“…how do you explain in the last housing downturn of the nineties, when areas like Balboa Island, and Aspen, Colorado were hit hard, some properties were selling for fifty percent off? You would think that people in those areas don’t need to sell, as many paid cash for their multi-million dollar mansions.”
I grew up in Newport Beach and my experience was that the ones who lived highest on the hog were often the deepest in debt. The cars and boats were leased, the credit cards maxed, the house(s) mortgaged to the hilt, etc. The need to impress others and their greed impaired their judgment.
Ironically, the ones who lived “modestly” were the ones who could afford to send their kids to a good college and they were likely still plugging away at their original 30 year mortgage on a nice but sensible house. They were doctors, lawyers and business owners. They perhaps had a boat in the harbor and a yacht club membership, but they didn’t flaunt it. They didn’t have a Bentley in the driveway and their house wasn’t a McMansion, but they were far, far from broke. If their house went down in value it wasn’t a huge deal because they weren’t upside down. They bought in years ago so they had equity regardless. The ones who paid top dollar for everything had no breathing room. They were the panicky types who unloaded for whatever they could get.
You’ll see that happening again this time too. Mark my words.
