Portrait of a seller finding motivation: 803 Ida Avenue

The sellers at 803 Ida Avenue in Solana Beach are gettin' real. After holding out for $1,199,000 for more than four months, they have been dropping the price by small amounts almost daily, and yesterday added a $54,000 drop bringing the price to $995,000. That's a 17% price drop in less than six months, or a 38% annualized decline.



It's a nice house in a pretty good neighborhood. But there are a lot of million dollar houses in coastal San Diego, and not that many buyers who can afford a million dollar house in a recession.

The problem with paying a million dollars for a house is that you'll never own it. You'll be renting it in perpetuity from the state. Even if you have $200,000 in cash lying around for a down payment, and even if you can make the $5500 monthly mortgage payment plus a little more for insurance, you still owe the state more than $1000 a month in property taxes. That's a rent check in itself to some people. And if you manage to pay off the mortgage in 30 years and retire, that $1000+ per month plus inflation adjustments will eat up a big chunk of your Social Security check (assuming you haven't been means-tested out of getting a Social Security check). You had better be saving a big chunk of change outside of your home equity if you don't want to be eating Alpo in that house.

Notice the current tax assessment on the house: $623,838. So if you buy the house at the current asking price, you jack up the tax bill by 59.5% forever. Bad trade!