The best source of finding out how people feel when they are underwater or upside down on their homes is to talk to those of us who purchased property in San Diego in the late 80’s and then watched the local economy tank and real estate values follow. It was not a pretty time. Even the first of the newfangled downtown luxury condo towers (Harbor Club) came out of the gate right into bankruptcy. Most people who bailed on SD did so because of lost jobs – mostly defense budget cut related. I can tell you, though, even being upside down on real estate and a shaky job market, there was a sense that SD was special place. Many of us in the construction/real estate/lending world believed that we would ultimately find ourselves in a situation akin to LA, NYC and SF as to real estate prices in the future.
Many of us bought property at the apex of rising prices, held on, refinanced multiple times to get lower rates, and now have seen even more remarkable increases over time. The long term story of places like those mentioned above, and SD, is that values are going up. So for those of you who have recently purchased that $650K condo and are freaking because your neighbor can’t sell his for $595K – take a deep breath and think about the guy who was freaking in the early 90’s because he bought the same condo in ’89 for $155k and there were no buyers to be found. If you’re in it for the long haul, you will make money, period. If you’re out to make a quick buck, you will likely suffer the fate of most quick buck artists. And anyone waiting for a 50% value implosion should sit down and get real comfortable because it is not going to happen in SD.
