One five-bedroom bungalow by the beach has been hanging over her, at $1.2 million, since January. The owners, who bought the house as a second home, aren't willing to lower the price, but they need to sell it to pay off debt borrowed against it during the boom. In the meantime, they're renting the place out to their own children.
Well at least in this article the owners admit they borrowed against the home during the boom.
The home was bought Dec 1998 for $725K it is currently listed at the amount needed to pay off accumulated debt, $1.175MM. If the home was purchased with 20% down on a fixed amortizing loan and not refinanced the owners would currently owe about $485K. This means each year for 10 years the owners removed $65,000 post tax dollars from their home versus "traditional" mortgage paydown actions.
In other words just another owner in So Cal that added another $100K pre tax income to their household prior to the boom. How many $100K jobs are there in So Cal? How is the Cal economy going to recover?