It was not all that long ago that the $100 sq/ft barrier fell. I did a post on October 10th 2007 where I listed a few homes that had finally gone under $100 sq/ft. Most of those were in San Jacinto, Murrietta, Lake Elsinore etc.
Here we are, less than 4 months later and there are homes selling for under $80 sq/ft. That's a 20% drop in only 4 months for the price leaders.
On to our price leader.
615 Drake DR San Jacinto, CA 92582, This is a 4 bed/4bath house. It's 2850 sq/ft and sits on an average lot of 7400 sq/ft. This home was built in 2005 and sold new for $425k. It has been listed as a bank sale for 155 days now. they started out looking to get thier money back but that did not work out so well for them. 4 price reductions later they are now asking $215k. That's $75 sq/ft and make this house 50% down from it's original selling price.
4440 THORNBUSH Hemet, CA 92545, This is a 5 bed/3 bath home. It's 3127 sq/ft and sits on a 6097 sq/ft lot. This one was built in 2002 and sold new for $212k. It sold last in Sept 06 for $420k. Before going back to the bank in Oct 07. Again they originally listed this a little too high and after 2 reductions they are currently asking $248k, that works out to $79 sq/ft
I have no idea what homes rent for in SJ/Hemet but these tow have got to be close to penciling-out as rentals.I did find several others but they looked like short sales so I'm going to leave those out for now. There are now a multitude of homes under $100 sq/ft and many of those are under $90 sq/ft. Still, most of these are in the out lying areas but like ripples in a pond they will work there way towards the more central areas. I'm still shocked by the speed of the price declines. I was sure the prices would come down but I was expecting it to happen over several years. Personally I think a quick deep correction is going to be far better for the economy that a long slow one. So, I'm happy to see the speed that this is moving at. Even though my house is probably worth 1/2 what it was last year.....
12 comments:
You think these people will entertain an offer of $80/sq.ft.??? LOL!
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=I08003516&mls=mls_so_cal&source=MRMLS&propertyType=SFR
Well that didn't work. Here it is again, Redfin version. :)
http://www.redfin.com/stingray/do/printable-listing?listing-id=1384376
And here's what I what I am wondering. Even if it does make financial sense (or will make sense soon) to rent some of these homes, who is going to buy them and more importantly, are there any renters?
All of which assumes the homes are in the appropriate condition to rent.
All of which is to say that it's not impossible to consider some of these rentals but how realistic is it?
I really don't know. I'm looking for a local opinion.
If they can actually be rented with positive cash flow then they will sell. There are plenty of investors that will buy the properties if they will be cash flow positive. I would, wouldn't you? Now who's going to rent them is a better question. All the people that are losing their homes have to go somewhere. But there credit is probably sunk. Will they even be able to rent with credit scores lower than the superbowl score. There are reports that indicate the IE is overbuilt. Judging by what I see I have to agree. Every new apartment complex I drive past has signs offering specials. They built so many I cannot imagine how they will rent them all. Many people, especially those with families would rather have a house. Maybe there will be more demand for houses but you have to think with all the competition the rents will start to fall.
$215k is not a bad price for that first house. Even with a 20K down payment that's just over $1000 a mo . Taxes are only another $200/mo. Add a little for insurance and you are still only around $1300. I have no idea what homes rent for out there but $1300 seems awfully cheap for a house that size.
PS
These two houses are nice and inexpensive. However, they are 90 miles from LA, 75 miles from OC and 35 mile from City of Riverside. One may buy one of them as second home, and live there only at the weekend.
I dunno how many times it needs to be mentioned this BUT, there are jobs in the IE that don't require a 90 mile commute to LA or OC. Face it, no one with a good job in LA is going to live in San Jacinto or Hemet. The vast majority of people living there work in the IE. I live and work in the IE and 80% of the people I know work out here. Most of the people that live near me work out here. BFD, those houses are 30 miles for Riverside. That's still better than living in Corona or Fontana and driving 40 miles to the OC or LA on the 91 or the 10.
Pool could add about $30-50k nowadays, but for me, a once-while-swimmer, it's definitely a negative feature. I don't want to spend the time and money to maintain a pool that I might only use once a month..
Oops, replied to the wrong post..
[The vast majority of people living there work in the IE. I live and work in the IE and 80% of the people I know work out here. Most of the people that live near me work out here.]
I'd like to know what type of jobs those people doing. From reading the previous posts from this blog, I learned that most of the jobs in IE are blue-collar, teacher or nurse type. Correct me if I am wrong.
Most of the jobs in the IE are blue collar. Wherehouse, shipping, manufacturing, medical, education. Etc. There are few technical/engineering or financial jobs (unless you count working in a bank). Most of these jobs pay well enough to buy a $200k home. My brother in law works in machine shop, he is a CNC machine operator. He makes about $60k/yr. My sister is works as a nurse and also makes about $60k/yr. Even a single person with a decent job should be able to afford a $200k home with interest rates at 5.5%. A two family income should be able to swing it even if they are both only making $15/hr. There seems to be a perception around here that every job is in the OC or LA. Or that the only jobs in the IE pay $8/hr. Yes, the pay scale out in the IE is less in most cases but it's not that much less.
Papasmurf:
I am a financial analyst and guess I am out of the luck to buy this $200K house. Thanks for the information anyway.
Poking around Craigslist the properties weem like they'd make money as rentals. I've seen a lot of empty houses in Hemet, though. Are there not enough people even at those prices?
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