[quote=bearishgurl][quote=deadzone]Regarding the lower pricing I am seeing in La Jolla, it is a combination of all cases. There are some short sales, some foreclosures, and in some cases long time residents (presumably way above water) who are finally waking up to reality that they have to lower their asking prices significantly if they want to sell.[/quote]
Why do these “way above water long time residents” in LJ have to lower their asking prices significantly if they wish to sell? Are there short-sale closings and foreclosures on their street? What’s keeping these longtime owners from withdrawing their current listing and waiting for a “better day?”
I maintain that the way above water sellers you speak of who feel they MUST reduce in order to sell MUST SELL NOW for a REASON during a time when nearby lower sold comps are affecting the value of their properties. Those nearby lower sold comps are lower for a REASON. What are those REASONS, deadzone??
If you knew these answers as well as what the likelihood was that this scenario would continue to “play out” in a “micro-area,” then you might be able to determine if now would be a good time to buy in that area.[/quote]
Because they need or want to sell. It really is that simple. If buyers aren’t willing to pay their price, then their price is too high.
As to why a neighboring property might have sold for less…it’s because nobody was willing to pay more for it. If somebody wants to sell something, they have to price it to sell. For example, I can put ads online and in all the newspapers listing my dusty minivan for $200K. Just because I listed it for $200K doesn’t make it worth $200K (and just because, once upon a time, some idiot was willing to use someone else’s money to pay $200K for a similar vehicle…doesn’t make MY dusty minivan worth that price, either). In any given market, it is the buyers who determine price. Always.
They have to lower their prices because *smart buyers* know that the prices of this past decade were driven by idiot borrowers (and lenders) who were agreeing to pay prices they could NEVER afford. Just as some sellers think that today’s prices are driven by “distressed” properties, buyers know that the high prices since 2001 were driven by idiot buyers who thought “real estate only goes up,” and who over-leveraged themselves to the point that these foreclosures became inevitable.
Just because a particular neighborhood didn’t see a lot of sales during the credit bubble does NOT mean the prices of those homes weren’t affected by the mania. Even if 1 out of 2 sales were to people who were willing to overpay (and there were PLENTY of people buying in the $800K++ range with “exotic” mortgages), that’s half the market! Prices in neighboring areas (San Diego, in general) during the bubble absolutely affected other areas nearby. Just like that one foreclosure down the street can affect prices, one sale to an overleveraged, idiot buyer affected what neighboring owners thought their houses were worth. The market does not exist in a vacuum, no matter how “special” an area is.
The foreclosures and short sales are happening because those very same buyers who were overpaying during the bubble are now being taken out (but you never hear these neighboring owners admit that the peak sales to overleveraged speculators shouldn’t count, they only think the “distressed” sales shouldn’t count…one is the mirror image of the other). All of it needs to be unwound.
