[quote=Jazzman]BG, a willingness to pay does not necessarily mean homes aren’t over-priced. After all, people showed willingness to buy at the height of the bubble, and homes very clearly weren’t worth what someone was willing to pay. Willingness to pay is a concept borrowed from fine art auction houses, where superfluous cash of high net worth individuals is seeking an alternative place to park itself. The same cannot be said of ‘common or garden’ real estate. ‘Deceived into believing’ might be a more appropriate term that still describes the prevailing ethos.[/quote]
Jazzman, nobody’s arm is getting broken, here. Even when the prevailing interest rate on a fixed mortgage was 7.5%, 10.5% or even higher, SD Co buyers were still willing to pay MUCH more for properties situated in coveted coastal areas … condition be damned.
Historically, unless independently “wealthy,” a newcomer cannot expect to waltz into SD Co and have all or even most of their housing wants and dreams filled initially. For a worker bee, this has typically taken at least 25 years for a dual-income couple to achieve, and that is thru selling/buying laterally or a little up several times while still being able to raise a family in the interim.
Perhaps in a state such as TX, a young newlywed couple (w little help from parents/wedding gifts) can buy an exurban Mcmansion on 1/2 to 1 AC straight out of the gate (w/humungous property taxes, lol). Not so in SD Co, CA.
And correct me if I’m wrong, but IIRC, about 35% of 2011 residential sales in SD Co were all cash sales, so the prevailing mtg interest rate had nothing to do with how much people were willing to pay. Granted, many of these sales were “distressed” and so closed at prices below fundamentals but nevertheless, they closed in every zip code.
You can’t change this “ethos,” Jazzman. It is what it is.
And so I understand you were frustrated with the SD Co market …. so you moved away.
It was the right thing for you to do, IMHO.
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Ignorant and self-serving buyers buying with 100%+ NINA financing during the “millenium boom” should not be compared to buyers who bought before the boom or after the crash, as these buyers actually had to have a downpayment and “qualify” for financing or pay cash.
The bulk of those “millenium-boom buyers” you are referring to did not care what the sales price was. The properties they made offers on were likely out of their league (before, during and after the boom) and they were shown a way to “get in” by an unscrupulous mortgage broker recommended by their unscrupulous agent. (I know a few like this.)
All these boomtime buyers could envision was “living there.” During this era, some buyers literally moved from Tijuana, their (local) parents’ back bdrm or granny flat, their vehicle or a trailer/motorhome into these homes they could never in a million years actually “afford.”
“Millenium-boom” borrowers (subprime in particular) and “mainstream” borrowers (who bought before and after the boom) are two completely different animals.
