SD's housing price Fall/Winter 2013

Submitted by AN on August 28, 2013 - 10:19am
Up
28% (13 votes)
Flat
38% (18 votes)
Down
34% (16 votes)
Total votes: 47
Submitted by AN on August 28, 2013 - 10:35am.

Let bring back more RE related discussion. So, what do you guys/gals think will happen this Fall/Winter? Why?

I vote for flat to slight down. It will be back to normal cycle, where we'll see up during spring/summer and flat to slight down in fall/winter.

Submitted by SK in CV on August 28, 2013 - 10:52am.

I agree AN. I voted flat, but of course it won't be exactly flat. ±5% for fall and winter is what I'm expecting, with the downside of that limit more likely.

Submitted by AN on August 28, 2013 - 11:07am.

I agree with ±5%. That's what I mean by flat. I didn't mean to say that it'll be perfectly flat. I guess up would be >+5% and down would be >-5%. Bouncing around ±5% is flat to me.

Submitted by flu on August 28, 2013 - 11:20am.

AN you're quickly exhausting your piggington energy credits. However, if you need more, you can buy some from me :)....

Submitted by spdrun on August 28, 2013 - 11:31am.

Betting on -10%-20% (at least) for condos. There was a brief period when condos in the area where I bought were selling for +70-80% (or even +100% in one case) of their winter 2012-3 price. Now I see condos that are priced at +50% sitting, and even condos priced at +20% in different buy decent areas on market (active) for 45 days with no good result.

People got very exuberant in April-June and the hangover will be painful. Same as the end of the $8000 credit in 2010 was painful for SD. The effect of a 30-40% rise in rates will be much greater than the loss of the credit for most properties, and the SD market seems to be more sensitive to external stimuli than most places.

Watch out. (Or watch-in, if you're in the market to buy in the next year.)

Submitted by recordsclerk on August 28, 2013 - 11:36am.

I think there is enough momentum to get us through the end of the year. The frenzy is over, but there are a lot of left over buyers in the market. Plus not too much Short Sale inventory left to skew the numbers. Next year will show lower year over year gains since we are at a very high level now. What I see as overpriced, buyers are seeing an oportunity to buy in a rising market. I think the moveup market is finally showing signs of recovery. Although it doesn't make sense to buy, for some it is the first time in years that they can sell current property with equity.

Submitted by spdrun on August 28, 2013 - 11:45am.

Only considering what I'm interested in for now:

Condos in low to mid 100k range. They sold in 2005-2007 in the low to mid 200k range, if not higher.

They're still under water, and are now in the mid 100k range instead of the low 100k range. There may have been a BRIEF period in spring where they were above water.

Therefore, most of the sales coming to market in my area of interest in the next 6-12 months will be shorts. Shorts = more waiting = a still abnormal market which not everyone has the saintly patience to deal with. Since the investor frenzy has slowed down, there will be opportunities.

Not to flip or even sell inside of two years, but as solid, clean rental stock.

Submitted by SD Realtor on August 28, 2013 - 11:48am.

I'll ignore the noise and pretty much agree with you AN. Also you can't sell Piggington credits FLU. Al Gore invented the internet and thus by association has control over all credits to any internet activity. It is not as lucrative as his carbon credit scam but he still makes money off of them.

Submitted by FlyerInHi on August 28, 2013 - 11:54am.

Flat because of rising rates.
I believe it's all about debt service as proportion to income.

Unlike someone said before, it's not a waste of time to try to predict prices. That's how you get good deals and decide when to hold and when to sell.

I got 3/2 condo in Vegas for $80 + $10 remodel to attract quality tenant. Prices are up to $125 this year. But one listing is sitting because of higher rates and difficulty of condo financing. Investor won't buy for cash so only time will fix the impasse. I'm getting $1,100/mo. $150 HO, $800/yr taxes, $200/yr insurance.

Of course, each market is different. My Sorrento condo is not doing as well. But it's a longer term bet on the area being a growing tech sector.

Submitted by spdrun on August 28, 2013 - 12:07pm.

If it's sitting at $125k, negotiation will fix the impasse. It might not sell for $80-90k as you bought it for, but eventually someone will come by with $105k or $115k and it will be accepted.

Not that 8.5% pro forma cap (as your numbers seem to suggest at a $125k purchase price) is horrible for a condo that's easy to rent. What kind of area is this, and how long did it take you to find a decent tenant?

Genuinely curious, feel free to PM if you're not comfortable discussing on public forums. I have a friend who has a rental in Vegas, but the city has always scared me a bit.

Unlimited desert to build out around town and MASSIVE overbuilding in the 2000s, plus having basically one industry that's very economically dependent.

Submitted by moneymaker on August 28, 2013 - 12:28pm.

"Submitted by moneymaker on March 14, 2013 - 8:31am.
This spring should be the real test for real estate. With low inventory and seasonal demand, low interest rates, cash buyers, threat of inflation around the corner. I'm going to speculate that we will be having a mini bubble this summer that will only last a short time. Great time for mortgage brokers and anyone wanting to get rid of Private Mortgage Insurance (although not FHA MIP I guess)."
I voted for flat but am somewhat optomistic that it could be a slightly upward tick.

Submitted by FlyerInHi on August 28, 2013 - 12:40pm.

Condo in southwest.

Found tenant within 1 week of listing on Craigslist. Lots of competition but if the condo shows well then you will get good tenant. Decent people want decent accommodations. My tenant paid 2 months deposit and fist month rent. Lives with gf. He had foreclosure and divorce but has a great job in entertainment industry with a well known company.

Seller at $125 is investor. He can hold indefinitely.

FYI, north Las Vegas is shit. That's were the cheap prices are now.

Lots of rift rafts in Vegas so screen carefully. But the economy is growing and diversifying. The city is sprawling out. So focus on good communities in convenient location.

Like any city, you have to spend lots of time to get the lay of the land. I'm lucky that I got good friend who let me use his house before i got my own.

I got great deal at manhattan complex. Up 60% from bottom. Google it and compare to real manhattan just for kicks, hehe. I love the kitsch of Vegas.

Submitted by FlyerInHi on August 28, 2013 - 1:20pm.

The bottom in rates was around 1 1/2 years ago. So the bottom in rates followed the bottom in prices. The two helped propel the healthy house price recovery. We no longer have that confluence going forward.

The investors are pulling back so now we have homeowner residents looking for financing.

Submitted by spdrun on August 28, 2013 - 1:31pm.

Of course he can hold indefinitely, but will he want to, or just take $25-35k over what he paid instead of +$45k? Either way, a profit's a profit, and few people expect to sell exactly at their ask price.

The problem with the city sprawling out is that it has indefinite room to sprawl, which will temper price rises even if population goes up.

As far as Manhattan complex, I've actually seen pics before. I'll still take the real thing (or Brooklyn), thanks :) To be honest, I'm not really interested in Vegas or Phoenix.

Not while deals remain in SD (and I've seen a few in the last month) and NJ. Unfortunatly, I don't handle heat well, and having to go there in summer and not be able to go outside would make me want to go play in traffic (if I had the energy).

Submitted by FlyerInHi on August 28, 2013 - 3:35pm.

I read somewhere that median flip profit is $18k nationwide. $15k in Vegas because of competition. Definition of flip is property resold within 6 months of purchase.

Hardly seems worth the hassle. I'm sure the flip profit over 6 month hold period is higher.

I would rather hold, rent out, and collect the money.

Lots of people don't know how to remodel a place and attract good tenants. Or they need the money to repay debt to partners or whatever.

Good tenants want decent place and the unit needs to show that way. . It's an art to screen tenants. I'm learning.

Submitted by spdrun on August 28, 2013 - 5:46pm.

^^^

Agreed.

Though if you can flip 5-10 condos a year with minimal work (painting, refreshing some interior parts), then maybe it's worth it.

Submitted by ocrenter on August 29, 2013 - 6:58am.

AN wrote:
I agree with ±5%. That's what I mean by flat. I didn't mean to say that it'll be perfectly flat. I guess up would be >+5% and down would be >-5%. Bouncing around ±5% is flat to me.

agree. picked flat as well.

interest rate increase, more inventory, and lack of exotic sources of financing makes it difficult to have that continuing rise in prices. downward trend? do not see dramatic inventory rise necessary to create price drop at this time.

Submitted by bearishgurl on August 29, 2013 - 1:39pm.

I picked rising (single-digit in SD County, depending on micro-area). I don't see a proliferation of inventory coming out of the woodwork in ANY zip code thru 2016.

As far as the other CA coastal counties, I predict 5-25% price hikes (with commensurate sold comps) in 2014 thru 2016.

Boomers are beginning to retire en masse and I see listed properties in "sleeping giants" such as Marin, Sonoma, Mendocino, Humboldt, Del Norte and Santa Cruz Counties get gobbled up in the next few years, driving the prices up a LOT in Counties 1, 3 and 6 and up sightly to moderate in counties 2, 4 and 5.

The less well-heeled boomers will drive RE prices in Napa, Lake, Shasta, Placer, El Dorado, SLO and Santa Barbara Counties. Except for Napa and SLO Counties (which each have a handful of new subds with MR), note that all of these counties are comprised of "very well-established communities," long sought-after by the boomer crowd for vacations and weekend visits to relive their childhood memories :)

Prevailing mortgage rates be damned.