Well don’t forget I paid 50K for it, not 17K. So with carrying costs over 12 years, the extra 20K didn’t come close to even paying interest on my original investment. I also spent significant money on upkeep, rates (equivalent of property tax), repairs. I didn’t sell it purely because I pretty much couldn’t. But it affected my ability to buy elsewhere as I already had a mortgage. All in all I remember it as an ongoing nightmare.

Today – hard to estimate, probably 150-200K pounds. Which is completely ridiculous for a crapy 900 sq. ft. one bedroom appartment in a poor part of London. It’ll crash again.

Not really – by that point I owned 3 properties, this one, another I bought later in Oxford (also rented out to students) and one I built in Ireland. I had just moved back to the UK from Ireland and I was renting. So I liquated all the other properties and bought something where I worked in the UK. THEN I moved to San Diego. At one point I had about 400K pounds in mortgage on 3 properties and my ability to pay was completely tied to my ability to rent them all out. The only moral I think is applicable is the collapse in value can be horredous and my experience in London was that it was far, far worse in outlying areas. The pattern was prices rose in the center of town until people coud not afford them. Then outlying areas started to rise, with gentrification following (Brixton for example). Prices in the center stagnated whilst the outer areas continued to rise. Whnen the crash hit, people could suddenly start to afford the more fashionable neighbourhoods again and you couldn’t give away property where I lived.

I’d be very suprised if the same thing doesn’t happen here…there will be a bloodbath in Temecula for example because most people only live there because they have to and endure the commute. A drop in pricing in Carmel Valley, Del Mar, Cardiff, Carlsbad will KILL the Temecula market. I bet it’s already happening. And the drop can be far, far steeper than I think most on this site even realise. Forget 20 or 30%. Try 60, 70, 80% in these areas.

Still, I think 60-80% is something that we would only see in a very extreme situation related to — you name it — a true depression, national catastrophe, nuclear calamity

There was no nuclear war that I remember in London in the early ’90s. There was a mild recession ’90/91 related to high interest rates. My property still lost 60%+ of its value. The market essentially froze – no one was buying or selling unless desperate. The phrase ‘negative equity’ was commonplace (you owed more than the house was worth). There was talk of a government bailout – it never happened. Problem was any buyers that existed headed for affordable property close to their jobs. Maybe Temecula is different and there’s huge industry up there I don’t know about…but if a lot of people live there and work in San Diego, good luck.

Why is it people can accept a 60% RISE in value as normal, but a FALL back to the original value takes a nuclear winter? We ended up at 1979 pricing in London as things overshot the other way and then recovered.

The train wreck took maybe 5 years to unfold. We’re in year 0.5 and I’ve already seen 10%+ price drops.