I’m a North County Coastal homeowner. And I don’t care if my house drops 50%. I bought it a long time ago and I made a conscious lifestyle decision to live there.
A 50% drop would give me the opportunity to buy something I would rather live in central San Diego city.
A 50% drop sounds like a catastrophe. But if you think in terms of dollars, it’s not. It wasn’t too long ago that we had median prices about $300k. And at that time, housing was alredy too expensive. Prices can revert back to the mean and we’ll be fine. People in real estate related businesses will be hurt, but everyone else will be fine. Just roll back the clock 5 years.
I think that all housing will be affected by the same percentage at different times. I don’t know of any downturn before where “superior” products declined a lower percentage. Actually, the supply of “luxury” housing is propertionately greater so it could well be that “luxury” housing will turn into average housing.
Another psychological point that affects feelings about real estate is that homeowners who stretched to buy feel that they worked really hard to afford their homes. Thus they feel entitled to be rewarded with housing appreciation. People stretch to buy all sorts of things. What’s different with a house? Should buying a house be “rewarded” anymore than working hard for a Ferrari or a big diamond ring or a luxury vacation to Europe?
