SD prices post fires

[raptorduck]

My wife and I are having a um “debate.” She thinks we need to hurry up and buy in RSF because she thinks prices will be going up post fires. Her rational is newspaper stories she has read about rents going way up since the fires (price gouging, which is illegal during a state of emergency) and that because there are so many displaced residents in RSF (66 homes burned), many will decide not to rebuild, but just buy an undamaged house, which will eat up a lot of inventory and thus drive prices up.

She uses as an example the only house in Cielo that we are interested in. It is overpriced by about $500k when looking at comps, particularly for new construction there and has been on the market well over 100 days. Although the fire did not burn it down, it did destroy all the expensive landscaping. The sellers have never lowerd their price and are holding firm post fire (notwithstanding $300k of damage to the landscaping). Apparently they feel, there will be more buyers now.

Now I am sensitive to the tragedy, but as a buyer, if I am looking at a home that now has a black back yard and is in an area full of black common areas, its value has just gone down. So I disagree with my wife and those sellers. I have instructed my agent to take that house off our list of contenders.

So what do folks feel about the fire impacting prices, either to increase them or further lower them?

Incidentally, this issue raised a moral dilema in my mind. Objectively, I feel a fire damaged neighborhood is of less value to me as a buyer, and any fire damaged house in it. So I would offer less than I would have before the fire. But I feel like I am taking advantage of a tragedy by doing that. The outcome for me is that I don’t want to be the first buyer to say “yea, but I can’t pay you as much as I would have before the fire.” So I prefer to stop looking for 6 months or more until the damaged areas recover, rather than low balling sellers even more. But the outcome is the same, because now there is one less buyer in an already buyer rare market and that has some incremental impact of helping the market drop even further. If other buyers think like me either way, the market will drop with greater velocity than before the fire.

Either way, I am now in fact going to stop looking for 6 months to a year because of this moral dilema.

I will keep visiting this board though. Great info and dialog.

[Ex-SD]

For what it’s worth: I am convinced that prices will drop in the areas where you are looking. Historically, the high end areas have been the last to see prices fall………..but they fell just like everywhere else. I think that you will NOT regret waiting. You can always start looking again when you feel the urge.

[Ex-SD]

For what it’s worth: I am convinced that prices will drop in the areas where you are looking. Historically, the high end areas have been the last to see prices fall………..but they fell just like everywhere else. I think that you will NOT regret waiting. You can always start looking again when you feel the urge.

[Ex-SD]

For what it’s worth: I am convinced that prices will drop in the areas where you are looking. Historically, the high end areas have been the last to see prices fall………..but they fell just like everywhere else. I think that you will NOT regret waiting. You can always start looking again when you feel the urge.

[4plexowner]

This is a good example (the wife’s thinking process) of how people rationalize bad decisions (human beings are not RATIONAL beings – they are rationalIZING beings)

They come up with some reason that boils down to “this time is different” and then they make the decision that they were going to make anyway

When buyer’s remorse sets in (or decision-maker’s remorse) they will come up with some new bullshit to rationalize how the current result wasn’t due to their poor decision making process in the first place

[4plexowner]

This is a good example (the wife’s thinking process) of how people rationalize bad decisions (human beings are not RATIONAL beings – they are rationalIZING beings)

They come up with some reason that boils down to “this time is different” and then they make the decision that they were going to make anyway

When buyer’s remorse sets in (or decision-maker’s remorse) they will come up with some new bullshit to rationalize how the current result wasn’t due to their poor decision making process in the first place

[4plexowner]

This is a good example (the wife’s thinking process) of how people rationalize bad decisions (human beings are not RATIONAL beings – they are rationalIZING beings)

They come up with some reason that boils down to “this time is different” and then they make the decision that they were going to make anyway

When buyer’s remorse sets in (or decision-maker’s remorse) they will come up with some new bullshit to rationalize how the current result wasn’t due to their poor decision making process in the first place

[Alex_angel]

RD. You sound like you have millions to spend yet you sit here on piggington asking for advice? How did you make your millions? Sitting on blogs asking for advice? Did you win the lotto? I’m pretty sure if you really had the scratch that you claim you do that you wouldn’t be posting on a blog site asking for advice from internet strangers on making a multi million dollar purchase

[Alex_angel]

RD. You sound like you have millions to spend yet you sit here on piggington asking for advice? How did you make your millions? Sitting on blogs asking for advice? Did you win the lotto? I’m pretty sure if you really had the scratch that you claim you do that you wouldn’t be posting on a blog site asking for advice from internet strangers on making a multi million dollar purchase

[Alex_angel]

RD. You sound like you have millions to spend yet you sit here on piggington asking for advice? How did you make your millions? Sitting on blogs asking for advice? Did you win the lotto? I’m pretty sure if you really had the scratch that you claim you do that you wouldn’t be posting on a blog site asking for advice from internet strangers on making a multi million dollar purchase

[LostCat]

Life’s biggest mistake = thinking that a woman, not matter how smart they are, can think rationally about investment especially when its a house. First they’ll get you in the door saying that it’s worth it and they love it. Then they’ll want to buy all kinds of crap for it, then they’ll want to move because its not as big as her friends or it doesn’t have what the kids friends parents houses have.

It’s going to crash, don’t buy.

[LostCat]

Life’s biggest mistake = thinking that a woman, not matter how smart they are, can think rationally about investment especially when its a house. First they’ll get you in the door saying that it’s worth it and they love it. Then they’ll want to buy all kinds of crap for it, then they’ll want to move because its not as big as her friends or it doesn’t have what the kids friends parents houses have.

It’s going to crash, don’t buy.

[LostCat]

Life’s biggest mistake = thinking that a woman, not matter how smart they are, can think rationally about investment especially when its a house. First they’ll get you in the door saying that it’s worth it and they love it. Then they’ll want to buy all kinds of crap for it, then they’ll want to move because its not as big as her friends or it doesn’t have what the kids friends parents houses have.

It’s going to crash, don’t buy.

[LostCat]

Life’s biggest mistake = thinking that a woman, not matter how smart they are, can think rationally about investment especially when its a house. First they’ll get you in the door saying that it’s worth it and they love it. Then they’ll want to buy all kinds of crap for it, then they’ll want to move because its not as big as her friends or it doesn’t have what the kids friends parents houses have.

It’s going to crash, don’t buy.

[XBoxBoy]

Prices will fall due to the fire. Least that’s my expectation. There are two forces that you must weigh in order to make this decision. First, as Raptorduck mentions, some of the people who lost there homes will simply buy another home. And the second force is that there will be some people who had been thinking of retiring or moving to San Diego who will now be less inclined to do so. Obviously, the people who lost homes and simply go buy another will increase demand. Those that decide not to move to San Diego will decrease demand. So the question is which of these two forces do you think will be stronger?

My belief is that only a few people who lost their homes will simply go out and buy another. There might be a few who can do that, but most will need to settle insurance and deal with their previous house, either sell off the lot, or rebuild then sell. Thus the increase in demand from people who lost their homes will be slight.

On the other hand, during the week of the fires, I heard from many friends and relatives all over the country asking about the fires. All their comments made it clear that they were really surprised/shocked by what was going on. While I have no real evidence or data, my hunch is that the fires will discourage a lot of people who were thinking of moving here. Thus I believe the decrease in demand caused by people not moving here will outweigh the increase in demand caused by people who lost their homes.

But, as a side note, I will also mention that I believe the popping of the real estate bubble will far outweigh either of these two forces. And so prices will be going down regardless of the impact from the fires.

Just my two cents…
XBoxBoy

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