Best way to deal with smug homeowners?

[powayseller]

I agree. Poway is like living in heaven, except it gets in the high 90s in the summer, and you need A/C.

[powayseller]

I read this in Sell Now – outlying areas are hit hardest. Now with gas so high, people who escaped high housing in the city, cannot afford the gas to get cheaper housing in Ramona. The most desirable areas will be least affected. So if Ramona loses 50-60%%, coastal Carlsbad or hot neighborhoods lose 40-45%?

[JJGittes]

So you think a coastal carlsbad house that sold for, say, $850k last summer is going to drop to $510k? Wow, and I thought I was bearish. Absent interest rates going way way way up, or a successful al qaeda attack on the nuke plant up the coast, I just don’t see that happening. Maybe 40% down in temecula, which got truly ridiculous (and the lots there are puny too!) over recent years, but absent some huge ugly event, I don’t see such a drop for Carlsbad.

[4plexowner]

Psychology of Denial

If you really care about influencing the opinions of others, I would recommend that you read a little bit about the ‘psychology of denial’.

The psychology of denial says that once a human being has made up their mind about something you have almost zero chance of changing their mind.

Related to the psychology of denial is a feature of the human brain called the reticular activating system (RAS).

The RAS causes us to focus on what we are interested in and filter out all of the other extraneous input. For example, you go buy a new car and as you are driving home you ‘happen’ to see numerous cars just like yours – your RAS is alerting you to something you are interested in – and your RAS had been filtering all those cars out until you bought one.

The RAS also helps up maintain opinions that we hold. If I decide that the world is flat (and can convince my brain of that), my reticular activating system will cause me to focus on all the ‘facts’ that support my (incorrect) view of the world. My RAS will also filter out (deny) any facts which would upset my view of the world being flat.

So, how does this apply to real estate?

Currently we have a nation of people that mostly believe: “real estate only goes up”; “you can’t go wrong with real estate”; “it is better to own than rent”; etc.

Some local beliefs: “we are running out of land in San Diego”; “more people are moving to San Diego everyday”; “if I don’t buy now I will be priced out of the market”; etc.

The RAS’s of the people holding these beliefs cause them to focus on the positive news about real estate (which is provided in spades by the real estate industry, US government, media, etc) and filter out (deny) any of the reality about the current trends in real estate (which we discuss in this forum).

When you try to point out real estate realities to these people their RAS has to do something to allow them to deny your input. Categorizing you as a ‘gloom and doomer’ or ‘pessimist’ or even ‘arrogant asshole’ helps them maintain their (delusional) reality.

I have been on the ‘gloom and doom’ bandwagon for about 4 years now and I have made numerous attempts to educate family and friends about the future we are facing here in America.

None of the people that I tried to educate about silver and gold purchased any (too bad – could have bought gold for about $375 and silver for less than $5).

None of the people that I have tried to educate about real estate have been influenced by my input either.

Between 2002 and 2005 I sold five fourplexes and explained to many people why (the market is about to tank) (yes, I sold “too early”). Regardless of my words and actions, my sister bought a 400K house in 2003 and one of my co-workers bought a 900K house in late 2005.

Anyway, my point is that you shouldn’t get worked up about people denying what you perceive to be reality. They will eventually realize that you were right and then they will like you even less!!!

[powayseller]

Read the Bubble Primer, and extrapolate the graph on per capita income/median price.

[LookoutBelow]

EXCELLENT observation by 4plexowner, however you missed one point, the people you have tried to educate WILL NOT suddenyl realize you were right when real estate crashes, NO, they will have completely forgotten about what you said in 2005, to admit to themselves you were in fact right, would go against their bloated self ego’s.

They are FULLY subconsciously aware of their predicament, its called “Cognitive Dissonance” or, in the book “1984” it was referred to as “Doublethink”…the constant mental anguish caused by holding and believing two opposite beliefs at the same time.

One must know thyself before he can trust himself to purchase anything in a bubble atmosphere.

Shit, ? thats pretty snappy! I might have just coined a NEW phrase…..you heard it here first

Cheers,

B

[Anonymous]

Out here in DC a similar thing is going on with home-owning folks insisting that other areas of the country might see real estate declines – but not DC. Why? They cite government spending, thriving job market, etc. (Salaries are no more here than in other parts of the country, and yet housing is wildly expensive compared to more exciting cities such as Chicago or Austin. ) It seems to be that ole NIMBY mentality asserting itself, such as when folks say Congress is rotten – but not my representative!

At least in San Diego you all get some good weather on a regular basis. DC was built on a drained swamp, after all! Many people find it hard to pay a lot of money for poorly built housing here – especially when it’s 50% cheaper to rent…

[sdrealtor]

PS
Sorry but I think you lost a little credibility by throwing Omaha into the mix. It is so far down the list of desireable places to live in the US you point is lost.

[powayseller]

Well, don’t tell that to my dad. He lived in Germany and Switzerland, and left a job as an executive manager at Sandoz AG in Basel to return to Omaha. He travels all over the world at least a dozen times a year to lecture on his field of expertise, has condos in Aspen and Portugal, and says he will never leave Omaha. My dad has been to every country in the world, even Russia and China during the 80’s, Africa, Italy, etc. He turns down lecturing offers if he doesn’t like the city. For example, regardless of the offer, he won’t go to Washington DC. He only goes to San Diego to see me, because he says this is nothing compared to Portugal’s beaches. He finds La Jolla’s beaches dreadful. Yet he loves Omaha. He loves the small town feel and change of seasons. My husband and I have family who choose to stay in Omaha, so I don’t think we should belittle their tastes. Certainly there are people who choose to live where they do, despite other options.

Anyway, I personally couldn’t wait to leave Omaha. Too cold in the winter, too humid in summer.

That is precisly why I bring Omaha in the mix. A simple Midwestern town, with normal appreciation, no bubble at all. Yet, we see rising foreclosures. Rising inventory. If this can happen in Omaha, it can happen in Ames, Iowa, in Davenport, Iowa, in Timbuktu, Wisconsin. Exotic lending is far reaching, to the most unlikely places. Every town in America is subject to home price drops.

A common rule of etiquette, sdrealtor, is that someone can critique their own race, city of origin, choice of clothing, but doing that to another is considered bad sportsmanship. We need to focus on exchange of ideas and information, and refrain from poking fun, intimidating, insulting. This skill of holding your tongue will work wonders in your personal relationships too. Just some advice from an old married lady..

[Jim Brubaker]

Excellent post 4plex–it kind of scares me that I could be RAS’s myself on the bubble and crash (one or two seconds maybe).

Another point I have noticed; that if enough people believe a fact as being true, like the earth being flat, then it IS flat. “Group Think” offers a peace of mind somewhat like a religious experience. To argue against the group makes you “one of them,” (everyone knows who the “them” is except me).

I can remember hearing in the ’60’s “Your home will be the worst investment you’ll ever make, but a necessary one.”

[lostkitty]

SDrealtor-
I have read your insults on this site for so long, I wonder, have you ever lived anywhere else as an adult? I know you said you grew up back east, but as an adult…? Just wondering. You seem very shallow in your appreciation of what the rest of the US is really like to LIVE in. I grew up in San Diego and have lived there on and off for years (and abroad). Although I love the weather, and hate the cold, I still struggle between wanting to go back just for the weather, and staying where I am for so many other reasons. Excellent, well-educated, tolerant neighbors, superior schools in every regard, affordable housing and the ability to save save save, historical sites within a short-drive (some minutes away), cultural opportunities unrivaled in SDiego, public transportation that actually works, less emphasis on appearances and cars, etc. For raising kids, the rest of the US is wonderful…(I dont mean from a vacation standpoint – obviously SanDiego has few equals aside from Hawaiian destinations).

[lostkitty]

I’m not so certain inventory will go that high (of course, i could be wrong). The only reason I say this is because i’ve been watching towns in and around Boston that started rising in inventory a little before San Diego. One example, Marblehead MA, is just like Coronado, only with the best school district in the country, much more character, and a rich history dating bak to the Pilgrims. Inventory there was rising quickly, but has hit a plateau the past couple of months. I think with the speed of information flow these days (via the boob-tube, internet, etc) it will not take as long as historically for the market to reach bottom. Interestingly – prices there have dropped very little.

[hs]

Lostkitty, you are right. He is shallow AND ARROGANT!
He said he is having the best year ever. Hey, it is only April, so he’d better keep himself humble.

[sdrealtor]

Yes I have lived in other places as an adult and have spent alot of time in many parts of the US. I have been to every state in the country and have friends in many of them. I know what it is like to live in places like Chicago, Miami, NYC, DC, Dallas, Houston, denver, SEattle, Ralieigh/Durham etc. My viewpoint comes from years of living here and talking to people who live elsewhere. I have almost never heard anyone say anything but great things about SD and that they would like to live here.

I apologize if it was taken as an insult to Omaha. Quite frankly, I’ve never been there. My point was that it is not anywhere on the lists of the best places to live that I have ever seen and surely not on the tip of the average american’s tongue as a place they would desire to live. Home prices are very very low there and certainly not a place I’d compare to SD as a comparable place to live in any regard. Nothing against it, I’m sure it’s a nice place to live. Once again, my apologies if you took it as an insult.

[hipmatt]

4plexowner..
I find your post very interesting and accurate. I was wondering, where you would invest in today? Do you think gold is still the answer? I too sold my home last summer and am currently renting..(in Temecula where the homes priced from $500-$700k are sitting for long times. I am renting in Harveston..a little yuppie like lake community with small lots, high taxes, overpriced homes, and such. There are two homes on this street priced at over $650k, both have sat for over 4 months easy. I must have seen this one agent hold at least 5 open houses on one of the homes that is vacant.)..anyways, I have a little sum of money, and I need a few more ideas to invest it. The stock market scares me too much, and I’m green in the investment/economic world. Any advice would be great, thanks!

[Author]

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