[quote=CA renter]Sorry, BG, but I have to disagree with your assertion that rich people are fools just waiting to be parted from their money. They will expect a certain type of house, but they won’t have a pre-determined price they are willing to pay for it without taking into consideration the houses above and below that level, and what those houses are selling for. They are not fools, and they have no intention of throwing their money away on anything, including housing. Why on earth would they offer $5 million on a place that is worth only $3 million? They simply wouldn’t do it. These are the people who tend to analyze everything, and you can be certain that they understand the relationship between asset prices and interest rates (some exceptions might be brand-new money with poor management and/or lottery winners who, statistically, stand to lose all/most of their money at some point).
And I disagree with you about what buyers are willing to settle for. Those 3/2, 1,500 tract homes in old neighborhoods are different today than they were 30+ years ago. They are often older, and more likely to have crime issues than they were back then. People don’t have higher expectations these days; the neighborhoods have changed. If crime rates are higher and houses are older, people will not want to pay as much as similarly-situated buyers did 30 years ago.[/quote]
I wasn’t referring to the $1M and over market, CAR. Depending on area, residential RE values in the upper tiers are very subjective, due to only a fraction of them being “on tract.” The majority are custom-builds. I’m not even referring to “rich” buyers. I was referring to “typical” FTBs and STBs, downsizers, second-home buyers and vacation-home buyers. Believe it or not, these are all “regular people,” the first two types likely being “worker bees.”
If anything, 50+ yr old areas in SD County are MUCH BETTER now than they were 30+ yrs ago for the following reasons:
-invention of the double-paned vinyl window and mass replacement of windows on these homes;
-mass-remodeling done to the extent that there are little to zero “fixers” left to buy in a given area;
-mass replacement of shake shingle roofs due to fire insurance requirements;
-mass replacement of (unsanitary) carpet and linoleum with hardwood, travertine, engineered flooring, ceramic tile, etc;
-mass replacement of appliances with energy-efficient models;
-mass replacement of “Formica” countertops with granite and stone;
-mass replacement of “plywood” cabinets with euro-type cabinets (which roll in/out smoothly);
-mass replacement of asphalt t-lock shingles with slate and tile;
-unparalleled urban views and waterviews available which are not found in suburbia or exurbia;
and, most importantly, civic improvements in local parks, tree maintenance and sidewalks as well as newly established “upscale” local businesses within walking distance and higher-earners moving in as houses turn over, one by one.
In addition, 19+ years ago there weren’t any *distracting* API scores to confuse homebuyers because they didn’t exist. MANY “inner-city” schools now have a plethora of available services that were unheard of in the ’70’s and ’80’s, such as:
-pact with local CC for “free” HS credits;
-GATE programs;
-performing arts and science programs;
-many more AP class offerings;
-IB programs now available;
-state of the art vocational training while in HS;
….just for starters.
No one can tell me that today’s highly-paid legal and medical professionals (yes, even those with minor children at home) are not attracted to prized ‘hoods in 92115, 92104, 92103, 92102, 92106, 92107, 92110 for all of the above reasons …. as they were in previous generations.
Location will always trump size and age in coastal CA counties and this will never change. This is why a buyer will get less sf for the money in these areas than in suburbia/exurbia. You get what you pay for in this life. After about ~1850 sf for a family of four, the rest is excessive, unless that family entertains a lot. In that case, ~2200+ sf would be better … with a 7500+ sf lot.
The miles of tract subdivisions in suburbia and exurbia with 3000+ sf mcmansions with soaring ceilings situated 6-8 ft from one another being the norm are unnecessary for 90% of families (of 4 people and under). The excess space is unused and needs to be furnished, heated, cooled, cleaned and dusted. They would be better off (by realizing less commuting cost and higher appreciation) in a closer-in <=2000 sf house with a large backyard for the kids to play in.
