How much do you have pay for a good house in L.A or San Diego?

Question

i looked some up and i saw half a mill houses even 700,000 that was a small shitty house? is the realty gonna get any lower there?

Answer 1

Asking price isn't the selling price anymore.
http://biz.yahoo.com/brn/060909/19463.html

http://money.cnn.com/2006/09/08/real_estate/caught_in_the_bubble/index.htm?postversion=2006090814
http://money.cnn.com/2006/09/05/real_estate/Ofheo_home_prices/index.htm?postversion=2006090514

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How to value a property during market downturn?

Housing market continues to slump. Now we can calculate true value of a property easily. As price decline, we don't need to guess and factor in the potential price appreciation while calculating home value. Without the guesswork, figures are more accurate.

Let's use following example:

Today, a typical 15 years old, two bedrooms condo/townhouse is priced around $500,000 and $550,000 in Sunnyvale, California. Rent for similar condo/townhouse is $2000/month.

If you are a home owner, $2,000/month in rent means $20,000 a year in profit ($24,000 per year in rent, minus $4,000 maintenance costs). A $20,000 income is equilevant of owning $400,000 bonds or CDs, because current yield of 30 Years U.S. treasuries are 5% (5% of $400,000 is $20,000). Bank CDs have similiar yields.

In our example, the two bedrooms condo/townhouse is 20% to 25% overpriced. They should be priced at $400,000.

It is interesting to note that if we redo the calculation from buyer's perspective instead of seller's perspective, the figures are even more shocking.

Mortgage payment consists of two parts: mortgage interests and mortgage principal. The interests portion is similar to rent. If you pay interest, it disappears and doesn't add equity to the property. To fully simulate characteristics of renting, we assume buyer will apply for a zero down, interest-only loan.

It turns out that rent of $2000/month is equivelant to mortgage payment of a $340,000 loan at 7.0% APR. And comparing $340,000 loan to $500,000 or $550,000 price tag, from buyer's view, the two bedrooms condo/townhouse is 30% to 35% overpriced.

One may ask, why is there a discrepancy between two perspectives of the buyer and owner?

The discrepancy is a result of 2% differences in interest rate that buyer borrow comparing to yields of bonds and CDs that owners would get. We understand that buyer would always pay more. That is the premium of buying to own. However, looking from home owner's perspective, current housing market is probably 20% to 25% overpriced. We recommand investors to wait for a better entry point.

Answer 2

It *has* gotten lower in San Diego. Stuff that was going for 500 or 520 a year and a half ago is having trouble getting 420.

This week I've seen the first sign that the market may be turning back to sellers. The ratio of sellers to buyers has been 38 or 40 to one for about 3 months. This last week it went down to 34. We may lose a little more, or we might not. I started predicting a 30% drop from peak 2 years ago. But it might not be that much. The best buying opportunities may already be behind us.

As to how much for a good house, depends upon where you want to live. East County, $450,000 will do it. Coastal North County, be prepared to spend $1 million.

Answer 3

see if a local real estate agent can help you find something cheaper. http://www.realestateforsaleincalifornia.net

some of them specialize in fixer-uppers, so you might have some luck there.

Answer 4

Nope.

Answer 5

Nope, been here eight years and they just keep going up.

Answer 6

http://sandiegomarketmonitor.blogspot.com/2006_09_01_sandiegomarketmonitor_archive.html

Answer 7

http://www.robertoclementehomes.com/Nav.aspx/Page=%2fListNow%2fDefault.aspx%2fddlPropertyTypeID%3d1


Face it, if you have to ask, you cannot afford.