Recently in Current Market Category
These are newly listed HOMESTEPS properties from Freddie Mac for the areas I work
I also have a list of upcoming HOMESTEPS properties not on the market yet
If you have questions, Contact me
El Cajon
Address: 1509 E WASHINGTON AVE UNIT 10, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 144,900.00
Address: 294 CHAMBERS STREET 53, EL CAJON, CA
Rooms: 3 Bed: 1 Bath: 1.0 Price: 72,900.00
Address: 589 NORTH JOHNSON AVENUE 230, EL CAJON, CA
Rooms: 4 Bed: 1 Bath: 1.0 Price: 92,500.00
Address: 190 CHAMBERS STREET APT 13, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 127,500.00
Address: 1797 WOODBURN STREET, EL CAJON, CA
Rooms: 5 Bed: 3 Bath: 2.0 Price: 349,900.00
Address: 745 EAST BRADLEY AVENUE 37, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 1.0 Price: 99,000.00
Address: 1321 OAKDALE AVENUE, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 1.5 Price: 109,900.00
Address: 551 WAYNE AVENUE, EL CAJON, CA
Rooms: 5 Bed: 3 Bath: 2.0 Price: 177,000.00
Address: 1526 STONE EDGE CIRCLE, EL CAJON, CA
Rooms: 5 Bed: 2 Bath: 1.5 Price: 209,500.00
Address: 584 BROCKWOOD DRIVE, EL CAJON, CA
Rooms: 5 Bed: 3 Bath: 1.0 Price: 227,900.00
Lakeside
Address: 11505 POSTHILL PLACE, LAKESIDE, CA
Rooms: 7 Bed: 4 Bath: 2.0 Price: 232,900.0
Santee
Address: 7895 RANCHO FANITA DR E, SANTEE, CA
Rooms: 5 Bed: 3 Bath: 1.5 Price: 259,900.00
Address: 10235 BRIGHTWOOD LANE 3, SANTEE, CA
Rooms: 5 Bed: 3 Bath: 3.5 Price: 318,900.00
Address: 8803 APPLE BLOSSOM CT 5, SANTEE, CA
Rooms: 8 Bed: 4 Bath: 4.0 Price: 319,900.00
San Diego City
Address: 4287 48TH STREET, SAN DIEGO, CA
Rooms: 5 Bed: 2 Bath: 1.0 Price: 199,000.00
Dan Melson, Agent
Clarity Real Estate Network
619-300-7425
These are newly listed HOMESTEPS properties from Freddie Mac for the areas I work
I also have a list of upcoming HOMESTEPS properties not on the market yet
If you have questions, Contact me
El Cajon
Address: 1509 E WASHINGTON AVE UNIT 10, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 144,900.00
Address: 12190 CUYAMACA COLLEGE DRIVE E, EL CAJON, CA
Rooms: 5 Bed: 2 Bath: 2.0 Price: 184,900.00
Address: 294 CHAMBERS STREET 53, EL CAJON, CA
Rooms: 3 Bed: 1 Bath: 1.0 Price: 72,900.00
Address: 589 NORTH JOHNSON AVENUE 230, EL CAJON, CA
Rooms: 4 Bed: 1 Bath: 1.0 Price: 92,500.00
Address: 170 CHAMBERS STREET 18, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 104,900.00
Address: 190 CHAMBERS STREET APT 13, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 127,500.00
Address: 1797 WOODBURN STREET, EL CAJON, CA
Rooms: 5 Bed: 3 Bath: 2.0 Price: 349,900.00
Address: 745 EAST BRADLEY AVENUE 37, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 1.0 Price: 99,000.00
Address: 1321 OAKDALE AVENUE, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 1.5 Price: 109,900.00
Address: 1321 GREENFIELD DRIVE 25, EL CAJON, CA
Rooms: 5 Bed: 2 Bath: 1.5 Price: 119,900.00
Address: 1423 GRAVES AVENUE 230, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 131,300.00
Address: 551 WAYNE AVENUE, EL CAJON, CA
Rooms: 5 Bed: 3 Bath: 2.0 Price: 177,000.00
Address: 1526 STONE EDGE CIRCLE, EL CAJON, CA
Rooms: 5 Bed: 2 Bath: 1.5 Price: 209,500.00
Address: 584 BROCKWOOD DRIVE, EL CAJON, CA
Rooms: 5 Bed: 3 Bath: 1.0 Price: 227,900.00
Lakeside
Address: Address: 11505 POSTHILL PLACE, LAKESIDE, CA
Rooms: 7 Bed: 4 Bath: 2.0 Price: 232,900.00
Santee
Address: 7895 RANCHO FANITA DR E, SANTEE, CA
Rooms: 5 Bed: 3 Bath: 1.5 Price: 259,900.00
Address: 10235 BRIGHTWOOD LANE 3, SANTEE, CA
Rooms: 5 Bed: 3 Bath: 3.5 Price: 318,900.00
Address: 8803 APPLE BLOSSOM CT 5, SANTEE, CA
Rooms: 8 Bed: 4 Bath: 4.0 Price: 319,900.00
San Diego City
Address: 4287 48TH STREET, SAN DIEGO, CA
Rooms: 5 Bed: 2 Bath: 1.0 Price: 199,000.00
Dan Melson, Agent
Clarity Real Estate Network
619-300-7425
These are newly listed HOMESTEPS properties from Freddie Mac for the areas I work
I also have a list of upcoming HOMESTEPS properties not on the market yet
If you have questions, Contact me
El Cajon
Address: 1509 E WASHINGTON AVE UNIT 10, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 144,900.00
Address: 12190 CUYAMACA COLLEGE DRIVE E, EL CAJON, CA
Rooms: 5 Bed: 2 Bath: 2.0 Price: 184,900.00
Address: 294 CHAMBERS STREET 53, EL CAJON, CA
Rooms: 3 Bed: 1 Bath: 1.0 Price: 72,900.00
Address: 589 NORTH JOHNSON AVENUE 230, EL CAJON, CA
Rooms: 4 Bed: 1 Bath: 1.0 Price: 92,500.00
Address: 170 CHAMBERS STREET 18, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 104,900.00
Address: 170 CHAMBERS STREET 16, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 118,000.00
Address: 1797 WOODBURN STREET, EL CAJON, CA
Rooms: 5 Bed: 3 Bath: 2.0 Price: 349,900.00
Address: 745 EAST BRADLEY AVENUE 37, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 1.0 Price: 99,000.00
Address: 1321 OAKDALE AVENUE, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 1.5 Price: 109,900.00
Address: 1321 GREENFIELD DRIVE 25, EL CAJON, CA
Rooms: 5 Bed: 2 Bath: 1.5 Price: 119,900.00
Address: 1423 GRAVES AVENUE 230, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 131,300.00
Address: 1526 STONE EDGE CIRCLE, EL CAJON, CA
Rooms: 5 Bed: 2 Bath: 1.5 Price: 209,500.00
Lakeside
Address: 11505 POSTHILL PLACE, LAKESIDE, CA
Rooms: 7 Bed: 4 Bath: 2.0 Price: 232,900.00
Santee
Address: 7895 RANCHO FANITA DR E, SANTEE, CA
Rooms: 5 Bed: 3 Bath: 1.5 Price: 259,900.00
Address: 10235 BRIGHTWOOD LANE 3, SANTEE, CA
Rooms: 5 Bed: 3 Bath: 3.5 Price: 318,900.00
Address: 8803 APPLE BLOSSOM CT 5, SANTEE, CA
Rooms: 8 Bed: 4 Bath: 4.0 Price: 319,900.00
San Diego City
Address: 4481 ORANGE AVE, SAN DIEGO, CA
Rooms: 4 Bed: 2 Bath: 1.0 Price: 109,900.00
Address: 4775 SEMINOLE DRIVE 207, SAN DIEGO, CA
Rooms: 5 Bed: 2 Bath: 1.5 Price: 159,500.00
Address: 4287 48TH STREET, SAN DIEGO, CA
Rooms: 5 Bed: 2 Bath: 1.0 Price: 199,000.00
These are newly listed HOMESTEPS properties from Freddie Mac for the areas I work
I also have a list of upcoming HOMESTEPS properties not on the market yet
If you have questions, Contact me
El Cajon
Address: 1509 E WASHINGTON AVE UNIT 10, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 144,900.00
Address: 12190 CUYAMACA COLLEGE DRIVE E, EL CAJON, CA
Rooms: 5 Bed: 2 Bath: 2.0 Price: 184,900.00
Address: 294 CHAMBERS STREET 53, EL CAJON, CA
Rooms: 3 Bed: 1 Bath: 1.0 Price: 72,900.00
Address: 589 NORTH JOHNSON AVENUE 230, EL CAJON, CA
Rooms: 4 Bed: 1 Bath: 1.0 Price: 92,500.00
Address: 170 CHAMBERS STREET 18, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 104,900.00
Address: 170 CHAMBERS STREET 16, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 118,000.00
Address: 1797 WOODBURN STREET, EL CAJON, CA
Rooms: 5 Bed: 3 Bath: 2.0 Price: 349,900.00
Address: 745 EAST BRADLEY AVENUE 37, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 1.0 Price: 99,000.00
Address: 1321 OAKDALE AVENUE, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 1.5 Price: 109,900.00
Address: 1321 GREENFIELD DRIVE 25, EL CAJON, CA
Rooms: 5 Bed: 2 Bath: 1.5 Price: 119,900.00
Address: 1423 GRAVES AVENUE 230, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 131,300.00
Address: 1526 STONE EDGE CIRCLE, EL CAJON, CA
Rooms: 5 Bed: 2 Bath: 1.5 Price: 209,500.00
Lakeside
Address: 11505 POSTHILL PLACE, LAKESIDE, CA
Rooms: 7 Bed: 4 Bath: 2.0 Price: 232,900.00
Santee
Address: 7895 RANCHO FANITA DR E, SANTEE, CA
Rooms: 5 Bed: 3 Bath: 1.5 Price: 259,900.00
Address: 10235 BRIGHTWOOD LANE 3, SANTEE, CA
Rooms: 5 Bed: 3 Bath: 3.5 Price: 318,900.00
Address: 8803 APPLE BLOSSOM CT 5, SANTEE, CA
Rooms: 8 Bed: 4 Bath: 4.0 Price: 319,900.00
San Diego City
Address: 4481 ORANGE AVE, SAN DIEGO, CA
Rooms: 4 Bed: 2 Bath: 1.0 Price: 109,900.00
Address: 4775 SEMINOLE DRIVE 207, SAN DIEGO, CA
Rooms: 5 Bed: 2 Bath: 1.5 Price: 159,500.00
Address: 4287 48TH STREET, SAN DIEGO, CA
Rooms: 5 Bed: 2 Bath: 1.0 Price: 199,000.00
These are newly listed HOMESTEPS properties from Freddie Mac. I also have a list of upcoming HOMESTEPS properties not on the market yet
If you have questions, Contact me
El Cajon
Address: 1509 E WASHINGTON AVE UNIT 10, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 144,900.00
Address: 12190 CUYAMACA COLLEGE DRIVE E, EL CAJON, CA
Rooms: 5 Bed: 2 Bath: 2.0 Price: 184,900.00
Address: 294 CHAMBERS STREET 53, EL CAJON, CA
Rooms: 3 Bed: 1 Bath: 1.0 Price: 94,900.00
Address: 170 CHAMBERS STREET 18, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 104,900.00
Address: 170 CHAMBERS STREET 16, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 118,000.00
Address: 1797 WOODBURN STREET, EL CAJON, CA
Rooms: 5 Bed: 3 Bath: 2.0 Price: 349,900.00
Address: 745 EAST BRADLEY AVENUE 37, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 1.0 Price: 99,000.00
Address: 1321 GREENFIELD DRIVE, EL CAJON, CA
Rooms: 6 Bed: 2 Bath: 1.5 Price: 121,200.00
Address: 1423 GRAVES AVENUE 230, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 131,300.00
Address: 1526 STONE EDGE CIRCLE, EL CAJON, CA
Rooms: 5 Bed: 2 Bath: 1.5 Price: 209,500.00
Lakeside
Address: 9932 LINDO LAKE PLACE, LAKESIDE, CA
Rooms: 8 Bed: 3 Bath: 2.0 Price: 259,900.00
Santee
Address: 10235 BRIGHTWOOD LANE 3, SANTEE, CA
Rooms: 5 Bed: 3 Bath: 3.5 Price: 318,900.00
Address: 8803 APPLE BLOSSOM CT 5, SANTEE, CA
Rooms: 8 Bed: 4 Bath: 4.0 Price: 319,900.00
Eastern San Diego City
Address: 4775 SEMINOLE DRIVE 207, SAN DIEGO, CA
Rooms: 5 Bed: 2 Bath: 1.5 Price: 159,500.00
Address: 4287 48TH STREET, SAN DIEGO, CA
Rooms: 5 Bed: 2 Bath: 1.0 Price: 218,500.00
Address: 1441 CAMINO ZALCE, SAN DIEGO, CA
Rooms: 5 Bed: 2 Bath: 2.5 Price: 292,500.00
These are newly listed HOMESTEPS properties from Freddie Mac.
If you have questions, Contact me
El Cajon:
Address: 1509 E WASHINGTON AVE UNIT 10, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 144,900.00
Address: 11354 VIA RANCHO SAN DIEGO UNI, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.5 Price: 229,900.00
Address: 294 CHAMBERS STREET 53, EL CAJON, CA
Rooms: 3 Bed: 1 Bath: 1.0 Price: 94,900.00
Address: 170 CHAMBERS STREET 18, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 104,900.00
Address: 170 CHAMBERS STREET 16, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 118,000.00
Address: 1797 WOODBURN STREET, EL CAJON, CA
Rooms: 5 Bed: 3 Bath: 2.0 Price: 349,900.00
Address: 745 EAST BRADLEY AVENUE 37, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 1.0 Price: 99,000.00
Address: 1321 GREENFIELD DRIVE, EL CAJON, CA
Rooms: 6 Bed: 2 Bath: 1.5 Price: 121,200.00
Address: 1423 GRAVES AVENUE 230, EL CAJON, CA
Rooms: 4 Bed: 2 Bath: 2.0 Price: 131,300.00
Address: 1526 STONE EDGE CIRCLE, EL CAJON, CA
Rooms: 5 Bed: 2 Bath: 1.5 Price: 209,500.00
Santee:
Address: 7895 RANCHO FANITA DR E, SANTEE, CA
Rooms: 5 Bed: 3 Bath: 1.5 Price: 259,900.00
Address: 10235 BRIGHTWOOD LANE 3, SANTEE, CA
Rooms: 5 Bed: 3 Bath: 3.5 Price: 318,900.00
Address: 8803 APPLE BLOSSOM CT 5, SANTEE, CA
Rooms: 8 Bed: 4 Bath: 4.0 Price: 319,900.00
Lakeside:
Address: 9932 LINDO LAKE PLACE, LAKESIDE, CA
Rooms: 8 Bed: 3 Bath: 2.0 Price: 259,900.00
San Diego City
Address: 6333 COLLEGE GROVE WAY, SAN DIEGO, CA
Rooms: 4 Bed: 2 Bath: 1.5 Price: 136,350.00
Address: 4775 SEMINOLE DRIVE 207, SAN DIEGO, CA
Rooms: 5 Bed: 2 Bath: 1.5 Price: 159,500.00
Address: 4287 48TH STREET, SAN DIEGO, CA
Rooms: 5 Bed: 2 Bath: 1.0 Price: 218,500.00
Address: 1441 CAMINO ZALCE, SAN DIEGO, CA
Rooms: 5 Bed: 2 Bath: 2.5 Price: 292,500.00
Let's do a thought experiment. Any market in any commodity has two components: The demand, or willingness and ability to pay for that good, and the supply of that good.
Let's consider the demand half of that first. Specifically, ability to pay.
According to the most current credible statistics I could find, San Diego Demographics & Household Information, we have 421,952 workers in San Diego.
Let's consider what this means, first in terms of how much they make, and how many dollars they can afford to lay out:
Column 1 is the range, column 2 is how many workers reported that income, column 3 is percentage of workers in that bracket, column 4 is taking the middle of the range and translating that into dollars per month, and column 5 is what percentage of the total working population can afford that much or better.
Here's the income ranges and frequency:
| Range < $10,000 $10,000-$14,999 $15,000-$24,999 $25,000-$34,999 $35,000-$49,999 $50,000-$74,999 $75,000-$99,999 $100,000-$149,999 $150,000-$199,999 $200,000+ | number 8463 25,745 54,563 54,499 70,654 87,022 50,494 43,452 13,558 13,502 | pct 2.0 6.1 12.9 12.9 16.7 20.6 12.0 10.3 3.2 3.2 | midrange monthly $416 $1041 $1666 $2500 $3541 $5208 $7291 $10,416 $14,583 $20,000* | afford pct 100 98.0 91.9 79.0 66.0 49.3 28.7 16.7 6.4 3.2 |
Now, let's stop a minute here. Someone making less than $10,000 per year is not a full time employee. Minimum wage is $8.00 per hour in California, times 40 hours times 52 weeks is $16,640. So the folks in the first two ranges are not working full time. Period, end of discussion. I think they should have housing, but I have my doubts whether we should be concerned about whether they can afford detached single family residence type housing on their current wages. In most cases, I would posit that they're either teenagers working for pocket money or retirees working for whatever reason strikes them as sufficient. Also, I should mention that I arbitrarily used $240,000 per year as midrange for those folks making over $200,000. Such an estimate is probably too low, but let's face it: Those folks are doing fine.
Now, let's look at what these folks can afford: I took the midrange monthly for that salary range, and assumed they bought, with 5% down, a condominium with HOA dues of $225 per month, or a single family detached home with insurance of $100 per month. This assumes they do all their own maintenance for the detached home, but someone sufficiently determined can at least approach this. I assume property taxes of 1.25% per year (slightly high for most of California), and a fully amortized FHA type loan at 6.5%. For purposes of this exercise, I didn't stress about Jumbo or conforming, as I used the FHA as a basis, nor did I concern myself over whether it fits within FHA limits, as the point of this is simply to perform a thought experiment: How much house people can afford under these assumptions, which are quite reasonable. Once again, it would break down at the higher end of the scale, but folks on that end of the scale are doing fine. I was mostly after was Joe and Jane Average can afford. These numbers given are in terms of the loan amount, not purchase price, which the loan amount was assumed to be 95% of (in other words, $95,000 loan amount means it was $100,000 purchase price).
Column 1 is once again, that monthly midrange, Column 2 is 45% of that, the traditional back end ratio. Column 3 is the maximum condo loan they can afford, under the conditions described, Column 4 is the single family residence, and Column 5 is, once again, what percentage of all workers can afford this level or better.
Let's take a look at the results:
| midrange monthly $416 $1041 $1666 $2500 $3541 $5208 $7291 $10,416 $14,583 $20,000* | Housing+debt serv $187 $468 $750 $1125 $1593 $2343 $3280 $4687 $6562 $9000 | condo limit n/a $32,000 $70,000 $121,000 $184,000 $285,000 $412,000 $601,000 $854,000 $1,183,999 | house limit na $49,000 $87,000 $141,000 $201,000 $302,000 $428,000 $618,000 $871,000 $1,199,000 | afford pct 100 98.0 91.9 79.0 66.0 49.3 28.7 16.7 6.4 3.2 |
So even though someone making $12,500 per year is not a full time worker, they can still afford roughly a $70,000 condo if they want to own badly enough to do what it takes. I'm assuming fully amortized 30 year fixed rate loan, which when the loan is paid off, gets your monthly cost of housing down under the inflation adjusted equivalent of $300 per month in current dollars. There may be only 35 of these currently for sale as I log onto MLS, but I can't tell you why there are any.
Put two of these folks together, a married couple or two friends, it doesn't matter. Remember, neither of them is working full time, and they can afford a $250,000 condo loan under conditions described (Remember, there's only 1 HOA fee, and taxes are only collected once). Insist it be a minimum of two bedrooms, even. There are 3600 Active Listings right now that are asking at or under this price, and almost 3000 have sold in the last twelve months in San Diego County. No, these places aren't right by the beach or in downtown La Jolla, but they are affordable, they're livable, and they put your housing situation and cost forevermore under your own control.
Someone making $15 per hour, in the middle of the fourth range, is about where most folks would start saying, "This is someone who should be able to buy something," and they can: $129,000 worth of condo loan. 594 Actives asking that or less, 383 sold in the last twelve months. Get a roommate, friend, or spouse making the same amount, and you're looking at $273,000 worth of condo, more or less, or $290,000 worth of house. 4100 actives are asking $273,000 or less, even if you restrict your search to two bedrooms or more, and over 3700 of them have sold in the past year. Even if you restrict the search to detached housing, there are 1700 actives where the asking price is $273,000 or less. Two-thirds of all workers can afford this level of housing. In a market where the restrictions on building artificially limit the supply of housing. They may not have travertine floors and granite counters, but the majority of the people in the world would jump at the chance to live in them.
Let's consider someone in the middle of the sixth group, with a spouse in the middle of the fourth. By themselves, that professional can afford $285,000 of condo loan, $302,000 of house loan. Add in the spousal income, and you've got $437,000 worth of condo, $454,000 worth of house. Now, we're just talking over-inflated expectations, unwillingness to economize in other areas of your life, or some combination of the two. In any case, it's no longer affordability - it's that the folks don't want to do what it takes. My Gran had a standard answer for children like that, humiliating and painful, but a lot less so than missing this opportunity will be. Tough old gal, my Gran. Raised a family of six by herself through the Great Depression after second husband died, and she didn't take nonsense or whining from anyone. There are 9500 Active listings where the asking price is under $437,000. I can find you a fairly nice piece of property in pretty much any area of the county for those prices. Just under half of all workers, including part timers, are at this level or better, and the breadwinner (or main breadwinner) is smack dab in the middle of the most common earning range for all workers, and the secondary worker, if we're using one, is two income groups down. People have the ability to pay these prices if they want to. The ones who want to will find themselves sitting very pretty in a few years.
Why do I say that? Because of the supply situation. It's not like we can expand indefinitely in all directions. The Pacific Ocean is wonderful, and it brings a lot of people to visit and most of them want to stay and it helps moderate the climate, but you can't build housing in it. Lots of San Diegans like visiting Mexico, and quite for a number of them, the proximity of Mexico adds a lot to being here in sunny Southern California, but once you cross that border, you're no longer living in San Diego, with all the advantages of life in the United States that start at economic opportunity, run through a government that's actually somewhat accountable to its people, and where there's something resembling a rule of law. Great place to visit, Mexico, but I don't want to live there, where everything is subject to the whims of one of the most corrupt and unaccountable systems of government ever. It appears that pretty much everyone agrees with me. Then there's Camp Pendleton on the north. You can try and take it away from the Marines if you want. I'm not that stupid. They've got the US Government bankrolling them - their armor and weapons and ammo are government issue, which means that you're paying for them to shoot at you. Yes, this is more than a little over the top. The point is, Camp Pendleton is off limits to expansion.
So is most of the eastern portion of the county. Cleveland National Forest, don't you know. Great place to visit, hike, sightsee, camp - but people aren't allowed to live there. 300 million Americans, including all of your neighbors who have already bought and want prices to rise for when they sell, have set up the rules setting that land aside. This might change at some point in the future, but it would take, first, over half of all 300 million Americans changing their mind, then fighting epic court battles as the minority takes every chance possible to keep developers out. They have quite a lot of avenues to stop it; fifty years probably wouldn't be enough. Not to mention eighteen Indian Reservations, and none of the tribes appears eager to sell land to outsiders for tolerably obvious reasons. Lease it, yes. But most people want to own the land, and leasehold property has a fraction the value of land owned outright, even if it's held in a common interest development, because at some point, all leaseholds end and the property, together with all improvements, reverts to the actual owner.
Even in the settled areas where development is possible, look out your window, anywhere in the urban and suburban areas of San Diego. Chances are you're not seeing vacant land. Even if you are, there are zoning and use restrictions and open space preserves. Beyond that, there are permits required and environmental studies to fund, and let's not forget the court battles than pretty much anyone looking to develop open land can expect these days. They started fighting over what's now the 56 corridor in the late 1970s, and the battle still isn't over, by which I mean there's people who want to develop but still have court battles to win and environmental hoops to jump before they can. Question: Do you think all of this makes the supply of available housing greater or less? What do you think constricting the supply of housing does that do to the price of housing? Every time somebody wants to move to San Diego, and there isn't the housing supply for them, two things happen. One, the price goes up by just that little bit necessary so that one person can no longer afford housing. Two, you've either created a homeless person, or someone has been forced to leave.
There are an awful lot of people that want to live here. Add the weather and the beach to the economic opportunity and everything else that the area offers, and you're repeating those two events from the end of the last paragraph many times over. Price going up, people becoming homeless or forced to leave. Multiply them by three million residents of the county, and what do you have? Pricing goes up, up, way up. The "Sunshine Tax" people talk about that we pay for living here is quite substantial. There are areas of the country where two people living on minimum wage can buy a pretty good house. This isn't one of them, and never will be again. The supply is too limited, and the demand too high. Nor is it all housing that we're considering here. It's only that fraction that the current owners have voluntarily decided to sell. If 99% of the current owners are happy where they are and don't want to sell, only 1% of the properties that exist are available for those who want to buy. They bid against each other until enough people drop out of the bidding that there is a one to one match between sellers and buyers.
Let's look at what it took to bring the market to this pass. For several years, more than eight out of ten properties was purchased with an unsustainable loan. People literally did not believe me when I quoted official SDAR and SANDAG statistics that said forty percent of all purchases were with a negative amortization loan, and another forty percent via an interest only 2/28 or 3/27, and both of these were usually stated income. Agents didn't want to tell people to settle for what they could afford, and in the Era of Make Believe Loans they didn't have to. Nor did they want to risk their commission checks by having buyers find out they couldn't afford the prices they were agreeing to pay, and if one loan officer was telling people what they really could and could not afford, there were plenty of others who'd keep their mouth shut and pocket the commission check. Buyers, for their part, weren't exactly models of restraint either. If anyone did try and buck the tide in order to tell them they really couldn't afford a certain property they had their heart set on, they would simply find someone else who'd keep their mouth shut and make it happen.
This all ended rather predictably. Wile E. Coyote looked down, by which I mean that buyers stopped buying. In one of my first on-line articles, I wrote how I had called our county assessor out over this wishful thinking. Prices stopped rising. The increases in value all of the agents, loan officers, and buyers were banking on in order to make the situation not self-destruct came to an abrupt and screeching halt. No increases in value meant that refinances wouldn't fly. Few people could afford new payments, closing costs, pay their loans down enough to enable them to refinance, or do anything else to salvage the situation. Indeed, the sudden wave of all this happening meant there was a veritable tsunami of people who had no other choice but to sell. Indeed, inventory through most of the last three years has been four times or more what it was when the market was hot. When four times as many properties come onto the market, and their owners have no bargaining power, and suddenly nobody wants to buy, it's no surprise the momentum of the market has shifted. It would have been a miracle greater than parting the Red Sea if it hadn't gone the opposite direction just as strongly as it had been going up before. Remember, Supply and Demand.
Let's look at what's happening now. The forgoing chaos created a limited window of opportunity, and that window has started to close. Active Inventory is currently 17,344 listings in San Diego County. This is down almost 1000 in the last month, 5000 in the last four. It's a 24 week supply, down from 26 at the beginning of July. People are figuring this out, despite heavy negativity in the media. The ratios of short sale to foreclosure are shrinking also, as the distressed properties move through the foreclosure cycle. Furthermore, as I said a couple of months ago, a lot of what's out there is still in denial. I was searching detached properties with asking prices below $460,000 in La Mesa earlier in the year and getting roughly 140. I just searched at or below $500,000 and only came up with only 107. Furthermore, it's hit the good stuff disproportionately - all ten of my most recent Hot bargain Properties are off the market. The situation is similar in Santee (104 under $500k now as opposed to mid 130s below $460k), El Cajon (311 vs nearly 400, same circumstances), and San Carlos (18 now vs 33 last time I checked, once again with the maximum search price raised now).
So, does this sound like an overpriced market due for more of a fall, or an underpriced market beginning a recovery? Shrinking inventory at higher prices. Heavy competition for the bargain properties. People able to afford the prices that are being asked with full documentation loans, fully amortized, instead of needing stated income, interest only or negative amortization loans to qualify?
The time of greatest affordability is in the past. If you're looking to buy in San Diego, the time to get off the sidelines is now. The current generation of executives at the lenders who enabled the Era of Make Believe loans has learned their lesson. The ones that survive are not going to relax loan standards to where they were two years ago any time soon. There's not going to be another bubble fueled by speculative loans. There will, however, be an extended period where the disparity between supply of and demand for housing in San Diego is going to get wider and wider, rents are going to increase, if anything, faster than purchase prices, and it's only those who have bought who are in control of their housing situation. Quit trying to time the market - you've already missed bottom, and even the lenders have started admitting it - removing the declining market designation. In case you are unaware, that's a trailing indicator, happening after the fact, not a predictive indicator. If you want to buy here in San Diego at the best prices possible from here on out, it's time to get off the sidelines and act.
If you want to talk, here's my contact information.
For the sellers who have managed to hold off this long, it's only going to get better for the forseeable future, and therefore I'd hold off if I had other options. The only exception is if you want to move up to something more expensive, in which case, let's get a move on! Otherwise, wait. If you're selling to move elsewhere or move down, things are only going to get better as inventory drops and more buyers figure out that we've already hit bottom and are on the way up.
Now, as to whether these conclusions apply outside San Diego County: They do not. There is no such thing as a national housing market, and even a countywide market like I'm talking about here is pretty much a fictional idea, applying only as an amalgamation, as each and every neighborhood of every city in the county is different. But these methods of analysis apply everywhere. In the case of San Diego, they yield an increasingly coherent picture of market recovery. Your local results will vary with your local conditions.
Caveat Emptor
For at least the last thirty years, I've been hearing "affordable housing" advocates yammer about the high cost of housing, and how working families can no longer afford "decent" housing, which they apparently consider to be the three or four bedroom, two bathroom detached home. They go on and on about what is necessary to create more of this type of housing and our "moral obligation" to create more of it. Against this, we have their actual actions, politically allying with forces that make housing more expensive by constricting the supply.
Newsflash: Making business difficult for suppliers of a good does not lower the price nor improve the availability of that good.
Who does artificial constriction of the housing supply hurt?
Certainly not developers. The price of the actual permits, last I checked was in the $20,000 per unit range. But the decreases and constrictions and delays in supply add something like $160,000 to the price tag of that same unit. The people who want housing are here. If the demand is there and the supply isn't, what does that do to price? Oh, those poor developers! They're being hurt to the tune of $140,000 additional profit for each unit they build. Please, Brer Fox, don't throw me into that briar patch! To stay within the genre, trying to harm developers in this sort of fashion is a tar baby for those trying to do it.
It sure as heck doesn't hurt the wealthy, either. They can afford housing. Matter of fact, the constriction of supply makes their real estate investments appreciate more rapidly. Increasing demand and regulatory brakes on the ability to furnish supply is pretty much the recipe for rising prices. Furthermore, this encourages speculation, driving bubbles like the ones that we just went through. It wasn't the wealthy that got hurt by that bubble. It was the folks who could just barely qualify and the people who stretched more than they should have or told fibs in order to qualify. Who was that? It certainly wasn't the wealthy. High end housing was the first to start sitting longer, because the wealthy weren't worried about getting priced out.
It certainly doesn't hurt current owners, who ride the price wave in the same manner as the wealthy investors, if not quite to the same level of profit. Anytime the ratio of demand to supply rises, so does price, and anyone who already owns benefits. These are folks well-established in life for the most part, along with high income individuals and those who inherited wealth. Sound like anyone who needs to be getting what is effectively a public subsidy?
So who does keeping the supply of housing low hurt the worst?
The young. People just getting started out. People who won't get started for another fifteen years, by which time current housing prices will seem like the Golden Age. Every time there's a new household but no new housing, the price goes up. We're going to keep gaining new households, and I don't see enough new housing on the horizon. You do the math.
Transplants coming from where housing is cheaper. Even if they own a $100,000 house free and clear, that's only a 20% down payment on $500,000. Lots of San Diegans seem to have an attitude about transplants - but most of them are themselves transplants. The question of "who is a transplant?" is very much a question of where you draw the line. Speaking as a second generation native, my take is let's just trash the whole transplant prejudice thing. People want to live here. Providing they're in the country legally, they have the same rights to do so that my family and I do. We can create the housing for them, or we can create shortages, which lead to higher prices and unaffordable housing for everyone.
The working poor. Yes, the very people the affordable housing folks claim they want to help. But keeping the supply low, delaying the arrival of more units onto the market while keeping others from happening at all, is a recipe for rising prices. A couple making $15 per hour each makes just over $5000 per month, which translates to about $2300 they can afford for housing and all their debts. Assuming they have no other payments, that's a purchase price of a little over $300,000. That might buy a severe fixer detached home or a condo in decent shape. What happens the next time they need to buy a car? Unless they're one of the rare folks who still manage to put money aside every month, they have to consolidate the car loan with their mortgage in order to afford it. Ditto any other sudden expenses. This is the opening movement to a symphony of financial disaster.
I know that the political alliances in this country have gotten completely nonsensical, but it's past time for affordable housing advocates to break away from the same party that houses the anti-development and anti-business activists. Yes, ACORN, I'm looking at you (among many others), with your "retain voter registrations of your favorite party, trash registrations of their opposition" drives (blatantly illegal, by the way, and this isn't the only such story by any means). Never mind what's the matter with Kansas, I want to know what's the matter with affordable housing activists. By any reasonable measure, they're making the problem worse with their political alliances, by supporting the agenda of their natural antithesis. If their game is to actually make housing more affordable, most of them are miserable failures at what they say they're working towards.
Of course, if the game is to make the problem worse, so that people have no choice but to deal with these organizations as supposedly the only hope of the working poor, thereby increasing their own power, these organizations are doing just fine. Trojan horses for empire building are one of the classic recipes for political success.
Caveat Emptor
My advice to sellers is very simple: Hold off if you can. Things have already improved, but better times are coming once more inventory clears. The prognosis for this is very good. I'm seeing fewer short sales, at least in my area, which means that there are fewer people who need to sell.
For buyers, it's not going to get any better than this. Stop worrying about whether the market has hit absolute bottom. Trying to time the market is worse than useless, and as I said in When You Should Not Buy Real Estate, the math works against buying for less than about three years duration. Look at the likely situation at least three years out in determining whether it's a good time to buy a place to live (if you can't last three years, stay a renter). That likely situation for property owners three years from now by comparison with now is so much better that I'm worried about diabetes every time I consider it. The local economy is doing well - enough people can afford higher prices than current to make this a strictly temporary depression in real estate prices. Growth policy is getting more restrictive all the time, and it's not like there's a whole lot of places left to build anyway. Increasing the density of existing housing doesn't seem likely in the short term, and the one municipal government that had a little bit of sanity on the manner has changed its tune for the worse. Against all these constraints on supply, demand keeps growing. The only thing working against price recovery longer term is the interest rate outlook, and I don't think those are going above the mid sevens, if that high - which would make a difference of about 10% to prices by equivalent payments - and the other factors more than compensate. Increased demand and economic ability to pay each account for more than that. Don't forget the effects of high gas prices, either, raising the value of the older suburbs that are closer in relative to that of the exurbs.
This buyer's market is not going to last three more years. I can't tell you exactly when it's going to become a seller's market again, but it isn't going to be three years. The ratio of sellers to buyers has dropped twenty percent in the last year, from 32.6 to 26.7, and absolute inventory is starting to drop - it's off over 2000 units in the last three months, when you'd expect more new inventory to be coming onto the market given the time of year.
Furthermore, those ratios are misleading because a large proportion of property for sale is still overpriced in terms of asking price when you judge by the prices things actually sell for. In my primary area, it appears that about sixty percent of what's on the market is overpriced given actual sales in the neighborhood. Some of these are Short sales where the lender just isn't going to deal due to mortgage insurance, and buyers would be wasting their time to make an offer. Others are represented by agents "buying" a listing, although that's pretty much a constant of any market. When you get down to sellers willing to allow their agent to market the property correctly and talk a reasonable price, the ratio is probably about ten sellers per buyer. Given that, Sellers don't have to compete nearly so strongly as they did even a few months ago.
Indeed, right now there is a severe constraint upon buyers that's likely to get loosened a bit in the near future: Available loans. The loan market always controls the real estate market. With San Diego designated a declining market by every lender I'm aware of, the buyers with small down payments have been locked out of the market. Currently, the only way to get high loan to value ratio loans is loans with a federal government guarantee attached: either FHA (decent) or VA (better). For conventional loans, the appraisal is automatically reduced 5% and the lenders are capping out at 90 to 95% of the lower of cost or market, which is to say, the lower of purchase price or appraisal. But Fannie Mae and Freddie Mac are still willing to buy 100% loans, at least up to the conforming limit (currently $417,000). It's just that the lenders they're buying the loans from who aren't. I'm not having issues with appraised value constraining the loan, but folks with less careful buyer's agents are, and they're needing a minimum 10 percent, and maybe 15% down payment just to get financing at all. But that "declining market" label came to us relatively recently, long after values had registered the lion's share of the drop we've had. It's going to warrant removal sometime in the not too distant future. Indeed, it seems to me that the numbers probably are there to support removal, but it's going to be a while longer before this fact is apparent, thanks to the boards of realtors who manipulated statistics to make the drop in property values appear as small as possible for as long as possible.
So what happens when the restrictions are loosened a little bit? Instead of ten to fifteen percent down payment, people need just 5% - and maybe none. Right now, people with 5% down payment just aren't a factor in the market for the most part. What happens to the seller to buyer ratio when they are? It drops. What happens when it does? Even more of the power swings from buyers to sellers. What happens to prices then? They shift upwards.
As a special note: The prices of Condos and Townhomes and even PUDs has been hit particularly hard - much harder than that of detached housing. I'm seeing nearly 200 current listings just in La Mesa, El Cajon, Santee, and Lemon Grove where the asking price is less than $150,000, and fifty have already sold. With an FHA loan, you can buy into those for 3% down, or roughly $5000. Payment on $150,000 at 6.5% (including FHA insurance) works out to $948. Add $200 HOA dues and $150 per month in taxes, and in many cases you're coming out about even on the rent - and that's without a significant down payment. Furthermore, less than $3000 per month of income can qualify you, when it might have taken twice that a few years ago and it still takes $5000 per month income for even the cheapest "fixer" detached home. With the Era of Make Believe Loans departed for now, Condos and Townhomes and maybe PUDs are going to be what first time buyers can afford in the future, and the price of gas is going to constrain people as to where they live. I expect those prices to recover more value, more quickly, than detached housing. These might not be what people want, but they are what people are going to be able to afford. Once prices start upwards again (and they will, soon), many people who won't consider them now will stop being in denial about economic reality. The choice for most folks is going to be "buy a condo or rent forever". Expect the demand and the prices to go up significantly.
Caveat Emptor
I know I've been predicting this for eighteen months, first from a trendline and later from watching the local market in action. I was hoping to see the recovery start last summer but that was when the national media finally picked up on how bad things had gotten. When masses of people are hearing gloom and doom daily, they're not likely to take out mortgages to buy real estate.
But in the last month, things have turned around so much it's actually a little scary.
The last three properties I've been involved in negotiations for all had bidding wars going on. Right now, I'm waiting to hear back from a house my clients have put in an offer on. I said an offer, but it's really more like a bid, because I know of thirteen competing offers on the property. It has been on the market for precisely six days as of right now, and today was the deadline for a "best and highest" from everybody. My clients offered almost ten percent over the asking price. At that price, I'm still seeing excellent value and if we get it, everybody will be happy. If we don't, there are still other properties they'll be quite happy with. But previous to that, I helped other agents with four and five offers competing against their client, and that was only in the last two weeks.
Even the kind of buyer we're getting has changed. I don't know where they all came from, but offers with twenty and thirty percent down payment are coming out of the woodwork. Maybe they're all investors that sold at the top of the market and think the time is right to jump back in. Maybe they're representing foreign investors looking to buy at a favorable time. Suddenly, I've got a couple sets of clients with more of a down payment, on average, than I've seen since I've been in the business.
Now, before all of the desperate overpriced sellers and their listing agents start singing "Hallelujah!", these properties are special cases. They're in desirable locales, mostly with good schools, they're attractive properties, and they've been priced correctly from day one. Actually, the one that saw the best bidding action was somewhat under-priced to start with. Indeed, there's a property on the same block going through what has been the story for the past two years: Start overpriced, come down slowly bit by bit, until nine months or a year later someone like me notices there's value there and they've been on the market long enough that they're likely desperate enough to deal, and my clients come in and get it for twenty percent below what they might have gotten if they priced it correctly in the first place. It's a story that's been played out thousands of times here locally. I can sing this hymn verbatim with my eyes closed and no accompaniment.
But what happened is that these owners and their agents came out and listed the properties for just noticeably less than market on the first day. Exactly like I keep telling people, it generated enough traffic to more than bid the price back up and make up for whatever underpricing they had done. Furthermore, the properties are coming off the market and going into escrow within a very short time - a week or two, instead of several months. No carrying costs of thousands of dollars per month, or only very small ones. No trying to find the money for multiple mortgages, or rent plus the mortgage on the property they're selling. No stress of wondering when it's going to sell. Multiple offers came in from quality buyers with significant down payments and plenty of income to justify the loan. No stated income 100 percent financing, 2/28s, or negative amortization here. Sustainable, longer term loans are the order of the day - and A paper, too.
So far, this is a limited phenomenon, even if it is expanding. The sellers and their agents are still having to make the correct moves to get this to happen. Omit one of the critical items (correct price and attractiveness), and the property will still sit on the market. Mind you, bargain properties have always been able to move, even at the nadir of the market, but now more properties are moving more quickly, and the ones that stand out for value are seeing multiple highly competitive offers very quickly, something we weren't seeing the last couple of years.
So even though the headlines today are screaming that housing prices fell 13.5% from February 2007 to February 2008, those are sales which started six weeks or so earlier than that, due to the refinance mini-boom we had. The actual experience I and other agents are having out in the market these last couple of weeks has been painting a very different picture. Yes, it's all anecdotal, but if you put enough anecdotes together, you get a trend - and it seems like every agent I'm talking to is reporting the same thing.
There's a huge amount of pent-up demand for housing locally. I've been noticing people talking about holding off for better than two years now. Waiting for the market to show signs of bottoming out. Well, it's showing signs of the bottom having been sometime in the past now. I did call market top almost a year before the local Association of Realtors admitted it, and the current consensus by local economists has that I only missed it by a month. I just made appointments to see some properties with some clients on Saturday, and three out of three agents where the property wasn't vacant told me they're in counteroffers right now, and they may be in escrow by then. I told them to call my cell if that was the case, and we'd pass the property by.
For those who have been holding off, we have hit bottom. I've been saying all along the economic support was there for $350,000 to $400,000 starter level single family residences, and it now appears that has been borne out. If there are still a few thousand sellers whose property is sitting on the market because they're in denial of the decline, that's their problem. The people who are serious about selling, properties are not only selling, but they're seeing bidding wars like I haven't seen in five years. From this point on, the longer you wait, the higher the price you're likely to pay. When the word gets around, and the kind of pent-up demand that has been keeping the market depressed these last two years plus gets ready to strike, expect to see a significant recovery in prices before the media starts reporting a trend.
Caveat Emptor
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