Will the layoffs reduce house prices in the San Diego area?
55 replies (most recent on top)
Anonymous122349 - "Discounted" price is the market price....right?
Anonymous122350.... Good luck with the pricing. (btw...I am not a renter, own my home in N County, sold a home in CV, and I have no interest in purchasing in this market or being a landlord. Just commenting that prices will be a challenge not only because of the layoffs....but the upcoming interest rates, seasonality, etc. I don't bury my head in the sand ignoring these factors.)
@Anonymous122292 - You dont know what you are talking about - go back to your rental unit before I break your lease and kick you down the street
So instead of "renter" headache, I'd go with with a discount sale?
Anonymous122271- Because I wish not be a landlord with the headache of renters. Even with a management company, don't want my home to be trashed for when I eventually sell it.
Are you guys freaking nuts - do you know how many folks with 10+ years with QCOM have at least a million in the bank (or brokerage or whatever) - every single one of them, do the math man, do you even know that our stock went 2,619% in 1999 - no go figure the value of the RSUs for the folks who had them prior to the jump. Our wild growth continued for decades - do you really think that those folks will be giving you a discount so you can finally be able to afford a house of your own. Oh, boy, why am I even discussing this here...
I may move out and go somewhere else (unlikely but let's assume that), but really - do I want to sell at the loss when I can rent the house to you, get the money from you, pay my mortgage, pay the company who will manage the property, pay repairs, take my tax deduction and still be better off. I'll just wait, there is no way in hell that I would give you a 100K discount on my 1.1M home, no way in hell. I love my 3.3% interest rate and you will be paying it - it's a 3300 sft property with a nice yard and decent view, I will find a renter willing to shell out 3.5K for it in no time - I am telling you, it'll happen in no time - why would I sell it to you at a 100K discount, please explain it to me - my math is healthy, I have a sizable capital reserve and I'll be just fine.
The generally accepted view is that markets are always right, that is, market prices tend to discount future developments accurately even when it is unclear what those developments are. I start with the opposite view. I believe the market prices are always wrong in the sense that they present a biased view of the future. Trillions were lost trying to beat this hypothesis, the fact is, nobody knows where the housing market is headed.
The challenge is that many displaced workers will be forced to relocate. They will not have the luxury of waiting to get their listed or intended price.
Yes....our jobs are where it is higher demand.... but that does not guarantee we will have a choice in location. That will require a relocation.
OK, renters, so now wait for next three years to buy, and wait for that 10% drop, what you'll see is a 9% jump in inflation which will bring prices 9% up as wages creep up at the inflation rate. So, you'll get your 10% drop but you'll also get a 10% increase in prices, so, it'll be a wash. But hey, what if the prices go up (you'd agree this is plausible as well) - then at 3% price increase per year, in three years are you going to be better off. Keep in mind our 3.3% population growth rate which further exacerbates the issue as there are more and more folks joining the workforce. On top of that add that mad Asian money that keeps pouring into our markets like there is no tomorrow, I'd say your bets might be fairly risky. I do not know where prices will go, but if you are guessing on an educated level (I recommend Bill McBride's blog CalculatedRisk.com - he nailed it during the downturn in every single housing aspect - a SoCal native) you will realize how risky it would be to wait for a correction. Or, as George Soros would say, all prices are inflated and we should get out, but we just do not know when is the right time to do that. They do not ring bells at tops and bottoms my friend.
Homes in del mar are going to fall 50% after they fall 50% after they fall 50% on top of that... yea ha... Because everything I can't afford must be a bubble!
Renting indefinitely is a smart move...Yeeha!!! I love making my landlords rich...
Real estate in socal never goes down
my foot
what happened in 2009
1997 1987
1981
HEEHAWHAW
Speaking of 2006 pricing level, do not discount the inflation factor, 2006 through 2014 (end of year) has blessed us with the follow inflation numbers (per Bureau of Labor Statistics) - Compounded Inflation Rate 2006 to 2014 = 21.5%, annual inflation rates are as follows: 2014 @ 1.6%; 2013 @ 1.5%; 2012 @ 2.1%; 2011 @ 3.2%; 2010 @ 1.6%; 2009 @ -0.4%; 2008 @ 3.8%; 2007 @ 2.8%; 2006 @ 3.2%
Anonymous122239,
I wouldn't go that far to say that. But it will take a much larger macro environment events to crater RE prices back to 2008. Because the housing price isn't being driven by Qualcomm's stock price by itself. You need to take a step back and looking at what is driving purchases in SD.
You cannot take Pacific ocean or the weather out of San Diego. San Diego will remain the finest city of US. Even if Qualcomm doesn't exist in San Diego, the real estate will not be affected.
Sure, it's a major meltdown - hahaha, oh boy, nobody can be bitter like a renter: 6/1 through Present - Carmel Valley Stats (SDLOOKUP.com) - All Properties - Total Amount Asked: 143M, Total Amount Paid: 141M, Total Discount: 2.2M, Total Discount %: 1.55%
Anonymous122222, well I didn't say it was "great"...Obviously is job loss is not a net positive housing. But it's absurd if you think home prices are going to crater drastically in a short time over job losses of one employer. As sucky as it is for qualcomm employees, the SD economy does not completely revolve of qualcomm, and the buyer pool from a lot of North County home purchases have a lot more to do with foreign buyers and other professions than mid-paid engineers from qualcomm (especially the newer ones that don't even have decent RSU grants)...As far the older timers ones, most of them that do have a boatload of RSU/options are already financially set so it's unlikely they will be massively hit even if they are let go. Ask your relator to run statistics on the the majority of closing for the past 90 days, and the stats will show you very interesting demographic...stats don't lie. A significant amount of purchases are foreign purchases that has nothing to do with Qualcomm engineer's economic plight, at least that is the case for north county.
I'll ride it out - I love my place I do not care if it goes down. I am happy with my payment and with my place. Bought in 2003, will be here at least 10 more years. I understand why many people who are entering market are frustrated, the prices are high and it's hard to start. I really do not a major cash flow to cover my mortgage expenses, we are a two income houselhold and we purchased enough of the house to feel comfortable with our liabilities in a case one of us loses income. Keep in mind that there is a major shortage of skilled and articulated engineers and programmers and I put myself in this category, I've lost jobs before and it's not the end of the world. Unemployment rate for software engineers is under 3%, each of us has gazillion opportunities.
Anonymous122197, again. There will be a "price change". But you are sorely mistaken that you think you're getting a "good deal" or a "discount"... Where prices sit right now, a good number of MLS listings are ridiculous absurd asking prices (even for current market price standards) that are going to move even if QC wasn't laying off people anyway. And for a lot of these homes, it's unotainable by QC employees anyway. There were never in the buyer pool then, there aren't in it now. You might have some people hit with a relocation from a layoff, but unless there is a drastic change in the demand from foreign buyers or from other professions, or unless interest rates drastic rise quickly (a slow trickle won't do shit, but a sudden large bump up will), demand will still be there. Prices have NOT stopped rising. The rate of price change has slowed down, but prices still are creeping up. Look at the data... What slow down, what massive price discount?
http://www.sdlookup.com/Market-92130-Carmel_Valley
http://www.sdlookup.com/Closings-92130-Carmel_Valley
Anonymous122222... I am not going to "guess" what is the reduction.
All I am saying is that the real estate environment is not so great.
Layoffs/fewer buyers in the market
Interest rates
Seasonality
Kids going back to school
Inventory levels/more homes and competition
Days on market
Wage growth
Anonymous122215 you think 15% going down. Ok I will not buy home Thanks guys writing on my wall. I made my decission
Anonymous122197...but they know what selling strategy is being deployed.
The environment has changed ... fewer/no QCom relo..... higher interest rates soon. real estate season ending..... kids going back to school....
This is a lively thread. I am a North County realtor, "Ask Me Anything" here - will answer frankly and without spinning this... So, AMA...
Anonymous122183, I learn that people are 100% accurate in reading about history but 0.1% accurate in predicting it correctly. Afterall, even a broken clock tells the correct time twice a day.
Anonymous122182, I haven't really seen too much competition from Qualcomm engineers....I think most of them have already been priced out to begin with.
Anonymous122177, No actually some buyers are pretty dumb. That's why we're seeing people pay over $450/sqft foot when peak prices reached were $400/sqft. And guess what, none of the buyers are Qualcomm engineers. They are are foreign money or doctors/lawyers...
Anonymous122182...for that strategy you require ample number of buyers and lower inventory of homes.
With the layoffs, there will be few relocation buyers as the job center has disappeared.....and new listings will increase the inventory.
yea, expect 10-15% down realistically
Anonymous122182 you are in unrealistic dream world, probably you are getting nervous about the home price, got psychiatrist, get advise. Sorry you are going grandpa soon.
Anonymous122177... you may attempt that selling strategy. However what matters is a comparison of the price per sq foot to the market.
Buyers are smart enough to know the value of a home with data available from the internet, selling agent, and comps in the area. They are not fooled as you described.
The strategy you described will likely result in not having multiple offers which will drive prices.
As you described, you are willing to wait to see if anyone bites....all while you take price cuts to the normalized pricing.
Guys
If you can learn anything from history then it is this
Real estate in socal is always boom n bust
the reasons r different every time
But the outcome remains same...
Of course the other strategy I love to play is if my house is really worth $1.3 million on the markets, I love to list it in MLS as $1.1... Because most people that end up looking at the $1.1million and think they'll get a good deal. And then after 1 weekend of showing, I get 8 offers all with case, some at $1.1 and some above $1.1...And then this, is were I tell my broker to do a multiple counter offer, in which I notify each prospective buyer that they are in a multiple-offer scenario, and that they'll have to do better than $1.1 million to get the house. Some of them will drop out. Others will stay in, and they'll come and look at the house and really want it...So they'll bid up the price, one after the other, trying to top each other. The final guy/gal, will end up paying $1.31 or something like that, because he/she got all emotional during the multiple-offer situation...Kinda of like on ebay, when often times with a auction, people end up paying more than how much the product normally sells for...
Example, I might price one of homes at $1.5 million, when peak prices in 2006 was $1.0million that I bought in in 2008 for around $850k. I know a $500k premium above peak is ridiculous, but I'm just going to wait to see if anyone bites. If no one bites at $1.5million, I I might lower it to $1.3million, and someone probably will buy it around $1.29m. Yeah, you think my home price fell by $200k. No it didn't. I wasn't really expecting to get $1.5million for it. I just put it up there because I wanted to see if anyone would be willing to bite. But selling it at $1.29million, I'm still pretty happy about it, and I'm sure that buyer is happy because he/she things he/she got a $200k discount off of his/her home. Lol.
North County sellers are pushing the envelope in selling price in that they are asking well above peak prices reached in 2006. Any sort of price correction is just removing the ridiculous premium that not-in-a-hurry sellers are putting on top of what is considered fairly priced homes in North County. For example, those idiots trying to price a homes $500sqft home when a fair market price is $450/sqft (for example) isn't going to see their home move until they reduce their ridiculous asking price. It has nothing to do with the health the housing market. If you see a huge decline in selling PPSF below $400/sqft, that's called a correction. Anything above $400/sqft, and it just means sellers are selling at fair market prices (close to 2006 peak, and not above peak). This doesn't mean anything in terms of home price affordability. What it does mean is prices will still be well above 2008 hugely discounted prices.
Carmel Valley has typically sold homes above list price with minimal days on the market.
Since December, the premium above list price has shrunk and the average days on the market on the rise.
With fewer relocation buyers and additional inventory of homes from homeowners listing properties, the environment will be of lower prices. Supply and demand.
Even if the layoffs did not occur....prices will decline because of higher interest rates and the end of the real estate season as kids go back to school.
How's that Shale Oil Industry doing in Texas, BTW... LOL
Anonymous122156,
Asians don't want to retire in hickville Texas. At least not by their purchasing habits. Neither do the canadians (#2 foreign purchase).. You are correct. people that can't afford to live here will move out. And people who can will move here or stay.. Been that way all along. It's how the 1% stay the 1% and keep the 99% where they99% belong.
Anonymous122156 you dont know what you are talking about, 25-35% down in SD 2008-2012 when crisis come no vacation and no retirement. Because of the drought and water issues in CA, population will migrate to Texas and Florida. For retirement lot of people moving to Texas after selling 2500 sqft rat hole in SD, they can buy big mansion in Texas. SD is not a retirement place anymore. Thats reason prices will go down in SD