Los Angeles Real Estate (Whittier, La Habra: real estate market, foreclosed, rental)

[user_id]

Originally Posted by miyu

I'm not sure if prices are going to come down much because there are so many rich people in LA. By looking at median income you are assuming people aren't renting - and most are... I hope it will come down though because it's definitely insane right now.

There aren't "so many rich people in LA" and the median income has nothing to do with whether you are renting or not. The median income tells you what the "middle" income is.

[JohnG72]

Originally Posted by JonathanLB

Uhh, yeah, we are. Why would I want to be right next to my parents in the other room doing god knows what? Or have a room right next to my sister? Trust me the space is very useful. I cannot imagine growing up in a house that small, 1,500 sq. feet!? Good god, where do you put everything? I'm sorry that's just a weird concept to me.

Now if you said like 3,000 sq. feet, sure, that'd be ok. But come on, 4 people into 1,500 sq. feet, not even 400 per person. I'm living in a place a bit under 1,000 sq. feet and it's like a tiny little box that I'm trapped in, haha.

So do I(853 sq ft).

I don't have lots of junk. Two flat screens, a computer desk, a few book shelves, a couple couches, a bed, a dining table....and thats really it. I have some stuff packed in about 30 boxes that are stored in an alcove.

And theres plenty of room to entertain...I've had as many as 10 people over at once.

I agree 1500 sq ft is a bit on the small side for a family of 4. But nothing unworkable. Grew up in an 1800 sq ft house, family of 4, and there was never any sort of crowding issue.

I agree with the posters who are saying that most of the issue is people accumulating too much junk.

[miyu]

Originally Posted by user_id

There aren't "so many rich people in LA" and the median income has nothing to do with whether you are renting or not. The median income tells you what the "middle" income is.

There are many who can afford the housing on the Westside, enough to keep the BS going.

I know what a median income is. But they should use the median income of home owners and home buyers to determine where the housing prices should be, not the median income of everyone including all the renters. It is skewed data. Obviously we are looking at very different populations of people here, some of whom are living next door to each other. Assuming that 50% of people rent. You are using the high end of the renter's income to estimate what housing should cost.

[user_id]

Originally Posted by miyu

There are many who can afford the housing on the Westside, enough to keep the BS going.

Where were they 10 years ago when homes were more affordable? Why have prices been moving downward for the last 3~4 years?

There are undoubtedly wealthy people in LA, but they represent a small percentage.

Originally Posted by miyu

But they should use the median income of home owners and home buyers to determine where the housing prices should be, not the median income of everyone including all the renters. It is skewed data. Obviously we are looking at very different populations of people here, some of whom are living next door to each other. Assuming that 50% of people rent. You are using the high end of the renter's income to estimate what housing should cost.

You want to know the income distribution of everyone, not just home owners. You are speaking as if everyone renting can't afford to buy, but that makes little sense. The single largest demographic of home buyers (i.e., first-time buyers) are going from renting to buying.

Furthermore, rents are usually at parity with the cost of ownership, the fact that they aren't today just indicates that real estate is still inflated.

[miyu]

Originally Posted by user_id

Where were they 10 years ago when homes were more affordable? Why have prices been moving downward for the last 3~4 years?

There are undoubtedly wealthy people in LA, but they represent a small percentage.

You want to know the income distribution of everyone, not just home owners. You are speaking as if everyone renting can't afford to buy, but that makes little sense. The single largest demographic of home buyers (i.e., first-time buyers) are going from renting to buying.

Furthermore, rents are usually at parity with the cost of ownership, the fact that they aren't today just indicates that real estate is still inflated.

Prices are moving down, but not enough in the mid-tier markets that I'm looking at. I'm stuck in a limbo between being way too qualified to rent and being way too poor to buy. I would be in the top tier of renters trying to shift into buying. I have been waiting for the last few years for an opportunity but it hasn't materialized. A lot of my coworkers are in the same boat with our incomes ranging about 140k to 300k. All of us are younger so we never got the chance to profit from a housing bubble and have to rely on our savings. I think prices will continue to drop but still not enough to make it desirable to take on the risk of owning a home.

I agree there is a large disparity between rental price and purchase price of a home. But I'm not sure if that is because there is a large socioeconomic gap between the renters and the buyers. Believe me, I wish prices would come down to reality. But the land price alone is so expensive in many areas.

My parents bought their LA properties 2 decades ago for less than 300k, now they are worth at least 800k. That's a nice profit for them to use if they want to trade it for a house at the current elevated prices. I think a lot of people get their leverage to buy a new home from their profits on their existing properties.

Honestly I think we might be talking about different pockets of the LA market.

[user_id]

Originally Posted by miyu

Prices are moving down, but not enough in the mid-tier markets that I'm looking at. I'm stuck in a limbo between being way too qualified to rent and being way too poor to buy.

What in the world does it mean to be "way too qualified to rent"? It seems as though you think renting is demeaning and you need to purchase a home so you can be "respectable".

In terms of the prices, they are still falling so one would have to wait. I really doubt the prices will come down quickly, they may not even decline in nominal terms.

Originally Posted by miyu

But I'm not sure if that is because there is a large socioeconomic gap between the renters and the buyers.

You are oddly categorizing people in terms of "renters" and "buyers" as if these are meaningful social categories. They aren't, people rent for all sorts of reasons and in some areas most people own even those close to poverty.

Originally Posted by miyu

I think a lot of people get their leverage to buy a new home from their profits on their existing properties.

A move-up transaction requires another buyer and as you move down the chain you're going to find a first-time buyer so this wouldn't support inflated real estate prices.

A lot of people plan to use their equity for retirement though so I don't think this is all too common in the first place.

Also, I'm not talking about any particular area in LA. You see the same thing in most areas, namely the houses were affordable ~10 years ago and they are still inflated today. What has changed? Well the unemployment rate is a lot higher.

[CA4Now]

Originally Posted by miyu

My parents bought their LA properties 2 decades ago for less than 300k, now they are worth at least 800k.

Are you sure? That sounds like a peak (2008) price.

Honestly I think we might be talking about different pockets of the LA market.

No kidding. It's hard to imagine people with incomes between 140 and 300k who can't find a house somewhere in greater L.A. that meets their qualifications.

[JohnG72]

Originally Posted by CA4Now

Are you sure? That sounds like a peak (2008) price.

No kidding. It's hard to imagine people with incomes between 140 and 300k who can't find a house somewhere in greater L.A. that meets their qualifications.

On the low end of that...$140K...its very hard to find a $420K(3x income) home in a neighborhood with safety, good public schools, and 45 minute or less rush hour drive to Downtown, Century City/SM, or South Bay.

This assumes a family of four, 3bd/2ba 1500 sq ft home.

[miyu]

Originally Posted by CA4Now

Are you sure? That sounds like a peak (2008) price.

No kidding. It's hard to imagine people with incomes between 140 and 300k who can't find a house somewhere in greater L.A. that meets their qualifications.

It's the westside and it's 2 properties for 800k total, definitely not a peak price...

I wouldn't dare commute from any other location. My bosses who earn way more can only afford condos. Some are still waiting to get into the market. Some only recently entered.

[miyu]

Originally Posted by user_id

What in the world does it mean to be "way too qualified to rent"? It seems as though you think renting is demeaning and you need to purchase a home so you can be "respectable".

In terms of the prices, they are still falling so one would have to wait. I really doubt the prices will come down quickly, they may not even decline in nominal terms.

You are oddly categorizing people in terms of "renters" and "buyers" as if these are meaningful social categories. They aren't, people rent for all sorts of reasons and in some areas most people own even those close to poverty.

A move-up transaction requires another buyer and as you move down the chain you're going to find a first-time buyer so this wouldn't support inflated real estate prices.

A lot of people plan to use their equity for retirement though so I don't think this is all too common in the first place.

Also, I'm not talking about any particular area in LA. You see the same thing in most areas, namely the houses were affordable ~10 years ago and they are still inflated today. What has changed? Well the unemployment rate is a lot higher.

Renting isn't demeaning. By qualified I mean financially qualified - we are among the top earners amongst renters and qualify for a pretty substantial loan, but still underqualified to buy due to lack of housing prices in our range. If you want to link financial means with personal value then those are not my words. Most people I know are renting still... doesn't mean anything. I'm not close to poverty and I choose to rent for good reasons so why would I dog myself.

One can only hope that you are right and that the housing prices drop. But it's hard to imagine that happening in coastal cities. I think the places where unemployment is highest have experienced equivalent home price decreases and vacancies. Maybe it's the case that I will eventually be pushed inland but honestly I would rather rent in a location that cuts down on commute time.