I think that there’s a coastal, premium, superior property myth. Sure the best houses in the best areas are always more expensive.
I’ve seen houses triple in prices, since 2000, in the not-so-nice areas. But they only double in “superior” areas.
The rate of depreciation is market-based in my view. If well-to-do folks get hammered during the coming recession, prices will drop accordingly. My sense is that a whole class of people became prosperous thanks to easy-money leverage in the last 10 years. Leverage can very quickly bring people from uppper-middle back down to middle-middle or lower-middle.
Look at this La Jolla house. It doubled in value since 2000. In the same period, houses in Clairemont or Mira Mesa or La Mesa or North Park have tripled. Does that mean that this La Jolla house is a relatively better deal? I think not. This area got overpriced earlier in the cycle (1997-2000). This house increased less since 2000, so when it drops in value, it might appear as though it’s holding value better, if the base year is 2000.
Unlike the stock market where the value is “virtual,” real estate is different. You have to be intimately familiar with the neighborhoods in order to spot the value buys — the stats are only a guideline.
List Price: $1,099,000 – $1,099,000
2785 RIDGEGATE ROW, La Jolla, CA 92037**
Bedrooms: 3
Full Baths: 2
Partial Baths: 1
Square Feet: 2,581
Lot Size: 5,719 Sq. Ft.
Year Built: 2001
Listing Date: 02/19/07
On Market: 1 day
Type: SFR
Status: ACTIVE
MLS #: 076014143
