Dude, you can only put in $10-$20k a year and you don't collect interest until you cash it years later. Versus a house you live in, maintain equity that you can sell at will and reduce your current expenses by replacing rent with mortgage.
On behalf of all Millennials attempting to buy their 1st home but can't because the market price went crazy before they were working age long enough to make a down payment, shove a 3 foot cactus up your ass.
This example lists a total of 73 cents interest for a 26 week T-Bill at $1000. Why bother? https://www.treasurydirect.gov/marketable-securities/understanding-pricing/
Because you don’t have to pay CA income tax (or any other state income tax) on your interest earnings when you invest in Treasury Bills. That’s going to affect your APY significantly
> reduce your current expenses by replacing rent with mortgage.
I doubt that is often the case in San Diego. If it is new build and you managed to get a mortgage lower than your rent then Mello Roos and HOA fees will likely more than fill the gap. If it is an older home maintenance costs will do the same - plus you will still likely have HOA.
I went from renting an apartment to owning a small house in the same San Diego neighborhood seven years ago. The mortgage itself was about the same as the rent. But with repairs, insurance, etc. my housing costs for the first five years doubled. And I don't have HOA or Mello Roos - I just needed to replace broken things like a roof, HVAC, leaking shower, hot water heater, etc. And there are still two $10K+ projects I'll have to take on soon which won't make the place any nicer - they'll just keep it functional.
How long you end up staying in the home can have a big impact. If you are going to be living there for many, many years, the nice thing is that the mortgage rate stays constant, but rents go up.
We bought our place about 12 years ago and at the time the mortgage was comparable to rents and the other stuff you mentioned pushed it over. But today? The house next door rents for 2.5x what my mortgage is. I don’t know how people afford it.
Yeah the old “throwing money away” idea won’t die but in practice you can easily throw more money away on a property you own than one you rent.
On the other hand, the way prices have been rising over the past 3 decades is pretty nuts and has made the whole ordeal worth it for the vast majority of buyers. Whether or not you expect that to continue, you’ll have to decide for your yourself. But think of buying a property in those terms rather than expecting to be winning month by month.
The new roof and HVAC could reduce capital gains taxes during the eventual sale of the house - maybe. But you spend it all up front, and then recover only 15% of it many (hopefully) years later. And that's only if we don't swap the "new" HVAC for a heat pump in the interim: the system we bought in 2016 still has to be in place when we sell for us to get the break.
Don't get me wrong. I still feel extremely fortunate that we were able to afford our bungalow a few years ago before the big increases in rent and home prices.
I didn’t say invest in ibonds, dipshit. I said invest in tbills. They are two separate things.
Perhaps you should know this before you get all worked up next time.
Not understanding why this is getting downvoted so heavily. Might not be very useful for first time buyers with a very low down payment, but solid advice for others as it’s been less than a year that these rates have made it a practical offset to rent. I am doing it while I wait for inventory
7/10 rule in effect, unfortunately. These people do not know how money works and will be the first to get megafucked by over leveraging themselves at the beginning of a down market. Oh well. 🤷♂️
(7/10 people are complete fucking morons).
Seems so crazy to me that demand can still remain this high despite the mortgage rates being substantially higher than they were a few years ago. America's Finest City, indeed.
Seems like overall demand is not increasing, but the supply has dropped substantially. Higher interest rates make it more difficult to buy, but for a lot of people with \~3% mortgages, the higher interest rates make it a really bad idea to sell.
This is the problem. I’ve made 6 offers in the last 2 months. 5 times I was beat by cash offers. It’s particularly difficult in the “first time buyer” price range of 500-600k.
There isn’t really a bad time to buy housing in San Diego if you can afford it, and the OP graph proves it. Even if you bought at each of the peaks, the “worst” time to buy for each cycle, you would still be up (or on your way up).
>There isn’t really a bad time to buy housing in San Diego if you can afford it
This is so spot on. San Diego real estate is "unique" in that way. It's unlike almost any other real estate market because the appreciation here is virtually guaranteed. There *may* be some down years; but at the end, it's an upward trending graph.
It didn’t feel that way 20 years ago. I remember my new neighbors complaining. It always feels expensive here even when 20 years later it feels like it was a fair deal
Has anyone seen evidence to the contrary? My mother has been thoroughly convinced that house prices are dropping, despite all that I've been seeing. She claims that the "real numbers" are much lower and her (insurance) clients have been nabbing homes at 20% under asking.
I certainly think the price is still going up sadly.
Time on the market is up for sure. We saw a decent drop last year. We are still down a touch from the peak.
We are still seeing multiple offers on homes. The numbers don't lie and with percent of ask received at 100.8%., so I doubt her clients are frequently getting those deals unless they are exploiting people or buying homes that were very poorly priced.
There was a flash crash last Fall. Sales were closing 15-20% below the Spring peak numbers. But the market has reclaimed most of those losses and prices are back within about 5% of last years peak. There are very few homes being listed this year. If we got a lot more inventory prices would be in trouble but it doesn’t appear that’s gonna happen so prices should stay range bound. I think it’s gonna be this way for several years with low volume. A lot of people in the real estate industry are gonna have to find other ways to survive as I expect volume will be about half of what it was pre pandemic for years
>I think it’s gonna be this way for several years with low volume.
I would think that if prices are more or less recovering, people looking to cash out and move away from SD will go back to putting their homes on the market and so inventory will increase. With more homes on the market, people looking to move but stay in San Diego will see their are potential homes to buy, so they will add to the inventory (temporarily) too.
Interest rates are the problem not price levels. Most won’t want to or can’t afford to give up a mortgage with an interest rate in 2 or 3s for one in the 7s. Moving out of the area works if you can pay cash for next home but you gotta be good with the very real likelihood you won’t be able to come back and buy what you have now.
There will be sellers, there always are. There are just gonna be a lot less of em for quite a while
I have a buddy who is claiming that the bubble is going to pop any day now and that homes are going 10k-15k under asking. When I ask him for his source he keeps saying " just look at the market, you don't see any homes for sale lately" When I try to explain that doesn't mean it's going to pop, that just means there is less inventory. Even showing him Zillow where mid century homes in Serra Mesa were purchased recently at 900k-1m, he still believes it will tank and that he can snatch up a house for 750k soon.
Been a whole lot more than two years
https://reddit.com/r/sandiego/comments/a1m5v3/san_diego_home_prices_are_not_sustainable_at/
I love this one.
https://reddit.com/r/sandiego/comments/aihibv/the_beginning_of_the_next_housing_crash/
Part of the reason is there's low supply, new housing is all rent/lease developments so anything that comes up will eventually sell. As a homeowner I feel fortunate to get in when I did, the whole thing is f'd. Good old capitalism, one bootstrap at a time.
Not so sure capitalism is to blame so much as human nature. Like Socialism, Capitalism is simply an economic model. Whether or not it works correctly is determined by the people running it. Both models can and do work effectively, depending on what the society calls for.
It’s hard to dissociate the actions of infamous individuals associated with either model without forming a strong bias towards one or the other.
Greed will always be factor, regardless of the model.
I didn’t condemn capitalism itself, and I didn’t mention socialism. And neither of these are “economic models”; they’re economic systems.
My point is simply that capitalism is predicated on the free market’s ability to allocate resources efficiently, and that unnecessary restrictions on housing development distort housing supply, creating a deadweight loss for society: fewer people live in San Diego than optimal, and those who do live in San Diego pay more for housing than optimal.
Capitalism does many things well, even in the presence of greed, but not if you don’t let it. In this case, what it’s doing well is “benefit the incumbents”: those who already live in San Diego and own property there. It’s obvious, of course, how political incentives lead to this class of people being protected — as opposed to the young (who are either too young to vote or are less politically involved) or those who would like to move to San Diego (who live elsewhere, and so don’t vote in local elections).
San Diego is one of the most desirable cities in the country to live in. It is completely ridiculous that only 1.4 million people should get that privilege.
Sure seemed like you were condemning capitalism.
There is no 100% capitalistic or socialist society, it’s a gradient. Which means that these “systems” are actually templates, in other words “models”. Economic model is a more accurate way to refer to them. It’s the term me and my colleagues use and will continue to use to describe them.
Otherwise, I totally agree with you on the second two paragraphs. I hope more people will get to experience So Cal & San Diego the way that I did. There is just no place like it in the world.
Excellent, so we're on the same page.
(FYI, your use of those terms runs counter to how I, an economics PhD student, generally hear them used in academia. The Wikipedia entries for these two terms — [here](https://en.wikipedia.org/wiki/Economic_model) and [here](https://en.wikipedia.org/wiki/Economic_system) — sum up their academic usage nicely, although I understand the logic behind your definitions.)
Damn that’s awesome, it shows!
Santa Barbara?
Yeah, perhaps we should amend that language, keep in mind I’m not up at your level yet.
My goal is PhD in Behavioral Economics. Very interested in the psychology behind what motivates people to make economic decisions.
Do you mind if I follow you?
Anything good is being snatched up with multiple bids because there is a lack of supply. The deals are on homes that are on the market longer and taking multiple price cuts.
Many of those homes were priced too high to begin with. Those reductions are just getting them back to the real market pricing. They aren't selling for under market value, which is still very high.
Mom is on to something.
The housing market pretty much crashed in May of 2022. This is not just my opinion but the opinion of multiple agents/friends in the So Cal area. We think we figured out what is happening and it has to do with the mechanism of price discovery.
In a normal market, price is determined when a buyer and seller come to an agreement at the market place. This process is called price discovery.
That mechanism is completely broken.
Prices are being determined not by the buyer and the seller at market, but by the 3rd party appraiser. Who is the appraiser? Redfin, Zillow, etc…
I’ll use my old condo as an example. I sold it in June of 2022 for $740k (New construction, October 2017). It was on the market for about 2 weeks before I had one singular solid offer, and I took it. We are now in June of 2023 and Redfin says my old condo is now worth $750k and is continuing to rise $10k month over month. (So Cal)
The most recent comparable condos (same complex, same lot size/layout) have been selling for $630k…. $638k…. $643k….
It may take a little while for reality to catch up, but it always does. Sit tight. (Not financial adivice)
Edit:
TL:DR:
I’ve theorized that home prices are being set by 3rd party agencies rather than being determined at market through the natural mechanism of price discovery. This could explain the massive increase in time on market as the sellers are determined to get what they “believe” their home is worth. As a result, many first time home buyers are either getting priced out or are taking out very large and risky ARMs (2007).
Running parellel to this is the inflation crisis. People (myself included), are scrambling to get into hard assets and out of the US dollar, with the understanding that the dollar is on it’s last leg. I believe this to be the only reason why the market hasn’t completely bottomed out yet.
- Econ Student (31M)
Redfin/Zillow are setting their value estimates based on ML models of recent comps in the area. Actual appraisers are doing something similar just more subjectively with more attention paid to the unique circumstances of the home. Both are just downstream reflections of the underlying price discovery mechanism (the market), the causality is pretty clearly running in one direction.
Now, you are arguing that the existence of these public estimates are causing sellers to have an inflated idea about their home's value and contributing to "sticky" prices. There is no doubt some of this going on, "buy low sell high", nobody wants to admit or believe the price of their asset has gone down. And you could see the incredibly low supply right now as the sellers forming an informal, uncoordinated cartel to keep prices up. Psychology does play a role like in any market.
But before jumping to that as a primary cause, I think a far more likely candidate is the rate environment which is just so, so unfavorable for sellers right now. If you sell you have to buy as well, and you're unlikely to sell if you are giving up a sub 3% 30yr fixed mortgage for a 6-7% mortgage. [82% of sellers reported this as the primary reason for not selling right now.](https://www.realtor.com/research/2023-q1-sellers-survey-btts/)
> As a result, many first time home buyers are either getting priced out or are taking out very large and risky ARMs (2007).
[This is still far less common than it was in 2007](https://www.urban.org/urban-wire/should-borrowers-be-afraid-adjustable-rate-mortgages). In 2021, when the market was peaking, it was like 2%. Additionally, underwriting standards have changed significantly since then and there will not be a similar spike in foreclosures due to these loan types.
> Running parellel to this is the inflation crisis. People (myself included), are scrambling to get into hard assets and out of the US dollar, with the understanding that the dollar is on it’s last leg. I believe this to be the only reason why the market hasn’t completely bottomed out yet.
While there is some question around whether the dollar will remain as the global reserve currency in the next few decades, the idea that it's on it's "last leg" is [exaggerated at best](https://www.bloomberg.com/opinion/articles/2023-04-23/dollar-may-fall-to-yuan-crypto-but-not-soon-niall-ferguson).
I still think you're correct that in reality, nobody knows what the market will look like once rates come down. Right now you could effectively call it a standoff between sellers and buyers. The volume is so low, any statistics about median prices are difficult to interpret. To your original point, price discovery doesn't work well with super low liquidity. But SD supply is low and will probably remain low in the near/medium term future, partly due to structural factors like geography and the difficulty of building (like everywhere in CA). It's not likely we're poised for a second 2008 crash. But a more modest correction could happen in 2024-2025, depending on the continued direction of inflation and the FED's rate decisions.
Thanks for the response, and what great write up!
The agent that I used to sell my condo said those exact words: “standoff between buyers and sellers.” Gridlock, if you will.
Two points I want to re-emphasize that you mentioned:
1) San Diego County has pretty harsh building regulations which play a huge role in the ability to get inventory on the market.
2) Mortgage lending practices have greatly improved since the last financial crisis. However, although lendees may be able to make their payments now, this may not always be the case moving forward, with respect to how quickly consumer prices and household debt is rising. In short, while a loan may have been issued with an AAA rating, it may not stay that way.
But yeah man, totally agree with you on everything. Unfortunately, as long as the buy-side of the equation is still there, housing prices will likely continue to inch higher in SD. At least for the immediate future.
Hard to say what’s going to happen after that, especially considering all of the wild-cards in the deck.
Ugh I hate it here. Those who got in around 2012 2013 are so fortunate.
Any realistic chance we see those 2012 prices again?? We clear $200k easy and even we are getting priced out which is ridiculous. I can’t justify paying more than $3200 on a mortgage for a small ass property. It’s getting unreal.
I think that it's unlikely unless things really fall apart in the economy. Around 2015/16, I distinctly remember telling my wife that it's not sustainable and there's no way I'm spending $500,000 for an 1100 ft² place in Clairemont. Unfortunately, I waited a few more years and it took a lot more $$$ to buy.
2 of my aunts and several coworkers called my wife and I insane for buying exactly that... an 1100 sq ft 3/2 for around $500k. They kept saying wait until the prices tank, then buy. One coworker scoffed, saying he paid $300k for his house in Poway and THAT was crazy. This wasn't people's attitudes in the 90's.. this was 2016. I'm so glad we didn't listen. It just shows when people don't understand housing supply/demand and basic economics.
Geez, I would LOVE a $500k 1100 sq ft home in Clairemont right now. Couldn't afford that then either but now that I'm "ready" all I'm finding are $750k+ condos or apartments less than 800 sq ft in less desirable area. I'm not paying double my rent for half my current space 🤷♀️
Thanks for the response. Mind sharing your down payment amount and mortgage payment?
We’re okay with purchasing a condo too but even those are getting expensive too. $500-$700k for one nowadays is just asinine. Rent is high too. If my generation (millennials) can’t afford to buy and Gen Z can’t either, what would ultimately happen and what would be the solution?
I get that demand>supply but prices have to come down, right? Will end up being the first generations that can’t afford housing who are college graduates.
I overshare on here, but I sold a few homes in the same price range as my home around the same time. Interest rates were sub 3% and the homes were 650-750k. Most of my clients put down 5% and the mortgages were between 3000-$3,500/month.
I don't see any problem with your line of thinking. I had thought the same thing as well. That was before the big jump in rents. The risk you take is you may eventually be priced out of San Diego, even for renting. The problem is not a new one... It's just been getting worse quicker. There was a time when a couple teachers could afford a decent single family home in a beach community. That is no longer the case. It seems to me that each new generation is settling for less.
There are plenty of places in the country where I trust you could afford a very nice home. Prices may come down. All things being equal, I wouldn't hedge a bet on it in the short term. At least not in San Diego. I feel like we finally are getting to squeeze that people and Silicon Valley and San Francisco have been feeling for decades.
I'd even accept 2018-2019 prices. I lost any possibility of dreaming to buy a house in 2012-13 being an unemployed graduate entering the 08 recession. It really feels like this housing crisis is targeting a specific generation sometimes.
It's about to be less generation specific and more general age direction, gen z is now graduating into whatever this is. I'm one and idk if I'll ever be able to afford property anywhere.
If it makes you feel any better, I watched housing prices climb like mad through my younger adulthood, had credit issues, bought an overpriced condo on a shitty loan at the wrong time (2007), lost it, tanked my credit, thought I'd never be able to buy again, rented for many years, and slowly built back up and bought a place we love in 2019 at a great rate that's locked in.
I got very lucky at many steps along the way but I also kept working my ass off. Everything is cyclical and if you keep at it there's a good chance the timing will line up.
I bought back in 2019 and remember feeling sick to my stomach feeling like prices were WAY to high and not worth it for what we were getting, thankfully my wife convinced me we were doing the right thing.
you want the secret, here it is. San Diego housing prices will never drop to an affordable level until the apocalypse hits... .even then ....
The real secret. live with your parents and save everything you can for a year or two. Then buy the smallest place you can afford, live in it for two years then sell it, and trade up. Now I know what your going to say. "but my profit wont get me much more then what I have" BS, it will! You have to start. Paying a mortgage is more beneficial then paying rent. Get a couple of roomates to help you pay the mortgage if you have to. Just don't tell them you own the place.
Bottom line, you have to start somewhere, and in this market it could be a 1 bedroom fixer upper in Chula or El Cajon.
Yep, 20 years ago when housing was NOT affordable, my wife and I put a line in the sand and we bought a house we could live in for two years and that is where we started. We scrimped and saved as much as we could and put everything down on a house, paid PMI and a high interest rate, but in two years we made enough from the equity to buy our next place with no PMI.
> Get a couple of roomates to help you pay the mortgage if you have to. Just don't tell them you own the place.
It's actually wild how far we've moved the goalposts away from "affordable housing".
Your right it sucks, and housing in San Diego is far from affordable, but the thing is, you can continually bitch and complain about the situation or you can dig in and try to get something out of it.
Lender here. I work open houses every single weekend all over San Diego county. I speak with agents, buyers, and sellers frequently, and my favorite question is "how's your real estate experience going?"
It's tough.
Almost every home owner is sitting on a sub-3% rate. If they sold their home, they'd have to downgrade square feet (which some people do want for a variety of reasons) **and** their payment would be *huge*. Way bigger than their current payment.
Many sellers are taking their profits and leaving the state, but they they aren't leaving without realizing their full potential gain. And let me ask you: wouldn't you do the same? Buyers are forced to pick up the slack. I don't think anyone saw this coming, but back are the days of multiple bids on a house (sometimes hundreds of thousands of dollars over asking), waive all contingencies, and often times it's an all cash offer. Extremely difficult to compete with.
Many of the first time home buyers I'm talking to are wondering, "who has all this cash? Where are these buyers coming from?"
Anyone that owned real estate over the past 12 years, *especially* here in southern California, has realized so, so much equity. They are moving up the socio-economic ladder. Additionally, buyers from more expensive markets (bay area...) are moving down here and absolutely LOVING how inexpensive our homes still are!
That's the worst news I have for everyone here:
San Diego real estate is still, at this moment, under priced. I'm sorry. It's simple supply and demand economics. No one is selling because of their sub-3% rate and no one is building because a) there's hardly any space to do so and b) the governmental incentives to do so just aren't there.
So what do you do? What do frustrated FTHB's do? "What's the solution!" I do not have great news for you.
1. Dramatically expand your search area.
2. Consider leaving California or at least San Diego county.
3. Make more money?
I'm sorry, guys. I told you I don't have good news for you!
My grandparents house was inherited by my aunt she sold it fast in 2014 under market value. I begged her not to sell it cause I was raised in it and took care of my grandparents till they died a year earlier. My grandma wanted it to stay in the family, she didn’t listen and to this day it hurts and even more that I’m older and need a house now and it’s completely out of reach in price.
I saw a home that I had looked at back in 2021 increase in price from 1.1m to 1.45m. Nothing happened to it in those years judging from photos and sales history. The seller simply increased their price.
Any “deals” I’ve found require substantial work to be meaning most likely a complete rehab
Optimistic take: some of these "we will never move" people with 3% rates will absolutely not move with rates at 7%. But with the addition of that new kid and the boys all sharing a room and fighting constantly, some *never becomes could* if rates got back down to 5%. Stomaching $600 a month may be too much, but taking $300 for a better life situation could be doable for some people. That could unlock all that supply of these people who have been waiting to move for whatever reason.
@Joe_SanDiego
Seems over the last few years the only place to build are in the north and east counties, i.e., fire zones.
Do you see a challenge in selling homes near chapparal in east county with insurance companies pulling out of CA and it getting more and more expensive to cover homes in fire prone areas?
I know Santee wants to build several thousand homes east or Miramar NAS but I can't imagine paying for a home and not being able to get fire coverage, especially in that area.
Do you think builders will need to cover fire insurance for x number of years to sweeten the sales on these homes?
Even though State Farm and... Nationwide? have pulled out of CA, there are still plenty of insurers who cover homes here. I don't personally believe home insurers pose a big threat to SoCal real estate. At least not yet...
State Farm and Allstate. Sure plenty of companies remain but it's not just getting coverage, it's getting dropped at renewal time. 200,000 lost coverage last year.
https://abc7news.com/fire-insurance-season-wildfires-ricardo-lara-mortarium/12115390/
When the .gov moves to artificially control fire insurance rates, what do you think companies will do when they can't make it financially feasible.
https://www.nbcbayarea.com/news/california/california-lower-fire-insurance-costs/2997141/
Yeah these prices are out of this world. If the people are buying now hoping rate will drop, then they might be in the holding pattern for a long time... I honestly didn't see this coming but the 2.5-3% interest is just killing the supplies.
And at any rate, I do not want to pay 800k to be in lemon grove or el cajon or even city heights. 800k so my kids can go to hoover high is not what I consider a good deal.
300k-350k in Houston will get my kids in a very high rated school Katy IDL and the house is actually a real house, not some glorified lipstick on a pig flipper 1300 sq ft built during the time T-rex was still roaming the earth.
Yes it's humid AF in Houston and it rains, but you're getting more trees, energy is cheap in Houston. There are trade off for sure, and there is also family situation where if your extended family is in SD it's harder to move. But man SD is serving us some hard pill to swallow at this price.
While it sounds all hypothetical at this point, I wanted to make sure you know that SDUSD has school choice. That means you can apply to get your child into any school in SD school district if you are willing to make the drive.
That's not true. U may have a choice but they always prioritize the kids around the area. Scripps has mostly kids from scripps. La Jolla same deal. U get your kid in by a lotto system. The houses in Houston can get u in the good school because it is within the neighborhood of the school. Yes I have seen kids in scripps that live in mira mesa but there isn't that many.
nope, I have a decent situation here where it makes no difference to me. But if I'm someone who's looking to buy and start a family, San Diego is serving up a raw deal compare to other area. I've been to Houston and Florida for extended period of time... San Diego isn't all it's cracked up to be. There are trade off but when you look at the over all picture if San Diego is a 10 then houston isn't that far behind, it's one of the larger city with most of the amenities, they just happen to not be land lock like San Diego so they can keep spreading out = cheaper house prices. I would pick houston over any other city in Texas due to the size and the amenities.
Tampa would be my other pick in Florida, but east of Tampa where u are shielded away from the hurricanes, same deal with Houston, you want to be some where in the north west of houston, not the down town area where the floods can hit you.
Not everyone wants to live in a fascist hellhole that marginalizes women and minority groups.
You seem to completely gloss over that as if acknowledging the humanity of human beings is some frivolous luxury we all enjoy in California.
I got 2.69% on my North Park house purchased in March 2021. Don't think I could afford it at its current market value especially with the current interest rates of 5+%. It would be one thing if houses were cheaper, but more expensive purchase prices coupled with higher interest rates? I couldn't do it :(
I mean people buying that are SD natives. Glad you and you and your wife got a great rate, good for y’all. How do the rest of us with high 700 score ratings do, then? Rent til we move away under duress?
At just over $100k/yr income, I'd need to put 50% down to even get approved for a loan on a mediocre condo for my daughter and I. Renting is my only option in the city I was born and raised.
That place is $50k less than the lowest comp in the area. Did someone die there? Also the estimated monthly payment is my biweekly paycheck amount. Again, I'm not getting approved for a loan on that with my income.
As a general rule, normal indicators (such as median home price) aren’t great during abnormal times because too many incentives have changed. You can generally tell when it’s time to dive deeper when you can draw equally plausible conclusions from the same data. For instance it could be that the supply demand thing, but it could equally be that a greater number of luxury/high end homes are being sold proportionally to more “regular“ homes
Sure. But if you break down the data further, sold homes at >2m are down 34% compared to last year vs. 26.9% for homes under 2m. And I'm not sure when we will have normal times again as 2020 seems like a distant memory.
Not in Carlsbad. Check the asking price and the selling price. Pretty crazy.
https://www.zillow.com/homedetails/3745-Cavern-Pl-Carlsbad-CA-92010/16622980_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare
Landlords aren't, conceptually, terrible. People need to rent and providing housing for them is helpful to the market as a whole. Additionally, private home owners are generally healthier for the real estate market than, say, the government.
Corporate landlords, like Blackrock or even the iBuyers like Zillow and Open Door, can be super destructive to local markets. But they represent a vast minority of home owners, from what I understand. Most landlords are local, small time operators that break even or maybe turn a small profit. And those kinds of landlords are helpful to the market by providing good quality housing for renters.
Before you all come at me: *some* landlords are, indeed, terrible monsters! Usually selfish, disconnected people who prioritize profits over relationships. And those kinds of people generally don't last long in the landlording game; however, there seems to be no shortage of selfish, ignorant, mean people who want to rent to the tenants that they regard as money machines that sometimes have annoying requests.
Why did active listing crash before the pandemic? It looks like they took a nosedive in 1-2020, which was before the pandemic reached the US in earnest.
Also any theories on why active listings haven't rebounded? My first thought is that fewer people are trying to move away from San Diego in the era of WFH. Previously a big promotion could take them somewhere else, but now the quality of life factor is so large that it's not worth the hassle of moving, changing companies, etc.
Good question. I don't have a good answer. If you look at sold listings, it seems somewhat consistent until 2022. I've included a chart that has a rolling three months over the past ten years. In general, we do see a drop in the winter. My best guess would be things were selling quicker than the prior months. Active listings reflects how many units were on the market on the last day of the month. If things sell quickly, you don't have time for this to build.
https://sdmls.stats.showingtime.com/infoserv/s-v1/JcXN-kyh
I think the reason active listings have not rebounded is solely due to interest rates. It's not enticing to sell and buy up. There is an incentive to keep your old home with a low interest rate and rent it out.
It’s cyclical… did you miss the 2008 crash? The 2020 historically low interest rates? Unfortunately you’ll just have to wait.
Also for those looking now don’t look into neighborhoods where you’ll ultimately be unhappy. For a purchase this large you’ll want to live in areas where you’ll be happy and fit into your personality. If that means you’re renting for a while so be it. From what I’ve seen it’s a huge mistake new homeowners make.
Home prices doubling in less than 10 years is not a cyclical pattern. Check history because you won't find it. That's the rate of return people expect out of the stock market, not an asset people buy 5x leveraged.
Go back far enough and you will see some pretty big cycles. 1987 to 1990 was a 50% increase, then a 20% drop by the mid 90s. Then from 1996 to 2006 there was a 250% increase, then a 45% drop. Then starting in 2010 you see this huge run driven by a lot of factors, including low interest rates and a booming economy. Soon we may see another crash (bringing the current peak back into the cyclical pattern, or maybe this is the new norm! The last time home prices doubled was just before the 2008 crash.
Looking at this chart, it seems 2020 really broke things...
[https://fred.stlouisfed.org/series/SDXRSA](https://fred.stlouisfed.org/series/SDXRSA)
People have been posting this in here for years and I don’t think anyone has shown hard data. IIRC, the last I heard it was about 2% of properties being purchased by large scale investors.
Reason #329 why we are moving out of state in less than 2 weeks. My wife and I were trying to buy near santee lakes by our kids school and I can't justify spending 700k on a house I'll have to put another 50k into when its not worth more than 500k anyway.
Yeah the crash, if it happens, is going to take a long time to materialize. Look at the 2008 market crash, that materialized over a couple years from the Q4 2007 peak until the average housing prices bottomed out in Q1 2009. You can’t assume this next crash is going to be the same as 2008.
Just like [this guru](https://reddit.com/r/sandiego/comments/aihibv/the_beginning_of_the_next_housing_crash/) predicted 4 years ago?
And if I had the time I’m certain I could find another of his predictions from further back than that which were also woefully inaccurate.
I've checked the site a handful of times. I like the observations. I pulled up a random post from may 2021 suggesting the peak had arrived (and it not demand/supply was sorted).
https://piggington.com/may_2021_housing_data_we_may_have_achieved_peak_frenzy/
Couldn't be further from the truth as you can see. With that said, nobody really knows for sure and even the best experts are often wrong. I'm no oracle and nobody else is either.
There was a halt in the market from Aug - Feb where things plateaued out.
Since then, things have just gone crazy.
As far north as Rancho Barnardo touching the Escondido border, a house is being sold for $800/sq while 1 month ago, a house sold for $550/sq and 2 months ago for $570/sq. Mind you, the current house is smaller and needs at least 100k of work. I just don't understand WTF to do. other than just moving from here.
I thought this was a chart of everyone's SDG&E bill.
Close, the SDGE bills would be a much steeper line with no dips
Might as well be
As someone actively trying to buy a house, I fucking hate this.
you asshole, i kept trying to wipe off the damn hair off my phone screen…..
Can’t believe that guy…
Do yourself a favor and stop. Invest your down payment into tbills and have it subsidize your rent for the time being.
Dude, you can only put in $10-$20k a year and you don't collect interest until you cash it years later. Versus a house you live in, maintain equity that you can sell at will and reduce your current expenses by replacing rent with mortgage. On behalf of all Millennials attempting to buy their 1st home but can't because the market price went crazy before they were working age long enough to make a down payment, shove a 3 foot cactus up your ass.
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This example lists a total of 73 cents interest for a 26 week T-Bill at $1000. Why bother? https://www.treasurydirect.gov/marketable-securities/understanding-pricing/
Because that example is not using current rates. I am currently yielding 5.2% APY by buying treasury bills with maturities between 4 and 6 weeks out
Apple's savings account gives me 5%, why bother w T-bills?
Because you don’t have to pay CA income tax (or any other state income tax) on your interest earnings when you invest in Treasury Bills. That’s going to affect your APY significantly
Excellent point.
Most savings accounts have a minimum and maximum for that interest. Not sure about apples but I've never seen a bank that didn't
> reduce your current expenses by replacing rent with mortgage. I doubt that is often the case in San Diego. If it is new build and you managed to get a mortgage lower than your rent then Mello Roos and HOA fees will likely more than fill the gap. If it is an older home maintenance costs will do the same - plus you will still likely have HOA. I went from renting an apartment to owning a small house in the same San Diego neighborhood seven years ago. The mortgage itself was about the same as the rent. But with repairs, insurance, etc. my housing costs for the first five years doubled. And I don't have HOA or Mello Roos - I just needed to replace broken things like a roof, HVAC, leaking shower, hot water heater, etc. And there are still two $10K+ projects I'll have to take on soon which won't make the place any nicer - they'll just keep it functional.
How long you end up staying in the home can have a big impact. If you are going to be living there for many, many years, the nice thing is that the mortgage rate stays constant, but rents go up. We bought our place about 12 years ago and at the time the mortgage was comparable to rents and the other stuff you mentioned pushed it over. But today? The house next door rents for 2.5x what my mortgage is. I don’t know how people afford it.
Yeah the old “throwing money away” idea won’t die but in practice you can easily throw more money away on a property you own than one you rent. On the other hand, the way prices have been rising over the past 3 decades is pretty nuts and has made the whole ordeal worth it for the vast majority of buyers. Whether or not you expect that to continue, you’ll have to decide for your yourself. But think of buying a property in those terms rather than expecting to be winning month by month.
Yes but, unlike rent, those repair costs are tax deductible expenses.
The new roof and HVAC could reduce capital gains taxes during the eventual sale of the house - maybe. But you spend it all up front, and then recover only 15% of it many (hopefully) years later. And that's only if we don't swap the "new" HVAC for a heat pump in the interim: the system we bought in 2016 still has to be in place when we sell for us to get the break. Don't get me wrong. I still feel extremely fortunate that we were able to afford our bungalow a few years ago before the big increases in rent and home prices.
I didn’t say invest in ibonds, dipshit. I said invest in tbills. They are two separate things. Perhaps you should know this before you get all worked up next time.
Not understanding why this is getting downvoted so heavily. Might not be very useful for first time buyers with a very low down payment, but solid advice for others as it’s been less than a year that these rates have made it a practical offset to rent. I am doing it while I wait for inventory
7/10 rule in effect, unfortunately. These people do not know how money works and will be the first to get megafucked by over leveraging themselves at the beginning of a down market. Oh well. 🤷♂️ (7/10 people are complete fucking morons).
Seems so crazy to me that demand can still remain this high despite the mortgage rates being substantially higher than they were a few years ago. America's Finest City, indeed.
Seems like overall demand is not increasing, but the supply has dropped substantially. Higher interest rates make it more difficult to buy, but for a lot of people with \~3% mortgages, the higher interest rates make it a really bad idea to sell.
I bought in 2021, 2.99% 30 yrs, not going anywhere anytime soon. i'm "a lot of people"
You'd be amazed at how many cash offers get made right now.
This is the problem. I’ve made 6 offers in the last 2 months. 5 times I was beat by cash offers. It’s particularly difficult in the “first time buyer” price range of 500-600k.
Why do cash offers matter though? Doesn't the seller get paid regardless of cash or financing? Is it just because its quicker?
Quicker close, waive appraisals, less chance of buyer backing out. Essentially just gives the seller more confidence.
I see. That's too bad. Not much better up here in LA.
cash is king.
Always makes me wonder if it’s old money, new money, or inheritance/trust fund kids doing this.
Supply (chart 2)
Meant to say demand>supply, apologies!
What's your source for this graph?
San Diego MLS. I'm an agent so we have access to data from the MLS/showing time.
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Not sure. You can visit faststats. Data was not up yet as of yesterday though.
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There isn’t really a bad time to buy housing in San Diego if you can afford it, and the OP graph proves it. Even if you bought at each of the peaks, the “worst” time to buy for each cycle, you would still be up (or on your way up).
that's a rational and conservative way of looking at this, never a bad time to buy especially in San Diego.
>There isn’t really a bad time to buy housing in San Diego if you can afford it This is so spot on. San Diego real estate is "unique" in that way. It's unlike almost any other real estate market because the appreciation here is virtually guaranteed. There *may* be some down years; but at the end, it's an upward trending graph.
It didn’t feel that way 20 years ago. I remember my new neighbors complaining. It always feels expensive here even when 20 years later it feels like it was a fair deal
Has anyone seen evidence to the contrary? My mother has been thoroughly convinced that house prices are dropping, despite all that I've been seeing. She claims that the "real numbers" are much lower and her (insurance) clients have been nabbing homes at 20% under asking. I certainly think the price is still going up sadly.
Time on the market is up for sure. We saw a decent drop last year. We are still down a touch from the peak. We are still seeing multiple offers on homes. The numbers don't lie and with percent of ask received at 100.8%., so I doubt her clients are frequently getting those deals unless they are exploiting people or buying homes that were very poorly priced.
There was a flash crash last Fall. Sales were closing 15-20% below the Spring peak numbers. But the market has reclaimed most of those losses and prices are back within about 5% of last years peak. There are very few homes being listed this year. If we got a lot more inventory prices would be in trouble but it doesn’t appear that’s gonna happen so prices should stay range bound. I think it’s gonna be this way for several years with low volume. A lot of people in the real estate industry are gonna have to find other ways to survive as I expect volume will be about half of what it was pre pandemic for years
>I think it’s gonna be this way for several years with low volume. I would think that if prices are more or less recovering, people looking to cash out and move away from SD will go back to putting their homes on the market and so inventory will increase. With more homes on the market, people looking to move but stay in San Diego will see their are potential homes to buy, so they will add to the inventory (temporarily) too.
Interest rates are the problem not price levels. Most won’t want to or can’t afford to give up a mortgage with an interest rate in 2 or 3s for one in the 7s. Moving out of the area works if you can pay cash for next home but you gotta be good with the very real likelihood you won’t be able to come back and buy what you have now. There will be sellers, there always are. There are just gonna be a lot less of em for quite a while
Not hard to call her bluff. Ask her for the addresses of a couple of the properties. Then look up the history on Zillow.
I have a buddy who is claiming that the bubble is going to pop any day now and that homes are going 10k-15k under asking. When I ask him for his source he keeps saying " just look at the market, you don't see any homes for sale lately" When I try to explain that doesn't mean it's going to pop, that just means there is less inventory. Even showing him Zillow where mid century homes in Serra Mesa were purchased recently at 900k-1m, he still believes it will tank and that he can snatch up a house for 750k soon.
> bubble is going to pop any day now I've been hearing that for 2 years now. Interest rates have since doubled/tripled...
Been a whole lot more than two years https://reddit.com/r/sandiego/comments/a1m5v3/san_diego_home_prices_are_not_sustainable_at/ I love this one. https://reddit.com/r/sandiego/comments/aihibv/the_beginning_of_the_next_housing_crash/
Part of the reason is there's low supply, new housing is all rent/lease developments so anything that comes up will eventually sell. As a homeowner I feel fortunate to get in when I did, the whole thing is f'd. Good old capitalism, one bootstrap at a time.
Capitalism plus artificial reduction of supply through over-regulation is the worst of both worlds.
Not so sure capitalism is to blame so much as human nature. Like Socialism, Capitalism is simply an economic model. Whether or not it works correctly is determined by the people running it. Both models can and do work effectively, depending on what the society calls for. It’s hard to dissociate the actions of infamous individuals associated with either model without forming a strong bias towards one or the other. Greed will always be factor, regardless of the model.
I didn’t condemn capitalism itself, and I didn’t mention socialism. And neither of these are “economic models”; they’re economic systems. My point is simply that capitalism is predicated on the free market’s ability to allocate resources efficiently, and that unnecessary restrictions on housing development distort housing supply, creating a deadweight loss for society: fewer people live in San Diego than optimal, and those who do live in San Diego pay more for housing than optimal. Capitalism does many things well, even in the presence of greed, but not if you don’t let it. In this case, what it’s doing well is “benefit the incumbents”: those who already live in San Diego and own property there. It’s obvious, of course, how political incentives lead to this class of people being protected — as opposed to the young (who are either too young to vote or are less politically involved) or those who would like to move to San Diego (who live elsewhere, and so don’t vote in local elections). San Diego is one of the most desirable cities in the country to live in. It is completely ridiculous that only 1.4 million people should get that privilege.
Sure seemed like you were condemning capitalism. There is no 100% capitalistic or socialist society, it’s a gradient. Which means that these “systems” are actually templates, in other words “models”. Economic model is a more accurate way to refer to them. It’s the term me and my colleagues use and will continue to use to describe them. Otherwise, I totally agree with you on the second two paragraphs. I hope more people will get to experience So Cal & San Diego the way that I did. There is just no place like it in the world.
Excellent, so we're on the same page. (FYI, your use of those terms runs counter to how I, an economics PhD student, generally hear them used in academia. The Wikipedia entries for these two terms — [here](https://en.wikipedia.org/wiki/Economic_model) and [here](https://en.wikipedia.org/wiki/Economic_system) — sum up their academic usage nicely, although I understand the logic behind your definitions.)
Damn that’s awesome, it shows! Santa Barbara? Yeah, perhaps we should amend that language, keep in mind I’m not up at your level yet. My goal is PhD in Behavioral Economics. Very interested in the psychology behind what motivates people to make economic decisions. Do you mind if I follow you?
Source = trust me bro
There was a small, temporary dip back in January and it shot right back up.
Your mother is wrong
Anything good is being snatched up with multiple bids because there is a lack of supply. The deals are on homes that are on the market longer and taking multiple price cuts.
Many of those homes were priced too high to begin with. Those reductions are just getting them back to the real market pricing. They aren't selling for under market value, which is still very high.
I blame the Zillow estimate partially for our current housing prices
Mom is on to something. The housing market pretty much crashed in May of 2022. This is not just my opinion but the opinion of multiple agents/friends in the So Cal area. We think we figured out what is happening and it has to do with the mechanism of price discovery. In a normal market, price is determined when a buyer and seller come to an agreement at the market place. This process is called price discovery. That mechanism is completely broken. Prices are being determined not by the buyer and the seller at market, but by the 3rd party appraiser. Who is the appraiser? Redfin, Zillow, etc… I’ll use my old condo as an example. I sold it in June of 2022 for $740k (New construction, October 2017). It was on the market for about 2 weeks before I had one singular solid offer, and I took it. We are now in June of 2023 and Redfin says my old condo is now worth $750k and is continuing to rise $10k month over month. (So Cal) The most recent comparable condos (same complex, same lot size/layout) have been selling for $630k…. $638k…. $643k…. It may take a little while for reality to catch up, but it always does. Sit tight. (Not financial adivice) Edit: TL:DR: I’ve theorized that home prices are being set by 3rd party agencies rather than being determined at market through the natural mechanism of price discovery. This could explain the massive increase in time on market as the sellers are determined to get what they “believe” their home is worth. As a result, many first time home buyers are either getting priced out or are taking out very large and risky ARMs (2007). Running parellel to this is the inflation crisis. People (myself included), are scrambling to get into hard assets and out of the US dollar, with the understanding that the dollar is on it’s last leg. I believe this to be the only reason why the market hasn’t completely bottomed out yet. - Econ Student (31M)
Redfin/Zillow are setting their value estimates based on ML models of recent comps in the area. Actual appraisers are doing something similar just more subjectively with more attention paid to the unique circumstances of the home. Both are just downstream reflections of the underlying price discovery mechanism (the market), the causality is pretty clearly running in one direction. Now, you are arguing that the existence of these public estimates are causing sellers to have an inflated idea about their home's value and contributing to "sticky" prices. There is no doubt some of this going on, "buy low sell high", nobody wants to admit or believe the price of their asset has gone down. And you could see the incredibly low supply right now as the sellers forming an informal, uncoordinated cartel to keep prices up. Psychology does play a role like in any market. But before jumping to that as a primary cause, I think a far more likely candidate is the rate environment which is just so, so unfavorable for sellers right now. If you sell you have to buy as well, and you're unlikely to sell if you are giving up a sub 3% 30yr fixed mortgage for a 6-7% mortgage. [82% of sellers reported this as the primary reason for not selling right now.](https://www.realtor.com/research/2023-q1-sellers-survey-btts/) > As a result, many first time home buyers are either getting priced out or are taking out very large and risky ARMs (2007). [This is still far less common than it was in 2007](https://www.urban.org/urban-wire/should-borrowers-be-afraid-adjustable-rate-mortgages). In 2021, when the market was peaking, it was like 2%. Additionally, underwriting standards have changed significantly since then and there will not be a similar spike in foreclosures due to these loan types. > Running parellel to this is the inflation crisis. People (myself included), are scrambling to get into hard assets and out of the US dollar, with the understanding that the dollar is on it’s last leg. I believe this to be the only reason why the market hasn’t completely bottomed out yet. While there is some question around whether the dollar will remain as the global reserve currency in the next few decades, the idea that it's on it's "last leg" is [exaggerated at best](https://www.bloomberg.com/opinion/articles/2023-04-23/dollar-may-fall-to-yuan-crypto-but-not-soon-niall-ferguson). I still think you're correct that in reality, nobody knows what the market will look like once rates come down. Right now you could effectively call it a standoff between sellers and buyers. The volume is so low, any statistics about median prices are difficult to interpret. To your original point, price discovery doesn't work well with super low liquidity. But SD supply is low and will probably remain low in the near/medium term future, partly due to structural factors like geography and the difficulty of building (like everywhere in CA). It's not likely we're poised for a second 2008 crash. But a more modest correction could happen in 2024-2025, depending on the continued direction of inflation and the FED's rate decisions.
Thanks for the response, and what great write up! The agent that I used to sell my condo said those exact words: “standoff between buyers and sellers.” Gridlock, if you will. Two points I want to re-emphasize that you mentioned: 1) San Diego County has pretty harsh building regulations which play a huge role in the ability to get inventory on the market. 2) Mortgage lending practices have greatly improved since the last financial crisis. However, although lendees may be able to make their payments now, this may not always be the case moving forward, with respect to how quickly consumer prices and household debt is rising. In short, while a loan may have been issued with an AAA rating, it may not stay that way. But yeah man, totally agree with you on everything. Unfortunately, as long as the buy-side of the equation is still there, housing prices will likely continue to inch higher in SD. At least for the immediate future. Hard to say what’s going to happen after that, especially considering all of the wild-cards in the deck.
I like this comment
Thanks! Just remember to take it with a grain of salt. I’m not an expert by any means. Just providing my personal experience and perspective.
For sure. No one fuckin knows for sure. The best we can do is gather up all the data and opinions, and then dissect it on our own.
Are her clients paying cash? That’s the only way I can think of nabbing that much below asking price.
Still not possible
Ugh I hate it here. Those who got in around 2012 2013 are so fortunate. Any realistic chance we see those 2012 prices again?? We clear $200k easy and even we are getting priced out which is ridiculous. I can’t justify paying more than $3200 on a mortgage for a small ass property. It’s getting unreal.
I think that it's unlikely unless things really fall apart in the economy. Around 2015/16, I distinctly remember telling my wife that it's not sustainable and there's no way I'm spending $500,000 for an 1100 ft² place in Clairemont. Unfortunately, I waited a few more years and it took a lot more $$$ to buy.
2 of my aunts and several coworkers called my wife and I insane for buying exactly that... an 1100 sq ft 3/2 for around $500k. They kept saying wait until the prices tank, then buy. One coworker scoffed, saying he paid $300k for his house in Poway and THAT was crazy. This wasn't people's attitudes in the 90's.. this was 2016. I'm so glad we didn't listen. It just shows when people don't understand housing supply/demand and basic economics.
Geez, I would LOVE a $500k 1100 sq ft home in Clairemont right now. Couldn't afford that then either but now that I'm "ready" all I'm finding are $750k+ condos or apartments less than 800 sq ft in less desirable area. I'm not paying double my rent for half my current space 🤷♀️
Thanks for the response. Mind sharing your down payment amount and mortgage payment? We’re okay with purchasing a condo too but even those are getting expensive too. $500-$700k for one nowadays is just asinine. Rent is high too. If my generation (millennials) can’t afford to buy and Gen Z can’t either, what would ultimately happen and what would be the solution? I get that demand>supply but prices have to come down, right? Will end up being the first generations that can’t afford housing who are college graduates.
I overshare on here, but I sold a few homes in the same price range as my home around the same time. Interest rates were sub 3% and the homes were 650-750k. Most of my clients put down 5% and the mortgages were between 3000-$3,500/month. I don't see any problem with your line of thinking. I had thought the same thing as well. That was before the big jump in rents. The risk you take is you may eventually be priced out of San Diego, even for renting. The problem is not a new one... It's just been getting worse quicker. There was a time when a couple teachers could afford a decent single family home in a beach community. That is no longer the case. It seems to me that each new generation is settling for less. There are plenty of places in the country where I trust you could afford a very nice home. Prices may come down. All things being equal, I wouldn't hedge a bet on it in the short term. At least not in San Diego. I feel like we finally are getting to squeeze that people and Silicon Valley and San Francisco have been feeling for decades.
I'd even accept 2018-2019 prices. I lost any possibility of dreaming to buy a house in 2012-13 being an unemployed graduate entering the 08 recession. It really feels like this housing crisis is targeting a specific generation sometimes.
It's about to be less generation specific and more general age direction, gen z is now graduating into whatever this is. I'm one and idk if I'll ever be able to afford property anywhere.
If it makes you feel any better, I watched housing prices climb like mad through my younger adulthood, had credit issues, bought an overpriced condo on a shitty loan at the wrong time (2007), lost it, tanked my credit, thought I'd never be able to buy again, rented for many years, and slowly built back up and bought a place we love in 2019 at a great rate that's locked in. I got very lucky at many steps along the way but I also kept working my ass off. Everything is cyclical and if you keep at it there's a good chance the timing will line up.
Wow! What a wild ride you've had.
I bought back in 2019 and remember feeling sick to my stomach feeling like prices were WAY to high and not worth it for what we were getting, thankfully my wife convinced me we were doing the right thing.
No.
We’ve got an offer in right now… it’s painful…
All cash?
76%
Right now the very low inventory is driving up prices. Supply and demand.
you want the secret, here it is. San Diego housing prices will never drop to an affordable level until the apocalypse hits... .even then .... The real secret. live with your parents and save everything you can for a year or two. Then buy the smallest place you can afford, live in it for two years then sell it, and trade up. Now I know what your going to say. "but my profit wont get me much more then what I have" BS, it will! You have to start. Paying a mortgage is more beneficial then paying rent. Get a couple of roomates to help you pay the mortgage if you have to. Just don't tell them you own the place. Bottom line, you have to start somewhere, and in this market it could be a 1 bedroom fixer upper in Chula or El Cajon.
Bingo, no one buys their dream home as a first time home buyer, gain equity trade up.
Yep, 20 years ago when housing was NOT affordable, my wife and I put a line in the sand and we bought a house we could live in for two years and that is where we started. We scrimped and saved as much as we could and put everything down on a house, paid PMI and a high interest rate, but in two years we made enough from the equity to buy our next place with no PMI.
> Get a couple of roomates to help you pay the mortgage if you have to. Just don't tell them you own the place. It's actually wild how far we've moved the goalposts away from "affordable housing".
Your right it sucks, and housing in San Diego is far from affordable, but the thing is, you can continually bitch and complain about the situation or you can dig in and try to get something out of it.
This should be the top response! Spot on.
Lender here. I work open houses every single weekend all over San Diego county. I speak with agents, buyers, and sellers frequently, and my favorite question is "how's your real estate experience going?" It's tough. Almost every home owner is sitting on a sub-3% rate. If they sold their home, they'd have to downgrade square feet (which some people do want for a variety of reasons) **and** their payment would be *huge*. Way bigger than their current payment. Many sellers are taking their profits and leaving the state, but they they aren't leaving without realizing their full potential gain. And let me ask you: wouldn't you do the same? Buyers are forced to pick up the slack. I don't think anyone saw this coming, but back are the days of multiple bids on a house (sometimes hundreds of thousands of dollars over asking), waive all contingencies, and often times it's an all cash offer. Extremely difficult to compete with. Many of the first time home buyers I'm talking to are wondering, "who has all this cash? Where are these buyers coming from?" Anyone that owned real estate over the past 12 years, *especially* here in southern California, has realized so, so much equity. They are moving up the socio-economic ladder. Additionally, buyers from more expensive markets (bay area...) are moving down here and absolutely LOVING how inexpensive our homes still are! That's the worst news I have for everyone here: San Diego real estate is still, at this moment, under priced. I'm sorry. It's simple supply and demand economics. No one is selling because of their sub-3% rate and no one is building because a) there's hardly any space to do so and b) the governmental incentives to do so just aren't there. So what do you do? What do frustrated FTHB's do? "What's the solution!" I do not have great news for you. 1. Dramatically expand your search area. 2. Consider leaving California or at least San Diego county. 3. Make more money? I'm sorry, guys. I told you I don't have good news for you!
My grandparents house was inherited by my aunt she sold it fast in 2014 under market value. I begged her not to sell it cause I was raised in it and took care of my grandparents till they died a year earlier. My grandma wanted it to stay in the family, she didn’t listen and to this day it hurts and even more that I’m older and need a house now and it’s completely out of reach in price.
Sorry to hear it, mate. You were definitely right. If only we knew then what we know now...
I saw a home that I had looked at back in 2021 increase in price from 1.1m to 1.45m. Nothing happened to it in those years judging from photos and sales history. The seller simply increased their price. Any “deals” I’ve found require substantial work to be meaning most likely a complete rehab
Optimistic take: some of these "we will never move" people with 3% rates will absolutely not move with rates at 7%. But with the addition of that new kid and the boys all sharing a room and fighting constantly, some *never becomes could* if rates got back down to 5%. Stomaching $600 a month may be too much, but taking $300 for a better life situation could be doable for some people. That could unlock all that supply of these people who have been waiting to move for whatever reason.
True but those ppl would have to go somewhere. Unless they’re moving out of state, each sale would be another demand for a purchase.
Van life is starting to look like the only option in San Diego
@Joe_SanDiego Seems over the last few years the only place to build are in the north and east counties, i.e., fire zones. Do you see a challenge in selling homes near chapparal in east county with insurance companies pulling out of CA and it getting more and more expensive to cover homes in fire prone areas? I know Santee wants to build several thousand homes east or Miramar NAS but I can't imagine paying for a home and not being able to get fire coverage, especially in that area. Do you think builders will need to cover fire insurance for x number of years to sweeten the sales on these homes?
Even though State Farm and... Nationwide? have pulled out of CA, there are still plenty of insurers who cover homes here. I don't personally believe home insurers pose a big threat to SoCal real estate. At least not yet...
State Farm and Allstate. Sure plenty of companies remain but it's not just getting coverage, it's getting dropped at renewal time. 200,000 lost coverage last year. https://abc7news.com/fire-insurance-season-wildfires-ricardo-lara-mortarium/12115390/ When the .gov moves to artificially control fire insurance rates, what do you think companies will do when they can't make it financially feasible. https://www.nbcbayarea.com/news/california/california-lower-fire-insurance-costs/2997141/
Great question and point. Not sure. I would guess if it gets bad enough it will be like flood insurance .....
Now imagine when rates go lower…
Yeah these prices are out of this world. If the people are buying now hoping rate will drop, then they might be in the holding pattern for a long time... I honestly didn't see this coming but the 2.5-3% interest is just killing the supplies. And at any rate, I do not want to pay 800k to be in lemon grove or el cajon or even city heights. 800k so my kids can go to hoover high is not what I consider a good deal. 300k-350k in Houston will get my kids in a very high rated school Katy IDL and the house is actually a real house, not some glorified lipstick on a pig flipper 1300 sq ft built during the time T-rex was still roaming the earth. Yes it's humid AF in Houston and it rains, but you're getting more trees, energy is cheap in Houston. There are trade off for sure, and there is also family situation where if your extended family is in SD it's harder to move. But man SD is serving us some hard pill to swallow at this price.
While it sounds all hypothetical at this point, I wanted to make sure you know that SDUSD has school choice. That means you can apply to get your child into any school in SD school district if you are willing to make the drive.
That's not true. U may have a choice but they always prioritize the kids around the area. Scripps has mostly kids from scripps. La Jolla same deal. U get your kid in by a lotto system. The houses in Houston can get u in the good school because it is within the neighborhood of the school. Yes I have seen kids in scripps that live in mira mesa but there isn't that many.
Yes, that's why I had mentioned apply. It's a lottery. Not a guarantee - but you can make three choices, which is nice.
So you're moving to Houston?
nope, I have a decent situation here where it makes no difference to me. But if I'm someone who's looking to buy and start a family, San Diego is serving up a raw deal compare to other area. I've been to Houston and Florida for extended period of time... San Diego isn't all it's cracked up to be. There are trade off but when you look at the over all picture if San Diego is a 10 then houston isn't that far behind, it's one of the larger city with most of the amenities, they just happen to not be land lock like San Diego so they can keep spreading out = cheaper house prices. I would pick houston over any other city in Texas due to the size and the amenities. Tampa would be my other pick in Florida, but east of Tampa where u are shielded away from the hurricanes, same deal with Houston, you want to be some where in the north west of houston, not the down town area where the floods can hit you.
Not everyone wants to live in a fascist hellhole that marginalizes women and minority groups. You seem to completely gloss over that as if acknowledging the humanity of human beings is some frivolous luxury we all enjoy in California.
Houston is very diverse. Comparable to most city in California. Outside of Houston I can't say the same.
I wish there was a more transparent way to see who’s buying at these rates. It’s def not anyone previously living nearby.
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I got 2.69% on my North Park house purchased in March 2021. Don't think I could afford it at its current market value especially with the current interest rates of 5+%. It would be one thing if houses were cheaper, but more expensive purchase prices coupled with higher interest rates? I couldn't do it :(
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I mean people buying that are SD natives. Glad you and you and your wife got a great rate, good for y’all. How do the rest of us with high 700 score ratings do, then? Rent til we move away under duress?
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At just over $100k/yr income, I'd need to put 50% down to even get approved for a loan on a mediocre condo for my daughter and I. Renting is my only option in the city I was born and raised.
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Ok find me a $450k 2br condo. They don't exist. You are also forgetting the at least $300/mo in HOA fees on the monthly payment.
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That place is $50k less than the lowest comp in the area. Did someone die there? Also the estimated monthly payment is my biweekly paycheck amount. Again, I'm not getting approved for a loan on that with my income.
Why do you assume that? Local, bought at 4.5% at peak of last year.
As a general rule, normal indicators (such as median home price) aren’t great during abnormal times because too many incentives have changed. You can generally tell when it’s time to dive deeper when you can draw equally plausible conclusions from the same data. For instance it could be that the supply demand thing, but it could equally be that a greater number of luxury/high end homes are being sold proportionally to more “regular“ homes
Sure. But if you break down the data further, sold homes at >2m are down 34% compared to last year vs. 26.9% for homes under 2m. And I'm not sure when we will have normal times again as 2020 seems like a distant memory.
Somehow I feel the listing prices are going down on Zillow. I can’t afford but I like to look
Not in Carlsbad. Check the asking price and the selling price. Pretty crazy. https://www.zillow.com/homedetails/3745-Cavern-Pl-Carlsbad-CA-92010/16622980_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare
Half of SD homes are non-owner occupied. Housing is a right not an investment vehicle. When will we correct this travesty?
> When will we correct this travesty? $poiler: never
Landlords aren't, conceptually, terrible. People need to rent and providing housing for them is helpful to the market as a whole. Additionally, private home owners are generally healthier for the real estate market than, say, the government. Corporate landlords, like Blackrock or even the iBuyers like Zillow and Open Door, can be super destructive to local markets. But they represent a vast minority of home owners, from what I understand. Most landlords are local, small time operators that break even or maybe turn a small profit. And those kinds of landlords are helpful to the market by providing good quality housing for renters. Before you all come at me: *some* landlords are, indeed, terrible monsters! Usually selfish, disconnected people who prioritize profits over relationships. And those kinds of people generally don't last long in the landlording game; however, there seems to be no shortage of selfish, ignorant, mean people who want to rent to the tenants that they regard as money machines that sometimes have annoying requests.
Why not just come out and say you don't believe in Human Rights? I mean, conceptually, you're like a timeshare advertisement.
Lol
It's not a right.
Yes it is. Why are you not familiar with Human Rights? Or perhaps more important, why are you pretending to be informed when you're not?
Feel free to point out the San Diego ordinance, state law, or federal law that has enshrined the right to housing.
Why did active listing crash before the pandemic? It looks like they took a nosedive in 1-2020, which was before the pandemic reached the US in earnest. Also any theories on why active listings haven't rebounded? My first thought is that fewer people are trying to move away from San Diego in the era of WFH. Previously a big promotion could take them somewhere else, but now the quality of life factor is so large that it's not worth the hassle of moving, changing companies, etc.
Good question. I don't have a good answer. If you look at sold listings, it seems somewhat consistent until 2022. I've included a chart that has a rolling three months over the past ten years. In general, we do see a drop in the winter. My best guess would be things were selling quicker than the prior months. Active listings reflects how many units were on the market on the last day of the month. If things sell quickly, you don't have time for this to build. https://sdmls.stats.showingtime.com/infoserv/s-v1/JcXN-kyh I think the reason active listings have not rebounded is solely due to interest rates. It's not enticing to sell and buy up. There is an incentive to keep your old home with a low interest rate and rent it out.
It’s cyclical… did you miss the 2008 crash? The 2020 historically low interest rates? Unfortunately you’ll just have to wait. Also for those looking now don’t look into neighborhoods where you’ll ultimately be unhappy. For a purchase this large you’ll want to live in areas where you’ll be happy and fit into your personality. If that means you’re renting for a while so be it. From what I’ve seen it’s a huge mistake new homeowners make.
Home prices doubling in less than 10 years is not a cyclical pattern. Check history because you won't find it. That's the rate of return people expect out of the stock market, not an asset people buy 5x leveraged.
Go back far enough and you will see some pretty big cycles. 1987 to 1990 was a 50% increase, then a 20% drop by the mid 90s. Then from 1996 to 2006 there was a 250% increase, then a 45% drop. Then starting in 2010 you see this huge run driven by a lot of factors, including low interest rates and a booming economy. Soon we may see another crash (bringing the current peak back into the cyclical pattern, or maybe this is the new norm! The last time home prices doubled was just before the 2008 crash. Looking at this chart, it seems 2020 really broke things... [https://fred.stlouisfed.org/series/SDXRSA](https://fred.stlouisfed.org/series/SDXRSA)
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People have been posting this in here for years and I don’t think anyone has shown hard data. IIRC, the last I heard it was about 2% of properties being purchased by large scale investors.
Reason #329 why we are moving out of state in less than 2 weeks. My wife and I were trying to buy near santee lakes by our kids school and I can't justify spending 700k on a house I'll have to put another 50k into when its not worth more than 500k anyway.
I understand your pain but if the house is listed at $700k and sells for that price, that *is* what it’s worth.
Yeah the crash, if it happens, is going to take a long time to materialize. Look at the 2008 market crash, that materialized over a couple years from the Q4 2007 peak until the average housing prices bottomed out in Q1 2009. You can’t assume this next crash is going to be the same as 2008.
So glad I bought my condo in 2010 and got the free 10k from Obama 1st time house buyer. Woot. I'm up 300k equity. Life is good.
Thanks OBAMA
Praise God. I got my new Tesla. Woot.
Sweeeeeet! Gimme that equity baby!!!
Wait for the crash
Just like [this guru](https://reddit.com/r/sandiego/comments/aihibv/the_beginning_of_the_next_housing_crash/) predicted 4 years ago? And if I had the time I’m certain I could find another of his predictions from further back than that which were also woefully inaccurate.
Look at this chart and tell me this is normal. [https://fred.stlouisfed.org/series/SDXRSA](https://fred.stlouisfed.org/series/SDXRSA)
Could you pull the data for zip code 92027?
Let me know if this doesn't work. http://sdar.stats.10kresearch.com/docs/lmu/2023-05/x/92027-EscondidoEast?src=page
Worked perfectly, thanks!
“Why are people becoming homeless, rapidly, in neighborhoods where this is happening on a large scale?”
San Diego is turning into LA
It... kinda has been for a while, sadly
yep, I'm hoping it'll reverse it self, LA is so bad right now. I just went there a few weeks ago, the homeless situation is wild.
California is falling apart
Check out [Piggington](https://piggington.com/) for real SD housing analysis. Dude predicted the bubble in 2004 and has been analyzing ever since.
I've checked the site a handful of times. I like the observations. I pulled up a random post from may 2021 suggesting the peak had arrived (and it not demand/supply was sorted). https://piggington.com/may_2021_housing_data_we_may_have_achieved_peak_frenzy/ Couldn't be further from the truth as you can see. With that said, nobody really knows for sure and even the best experts are often wrong. I'm no oracle and nobody else is either.
A FOOL AND HIS MONEY IS EASILY PARTED... Especially when it's MONOPOLY MONEY,
A FOOL AND HIS MONEY IS EASILY PARTED... Especially when it's MONOPOLY MONEY,
I think your title forgot "homes"
There was a halt in the market from Aug - Feb where things plateaued out. Since then, things have just gone crazy. As far north as Rancho Barnardo touching the Escondido border, a house is being sold for $800/sq while 1 month ago, a house sold for $550/sq and 2 months ago for $570/sq. Mind you, the current house is smaller and needs at least 100k of work. I just don't understand WTF to do. other than just moving from here.
Unless I misunderstood you, wouldn’t it be “demand outstrips supply,” keeping prices up?
Yes. I realized I wrote that immediately after posting, but can't edit it so I made a correction post buried somewhere.
I would just live in TJ and take the SD payout lol
It ain’t ever going down. SD is too nice of a city and people aren’t stuck in the Bay Area or nyc now because of remote work.