrun on March 12, 2013 - 10:39am.

Not advising anything, but the possibility exists. And probably wouldn't look unKosher assuming that he didn't buy another place that could be construed as a primary.

Submitted by SD Realtor on March 12, 2013 - 10:53am.

sounds fantastic. why don't u take a poll to see how many property owners have pursued that unique strategy. really i am sure plenty have done so.

Submitted by FormerSanDiegan on March 13, 2013 - 9:09am.

spdrun wrote:
The way to do it is clear, just not legal. Keep "living" in the unit...

Independent of the legality, treating the rental as a primary may or may not be beneficial.

It depends on your ultimate goals for the property.

If you are going to hold for your lifetime to provide retirement income and pass to your children it makes no sense to continue to treat it as a personal residence for a future tax break on the sale that your heirs would get anyway.

One of the advantages to rental real estate is having the potential for tax sheltered income due to paper losses.

Here are some issues:
1. You cannot depreciate the property or upgrades
2. You cannot deduct insurance, maintenance, utilities between tenants, advertising costs.
3. Limitation on tax deductible interest to $1 Mil.
(If you have two $600k loans you can't deduct the full amount.
4. AMT limitations on the property tax deductibility.

There are probably a lot of other issues to consider.

Not saying that it's better to treat as a rental for all cases. But there are plenty of scenarios where cheating and treating as a primary may not even pencil out.

Submitted by mom2dmd on April 18, 2013 - 5:09pm.

Any idea what's going on with 13127 Decant Drive? The MLS shows that the listing expired last September at $560K. The listing agent told me today that it's been on the market for a month in the range of $699-799K. Why is it not showing up on the MLS? What's up with the pricing? Recent comps are $100K less!

Submitted by SD Realtor on April 18, 2013 - 6:10pm.

Don't know what to tell you. Did not see it as an active listing either, only as expired like you did. As much as the market is on fire right now they are on crack if they think they will get that much for that home. When an agent takes a listing they can get an exception and not post it on the MLS but the seller must know and authorize that, which is a stupid thing to do. Call the listing agent again and ask them why the home is not posted on the MLS.

Submitted by mom2dmd on April 18, 2013 - 6:34pm.

The listing agent made it sound like it was my mistake. She was quite rude about it.

Submitted by SD Realtor on April 19, 2013 - 7:11am.

Hmmm...if you want to pm me her contact info, I will call her. The address as you wrote it is not on the Sandicor MLS.

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