[quote=bearishgurl]In these areas, value is determined by exactly how much a buyer is willing to pay, period.[/quote]
I know what you were trying to say, but this sentence is actually true for every square inch of privately held land in the country. Better to say that highly desirable locations are less affected by other economic influences. However, no location, no matter how perfect, is immune to economic pressure from outside the area.
As for value, let’s say a beach property sells for $2m in 2006, then sells again today for $1.5m. The buyer was willing to pay $2m in 2006, and that’s how much it was worth in 2006, but today’s buyer was willing to pay no more than $1.5m. The value can (and will) still change over time, regardless of what people are willing to pay at this moment and regardless of salaries in the area. Much of this change is likely due to outside influences. No one questions that Dr. Feelgood in Del Mar is capable of paying $2m for that house, he just isn’t willing to. In a year, he may not be willing to pay $1.4m.
