My friend just bought a house in San Diego - a few data points

[slackmaster]

A friend of mine just bought his first home! I went there yesterday to check it out and help with a few small tasks like lightnig the water heater. He was just installing new door lock sets on all the exterior doors.

He got a 3-bedroom place with a detached 2-car garage, on a 7,100 square foot lot with a nice back yard and a view of the ocean, south San Diego Bay, the hills and beaches of Tijuana, and the Coronado Islands off Mexico. The air was so clear yesterday you could see the famous Bullring by the Sea. The house is small, 975 square feet, but efficiently laid out. The lot is located in the old Valencia Park neighborhood in far southeastern San Diego. That is traditionally considered to be a "rough" neighborhood, but my friend grew up in Chicago. He's about 42, a big man and teaches at the middle school level, so he's not worried about that.

The plumbing and electrical systems are all in good shape. The house needs a new roof, and he's already scheduled that.

A few data points for reference:

- The home sold for $154,000 in February 2001, from a family that had lived there a long time to an individual. Judging by the construction of an old workbench in the garage and placement of tool-hanging provisions, it appears the long-term owner had been quite short in stature.

- The person who bought it in 2001 took out a series of refinance and equity loans, including what appears to have been a HELOC with a limit of almost $340,000 in August 2005. There were several other loans.

- He apparently went belly-up financially in the summer of 2007. The home was foreclosed, and sold by American General Financial Services (a subsidiary of AIG) to its own liquidation division, in a trustee sale for $280,000.

- My friend bought the house for $160,000 on October 7.

- The ZIP code, 92114, has seen some of the steepest declines in home values of anywhere in Southern California. American General really took a bath on the deal, writing off at least $120,000. I can't tell what happened to the man who bought the place in 2001 or why he leveraged his equity; but whatever his situation otherwise, he's out of a house.

The friendly next-door neighbors have lived in their home for 32 years. They were having a big Mexican-style cookout with lots of guests. It seems like a neighborhood that has potential to get better as more people own their homes, as has happened where I live.

My friend told me he had looked at almost 150 houses before settling on the one he bought. I'm very happy for him, and proud of him for having the perserverence and guts to buy. He was beaming with pride.

This is how the housing crisis will end - One home at a time being bought up by bold people who have good jobs and have managed their finances well.

[JDPriestly]

1. Congratulations to your friend.

Neighborhoods do improve. Not to worry. Ours has improved drastically over the past few years. The secret is to get to know your neighbors and watch out for each other. Build community, just by being friendly.

[gateley]

2. It sounds like a wonderful home -- and with friendly neighbors (who have

Mexican-style cookouts!) I hope he's happy there for many years!

[tandot]

3. That is how we bought our house in March here in N CA

We've rented all of our lives (we are over 40) and the prices finally came down enough for us to afford buying.

:hi:

[nosillies]

4. Congrats to him! Buying a first home is so exciting.

I hope he takes the time to make some changes -- repairs and a DIY project always make it feel special and more "yours."

I wish there were more buyers in the area where I'm trying to sell! :cry:
We've had our house up for sell for a while, and it's had lots of lookers. They've all made offers on other properties. Two kinds of houses are selling there -- starter homes/dirt cheap properties, or expensive waterfront mansions. Middle class people can't buy middle class homes in middle class neighborhoods anymore, so we're going to be stuck with an empty home a few states away for a while, I'm afraid.

I'm just torn with all this home ownership stuff right now. On the one hand, I'm so happy for people like your friend, who are finally able to afford houses since they are now reasonably priced, and who are helping support the economy in a valuable way. However, that dream comes at a cost. Someone else had to lose a home and a dream and their money to make that happen. And I know people like to villianize the "loser," but that loser isn't always a bad person who took out a shady loan on more home than they could afford. They could be like me -- had to move because of a job at a bad time, and am having to sell my home which I put over a 30% down payment on and took out a 30-year fixed mortgage for. If someone ever buys our house, they're going to get a great deal. But we're probably going to end up having to sell it for about $50,000 less than we owe on it. That means our life savings are wiped out, we'll probably never be able to own a home again, and we'll probably have to work until we die. The now-affordable dream is coming at a steep price for many.

[Coventina]

5. 975sq with 3 bedrooms?!?!? Wow. It MUST be efficient!

Our house is 960sq with 2 bedrooms and those two bedrooms are TINY! We have a large eat-in kitchen, though. Maybe that's what gobbles up our room.

Wow, properties in SD under $200,00? I'm tempted to move!!

[lumberjack_jeff]

6. It was a good investment for the person who bought it in 2001

He netted almost $200,000 by buying it.

He had to walk away when he could no longer afford it? So what. He'd already extracted the paper equity. I'm sure he didn't walk, actually. He probably drove a new truck with his new belongings.

Sadly, we taxpayers are left indirectly holding the bag.

[dixiegrrrrl]

7. As one of the tax payers,

does this mean we have equity in the houses we bought for other people?
Or maybe we can just use a bedroom when we are in the area?

Just curious.