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 PerryChase on April 22, 2007 - 11:05am.

How far is the Sprinter station from those houses? It might be a plus for some commuters.

Submitted by ocrenter on April 22, 2007 - 11:41am.

perry, for some of these homes the train is so close to them they can just jump down from their yard directly on to the roof of the train, no station needed.

Submitted by sdrealtor on April 22, 2007 - 6:17pm.

OCR is correct. Some but not all of the homes are within 25 feet of passing trains. There will be a station within walking distance of the homes.

Submitted by juice (not verified) on April 22, 2007 - 7:02pm.

Close station is a positive, double tracks within jumping distance of your backyard with trains going by every 15 minutes from 5am-11pm = reason so many homes there were/are for sale.

Submitted by ocrenter on October 30, 2007 - 2:07pm.

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.

http://bubbletracking.blogspot.com/2007/...

Submitted by sdrealtor on October 30, 2007 - 3:49pm.

OCR,
As one of the original posters on this thread I like my prediction much more than yours as of this date. The proeprty you are referencing is a short sale attempt at a price the lender likely has no knowledge of and a smaller floorplan with less bedrooms.

Here are the last 2 closed comps.

2172 sq ft closed on 9/24/07 for $545,900. BTW, the buyer put about 30% down.

2445 sq ft closed on 8/22/07 for $559,900. BTW, buyer put down over 50%.

The last sale of the floorplan you are referencing (1909 sq ft) closed on 7/19/07 at $490,000. It was a Short sale attempt listed at $480,000. BTW, the buyers put down over 20%.

It appears this hood is holding up very well with 5 current active listings and two others ine scrow with asking prices in the same ballpark as the recent closed sales.

Submitted by JWM in SD on October 30, 2007 - 4:37pm.

"It was a Short sale attempt listed at $480,000. BTW, the buyers put down over 20%"

Uhh, the buyer managed to save $96K but still couldn't make payments???? More likely they were a move-up buyer who didn't have the income to make the payments.

Submitted by ocrenter on October 30, 2007 - 4:44pm.

what I have been finding is you get the short sale attempt approaching the true price point. but the lender rejects it and let it head to foreclosure. by the time the lender has it as a REO, guess what, it is listed at the short sale prices or a bit above.

if the prices are holding up so well, why the price reductions:

--09/2007: listed for sale at $475,000.
--Price Reduced: 09/19/07 -- $475,000 to $459,000
--Price Reduced: 09/26/07 -- $459,000 to $445,000
--Price Reduced: 10/03/07 -- $445,000 to $435,000
--Price Reduced: 10/10/07 -- $435,000 to $425,000
--Price Reduced: 10/29/07 -- $425,000 to $409,000

Submitted by JWM in SD on October 30, 2007 - 7:47pm.

"...if the prices are holding up so well, why the price reductions:...."

Simple, because they aren't holding up so well. But hey, Realtors gotta eat too right??

Right sdrealtor??

Submitted by sdrealtor on October 31, 2007 - 11:13am.

JWM,
The buyer of the Short Sale put down over 20% not the seller who lost the house. Cmon, buddy user your brain a little before it atrophies.

sdr

Submitted by sdrealtor on October 31, 2007 - 11:13am.

dupe

Submitted by sdrealtor on October 31, 2007 - 11:17am.

OCR, I wont disagree but thats not the point. I compared our predictions to WHAT IS not WHAT MIGHT BE. Based upon what actually happened so far, I take the victory here.

As for the price reductions, we have a seller without patience and/or time. Average market times are about 6months these days and that guy/gal cant or wont wait.

Submitted by sdrealtor on October 31, 2007 - 11:21am.

JWM,
I'm eating just fine! I own a couple non-RE businesses and my MSFT stock alone is probably worth more than your net worth. You could have joined me at Arterra last Saturday. I'm heading out to Bistro West for lunch now but you can catch me at Donovan's this Saturday nite.

Submitted by JWM in SD on October 31, 2007 - 12:41pm.

"The buyer of the Short Sale put down over 20% not the seller who lost the house. Cmon, buddy user your brain a little before it atrophies."

Point taken...that's what I get for reading this on my Treo. Tiny screens are not always good.

Submitted by JWM in SD on October 31, 2007 - 12:41pm.

"...my MSFT stock alone is probably worth more than your net worth"

Let me guess, you bought it between '85 and '95 right?

Submitted by sdrealtor on October 31, 2007 - 4:39pm.

6 months after the IPO and havent sold a share after more splits than i can count.

btw, lunch was great

Submitted by ocrenter on November 1, 2007 - 7:50am.

WHAT IS is the fact that if you really need to sell you got to lower your price to mid-lower 400's. The rest of the sellers can sit there for another 6 months with their over 500,000 listings, they ain't gonna get any action.

as a realtor would you advice the homeowners to just sit and wait?

Submitted by sdrealtor on November 1, 2007 - 8:59am.

OCR,
You are speculating again. No one knows what it will take to get it done right now. There are two of the larger floorplans in escrow right now and some very recent sales well over 500K. Also you are comparing the smaller floorplan.

Bottomline, I was spot on. You were a bit premature should we say?

What the future brings? Well that's the fun part we get to watch.

sdr

Submitted by ocrenter on November 4, 2007 - 12:13pm.

You are speculating again. No one knows what it will take to get it done right now. There are two of the larger floorplans in escrow right now and some very recent sales well over 500K. Also you are comparing the smaller floorplan.

Bottomline, I was spot on. You were a bit premature should we say?

here's a larger floorplan asking in the mid-400's.

584 VIA DEL CABALLO, San Marcos, CA 92078
--2,259 sqft for $459,000 to $475,000.

is this also a short sale attempt that we shouldn't count?

you like to pull the "I'm right and you are wrong" game. I like to simply point out that prices are now entering into the $400's in this neighborhood. Which is firmly in 2003 pricing. As for the folks that bought or are pending at prices "well over 500k," just more knife catchers IMHO.

Submitted by SD Realtor on November 4, 2007 - 7:09pm.

Just my two cents here... This particular subdivision is Belleza. The property you just listed OC does have a lis pendens filed against it and a 450k recorded mortgage so I do believe it is going to be a short sale. Indeed it is priced aggressively which IMO is what is needed these days.

This is one of those cases where you can look at the data and interpret it in either direction. Yes as sdrealtor pointed out there were two sales in 9/24 and 8/22 but there have been no sales since. There is an additional home that is pending at 490k but it is the small 1909sf plan. Nothing else is pending. I would say prices are "heading" towards 2003 like you pointed out OC. Those that really really want to sell will IMO need to price more along those lines.

Also there have been 9 unique expirations/cancelleds verses 7 solds for this subdivision for listings hitting the MLS since 1/1/07.

SD Realtor

Submitted by ocrenter on November 5, 2007 - 8:51am.

thanks for the additional info SD Realtor.

now here's something fun:

549 ECHO, San Marcos, CA 92078
--3,715 sqft
--currently a REO with countrywide
--asking for $599,000. looks like this is because the prior owner took the AC unit with him when he took off prior to the auction.

I remember seeing this place for sale at $670k back earlier this year.

Submitted by patientlywaiting on November 5, 2007 - 10:34am.

I like to simply point out that prices are now entering into the $400's in this neighborhood. Which is firmly in 2003 pricing. As for the folks that bought or are pending at prices "well over 500k," just more knife catchers IMHO.

Its seems to me that OC renter identified a trend.   Just like realtors who identified a trend on the way up, asked for the moon and got it.  It works the same on the way down. 

Thanks, ocrenter, for a  super informative, and fun blog.  You're make a great contribution to the real estate bloggosphere.  

 

Submitted by sdrealtor on November 5, 2007 - 10:35am.

OCR,
Whatever. You are cherry picking to prove your point. if you go back to the threads begining you see we were talking about the 2300+sq ft model. A few times we looked at the 2100 sq ft model. Now to prove your point that we might get into the low 400's in 2007 you pulled out a much smaller model that was never part of the thread. If you look back to August 2006 posts you will see asking prices in the low 500's for the larger models and your speculating they would dip below 500K. One year later we still see them closing above 500K.

SD R,
Jeezuz! if 30 to 60 day comps arent current enough what is? You also missed a pending on Camino Verde with an asking price of 575,000. probably didnt go that high but certainly not in the low 400's.

A pending of the smaller 1900 sq ft model with an asking price of $490,000 is pretty strong IMO. BTW, this floorplan was selling in the high 300's in late 2003. Throw in the fact that Twin Oaks Valley Road now goes through San Elijo Hills dramatically improving access to the coast and I'm still calling victory on this prediction.

Guys,
I dont deny the direction of where things are heading but OCR's call was wrong given the timing of it. As for entering 2003 pricing, that is a pretty meaningless statement as we have been there for a year already in most areas. The question is not are we in 2003 pricing but are we in January 2003 pricing which is vastly different from November 2003 pricing as there was substantial appreciation throughout the year.

Submitted by SD Realtor on November 5, 2007 - 11:01pm.

sdrealtor I did not miss the Camino Verde pending. As I wrote, the only comps I pulled up were for the Belleza subdivision. The Camino Verde comp that you pulled up did not list Belleza as the subdivision so that is why it did not come up in my search.

Again as I wrote in my post above I am not really saying anybody is right or wrong here. I would not agree that prices are at the 2003 level. As I posted, they are "heading" in that direction, I think they will get there but no they are not there yet. Your point rings true that in other areas of the county we are certainly at 2003 prices while indeed we have not reached them yet here. I do think ocr's point was to say that hey here is one here and one there, yes cherry picking, yet that is how it starts right? However people on this board tend to get all worked up and yes, they sometimes do take a distressed listing and extrapolate it to a much broader extreme which is erroneous to do.

Finally my point about the two comps was not to point out they are stale by any means, it was more to point out that the volume is low. Admittedly I am not an expert at this particular subdivision so maybe that volume is good for the size of the subdivision. I would say that the trend will keep putting pricing pressure on this subdivision (and area as a whole) such that we will see 03 prices here.... not sure when though.

SD Realtor

Submitted by sdrealtor on November 5, 2007 - 11:11pm.

Huh? Didnt miss the Camino verde pending? Of course you did. You took a short cut and searched by subdivision rather than searching by zip and pulling out the applicable comps by street name which caused you to miss it.

As for not being at 2003 prices, my point is that there is no such thing. Prices changed so dramatically throughout 2003 that you need to refer to a specific month or at least season in 2003 when refering to pricing levels. Much of North County and I suspect the rest of the county is seeing sales at prices we last saw in late 2003. That of course is nowhere near early 2003 prices.

Finally, two comps in the last 60 days is hardly low volume. In fact with the pendings its pretty darn high volume.

Submitted by SD Realtor on November 6, 2007 - 1:23am.

Yes that is correct, I did do my search by putting the subdivision in and searching on that text string. As I said, I do not know much about the subdivision nor do I know all of the streets in the subdivision so it would not make sense for me to do a street search would it? For all I know there also could have been more cancelled/expireds/withdrawns on other streets within that subdivision but where the realtor didn't put in the subdivision name so how am I to do the search if I do not know the boundaries? Surely you wouldn't suggest doing a street search on every street in the subdivision would you?

If we are going to nitpick each other then let's cover all the bases shall we?

As far as putting a label on 2003 pricing I do agree with your statement 100%. 2003 may be one of the wildest years ever for socal real estate and the disparity for early 03 verses late 03 is quite substantial.

SD Realtor

Submitted by ocrenter on November 6, 2007 - 7:37am.

looks like I got sd realtor in full flaming mode.

good grief. I forgot this part of sd realtor's personality.

for the sake of the forum, I'm backing off.

I was wrong, sd realtor is completely right. afterall, he is a REALTOR®, and I'm just a guy with too much time on my hand.

Submitted by JWM in SD on November 6, 2007 - 8:00am.

That's okay OCrenter. It is largely because he knows where this ultimately headed and it's not good for him.

Submitted by Raybyrnes on November 6, 2007 - 8:27am.

I might be missing something but I would think that right now is probably a great time to be an Experienced Realtor. Bank inventories are growing. I would think that you get one account and you are on easy street. They might require a little bit more paperwork but once you have your staff trained you can create a significant value add to the clients you represent. Additionally the small realtors who got into the business to help their friends are being flushed out. Sure their is a little pain as you go through the transition but ultimately you can come out way ahead. No different than when a factory has to retool. Things slow down and then produciton increases.

Submitted by sdrealtor on November 6, 2007 - 11:05am.

JWM
Quite to the contrary a substantial decline in prices would be great for me. The quicker the better. First, I have the assets, income and knowledge to exploit the heck out of a market at its bottom. Second, lower prices will ultimately increase sales volume and create another huge income stream to me selling investment properties and homes to my personal network.

As for being in full flame mode, you guys know how much more I have. I just calling a spade a spade here. We all are on the same boat as to where we think the market is heading. We just differ in where we think we are now and how fast we'll get to where were going.

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