How am I going to keep this ball in the air?
now about those "savings" buyers?
signonsandiego.com
By Jenifer Goodwin
UNION-TRIBUNE STAFF WRITER
June 10, 2004
Esther Harper rarely drives by a front lawn house-for-sale flier without stopping to pick it up. Her favorite weekend pastime is visiting open houses.
And those postcards and newsletters from real estate agents that seem to arrive in her mailbox daily?
"Before, I'd throw them away," said Harper, a 50-year-old homemaker. "Now, I dwell on them. When a house is up for sale, I'm the first to drive by to check out the curb appeal."
Harper isn't in the market to buy or sell a house. She's a looky-loo – a window shopper in the most literal sense.
Although content with her Oceanside home, she likes checking out what's passing for a million-dollar house these days, knowing what her new neighbors had to pony up and figuring out what it means for the soaring value of her house. "It gets my adrenaline going," she said.
It's having that effect on many homeowners.
San Diego County housing prices have reached staggering heights, minting tract-home millionaires each month. With the April median price hitting $439,000, houses appreciated $967 a day in that month – more than most people earn in a week.
The unprecedented run-up in home prices has infected San Diegans with a feverish fascination. "I am absolutely obsessed with it and most people I know are, too," said Kevin Schugar, who owns a home in Carmel Valley worth well over $1 million.
Neighbors are chatting over backyard fences about what to do with their equity and speculating how high prices can go. They're cruising Web sites such as Realtor.com and Domania.com, finding out for fun the latest astronomical asking price and how much the poor schmo down the street paid.
The hottest classes at the Learning Annex, which offers adult education classes on everything from belly dancing to nonsurgical face lifts, are those that teach wanna-be investors how to make a bundle – fast! – in real estate: "Real Estate Riches: How to Make Big $$$ With Minimal Investment," "How to Find Great Real Estate Deals in San Diego's Next Hot Neighborhoods," "Buying Fixer-Uppers. Make Big Profits – Part Time!"
"Two years ago, we had one or two pages of real estate classes," said Rick Dilliott, operations manager at the Learning Annex. "Now there's five or six, even some all-day events. We just keep adding classes and people just keep taking them."
In some ways, the obsession with and fixation on housing prices is reminiscent of the infatuation with the stock market during the 1990s tech boom.
Back then, small-time investors stayed glued to CNBC on their treadmills at the gym, traded stocks in their cubicles while they were supposed to be working, even gave up jobs to become day traders.
Todd Conway remembers it well. As a college student, he had one overriding goal: "How can I get into the market and start making some money?"
Five years after the bust, Conway and his friends discussed the pros and cons of interest-only loans and talked about pooling money to buy investment properties.
"It's the most important thing that's going on," said Conway, a 26-year-old mortgage broker who just bought a house in Murietta with a friend. They hope to sell it for a profit in a couple of years. "It's almost like a second job. You're earning the same amount of money from your house, if not more, than you are at your job. . . . It's crazy.
For San Diego County residents struck by real estate mania, following the market has never been easier.
A few years ago, for-sale listings were the secret domain of real estate agents who paid to access a multiple-listings service, which gives the asking prices and specs of properties for sale.
Today, anyone can sit at a home computer and check out Realtor.com, owned by the National Association of Realtors, which lists 2.1 million properties, about 90 percent of the nation's residential real estate for sale.
With a few clicks, you can see pictures, take a tour, find out a house's square footage and whether it has an inside laundry room.
Similar features are available on other sites, such as SignOnSanDiego.com, the Web site of the Union-Tribune.
A few years ago, if you wanted to know what the house sold for down the street, you either had to go to the county assessor's office (sale prices are public record in most states) or consult an agent.
Today, you can register free at Domania.com and get the dirt on the sale prices of houses in 41 states and the District of Columbia back to 1987. Some recent price information is also available on the county assessor's Web site.
"I would not be surprised if half of our users are real estate junkies," said Ben Joslin, general manager and vice president of marketing at Domania, which is owned by the Lending Tree, a brokerage firm. "Just like there are armchair travelers, there are armchair real estate investors."
'Uncharted territory'
California real estate, historically subject to booms and busts, has always been a hot topic. But people in the business say they've never seen a frenzy quite like this, not even during the last boom in the late 1980s.
Lured by the promise of big money, the ranks of agents and brokers have swelled 20 percent from 316,499 to 380,613 in the past two years.
"I woke up a year ago and found I was a millionaire," said Jeff Brummitt, a Coronado real estate broker with 25 years of experience and partial owner of several properties. "We're all scratching our noggins trying to figure it out. It's just breathtaking. It's uncharted territory."
Ordinary homeowners are no less amazed, which is one reason why they can't stop talking about it.
"When people are doing well, they have a sense of hubris and intelligence, a sense of capacity, a sense of 'I did this because I'm smart,' " said Stephen Goldbart, a psychologist and co-founder of the Money, Meaning & Choices Institute in San Francisco.
These days, everyone's a real estate genius. While stocks are no sure bet, real estate still offers the chance for quick riches.
Kevin Schugar, 43, bought his first house in 1993 for $129,000 and has traded up every few years since. Last year, he and and his wife, Yvonne, bought a five-bedroom, 4,400-square-foot house with a four-car garage in the Carmel Country Highlands development of Carmel Valley for $797,000. They added $100,000 more for landscaping, travertine tiles, crown molding and granite countertops.
Eleven months later, they could hardly believe it when a house down the street sold for $1.6 million.
"I contribute 10 percent of my income to my retirement accounts and it's a joke," Schugar said. "The thing made 275 bucks last month. My house made more than that in a day."
And yet, despite his paper gains, he's not feeling overly smug.
He and his wife, a laboratory supply sales rep, have four children under age 7. Although less than a year into his 10-year, fixed-rate mortage, he's already worried what rising interest rates could do to his mortgage payment.
"The only reason I'm able to live here with my four kids is because I got on the equity bus when it was just starting up," he said. "My kids like to go in our dual shower-head, marble Las Vegas-style shower and stay in there for 2 hours. There goes another 15 bucks. And I'm chewing my nails downstairs making nine sandwiches for their lunches and wondering, 'How am I going to keep this ball in the air'?"
'Sense of anxiety'
In San Diego County, only about 15 percent of households are able to afford the median price of a home, the state association of Realtors has reported. Ever-rising prices and houses fetching multiple offers are leaving many would-be home buyers with the nagging feeling that they're locked out.
"It creates a sense of anxiety," Goldbart said. "The attitude is, 'I don't want to miss out. I don't want to lose out.' The urgency is created by a mass psychology of wanting to win, wanting to be part of the 'haves.' "
Desperate to get in, more are turning to creative financing. Nearly 72 percent of loans processed in April in San Diego were adjustable-rate mortgages, according to DataQuick in La Jolla.
Others are taking out interest-only or negative amortization loans, in which the balance owed ends up higher after a few years.
"In my business, three of four people are asking for interest-only loans," said Hal Weinshank, senior loan agent with Mortgage Partners in San Diego. "Two to three years ago, I barely saw that at all."
Mary Watson knows about home buyers' anxiety. For years, she diligently checked the house listings, her heart sinking as prices rose.
"I felt like I was never going to be able to own my own piece of property, that it was getting further and further out of reach," said Watson, a 39-year-old paralegal."That made me feel very vulnerable. I was scared."
Last month she managed to buy a $230,000, one-bedroom condo in North Park. Although it's still in escrow, she's already feeling good about the purchase because a similar property down the street just went for $310,000.
Just how long housing prices will remain scintillating cocktail party conversation depends on the market. If prices were to dip – or worse, plunge – discussing real estate will be as much fun as talking about your tech portfolio.
"When things go down, there's a sense of humility. People feel embarrassed. They feel stupid," Goldbart said.
Until that happens, Harper will keep attending real estate seminars and dragging her husband to open houses on the weekends.
At one point, she considered selling the house she bought for $200,000 14 years ago. But in the end, she decided even a property in the $900,000 range couldn't replace what she already had: a Tuscan-themed kitchen renovated to her exact specifications, and a lush, tropical back yard created by her husband, a general contractor.
Her only regret?
"I wish I would have bought more properties when I had the chance." |
