Hi PD – I once had a friend who was very caustic in his communications (he died a few years ago and a lot of people said it was because of his attitude). He actually was my best friend for more than 45 years and everyone called him the “dark cloud.”
But I really appreciated this guy because he had the courage to always speak up and take a contrarian position in the face of huge opposition. His tone was often negative but he was always interesting and backed up his opinions with data that was carefully researched and analyzed. He was always giving of himself in a way that most didn’t understand but I knew that his true intentions were – to share himself with others so that they might benefit from his knowledge of a particular situation.
He used to call me pathologically optimistic. He took issue with everything I said and I knew that he constantly tested me because he cared about me as a friend and didn’t want me to make a mistake or put my finances at risk by making a bad decision. We both had our own individual successes but with a totally different perspective on life. Oftentimes his perspective was very helpful to me and impacted my decisions on many important issues in my life thorough the years.
He taught me something very valuable: People express their opinions and beliefs in many different ways and with varying degrees of emotion but the bottom line is this: true communication is the appreciation of differences. We have to weed through all of our pre-determined notions about how something is being said and really “listen” to what is being said.
I honestly did not interpret sdduuuudes tone as snide. I read it as more a challenge to forum readers to test their own beliefs. And regardless of our interpretation of his “tone”, I think his intent was clear: to assist us in making more informed decisions and to remain open to what others have to say. Then, once all our considerations are out of the way, we can come to our own conclusions and take whatever action is necessary, if any at all.
You said we don’t know how far down it (real estate) will go…nor do we know if it will go down at all. The probability is high that we will see a correction, but I am not willing to make a prediction based on what is happening in certain neighborhoods around the county at this point in time.
Just because a highly speculative condo market crashes downtown does not mean that custom homes in a gated community in North County will follow suit. Just because one neighborhood of a certain priced home is seeing 10% price reductions in sales prices does not mean another area in a different price strata will do the same.
Real estate is a local market with many variables impacting value and pricing. People with financial means will opt for those areas that appeal to their own set of particular wants and needs and will not react out of fear or greed.
From my perspective, this bubble will burst when many homes across several price ranges start to sell for less than what they sold for on the last go around.
Just because a home sells for less than a comparable one sold for a month earlier (but both sellers make a profit) does not necessarily mean the bubble is bursting. It means the market is adjusting and a 10% or even a 20% correction is not uncommon in certain markets after a run up like we have seen over the last several years. When people start losing money on a regular basis, then I will look closely at what type of trend is evolving.
So far, in certain neighborhoods in San Diego, I see a slowdown but in my experience, those are also areas where people bought at the top of the market were speculating or took on loan products they probably should have avoided.
In areas where buyers put down lots of equity or even paid cash, where the buyers have secure jobs and strong fallback positions, I see absolutely no erosion in value because the conditions driving those sales are totally different that maybe another area that is experiencing weakness.
For many years, I have been looking for a home in a particular neighborhood, close to where I grew up. Even with the huge increase in prices over the last several years, nobody in that neighborhood ever seems to sell. Families pass on their homes to their children because the location is so desirable and the particular ambiance could never be reproduced again. The neighborhood is older and completely built out and no one seems to be motivated by profit to sell.
When homes sell in this area, they are usually sold quickly and quietly at full price (in some cases, overprice, depending on how well the agent gauged the market) and the sale is usually direct from the agent to a buyer he has already been identified well in advance. Rarely are the homes in this area even listed in the MLS. So that is a market unto itself, not correlated to the real estate market in general. High quality at a fair price will always sell, regardless of external market conditions.
So, looking at the broad real estate market has certain value but not necessarily on an individual, personal level. I think we have to look at exactly where we want to live, how we want to live and then determine if the price someone is asking is worth what we are willing to pay. Waiting for a market to crash so we can get a better deal on a family home is no different than speculating on the way up. Both are dangerous stances to take with your personal residence.
What if we are wrong in our “prediction” of what will happen? We could miss the opportunity of our lifetime by treating our home as an “investment” and not buying our dream home when it comes on the market.
My mentor once told me “If you see something you love, go for it, because that opportunity may never come again.” So many times in my life those words have helped me make certain decisions for the right reasons and I have never regretted acting under those set of circumstances.
To me, a home is a place where you live your life, watch your children grow up, create the memories that define your existence. And I will pay any price to secure the type of life I want, regardless of market conditions. After all, why do we earn money anyway? I believe we earn first to survive and then so that we can create the type of life we want, so we can feel safe and secure and empowered and find meaning in our existence.
Back to the market: My experience at this point in time is that sales are slowing down but prices are holding (at least where I live and also in areas I plan on living in the future). But then I am possibly looking at the elephant from a different perspective than you.
