SD housing market nightmare (San Diego, San Carlos: real estate, HOA fees, condo)

[Cardiff Kook]

Originally Posted by John7777

That would normally be true. A house would normally be worth whatever someone is willing to pay. But unfortunately, most people no longer use real money. The Fed is playing games, trying to prop up the housing market to make things seem normal and to save banks that should have failed long ago. And so we have zero interest rates, or just about. People borrow most of the money and have no real stake in the matter. In California and other states with non-recourse financing, if a buyer pays too much, he can always walk away and mail the keys back to the bank. There's little real risk.

My guess is that before too long, many many people are going to be regretting the day they ever thought it would be a good idea to buy a house in California. Those $700K houses are probably only worth about $125K in the real world.

I could have guessed you were going to come into this thread and say something along these lines. Zero chance houses in my neighborhood or any other coastal neighborhood will ever be worth 125k again. In fact, I hope they are so I can buy one in cash..

[LuvSouthOC]

Originally Posted by John7777

That would normally be true. A house would normally be worth whatever someone is willing to pay. But unfortunately, most people no longer use real money. The Fed is playing games, trying to prop up the housing market to make things seem normal and to save banks that should have failed long ago. And so we have zero interest rates, or just about. People borrow most of the money and have no real stake in the matter. In California and other states with non-recourse financing, if a buyer pays too much, he can always walk away and mail the keys back to the bank. There's little real risk.

My guess is that before too long, many many people are going to be regretting the day they ever thought it would be a good idea to buy a house in California. Those $700K houses are probably only worth about $125K in the real world.

125k, really? Coastal SoCal will always be expensive.

[John7777]

Originally Posted by LuvSouthOC

125k, really? Coastal SoCal will always be expensive.

I was exaggerating a little bit, but you understand what I'm saying.

What's the average family income in the San Diego area? As I recall, it's not all that much. Let's say $65K. And with a $65K income, what kind of loan would you qualify for? Sooner or later, the market will revert to the norm. Homes will be priced at what people can afford. I do realize that things have been abnormal for a long long time. And maybe today's current buyers are the smart ones. Maybe we'll have hyperinflation sometime soon?

I'm thinking about buying a place in San Diego again, even though I know it's silly. But I'm 64 and could well be dead in 10 or 20 years. So in a certain sense, it doesn't matter. I won't be around to see how it turns out.

[Encinitan]

Originally Posted by John7777

I was exaggerating a little bit, but you understand what I'm saying.

What's the average family income in the San Diego area? As I recall, it's not all that much. Let's say $65K. And with a $65K income, what kind of loan would you qualify for? Sooner or later, the market will revert to the norm. Homes will be priced at what people can afford. I do realize that things have been abnormal for a long long time. And maybe today's current buyers are the smart ones. Maybe we'll have hyperinflation sometime soon?

I'm thinking about buying a place in San Diego again, even though I know it's silly. But I'm 64 and could well be dead in 10 or 20 years. So in a certain sense, it doesn't matter. I won't be around to see how it turns out.

Well, either the home prices can drop to the level people who live there can afford. Or, people with higher incomes can come to the area and pay the higher prices. So far, at least along the coast, it's been the second scenario, not the first. As a coastal property owner, I'm betting it continues.

[tickyul]

I think this sharp ride-up is going to go on for quite a few more years.

Sucks, but it is going on in many parts of the country and it does not look like it wants to stop.

[adr3naline]

Originally Posted by LuvSouthOC

125k, really?

Originally Posted by John7777

I was exaggerating a little bit, but you understand what I'm saying.

Building a cookie cutter 1100 square foot home on a flat parcel for $125k isn't out of line. In Socal the land provides much more of the property value than the average Joe tends to think.

[1AngryTaxPayer]

Originally Posted by John7777

I was exaggerating a little bit, but you understand what I'm saying.

What's the average family income in the San Diego area? As I recall, it's not all that much. Let's say $65K. And with a $65K income, what kind of loan would you qualify for? Sooner or later, the market will revert to the norm. Homes will be priced at what people can afford. I do realize that things have been abnormal for a long long time. And maybe today's current buyers are the smart ones. Maybe we'll have hyperinflation sometime soon?

I'm thinking about buying a place in San Diego again, even though I know it's silly. But I'm 64 and could well be dead in 10 or 20 years. So in a certain sense, it doesn't matter. I won't be around to see how it turns out.

Coastal homes may dip but history shows they NEVER go down for long. Too many people with money and they aren't working here in San Diego. They already have money. I wish I had bought 2.

[John7777]

Originally Posted by 1AngryTaxPayer

Coastal homes may dip but history shows they NEVER go down for long. Too many people with money and they aren't working here in San Diego. They already have money. I wish I had bought 2.

There's no doubt about it. A lot of the people who live along the coast already have money. For them, buying a house is no big deal. Maybe that will continue.

[JohnAlt]

Originally Posted by RosieSD

The market seems to be particularly crazy right now. My hunch is that people are rushing to get in before interest rates go up, and that has created a bit of a panic market.

Seems idiotic to bid up home prices before interest rates rise when low interest rates are in part propping up prices in the first place. Do people not get that there's an inverse relationship between interest rates (lower create more demand) and prices that can be fetched? Never mind. I already know the answer.

[John7777]

Originally Posted by JohnAlt

Seems idiotic to bid up home prices before interest rates rise when low interest rates are in part propping up prices in the first place. Do people not get that there's an inverse relationship between interest rates (lower create more demand) and prices that can be fetched? Never mind. I already know the answer.

One has to wonder what home prices would do if interest rates were to rise to say, 7%. I guess that's not going to happen, although maybe it should.

Perhaps people are buying because they know that the money printing and easy money will continue indefinitely, and that someday, all that money will cause a lot of inflation? That makes some sense to me. I have seen a lot of inflation over the years. A new car used to cost $3300. Today, 10 times as much. It's that way for many things.