California Coastal Housing Market Will Not Collapse

[NeetaT]

“Some who aren’t in the housing market are waiting patiently for prices to come down to an affordable price. But so far, we don’t see a collapse in prices coming. Nationwide, and even statewide, the story might be different. But when you’re talking about the coast of California, don’t expect real estate prices to bottom out.”

Reasonable assessment?????

[an]

If anyone read this site for any meaningful period of time, they’ll see plenty of examples of coastal California dropping, some big, some small, but most are dropping. Even a lagging indicator of median price in SD is also negative. Call it a crash, call it a deflate, I don’t care. All it means is things are getting cheaper.

[kewp]

I’ll agree somewhat, in that there will always be a market for premium properties, especially in coastal California.

Some caveats:

I think some of the less-upscale areas may take a dive (PB, OB), while the DelMar/LJ areas will do ok.

These properties are inherently at high risk, regardless of the housing market, to environmental issues. Hurricanes, tsunamis, coastal flooding, etc. It only takes one bad event to wipe out a few billion dollars of equity.

[Bugs]

The losses probably won’t be quite as bad as the inland areas but they’ll still be significant.

The outlying areas (relative to the employment centers) will do worse overall. The closer areas will do a little less worse. Coastal areas may actually end up somewhere between the two.

Bressi Ranch (Carlsbad) is already booking 10%+ losses, and they’re only 3 miles from the coast. I saw a breachfront property lose 10% in a single year. I wouldn’t say these markets are immune at all.

[Anonymous]

Coastal prices are going to crash just like everywhere else. Just look at the prices from the mid-90s (after the last crash) as a baseline. They will still be more expensive than inland areas but it doesn’t mean they won’t drop hard.

[PerryChase]

I think that there’s a coastal, premium, superior property myth. Sure the best houses in the best areas are always more expensive.

I’ve seen houses triple in prices, since 2000, in the not-so-nice areas. But they only double in “superior” areas.

The rate of depreciation is market-based in my view. If well-to-do folks get hammered during the coming recession, prices will drop accordingly. My sense is that a whole class of people became prosperous thanks to easy-money leverage in the last 10 years. Leverage can very quickly bring people from uppper-middle back down to middle-middle or lower-middle.

Look at this La Jolla house. It doubled in value since 2000. In the same period, houses in Clairemont or Mira Mesa or La Mesa or North Park have tripled. Does that mean that this La Jolla house is a relatively better deal? I think not. This area got overpriced earlier in the cycle (1997-2000). This house increased less since 2000, so when it drops in value, it might appear as though it’s holding value better, if the base year is 2000.

Unlike the stock market where the value is “virtual,” real estate is different. You have to be intimately familiar with the neighborhoods in order to spot the value buys — the stats are only a guideline.

http://sdlookup.com/PropertyDetails/tabid/53/forumid/1/view/topics/pid/3D0B0B27/Default.aspx
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=076014143&page=1&property_type=SFR&mls=mls_sandiego&cKey=wj9fr6p6&source=SANDICOR

List Price: $1,099,000 – $1,099,000
2785 RIDGEGATE ROW, La Jolla, CA 92037**
Bedrooms: 3
Full Baths: 2
Partial Baths: 1
Square Feet: 2,581
Lot Size: 5,719 Sq. Ft.
Year Built: 2001
Listing Date: 02/19/07
On Market: 1 day
Type: SFR
Status: ACTIVE
MLS #: 076014143

[anxvariety]

All it takes is one big wave… eventually somewhere in the hundreds of thousands of square miles of the pacific, something will happen that will affect the landscape of our coastline..

[Doofrat]

Coastal real estate won’t deflate as much as the outlying areas and as much as condos and condo conversions but it’ll be affected by the burst. An unreasonable valuation is an unreasonable valuation no matter where it is or how nice the location is.

The place I used to rent was a condo on the water in North County. The landlord offered it to me for a price in 1999 and the landlord sold it in 2005 for almost triple that price. What changed that made it worth so much more? Interest rates went down, crazy loans came into style, and mania set in. I can’t really think of much else. What happens when these things go away?

[kewp]

“Coastal prices are going to crash just like everywhere else. Just look at the prices from the mid-90s (after the last crash) as a baseline. They will still be more expensive than inland areas but it doesn’t mean they won’t drop hard.”

I dunno.

I’ve a few rich friends in the LaJolla area and I’ve seen multiple properties in their neighborhood (nice ones) sold, razed and rebuilt. Just so the owner could get just what he/she wanted. I doubt these were paid for with funny money, either.

There are enough cash millionaires around the world to keep prices up, though I’m sure there is going to be some drop.

[LookoutBelow]

A new twist on an old saying: "A receding tide lowers all ships"

I think there's MORE coastal property out there than there is "Cash" millionaires today. Simple economic supply and demand

[bob007]

I see multi-millionaires from over USA and world buying California coastal property – La Jolla, Del Mar, Laguna Beach, Newport Beach, Santa Cruz.

Can prices fall ? Sure.

[bob007]

I see multi-millionaires from over USA and world buying California coastal property – La Jolla, Del Mar, Laguna Beach, Newport Beach, Santa Cruz.

Can prices fall ? Sure.

[PerryChase]

There are enough cash millionaires around the world to keep prices up, though I'm sure there is going to be some drop.

No, there aren’t enough cash millionaires. Cash millionaires buy, hold and sell over decades. Cash millionaires already have homes. The leveraged-millionaires are the ones buying, selling and climbing the ladder. I was around the in 1990s and I saw how La Jolla and Del Mar prices dropped.

Like the English say, the difference between old families and new families is whether you inherit or you buy your furniture.

 

[blahblahblah]

The prices of the premium coastal properties are going way down, but guess what — you still won’t be able to afford them! Even in the disaster scenario of a 30% drop, that 3M home is now 2M. And of course it’s going to be harder to borrow money AND interest rates will probably be higher.

So big whoop, I’ll probably be looking for a place in Santucky even after the crash.

[PerryChase]

Where is Santucky? Santee?

[Author]

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