Location, location, location

The real estate broker who coined the phase ‘location, location, location” sure knew what (s)he was talking about!

Last Thursday I was in San Diego addressing a gathering of CFOs, and during lunch the conversation rolled around to the housing crisis. One of the CFOs was from the Detroit area and lived in Gross Point – the most upscale area in an otherwise downtrodden city. According to him, huge numbers of homeowners were “under water.” Luxurious homes that once sold for more than a million dollars were on the market for a fraction of that price. That evening I went on line to check it out, and sure enough, I found several four and five thousand square foot homes selling for an average of $60 - $80 per square foot.

Now, you may say ‘well, who wants to live in Detroit?’, but the same thing appears to be true in other parts of the country as well. Just look at Phoenix, for example – a very decent place to live if you ask me.

Two days later, on Saturday, I flew to San Francisco to visit my oldest son, Alex. He rents an apartment in the Russian Hill area of the city and hopes to buy a modest one bedroom condo in a more affordable neighborhood. We went to about six open houses and the prices were astounding…..a 600sf condo for $500K; a 750sf condo for $600K; and, an 800sf condo for $675K. That’s an average of $825 per square foot. And then there’s the condo fee and the taxes on top of that! And these condos weren’t even in desirable neighborhoods. The swanky sections of town are a good deal more….well over $1000 per square foot. And if you think that the recession hasn’t affected San Francisco, think again. To boot, the entire state is on the verge of bankruptcy.

The whole thing makes no sense to me. I’m thinking of moving to Gross Point and ‘working from home’!