Congestion is Driving Southern California's Market...

[mcmsinger]

"It was also driven by the need to impress and keep up with others."

Which by the way seems to be a common ideology in California, even today. Hate to stereotype but it's true. Great state that has something different but also has a few SERIOUS flaws.

I will still however move there. Ironic huh?

[Lovehound]

Originally Posted by mcmsinger

@ LoveHound,

You just proved myself right. People want to be here so bad & so many people want to be here - that it's exactly what is creating prices to go up. You have too many people wanting the same thing: which is a similar definition of CONGESTION..

I think the major difference between your opinion and mine is that apparently you are asserting that the congestion is the cause of the popularity, while I assert that the popularity causes congestion.

[Ultrarunner]

Originally Posted by Charles

Those years had super high mortgages too, putting downward pressure on house prices (opposite of today, low rates helping support house prices).

So, you bought low, probably refinanced, and rode housing prices up through the late 1980s? Sound about right?

I actually paid cash for the place AS-IS... the home was in very bad shape... I could see the dirt crawl space under the bath room sink as a result of a leaking sink trap that rotted away the floor.

My savings were enough for a down payment in a nice area... I've been paying into Social Security since age 12. I decided to take my down payment money and buy a run down inner city home for cash... more like a cottage at 800 square feet.

At one time, a 12% fixed rate loan was considered outstanding

I never did refi... after I finished everything needed, I rented the home when I found my next project house... I did refi the next home, rented it and started on my next project house...

The early 80's had very high unemployment, record mortgage rates and a ton of foreclosure properties... especially in older, inner city neighborhoods... just like today... except the mortgage rates are at record lows.

[mcmsinger]

^ Renting is usually a great way to actually make money from real estate.

I don't think flipping is really that much fun. Too much risk, work and annoyance. Also you get taxed for any flipping profits.

[Lovehound]

Impressive story Ultrarunner.

Mcmsinger it isn't about fun at all. And the profitability of flipping depends on the times. It was really good until recently, then it crashed and I'm sure lots of people lost money, but there's no reason to not expect it to improve. The big question is, when? Not now for sure.

[John23]

I've lived here for a long time, I've never bought the weather arguement.

The weather has always been good.

-During the Rodney King riots and afterwards (when many fled LA).

-During and after the northridge earthquake (when more people fled).

-At the bottom of the 90's real estate cycle, the weather was just as good as it is now.

Why wasn't everyone rushing to buy then?

I think the housing market has to do with...

-Terrible schools. Less attractive schools, more demand for that area, higher $$$. The quality of schools has sloped down at a 90 degree angle for the last 15 or 20 years. Its not so much that everyone clamors to live in LA. They just want to live in smaller and smaller nice areas.

-Baby boomers holding on, extending their activities much further than anyone would have realized. If they had sold out when they "should have" (up for debate), then prices would have come down in the 2000's.

-And basically low interest rates, and govt manipulation. Since the late 90's at least, the market hasnt been able to function on its own. Much like a card player thats used every trick in the book to stay in the game for 12 years. When on his own, he would have been out in 6. Eventually these things will fully reverse.

Where would homes be if mortgages were 12% again? Much lower than today. I think it'll take another 3-5 years at least to hit a real bottom.

[HarryKerry]

I think the high paying jobs have more to do with it. Of course, legions of poor or working class, but the entire LA metro area has affluence everywhere that seems to support the price gouging here.

[EscapeCalifornia]

Originally Posted by John23

-Terrible schools. Less attractive schools, more demand for that area, higher $$$. The quality of schools has sloped down at a 90 degree angle for the last 15 or 20 years. Its not so much that everyone clamors to live in LA. They just want to live in smaller and smaller nice areas.

I think this is an important part of it. People look at the median income and median home prices for the region and rightfully say they don't add up. But the question shouldn't be whether the average family can buy the average house. It should be whether there's enough homes in safe areas with good schools for the number of people with high incomes. I believe the answer is probably yes. Those with lots of income, cash, or equity to transfer will outbid the rest to live the parts of SoCal that are still livable. Those without have to settle for marginal neighborhoods with marginal to poor schools.