[quote=bearishgurl][quote=Jazzman]Bearishgirl, I am with you all the way on Prop 13. The SD/Charlotte example was just to illustrate a point, that measures of life style, geography, weather etc alone don’t determine home values. RE is the biggest industry in CA. If memory serves me, it is a whopping 17% of GDP. The mortgage/Wall Street fusion was purportedly born in Orange County. CA has one of the largest foreclosure rates in the country. I don’t think this is all coincidence, or that people are simply “prepared” to pay higher home prices. Life-style is sold here big time, and some might argue largely on the back of Hollywood glitz and glamor, so one is “stuck” with the high prices.[/quote]
Jazzman, I don’t think a “lifestyle of glitz and glamor” are what people are buying in SD County when they purchase RE. ANY area of the US is free to “sell” its “lifestyle” and many do. I think, plain and simple that the weather in SD county is more consistent year round and year over year and less prone to natural disasters (we’ve also been lucky in recent decades in this regard). This is a BIG sell. One doesn’t need to visit here long in the winter or during hurricane season to experience the difference because between SD and Charlotte. I also think the diverse housing stock, diverse kinds of people and proximity to the Pacific Ocean and Mexico are a big draw, as well.
Foreclosures and property distress is happening everywhere in the US with some locales affected far more than others. NINJA loans were likely available in all 50 states. [/quote]
Not sure you can entirely isolate SD from the rest of CA, where very similar conditions exist, or that you can boil it down to things like environmental factors such as weather. Moscow has miserable weather, but has very high prices. Arizona has a lot of sun, yet comparatively low prices. California is in the top five states with the highest foreclosures, but where home prices are over twice as much. Prices didn’t correct as much as Las Vegas due mainly to supply. Supply has a huge effect. Monaco is an extreme example of this. Incomes have another effect as can be seen in NY and London. Cheap credit is a major culprit as can be seen in the English speaking world.
Another factor in sticky high prices that I am personally experiencing is falling prices. That seems like a contradiction, but many of the homes I have been making offers on can’t accept FMV, whether they be REOs or normal sales, due to outstanding loan balances. More interesting is the reluctance of many brokers to make offers that reflect FMV. Most seem happier to make offers based on outstanding loan balances. My question to these owners is why should I bail you out? I could equally ask some buyers why are they willing to bail them out, which leads us get back to the bubble addiction hypothesis? So you see a dark cloud seems to be obscuring the sunshine theory.
