Back to your SD County discussion, there ARE cities which one can purchase a SFR today for the same price (or slightly more) than those in Temecula. Yes, they may be slightly smaller homes (on average) but maybe not. Examples:
Santee
Lakeside
El Cajon
San Marcos
Oceanside
Vista
Fallbrook
Bonsall
Escondido
I don’t have to tell YOU that ALL of these locations are closer (some MUCH closer) to major job centers in SD North County than Temecula is. And all of them have reasonably-priced homes to choose from. I don’t buy the argument of “die-hard Temeculans” that the IE it is the ONLY place in SoCal to buy into for those families headed by FT workers who are in the the sub $500K homebuyer bracket. It’s not.
My point here is that most SoCal homebuyers whose jobs are NOT in the IE CAN buy a decent home much, much closer to work for the same or similar price as a home would cost in the IE (but w/o MR and HOA) but consciously choose not to. Yes, even today! Listings for these (mostly mid-century) ranch-style family homes of 1100 to 1900 sf abound in at least 30 (inland) cities in LA County. The same mid-century family home costs slightly more ($0 to $80K, depending on location) in at least a dozen cities in the inland OC. Again, with no MR/HOA expense.[/quote]
The problem BG is that you’re missing the point – it’s not just about being close to some fictional job center.
And the market bears this out….hard to argue with the market.
It’s not unlike cars: you might like a certain car and think it’s the best car in the world, but let’s assume that car you like has a crappy residual value.
Again, you can’t really argue with the market – the market is all knowing. It is what it is…
Temecula is packed with people for good reasons….
Another example: There are also good reasons why so many commute from Manhattan to Stamford, Connecticut. 1 hour each way daily![/quote]
But when the chips fell (in early 2008), it was actually Temecula and the IE which suffered the crappiest residual values in SoCal, en masse. Residential properties in the City of San Bernardino fell in value to such as extent that the City went bankrupt, mostly due to insufficient property tax revenue. Victorville and Adelanto homes were going for 70 – 80% off!
During the same time frame, the closer-in established areas (ex: close-in LA County cities) either didn’t fall at all in price (had a stagnant market) or did have some distress but that distress was not due to hoardes of buyers coming in between 2004 and 2007 in search of “new or newer construction” (there wasn’t any) and paying way too much for their homes. It was primarily due to longer term owners with low, moderate and/or on fixed incomes taking out sub-prime second TD’s and HELOCs on their homes and then couldn’t pay them back under the terms they agreed to. The foreclosing lender deficits and the typical short payoffs requested by short sellers in established LA were far less than those that occurred in the IE, where the typical SFR fell in value by 50-60% and it was not uncommon for lenders to take a $200K – $350K hit on homes they either foreclosed on or agreed to sell short.
Yes, I agree that the market IS all-knowing. It is what it is. Areas located further from major job centers will continue to suffer boom and bust RE cycles more deeply than closer-in cities. That’s the way its always been.
Just jog your memory a little as to what happened in your well-established “hometown,” Pt Loma (SD) between 2008 and 2011, paramount. It had a few MAJOR fixers which sold 30-40% under the market during that time frame and a few (VERY few) short sales (not sure HOW short). But for the most part, the PL market was stagnant to improving there during that time frame, depending on micro-area of the listing. There were never very many listings at one time there because when sellers don’t HAVE to sell in a stagnant or down market, they won’t list!
The major difference in residential RE values between the IE cities and the established cities in coastal counties (for example) is primarily due to the differences in types of owners. In the established areas, the owners have far less debt than a homeowner in a new or newer construction tract, on average, regardless of their income or the value of surrounding homes. In many established micro areas, most of the homes are owned free and clear. Long-term owner solvency has EVERYTHING to do with RE values remaining stable.
