It takes a tremendous amount of confidence to actually put into practice an opinion involving the declining value of your own home prior to it actually happening – not many people can get to that point. It takes even more confidence to tell other people to do the same and mean it.

The problem with giving people advice on how to act is that sometimes they take it. Now if the advice turns out to be good that can be a good thing for them and for the relationship. If, for some reason, that advice turns out to be bad the results can be bad for both the advisee and the relationship.

There are enough variables involved in this particular problem that it’s hard justify this level of involvement in someone else’s life. Just the timing alone is enough of a variable that it can make the difference in this case. What if the market experiences a nice rally right as the project is completed and it turns out there is a profit in there for those people who stuck with it?

In your shoes – not that I’m advising you to do this 🙂 – I’d express my opinion about the long term trend, explain why I hold those opinions, and then wish them well on whatever decision they make.

This person is apparently thinking the currently soft trend will rebound and increase during the two years or so that it takes to close escrow on this unit. There are a lot of people who share that view thanks to the NAR PR machine. That’s your competition in this.

I’ve got a ton of stuff to do today so I’ll make this quick. I don’t know what the future holds. I’m looking at the information at hand and trying to extrapolate it into the future. I fully agree with you that based on what has happened in the past and what’s happening now I THINK we’re headed for a huge decline. But I have been wrong before and I can be wrong again.

My problem with saying things WILL happen in the future is that there are variables that nobody can know. What if oil goes through the roof and the downtown condos do better than everywhere else because of their proximity to employment? What happens if the dollar takes such a beating that inflation corrects the wage/price imbalance? What happens if long term interest rates don’t go up like we think they should? What if there’s some new tax break that comes about to promote RE investment positions?

Granted, the idea that any of these scenarios could be of such effect on the local market as to enable the prices to remain strong or rally is far-fetched, but what rational person could have guessed in 2003 that the interest rates and the markets would have done what they did in fact do? I was wrong about that back then and I need to be honest and not forget that as an example that I can be wrong about this, too.

I’ll give you one more example before I split. When I was realtively new to my current occupation I thought I was so good. I had learned enough to develop a rythym and it was working for me. I could look at a problem and instantly develop my opinion. I saw everything in terms of black-white. But as time wore on and I saw more examples of the exception to the rule, more complicated problems, and ran into situations that had more variables, I came to realize there is no black and there is no white; it’s all shades of gray. I especially learned that people do not always act rationally nor are they often well informed. Now I have a hard time ever being judgemental enough to commit to a single course of action until I’m at the very end of my process. Prior to that it’s all subject to additional information and consideration. Some people would call that weakness and maybe it is, but I like to think of it as keeping an open mind.

I’m not sure if this has been discussed as I’ve been away from the board for awhile. McMillin had plans to build a high-rise condo complex somewhere downtown on land they already own…but have cancelled the entire plan due to bad market conditions. I’m sure the building plans, permits, etc…have been in the works for several years. They’re just going to wait and hold onto the land until the market gets better. That may be quite awhile…….Just another sign of the times….

Farls

The condo your friend is likely buying is VantagePointe. It’s a huge building that’s only 50% reserved. The units in the building are very very small and the building has lost a level of parking due to a constraint that came up during the excavation phase.

If you want to show your friend some examples of people losing on downtown condos take a look at my blog, I’m posting specific examples of losses as I run across them.

http://sandiegomarketmonitor.blogspot.com/

I think the Phase 2 and beyond people had to put 5% down to get started, most VantagePointe buys are now in escrow and will need to put another 5% down when the building is topped out.

The $5,000 deposit was to reserve a unit, once the escrow opened the buyer needed to deposit more funds to reach 5%.

At this point I doubt that construction would stop on the project.