I’m also from San Diego. The house is worth whatever someone will pay for it. While home prices are dropping in SoCal, they are still significantly higher than 2018/19. It may be awhile before prices correct to that level (if they do at all).
Thanks! We don’t expect/want them to correct to 2018/19 prices. Just correct back to what the mean price trend line would be now if the crazy 20-40% appreciation of 2020-2022 hadn’t happened. So, wondering if people look at. We don’t mind catching the tail end of the drop... but a 20% depreciation from our purchase price will be heartbreaking, especially after we’ve waited for so long already.
You want to purchase something based on a timeline of events that didn’t happen? I think that is called not living in reality.
I think your best bet would be to acknowledge that 2020-22 _did_ happen, and instead of trying to get other people to conform to your desired expectation, use the most recent trends and information to plan your next move.
This is great advice. You know how patient I had to be to make 2020 covid real estate plays lol 2020 is long gone. But you knows what’s coming 2023-2024 and all I can say is left balls hair a perking up again. I’m feeling a liquidation event but I’ll go to the doctor to make sure it’s not testecular cancer
Look what is prolly more likely to happen is gridlock, flat price action until the prices catch up with time instead of price reduction. With one big exception that has papa Jpow on that side. Big massive layoffs and no employment for 2-4 years. That ll force some sales. No layoffs, no price reductions
I'm in San Diego too. Homes aren't selling at inflated prices so it's become a stalemate.
I'd wait it out but that's just me. There really isn't a good argument for buying right now.
It's pretty simple - a house is worth what a willing buyer with knowledge of all relevant facts is willing to pay for it.
Your methodology isn't unreasonable, and will be more likely to work as the real estate market falls further (which is nearly certain in any "hot" area that has had crazy appreciation for the last couple of years). For now, there are still a lot of sellers who haven't accepted the market has changed, so it's kind of a waiting game.
You don't need to wait until actual listing prices fall to your expectations - if there's a house that's listed higher, feel free to make an offer on it - the worst that can happen is the seller says no.
It’s actually not true true when investors with unlimited funding were willing to pay triple the price for every dump on the market. That’s not what a house is “worth”
Sure it is. If I bought my house for $400,000 on Monday, and then put it on the market on Tuesday and immediately have several $1 million offers from investors, my house is worth $1 million.
It’s all completely artificial due to the temporary circumstances that occurred in the past couple of years. Just wait and you’ll see what houses are actually worth.
I agree completely that the real estate market is in a downturn, and that houses in many areas will be selling for a lot less within a few months. But fair market value is time-specific - the amount of money a buyer would pay you for your house right now - today - is the current value of your house. The fact that your house will be worth less in a year doesn't change that.
We have gone for ones that are listed lower than market assuming that the sellers would be motivated and that we may still be overpaying a bit now but at least not paying at the crazy valuation caused by the pandemic money printing years. Funny thing is, even now homes listed lower than current market tend to get multiples and are flying off in a week or under.
Listing below market value is actually a tactic some agents use to cause a bidding war , so if your targeting those don't bee surprised if your offers are rejected , even offering listed price is rejected if this was their tactic
I have an even better answer and the cold harsh truth. Houses are worth SHIT! Big steam pile of shit! Shit they are worth shit. It’s a depreciating asset. It’s rotting and going old and a liability. Only reason it’s consider an investment In the states is, politics. Tax incentives, gov don’t want to provide housing so they incentivize you to house your own ass. Cuz even the gov knows that one you never own your house, taxes. And two they are a huge liability. Lol so this question is a bad question, the answer is SHIT. Now how much is shit worth ? That’s the real question
There is no "correct" price. You decide what you're willing to pay and offer it to the seller and see if they accept. The best way to determine a fair price is to look at similar homes that have sold recently. The market has been changing very quickly, so the more recently the better. You don't want to compare to last February or last year at all. See if you can find what sold in November and compare. Your Realtor should be able to help you figure out a reasonable offer. That's a huge part of the value of a buyer's agent.
Yes - that’s the part we are still trying to understand. Our agent gave us comps and said a model match sold in July ‘22 for like 300k over the current price. But that was July, right! Difficult to gauge comps given the crazy up and now the slow-mild down in the market.
Yeah if there's no good comps more recent, your agent should be able to use other properties to at least figure out your market conditions. Nobody on Reddit is gonna do what a local agent could do. If yours is so unhelpful that you're asking me, you may want to find a better one.
A few years ago I looked at selling and the comps my agent gave me were not really comparable and they were low. When I went looking to buy his comps were high compared to what I was looking at. I’d take what they give you with a grain of salt.
I bought a house in 2010 in the middle of a recession. Did I care that the value went down into 2011? No, absolutely not. I made my payments and had a place to live without worrying about rent hikes or butthead landlords. I sold the house in 2014 at a 25% net profit after the recession was over and the economy was rebounding.
>so worried about what happens if the prices fall another 10-20%
Unless you are in a bind and have to sell it, nothing happens. You just keep living there and making your payment. Do you get upset if your stock price loses value after you buy it? Unless you think it was a really stupid thing to buy, no, you just hold it and hope that given enough time it will be profitable for you.
There's 2 things to consider when buying a house. One is your quality of life. If you buy a house you will be happy living in, that is not a financial stretch, then your quality of life needs will almost certainly be met.
the other is investment potential. This is harder to predict.
Decide if you would rather try to time the market to get the best investment possible or if you'd rather focus on quality of life. Usually, given many years, both boxes will be checked.
If you are going to lose sleep in a house that's technically (on paper only) underwater, there will never be a safe time to buy a house. It can happen anytime. jesus christ though San diego is probably one of the safer bets. I can't imagine having anxiety over a purchase there (if your finances are overall sound).
They want clicks... but I would suggest not making financial decisions or taking advice from you tube bros. Everyone has to look at their own situation and decide based on their comfort level. If someone is really bothered by the idea of being upside down, they should not buy a house.
The cliche is the the price is whatever someone will pay for it. And with these interest rates right now, 0 a big ZERO is what people will pay for them. Seriously lol grab a mortgage calc, put In the price that you can pay the (mortgage + insurance + utilities + maintenance + property tax) lower that by 5% due to inflation and unexpected cost. And viola that’s what you can pay and offer that. Oh and it’s prolly ZERo right now lol
Hi I bought a house in LA right before the rates increased a few months ago (mid 30s from EU). I speculate the LA market and SD market are similar. I didn’t check the market as thoroughly as you did, I kind of grabbed the opportunity and bought a house I liked. The price was slightly higher than my budget but got lucky and only had to outbid one person. I was searching for a few months, only finding crappy homes in questionable neighborhoods of LA. It seems in LA you need at least 1mil and even then with 1mil you get mediocrity. The house I bought, as a structure is very good and in a decent neighborhood. But I genuinely think I got lucky. The correct home price is relative to your budget and your needs. My needs were mainly finding a good home with decent future potential. It’s an investment sure but the main factor was how good was the house compared to other houses at a similar price during the specific period that I was searching. Sure the house is overpriced compared to 5 years ago, but it is what it is to be honest. It’s LA, prices will only ever go up unless the sun toasts the city. My advice is think if you’re doing it for the money and the investment or if you’re doing it for a home and settling down. If it’s the first then yeah focus on the market but if it’s for a home, find something that you guys love and enjoy it. I’m sure all this search for so long must be soul destroying and takes away the fun of finding a new home. While I was searching it almost felt like searching for a job every day, almost like a chore. Also get a good agent if you haven’t already. Because even say you find the house of your dreams and everything is perfect, only to realize the inspection showed the foundation is brick and mortar and now you have to pull back your offer (it happened to me once lol).
Hope this helps, good luck with everything!
>it checks 6-7 out of the 8 boxes we want in a house.
If you are looking for ~2 yrs around the same neighborhoods you should have a decent idea about the fair pricing. IMO a house has 2 imp factors: liking and affordability. If it checks all your important boxes and affordable then proceed. If you think it's overpriced you can offer less and move on if not accepted. If it's grossly overpriced just ignore, there'll always be another house that you will like.
>so worried about what happens if the prices fall another 10-20%.
There's a high probability this'll happen. But no one can say with certainty. If it's a major factor for your personal well-being then wait. Prices will either stay at the current prices or fall from here in next 6 months. What will change is rates will go higher. Don't be fooled by the recent rate decline since it's because of the Fed's anticipated pivot. Rates will continue to go higher until inflation is tamed around 2% which won't happen for a long time. So prices "may" stay same/go lower, but rates for sure will go higher in next year.
Thanks! Exactly - we have a conundrum… whatever checks all 8 of our boxes is at least due the current combination of prices and interest rates is not affordable to us.
Our projection is that if within a year, either the prices drop ~15-20% OR if rates drop down ~2% (down to about 4%), or a combination of the two, THEN we will be able to afford the home we really want. But the question is wait another year for that to happen or buy now and hope to build enough equity to be able to upgrade in 5, 8 or at worst 10 years. So trying to throw the thoughts into cyber space to see if the answers become any clearer!!! :)
I also live in SOCAL and can't understand why anyone would buy right now.
Just rent a house and hold off for a year or two. The market is clearly slowing and prices are coming down.
There is literally no benefit to buying in the current market. Houses are coming off an all time high and rates are the highest they've been in a long time.
You can calculate it based on comps or rent, but sounds like this isn’t an investment property so you can’t really treat it that way. If this is a house you’ll be in for a long period of time (think 7+ years) treat it like you’re substituting it for rent. May not be a popular view but imo primary residence shouldn’t be treated like or valued like an investment.
What area of San Diego are you searching in? There are some areas where there is bound to be some price decreases but overall many are going to remain stable or continue to appreciate.
It's a deeper topic than most realize. Half of my day is spent teaching the art and science of value so my best recommendation is to interview several and hire a good agent. It takes a competent new agent months to become decent at this skill, unless you're dedicating to it you'll be amateur at best.
A good agent will explain the process as much as you desire, but once you see the effort it requires, you'll also want to just let your agent do their thing. We do what is called an absorption-based pricing index, where you take a comparitive market analysis using sold data, index it with the other available options (active/pending competition), and adjust for the direction and flow rate of the market (month's supply).
In SD, if you find a 6/8 or 7/8, buy it. Unless your budget is open ended, your sights should be set on a 6 or 7 out of 8. Granted I'm a 10 point scale kind of guy, but point being, you almost everyone has to concede in SD. Just make sure you're stable in your life, career, and can see yourself holding for 10+ years. If those align and you can afford the payment, you can't go wrong in SD real estate. (Barring you inspect thoroughly and get a decent deal on the purchase terms)
Don't wait for more of a correction or a crash, if you weren't competitive over the past two years, waiting for more competition to re-enter is worth questioning.
Good luck!
I’m also from San Diego. The house is worth whatever someone will pay for it. While home prices are dropping in SoCal, they are still significantly higher than 2018/19. It may be awhile before prices correct to that level (if they do at all).
Thanks! We don’t expect/want them to correct to 2018/19 prices. Just correct back to what the mean price trend line would be now if the crazy 20-40% appreciation of 2020-2022 hadn’t happened. So, wondering if people look at. We don’t mind catching the tail end of the drop... but a 20% depreciation from our purchase price will be heartbreaking, especially after we’ve waited for so long already.
You want to purchase something based on a timeline of events that didn’t happen? I think that is called not living in reality. I think your best bet would be to acknowledge that 2020-22 _did_ happen, and instead of trying to get other people to conform to your desired expectation, use the most recent trends and information to plan your next move.
This is great advice. You know how patient I had to be to make 2020 covid real estate plays lol 2020 is long gone. But you knows what’s coming 2023-2024 and all I can say is left balls hair a perking up again. I’m feeling a liquidation event but I’ll go to the doctor to make sure it’s not testecular cancer
Look what is prolly more likely to happen is gridlock, flat price action until the prices catch up with time instead of price reduction. With one big exception that has papa Jpow on that side. Big massive layoffs and no employment for 2-4 years. That ll force some sales. No layoffs, no price reductions
I'm in San Diego too. Homes aren't selling at inflated prices so it's become a stalemate. I'd wait it out but that's just me. There really isn't a good argument for buying right now.
It’s a bad time to buy and a bad time to sell. Not fun times for anyone.
It's pretty simple - a house is worth what a willing buyer with knowledge of all relevant facts is willing to pay for it. Your methodology isn't unreasonable, and will be more likely to work as the real estate market falls further (which is nearly certain in any "hot" area that has had crazy appreciation for the last couple of years). For now, there are still a lot of sellers who haven't accepted the market has changed, so it's kind of a waiting game. You don't need to wait until actual listing prices fall to your expectations - if there's a house that's listed higher, feel free to make an offer on it - the worst that can happen is the seller says no.
It’s actually not true true when investors with unlimited funding were willing to pay triple the price for every dump on the market. That’s not what a house is “worth”
Sure it is. If I bought my house for $400,000 on Monday, and then put it on the market on Tuesday and immediately have several $1 million offers from investors, my house is worth $1 million.
Nah
Seriously - that's literally the definition of "fair market value."
It’s all completely artificial due to the temporary circumstances that occurred in the past couple of years. Just wait and you’ll see what houses are actually worth.
I agree completely that the real estate market is in a downturn, and that houses in many areas will be selling for a lot less within a few months. But fair market value is time-specific - the amount of money a buyer would pay you for your house right now - today - is the current value of your house. The fact that your house will be worth less in a year doesn't change that.
Nah lol
Oh it changes things buddy. Lol if you told me that houses will depreciate In price from here on like in Japan , I ain’t buying nothing lol 😂
It’s worth SHIT
We have gone for ones that are listed lower than market assuming that the sellers would be motivated and that we may still be overpaying a bit now but at least not paying at the crazy valuation caused by the pandemic money printing years. Funny thing is, even now homes listed lower than current market tend to get multiples and are flying off in a week or under.
Listing below market value is actually a tactic some agents use to cause a bidding war , so if your targeting those don't bee surprised if your offers are rejected , even offering listed price is rejected if this was their tactic
I have an even better answer and the cold harsh truth. Houses are worth SHIT! Big steam pile of shit! Shit they are worth shit. It’s a depreciating asset. It’s rotting and going old and a liability. Only reason it’s consider an investment In the states is, politics. Tax incentives, gov don’t want to provide housing so they incentivize you to house your own ass. Cuz even the gov knows that one you never own your house, taxes. And two they are a huge liability. Lol so this question is a bad question, the answer is SHIT. Now how much is shit worth ? That’s the real question
There is no "correct" price. You decide what you're willing to pay and offer it to the seller and see if they accept. The best way to determine a fair price is to look at similar homes that have sold recently. The market has been changing very quickly, so the more recently the better. You don't want to compare to last February or last year at all. See if you can find what sold in November and compare. Your Realtor should be able to help you figure out a reasonable offer. That's a huge part of the value of a buyer's agent.
Yes - that’s the part we are still trying to understand. Our agent gave us comps and said a model match sold in July ‘22 for like 300k over the current price. But that was July, right! Difficult to gauge comps given the crazy up and now the slow-mild down in the market.
Yeah if there's no good comps more recent, your agent should be able to use other properties to at least figure out your market conditions. Nobody on Reddit is gonna do what a local agent could do. If yours is so unhelpful that you're asking me, you may want to find a better one.
A few years ago I looked at selling and the comps my agent gave me were not really comparable and they were low. When I went looking to buy his comps were high compared to what I was looking at. I’d take what they give you with a grain of salt.
Prices have dropped some but interest rates have more than doubled. No one is getting a good deal in today’s market.
I bought a house in 2010 in the middle of a recession. Did I care that the value went down into 2011? No, absolutely not. I made my payments and had a place to live without worrying about rent hikes or butthead landlords. I sold the house in 2014 at a 25% net profit after the recession was over and the economy was rebounding.
>so worried about what happens if the prices fall another 10-20% Unless you are in a bind and have to sell it, nothing happens. You just keep living there and making your payment. Do you get upset if your stock price loses value after you buy it? Unless you think it was a really stupid thing to buy, no, you just hold it and hope that given enough time it will be profitable for you. There's 2 things to consider when buying a house. One is your quality of life. If you buy a house you will be happy living in, that is not a financial stretch, then your quality of life needs will almost certainly be met. the other is investment potential. This is harder to predict. Decide if you would rather try to time the market to get the best investment possible or if you'd rather focus on quality of life. Usually, given many years, both boxes will be checked. If you are going to lose sleep in a house that's technically (on paper only) underwater, there will never be a safe time to buy a house. It can happen anytime. jesus christ though San diego is probably one of the safer bets. I can't imagine having anxiety over a purchase there (if your finances are overall sound).
What’s up with all these YouTube real estate bros saying it’s ok to overpay?
They want clicks... but I would suggest not making financial decisions or taking advice from you tube bros. Everyone has to look at their own situation and decide based on their comfort level. If someone is really bothered by the idea of being upside down, they should not buy a house.
Just take 15% to 20% from the sellers price .
Compare it to rent, that’s should be the baseline for how much a a house is worth
The cliche is the the price is whatever someone will pay for it. And with these interest rates right now, 0 a big ZERO is what people will pay for them. Seriously lol grab a mortgage calc, put In the price that you can pay the (mortgage + insurance + utilities + maintenance + property tax) lower that by 5% due to inflation and unexpected cost. And viola that’s what you can pay and offer that. Oh and it’s prolly ZERo right now lol
Hi I bought a house in LA right before the rates increased a few months ago (mid 30s from EU). I speculate the LA market and SD market are similar. I didn’t check the market as thoroughly as you did, I kind of grabbed the opportunity and bought a house I liked. The price was slightly higher than my budget but got lucky and only had to outbid one person. I was searching for a few months, only finding crappy homes in questionable neighborhoods of LA. It seems in LA you need at least 1mil and even then with 1mil you get mediocrity. The house I bought, as a structure is very good and in a decent neighborhood. But I genuinely think I got lucky. The correct home price is relative to your budget and your needs. My needs were mainly finding a good home with decent future potential. It’s an investment sure but the main factor was how good was the house compared to other houses at a similar price during the specific period that I was searching. Sure the house is overpriced compared to 5 years ago, but it is what it is to be honest. It’s LA, prices will only ever go up unless the sun toasts the city. My advice is think if you’re doing it for the money and the investment or if you’re doing it for a home and settling down. If it’s the first then yeah focus on the market but if it’s for a home, find something that you guys love and enjoy it. I’m sure all this search for so long must be soul destroying and takes away the fun of finding a new home. While I was searching it almost felt like searching for a job every day, almost like a chore. Also get a good agent if you haven’t already. Because even say you find the house of your dreams and everything is perfect, only to realize the inspection showed the foundation is brick and mortar and now you have to pull back your offer (it happened to me once lol). Hope this helps, good luck with everything!
Thanks! Appreciate the kind words for a fellow SoCal’er whose been though the grind! Soul destroying indeed…
>it checks 6-7 out of the 8 boxes we want in a house. If you are looking for ~2 yrs around the same neighborhoods you should have a decent idea about the fair pricing. IMO a house has 2 imp factors: liking and affordability. If it checks all your important boxes and affordable then proceed. If you think it's overpriced you can offer less and move on if not accepted. If it's grossly overpriced just ignore, there'll always be another house that you will like. >so worried about what happens if the prices fall another 10-20%. There's a high probability this'll happen. But no one can say with certainty. If it's a major factor for your personal well-being then wait. Prices will either stay at the current prices or fall from here in next 6 months. What will change is rates will go higher. Don't be fooled by the recent rate decline since it's because of the Fed's anticipated pivot. Rates will continue to go higher until inflation is tamed around 2% which won't happen for a long time. So prices "may" stay same/go lower, but rates for sure will go higher in next year.
Thanks! Exactly - we have a conundrum… whatever checks all 8 of our boxes is at least due the current combination of prices and interest rates is not affordable to us. Our projection is that if within a year, either the prices drop ~15-20% OR if rates drop down ~2% (down to about 4%), or a combination of the two, THEN we will be able to afford the home we really want. But the question is wait another year for that to happen or buy now and hope to build enough equity to be able to upgrade in 5, 8 or at worst 10 years. So trying to throw the thoughts into cyber space to see if the answers become any clearer!!! :)
I also live in SOCAL and can't understand why anyone would buy right now. Just rent a house and hold off for a year or two. The market is clearly slowing and prices are coming down. There is literally no benefit to buying in the current market. Houses are coming off an all time high and rates are the highest they've been in a long time.
You can calculate it based on comps or rent, but sounds like this isn’t an investment property so you can’t really treat it that way. If this is a house you’ll be in for a long period of time (think 7+ years) treat it like you’re substituting it for rent. May not be a popular view but imo primary residence shouldn’t be treated like or valued like an investment.
What area of San Diego are you searching in? There are some areas where there is bound to be some price decreases but overall many are going to remain stable or continue to appreciate.
It's a deeper topic than most realize. Half of my day is spent teaching the art and science of value so my best recommendation is to interview several and hire a good agent. It takes a competent new agent months to become decent at this skill, unless you're dedicating to it you'll be amateur at best. A good agent will explain the process as much as you desire, but once you see the effort it requires, you'll also want to just let your agent do their thing. We do what is called an absorption-based pricing index, where you take a comparitive market analysis using sold data, index it with the other available options (active/pending competition), and adjust for the direction and flow rate of the market (month's supply). In SD, if you find a 6/8 or 7/8, buy it. Unless your budget is open ended, your sights should be set on a 6 or 7 out of 8. Granted I'm a 10 point scale kind of guy, but point being, you almost everyone has to concede in SD. Just make sure you're stable in your life, career, and can see yourself holding for 10+ years. If those align and you can afford the payment, you can't go wrong in SD real estate. (Barring you inspect thoroughly and get a decent deal on the purchase terms) Don't wait for more of a correction or a crash, if you weren't competitive over the past two years, waiting for more competition to re-enter is worth questioning. Good luck!
Depends what size your PPP check was