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Jim,
Thanks for the data, however, you left out one very important piece of information! Carmel Valley was still RISING in 2004/2005. CV peaked (at the earliest) in June 06' (Case-Shiller top tier index peak), and one could make the argument it wasn't until July 07'. Buying in CV today at 04' prices is a significant discount from the peak. In addition, you definitely pulled out the strongest examples, I can find others for you that indicate a loss. That said, a couple of your examples do show some surprising individual strength.

Any idea if the buyers were first timers or moving in from outside San Diego?

If some are first time buyers... then I'm surprised. People that are either naive or don't care about overspending on a house that is destine to fall in price in 2010-2011

If the buyers bought into the housing market years back, well that's a different story.

I work in hi-tech in CV-92130 and 90% of the people at my company are Indian or Chinese. They have a different culture and perspective on things. A lot of times it's a young married couple both making good salaries. They talk among their similar friends and seem to want to swim against the tide. They don't care about the price, or they're not well informed. One girl I spoke with last year was looking to buy in 4S and I told her my expectations for the housing market and why I wasn't buying. I recently bumped into her and asked how her new yard was coming along. She said I was wise not to buy.

There's a lot of us with $$$ that are "sitting on the fence" waiting to see how things turn out. Everyone knows where the best neighbourhoods are and when those houses come on the market at a seemingly decent price buyers jump on them. I know because I've been outbid.

But, it's no big deal. More and more houses seem to be making their way into the foreclosure sale ranks. Unfortunately finding the right one to buy takes a lot of patience. It's like watching paint dry.

I feel bad for what I wrote above. I don't want to come off as stereotyping anyone. This is my biased perspective because the only people that I know talking about buying houses in the near future are those I work with.

And to add.. there's probably not a whole lot of competition in CV right now. Lawn's in my neighborhood definitely aren't littered with for-sale signs. As discussed a few days back, sellers in CV appear to have an unbaited hook in the water or are just sitting tight to ride out the storm.... which is on its way.

What I've noticed in my CV townhouse subdivision is people have come to accept that they cannot sell now for what they wish so they've decided to wait it out. Last summer-fall there was about 7-8 units for sale, now there is 0, not a single one. Of the 7-8 listed last year, I think only 2 actually sold. This is older CV built during the last bubble (1990), most people here bought for 150-225K (very low cost basis).

Jim, or anyone else: any updates on the Pardee developments in the desirable parts of Carmel Valley (Derby Hill, Bridle Ridge, Carriage Run developments)? Any info on Pardee Shaw Lorenz -- they are moving quickly to build 140 homes in the Del Mar Mesa area - I heard pricing 2.5mil and up... You can say what you want about Pardee, but they too are bullish on Carmel Valley, and thus far seem to be doing OK.

Thanks CV Watcher - I didn't go into detail about why I was fascinated by these closings.

We've been seeing an average of $330-$340/sf around 92130, and we were figuring by the middle to end of 2008, it should get down to $300/sf.

But none of these are close - I just want to see one or two of those 4,000sf tract houses on small lots selling for $1,200,000 or less so I can use them to bolster my argument with sellers. But if these July sales are all I have to work with......

I am still confident we'll be seeing $300/sf by the end of the year - I'm really looking forward to 4Q08!!

Prior to the subprime foreclosures in CA, we all heard that prices are "sticky on the way down." But what most didn't anticipate was the massive numbers of foreclosures on the low end forcing prices down very quickly - lubricating prices, if you will. Areas which haven't seen many foreclosures are, however, exhibiting the stickiness which everyone one expected but has not forgotten about.

Look for the prices in desirable/low foreclosure areas to be sticky. Unless Alt-A option loans lead to massive foreclosures; a possibility, but probably somewhat unlikely.

All of this suggests a gradual drop in prices taking 3-5 years - one year down, 2-4 more to go.

Interesting comment by Gaswilla about the Pardee homes in CV. My wife and I drive by Pacific Highlands Ranch all the time. We knew they were overpriced and construction had stopped, but we finally decided to drive through the neighborhood because we figured it would be nice and we wanted to see.

It seriously looked like a ghost town. Very few homes had been landscaped, and the streets were filled with dirt and construction debris. It looked as though the builders just quit in the middle of building homes to never come back. There were some homes with tiles waiting to be put on the roof, some with tarps, some half-completed with lumber in the dirt yard . . .

We saw one family outside playing with their children (they obviously recently bought there,) riding their little bikes around the dirt and debris with nobody else around. I actually felt sad for them - it's like they bought into this nice family neighborhood which now shows no sign of getting completed.

Your numbers are surprising, Jim. When I look at the MLS in CV, I can't take ANY of them seriously. Renting in CV myself, I have to give credence to the cultural hypothesis mentioned a few times here on bubbleinfo. How can the homes be worth this much? How are these prices being sustained??

"Unless Alt-A option loans lead to massive foreclosures; a possibility, but probably somewhat unlikely."

I think there is a very good chance that the option loans will lead a huge foreclosure wave. 80% of these folks were under water the moment they made their first payment - what makes you doubt they will default?

bearing01 - I agree, there are a lot of Asian families living in CV who bought between 03 and 07, obviously for the schools. They bought with their parents cash as well. Who knows if they actually had enough to not have an Alt-A...we will soon find out.

I confirm gaswalla's comment that they are "bullish on CV." I talked to the Pardee people at Pacific Highland Ranch. They plan to start building more homes this summer on the land out there that's been graded.

bearing01 and pipes comments are unfortunate. It seems to me that if ANY family that:

1. Has two young working parents.
2. Wants CV's public schools instead of paying for private.
3. Is comfortable with living with another generation instead of paying for a retirement home.
4. Doesn't plan on moving.

would be in a better position financially to own in CV. These should be the issues not race, nationality, or culture.

I stopped by the sales offices at Derby Hill and Bridle Ridge today.

Derby Hill - no let up in pricing or demand. They have six houses for sale, and two phases to go, but the houses are all inferior locations. The two phases left include the models, and I'd guess they'll offer those for $1.5 to $1.7. There are 160 people on the waiting list, down from the 300-400 previously - but it goes to show you how buyers want the very best, and forget the rest. Why wouldn't some of the 160 buy the six for sale? (houses are 3,505 sf to 4,587 sf on lots that probably average 7,000sf, and I'd guess about a third back to a canyon)

Bridle Ridge started selling 9-10 weeks ago, and have only sold six of eleven in their first two phases - the second phase was released two weeks ago. But four of the five for sale back up to power lines - the kiss os death for most buyers. They have 55 people on the waiting list, and 77 houses to sell in three locations in the area. Pardee is using these to build out their leftover acreage. (Houses are 2,353sf to 2,734sf and range from $1,028,900 to $1,080,000 - lots are 7,000sf to 12,000 sf, and the bigger lots are the ones backing to power lines) Mello-roos is $95/mo.

Hi, Jim

Check out 4950 Beauchamp Ct in CV, on redfin it says the house was sold on Jun 20th for 1.16M, that is $304/sf.

Derby Hill will now accept contingency and 1031exchanges - something they wouldn't 6 months ago. Things are getting tighter there.

Jim - one time you posted that 90% of the homes in Derby Hill sold owe over 1 million and 2 are in default. Does that still hold true? Did it get worse?

Carmel Valley is a very "international" crowd. Some people don't like that - I personally love it.

Thanks aa, there are others too that were getting my hopes up. It's probably just a fluke that we had a run of nine high sales this month, right? I sure didn't want to call it a biunce, you guys would kill me!

When it comes to Carmel Valley, I am a buyers' agent. I can't get any sellers to list for my price, and there are so many other agents willing to take them higher and sit. The agents don't think it's the pricing that is the problem, it's the buyers.

As of today, there are 203 detached active listings in 92130, and 37 closed last month, averaging $371/sf.

I'm counting on all those remaining unsold sellers for my 4Q08 buyer sales.

Todd, I'll check the F/C score a little later.

CV Man, I don't think Bearing01 and Pipes' comments are out of line. Mentioning race does not mean one is racist. It would be foolish to ignore cultural differences and their effects in a community.

If a particular culture is inclined to live amongst each other, place a high premium on school systems, live in the same home with multiple generations of a family, and buy a new home no matter the cost, this would have an inflationary effect on the local RE market. Would it not? This would be especially true if "they bought with their parents' cash as well." I don't know how Pipes knows this, but maybe he can substantiate it, and either way it is not disparaging to anyone's race.

Back to the schools, is it really worth an extra $300 - $400k to live in CV versus other nearby areas for the schools? Private school isn't THAT expensive, is it? Furthermore, La Costa Valley, La Costa Oaks, Encinitas, Santa Fe Ridge are all in the same school district and they're falling, so that argument doesn't hold much water IMHO.

Thanks Blur,
I am certainly not racist. My point was trying to identify the types that are driving the CV market. Those from vastly different countries, where a condo is mortgaged out over 100 years and handed down generation-to-generation for example, may have a different impression of the current economic situation than me.

I agree that CV is a great place. As for future equity growth, I'm sure CV will be the last to drop and the first to bounce back. Me personally, If I needed to live in a house in CV immediately I would consider renting. I am in no hurry to put my life savings (cash in hand) into a down payment in a market that has a high probability of trouble coming. Someone else however that still has bubble-equity (money on paper) probably will sleep better after changing up their house in todays market than I would buying into this market.

Private school is expensive and reputation is as important as quality. $10,000-$20,000 per kid per year adds up. Health care / nursing homes for seniors are also very expensive and rising. All they're giving up is some square footage.

I'm not accusing anyone of being a racist. I just thought the comments were unfortunate and suggested an entire group of people were all foolhardy buyers.

As to the issue of inflationary effect- when does the minority become the norm? If a group of buyers keep buying is the price inflated or the market?

Sorry to do this again, as it's kinda OT. It's close to CV though.

http://www.redfin.com/CA/Del-Mar/13575-Portofino-Dr-92014/home/4436088

$285k/sqft in Del Mar? What am I not seeing here?

Genius - nice pick, gotta love the $285/sf!

We dig modern technology too - scroll down to the bottom of that listing and hit aerial view - it backs to the I-5 freeway. As long as that's OK, it's a value buy.

When I bought my first house it was a fairly common practice among my relatives (Chinese American, can't speak for others) to assist their children with first home money, either as gifts or under-the-table loans stated to be gifts. But the objective then was to build up the down payment to qualify for a conventional mortgage on a modest home, not to pump up some daft creative financing scheme to buy a McForbiddenCity. Maybe the younger generation is less risk-averse than mine and my parents', or maybe they're newer arrivals in the US who just saw what was going on around them and figured it was the norm here.

Thanks for the response Jim. Being a modern technology enthusiast myself, I looked over the listing and the only bad thing I noticed was its close proximity to the freeway. The last time I asked about a home that looked cheap compared to the rest of the market I learned of a 60 foot sink hole a couple of blocks away. I was hoping there wasn't a similar scenario here.

Things are looking up when I can almost afford to live in Del Mar. I see more and more places in nice ares popping up at big discounts relative to what they were. There are some beatiful properties in CV as well. Before today's post I hadn't payed much attention to the area.

I know someone who sold a house on Caminito Vistana in 2005. I think that neighborhood is pretty unique for CV. My friend's house was on about an acre of flat usable land, and most of the neighboring houses seemed to have equally large lots. Wouldn't that account for part of the price? Do you really expect a house on a nice acre lot to sell for the same price per sq foot as something in Derby Hill?

No I wouldn't expect that, I'm just pointing out the delta - the relative change between comps in 2004/2005 and 2008. The other reason I mentioned it was that it looks like 100% of these nine are holding up pretty well.

If there would have been a couple that caved on price, it wouldn't be much of a story. I think the folks here are expecting that scenario - a slow but steady deterioration of prices/values, one by one.

We'll check back at the end of the month - my guess is that 20% of the closed sales around a million and up will look like the seller had to cave to make the deal. Not sure if it means $300/sf yet, but I'm hoping that there will be a few closing in that range in 4Q08 - ideally with my buyers being the benefactors!

I have been looking to buy in CV for the past two years. The prices have fallen but it is not a bloodbath like downtown SD. 3755 Torrey view court sold for 810k, it was first listed for 869k. Since it was more than 2700 sq ft, the per sq ft price was right around 300/sq ft. There were at least two sales in San Raphael for under 300/sq ft. So there are deals to be had. CV looked to be buckling in the winter and early spring, it has bounced back in the summer. I'm hoping for a sharp price decline in whatever does not sell soon. Then will be the time to buy.

Tell me again why any of these properties won't be worth 20% less in the next 24 months?

Regarding the house in Del Mar, a lot of people are trying to sell on Portofino Dr right now. Not only do these homes currently back up to the freeway and are very noisy, but there is a lot of uncertainty on what is going to happen regarding the 5/56 interchange. Possibilities I have heard include putting in 70ft flyovers for the connectors next to these homes or even taking them via eminent domain. So while not exactly a 60 ft sinkhole, there is definitely some risk in buying here.

Unless we have the ethnicity info to go along with all the loan data for each house bought, sold or foreclosed, there is no way to tell how or if cultural differences have affected the CV market. This is true whether the CV market stays as it is or spirals down as everyone here is anticipating.

Even with ethnicity & loan info I'm not sure it tells you much. I've seen both, and can vouch for the recent buyers being an incredibly diverse 'international' group.

But you can say that about most new home tracts, because it's a fact of life. Our area is far more diverse than it used to be, and it will probably continue that way. I don't think we need to decide if it is good, bad, or other, it just is what it is - let's make the best of it.

"Tell me again why any of these properties won't be worth 20% less in the next 24 months?"

- People have to live somewhere. Some people have a lot of cash pent up, likely from buying into the So Cal real estate market in the past. They want great schools for their kids, they want to be close to the job market and/or the beach (or want a large lot). They don't want $500+/mo. to go to Mello-Roos and HOA fees. Del Mar, Solana Beach and parts of RSF fit that bill. These people also don't need to sell right now - they don't have weird loans that reset, or shaky job situations...so they wait, which keeps their for sale inventory low. Buy the best, forget the rest. I feel like some of you don't listen to Jim's advice :)

I would not touch a house within .25 miles of a the 5 freeway. You have very load constant noise