My husband and I went out to dinner last night with some friends who are moving to the Washinton, D.C. area. Big bummer for us. But the real estate situation here is a bigger bummer for them.
They live in a very nice area of Temecula called Harveston and paid $635,000 for their house a few years ago. Currently, the development is experiencing a slew of foreclosures. There was one right behind their house that is the same model as theirs (3600 square feet). It was for sale for the better part of a year or longer. There was an auction, but nobody bought it. Then the agent attached a banner to the front of the house that read "$425,000."
Wow! Talk about a fire sale! My friend had e-mailed me last week that the house sold, but she wanted to tell me the price in person so she could see the look on my face. At the restaurant, her husband blurted it out before she had a chance to build the suspense. However, this didn't compromise the shock value at all. The house sold for $395,000. She wasn't disapponted when she saw my expression. She heard that another foreclosed house is going for the low $300's.
Luckily, our friends are real estate investors, so they plan to hold on to their house after they move. They'll be fine, but it would be comforting to have better comparable sales in the area. So, for all you hardy investors out there, come and pick up these super cheap foreclosures to clear them out of the system, so prices can become steady again and then rise. (I know it's not so simple, but it's an optimisitc theory, nonetheless.)