Saturday, July 19, 2008

How low can it go?

About a year ago many here in the blogosphere talked about housing prices returning to sane levels. Most folks back then thought that $100 s/f for homes was probably the lowest we would see in the IE. After all a year ago most homes were still priced over $200 s/f in the nicer areas and even in the outer edges of the civilized world, places like Hemet and San Jacinto prices were well over $100 s/f. I remember how exciting it was when the first homes started to show up under $100 s/f. Heck that was less than a year ago!

So how low can prices go? Well theoretically they can go to zero but as long as we have a reasonably stable economy and people want to live in SoCal that's not likely to happen. But the question remains, how low will prices go?

If anyone a year ago would have suggested that you could buy a nearly new home in the IE for $50-$60 s/f they would have been ridiculed. But today there are actually homes listed for very close to that amount. Most of them are short sales but there are a few REO properties listed that low too. Granted these are out in San Jacinto, Hemet, Perris or other far flung locations. Even so that's quite a price. That's far less than it would cost to build a similar home.

Here's the cheapest one I could find. 3072 Coffeeberry Way, San Jacinto. This home is 3693 s/f and has 5 bedrooms and 4.5 baths. It was build in 2006. I don't know what is sold for but the appraised tax value was $425K, so I assume it sold for close to that. It's currently an REO property and it's listed for $189,900 or $51 s/ft!

Not a bad looking house, especially for $51 s/f. You can live in your very own McMansion for about $1200 mo. Hell, you can almost afford that working as a greeter at WalMart. Which is handy since that's about the only kind of job in San Jacinto.


Tyrone said...

Actually, that works. Get a few families in that place and they're good to go. The McMansion areas will become the barrios of the 21st century.

Marsupial said...

The house that we were renting in Sycamore Creek is now listed for $84/sf. I think that is the lowest price I have seen there. But... the MLS listing was just updated a couple of days ago, and it mentions that the place needs cosmetic work (true), but also new kitchen appliances and A/C! Hmmm... all that stuff was there when we moved out a few weeks ago, and the homedebtors were awfully anxious to get us out, even though they were about 8 months into a foreclosure... you don't suppose they... Hmmm. Just hmmmm..... (I'm waiting for us to get blamed for stealing the A/C compressors and appliances.)

Curious said...

if I had a reason to be in the IE, i would be extremely happy to be house hunting many options, definitely a buyers market, san gabriel is still going for over $350 s/f, and so is irvine, hope they will start coming down soon as well to affordable levels

Oldtimer said...

In places like Irvine and the San Gabriel Valley, you've got legions of renters paying $2,000-$4,000/mo. or more for large apartments or rental homes. As prices drop, some of those renters will become buyers.

In places like San Jacinto, Elsinore and Hemet, you don't have that constituency to sell the empty homes to. You have to convince buyers to move out to East Bejesus and those buyers gets to decide what that's worth. With gas at $5/gallon, the fair number is probably less than what it was before the market started over-heating in the early 2000s.

Ken said...

I live in Hemet and drove over to look at the house and my God you should see all the foreclosed homes. In addition, there are numerous homes for sale by people that are still living in them, like they have a real chance at selling! In addition, the people that live in this area are, how should I say, "undesirables". I would say at least a third of the homes int his track are either in foreclosure or for sale.

golfer_X said...

Undesirables, dude it's San Jacinto. That area has never been know as a bastion of the upper class.

A third of the homes are in foreclosure....only a third? The way I see it EVERY new house bought after 2004 in the IE has a very high chance of ending up in in foreclosure. Most of the newer tracts are going to be close to 100% eventually. I'm sure a few people paid cash or put down substantial down payments. I do know a few people that cashed out of Torrance and paid cash for homes in the IE. But those that financed will lose it because they can't afford it once those loans reset or they will come to their senses and just send the keys to the bank.

Sellin @ Da Drop said...

'That area has never been know as a bastion of the upper class.'

Hell you can say that about the entire IE. Ever been referred to as the land of the dirt people? As far as I have lived here (over 10 years) this area does and still continues to carry that stigma of 'the people that cant afford OC or LA'. Kind of hard to shake off. Especially areas like Moreno Valley and Hemet.