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Thursday, Aug. 17, 2006 | It’s not the business of this column to get political. I’m supposed to write about index funds and 529 college savings plans – real, personal-finance stuff. But nothing hits the finances in deeply personal ways like overpriced housing.

So when politics and the remarks of politicians cross hairs with the realities of making a living and managing one’s finances in a city as expensive as this one, I have to say something. I refer to the recent voiceofsandiego.org article in which County Assessor Gregory Smith – the guy who counts your property taxes – informed readers that now is a great time to buy a house in San Diego because it’s a buyer’s market.

voiceofsandiego.org’s Kelly Bennett reported:

Smith said the biggest caveat to his sweeping “buy now” endorsements is that people should make sure to “buy affordably.” That might mean looking to buy in neighborhoods like City Heights or Golden Hill.

“I’m not telling them to buy million-dollar condos, am I?” he said.

I’m not sure what else Smith could have said to make him appear more out of touch. And he seems to have plenty of company because I hear the refrain “buy affordable” all the time. Even a few voiceofsandiego.org readers have offered this wise advice in comments on my last two columns on renting.

What do these people consider affordable? A $500,000 condo? How about a $200,000 studio? Is that affordable? According to current MLS listings, condos in Golden Hill and City Heights start at about $200,000 for studios and one-bedrooms. Single family homes, range in the low $400,000s to $600,000s with a few particularly nutty people asking more. According to Bankrate.com, a 7 percent, 30-year, fixed rate, $420,000 mortgage costs $2,794.27 per month. That’s not affordable. And it doesn’t include property taxes, homeowner’s insurance and any maintenance likely to be necessary for an old house.

Keep in mind also that these prices are in neighborhoods where the median annual income is just under $30,000 according to Sperling’s Best Places to Live Index. I’m sure that’s why 67 percent of the homes in both neighborhoods are occupied by renters.

But I didn’t write this column to analyze how much every home in San Diego would cost in monthly payments if buyers agreed to pay the ridiculous prices sellers are slapping on their homes. And slap is the most accurate term to apply to a market in which sellers routinely list homes with $100,000 price ranges.

What further evidence do we need that pricing is purely arbitrary?

Take a look around your own neighborhood and you’ll likely find numerous comparable homes listed at wildly disparate prices even after upgrades have been factored into the equation.

Why are prices so arbitrary? Because the real estate market is so uncertain that sellers have no idea what their property is worth.

So you tell them. At the end of the day, a house is worth only as much as someone is willing to pay for it.

If this is indeed a buyer’s market why are buyers standing on the sidewalks anxiously hoping for a fire sale? Were investors passive about driving up prices in the first place? No, they were sharks who changed the market for everyone by marching up to the front doors of homes that weren’t even for sale and throwing cash around.

So stop being passive. Be a shark. It’s a buyer’s market. If this bubble is going to burst, let us bring out the needles.

I’m calling on all buyers and wannabe buyers to join forces in a boycott against overpriced homes. That means stop monitoring price reductions and start marching right up to the front door and setting your price. Chances are good that they’re not getting many other offers.

And I’m not talking about offering $20,000 or $30,000 below asking price. I’m talking low ball. You know that house you’ve been eyeing. The three-bedroom, 1,200 square foot, 1920s house listed for $700,000 – the one that’s been on the market for five months. Offer $500,000. $400,000 if it needs a facelift. $350,000 if it needs major reconstructive surgery.

Or, figure out what the house was worth five years ago and tack on 25 percent – 5 percent appreciation for each of the last five years, or what a normal market would have paid if investors and cheap money hadn’t screwed everything up. If it was worth $300,000 five years ago. It’s worth approximately $364,000 now. Offer that.

What’s the worst that could happen? They say no and slam the door in your face? They get insulted? Your agent is embarrassed to be seen with you?

Who cares? You’re the one paying the mortgage. Offer what you think the house is worth. As Gregory Smith said, it’s a buyer’s market. That means we set the price.

If you’re a seller, sit on your hands for a few minutes before you send me a sharply worded e-mail. Sit on them long enough to consider whether your house is overpriced. Do you really think a 1,200 square feet, three-bedroom house built 40 years ago in La Mesa is worth $500,000? Or the same house in Point Loma is worth $800,000? What have you done to your home to make it worth two or three times what it was worth, say, six or seven years ago?

Realtors always justify overpricing by arguing that this is San Diego, where everyone wants to live. The latter is nonsense. Lots of people don’t want to live here, which is why they don’t. And San Diego was San Diego 10 years ago when you could buy a single family home for less than $300,000. The beach was here too. Salaries were basically the same.

What happened in San Diego over the housing boom had nothing to do with ocean breezes and mild temperatures. Investors and cheap money drove up home prices.

Look outside your window now. If there are any investors on the sidewalk sizing up your property, feel free to fire off that e-mail. If not, maybe you should keep sitting on your hands.

Catherine MacRae Hockmuth is a free-lance writer living in Point Loma. Please contact her directly with your thoughts, ideas, personal stories or tips. Or send a letter to the editor.

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