San Marcos Price Reduction

User Forum Topic
Submitted by ocrenter on April 25, 2006 - 11:22pm

I have been giving sdrealtor a hard time at the other topic "Median Price Down in North County" by showing the following two properties:

xx7 VIA DEL CABALLO, San Marcos, CA 92078
Bedrooms: 4
Baths: 3
Sq ft: 2,358
Listing Price: $550,000 - $599,876
Last Purchased: Dec 03 $460,000

and comparing the asking price of the first home with the sale price of the second home.

xx5 Via Del Caballo, San Marcos, CA 92078
Bedrooms: 4
Baths: 3
Sq ft: 2,358
Mar 06 $625,000

There was a lot of back and forth about lot premium and lot size and upgrades to try to account for the $75,000 in price difference in two homes with the same sqft and same floorplan.

All of that, I believe, is now rendered completely pointless because of this new development. As of today 4/25/06, there has been additional price drop down to $539,000 on the first home. Why? Because this home is currently in pre-foreclosure.

If you recall, this home was purchased for $460,000 in 12/03. A look into the loan doc's indicates a 80/20, zero down loan. Assuming a 2 year fixed loan on the 80% portion, this means this person just experienced a reset of his mortgage 12/05. After 3 months of paying at the higher rate, he is defaulting and going into foreclosure.

To avoid foreclosure, all he has to do is keep lowering the price until someone bites, and this can get as low as $490,000 for him not to lose money on this sale. What would the sale of a home at $490,000 do to comps in this neighborhood? Let's not even go so low as that, what would it do to the comps if he gets a buyer at the current reduced pricing of $539,000.

The next question of course is: what happens if there's another foreclosure in the neighborhood and the owner decides to slash prices? Well, we shall see, as xx7's neighbor xx2 has now just entered into pre-foreclosure this month, we'll see if xx2 throw their hat into the ever expanding San Diego Inventory of homes for sale.

Submitted by ocrenter on June 16, 2006 - 7:35am.

sdrealtor, it appears xx7 Via Del Caballo went into escrow and fell out after a few weeks. recently it just became inactive again. can you update us on the current situation? I'm assuming at $519,900 (they increased the price a bit) they should have found a buyer. I'm also assuming as long as escrow close before the actual Auction date everything should be ok.

Submitted by sdrealtor on June 16, 2006 - 11:32am.

It's currently off the market and I dont know what is going on. My guess is that eventually it will get foreclosed upon. However, it looks like I was pretty much on target with my assessment of things over there. Those looking for a dramtaic crash to 500K have been sadly disappointed.

There are currently 12 homes on the market in the tract and there 2 more that are in escrow. In the last 60 days 4 homes have closed escrow with prices of $580,000, $590,000, $595,000 and $597,500.

The pricing of the homes on the market suggests the sellers are looking to get $575 to $600K. The pricing of the homes in escrow suggest they got between $550K and $575K. These sellers stepped to the front of the line (i.e. reduced price just a tad below the others and got theirs sold). The others are holding the line abover $575K and eventually others will step forward and sell at slightly lower levels.

UPDATE:
One of the pendings just closed. Asking price was 549 to 569 and it closed for 547.

Submitted by ocrenter on June 16, 2006 - 11:42am.

I don't think folks were looking at those going down to $500,000 instantly. It is sticky on the way down. We got this foreclosure coming up, we also have another one pending foreclosure as well. One of the homes for sale is being rented at a $2000/month loss, and that one is actually part of the 7 homes owned by an investor that is pending default on all 7 properties. So in the next few months there's going to be 3 homes going thru foreclosure in that tract alone. I can't imagine prices continuing to hold up following that.

Submitted by jabrwoki on June 16, 2006 - 3:00pm.

sdrealtor,
appreciate your insights as a realtor. One thing I never understood was this BS call value range pricing. I can understand the significance of a lower limit on bids which will be looked at by the buyer but why bother with the upper limit. Are they saying they dont entertain bids above the price ? Or are they hinting to the seller how much they think their property is really worth ! Dont they give the buyer even an iota of credit for looking around to see how much to bid.

thanks

Submitted by sdrealtor on June 16, 2006 - 3:55pm.

It's a marketing gimmick to increase interest in a property. Lets say you have a house worth 525K in a rising market. When you price it at 499 to 550, it turns up in searches up to 500 and the seller hopes the people at the lower end will stretch. It also built in cushion when the market was rapidly increasing for overbidding. Now it is used when the seller thinks their house is worth 525 to 550 but the agent things more like 500. Personally, I think it confuses the hell out of buyers.

Submitted by Bugs on June 16, 2006 - 8:41pm.

I'm seeing a larger percentage of sales closing at prices that are below their listing ranges. I'm seeing almost nothing selling any higher than the middle of their ranges. The days of overbids are over. I'm seeing more and more markets where the tramsactions with the highest sales are becoming too dated to use in an appraisal, and where listings are lower than the previous sales. Come July 1, most appraisers will stop using 2005 transactions as comparables, leaving only the sales that have occurred so far this year.

Once the regional market is conclusively proven to be in decline, the lenders will be compelled to switch gears on their underwriting. They can no longer assume that prices will continue to increase, thereby compensating for any errors. Interest rates don't have to go up much to affect a decision on a mortgage transaction - increased underwriting requirements will kill a lot of deals that would otherwise have been done in years past.

I don't think it will take very many deals going south because of tightening credit requirements to have an outsized effect on the market psychology.

Submitted by sdrealtor on June 16, 2006 - 9:59pm.

ABout 3 or 4 months ago I did a study on range pricing. Here's what I found. Approx 50% sold below low end. 75% sold at or below 25 percentile. 90% sold at or below middle of the range. Sales at or near the top of the range were neglible. I'm sure its worse now. Range pricing as an effective pricing tool died in mid-2005

Submitted by ocrenter on August 6, 2006 - 11:26pm.

update on this tract of homes in San Marcos

xx7 Via Del Caballo (2358sqft) was unable to find a buyer at $519,000. It went to auction 7/20/06. I don't know how long it takes for a REO to appear as a MLS listing, or maybe it was sold at auction. we'll see.

xx1 Via Del Caballo (2445sqft) never came on the market. It is going to auction 8/17/06.

most homes in this tract are down to $520-550,000 asking price. we'll see if these two homses about are going to make things interesting.

Submitted by ocrenter on August 21, 2006 - 12:10am.

two more properties in the same community coming on line for foreclosure.

xx4 Via Del Caballo (2358sqft)
purchase price $446,000 3/04 (zero down)
purchase price $585,000 9/04 (zero down)

xx7 Camino Verde (2172 sqft)
purchase price $364,500 12/02
HELOC $70,000 9/03
refinance $448,000 9/05

so that's 4 properties either just gone thru auction or just received their NOD in 1 small gated community. and on top of these there are 14 homes for sale. There's at least one other property in the pipeline for foreclosure. In 4-6 months there will be at least 5 REO's in this property. serious price drops will have to be necessary at that time.

Submitted by ocrenter on August 21, 2006 - 12:14am.

"Those looking for a dramtaic crash to 500K have been sadly disappointed." sdrealtor, 6/06.

San Marcos currently has a 1 year supply of homes for sale, now we got 4 foreclosures in one single community. I'm now looking at these properties going down into low $400,000's mid to late next year.

Submitted by JES on August 21, 2006 - 9:47am.

Couple points:

-I have been in that neighborhood numerous times and it is a fairly nice, gated community east and adjacent to Cal State.

-There is a Sprinter train station being built a couple hundred yards north of that neighborhood, at LaMore and Barham Ln. Possible reason for the # of homes for sale. We're talking diesel trains, every 15 minutes all day long, and traffic from the station and students.

-The university has plans to build nearby as well, but I don't know exactly where. It could be that a dorm will be built directly behind the neighborhood, who knows. Would have to look at the Cal State master plan for that.

-Look at the neighborhood to the west of this, Silvercrest by Centex (sold out) off of Shelley Dr. Actually go drive it...there are 12+ homes for sale on just the first 2 streets and all are reduced and none pending (last I checked). Edgewater Dr. is one of the roads in there.

Submitted by sdrealtor on August 21, 2006 - 10:48am.

OCR,
I stand by my comments on 6/6 but dont disagree that we could get into the mid 400's by the end of next year. However, there have been closed sales of $547K, $560K, $589K and $597K since my post on 6/6/06.

There are now 13 homes in the MLS, one priced at $520K to $545K after that the others are all clustered between the mid $500's and mid $600's. There are 2 in escrow at asking prices of $540K (a short sale that went quick in 2 days) and $585K. Sure there is a lot of inventory, but we just dont know how many of the owners NEED to sell. Clealry the four in trouble NEED to.

BTW, That neighborhood has always struggled for resales even in the boom market and isnt representative of the entire market. That area is full of people that couldnt afford to buy what/where they wanted but stretched to go there because they were new/relatively new homes. That will likely be one of the very ugly areas.

Submitted by speaker on August 21, 2006 - 2:56pm.

SD realtor is the devil!!!! he posted on 6/6/06!!!1

aaaaiiiiiiieeeeeeeeee!!!!!!!!!

"End of line."

Submitted by sdrealtor on April 19, 2007 - 3:25pm.

Just was through this tract and remembered this thread from last Summer. When we last left prices were in the mid 500's and ocrenter said "So in the next few months there's going to be 3 homes going thru foreclosure in that tract alone. I can't imagine prices continuing to hold up following that." I have to admit that I thought this neighborhood would struggle mightily also and that prices would be down around $500K by now.

Lets see what happened in nearly 1 year in this less than prime cookie cutter tract neighborhood. Since the first of this year there was 1 sale under $500K but it was for the smallest plan which we didnt even see on the market last Spring. The homes that were selling for $550K to $575K last Summer are well...selling for $550K to $575K. In fact, four have closed in 2007. There are also 2 more in escrow and 1 on the market. Kinda shocking to me as I expected an area like this to struggle far more than it has. The impact of the distressed properties/foreclosures has been nil.

SDiablo

Submitted by DaCounselor on April 19, 2007 - 4:19pm.

Nice update sdr.
__________________________

ocrenter's call in '06:
"San Marcos currently has a 1 year supply of homes for sale, now we got 4 foreclosures in one single community. I'm now looking at these properties going down into low $400,000's mid to late next year."
___________________________

There is certainly still time for ocrenter's prediction to be realized. If this neighborhood completely tanks and prices plunge 25-30% over the next 2-6 months, he/she will be right. Certainly not a bet I would make.

Submitted by an on April 19, 2007 - 4:48pm.

Just come to show that no one can predict the future, no mater how certain it look at the time. The only certain thing is that price will come back to fundamental. That's as far as anyone can claim. Anything else is just a wild guess. Be it flat to slow decline and have inflation eat away the price or hyper inflation which essentially give people income to afford the current price or major price drop. It can be anywhere in between as well. We'll just have to wait and see. The only faith I have is in the fundamental, not prediction.

Submitted by ocrenter on April 19, 2007 - 8:18pm.

I'm surprised this community hasn't fallen as hard as I thought it would as well.

sdrealtor is right about the less-than-prime location of these homes. sdrealtor, care to give us an update on the foreclosed homes?

604 Via del Caballo
554 Via del Caballo
521 Via del Caballo
477 Camino Verde

and here's something interesting... the new homes Fieldstone Homes are trying to unload north of Mission (I know, different part of town... but also less-than-prime location) are now selling for these prices:

839 VIA LA VENTA 3367 sqft for 598000
831 Via La Venta 3516 sqft for 632000
824 Via La Venta 3367 sqft for 633300

$/sqft for these homes have dropped to $187/sqft!!!

now why would anyone buy these 2100 sqft Via del Caballo homes at $550,000, or $262/sqft?

Submitted by PerryChase on April 19, 2007 - 8:29pm.

ocrenter, I wish that all buyers would think like you. The market would be a lot more sane. But a lot of the market is psychology. The psychology hasn't taken a turn to the negative yet. I still hear the majority of homeowners and buyers say that prices will continue to go up. A friend of mine who got lucky and sold his house this year just told me that he'll be buying by next year!! I just shake my head.

btw, great website that you have. I love it.

Submitted by sdrealtor on April 19, 2007 - 9:19pm.

My pleasure OCR,
BTW I like your site also. The Super Jenae stuff was awesome.

604 Via del Caballo-Failed to sell between 525 and 550 for over 6 months. Bank foreclosed on the 1st lien (they had the 2nd also but why bother). Put on the market and in escrow after 7 days with asking price of 540K

554 Via del Caballo-Failed at trying a short sale between 545 and 575. Bank foreclosed on the 1st lien (they had the 2nd also but why bother). Put on the market and in escrow after 113 days with asking price of 552.5K

521 Via del Caballo-never forewclosed and never on the market

477 Camino Verde-been on the market since June 2006. Never foreclosed on and have plenty of equity. Currently asking 555K.

Submitted by sdrealtor on April 19, 2007 - 9:22pm.

I also checked out Centex's Silver Crest neighborhood that is full of distress sales. They are nice homes and its been some time since I checked them out. Nice 3000 sq ft homes with all the bells and whistles for low 600's with landscaping installed. I never understood what the real problem is there until today. From some of the homes you will be able to reach out and touch the new Sprinter trains going by. WEEEEEEEEEEE..........

Submitted by sdrealtor on April 19, 2007 - 9:30pm.

Checked out the Fieldstone stuff and yes it is a very different location. Also the homes look as plain vanilla as they come. By the time you are done there with some upgrades over the linoleum floors etc and throw in some cheap landscaping and bed sheets on the windows you are still about 650k and best of all you probably get an aweful location overlooking a busy road.

As ugly as the Belleza homes are they are around the corner from what is becoming a rapidly growing Cal State University community.

Submitted by ocrenter on April 20, 2007 - 7:25am.

that still gets you $196/sqft. $196/sqft x 2100 sqft (of Belleza) and we get $413,600.

we know less than prime locations always lead the way. 92069, for example, tend to go down first, then 92078. and we also know builders lead the way in price drops as well.

could these fieldstone homes be the canaries as far as San Marcos is concerned?

Submitted by sdrealtor on April 20, 2007 - 10:04am.

Nahhh!!!

Submitted by North County Jim on April 20, 2007 - 2:34pm.

could these fieldstone homes be the canaries as far as San Marcos is concerned?

Maybe but I wouldn't be ready to bet on it yet. IMO, the Fieldstone development is the worst of the recent projects in San Marcos.

The location is terrible. It sits above the barrios in the unincorporated part of east Vista. From what I've seen, there's only one way in and out so you must drive through the eyesore of aging tilt-ups, industrial storage and run-down apartments every day.

Believe me, we've seen almost every newer housing project in San Marcos and I couldn't convince my wife to even get in the car for this one.

Submitted by forsale_2007 on April 20, 2007 - 2:42pm.

The current asking price seems to be $619k. Of course as Jim mentioned there is only one photo of interior (kitchen) that too recently added. There are also some caveats (to buyers) on staying away from a unfinished deck LOL. powayseller, membership seems to be $39.95 per month (a bit steep for just browsers) but probably justified if you are serious about buying right now.

 

 

Or if you're cheap..Just signup for a 1 week free membership and cancel.
 Then re-signup.... :)

 

Submitted by an on April 22, 2007 - 2:28am.

Here's something I just found out from khov.com, K Hovnanian website. They're build new homes at 791 Kirkwall Drive
San Marcos, California. The size range from 2152 sq-ft to 2761 sq-ft. The shocker is the price start from $485k for the smallest model and $530k for the largest model. That's $225/sq-ft for the smallest model to $191/sq-ft. That some very stiff competition from the builder.

Submitted by juice (not verified) on April 22, 2007 - 6:26am.

Saw a home online in the Silvercrest neighborhood of San Marcos yesterday (near CSUSM). Same model with same upgrades sold in 04-50' 860k, and also 810k and 815k. This one is now listed at 670k.

Submitted by sdrealtor on April 22, 2007 - 8:01am.

The Sprinter train which will start running shortly is a stone's throw from that house. I really mean a stone's throw. And it could be a 5 year throwing the stone!

Submitted by ocrenter on April 22, 2007 - 9:06am.

sdr, think the developer notified those homeowners/flippers of their future neighbor when they purchased a couple of years ago?

Submitted by sdrealtor on April 22, 2007 - 9:14am.

Absolutely Centex had to notify them. In the frenzy of it all people looked past the obvious to get a nice big house with all the bell and whistles for what seemed like a good price. Even so, i remember it took a long time to sell those puppies.

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