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“We took out a one hundred percent loan to value,” Harlan says. “But our real-estate agent double-ended the deal. So the place had appraised at $550,000, and basically she cut us a check for half of her commission.”

The Harlans paid no money down. Their mortgage is around $2900 per month, homeowners’ association (HOA) fees are $378 per month, and taxes are another $450 — for a total payment of just over $3700 each month.

Their 1100-square-foot unit is on the sixth floor — the top floor — and it faces the tree-lined courtyard inside Union Square. It has two stories, with a 300-square-foot private deck, stainless-steel appliances, and granite countertops.

Their unit reappraised last year for $450,000. But now, Jordon Harlan says, the value is closer to $400,000, or maybe even $350,000.

“With the economic situation,” Harlan says, “it could take five years for my place to get back up to the value it had when I bought it. At that rate, with me paying the interest payments on it and not actually amortizing the loan at all, it doesn’t make any financial sense to stay in the place. For instance, we figure that over the next three years it’ll cost us about $133,000. We’d need to see an increase in value for that to be worth it. And it’s not likely to happen.”

Harlan and his brother are looking into loan solutions offered by the government, but they’re not finding relief there. “There’s an $8.5 billion settlement offered by Countrywide,” Harlan says, “although that applies to subprime loans and pay options, which is where you can make a minimum payment for less than the interest on the loan [resulting in negative amortization]. And this is basically predatory lending. So they’re allowing you to call Countrywide and just have your place refinanced. But they don’t have those programs for prime loans, which sucks, because my value’s being hit by the subprimes and the pay options and the foreclosures, but they don’t have any solutions for me. But I’m going to call in and try to work out something where either they refinance the value of my loan down to a fair-market value. Or I’d even be open to the lender renting it to me, with the option of buying it back a few years from now.”

Harlan is a second-year law student at USD, and he waits tables a couple of nights a week at Tapenade Restaurant in La Jolla. But mostly, he’s going into debt, paying school loans on top of his home loan, without much income.

Harlan’s brother is in the search-engine-optimization business.

Harlan learned about real estate by reading books such as Home Buying for Dummies and from spending hours on the phone with his real-estate agent.

“My loan is an 80/20,” Harlan says. “The first is a 5.75 percent interest rate, which is really reasonable. And it was full doc [fully documented], which means they got all my income and my brother’s income. The 20 percent is a home equity line of credit, and that fluctuates with the prime rate.”

A new possibility that the Harlans have put on the table is foreclosure. “I don’t want to sit in the house for six years,” Harlan says, “waiting for the value to come back. It doesn’t make any sense financially. At this point, I’m going to pay more to stay here than I’ll ever make from selling it. Not to mention that the adjustable rate I got was for seven years, which was, I thought, more than enough. So my loan could actually adjust, which I thought would be unheard of when I first bought it.

“You feel like a failure, you know,” he says. “Because you made such a huge investment, and you had your naysayers when you did it. And you had your supporters, too, people who backed you up, people you trusted. And you didn’t know who to believe or what to believe. And then to have to foreclose is to say that you made the wrong decision. To admit that you had poor judgment. And there’s the credit issue. Landon’s credit has rebounded from the 500s to over 700 now. Mine is bordering on 800. I’ve never been late for a payment in my life. So to have a foreclosure, it’s like, Jesus, I went through so much work to get my credit where it is.

“We had the income to finance a house this size. But 100 percent financing was a bad idea, from the bank’s perspective. When you’re looking at a half-million-dollar house, if you don’t have any equity in it, and it stops appreciating, then you have no reason to stay in it except for your credit. You have no equity.

“It’s a tough situation to figure out what to do, because, how do you price your credit score, you know? And it’s an interesting side note for me, because I’m going through a moral-character application for the California bar, where they evaluate your financial record. So essentially, a foreclosure could keep me from being admitted to the bar. I have to worry about what this whole housing situation might do to my career.”

From a Developer’s Point of View

“This isn’t particularly a bad time for us,” says Brian Stoddard, emphasizing the word us, “it’s a bad time for everyone.” Stoddard is the president and chief operating officer for Calgary-based Pointe of View, Vantage Pointe’s developer. “We’re not having any project-related issues, we’re having market-related issues. We continue to believe in that building, and we continue to believe in San Diego. We’re putting up a landmark in a world-class city.”

Stoddard says that Pointe of View hasn’t made the decision yet whether it’s going to offer properties for rent. “Am I going to rent out units, or reprice the units, just because we’re in a bad market?” Stoddard asks. “Or am I going to sit there and carry those units and sell them at a time when I think the market may be better, if I think that’s going to be months instead of years away? That’s a mathematical equation for me. And it’s the kind of thing we’ve done in the past. We’ve sat on units. I have no reason to fire-sale units. We are a large developer. We have thousands of units all over the continent. We have buildings in Ontario, Calgary, British Columbia, Arizona, Hawaii, Orange County, and we have another site in San Diego (at 11th and Broadway), just two blocks away from Vantage, which we haven’t begun to build on yet. Again, we believe in San Diego. Those units in Vantage Pointe are going to sell. Is it going to take 8 months, 10 months, 15 months to sell them? Maybe. I don’t know. But it’s not going to break us to sit there and carry that building for the next year. We know the market is going to come back, and someday, we’re going to have two big residential buildings in San Diego. At least two.”

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Comments

danwhitehead1 Dec. 3, 2008 @ 6:14 p.m.

I am completely sickened at how a collection of greedy swine took such an easy-going, laid-back, relatively inexpensive place, like San Diego used to be, and RUINED it. I'm glad I got to experience San Diego (and indeed the whole of southern California), before it was destroyed by the locusts.

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Fred Williams Dec. 4, 2008 @ 7:33 a.m.

Do the math:

The average wage in San Diego is just over $40k per year.

Take away just 25% for taxes, and you're left with $30k net.

That's $2,500 take home pay per month.

If half of it is going to housing, (which is high), you can only pay $1,250 per month for your mortgage, HOA, and taxes combined.

Nothing downtown at that price.

Well, let's assume that all the people living downtown are exceptional and make double the average in San Diego...$80k per year.

Still only $2,500 per month for your housing.

So your spouse or partner must make at least another average ($40k) salary just to make ends meet on a one bedroom place. Either one of you lose your job, and you're in trouble. No 401k or retirement savings to dip into for a rainy day now...

In other words, under any foreseeable combination of circumstances there are going to be a growing number of those who cannot afford their downtown condo in the next several years, and almost certainly the alleged values of these properties must drop further from where they are today.

It's a lot cheaper to rent, with no risk of going further under water, I can't understand anyone who is buying at today's prices.

Look at craigslist and see...

The elected officials of our nation, and San Diego especially, at the behest of their development and finance backers, threw fuel on the housing fire during the bubble years. Now, with unemployment shooting up and people's savings wiped out, how will they respond to the new crisis?

One thing is certain. CCDC's job is over. It built out downtown, as it promised, and now we've got too many condos that are simply too expensive for most San Diegans to ever buy.

Now the city needs to concentrate on encouraging wealth creation not through property speculation but by actually producing things of value. I'd like to see the city encourage start ups in some of these vacant units, especially the ones near the ground floor, where telecommuters and knowledge workers can actually find well paid work here.

We'll see what happens over the next decade, but I predict it's going to get uglier still if we don't adapt to the changes in the world around us, or hold our heads under the sand.

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stevewag23 Dec. 4, 2008 @ 1:49 p.m.

You really need to me making $150,000 per year in San Diego to pull it off and live a nice life.

No kids. No dog. No wife.

$300k if you want those things.

Anyone know where to get a job in San Diego for 300k?

And we don't even have topless beaches with Model girls.

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stevewag23 Dec. 4, 2008 @ 1:50 p.m.

danwhitehead1,

Agreed.

So what is the next move?

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NinaNaNaNa Dec. 4, 2008 @ 2:22 p.m.

I think all the people who were interviewed sounded like d-bags. With their "mommies and daddies" paying for these places, and "recent USD Grad's" - what do they know about struggling? Interview a family with two parents working to supports kids and a house and how stressed out they are about making their mortgage that they busted their a**es for and took everything they had to get into in the first place and it would really change the tone of this article. I don't feel bad for these people....at all. Maybe Spick, because at least he seems intelligent.

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danwhitehead1 Dec. 5, 2008 @ 5:42 a.m.

To Stevewag23: I really have no answer as to the next move. The damage has been thoroughly and extensively done. I left in complete and total disgust in December of 2000. The San Diego that exists now is a sickening, loathsome aberration of the real San Diego. At this point in time, I wouldn't care if I never saw it again (and I NEVER thought I'd live to say such a thing!!).

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stevewag23 Dec. 5, 2008 @ 9:59 a.m.

NinaNaNaNa,

Lets not talk bad about USD.

Its one of the last bastions of class this town has.

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stevewag23 Dec. 5, 2008 @ 10:02 a.m.

danwhitehead1,

I have to hand it to you.

I moved back in 2000!

You are smarter than me.

A lot of this country is in a similar boat so its difficult at times to figure where to move.

Any suggestions?

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nofears Dec. 5, 2008 @ 7:38 p.m.

What a great article for all San Diegans. I came across the same article as NinaNaNaNa and saw her comments. It was a good article because it was San Diegans honestly sharing thoughts about their City and it's future. That is what The Reader is, and has always been, about. I have lived here since 1963 and I miss the old San Diego, too. But, it's always your choice where you live. BTW, NinaNaNaNa, have you met these people or walked in their shoes? USD has always been about excellent grades, scholarships and ethics. Rich kids get expelled. Did you really read the article or are you just standing on a pedestal playing poor me? Are you raising your children to be victims of the economy or to hate what is evolving? If you can take the time to criticize, you must be intelligent. Why don't you take the time to go to City Hall {202 C St. 12th Floor}? Do something to make your children proud and not embarrass them further.

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JohnnyVegas Dec. 7, 2008 @ 3:13 p.m.

Anyone know where to get a job in San Diego for 300k?

And we don't even have topless beaches with Model girls.

By stevewag23

Only place to get a $300K per year job in San Diego is with the government-and that would include the benefits.

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JohnnyVegas Dec. 7, 2008 @ 3:19 p.m.

USD has always been about excellent grades, scholarships and ethics. Rich kids get expelled.

By nofears

nofears, USD expells no one. USD is simply a trust funder univerity who gives every advantage to their rich pampered students.

I personally had a trust funder friend at USD who would have not lasted 2 semesters at San Diego State-but because he was at USD he was allowed to withdraw from classes on virtually the last day of class-which he did repeatedly because he was failing and would have received an F. This went on for 8 years. He withdrew from 1 specific class he needed to graduate on 9 different occassions.

BTW-this clown finally graduated with this extra ordinary private university flexibility-which you would never in a million years find at a public university.

Dont tell me USD is the meritocrocy of education you make it out to be. It's not.

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nomasbean Dec. 8, 2008 @ 12:26 p.m.

Oh my God! I don't think I've ever read so many lies.

There aren't going to be any walk throughs" or punch lists for months and months!
No one is going to be moving in in April OR May. I work in that building. It's so far behind schedule it's a joke.
We have all heard that all of the unsold units are going to be rentals.
What a crock.
Run away!!!!

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Burwell Dec. 10, 2008 @ 10:33 p.m.

Spick should bail out of his condo and face his family responsibilities. Downtown is no place to raise a child. The area is rife with dopers and drunks. He should give up his dream of a fantasy lifestyle that he probably can't afford and remain in Scripps Ranch where the schools are decent. He's never going to get a loan to buy the condo anyway. Lenders know that he'll walk on the Scripps Ranch loan if he receives a loan to buy the condo. They've seen the pattern over and over.

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JulieParrots Dec. 10, 2008 @ 11:31 p.m.

I agree with Burwell that the schools are decent in Scripps Ranch. If not in Scripps Ranch then in Carmel Valley. You can't raise a kid in downtown. Spick should get out now while he can.

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mythusmage Dec. 11, 2008 @ 9:17 a.m.

Hate to tell you this, but more than a few of you are being a bit too optimistic. When things go pear shaped you're going to see condo projects being abandoned outright. No finishing, nobody moving in. Shooting galleries with stainless steel washers and dryers.

What will change things?

Federal indictments. Indictments on people in local government. Indictments on upper management at the Union/Tribune. Indictments on upper management in construction companies. San Diego will have to go into receivership, with a Federal judge as "Governor General".

Add in one or more local judges, plus at least one state official (Yo, Moon Beam!) in that list of indictment recipients, and San Diego's gonna be a happening place pretty dang soon. You'll know things are going down when Mike Aguirre is called to testify before certain Congressional committees and sub-committees.

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danwhitehead1 Dec. 19, 2008 @ 10:30 p.m.

Mythusmage

Don't faint when you read this, but you are 100% correct and I couldn't agree with you more as per your above comments.

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stevewag23 Feb. 2, 2009 @ 9:03 p.m.

"Only place to get a $300K per year job in San Diego is with the government-and that would include the benefits."

Yeah, but what about the topless beaches with Model girls?

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stevewag23 Feb. 2, 2009 @ 9:04 p.m.

"Downtown is no place to raise a child. The area is rife with dopers and drunks."

It actually could use more dopers.

It would make it more fun and we would get more tourists coming in.

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mitthbevnuruodo Feb. 3, 2009 @ 11:11 a.m.

Anyone with kids in downtown would be transporting their kids to private schools anyway. They surely won't send them to public ones there. There are surely not load of dopers compared to how it used to be. Friends used to hold gigs in Croce's basement in the mid 80's, when Croce's was the only place there. Now there were dopers then! Or even round '90 when we used to track from 5th ave down to, oh was it 9th and G St? to go to Java, now there were really dopers!

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