Want to move to CA (lived there before), but see people leaving (San Diego: sale, real estate market)

[speedoflight]

These days, this means you'd have to buy in an older neighborhood as all the new neighborhoods developed in CA and in all the other states require for HOA. They're the in thing these days. I hate HOAs.

Originally Posted by Need_affordable_home

Where does the money on high HOA fees go? Who decides the HOA? We could all vote to fire the president of the neighboor that made up this ridicuolous HOA! Best if you buy in a place with low or no HOA, thats alotta money saved.

No, not bad location. An OK location, not upper class neighborhood. Just regular looking neighborhood. In a crappy neighborhoods where you can see your neighbors storing their dead cars on the street in front of the house, blaring their boom box with LOUD rap music, houses with weeds and things like that - you can get a house for about $580k.

Yuba City!!?!! If I had to go that far, I'd save money to buy a helicopter for guess what I'll need one with all the traffic gridlock and distance.

LOL $640k for a terrible 1200 ft. tract house that needs plenty of repairs and in a bad location? No thanks! Thats $533 a foot before repairs! Might as well buy an upper middle class house(like 3500 ft!) in Yuba city and commute by train to San F. Even for $250k you can get 1200-1500 ft of nice house in a good neighboor in Yuba city! The commute would kinda suck, maybe you can buy closer to SF for a still reasonable price and cut the commute by half.

[shannon94]

[quote=speedoflight;119422]I believe there will be a correction. Prices are already falling slightly. But the correction isn't going to be that much to the point that the average Joe can now run out to buy a house. Real estate in CA has always been higher than everywhere and higher than normal. It's a supply and demand issue as well. There's just way more people than there are houses to go around. There's little land left to build around here in the SF Bay Area. That's why when you buy here, you're unlikely to buy a brand new home. It's not like in TX where there's SO MUCH land even in the metro areas. There, unless an older home has tons of appeal, people tend to want to go for a brand new house. Why not? There's a builder around every block showing you nice designs for the same prices as old homes.

So instead of $650k for a house, you might see it drop to $620k. Well, that's still very high and out of reach for most.



I'm sorry, but prices are not THAT high because of supply and demand. That's what everyone likes to say to get people to buy!! lol..Prices are high because of crazy lending practices that didn't exist just a few years ago. Coupled with low low interest rates.
Home prices dropped for years in San Diego in the early nineties....for years. In fact they were still affordable in 2000. This time it will be much worse....it's a whole different dynamic.
I have friends who can not sell out there right now without taking a loss and there are many like them.
Anyway...i know i sound like a broken record on this forum...lol....I just feel strongly about it. I also worry about the trickle down effect of this upcoming housing crash.
I get alot of inside information from my husband....but here's a website to check out...lots to read....realestatedecline.com
Texas won't stay that way for long I'm afraid. Investors are already buying in a frenzy right now.

[speedoflight]

The "magic" of the low interest rates, creative lending came about because of supply/demand. That's microeconomics 101. If there were no demand, no amount of creative lending and low interest rates would get people to buy. Example: middle of nowhere Tiny Town, USA. There is no demand because there are no jobs, etc., so people don't dish out their life savings to buy. What banks have been so good about over the past few years is milk this supply/demand law to its max by offering these "magic" solutions to help you get what you need to buy that home. Another example: If CA had TONS of space and TONS of houses, then prices will not be that high because there's more than enough supply. In a regular climate, supply/demand microeconomics dictate high prices if there is a lower supply. But the real estate bubble created an artificial climate and skewed the supply/demand law of whack. It created a mutant situation that unfortunately isn't about to fall as much as people hope it will fall. As said, you won't likely find that $600k house priced at $250-300k - like where it really should be. Even at $250k-300k, one could argue it's still very expensive for the size, location (neighborhood) that it is.

I'm sorry, but prices are not THAT high because of supply and demand. That's what everyone likes to say to get people to buy!! lol..Prices are high because of crazy lending practices that didn't exist just a few years ago. Coupled with low low interest rates.
Home prices dropped for years in San Diego in the early nineties....for years. In fact they were still affordable in 2000. This time it will be much worse....it's a whole different dynamic.
I have friends who can not sell out there right now without taking a loss and there are many like them.
Anyway...i know i sound like a broken record on this forum...lol....I just feel strongly about it. I also worry about the trickle down effect of this upcoming housing crash.
I get alot of inside information from my husband....but here's a website to check out...lots to read....realestatedecline.com
Texas won't stay that way for long I'm afraid. Investors are already buying in a frenzy right now.

[Need_affordable_home]

Originally Posted by speedoflight

These days, this means you'd have to buy in an older neighborhood as all the new neighborhoods developed in CA and in all the other states require for HOA. They're the in thing these days. I hate HOAs.



No, not bad location. An OK location, not upper class neighborhood. Just regular looking neighborhood. In a crappy neighborhoods where you can see your neighbors storing their dead cars on the street in front of the house, blaring their boom box with LOUD rap music, houses with weeds and things like that - you can get a house for about $580k.

Yuba City!!?!! If I had to go that far, I'd save money to buy a helicopter for guess what I'll need one with all the traffic gridlock and distance.

Then buy in older neighboorhood and save hundreds a month. Probably also save on house price as well as no pesty HOA restrictions. I wouldnt buy in a bad location, maybe if the price was far, far less and you had no other choice.
Just use the train to commute between SF and Yuba city.

[speedoflight]

Then you come back to square 1 and have to talk beyond house prices - It's called Quality of Life. What kind of life can you get if you buy so faraway, spend forever commuting in a train? How long can you do it before you can't take it any more?

Originally Posted by Need_affordable_home

Then buy in older neighboorhood and save hundreds a month. Probably also save on house price as well as no pesty HOA restrictions. I wouldnt buy in a bad location, maybe if the price was far, far less and you had no other choice.
Just use the train to commute between SF and Yuba city.

[shannon94]

Originally Posted by speedoflight

The "magic" of the low interest rates, creative lending came about because of supply/demand. That's microeconomics 101. If there were no demand, no amount of creative lending and low interest rates would get people to buy. Example: middle of nowhere Tiny Town, USA. There is no demand because there are no jobs, etc., so people don't dish out their life savings to buy. What banks have been so good about over the past few years is milk this supply/demand law to its max by offering these "magic" solutions to help you get what you need to buy that home. Another example: If CA had TONS of space and TONS of houses, then prices will not be that high because there's more than enough supply. In a regular climate, supply/demand microeconomics dictate high prices if there is a lower supply. But the real estate bubble created an artificial climate and skewed the supply/demand law of whack. It created a mutant situation that unfortunately isn't about to fall as much as people hope it will fall. As said, you won't likely find that $600k house priced at $250-300k - like where it really should be. Even at $250k-300k, one could argue it's still very expensive for the size, location (neighborhood) that it is.

Again...demand has always been there. That's the dynamic. Everybody wants there own home, but not everyone can get one. Because there 's always something lacking. lol Supply? Last time I checked there's a 9 month supply in San Diego of unsold homes right now. Seems adequate to me. Interest rates? The bond market controls interest rates. Creative financing? If I understand you correctly you seem to imply that creative financing was designed to solve the affordable housing issue. But to the bankers and brokers who push these things they simply mean a higher gross profit. There is no doubt that there are wishful thinkers out there hoping to maintain the value of their assets, but, the overriding factor will be....jobs, and incomes. Jobs and incomes in California even in the next few years will not sustain these inflated prices. It's already starting to show. The only way to keep this "mess" rolling is through even more creative financing! Example...50 year mortgages. Oh Boy!!
Nobody knows where the bottom of this market will be, but based on present income levels and the swelling number of subprime customers there is a tremendous potential for downside.

I enjoy your posts...I just respectfully disagree.

[Need_affordable_home]

Originally Posted by speedoflight

Then you come back to square 1 and have to talk beyond house prices - It's called Quality of Life. What kind of life can you get if you buy so faraway, spend forever commuting in a train? How long can you do it before you can't take it any more?

Tons of people commute by train, bus and subway to NYC. I heard of people commuting up to 3 hours each way! I know a friend who has a friend who spent $300k for a condominium an hour commute by subway to NYC to his job! He could buy a detached house like 3 hour commute for $300k but decided 3 hours was just too much!

If you make tons of money and are rich, you can buy at or near San F. Else you are going to have to buy a ways out depending how much you can afford and how much house you want!

[Sassberto]

Originally Posted by shannon94

Again...demand has always been there. That's the dynamic. Everybody wants there own home, but not everyone can get one. Because there 's always something lacking. lol Supply? Last time I checked there's a 9 month supply in San Diego of unsold homes right now. Seems adequate to me.

Question is... how many of them are builder-owned tract homes priced at 1MM+ or 1BR condo conversions which are crappy apartments with new countertops?

In my neighborhood there are some houses for sale, but there are only 10-20 out of the 645 houses in Rolando Village. I read that 200 of 600 houses in Carmel Valley are for sale right now... that's insane.

[Need_affordable_home]

Could be a bunch of investors bought in Carmel and are unloading them now without much success. Serves them right and now they will lose money or get forclosed!

[speedoflight]

You don't have to agree with me on demand/supply microeconomics because there really isn't much to argue about one of the very basic tenets of economics. The laws of supply/demand applies to every facet of commerce. There are way more people living in CA than there are affordable homes. Affordable being the key word. In that one statement, you learn 1 simple thing - it's called supply. More people, less affordable homes = low supply. More people, less affordable homes = higher demand. Therefore, that very basic tenet of microeconomics apply yet again. Even if you factor that x% of people in CA have no intention whatsover to buy, y% can't qualify to buy, z% who are indigent and can't ever buy and so on, you still have p% who can qualify to buy and there are still far more of them than there is affordable housing. I say "affordable" housing because sure, if you have $2 million to spend on buying a house, you'd be able to buy for sure but you won't be of the norm. You may argue and say what about a market like Des Moines, Iowa where there are less people and there are still less affordable houses to go around. Fact #1: there will always be less affordable houses than there are people in any market, in any country. The difference between all these markets if you draw a graph and chart them all and compare is the steepness of that curve. Therefore, the graph tells you that in a market like SF Bay Area, CA, the demand is way greater and the supply of affordable houses is way less. Hence, the higher prices (in a normal non bubble condition). What has occurred in the past 5 years are artificial conditions that exaggerate the laws of demand/supply. These conditions are like the low interest rates and the creative financing plans. People who prospected and flipped houses banked on this demand/supply law to generate income. They know there is a huge demand for houses and they counted on people to pay a lot to get them at any price. It became no different than a widget on eBay being sold to the higher bidder. That widget can fetch that price because there is demand for it as there aren't that many of the same types of widgets auctioned on eBay. The winners in this were the house flippers and the banks. The losers were the house buyers. The so-called market correction that is occuring right now has much to do with 2 factors. Higher interest rates and the 'maturing' of those creative financing plans where people with adjustable mortgages, etc. are beginning to get hit bad. But if you look back at the supply/demand curve, you will see that the supply still continues to be low and the demand is still high. Therefore the laws of supply/demand still apply. That is why a dinky house in CA costs $600k whereas that same house in Des Moines may cost $80k. So even when the market begins to "correct" itself, that dinky CA home will very unlikely to ever cost $80k even if an earthquake were to strike. In 1989, when the Loma Prieta earthquake occurred, prices did not drop through the floor. Will prices continue to rise? You bet, they will but maybe not at the rate they were at one time. And given that over the past decade, the rate of salary increases have been so low or near stagnation while house prices continue to rise faster than salary gains, it will become harder to buy for your debt to income ratio would be too high. No bank would give you a loan, no matter how creative the options are even if you opt for the 50 year plan.

People have been just focused on home prices when the issue isn't just home prices but salaries. If inflation and year to year real estate gains are higher than salary raises/gains, then it doesn't take much for you to do the math to see you will not be able to afford to buy that house. If salary gains from say the 1970s through today were on par with the rate of inflation and other price gains, you'd be making at least 50-80% more money than you do today. Here in the SF Bay Area, salaries went up during the dot com boom but they fell like the NASDAQ when the dot com boom was over in 2000. Salaries decreased by at least 20-30% from where they stood during the height of the economy but other prices continued to gain. Take for example a gallon of gas. In 1998, it was about $1.80/gallon in CA. Just earlier this year, it went to $3.50 a gallon in some areas in CA.

Let's take an extreme example. Even if that dinky CA $600k house were to drop to $500k with "market corrections", it is still too high for many to afford. You would have be virtually debt free, earn $x income to afford it and pay for all your living expenses.

Originally Posted by shannon94

Again...demand has always been there. That's the dynamic. Everybody wants there own home, but not everyone can get one. Because there 's always something lacking. lol Supply? Last time I checked there's a 9 month supply in San Diego of unsold homes right now.