I know nothing about finance and have no experience in real estate. I’m originally from CT and moved here after college in ’95. In 2005 after renting a 1 bedroom condo for 5 years at $875 my landlord decided he wanted to sell. He never raised my rent but he gave me 60 days notice and put the unit briefly on the market. Soon thereafter he was renting it out again for perhaps $1000-1100 b/c he realized he could not sell it for even remotely close to what he apparently thought he could. The condo is by Del Taco in MV and is 700ish sq ft. He offered for me to buy it for $280k and this was 2005…as you can see he was clearly delusional and had no grasp of what was already in motion.
I began renting another condo for the year after that and due to family drama from the landlady she had to reoccupy the unit I lived in so I had to move yet again. Which brings me to present day 2007 when I began to rent a 1 bedroom condo on Friars Rd. for $1300 a month in April…the unit is about 800 sq ft. Just last week the landlady calls me all in a panic and leaves 2 voicemails and says she HAS to sell. And says something about it “doesn’t mean I’m out but…” So I call her and she says she needs to sell the condo and blah blah blah would I like to buy. I’m what you might call a pro-googler so she doesn’t know that I already know she’s in the home lending/mortgage/real estate field and that she purchased the sucker I”m living in in 2004 for $325k. My lease doesn’t end til the end of March mind you but she tells me basically she’ll give me a free month of rent if I agree to move whenever she finds a buyer. This is also fairly classic w/ the 500% foreclosure rate which even I, a novice, knows about and certainly she, an expert, would know. And the kicker is she tells me if I don’t agree then she will foreclose on the property and I’ll be out in 30 days…which begs the logical question…why would I buy it from her if I can buy from the bank at the auction?
Anywho I begin to research CA civil codes to figure out my rights etc. and ultimately consult a tenants right lawyer. I knew that if she sold it hte lease is attached to the property so I’d be fine so my real concern was foreclosure. In the back of mind I began to wonder if this was merely a scare tactic on her part and lo and behold it appears so. The kind lawyer has the Westlaw system where you can look up stuff and she owes on my unit about $270k w/ an adjustable mortgage and has a 2nd mortgage for $30k which may be fixed. The property is not in foreclosure…granted proceedings *might* have begun and the system might be 30/60 days behind but another search revealed numerous properties she partly owns w/ other individuals on the lease…obviously all investments and none of those are in foreclosure either. One would expect if she were truly overextended she might be in foreclosure on a few of her properties but I think it was a bald-faced lie most likely.
In the past few years I’ve had friends tell me I was dumb not to buy someting…anything really…these were the same friends who purchased an 1800 sq ft. condo for $400k in San Carlos maybe 3 years ago and invariably other friends who have bought SD real estate in the last few years.
Everything I have witnessed for SD real estate in the last 4 or 5 years is completely illogical…it made no sense to me what was going on…especially if you look up comparables for various condos from 1995-2000. I’m not a math wiz (though I did take AP Calculus but would be hard pressed to solve a problem) but none of this made any sense to me and I refused to be feared in to buying a crappy 1 bedroom condo for $325k and I can not tell you how glad I am that I have “foolishly” according to some people rented for the last several years. When you begin to research online the true state of our false economy in America and take note of the analysis of data by economists and others in the know you really do begin to see the conditions are ripe for major fiscal strife over the next several years in the U.S. And for those like my condo owner who are flailing now thinking they can sell they are just in denial…it was over in 2005 for my landlord then and it’s still over for my landlady now. There are the different stages of grief and many people in SD have been in denial for the last year or two and are just now diving in to the “oh, shit” stage.
For as glad I am that real estate will return to much more rational/normal levels in the next couple years I do not envy all the (albeit many dumb) people who bought in to the post 9/11 dream/frenzy that was served to them by their own gov’t who allowed $700k ARMs w/ no money down b/c that same gov’t is not save them now.