Real Estate Cold Spots
January 6, 2008
In the latest special issue of Fortune Magazine, there was an article about getting real about real estate. It attracted my attention since it also included a piece about San Diego real estate. Since I live in San Diego, I just had to read it to find out if San Diego is one of the hot spots for real estate appreciation.
Alas, it was not. It was more in line with the subtitle of the article that was how bad it will get. The projected forecast for San Diego in 2007 was reported to be a drop of 3.3% which places my favorite town not necessarily at a freezing cold real estate temperature but definitely chilly. For the curious readers, the worst real estate drop was projected to be Stockton, California.
As am looking out of my home office over our small orchard trees in an exclusive neighbor hood in San Diego, I think back over the last 20 year of owning home in California and the first small three bed room two bath house my wife and I owned in San Jose.
I remember buying that house with a price tag in mid 100,000. When we sold it, San Jose real estate had gone into the tank and in a few months we had to drop the price around $50,000. It was a significant drop if I wanted to ignore the fact that our selling price was still about three times as much as we paid for it. That is a 300%increase.
Taking into account that our down payment for that house, which was the real out of pocket expense, we made close to 800% on our original down payment.
Now you tell me, how would I react toward a projected 3.3% drop?
You may not live in California or lovely San Diego, but wherever you live, if you talk to folks who have had their property over ten years, chances are that they have made more money in real estate than any other investments they own.
I don’t know about you, but I have contacted my real estate agent to look into buying rental properties. With all the horrible real estate and Foreclosure numbers that are coming out and the wonderful job the media is doing promoting these numbers, I am hoping that there are a few motivated sellers out there who would be glad to let me handle the risk of ownership.
Time will tell.
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