[quote=sdrealtor]FWIW most of the distressed properties I see out there are not from the newbies they are from the renter class. Every city has a renter class. People who live paycheck to paycheck and who are best suited to renting. My maternal grandparents were part of that and never owned anything. The majority of what I see end up distressed is properties that were purchased by people in this category. WHen times got tough they saw they had nothing to lose. They were lifelong renters before and they could walk away and return to being renters in SD for the rest of their lives. . . . [/quote]
Yes, sdr, I completely agree that the “renter-class homeowner” was definitely a big part of what drove the residential RE bust we are experiencing now.
I know I may have somehow “intimated” here that “recent newcomers” were the primary purchasers of properties in CFD’s. In reality, there were many “locals” purchasing these properties. Many of my co-workers (several of whom were BORN here) FLOCKED to Eastlake Shores when tract phases and condos began to be marketed for sale in the Spring of 1987, even though their current rental was a BIGGER HOUSE on a BIGGER LOT! They were absolutely “mesmerized” by the Eastlake concept of a planned community around a man-made lake (Piggs, I can’t really find any other words to describe this “fascination”). There had not been much new construction since the ’70’s due to very high prevailing mortgage interest rates, so perhaps some of this “fascination” was due to “pent-up demand” for *NEW* HOUSES.
I have NO DOUBT that the vast majority of buyers of all the subsequent CFD tracts in Chula Vista (roughly 70K units total) were purchased by buyers who graduated from high school within ten miles of them. There is no question in my mind that many of them were in the “renter class” as you describe here. It’s not that they COULDN’T AFFORD to ever buy (esp w/poss family help) but the reality was that homeownership came as a financial shock to them when they finally did (MR and multiple HOA dues did not help in this regard). Many in the lifetime “renter class” are used to spending their money in ways that are not conducive to keeping and maintaining real property. There’s nothing wrong with having different values but these people should not be homeowners.
sdr, you mentioned parents of your “newbie” short-sale group willing to help them get back on their feet again (in their hometowns/states). Chula Vista locals who purchased new construction (w/poss family help) will usually not get another shot at family help to purchase again. Not only are the parents still living in their 40’s – 60’s longtime Chula Vista home, these new “defaulters” have other sibliings for mom and dad to consider helping, who have not made bad decisions, causing loss of their property. I’m not saying they wouldn’t put the defaulting kids (and poss grandkids up for awhile) but they won’t help them purchase again.
I think many of these “locals” signed up for “creative financing” purchase-money loans and due to family language barriers did not have a support system in place to talk them out of doing this when it was happening, so, “straight out of the gate,” they were screwed. Many of them then refied cash-out and took out HELOC’s, usually because a “trusted colleague” (school/church/family friend) told them they could qualify and should do this. Often, this “renter class” homeowner was told by one of these “trusted individuals” (often RE-agent relatives) that they should borrow from their (recently purchased) home to use as a down payment to purchase another nearby “new(er)” home in the same or nearby tract. Most buyers who did this lost or are losing both homes, due to tenant instability in the investment home and negative cash flow due to HOA(s) dues, MR and paying too much for both properties.
Yes, “newbies” to SD seem to prefer *newer,* but if given the chance, many locals will consider *newer* also, esp. if the CFD is close to their old “stomping grounds.”
I still stand by my assertion that SD County “newbies” should begin “managing their housing expectations” from the day they are selected for a new position in San Diego County. This “expectation mgmt” should begin at their county/state of origin and utilize a very knowledgeable SD local relo agent or neighborhood agent of their choice. If they currently own a 4400 sf brick mcmansion in Austin, TX on one acre and can expect to sell it for $275K, recovering $0 to $30K in “profit” after closing costs, and believe that money is going to get them something in SD, then that expectation needs to be “managed” ASAP. Perhaps it will end up being a wiser decision overall to NOT accept the position in SD County and instead remain at their current job in TX and leave their family put.
slightly OT: sdr, you recently posted in the “Why I am leaving SD thread,” something to the effect of, you had repeatedly witnessed “newcomers” to SD wanting a “lifestyle” that was “just beyond their reach” and were so despondent about this that they would rather leave SD County if they couldn’t have it. This is what I have seen as well (in the last ten years). But this didn’t need to happen at all. The despondent “newbie” would have been better off to NOT move their family here but remain in Ohio and just rent a condo on the beach here for one week a year than to attempt to move their entire family here. Their “expectations” were not properly managed from the get go so they became “shocked” after moving here at the loss of household discretionary income. If they didn’t have a cash-flow problem (whatever their income level) after moving here, they frequently became VERY dissatisfied with their surroundings, i.e. neighborhood, general area, neighbors, shopping, commute, etc.
Even with all that’s available on the internet, newcomers just don’t have a clue. Compare this “cluelessness” to BG driving by a potential “retirement property” in a rural portion of Marin County last month (on the way to wine-tasting, lol). The property’s photos were so ME online but the pfl online DOESN’T STATE anywhere that it is on an 8.5 mile-long, dark, narrow “cul-de-sac,” replete with many hairpin turns and sans guardrails! Even the map doesn’t show this in enough detail to understand it. And most importantly, the property has only peek-thru sunlight on the brightest day (fog is prevalent there a good portion of the year). It is in the CONSTANT SHADE of the dense “Muir Woods” . . . lol. Absolutely breathtaking . . . yes, LITERALLY! But NOT for me. And I HAIL from the SF Bay area and have DRIVEN thru Muir Woods and have BEEN to Muir Beach!! But it was driving on a STATE HWY, not a residential “view” road. And I have resided in this state for over 50 yrs … lol!! But I had NO WAY OF KNOWING this information without contacting the listing agent and knowing the right questions to ask them!!
There’s NO WAY for a newbie to SD to know what they will be “up against” without a preliminary trip to SD to meet with a knowledgeable neighborhood agent. This should be done ASAP so they can turn down the SD job offer if it becomes obvious that they or their family member(s) will never be happy living here. A property may look perfect for a relo family from the internet pics but they might feel too uncomfortable with the mom and pop store around the corner (that their local relo agent or a regular Pigg likes to frequent). You can’t tell anything from an online listing. You HAVE to be on the street, in the flesh and see it ALL for YOURSELF.
