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Thread summary:

California real estate: market, home pricing, secure investments, lowest interest rates, stock.

 
 
Old 07-20-2006, 05:37 PM
 
437 posts, read 63,617 times
Reputation: 243

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My one big concern is what migrating Californians are doing to so many smaller real estate markets with their fat, cash-out equity. In Europe they say that when America sneezes, they catch cold - I say, when Californians throw around money elsewhere, the locals (except the real estate & associated businesses that are only to happy to make a quick buck) lose out.

Last edited by brian_2; 07-20-2006 at 05:47 PM..

 
Old 07-22-2006, 10:50 AM
 
1,309 posts, read 3,940,027 times
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"Due to the influx of Californians moving in, housing prices here are through the roof!" Look at the Arizona, New Mexico, Texas, Florida, Nevada, Oregon, Washington, Hawaii, Colorado or North Carolina forums and you'll see comments like this all the time. You'll even read of Northern Californians accusing Southern Californians of doing it.
Most people don't understand the dynamics of real estate pricing and look for convenient explanations. The Deep Californian Pockets Myth endures because it's simplistic, has whipping-boy appeal, and is accepted at face value as it passes from person to person. Like all myths, there is a granule of truth to it. A lot of Californians did migrate out of the state in the late 1990's and on into the present century. Some of them may have paid the asking price in markets where homes typically sell for considerably less. But people who are priced out of their home markets don't carry hefty home equities away with them. More than a few of them sold their homes at a net loss. And even if ex-Californians are high-bidders, that isn't sufficient market pressure to cause the escalation in prices.
Today's high home prices are much more a result of the failure of the stock market in the late 1990's. Many people had made a lot of money and were looking for a more secure investment than stock. So they pulled their money out and bought real estate. Whenever the real estate market has to function as a sort of ersatz stock market, you get these crazy prices (the fact that the Baby Boomers are going into retirement is another market pressure, but I won't go into that here). The Migrating Californians Theory just doesn't hold up under critical scrutiny. There weren't enough of them and they weren't rich enough to exert that kind of market influence.
 
Old 07-22-2006, 03:53 PM
 
437 posts, read 63,617 times
Reputation: 243
Good post Steve. I've mulled over those same thoughts myself. Sure, I tend toward the lashout approach, but I've heard much complaining from small town folks in various areas about people from the west buying second homes in communities and creating problems in financial and social terms for the locals. There's a good bit of sourgrapes and a healthy dash of realism in many forum rants these days, and I'm as guilty as the next ranter in most cases. Go with the half full glass and the rational approach, but be on guard for the instances where the rant meets reality.
 
Old 03-10-2007, 02:48 PM
 
47 posts, read 156,160 times
Reputation: 28
real estate price acceleration has been primarily due to the lowest interest rates in history. job growth is not expanding fast enough to account for it. population growth is a factor but not at the acceleration rate of housing prices. it was a combination of low interest rates, and a huge amount of speculation combined. add in a dose of panic because of the perceived climb in prices, and you have a boom.

if interest rates went back up to 8% housing prices would collapse. there is no economic growth rate to overcome the cost. wages are fairly stagnant.

the other factor very few people ever take into account concerning its impact on housing prices was the change in taxation on capital gains for home ownership. being able to sell your house and pay no taxes, then carry all that cash into the next house has been a huge factor.
 
Old 03-10-2007, 05:30 PM
 
1,868 posts, read 3,926,911 times
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Quote:
Originally Posted by sedonaaz View Post
real estate price acceleration has been primarily due to the lowest interest rates in history. job growth is not expanding fast enough to account for it. population growth is a factor but not at the acceleration rate of housing prices. it was a combination of low interest rates, and a huge amount of speculation combined. add in a dose of panic because of the perceived climb in prices, and you have a boom.

if interest rates went back up to 8% housing prices would collapse. there is no economic growth rate to overcome the cost. wages are fairly stagnant.

the other factor very few people ever take into account concerning its impact on housing prices was the change in taxation on capital gains for home ownership. being able to sell your house and pay no taxes, then carry all that cash into the next house has been a huge factor.
Well said!! And don't forget my favorite term "creative financing" as to why housing prices are what they are in Cali!! (Yes California should be more expensive because of the desirability and supply and demand blah blah blah....but not what we have seen over the last few years)
 
Old 03-10-2007, 07:11 PM
 
47 posts, read 156,160 times
Reputation: 28
yes indeed. and if we dig even a bit deeper. we can thank the chinese for that flood of capital, and buying up all those treasuries, keeping interest rates artificially low. if the govt had to raise interest rates to attract capital the boom would not have happened like it did.

of course on the other hand they could sink california (and everywhere else) overnight by stopping the capital flow.
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