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Old 03-05-2012, 11:56 AM
 
25,801 posts, read 49,685,561 times
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The disaster of a home I bought sold for 20% of what a typical home sold for at the time...

Yes... it was that bad... the kicker is I had been saving for a down payment for years and had zero success trying to get a loan... even though I had 20% down and had 9 years of work history... all part time and full part time jobs.

Looking back.. the banks and savings and loans I went to did me a favor... at 21 I owned my home free and clear...

It taught me to think outside the box and provided the opportunity for sweat equity and a tremendous learning experience... I still own the home today and have had a total of two renters since I moved...

Still friends with neighbors in the old neighborhood.

My step-grandfather came to see my home two days after escrow closed... he could see my enthusiasm for what it could be... he told my Grandmother... he didn't have the heart to tell me I should just walk away... the home needed to be razed and I would have nothing but trouble living in the Barrio...

Later, I was able to take out a loan of 50% cash to equity and get all my money out and bought another project and started over... the rent covered my mortgage, taxes and insurance...

Several from my high school did the same... they moved every 2 to 3 years and 7 homes later... they are living in their forever home in the hills...

As to your original question... I don't know if an average person would have the desire to do what I did...

I bought an $800 dollar 1972 Plymouth Valiant in school and still have the car to this day... I used it to haul all my building materials on the roof rack by taking out the back seat... car now has over 300k... my car expense is $250 per month... gas mileage isn't that good...
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Old 03-05-2012, 12:00 PM
 
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Oh yea? So how much should you spend on a house then?
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Old 03-05-2012, 12:11 PM
 
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Originally Posted by thethinkman View Post
Oh yea? So how much should you spend on a house then?
You should spend whatever you want and can afford if it is your own money...

If you take out a loan... you are really renting money and then the old adage of keeping debt service to 1/3 or less of gross income has served me well.

Never had a car note or cell phone or cable and pay my card off each month unless they have some promotion...

Both my brothers bought modest homes in better areas then I did... they both had roommates till they got married... that extra $500 a month made all the difference when starting out...

Look and see what the least expensive home in the area where you want to live costs and ask if you can afford it... if not... look elsewhere... few can buy the perfect home starting out... life is about compromises.

A few years ago... when everybody and their brother was buying... I didn't... because the numbers didn't make sense to me...

The cashier at my local Safeway bought 5 homes over a two year period back in 2005-06... he was not alone. Today, he rents and all the homes were lost through foreclosure...

Just because money is available... doesn't mean you have to take it.
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Old 03-05-2012, 12:56 PM
 
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You should buy whatever youbcan afford? At 35k a year (which is an income alot of people will kill for ) you might possibly save 2-3k even after. 10years that's still not much maybe 20-30k . I doubt you can afford any Home even if there is no inflation


Before the cashier at subway bought those homes there were families living in those homes they sold the homes because due to high inflation they could no longer afford to live and the easiest option was refinance or sell your home. So now after the smoke cleared the families of the homes are now probably renting the guy at subway who took advantage of this situation and started flipping houses is now renting too cause whatever he made 5 years ago off flipping those houses still wasn't enough to live off. And the bank now owns this home and replaced the families with someone paying a high mortgage . Wonder why whatever city you goto the bank is always the largest building in town?
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Old 03-05-2012, 01:05 PM
 
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Originally Posted by 1200RT View Post
-Insane desire for people in other states to live here.
-Great climate in a relatively landlocked desert.
-10 million people living in LA county.
To this list I'd add:

--The area is largely built out, making it difficult to build new housing, especially in the most desirable areas.

--Government regulations/red tape under the guise of "environmentalism" prevent the building of new housing.

--Much of the new housing to be built in already built up areas would probably be high density, which neighborhood NIMBYs don't want because of perceived traffic/congestion it would bring (The NIMBY/environmentalism casuses are interrelated).

--Prop 22, which limits property tax increases, acts as a disincentive for local governments to build housing, because it costs more to serve residents than they get in tax revenue (I'm in favor of Prop 22, but I admit it's a disincentive to building new housing).

All of the reasons I listed are related to supply. If supply would be allowed to rise to meet demand, rents/home prices wouldn't be so high.

Last edited by mysticaltyger; 03-05-2012 at 01:55 PM..
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Old 03-05-2012, 01:06 PM
 
24,710 posts, read 26,777,106 times
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Originally Posted by dallasdan View Post
Basic supply and demand....Economics 101.
This is true, but what often goes unacknowledged is that supply is artificially constrained by government regulations and red tape.

Last edited by mysticaltyger; 03-05-2012 at 01:56 PM..
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Old 03-05-2012, 01:07 PM
 
24,710 posts, read 26,777,106 times
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Originally Posted by JohnG72 View Post
Why do you believe income is "so low".

Median household income for LA County is around $50k.
That actually is pretty low. Incomes throughout the rest of the US are the same, but housing costs in most of the rest of the country are much lower.
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Old 03-05-2012, 01:25 PM
 
25,801 posts, read 49,685,561 times
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Quote:
Originally Posted by thethinkman View Post
You should buy whatever youbcan afford? At 35k a year (which is an income alot of people will kill for ) you might possibly save 2-3k even after. 10years that's still not much maybe 20-30k . I doubt you can afford any Home even if there is no inflation


Before the cashier at subway bought those homes there were families living in those homes they sold the homes because due to high inflation they could no longer afford to live and the easiest option was refinance or sell your home. So now after the smoke cleared the families of the homes are now probably renting the guy at subway who took advantage of this situation and started flipping houses is now renting too cause whatever he made 5 years ago off flipping those houses still wasn't enough to live off. And the bank now owns this home and replaced the families with someone paying a high mortgage . Wonder why whatever city you goto the bank is always the largest building in town?
Some will never be able to earn enough to afford a home in their desired location because they are competing with others that have the same desires...

Los Angeles is not an inexpensive place to live... out in the valley and high desert... homes can be found for significantly less... not as much demand.

Other parts of the country... like Michigan have 3 story large brick homes with 4 or 5 bedrooms that could easily be bought for one years salary of $35k... I personally viewed several and would not have believed it had I not seen it.

The Safeway grocery store clerk bought new homes and fairly new homes... all were offered for sale the conventional way... none had tenants living in them when they were foreclosed... that was part of the problem... in theory being a successful landlord is easy... in practice it is not.

Rent may be high... just remember at a certain point... when it is cheaper to buy than rent... many will buy... so renting almost always provides more housing for the buck starting out...
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Old 03-05-2012, 01:26 PM
 
24,710 posts, read 26,777,106 times
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Originally Posted by sajae90 View Post
NO, that is NOT what I meant. I was speaking of LA, California. I was responding to the original OP question of why rent was so high in LA and the large amount of people who make low income.
Then you should say what you mean. What a concept!
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Old 03-05-2012, 01:32 PM
 
24,710 posts, read 26,777,106 times
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Originally Posted by sajae90 View Post
I don't understand; you can't follow the logic of what? That IS the current plan; to get rid of the middle-class. I didn't say that EVERYTHING cost more, but I was implying that the cost of basic needs are rising, which is a fact, I'm not talking cell phones or other electronics or candy bars; i'm talking having a roof over your head, healthy food (so you can see past the age of 50), medical/health care and insurance, car insurance, utility bills, medication, perscription glasses, etc.....you know....STUFF YOU CAN'T LIVE WITHOUT!
This is true....but only to a point.

I do think the cost of housing is a rip off in coastal CA (and even many of the inland areas aren't much of a bargain, either). But in most of the rest of the US, it's actually pretty resonable.

I do generally believe the inflation rate is understated, and has been since they made changes to the way the Consumer Price Index was calculated back in the late 1990s.

I will also say with respect to medical care, that a lot of what Americans deem necessary would, in fact, not be necessary at all if we would actually eat real food and live healthier lifestyles. More than 2/3 of us are overweight or obese and much of our health care costs are related to the high costs of treating diseases related to unhealthy eating/lifestyles (heart disease, diabetes, cancer, high blood pressure, stroke, etc...).

In short, we are getting screwed by forces beyond our control at times....but the larger part of is is we are screwing ourselves with our collective poor choices.

Last edited by mysticaltyger; 03-05-2012 at 01:40 PM..
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