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For me, I am liquidating all of my non neccessary assets (65 Corvette, tractor, horses, etc) to pay off debt, and only have a mortgage to deal with.
I want the Corvette!!!
Okay, back to housing...I think that the demand to live in any place in the Southern part of CA will always be high, IMHO. But, 'high' is such a relative term. I've been watching the market for years, but I don't think I'll buy for a while
Okay, back to housing...I think that the demand to live in any place in the Southern part of CA will always be high, IMHO. But, 'high' is such a relative term. I've been watching the market for years, but I don't think I'll buy for a while
I'm no expert. We bought a 2200 sqft home for $330K in Lang Ranch in Thousand Oaks in 1997. Our rate was 30 year 6.5 percent (I think). We sold in 2006 for $920K.
What changed? What fundamentals affected those numbers? Why is it "All of a sudden (OK nine years), prices increased almost 300%"?
These numbers are consistent with other parts of SoCal too.
Flip side: Were the 1997 prices undervalued, meaning 2006 values are corrected? Was 1997 a dip in the long term trend from 1991 through 2006?
What happened? What caused this frenzy? SoCal was just as desirable in 1997, was it not? The job situation certainly didn't change that much.
So, in the context of the thread, the juxtaposed question is, Why are they high now?
A Fed rate cut-- a virtual certainty next month-- will pretty much eradicate any chance of that.
The fed cannot cut the fed funds rate much as doing so will destroy the dollar. Regardless, lowering the fed funds rate will not prevent a crush in the housing market, it will only prolong it.
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And now that prices have shot up so high so fast, it's going to be very, very difficult to bring them back in line.
Why is this? They've had no problem dropping in other housing bubbles.
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it will retain an allure that defies fundamental-based pricing.
Really? Is the allure of Hollywood a new thing? Only in the last 5-6 years has the pricing in LA truly defied fundementals. Trying to justify the current prices in LA by Hollywood seems odd to say the least.
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The younger generation that's just old enough to buy real estate mostly reject their parent's ideas of car based suburbs and gated communities.
If people want to live in an actually city they will move to NYC, Chicago, Pilly etc. Nothing in LA comes closes to the cities on the east/mid-west. Also, do you have a study for what you said? I don't know many west-coasters that want to live the sort of city life you are talking about.
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So, in the context of the thread, the juxtaposed question is, Why are they high now?
The real estate bulls can never answer this question, they cannot point to a single thing that has changed that would justify the prices (ahem, because there isn't one).
If people want to live in an actually city they will move to NYC, Chicago, Pilly etc. Nothing in LA comes closes to the cities on the east/mid-west. Also, do you have a study for what you said? I don't know many west-coasters that want to live the sort of city life you are talking about.
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Across the country downtown areas have been revitalised, adaptive reuse redevelopment (lofts) has gone nuts, close-in neighborhoods have gentrified...open your eyes. Demographics on this is easy to find, National Association of Realtors site has many of them. I don't include people who live in the boonies in my statements. Boonies=not the city or surrounding suburbs. I've spent the last 3 years crunching numbers for myself (my former psychology background leads me to distrust studies) in many cities from large to smaller ones and the answer is the same in every one of them from L.A. to Miami to Cincinnati. Besides the loft dwellers, you have more of this generation buying and settling in places like Echo Park, Mt Washington...recently gentrified (or gentrifying) neighborhoods. If you live in a suburb, chances are you don't know these people as they don't live there anymore and have mostly been replaced by retirees. Many valley suburbs are seeing an increase in immigrants displaced by skyrocketing real estate prices in gentrifying neighborhoods. They're buying your old SUV's as we speak. Being in the business I meet quite a few younger people who are former suburbanites and prefer the lifestyle here. Living in a place with only houses a long drive from anythng to do bores them to death. Long commutes are exhausting and expensive and traffic and gas are both getting worse. This generation isn't flocking to the suburbs. They are doing the opposite. We've got tons of people from places like Agoura Hills, their parents idea of insulation and heaven, now living in lofts downtown. Others are living in the close-in revitalised, walkable neighborhoods. Sales are still going fairly strong in places like Echo Park and prices are still going up. Wonder why? Hollywood will see many thousands of units like this in the next couple years around Hollywood and Vine, another example of Smart Development...a walkable urban village with subway and bus/train service every 8 minutes. New developments are being built around transit maps, not outskirts. The L.A. Times just ran a very long article on this, it was quite accurate.
If people want to live in NYC, Chicago or Philly, they will go there. Yes, Manhattan is the ultimate urban experience. We're talking about L.A. and our city has different characteristics. You either like it here or you don't, it doesn't mean we don't have walkable urban villages because we do. LA vs. NYC arguments are silly because they are both wonderful places and couldn't be more opposite. As for Chicago and Philly, the former has even worse weather than NYC and the latter has never resonated with me at all. I like Boston better. For me and those who have settled in Los Angeles, freezing out butts off isn't an option and we like the look, feel and vibe of L.A. That's what home is.
Last edited by Sorcerer68; 08-21-2007 at 05:09 AM..
If you live in a suburb, chances are you don't know these people. I don't live in a suburb and I know plenty.
So no studies (You tell me to go to NAR, was that serious?), instead you tell me you don't live in the suburbs so you know what young people want now? I don't get it.
If you are only looking at folks in the city then clearly they are going to be people that prefer the city. But you made a claim about young folks in general..right? Also, I've lived in real cities, not the fake city life that LA provides.
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we like the look, feel and vibe of L.A. That's what home is.
If you like LA thats great, but when people want true city life they don't live in LA (At least from the people I've known). This isn't to say there aren't nice ares in LA county, there are. But they aren't city like.
I'm no expert. We bought a 2200 sqft home for $330K in Lang Ranch in Thousand Oaks in 1997. Our rate was 30 year 6.5 percent (I think). We sold in 2006 for $920K.
What changed? What fundamentals affected those numbers? Why is it "All of a sudden (OK nine years), prices increased almost 300%"?
These numbers are consistent with other parts of SoCal too.
Flip side: Were the 1997 prices undervalued, meaning 2006 values are corrected? Was 1997 a dip in the long term trend from 1991 through 2006?
What happened? What caused this frenzy? SoCal was just as desirable in 1997, was it not? The job situation certainly didn't change that much.
So, in the context of the thread, the juxtaposed question is, Why are they high now?
I'm with you. I wish someone could explain it to my satisfaction.
Yes, people will pay a premium for some locations. But it seems to me that there still has to be a connection to economic reality.
Personally I'll buy that prices might have been somewhat undervalued before they spiraled up and up and up. But NOT by 300%
Of course I have no doubt that the creative financing environment of recent years played into the unprecedented price jumps in a big way. But enough to account for the whole phenomenon? I'm just not sure.
Then again if all the posts on these boards about a "keeping up with the Jones" mentality being rampant in So Cal are even somewhat true; I guess I can see how the financing nonsense could have snowballed.
Of course I certainly don't think that mentality is exclusive to CA.
I recently read that as many as 1 in 10 homeowners really have no financial stake in their houses ie: they're mortgaged to the hilt. I wonder what that number is in CA where prices make no sense at all? (at least to me)
I think plenty of folks have been paying bills through home equity loans and cash out re-fi's. I guess that works as long as prices continue to rise. But if prices become stagnant or drop I'm thinking that group of house poor folks could be in for a bumpy ride. The ones that don't just walk away if things get too dicey that is.
Prices won't fall that much in L.A. proper or it's immediate burbs. My personal report from the L. A. beach cities is that prices are holding steady or rising slightly - location, location, location.
Prices will continue to fall in the Inland Empire - Corona, Rancho Cucamonga, Temecula, etc. and in over-developed areas of San Diego county. How low, I haven't done the analysis. I've been watching a couple of out-of-state markets closely for investment deals instead.
But I remain bullish about the near future of California. Things will change, as they always do, but you can't beat the phenomenal economy and perfect weather of Cali.
If you're looking to buy now - focus on the trends in your immediate desired market - that's all that matters. Keep an eye on the inventory as well as the prices.
You're absolutely right, PureHapa, prices in the Beach Cities aren't falling at all. The nicer properties still sell fast at or near asking, with the occasional multiple bids, and the lesser properties sell in line with the comps. No panic selling, no desperation, no signs of a plunge. For every seller, there's a buyer, and the market is stable. So for everyone's who's waiting, salivating, to snap up a beach house for a song, good luck with that!
Prices won't fall that much in L.A. proper or it's immediate burbs. My personal report from the L. A. beach cities is that prices are holding steady or rising slightly - location, location, location.
Prices will continue to fall in the Inland Empire - Corona, Rancho Cucamonga, Temecula, etc. and in over-developed areas of San Diego county. How low, I haven't done the analysis. I've been watching a couple of out-of-state markets closely for investment deals instead.
But I remain bullish about the near future of California. Things will change, as they always do, but you can't beat the phenomenal economy and perfect weather of Cali.
If you're looking to buy now - focus on the trends in your immediate desired market - that's all that matters. Keep an eye on the inventory as well as the prices.
OK, maybe you're right, but how do you answer the questions Charles asked?
I still have a really hard time understanding why the meteoric rise and justifying the disconnect with real world numbers. To be honest I have not done any in depth research as it sounds like you have, I'm just a casual observer trying to understand what is happening in the context of everything I learned in econ.
For example if the numbers I saw are correct and the median price for single family resale homes in OC was $734,000 in June and is in fact up both from the previous month and year over year... exactly how and why is that happening? It certainly does not jive with any income figures for the area that I've seen.
I guess it does go to support your assertions though.
Of course while prices were up, sales levels were still way down. If that trend continues, and as long as additional properties are being listed, it seems like eventually that would have to put downward pressure on prices, as would the tightening of credit standards.
You've got to be talking an annual income of over $120,000 to afford that median price OC home via any type of conventional financing... am I right?
Of course my income numbers are older and I have not verified them; they just come from a report I found online, but of 37 OC communities only 2 had a median household income over $100,000
Most were in the 60,000 - 70,000 range
2 were under $40,000
I guess I keep going back to the numbers and trying to understand it that way and it just does not make sense.
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What caused them to go high?
