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Originally Posted by Humanoid
Most of the efforts in old industrial cities have failed, for example Pittsburgh, Cleveland, Detroit etc. Yet all of these areas have "hot" areas outside of the city that are doing well (ahem suburbs).
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All? Are you sure? Regarding the rust belt...most of it is shrinking. Regarding suburbs..young people from the city for the most part aren't the buyers. And you're getting your first trickle of immigrants who have made a little dough. There will be more of this. Remember, they got displaced when we gentrified their neighborhoods. The poor ones went East, South or to Lancaster. Pittsburgh is coming along nicely. It's established suburbs are doing what much of the rest of the country is doing in this market. I worry about the job market supporting growth. I've been watching it closely. It's gentrification is just getting underway. Cleveland is a dying city. Period. It's still nicer than Detroit. The mass exodus will show up on the next census. Detroit is a disaster. I don't see people flocking to live in the Detroit suburbs. I'm not sure why you think this. It seems I meet someone else every other day who's left. More data that's readily available. Detroit's vacancies are out of this world right now and prices are plummeting. Another shrinking city. Next census will reflect this.
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...Also, it should be noted that that many suburban areas have gone up in value more than LA, for example Orange County....
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In case you didn't get the memo, the whole state has had price increases through the roof. Also, OC is NOT Los Angeles although technically part of the metro area. I was discussing recently gentrified neighborhoods which have outpaced even the OC in price increases. Mt Washington and Echo Park are the current crown holders in that department. I listed the numbers in a previous post. You're stretching this thin, what you started griping at me about was my claim that the younger generation of city dwellers wants to live in the city, not vanilla car based suburbs their parents fled to. The real estate price increases and still decent sales in close in, recently gentrified neighborhoods proves this. The younger generation includes me, I'm thirtysomething. I have plenty of money and there are scores of others like me. Most of the ones of my generation who want to live in suburbs were poor kids that have made a little money. They live in gated communities too. They don't shop at thrift stores nor do they go to flea markets or antique stores. They want a life opposite of their childhood. I do my homework.
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Of course demand is related to housing prices, but the younger generation doesn't have a lot of money.
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Well, some do and some don't. For those seeking lower prices in L.A., why would you pay twice as much for a house in Agoura Hills which will sentence you to half your life in your car and absolutely nothing to do when you can buy something in a newly gentrifying, thriving neighgborhood in the city? Walkable urban villages have been carved out all over the place. New suburbs aren't. Like I said, the data is all there, I already told you where to find it.
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Its common for people 35 and younger to have tons of student debt etc. They simply can't afford the current home prices
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Some can, some can't. Being in the business allowed me to meet them face to face. I love helping the ones of limited means take advantage of government programs to help with down payments, low interest loans and free money to renovate...get them started investing by buying something with more than one unit which in some cases the rental income will pay their
whole mortgage...and tax incentives to boot. Rich or poor, I love 'em all.
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If you want to talk about supply/demand you need to also consider the fact that as prices go up demand will dramatically drop.
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I'm afraid you've put the cart before the horse. First the demand drops, THEN the prices drop. There are plenty of cheap houses in our country because nobody wants them or far less people want them.
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Therefore, at the current prices the supply is far greater than the demand.
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Demand sets prices. Period. Interesting concept you have of free-floating real estate prices...in some areas...like suburbs...inventory has piled up as they have in many areas. Prices will drop there. The unilateral drop will be in condos, very few will completely hold their value no matter where they are. I explained why in a previous post.
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Take a look at Axiom's post above, to even afford a basic condo/home you need to make 100k+ a year! Even with an advanced degree your typical starting pay is not 100k+ a year.
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I quit school in the 11th grade and my household income is...well, much, much more than the figure you just listed. I got some college later and the job I got as a result made 23k a year. I became an entrepreneur/wheeler dealer after that. Most people don't buy houses and live in them alone. Combined household income is either enough or it's not. Getting 2 people to make 100k in Southern California isn't terribly difficult. My partner alone makes more than that working part time. If it is, people rent. Home ownership isn't a given.
87% of Manhattan residents rent and most of them wouldn't live anywhere else. We aren't anywhere near those numbers. Our housing market is making more renters, sad to say. People like me own the properties they live in. The neighborhood I grew up in started requiring 100k a year about 1980 to buy a house on my street.
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Prices always move first with the low-end homes and the less desirable areas. The fact that prices on higher-end homes aren't moving much is typical of a housing crush. You won't see big movements on the high-end until next selling seasons.
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I knew the housing crunch was coming in early 2005 when I recieved a panic call from an agent friend who worked in...the high-end market. That's always the first to cool. It's actually both the top and the bottom. The middle holds for the longest because it has the most demand. The prices high-end haven't moved so much as the sales. Hollywood Hills homes are worth more than ever but it seems every other home is for sale. They aren't moving. LB has dropped like a rock, some areas 20%. I followed this closely and still am. I almost bought something there but had the feeling...This time next year I'm buying a bunch of multi unit properties there. I said all this before. If an area is lower priced but undergoing gentrification, the prices will continue to rise. If it's not seen as a desirable area, they won't. This is part of the concept of supply and demand. Echo Park is still selling as we speak and the prices are still going up. Every weekend I see pretty young couples unloading their moving vans.
Like I said before, you must take this neighborhood by neighborhood. It's not simply "this or that". I've done hundreds of hours of research because my livelihood depends upon it. Nuff said.
Some images of hot selling areas:
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08-30-2007, 07:28 AM
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