California real state...the investors are back. (Los Angeles, San Diego: for sale, real estate)

[user_id]

Boy, I've been looking at the real state market in California and things have gotten out of hand again. Though homes haven't been truly affordable since the early 2000's, prices did become more reasonable between 2009~2011, but all that seems to have changed. Prices now are almost as ridiculous as they were towards the peak of the bubble, and with the recent increase in mortgage rates everything got 20~25% more expense for anybody buying a house with a mortgage. Why did prices go up? Certainly not because the average Joe is doing better....instead because the investors and flippers are back.

It seems California has no desire to change, California has become one of the worst states for young families (and businesses) to call their home.

[DMenscha]

Originally Posted by user_id

Why did prices go up? Certainly not because the average Joe is doing better....instead because the investors and flippers are back.

Prices in metro areas have gone up because a whole bunch of folks sat on the sidelines during the worst of the recession and no new inventory was put on the market. Investors and flippers were the only folks buying during the worst of it. Much harder now for them to make their margins in a rising market.

The average Joe is in fact doing better.

[zdg]

Yes. Stupid California for raising the price of real state and making it impossible for young families. California should lower the price of real state.

[jbunniii]

California has always had a boom-bust economy, but it does seem like the cycles are getting shorter.

[user_id]

Originally Posted by DMenscha

Prices in metro areas have gone up because a whole bunch of folks sat on the sidelines during the worst of the recession and no new inventory was put on the market. Investors and flippers were the only folks buying during the worst of it. Much harder now for them to make their margins in a rising market.

No new inventory was put on the market? I'm not sure what you mean by that, obviously new homes have been put up for sale every month. Inventory peaked around 2009 and has declined since then, but why? It wasn't because average people were out buying a lot of homes, home sales have been slow since the real estate bubble collapsed. Its because banks were allowed, due to accounting tricks, to keep foreclosures off the market and increased investor demand soaking up what was put on the market.

Originally Posted by DMenscha

The average Joe is in fact doing better.

How is that? House prices have increased by around 15~20% and now with increased mortgage rates you can add another 20% increase on top of that. So, compared to 2009, the average Joe has to pay around 40% more for housing. How are they doing better?

How people that bought during the bubble, may be doing better. Some of them were able to refinance the home that they over-paid for and the recent increase in prices gives them some more equity. But, young families and businesses? The current environment is terrible.

[user_id]

Originally Posted by zdg

Yes. Stupid California for raising the price of real state and making it impossible for young families. California should lower the price of real state.

Yes, indeed, stupid California. California has a number of policies that inflate real estate values, policies that also make real estate a valuable asset class instead of productive assets like, I don't know, businesses that actually produce things....

California should change the policies that inflate real estate, policies that have turned the California housing market into a volatile asset market like the equity markets.

In any case, California has become one of the worst states for young productive families and businesses. Nearly everything about the state has become antithetical for this group.

[zdg]

Originally Posted by user_id

Yes, indeed, stupid California. California has a number of policies that inflate real estate values, policies that also make real estate a valuable asset class instead of productive assets like, I don't know, businesses that actually produce things....

California should change the policies that inflate real estate, policies that have turned the California housing market into a volatile asset market like the equity markets.

I'm not saying you're wrong; could you please cite some of those policies?

In any case, California has become one of the worst states for young productive families and businesses. Nearly everything about the state has become antithetical for this group.

When you say "California" I assume you mean "San Diego, Los Angeles proper, and San Francisco" or do you actually mean the whole state?

[user_id]

Originally Posted by zdg

I'm not saying you're wrong; could you please cite some of those policies?

Sure, for example California's tax structure penalizes productivity with high income taxes while favors real restate speculation with low and limited property taxes via prop 13. California, somewhat ironically, has very loose regulations on mortgages..in particular home equity loans and cash-out refinancing deals. These loose regulations contributed to the housing bubble, though don't appear to be a major contributor right now. California has restrictive and expensive building permit process, these policies limit the supply of new homes and the permitting costs inflate home costs (its essential a hidden tax).

Of course, there are national factors as well.

Originally Posted by zdg

When you say "California" I assume you mean "San Diego, Los Angeles proper, and San Francisco" or do you actually mean the whole state?

No, I'm talking about the state as a whole. Though there are some areas with what seems to be affordable real estate, these areas also have poor economics or economies based on very low wage jobs.

Unaffordable homes are by no means isolated to the cities of San Diego and Los Angeles, they are unaffordable throughout Southern California (with the exception of inland desert communities...) Same goes for the bay area.

[CA4Now]

Originally Posted by zdg

Stupid California for raising the price of real state... California should lower the price of real state.

What? Since when does "California" decide residential real estate prices?

[NoMoreSnowForMe]

Prop 13 only benefits people who hold onto their property long-term. So, saying it has something to do with real estate speculators, doesn't make sense to me. Prop 13 just keeps the tax base at the purchase price, with minimal increases in following years.