Want to move to CA (lived there before), but see people leaving (Los Angeles: to rent, new house)

[speedoflight]

Banks are not there to help you for they couldn't care less if you lived under the bridge, they are there to make tons of profit. They designed these creative financing plans to enable more people to buy so that they (the banks) can make more money. Without methods to enable more people to buy, they would be out of an income source. Even if you defaulted on the loan, the bank still comes out ahead for they hold the title to that house.

Originally Posted by shannon94

If I understand you correctly you seem to imply that creative financing was designed to solve the affordable housing issue.

[shannon94]

Originally Posted by speedoflight

Banks are not there to help you for they couldn't care less if you lived under the bridge, they are there to make tons of profit. They designed these creative financing plans to enable more people to buy so that they (the banks) can make more money. Without methods to enable more people to buy, they would be out of an income source. Even if you defaulted on the loan, the bank still comes out ahead for they hold the title to that house.

You just said exactly what i said in the previous post. lol Of course banks come out ahead....they sell the risky loans off before they default these days.

[shannon94]

Originally Posted by Sassberto

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.

check out the foreclosure and preforeclosure numbers too

[shannon94]

To Speedoflight........(your post wouldn't fit)


It's not that I don't get the supply and demand issue. (But thanks for the lesson) Supply and demand USUALLY applies..but it's still not the main reason prices skyrocketed like they have. Do you not realize much of your post was just repeating what I had said regarding creative financing? We don't seem to be be communicating. lol
If the 500k house is still unaffordable.....and people aren't buying...and the investors have left... (they have already) what do you think will happen to the home prices then? Are they going to sit empty because home prices refuse to come down? I don't think so.
I prefer to rely on common sense rather than graphs and percentages.

[Sassberto]

I think both you guys are arguing from polar opposite sides of the issue. Did prices go up from demand or from specualtors? The truth is probably somewhere in the middle. In some areas where speculation was rampant (Condos in downtown San Diego) then the latter may be true. In other areas (detached homes in Del Mar, La Jolla, Mission Hills) then demand is probably what drove prices up.

In my neighborhood, where there is almost zero flipper activity (aside from rehabbers) we have seen a more modest rise in prices, but prices still only(!) doubled since 1999. Compare that to Carmel Valley or Poway or RB where prices rose 30% a year in some areas.

[speedoflight]

The base cause of the rise in prices year after year for goodness knows how long in CA have been supply/demand and the rise has always been higher than the rest of the nation. I knew an elderly lady who owned a nice 1800 sq ft, 4 bedroom home in SF which their family bought for less than $20k in the 1960s. By 1994, that house was worth nearly $650-700k. Remember this was way before the housing boom of the 2000s where all the nutty real estate speculation and extreme price escalation began. Other than Manhattan, NY, I do not know of another place where a house could rise in price as high as that even factoring in inflation and the higher costs of living in SF. Much has everything to do with the allure (demand) of SF. Like they say with real estate, it's "location, location, location". As said many times in my posts, there was the additional prospecting situation that caused for conditions to turn even worse and forced what were already high prices to rise to an extreme, thus causing the situation that we see currently. Also as mentioned, even if you took out the extreme gains, you'd see that the average house is still too expensive for the average person in CA. Hence the example I gave, say if that $600k house dropped significantly and got to $500k, it'd still be rough for many to afford.

Originally Posted by Sassberto

I think both you guys are arguing from polar opposite sides of the issue. Did prices go up from demand or from specualtors? The truth is probably somewhere in the middle. In some areas where speculation was rampant (Condos in downtown San Diego) then the latter may be true. In other areas (detached homes in Del Mar, La Jolla, Mission Hills) then demand is probably what drove prices up.

In my neighborhood, where there is almost zero flipper activity (aside from rehabbers) we have seen a more modest rise in prices, but prices still only(!) doubled since 1999. Compare that to Carmel Valley or Poway or RB where prices rose 30% a year in some areas.

[speedoflight]

If you were an investor, you'd still buy, particularly for the right property for it will still rise and that house is still worth a lot. This is no different than the "dot bomb" period post the dot com time. Were there investors investing in companies? You bet there were. Deals were still closing but not as rapidly as before and in the "right" companies. True investors don't run from bad times for sometimes bad times are the best times. A bear market is a great time to buy stock in the "right" companies that you know will rise in price when the market normalizes. It's the amateur flippers who are now in do-do for they want to indulge in a big boys game with little knowledge of the rules of the trade.

No matter how you work the numbers via a scientific method or not, you will see that houses in CA will still hold their high value because of all the many, many reasons we've already discussed. A true real estate market "correction" would have to go all the way back to x period, i.e. maybe more than 30 years but that is unlikely to happen. You will still pay way more per square footage for rent or to own than majority of the markets in the US. Therefore, you'd still pay $500k (instead of maybe $600k) for a tiny little sardine can of a house in a mediocre neighborhood as opposed to a very large sized house in a nice neighorbood in some other state.

Originally Posted by shannon94

To Speedoflight........(your post wouldn't fit)
It's not that I don't get the supply and demand issue. (But thanks for the lesson) Supply and demand USUALLY applies..but it's still not the main reason prices skyrocketed like they have. Do you not realize much of your post was just repeating what I had said regarding creative financing? We don't seem to be be communicating. lol
If the 500k house is still unaffordable.....and people aren't buying...and the investors have left... (they have already) what do you think will happen to the home prices then? Are they going to sit empty because home prices refuse to come down? I don't think so.
I prefer to rely on common sense rather than graphs and percentages.

[speedoflight]

I think we do agree on almost everything but perhaps say it differently.

Originally Posted by shannon94

You just said exactly what i said in the previous post. lol Of course banks come out ahead....they sell the risky loans off before they default these days.

[shannon94]

Originally Posted by speedoflight

If you were an investor, you'd still buy, particularly for the right property for it will still rise and that house is still worth a lot. This is no different than the "dot bomb" period post the dot com time. Were there investors investing in companies? You bet there were. Deals were still closing but not as rapidly as before and in the "right" companies. True investors don't run from bad times for sometimes bad times are the best times. A bear market is a great time to buy stock in the "right" companies that you know will rise in price when the market normalizes. It's the amateur flippers who are now in do-do for they want to indulge in a big boys game with little knowledge of the rules of the trade.

No matter how you work the numbers via a scientific method or not, you will see that houses in CA will still hold their high value because of all the many, many reasons we've already discussed. A true real estate market "correction" would have to go all the way back to x period, i.e. maybe more than 30 years but that is unlikely to happen. You will still pay way more per square footage for rent or to own than majority of the markets in the US. Therefore, you'd still pay $500k (instead of maybe $600k) for a tiny little sardine can of a house in a mediocre neighborhood as opposed to a very large sized house in a nice neighorbood in some other state.

I guess we'll see. I predict that eventually over the next few years prices in San Diego will at least go back to 2002-2003 levels. At todays income levels most people have no business buying more than 300k and that's at a low interest rate.
Yes California will always be more expensive.....but this recent run up is just ridiculous and unsustainable.

[speedoflight]

I don't know about San Diego but 2002-2003 was somewhat at the peak of the prices here. It got so bad that not only were houses selling like hot cakes, people didn't even get more than 5 minutes in a house before they had to bid on it. There were more than 10 bidders on each house. If your bid weren't over and above asking prices you won't get in. This peaked in 2004 and then in 2005, it began its decline to what we have today. It was the period of 2000-2005 that drove the prices to the extremes, so not sure why you want them to get to 2002-2003 levels. Something affordable would have to be somewhere near 1990 levels but that's not going to happen.

Originally Posted by shannon94

I guess we'll see. I predict that eventually over the next few years prices in San Diego will at least go back to 2002-2003 levels. At todays income levels most people have no business buying more than 300k and that's at a low interest rate.
Yes California will always be more expensive.....but this recent run up is just ridiculous and unsustainable.