vrudny, your friends could very well be in over their heads. At 8x income, their ability to ride out bumps depends on how much they put down, and what type of loan they got. An option ARM at 7x income, with $250K down, is a disaster waiting to happen. In the last downturn, Del Mar and Rancho Sante Fe had foreclosures, too.
No area is immune to price drops and foreclosures. Just last week, someone told me that the area around Poway High School, which has some of the most expensive Poway real estate, was full of foreclosures in the early 90’s. He said the area was littered with foreclosures.
We should all expect to see the most high priced areas full of REOs in 5 years. People make the mistake of projecting today into the future. Do you rememher last year, when the media was writing only about housing as a great investment? Hardly anyone mentioned the housing bubble. I didn’t see one story about exotic lending, the danger of option ARMs, the overbuilding. Now the media is full of those stories. By next year, the stories will have shifted to banks in trouble, large number of homeowners in foreclosure, and problems at Fannie Mae. In 3 years, you will realize that 10% – 25% of For Sales signs are distress sales, or owned by the bank, and our inventory should be at 50,000 – 80,000. Maybe even 120,000. We’re going to have 100,000 people with resetting ARMs in the next few years.
From foreclosure.com, here is today’s list of
City….foreclosures…preforeclosures
Poway… 4………..44
Del Mar…..1…….12 (near Beach: Luneta Dr, but the rest are off Del Mar Heights Rd)
Rancho Santa Fe….1……11
La Jolla……..1………30
San Ysidro…..13……..56
Fallbrook……11………63
Lakeside…….13………75
National City..13………76
Carlsbad…….11……..100
San Marcos…..24……..105
Oceanside….. 38……..238
Chula vista….67……..439
