Santa Monica Housing Price Shockers (rent, how much, house)

[CA4Now]

Originally Posted by thelopez2

Now take a dink where each bought homes/condos for 300k and sold for 400k if each had put 20% down each would be walking away with 160k each or 320k for the next home.....

But what if they bought in say, 1989 at the top of the market, then had to sell in say, 1992; they'd be sunk. Same with all the other housing bubbles in the past 50 years, especially the most recent crash in 2008. It depends on when you buy and when you sell.

Not everyone makes a fortune in real estate. And not everyone buys a house to make money....some people just want to live in it.

[thelopez2]

Originally Posted by CA4Now

But what if they bought in say, 1989 at the top of the market, then had to sell in say, 1992; they'd be sunk. Same with all the other housing bubbles in the past 50 years, especially the most recent crash in 2008. It depends on when you buy and when you sell.

Not everyone makes a fortune in real estate. And not everyone buys a house to make money....some people just want to live in it.

I was addressing the high income to price ratio and giving an example how they can be so high in a high cost living area.

I'll disagree, everyone buying in LA is expecting to make money with their house either in selling of having a lower future living expense, thus making money. Why would you tie up 20% down or hundreds of thousand of dollars in home equity, when you can rent for a few thousands a month. Owning in LA not just a place to live.

Originally Posted by CA4Now

We had a mortgage rate of 13.4% or something like that in the early 1980s, actually down from the previous year.

Still, all realtors back then used that rule, and most of us had to put 20% down.

I've wondered how far back that rule of thumb went. It'd be nice to be able to buy something nice in LA for 3X a good salary, but it is just not happening. Too much old money and equity out there. Even 3x a 150k salary is not happening for a SFR. Sellers have figured out how much people can afford rather than buyers using a rule of thumb guideline.

[CA4Now]

Originally Posted by thelopez2

I'll disagree, everyone buying in LA is expecting to make money with their house either in selling of having a lower future living expense, thus making money. Why would you tie up 20% down or hundreds of thousand of dollars in home equity, when you can rent for a few thousands a month.

I couldn't disagree more....but then I'm probably from an older generation than you are.

It'd be nice to be able to buy something nice in LA for 3X a good salary, but it is just not happening. Too much old money and equity out there.

Not because of "too much old money and equity" out there, but because of escalating real estate prices here. There's plenty of old money and equity in many other cities throughout the country but without the astronomical residential real estate prices.

[thelopez2]

Originally Posted by CA4Now

I couldn't disagree more....but then I'm probably from an older generation than you are.



Not because of "too much old money and equity" out there, but because of escalating real estate prices here. There's plenty of old money and equity in many other cities throughout the country but without the astronomical residential real estate prices.

So why don't you rent? Any why do you have hundreds of thousands tied up in the equity of your house not doing much, just so you can paint the walls and hang pictures?

Nope, astronomical prices create more equity than anywhere else.

[CA4Now]

Originally Posted by thelopez2

So why don't you rent? Any why do you have hundreds of thousands tied up in the equity of your house not doing much, just so you can paint the walls and hang pictures?

I guess that's the reason people buy homes, right?

[jacktravern]

Originally Posted by genjy

You get to enjoy the house in the meantime, though.

You can also pass it down to your children or relatives so they can live rent/mortgage-free.

I guess u get a good nights sleep and all. But are u really enjoying when ru getting blitzed on the mortgage, taxes, and maintenance?

And what if you have no children?

[Big-Bucks]

Now that Santa Monica has banned short-term rentals I think you can expect SM prices to ease up.

[harhar]

Yep, some places in LA have very high house prices.

These past 15-20 years have been particularly crazy.

Don't know what else to say.

Santa Monica and prime LA locations will always be high. I'm sure that same 34k house in Whittier was probably 5-10k.

Average salary in 1965 was $7k. And that was one income.

There are many reasons for unaffordability in the desirable metro areas.

-----

Like another poster I don't think prices will be that much more crazy because that would be unsustainable. But most homes will at least double and most homes will probably be in the millions in 25-35 years.

[CA4Now]

Originally Posted by jacktravern

are u really enjoying when ru getting blitzed on the mortgage, taxes, and maintenance?

Blitzed? You write off your property taxes, you have unbelievably low interest rates today, and maintenance is part of owning the home.

And what if you have no children?

Most older people are not able to pass on their homes to their children, if they have them. (We know all of 1 person who inherited a home, and have lived here for decades.) They either use the equity to fund their retirement, or they need it to pay their medical bills in advancing age.

[miyu]

Everywhere on the west side had huge upside potential. My parents bought probably 25 years ago 2 properties in Mar Vista for maybe 300k total, and now they are more than 1.6M combined. Even another property they have in suburbs in podunk area of San Diego went from less than 200k to 800k. If they were to purchase a new home today though, I don't think they'd be able to pay for all the maintenance costs and taxes. Their property tax is so low right now... why ever sell. They are stuck and they would never be able to relocate.

Not sure where the market goes from here but I think it's going to be stagnant for awhile like somebody said. Interest rates can't get lower and people's incomes aren't getting higher. Cash buyers from China are fewer in number. Most of these old homes need to be completely rebuilt and once they are, their value will continue to bring overall prices up. But not without rebuilding. I think I might just help my parents rebuild.