Reply
Contributor
PadreFan
Posts: 15
Registered: ‎11-15-2012

Am I just getting discouraged or are we in a new bubble?

[ Edited ]

My wife and I have been unsuccessfully looking for a place to purchase for the last 4 months. The catch is we are looking for a starter home and have been searching Point Loma, University Heights, North Park and have had no luck. If anything appears on the market it is purchased by all cash buyers the day it comes up on the market. Coincidently I have noticed the list price of homes has increased by over 30% since Jan. 12. I have also spoken with friends who are realtors and they have told me stories of hedge fund groups purchasing property in SD county hand over fist.  I would love to hear thoughts on if this is a temporary bubble based on very low interest rates or some other outside factor? Is it a buyers panic? I personally feel like it can't last since the wages have not changed for 99% of the people I speak with. Every indicator is pointing towards the early phases of a new bubble. People I am close with have indicated that they have a debt to income ratio where their mortgage is over 60% of their  monthly income. I have not experienced difficulty getting approved, I think as long as you have good credit and steady employment you are fine. I have however seen houses not appraising for the sale price so they come back on the market. The inventory issue is a whloe other beast that is creating a problem. I would love to hear suggestions from others who are or were in the same situation and the direction you decided to go in. Thank you.

Visitor
solefald
Posts: 1
Registered: ‎11-19-2012
0

Re: Am I just getting discouraged or are we in a new bubble?

I am in the same boat as you. Have been seatching since May, but after submitting 6 or 7 offers and getting outbid on the very same day i got really discouraged. My real estate agent friend suggested that I wait for a few months because summer is a busy moving time and everyone tries to find a new property  before the beginning of the school year, so kids can be situated in the new neighborhood/school. 

 

I've layed low for a while periodically checking the listings. Aaand here we are. End of November. I have found nothing of interest, but the properties that were in $350K range during summer, are now $400K+ and I have nothing to look forward to with my meager %5 down. 

 

I've heard the stories that banks will release their "shadow inventory" any day now, but that just sounds like some kind of conspiracy theory.

 

Visitor
emjj
Posts: 7
Registered: ‎11-23-2012
0

Re: Am I just getting discouraged or are we in a new bubble?

I'm also in the same boat as you.  It's extremely frustrating because I keep getting out bidded by "investors" who happen to also be realtors still flipping homes.  It seems so unethical and illegal!  There was a home I drove by to see during summer.  It had been on and off the market for months.  The list price was 220k.  The place was open and a man was inside.  I asked if he was the listing agent and if I could look around.  He said not to bother because the place had multiple offers up to 270k.  The place needed work, and I saw him writing down notes of all the repairs required.  I asked for his card.  The place continued on the market for a couple more weeks.  Final sale was 200k.  Not even two months later the home was placed back on the market for over 300k!  The realtor who sold the place also purchased the place within his company - a dual agent - I guess.  He basically scared me away to keep the home within his office because he knew with a few repairs - a bandaid on the home - he could quickly turn it around at a profit - and that's exactly what happened.  The remodel really didn't look like more than some paint and replacing or cleaning up some of the windows.  No new floors or no new kitchen remodel.  New toilets.  This is only one example - but I see shady deals like this all the time. Realtors on short sales posting one photo of a place - an ugly photo - with a low list price.  I don't get the game but it either discourages buyers or it gets the bank to accept a lower offer quickly when they already have an inhouse buyer so they can flip the home at a profit - squeezing out the first time home buyers.  This is mostly for homes/condos under 350k.  I don't know really what's going on with the higher priced homes, but I've tried offering well above list and still don't even get in as a backup offer.  Only thing available to buyers are stuff investors stay away from and really are overpriced even in this market - and many first time buyers have no clue if they really don't do their research or if they only listen to the realtors who are quickly pushing up the home values when wages still have not increased.  Honestly - there's way too much greed as always - and the hard-working middle class is getting hurt and this is not going to help the economy or the country.  It's only going to backfire like the insane home prices of 2006.  I'll live in my car before I feed into the greed or buy something outside of my means because that's all there is to offer.   And - there really isn't much more the banks are holding back in inventory.  I think most of the inventory has been released.  Now - banks are allowing people to refinance who haven't paid mortgages in a couple of years over having them give up the home they should never have bought in the first place.  A home well outside of their means.

Visitor
Luv4Labs
Posts: 2
Registered: ‎11-24-2012
0

Re: Am I just getting discouraged or are we in a new bubble?

[ Edited ]

I am just as frustrated while looking in the $500-$600K range!  It seems people are making multiple cash offers and tying up the property while they decide what works best for them. They then cancel escrow on some lame contingency. 

 

I am not an agent, but one bit of advice ... When I bought my first home in SD, I bought a duplex type home.  The added rental income helped me qualify and I got a home in a much more desirable area (Pt. Loma/OB).  It remains a great investment today.  If the idea appeals to you, ask your agent to look under 2-4 units in the area's you'd like to live.

 

Back to my search! :smileymad:

Visitor
propbuyer
Posts: 2
Registered: ‎11-26-2012
0

Re: Am I just getting discouraged or are we in a new bubble?

Yes definetly a bubble in some areas.  Not all of San diego is partcipating in this rally.  You got to look at the bigger picture, rates are lower than ever before( stop me if you have heard this one before), banks are not foreclosing nor giving loan mods as to not adversely affect their outstanding mortgages and properties in the areas.  You have china real estate popping, thus if you want a house in carmel valley, pq, Rb, scripps, you are getting tons of chinese buyers who have cashed out and are looking for a place to park money. 60% of them are investors, some are relocating to take advantage of US educational system. ( wsj chinese buying real estate) Look at Vancouver

 

On top of all this you have the flippers who have come out in full force, not to mention the hedge funds that are snapping of san diego properties...with the low rates they can get decent cap rates. Look at Arizona ....

 

And.....

Fed is still going to by 1 trillion in mortgage back securities til 2015.

 

 

Regular Visitor
pbs1
Posts: 7
Registered: ‎03-01-2012
0

Re: Am I just getting discouraged or are we in a new bubble?

I think the main issue here is the very low levels of inventory, and the low volume of sales. It has been this way for most of this year. I havent heard a good explanation for that.

 

Personally (although I havent any envidence) I think most people are holding onto their homes, and buying up second homes. In normal times they would have sold their older homes.  I am guessing again, but i suspect with the low interest rates they  are still making a good profit renting out their homes.

Visitor
HouseHunter2012
Posts: 5
Registered: ‎11-26-2012
0

Re: Am I just getting discouraged or are we in a new bubble?

[ Edited ]

I couldnt agree more with you all, this has been the most frustrating market of late! Short sales dont seem to be working for anyone, I wish they'd overhaul the whole system, at present it seems to be wrought with corruption.  Earlier in the year (Jan) gorgeous low priced homes would sit on the market for months, but with this extreme lack of inventory its almost impossible to buy. Homes go pending the day theyre listed, forcing people to make offers on homes they havent even seen the inside of. The flippers are out in force, buying  at foreclosure auctions and then popping $50k+ onto the resell price and putting properties back on the market immediately, outpricing entry level buyers such as my young family.  We too have offered on many properties (when we get the chance, they usually sell on the day of listing), we have been sitting on a short sale that is going nowhere, and becoming increasingly discouraged as 1 home or less a day comes onto the market in our entry level price range. So I feel your pain, every genuine buyer out there right now is going through similar situations, exacerbated by greedy opportunists taking advantage of the current lack of inventory, and flipping the few  attractive affordable homes there were and taking them out of entry level price range. I wish id been in a situation to have purchased earlier in the year, its taking a toll emotionally not being able to find a home. I fear if people panic and purchase the flipped properties at their overly inflated new pricing it'll just encourage those vultures and set new price predicents for the other homes in those complexes. Good luck to everyone else in the same situation. 

Contributor
PadreFan
Posts: 15
Registered: ‎11-15-2012
0

Re: Am I just getting discouraged or are we in a new bubble?

Thanks for the feedback. As much as I would like to own a property I think I am pulling out of the market. I have been doing extensive research and we are close to where prices where in 2006. I recently saw a home listed for $450K in west clairemont for that looked nice, after looking closer I noticed it was about 30 yards from the freeway. Homes in East Clairmont are going for $500k and the majority of them are poorly done flips. The only thing on the market left are homes in highly undesirable locations, those that need 50k in renovations to be livable, or those that have a glaring red flag (cracked foundation, on the freeway or major intersection etc). Point loma on the other hand you can no longer find a livable home under $600k. We are repeating history, its 2006 all over again. I think I am just gonna sit and wait for the market to correct becasue there is no way these prices can last.

Regular Visitor
latte
Posts: 5
Registered: ‎10-04-2012
0

Re: Am I just getting discouraged or are we in a new bubble?

Yes yes and yes to all of the comments above.

 

We've been looking since for a year as well.  I agree that the market is completely corrupt right now.  I've even seen a couple of cases with flippers buying a house, photoshopping the picture to show what it could look like, tacking on 50-150k, and actually doing *nothing* to the house.

 

Plus we don't want a cookie cutter kitchen in a 1925 vintage home.  I'm looking for the pre-flip version so that I can put in the kitchen *I* want, and do it with respect to the era.  These kitchens, other than granite counter tops, aren't even good workable kitchens, poorly designed for use, just all glitz.

 

But, like all of you, I can't get to that house before the flippers do.  We even have 300k to put down cash, and have still not been able to "outbid" the investors.  Either it never comes on the market (often you'll see them appear on redfin as new, but when you click on them they are already pending - they are only listed for legal reasons it appears, but the deal is done), or your bid is ignored anyhow, even if it is equivalent!  When we tried to put in a backup offer on one of these 300k houses (we offered all cash, you pick escrow, everything), we didn't even get a response.

 

Yeah, I'm tired of it.  Waiting on more inventory.  The prices *should* never go back to 2006 rates, those were unreasonable for cost to salary ratio.  I'm hoping they drop this summer, but who knows...

Gold Regular Contributor
sheriff
Posts: 2,220
Registered: ‎06-01-2012

Re: Am I just getting discouraged or are we in a new bubble?


PadreFan wrote:

Thanks for the feedback. As much as I would like to own a property I think I am pulling out of the market. I have been doing extensive research and we are close to where prices where in 2006. I recently saw a home listed for $450K in west clairemont for that looked nice, after looking closer I noticed it was about 30 yards from the freeway. Homes in East Clairmont are going for $500k and the majority of them are poorly done flips. The only thing on the market left are homes in highly undesirable locations, those that need 50k in renovations to be livable, or those that have a glaring red flag (cracked foundation, on the freeway or major intersection etc). Point loma on the other hand you can no longer find a livable home under $600k. We are repeating history, its 2006 all over again. I think I am just gonna sit and wait for the market to correct becasue there is no way these prices can last.


You are making a mistake.  The market will not correct for a couple of years, if then, because the fed is keeping interest rates so low through 2015.  It is, in many cases, cheaper to buy than rent.  As long as that situation continues home prices will not fall.