If they are planning to be there over 10 years and can easily afford to be there even if prices dropped in half – I would completely agree with you. In my own case I would be OK also – just pissed that I spent so much money on something which might not get back to that price for 10 or more years. I’m renting a house right now for $5,200 / month which would probably sell for 2.5M. I hate renting (it’s not my house which I am not used to) but can’t imagine rebuying a Carmel Valley house for 1.5M-2M which is the same as 20,000 other houses, each held together with spit and stucco, slapped together by crews, and which (in my opinion) will be under 1M within a few years. I also have a problem buying a 2500 foot house in La Jolla which looks like something Ozzie and Harriet owned and should cost $125,000 plus inflation for $2M…
The problem with the current market is that there is so much downward potential (just as there was a huge upside for no reason other than speculation and mass psychology).
And no offense… but…. I doubt that your business consists of 3 families wearing top hats and monocles who carry bags of cash around buying custom homes which they have searched for, for 3 years. This scenario somewhat smells to me. It sounds like my friend who claimed he always won at the track… every time… except of course when we went with him.
I am sitting on a pile of cash and I like most business people want to see at least a 0% increase on an asset. What I mean by this is that if I knew prices were stabilized but I wanted to own my home rather than rent, I might buy the house anyway. But most thinking people, without emotion, can see that the downside potential is enormous and the best case scenario (which I don’t believe) is that prices will stabilize and will slowly go up.
What about your more normal high-end buyers 70-80% mortgage, executive jobs, reasonable salary expectations… Are even this elite group ok with decreasing prices?
