[quote=CA renter]I see these long-time, unencumbered sellers in a different light. Since most of them don’t need a certain amount in order to clear their debt, they can sell for market price (that’s what a buyer is willing and able to pay), rather than wishing for that “special” buyer to happen along.
Heirs, especially when there are multiple heirs, usually want to sell and divide up their inheritance. They, too, do not need that “special number” in order to sell. They can sell for whatever the property is worth (non-bubble price). I was one of those heirs, and we were able to undercut everyone else in the neighborhood by tens of thousands of dollars, and sold rather quickly, even when there was essentially no mortgage market in mid-late 2007 — this was the worst time to sell during the downturn, as the inventory was at the highest levels, and the govt hadn’t yet intervened. We had no problem selling multiple properties in hard-hit areas because of the fact that everything was paid off.
IMHO, the focus on “distressed” inventory and foreclosures is overblown. What’s more important is the financial condition and wherewithal of future buyers. During the bubble, they had access to tons of EZ credit, so they pushed prices up, well beyond fundamental values, during the 2001-2006 period. Once that EZ credit is gone, prices have to come back down to where they would have been if the bubble had never existed. All those transactions — and the ones that were comped based on those transactions — need to be unwound. That’s why we’re seeing price drops. It has nothing to do with organic “distress,” and everything to do with unwinding transactions that should never have existed in the first place.[/quote]
Yes, I agree that in the case of multiple heirs, usually one or more of them needs the cash right away. However, I know an “only-child heir” and group-of-two heirs here in SD whose last parent died within the last 3 years. Both immediately cleaned out and leased their parents’ home after their deaths due to all the bottomfishing buyers out there. All had decent pensions they were happy with and were residing in paid-off homes themselves. The only-child heir lives less than a mile from mom’s old house and manages it himself.
CAR, in your 2007 sales of your parents properties, were they long-time rentals in underserved areas? I won’t mind if you don’t want to answer. Even though you sold under market, it was still smart of you to sell when you did, IMO.
I DO think properties in PL that were overmortgaged in past years which are now unaffordable to their owners are now being “unwound.” And I do believe the degree of distress in a micro-area DOES matter. What I’m inferring here (anecdotally) is that very desirable micro-areas of 92106 (i.e. Roseville, Fleetridge, La Playa) didn’t have the distress to begin with. By that I mean, the vast majority of persons who purchased these properties (even during bubble era) did not overmortgage them. Did some overpay?? Maybe. Depending on the exact property and whether they need to sell now, overpaying may or may not have been a mistake. I believe a the majority of PL properties in desirable micro-areas have been and are currently purchased with a mortgage of 60% LTV or less, or all cash.
Of course, you know that a current appraisal only includes comparable sales within the last six months. “Bubble-era” comps would not be part of these. So, buyers today aren’t paying “bubble-era” pricing.
Due to the rarity of exact views, lot sizes and configurations, house design and possible noted architect, how the lot is situated and what it faces, etc., there are many properties in PL where value is completely subjective and in the eye of the (often well-heeled) beholder. I’m not saying PL buyers are stupid and will pay anything. I’m saying that certain properties there offer amenities that can’t be found anywhere else. They are one of a kind and today’s fully-developed SD city skyline is truly “one of a kind.” You can’t buy this view for any price in LJ or DM or anywhere else, for that matter :=]
