[quote=Jazzman]Not sure you can entirely isolate SD from the rest of CA, where very similar conditions exist, or that you can boil it down to things like environmental factors such as weather. Moscow has miserable weather, but has very high prices. Arizona has a lot of sun, yet comparatively low prices. California is in the top five states with the highest foreclosures, but where home prices are over twice as much. Prices didn’t correct as much as Las Vegas due mainly to supply. Supply has a huge effect. Monaco is an extreme example of this. Incomes have another effect as can be seen in NY and London. Cheap credit is a major culprit as can be seen in the English speaking world.
Another factor in sticky high prices that I am personally experiencing is falling prices. That seems like a contradiction, but many of the homes I have been making offers on can’t accept FMV, whether they be REOs or normal sales, due to outstanding loan balances. More interesting is the reluctance of many brokers to make offers that reflect FMV. Most seem happier to make offers based on outstanding loan balances. My question to these owners is why should I bail you out? I could equally ask some buyers why are they willing to bail them out, which leads us get back to the bubble addiction hypothesis? So you see a dark cloud seems to be obscuring the sunshine theory.[/quote]
No, Jazzman, SD County is NOT isolated from other heavily-populated CA coastal counties in this regard. They’re ALL subject to having a percentage of distressed properties due to overborrowing and overpaying in the past decade. ALL of the CA coastal counties are highly desirable to different subsets of people for different reasons … even the semi-rural and rural counties. There’s only ONE CA coastline and its beauty sells for whatever that particular locale will bear. This will never change.
In addition, counties such as San Francisco, San Mateo and Santa Clara have a higher-paying job base than SD County and SF and SM Counties have been “built-out” for many decades. This keeps supply low and increases demand for whatever housing is available. Even extremely well-located close-in properties in Alameda and Contra Costa County (East Bay), especially SFR’s, are highly desirable and recent sold prices reflect this. Nearly ALL SFR’s =< 3 mi from the coast in Marin Co and =<2 mi from the coast in Santa Barbara Co are HIGHLY desirable, size and condition being of secondary consideration. And there isn't even much of a job base in those counties.
You can't compare coastal CA to AZ and NV. They are apples and oranges. AZ and NV are hot deserts and Phoenix and LV are situated on the desert floor and are among the few hottest places in the US. Any traveling or Russian Piggs, help me out here please, but I believe nearly EVERY head of household in Moscow is eligible for rental assistance from the government, making “landlording” there a very lucrative and much less risky endeavor than in the US. Hence, the higher prices for properties there. Any available properties are likely 85-90% multifamily buildings. Monaco has the same problem as SF Co, SM Co, Coronado, Catalina Island, Balboa Island (in the OC), etc. It is what it is.
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You are correct, Jazzman, in that you don’t have to offer what the “outstanding loan balance(s)” is/are on a property just to be the “selected bidder” on an overencumbered property. It’s not your responsibility, as a buyer, to “bail out” any of these fools. You need only offer what you feel a property is worth, based upon nearby comparable recent sold comps. Many of these sellers still HAVE a good portion of the money they “cashed out” on their properties in recent years tucked under a mattress or locked in a safe. Let some other sucker be the “winning bidder” (lol) and let their appraiser and inspector shoot the deal down and let them cancel their escrows because of it. If these sellers are struggling to keep up their payments or seller-deadbeats don’t care to make their payments, let them try to “convince” their lender(s) to sell short or take little to nothing from the sale. Let their credit be shot in the process. Let them get foreclosed upon if they have been “living for free,” saving living expenses (and also any cash they extracted from their properties and have hidden). They deserve it.
The solution to your problem, Jazzman, and to making a successful straightforward deal you will be happy with is to deal with a seller with plenty of equity … even a free and clear seller. I can assure you that they ARE around :=]
