Housing Hype & the Savvy Shopper

The Case for Buying Today

“Mr. White, we still don’t have a story for the front page and press time is here!”

“Great Caesar’s ghost Jimmy don’t bother me with that now! Just put in another story about Britney or the housing crisis. They always fall for that, ha ha.”

“No problem Chief, I’ll grab some stats & graphs to work up more panic in the real estate market!”

Dear Reader, do you feel that there’s a lot of hype over housing? Statistics strewn salaciously; prognosticators pontificating? Well, breathe easily, you won’t get more of that here. We talk about specifics for our community that you won’t find on every major newspaper and newsmag.

The fact is that not every property is suffering declining prices. Others have already reached their particular bottom and will be sold at today’s price. If you want a new home, you can find it today and never worry about declining prices.

Hey, I’m not guaranteeing that the price evaluation won’t fall, I’m assuring you that you won’t worry. Why? Because you will be making a long term investment and you will know that ultimately your home’s value will increase.

How do I know this? It’s simple arithmetic. There are 6.6 billion people on the planet and there are (trust me) 0.7 billion square miles of desirable property- almost all of it occupied. Soon there will be 9 billion people. And how many square miles of property do you think there will be? Still only 0.7 billion, if that after global warming and additional pollution. Here in suburban San Diego the population pressure will be even more intense. More people, less land–the land becomes more valuable. Simple arithmetic. If there’s a house on it, so much the better.

If you buy an elderly house on a large lot in El Cajon, La Mesa or Lemon Grove; you’re going to get a great price right now, today. Your Redfin refund is icing on the cake. If it drops another 8% over the next year does that matter to you? Only if you try to sell it then. But if you intend to stay you’ll see a huge value increase over the next 20 years. You’ll have opportunities to put maybe 6 rental units on that property and retire comfortably. What had been a tired old community will be thriving and you’ll be laughing all the way to the bank.

I see two indicators that say you should buy right now. (1) you need a house, (2) you plan to stay. The only question is which house to buy.

These elderly homes are on lots greater than 1/2 acre, less than $300/sq.ft.:

I happen to know that there is an error on this page. Can you find it?

[data from generally reliable sources, please comment on any errors!]

Foreclosures Up, Median Prices Down

The title of a North County Times article from Wednesday says it all: “Foreclosures hit new highs.” According to the article, “The number of foreclosures sold in the county during December leapt 328 percent from the previous year to 1,096, comprising 45 percent of all sales, according to data from a report by ForeclosureRadar…”

North County Times interviewed Professor Norm Miller of the University of San Diego who claims a healthy foreclosure rate is near 1 or 2 percent and until the percent of foreclosures drops, the housing market will not recover.

The article discusses the whole buying low and selling high (or a little bit higher) with foreclosures. The number of foreclosures sold at auctions “valued at about $5 billion… statewide in December. So far, about $3.5 billion has moved in January…”

And while foreclosures are on the rise, the Union Tribune reported on Tuesday that median home prices in Southern California have sunk more than 13% to the lowest level in almost three years. The article covers six counties: LA, Orange, San Diego, Ventura, Riverside, and San Bernardino. The average median home price in these counties was $425,000 last month (lowest since early 2005). This represents a 15.8% peak from last spring with a median price of $505,000. Additionally, “Home sales in the region dropped 45.3 percent to 13,240 from a year ago to the lowest sales total for any December in the 20 years that [DataQuick] has been keeping track.”

To be San Diego specific, another Union Tribune article, also from Tuesday, reported “last month’s median price at $430,000 [was] 17 percent below the November 2005 peak of $517,500.”

The Tribune interviewed Mark Schniepp of the California Economic Forecast who claims now is the time to buy: “I think there is a window of opportunity that will exist between now and summer… Interest rates are only going to fall. The credit crunch is going to get better. There is going to be plenty of inventory. We are not going to have a recession.” Some pretty affirmative words for a pretty unstable market.

On the flip side, The Tribune also interviewed Christopher Thornberg, co-founder of Beacon Economics, who is much more a pessimist: “Sure, it’s a good time to buy if you don’t mind losing 10 to 15 percent of the sales price… There’s no recovery in 2008, no bottom in 2008. Prices are falling at a pretty rapid pace and will continue to fall through 2008 and into 2009, and that’s the most critical thing to keep in mind.”

Up and down, up and down… does any feel like we’re on a roller coaster here?

Recent Sweet Digs Posts:

Affordable Housing in East County

Hot Deals and Downright Steals (You’re Gonna Get Busted!!)

Affordable Housing in East County

You probably know that these days affordable housing often means subsidized housing for renters and buyers. Let’s take a look at how this works using the following extract from a recent city document:

Regional Housing Needs Assessment

To ensure that there is adequate housing stock to meet the demands for Californian residents, the State of California has mandated that City’s provide housing opportunities in their communities. The housing development goals come in the form of the Regional Housing Needs Allocation (RHNA) figures. These RHNA figures are broken into affordability categories. Lemon Grove was given the housing production targets below in 2005:

Housing Type Target # % of Total Who Qualifies* Very Low 46 19% Less than $35,100 Low 32 13% Less than $56,150 Moderate 46 19% Less than $69,400 Above Moderate 118 49% Above $69,400

*Based on household income for a family of four

In order to ensure cities take an aggressive approach in meeting RHNA targets, the State is working toward holding back grant funding and transportation funding for those cities that do not make efforts in meeting the targets. For Lemon Grove, this will have a significant impact on funding for street improvements and park infrastructure projects.

What that means is that cities have incentive to support low income housing. Lemon Grove is working to meet these goals in various ways. One is a condo project on a small block facing Broadway which presently contains a donut shop and an empty house. This will likely have 36 small condos and about 2,200 sq. ft. of commercial space. The project requires a General Plan Amendment, a Zone Reclassification and accommodating commercial & residential neighbors. Density will be higher than normally allowed (expect such exceptions in your city too).

Another proposed project will have 25 units and more are under consideration.

The community receives significant funding for affordable housing but pays in other ways. Higher density, increased crowding of street parking, increased use of other infrastructure including water, energy, sewers, schools and possibly fire & safety resources all become added expenses. This is balanced with increased tax revenues, local business profits and more effective use of neglected land.

For regular buyers and sellers, subsidized housing could translate to increased downward pressure on prices in the area where it appears.

If you are a real estate pro, a local resident or shopping for a home you may wish to be informed about such activities in your area of interest. City governments are required to make such information public and much of it is available on the internet and at libraries. In Lemon Grove the City Manager and the City Planner are quite helpful with information about these proposals.

Hot Deals and Downright Steals (You’re Gonna Get Busted!)

A few weeks ago I noticed a flurry of sales in the Hillcrest, Ocean Beach, North Park areas and noted in my post Good Bye Good Buy, that some pretty fantastic deals had been snatched off the market.  I also saw that end of ’07 prices were swinging up and down which was very confusing and disorienting.  New listings were showing confident asking prices and reductions seemed to be dwindling.  Well, perhaps the year end confidence is waning or sellers were simply holding out for a sunnier forecast in the new year; whatever the previous mindset held, there have been some significant developments in the local market.  It wasn’t that long ago that we were talking about being able to buy a nice condo in Hillcrest under $400,000 and a single family home in that price range was an anomaly.  Now, and I mean right now, there are a number of new listings and reductions that are extremely well priced.  These sellers have positioned their properties to move firecracker fast.  Take a look.

3719 37th Street

• Price Reduced for Quick Sale
• Asking $219,000
• Zestimate $358,000
• 1950 single family home
• 2 beds, 1 bath priced at $281 per square foot
• On Redfin 26 days

3403 41st Street

• Bank Owned but not a short sale
• Asking $234,900
• Zestimate $347,500
• 1927 single family home
• 3 beds, 2 baths priced at $244 per square foot
• On Redfin 6 days

4104 36th Street

• Foreclosure
• Asking $205,000
• Last sold for $386,000 on 2/12/07
• 1924 single family home
• 2 beds, 1 bath priced at $261 per square foot
• On Redfin 113 days

If you liked this post you might also enjoy:

Take My House, Please

The Many Faces of the 2008 Real Estate Market

Rotten San Diego Home Sales – What’s That Smell?!

San Diego Recession Watch 2008

Fox6 asked a great question the other day, “Is San Diego Heading Into a Recession?” The network aired a story that started, “Some of the nation’s leading economists say the U-S is already in a recession. So is San Diego also heading in the same direction?” The rest of the story warned that San Diego could be at the national unemployment rate (5%) by the end of the year. Other areas of concern were the rise of foreclosures and fewer homes being built (hurting the construction industry).

The North County Times ran a story last weekend about the sad state of the economy and the hope of keeping a recession at bay (“Consumers cut back, and economists are gloomy“). Regarding consumer spending, the article had this to say:

“Sales of new cars and trucks, which typically account for more consumer spending than any other type of product, almost certainly fell again in 2007. Spending on furniture and other home-related items began falling in late 2006, a trend that one business owner in the industry says appears to have accelerated through the end of last year. Even the Christmas season, normally a bright spot for shopping centers, provided only a dim twinkle, according to an industry report last week.”

The article goes on to blame the decrease in consumer spending on the housing market: “Rising home values allowed San Diego-area homeowners to tap growing home equity from the mid-1990s through 2006 and go on a decade-long shopping spree… Several economic studies have concluded that a $100,000 increase in home value leads to an average increase of about $6,000 in consumer spending…” I would add that it’s not just the cash flow that encourages people to buy less, it’s the mindset that goes along with hearing consistent bad news of the falling market and rise in foreclosures. It’s like birth control for your wallet.

Recent Sweet Digs Posts:

Monday Madness

Holy Guacamole – What a Beaut!

Take My House, Please

If the Road to Italy is Paved with Spaghetti, What Leads to Hillcrest?

This elevator only goes down, Ma’am

Monday Madness

Gravitational Pull

Robin Realtor writes: “Dear Tom, you are so creative in your blog and so wise about what makes listings and photos good … I wonder if you can give me some tips on creating attractive listings.”

Well, thank you Robin. All that you say is true, of course, but you need to know that I’m not a Realtor. I’ve never faced the awesome responsibility of making my client’s listing look as good as they would like. Allow me to make suggestions that I’ve learned from observing the industry.

Let’s start with what is becoming known as ‘gravitational pull’. In reading some retail industry news I came across this blurb at wired.com: “Apple’s stores have a “gravitational pull” on shoppers. Nearly 30 percent of shoppers who pass within 25 feet of an Apple Store are drawn inside, according to a survey by analyst Gene Munster at investment bank Piper Jaffray.” A related term evolved with Steve Job’s (Apple) product announcements at high tech events. It is said that he created a ‘reality distortion field’ around himself which compelled people to fall in love with his product.

Mesmerizing Master of Marketing, Steve Jobs

[!] Looking directly at this photo may cause confusion and unintended spending.

To create a powerful listing, Robin, all you need to do is generate Gravitational Pull, while avoiding a listing that sucks. As we look around at Our East County listings, it is clear that many agents and sellers haven’t got the message. Ugly photos, gross misspellings, bad grammar and poorly described properties abound. Agents SHOUT IN ALL CAPS, they use extreme punctuation!!!!!, they gush over the handles on the kitchen cabinets and they don’t have a clue. Do listings in La Jolla or Beverly Hills have these problems? Not if the agent wants to keep his job. Commissions may be smaller here but that doesn’t warrant sloppy listings.

Disney’s maelstrom–Gravitational Pull or just plain sucky?

The listings have to generate Gravitational Pull, not fear and loathing. Carnival promotions may work in discount stores and used auto sales lots but are not recommended for major purchases. All those techniques do is tell the world that you are not ready for prime time.

First the basics. Buyers demand facts, useful facts. Many local listings don’t indicate how many square feet are included with a house or lot. It might be nice to know that the back yard can be used for a barbecue party, but if you neglect to mention the un-permitted patio conversion a potential buyer will be annoyed. Start with all the facts. If you must add commentary, keep it brief and encourage the reader to imagine the barbecue rather than spelling it out.

Beyond the facts you need creativity and consistency. Hopefully agents can find an agency that sets quality standards for listings and together you can create an image that the public will recognize even if it appears on a foreign listing site (like Redfin). Each agent in the organization needs to support the others to maintain that high standard. That helps to provide the consistency and opens the door to creativity.

Creativity is elusive, Robin. We have a lot creative of artists and musicians in East County, let’s find the creative Realtors. Someone in your group has it or knows someone who has it. One person can do it, provided that a control keeps him/her somewhat grounded in reality. Let that person go wild with concepts and fantasies until one catches on with the majority. Brainstorm! Then find a way to work it into all the groups’ listings.

You’ve seen a lifetime of creative promotions on TV, billboards, even business cards. Now you’ve got to find your own. Something consistent that will be identified with your group above all others. A trademark. It’s important. Here are some things that could be included in each listing: catch phrases, mantras and repeating images. A common word could be misspelled in each listing in a funny or subtle way and become a flag for your agency. Your photos could have your logo in the lower right corner, just like the TV stations do (I’ve seen this elsewhere but not sure of local constraints). Don’t overdo it; our small, somewhat intimate community will recognize your trademark over time. Use a consistent, sincere tone of writing and, of course, carefully planned photos.

My personal inclination is to offer absolute honesty along with some self-deprecating humor. Many agents are driven by ambition and ego and not too comfortable with, uh, self deprecation. Let’s look that up so I’m not making an idiot of myself… OK, that works. By looking it up, I allowed that I might have made a mistake. This is critical for people in the public eye (perhaps our President’s greatest flaw) if they wish to be perceived as human and likable. So, again, that’s a start in building your image and the consistent image of your group.

Robin, don’t be afraid to say something bad about a property if it is factual. A warning about potential noise problems or gophers, for instance. What you are suggesting is that (a) this house is not perfect (b) we acknowledge that, and (c) we’ve factored that into the price – you’re going to get a bargain!

Can we find a pattern in this article? Not exactly but we have several review points:

1. The Basics – useful facts, not fluff, not hype
2. Consistency – you and your group need an instantly recognizable identity
3. Creativity – also consistent and part of a pattern of exposition
4. Humor – self-deprecating, put aside the ego or find another job
5. Honesty – many listings should include a cautionary comment

Do this well and your listings will generate Gravitational Pull. Viewers will be unable to ignore your listings and soon they will recognize them on sight as they plow through the mass of dreck and find the bright light that your listings offer. If you still have questions, Robin, leave a comment at the link below and you’ll probably get an excellent answer from me or another reader.

One of my repeating images on left, possible change/addition on right.

I could just use the thumb. It permits use like this in photos and text. Still a human face is often the best choice. An agency needs both human images and a logo.

This logo, the “Sweet Digs” name for the Redfin blogs and more distinguish us from them. You probably paid no conscious attention to them till now, but over time they will have you salivating like Pavlov’s dogs for a fat refund on your next real purchase.

[Any resemblance to fact or usefulness in this article is purely unintentional.]

Holy Guacamole – What a Beaut!

Being just north of the border, San Diego has a rich cultural heritage that is strongly influenced by our geographic proximity to Baja.  Mexican traditions can be found in our food, language, home decor, festivals, art, theatre, politics and architecture.  Balboa Park is probably the most magnificent display of spanish architecture in San Diego, but there are good examples in homes throughout the city.  Typical to the style are curved entrys, ornate tile and plaster work, rich natural woods, deep and vibrant colors, clay shingles, and landscaping highlighted by cacti and bromeliads.  There is no particular part of the city that seems to be more heavily populated by this buidling style.  Rather, examples can be found here and there; scattered throughout the cityscape.  Here are a few good representations of spanish inspired homes in three different San Diego neighborhoods.

4820 Del Monte Avenue (Ocean Beach)

• 1937 Spanish home with 3 beds, 2 baths
• Asking $729,000
• 1,200 square feet, priced at $608 per square foot
• On Redfin 61 days

3483 Dwight Street (North Park)

• 1976 Spanish home with 3 beds, 3 baths
• Asking $549,000 (Bank Owned Foreclosure)
• 2,240 square feet, priced at $245 per square foot
• On Redfin 9 days

1092 Myrtle Way (Hillcrest)

• 1937 Spanish home with 3 beds, 2 baths
• Asking $1,700,000
• 2,403 square feet, priced at $707 per square foot
• On Redfin 45 days

If you liked this post you might also enjoy:

If the Road to Italy is Paved with Spaghetti, What Leads to Hillcrest?

San Diego Real Estate Listings I Like (And Why)

Carol’s Blue Ribbon Awards for Great San Diego Gardens

Take My House, Please

It was Henny Youngman, the violin playing comedian discovered by king of hilarity Milton Berle, whose quick wit and flair for one liners coined the infamous phrase…”take my wife, please.”  Even though Henny and Milton weren’t really comedians of my time, I inherited an appreciation for their dry sense of humor through my father and it has left an enduring mark on how I see the world and what makes me laugh.  I still think that line is belly aching funny and I love the old joke about who’s on third.  Comedy and our collective sense of what’s funny, like everything else, has evolved and today’s comic style seems to be more edgy and hard hitting; sometimes with undertones of anger and jaded cynicism, mirroring changes in our culture and social experiences.

Real estate, too, is evolving.  Typically considered an old school industry, there are significant advancements in the entrenched rituals of buying and selling homes.  The single causal factor is technology.  E-commerce has changed how we access information and the speed at which we expect the world to react to us.  Later this month, an old idea will re-launch with a new twist.  The concept is one that was developed in the early 90′s when the economy took a nose dive and real estate sales slowed to a snail’s pace.  Essentially a dating service for homeowners looking to relocate, upgrade or downsize, the Home Exchange Program pairs buyer-sellers with comparable needs.  This is not a tool for everyone.  It will not work for first time homebuyers.  Nor will it work for sellers whose properties have depreciated significantly.  To make this model work, the parties must be both sellers and buyers.  They must also have equity in their homes at least equal to the downpayment on their new homes.  It limits the scope of prospective properties since the trade pool is much smaller than homes on the market.  But, despite its limitations and lack of broad applicability, it does have some interesting benefits.  The biggest advantage is that it allows people to move now.  Instead of waiting for the market to turn around or be forced to sell in a down market at the risk of losing a sizable amount of appreciation, owners can trade properties at a higher value with someone in a similar predicament.  The program has been largely automated as well.  There are online tools designed to figure out whether or not this concept could work for you including an equity calculator and FAQs.  Because unlocking frozen equity is the cornerstone of this program, it may be difficult to implement in a market like the one we’re in now, however, it has some nice advantages.  Here are a few properties with sufficient equity, value and tenacity to make them potentially viable candidates for this creative initiative.

1012 Lincoln Avenue

• 1920 single family home with 3 beds, 2 baths
• Zestimate $849,500
• Asking $756,000
• Last sold on November 18, 1998 for $350,000
• On Redfin 108 days

3430 Lark Street

• 1950 single family home with 3 beds, 2 baths
• Zestimate $735,500
• Asking $995,000
• Last sold on May 24, 1989 for $295,000
• On Redfin 73 days

4820 Del Monte Avenue

• 1937 single family home with 3 beds, 2 baths
• Zestimate $634,500
• Asking $729,000
• Last sold on May 31, 2002 for $450,000
• On Redfin 60 days

If you liked this post you might also enjoy:

The Many Faces of the 2008 Real Estate Market

2007 Real Estate Headline News In Review

San Diego Money – Recent Sales of Million Dollar Digs

Open House & Sunshine

Good Day, Sunshine…

Good day, sunshine. Nice verse for a song, don’t you think? Song and sunshine you’ll have in abundance as you tour these lovely East County homes on January 12th and 13th.

What more is there to say about these homes? Here’s a hot tip- you can save nearly $17,000 if you buy that first one with Redfin. Click to see the listing with more detail and pictures. Follow up with a phone call or two. Take some time to hop in the car and get a better look.

[data from generally reliable sources, please comment on any errors!]

If the Road to Italy is Paved with Spaghetti, What Leads to Hillcrest?

Hillcrest is jam packed with wonderful gastronomic treasure chests and something we have an absolute abundance of is sushi joints.  Lots and lots (and lots) of sushi joints.  There’s the eclectic and casual Kiki Sushi who’s mascot is a pink plastic pig named, of course, Kiki.  We have Ebisu which is an elegant, upscale and intimate sushi house with dim, romantic lighting.  Then there’s Sushi Deli which is the economically minded diner’s den and is always packed with people overflowing out the door.  There is Nami which is open and airy and located right smack dab in the middle of everything.  There’s the famous Sushi Itto which stands out because of its huge red presence and trendy decor.  And then there’s Sushi Ono which is a long time favorite of locals and maintains a loyal following in its quiet little spot on University Avenue.  I have a friend who is a fellow San Diego urbanite and travels frequently to Japan.  He tells me that the Japanese eat sushi for breakfast but, that aside, the sushi we enjoy here is comparable in quality and taste and I believe him (he is a very credible guy).  Hillcrest is truly a sushi lovers paradise.  It is also a neighborhood rich in culture, color and energy.  If you’ve never come to visit this part of the city, it is an absolute must see.  Here are some local listings within walking distance to these delectable, delightful dining sensations.

522 Arbor Drive

• 2005 Rowhouse with 2 beds, 2.5 baths
• Asking $600,000 (Zestimate $716,000)
• 1,661 square feet, priced at $361 per square foot
• On Redfin 139 days

4204 3rd Avenue #2

• 1988 condo with 2 beds, 2 baths
• Asking $375,000 (Zestimate $415,500)
• 1,197 square feet, priced at $313 per square foot
• On Redfin 3 days

3825 First Avenue #324

• 2007 condo with 2 beds, 2.5 baths
• Asking $494,900 (Zestimate $448,500)
• 1,069 square feet, priced at $463 per square foot
• On Redfin 41 days

If you liked this post you might also enjoy:

Learn from the Stats – Recent Hillcrest Area Home Sales

Bang for Your Buck – Hillcrest Homes Under $400/Square Foot

Recent Price Reductions on Trendy 1920′s Hillcrest Homes