“I just want a great deal!”
Really? Well now I won’t send you this terrible deal I was going to convince you to buy. For some reason, people feel the need to tell me that they really want a good deal when they tell me what they’re looking for. Not an ok deal (I’ll come back to this later), not a bad deal, but a great deal. Typically this means they’re never going to buy anything because nothing will ever be good enough.
Here’s what I think…
A great deal in today’s market is just an ok/good deal. Sure, everyone has their own opinion of what a great deal is, but generally speaking it means something that’s severely under market value. The problem with this is that there are way too many buyers out there who are looking for the same exact thing. So even if a great home comes up for sale at a great price, a dozen buyers will submit offers and bid it up to a good/normal price. The days of great deals are long gone.
If you’re looking to buy now, I suggest you look for an ok deal. If you keep chasing for that incredible deal, you’re never going to find it.
True Story – A few months back, I had a client come to me and said that he wanted some investment properties. We discussed what he was looking for and I told him that if he waited, it was possible (though not probable) that we could find a great price for what he was looking for. He then told me that he just wanted a good price, as he felt that the market was getting better and he wanted to get in before things picked up even more. So…we got him some “good deals” and sure enough, a few months after he closed escrow, prices rose another 13% or so.
I’m not saying a 13% price increase is typical in today’s market, but my point is that my client had the foresight to see a shift in the market. People who say they only want an incredible deal are going to miss the boat and will never buy anything. There’s far too much demand and not nearly enough inventory. Looking at Q1 of 2011 versus Q1 of 2012, there was a 3.27% average sales price increase downtown (not including developer sales) and 50% of all purchases were all cash. Through the first half of 2012, downtown San Diego has had a 13.9% median sales price increase nearly a 15% decrease in average market time. Let me repeat that – almost a 14% price increase in 15% less time. Does that mean anything to you?
So…here’s my suggestion: First figure out what you need. Then figure out what you want, determining what’s a priority (ie, view, space, location, condition, etc). From there, determine whether or not you’ll be in a significantly better position to buy a home in a few years. If the answer is no and you haven’t found the right home, then you need to reevaluate what you’re looking for and what you want/need.
I’m not trying to discourage you, but if you wait for the perfect everything, you will miss out. Rates are probably lower than they have ever been in your lifetime and we might not ever seen them this low again.
Here are a few not so bad deals:
1. M2i – this top floor, 1003sqft loft is a short sale, listed at $290K. Similar units have sold in the last 12 months at M2i for $290-340K. With low HOA dues, modern architecture and 14 ft ceilings (for 7th floor units), M2i is a highly desirable midrise. I also think it’s in a great, expanding, undervalued area.
2. Horizons – right now there are three units for sale with the same exact floor plan. There are two ’05 units on the 16th floor (one in each tower) and another on the 15th floor. The two on the 16th floors are vacant and have been on the market for 189 and 118 days – the average market time for condos priced between $500-700K downtown is 62 days for the last 90 days). This floor plan is on the north west corner of the building and has bay views to the west. I personally would choose the unit in the 510 First building (south tower), since its bay view isn’t blocked by Pinnacle. I don’t think that these units are exceptionally great, but they are nice and I’m sure one of these sellers is wiling to sell before another ’05 comes on the market. Supply and demand.
That’s all I have for now. For those of you looking for great San Diego real estate deals, hopefully you don’t hate me. For those of you looking to buy, give me a call.
Denny Oh 858-243-2092 [email protected]