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As a favor, if it's not too much trouble, could you start including "year built?" The picture helps but for quality issues and evaluating how much improvement there has been year built is the thing. Thanks for your great blog.

These prices don't jibe with the UT horror stories. For all the bubble talk it doesn't seem like things are so bad if your not in the middle of a bunch of subprime borrowers and soon to be foreclosures.

I was at the Davidson models in La Costa Greens and expected to be by myself because of the the rain. Got there at noon and there had to be 10 families in the 3 models. Salespeople didn't say anything about incentives as they said the prices (starting in the 900's for a 2800 sq foot home) were set to match the market.

Double A,

Single Family homes are typically the most desirable types of property Jim specializes in them and that's what he uses as an example.

If you want to see horror stories check out the condo market. I can attest to a 50k decline pretty much across the board for all condos from last year till now in SD.

People that could only afford a 400k condo now have all kinds of choices. Including lower price SFR's that were previously unobtainable.

Also there's still a lot of fraud going on.

I'm with Double A.

The same thing happened to me at Davidson's development at Del Sur.

Yes, if anything it looks like Carlsbad is holding firm.

I wonder if the demand surge in January was from the plunging interest rates? Clearly that trend has reversed. I suppose the ARMs are still lower though.

I posted a while back that I had put an offer in the foreclosure on 1453 Heritage in Encinitas. FYI, my offer was one of 11. I countered back significantly higher than list price with a 60% down payment. I did not get the house. There were 3 full cash offers including the offer that eventually won out.

Looks like if we want a good deal today we are going to have to take a second tier area. The other option is to wait.

"Yes, if anything it looks like Carlsbad is holding firm."

It's not that Carlsbad is "holding firm" it's that what used to be considered condo buyers are able to make their $$$ go further as SFR house prices moderate.

I'm looking to buy and whenever I see a decent house fall under the 400k marker buyers come out of the woodwork. N. County might have a little different prices but the same idea applies.

Yes, adding year built would be very helpful.

Looks like things aren't that bad, are they, Jim. Unless there is a sucker born every second.

Buying at current levels shouldn't be complicated for buyers who are actually planning on paying back the mortgage they'll be signing. I guesstimate $843k @ 5 1/2% mtg over 30 years comes to a repayment amount of about $1,700,000. That's $1.7 million, folks. That's BEFORE the buyer turns on the lights, pays insurance, buys a car or two, goes to the grocery store or puts shoes on their kids. AND, that's before the buyer starts saving for the kids' college fund.
Let's put this silly argument back in perspective. Prices DOUBLED from 1997 to 2002 and increased again by roughly that same amount to 2005-2006. How many peoples' salaries kept pace with that meteoric rise? (Let's not forget, CA property buyers were already paying a hefty buyer's premium.) So what, I'd like to hear ANYONE explain, is so great about returning to 2004-2005 levels?
Housing as investment is OVER. Any knowledgeable investor will confirm, "liquidity follows inflation". Common sense alone strongly argues it's going to be a very LONG time before inflation returns to the residential R.E. market.
The unanswered question is, where will the buyers come from who can afford to pay $1.4 million loans (assuming 20% down) to buy ALL the SoCal Coastal properties aging boomers will be looking to unload in the coming years?
In a rising market sellers determine prices, in a buyers market buyers do. The sooner buyers return to looking at houses as commodities they're going to have to pay for, the sooner they'll be likely to dismiss the silly arguments about "VALUE" and the sooner sanity will return to the housing market.
We're in a BUYERS' market perople. If you miss out on a house, so what? Next month you'll see one like it or better - and it will be cheaper.
Want to test this argument? Ask any realtor why he/she thinks 2004-2005 prices offer lasting (historical) value.

Geez, Doug - I gotta find you a house!

I'll take a stab at at your last question. I bought a house in 2005, and it has declined about $100,000. Some have questioned my sanity, and ability to time the market.

But they never ask the million-dollar question - why did you buy a house in 2005?

It was the house next door to my primary residence, and used to be all one property before being split in two. Not only does it have a driveway easement over my property, but the former owner used to drive me crazy with his motorcycles, dirt bikes, scooters, and go-carts.

I have peace and quiet now, and control what happens next door - that's worth it to me.

I've included the year built, HOA, and Mello-Roos now. Thanks for the requests.

I'll add to the $1.7 million repayment argument too.

$1.7 minus tax savings of roughly $308,000 = $1.392 million.

If you rented the same house for $3,000 x 360 = $1,080,000.

$1.392 - $1.080 = $312,000 actual difference over 30 years, or about $10,400 per year, on average - though the tax benefit is front-loaded, so it's better earlier on. I know there is the cost of maintaining a house, but how many people are spending more than $1,000 per year? They should be spending it, but how many do?

I'll conveniently ignore it, because I don't think many people are not buying just because of the maintenance cost. But if that concerns you, add $1,000 to the equation below.

$312,000/30 = $10,400 per year vs. security, roots, and wife off back?

You make the call.

If price went down another $100,000, and you financed 80%, the amount of payment saved is $480/month, or $5,760 per year.

In simple form, that puts the buy vs. rent argument to within $4,640, or $386/month more than renting if buying when prices are $100,000 lower vs. $867/month more than renting today at Doug's $843,000 @ 5.5%.

$481 per month is a lot of money.

I think the better question is to wonder how much better of a house are you going to get in a year or two. Are the superior homes in premium locations going to be $100,000 less, and how easy will they be to find?

If you think they will be a dime a dozen, no problem - you'll get to save $481 per month over today's cost.

Carlsbad Holding Firm?

Ask someone in Bressi Ranch about that. My friend bought a 3000 sqft house for $930k with no landscaping. Now there's at least two just like it that aren't selling for $750k, with others listed higher. OUCH. Talk about dime a dozen . . .

When I see how long some of these Carlsbad homes have been on the market, I'd say it isn't holding. How many LC Valley/Oaks/Greens resales have been on the market well over 100 days? At least LC Valley has outstanding schools.

This is why those model homes are so crowded on weekends - the builders' prices are more reasonable (note: I did not say "reasonable.")

I think Jim alluded yesterday to the fact that tract homes are likely to follow the comps ("dime a dozen,") while an older unique home on a good lot will better hold its value. This makes the most sense to me.

"Carlsbad holding firm"

You caught me blur. I was referring to the Carlsbad houses in the San Dieguito school district.

The houses in LC valley and LC oaks are not exactly flying off the shelves but the prices don't seem to be crashing either.
The best deals in the San Dieguito schools seem to be foreclosures and the good ones are just frankly hard to buy right now (bidding wars).

The shoe already dropped in the Bay Collection. Both of the homes you profiled lost 6 figures when you consider what they spent on post builder upgrades and landscaping and that doesnt even consider selling costs. But that's noting compared to the loss on 7038 Heron Circle.

Jim-

Am I missing the obvious part of the rent vs. buy calculation? After 30 years you'll have a house with a couple million in equity, vs zero equity if you had rented for those years?

Santa Fe Hills:

Not quite: You've got to add back a market return on, say an S&P index fund, which is what you'd do with the difference between the rent you paid and the home ownership costs for all those years.

Notwithstanding the meteoric rise in home prices, my own threshold is that at 30-40% off peak pricing, Jim's point ("$312,000/30 = $10,400 per year vs. security, roots, and wife off back?") makes good sense to me even if I would have a little more in the index fund than the home equity.

I'm willing to make a mistake for those things (well, I don't have a wife but no doubt will someday and I'd be pleased if she was pleased with our home), just not a huge mistake. For me, 30-40% is a satisfactory margin.

BayBoy you are right, check out thebaycollection.net and you will see what a bloodbath they are experiencing!