For the past few months, I have been looking at the $3-$5 MM range for a European friend in La Jolla, and can offer a few insights:

– European buyers with a lot of money are not *necessarily* reckless. Some expect prices to fall a lot more, and so they are offering significantly less than sellers are asking.

– There is quite a range of sellers, where some have massive equity, and some have none or negative. The ones with a lot of equity have often lowered their asking price several times. We even had one case where a seller agreed to come down in price another 20ish % after listing at a fairly reasonable price (I think my friend will say if they agreed, then he offered too much, but we’ll see).

– The hysterics are much greater in this market, especially among those with little equity. When people put 2005 prices on their homes and expect to get them, it is not like negotiating in other areas of San Diego. People get indignant and just plain nasty. The denial seems to run especially deep here.

I agree with SD Realtor that it is another 1-2 years before you see the denial pass. For successful, active people, doing nothing sometimes is the most difficult option. My friend clearly understands now that time has been on his side.