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Unfortunately I discovered something about realestate.com and that is many of the houses that are in escrow and even that sold awhile ago are still up there. Many people don't take listings off until the house closes and then some, so I would be cautious here of weighting that data too heavily.
You are right about the investors they are in your state right now . . . Austin Texas. But one doesn't need to be on site to say over the phone, "Buy, Buy, Buy." They know this real estate well enough. They won't need to see it.
SHANNON94:
.....Actually I have some inside info on whether these homes have sold or not......there are alot of homes just "sitting".
What I meant about investors leaving the state is that they are not buying in Cali anymore.....not they have physically LEFT the state. lol Your right, they are buying in Texas right now. And you should see all the California plates I see out here now too. I just read yet another article that more people are leaving Cali than moving in. Yeah...the pop is still going up but thats mostly due to immigration and births.
So, you're young and don't remember 1990-92? Look up the records. Then look at what happened after that.
Oh, and while you're looking at records, go back to previous boom and bust cycles. My parents sold our house in Santa Barbara for $75,000 and we thought there was no way it could go up from there. Now it's worth at least 2 million.
It's easy to look at short-term trends and forecast the end of the world (and you may be right, we don't know when the next earthquake, tsunami, war or asteroid will hit) but barring some unforeseen external calamity, CA will bounce back just fine in a couple years. In the meantime, enjoy feeling like you're right. The clock is ticking, starting right..... NOW!
I grew up in the OC. My parents bought their house (a 2-bedroom in a nice, no-frills, no-association neighborhood in South County) for $190K in 1991. Now it's about to sell for nearly a million and they're taking that cash straight to Hawaii. (Dad's a surfer, mom's a beach bum -- but not here. She hates the beaches here. Guess she was spoiled by their life on Kauai, pre-me.)
I agree with other posters that this is simply the law of demand at work. However, we have a serious problem on our hands. I'm a teacher, employed in Anaheim, and I make **** fine money for a twenty-something. Mmy husband and I together make about $120,000 a year. And yet we CAN'T AFFORD A HOUSE.
We aren't in debt. We have two car payments (necessary, since I commute to OC and he commutes to Marina Del Ray from the South Bay), but other than that, our net income could go straight to a mortgage. Last time I checked, the most we could qualify for (without one of those retarded I-have-to-have-this-house-even-though-I-really-can't-afford-it mortgages concocted by lenders who smilingly collect their commissions and then say, "Hey, it was all in print on the contract you signed. Boo-effing-hoo," when the interest rates take a tiny upward hop and the payment leaps $1000 skyward) was $450,000.
Now, I don't know where y'all are looking but there are no houses (except in sketchy neighborhoods) I'd want to raise kids in for that dollar amount available. I imagine there will be at some point in the next few years and maybe that's reason enough to stay. But why would the prices drop significantly when -- as many of you have pointed out -- there are plenty of people here who are dumb enough to pay $600,000 for an ugly 900 sq. ft. two-bedroom condo in Redondo? (Oooh, that rhymed!) Oh, and then pay the $300 association fee that goes with that condo?
So, I'm supposed to raise my two kids and our dog (and my husband) in a condo, with no yard for them to play in and probably not enough room for each of them to have their own bedroom when they reach puberty? If we do somehow miraculously manage to get hold of a house in an okay neighborhood, it will be a major fixer-upper, and I'll have to use all my skills from growing up a contractor's daughter and being a good reader of how-to manuals to piece together a home out of that. In my parent's house, that process has taken 12 years of near-constant renovation.
Ummm... no thanks.
As if the schools we have down here don't suck enough already, what's going to happen when the older teachers who own homes now retire and the newer ones realize that on their salaries, unless they marry extremely wealthy individuals, they will never own a home? If they're smart enough, and if they like snowboarding and mountain-biking (and realize that there's a requisite three-hour drive to get to a mountain through LA traffic) more than they like surfing (like I do), they're getting the hell outta here.
It's either Tahoe or Denver, mes amie. Yes, I'll take a $9000 pay hit, but a 5 bedroom, 3 bath, 2300 square foot house in Denver costs, oh, $275,000. My kids will have grass, and other kids who will play with them in the neighborhood streets, where it will be safe for them to have a game of roller hockey or ride their bikes without fear of being run-down by some poor road-raging schmo who just spent two hours on the freeway trying to get home the 17 miles from Santa Monica to the South Bay.
So guess what that leaves all of the parents that are still here? Junk public schools with dumb "I'm-doing-my-job-and-my-job-only" teachers.
What about new cops?
And firefighters?
What about the architects and the engineers and the interior designers who ONLY make $80,000 (boo-hoo) a year?
What about the nurses?
The General Practitioners?
The accountants?
How the heck are they going to afford to live their lives here?
Bottom line, ladies and gentlemen, I have NO IDEA. If anyone can explain this to me, I'd be glad to hear it.
I dont recall EVER saying that California properties wouldn't go up again.....I just think it will be a longer downturn than 2-3 years.
Oh, my bad! I got a different impression. Yes, you might be right about the length of the downturn, that's a very tough call because of the number of unpredictable factors weighing on the market.
Quote:
Originally Posted by shannon94
And I hate to say it but Cali ain't what it use to be....take it from a native..
Alright, kiddo.... you asked for this one!
I was born in Santa Barbara in 1956 and have pleasant memories of stopping at that country store in Thousand Oaks in our old Woody station wagon. It was a long drive through the countryside to get to Los Angeles. And my goodness, those sparkling new freeways with their fancy interchanges! Of course half the freeways weren't there yet but to us they were amazing, and I'll never forget seeing TRAFFIC at ELEVEN AT NIGHT! My goodness, we were all home watching Father Knows Best by 8 PM in Santa Barbara!
And the surfing scene, well, it was pretty small and laid-back. Nobody had wet suits yet, they roughed it. But they had the waves to themselves, no need to fight all the other people trying to catch the same wave.
Driving north to San Francisco was awesome. The 101 was so empty between SLO and Salinas, I recall going 5 minutes at a time without seeing another car! And the San Marcos Pass, it was a windy old road and we'd wave to the few people we saw, we'd also have to honk at the blind curves on the one-lane stretches to make sure we didn't run into an oncoming car.
It was paradise. You're right, it's not what it used to be. You should hear all the locals griping about how Austin has changed, you'd think everyone would be leaving but property values are skyrocketing here because sometimes change isn't all bad, and certainly not to those who don't know what they missed "back in the good old days."
Now, go get yer slippers on and give yer momma a kiss goodnight before I read you a bedtime story, you young whippersnapper!
I will say that I'm very torn though. Mostly, if I'm honest, it's because I'm ubercompetitive. I want to be "as good" as the cute blonde with the implants in the Benz convertible next to me, and if living in SoCal is the measure of that, then I've failed. My imagination -- and I do have a wild one, so please feel free to correct me if I'm wrong -- tells me that that's what bums so many of us out. We've been sold this idea that the beautiful and successful (I'm both, but apparently not a powerful enough combination of the two ) can make it here, if only because they're prettier and smarter than everyone else. It's Hollywood BS, which we (and everyone else with access to cable) have been eating up since the 20s. So somehow, if you can't make it here, you're less than good.
I effing hate losing.
Then again...
If I get to snowboard every weekend, trail run every morning, ride horses in the afternoons when I'm not mountain biking (or planning lessons or grading essays -- 200 of which I'm currently ignoring in order to read your posts and rant -- ARG!) and raise my kids where the schools are good, where there are only 23 students to a teacher (imagine a high school classroom with less than 35 students in it. "Ha! Impossible!" you say. Yet, I wonder if you all even know that's what our classrooms look like. Oh, nevermind. Better not go down that road...), where my kids can play in a front yard with friends from the neighborhood (why doesn't that seem to happen here?), and where our mortgage doesn't preclude them from having their own bedrooms, playing league ice hockey or softball or going to summer soccer camp, then I'd say that's a durn fine trade-off. (And a durn long sentence! But, grammatically correct. Don't worry; I checked.)
At the end of this long post (bless you, those of you who managed to hang on this long), I think my kids deserve better than what I could give them here, even if it means I don't get to stare down the Barbie next door when she throws her new boobs and her diamond in my face while making a mental checklist of the reasons I'm as good as she is.
But still, can't I be effing p.o.ed that $120,000 isn't enough to live in the state where I was raised?! That a person entrusted with the education of the children who live here can't afford to live here?! That a girl with a Masters (in Literature, not Education -- puh-leeze) who went to Oxford University and got her masters from the University of California didn't have the foresight to make a ton of money in tech instead of doing something for someone other than herself?
Eff it.
I guess we'll just have to content ourselves with the surf at Kalaheo and the freshies at Vail.
How the heck are they going to afford to live their lives here?
Ummm.... rent? I just spent a few weeks in LA this summer and looked at some rentals. Prices were comparable to Austin for equivalent quality and location, but salaries are higher in LA.
But that's just my experience. Haven't lived there longer than 3 months at a stretch and that was in a rental in Studio City, nice place up on a hill with a great view, shared a 3/2 with a brilliant woman from Morocco and we split the $1200 a month down the middle. Sweet! That was just 3 years ago.
The discrepancy between renting and owning in CA is mysterious to me. I guess it's based on long-time owners who have low mortgages or they're taking tax deductions on their losses while waiting to sell, who knows...
OK, 3 billion trying to live there is an exaggeration. How about 300 million? I cut it by 90%.
This was a reference to an earlier posting in this thread which stated that 6 billion people want to live in California.
Not even 300 million people want to live in California. I'm the only person I know, literally, that actually would consider moving there because I find it a desirable place to live. In the midwest, south and east, to say "I want to live in California" will draw strange looks from people who think that you are crazy.
Quote:
Originally Posted by deeptrance
Econ. 101 lesson --- prices are high because people are willing to pay them. I travel to Cali all the time and nobody is standing guard on the borders forcing me to stay there and buy property. Supply and demand. Yes, costs such as taxes, earthquake proof engineering, and regulations all drive up the cost of building in Cali. But people are paying it. Why? BECAUSE THEY WANT TO! If Cali cost the same as any place else in the country, do you really think it wouldn't be flooded with people from all over the world? The prices reflect the current "premium" that people are willing to pay to live there. Nobody forces them to pay, they pay because they think it's WORTH paying more to be there.Just taking this one example, if you eliminated all taxes then housing prices would be even higher. People make decisions about buying a house based on the price of the house, the taxes, and a lot of other factors. Taxes don't cause high prices in situations where people have the choice to move to lower-tax regions. Your argument is DOA. You really should take just one basic economics class, or just read a textbook or something. There is absolutely no rationale behind your claims above. Yes, there is such a thing as speculative demand, but that's been going on for decades in Cali and if it were so imaginary then the housing bust of the early 90s would have been permanent. But it wasn't because there truly is high demand relative to supply.
Yes? I fail to see your point. I see that you have the most basic concept of macroeconomics down, however, this is a microeconomic market and situation. Right now California has far too many speculative buyers, which means construction has produced too many houses. One of the many spillover costs of this situation is the flood of people moving out of California and driving up property taxes in other areas. In keeping with negative externalities, the market has oversupplied and at too high a price.
However, because there are multiple substitutes for housing (ie, moving to other states) people are choosing something else. Demand has fallen in the face of skyrocketing supply. Because price is so high, supply has quadrupled as more and more suppliers are willing to supply at the higher price.
Right now, demand for housing in SoCal is highly elastic. No one has to live there, substitutes are amazingly plentiful; therefore, demand for housing in SoCal is elastic with respect to price. The logical thing to do is to lower the price and increase revenue.
Quote:
Originally Posted by deeptrance
And you say "people can't sell houses" --- Whiskey Tango Foxtrot Then how is anyone selling their houses and why are prices high?
That's the point. People aren't selling their houses. In San Diego and Los Angeles, houses are staying on the market for longer than 180 days, which is a terrifying prospect for real estate attorneys, sellers and agents. 90 days is considered overlong.
Prices are high because of factors listed above. In order to generate revenue, a rational person would have priced a house above what the price of their mortgage plus interest. However, such houses are not worth what they are priced. It is all a game that has been manipulated by real estate agents and house zoning laws, which creates artificial demand and appreciates value on a home that isn't real. It's all speculative. It's like saying, "this house SHOULD be worth this much" when the home is worth less than half of that.
The problem has been exacerbated by high taxes, the cost of sprawl, and the flight of people into underdeveloped areas that drives up cost. Construction material costs, the liens of people who could not afford to sell their homes and foreclosed on their mortgage, etc. There are a TON of people in Southern California right now that are saying the same things people are saying in this thread: This place is FANTASTIC, this is the best place ON EARTH, etc. Well, it isn't. Those are excuses, not realities, and highly subjective ones at that.
If you open a store and you can't sell any of your items because they're too high-priced, then you lower the prices or you go out of business. I have no idea what on earth you're talking about, it's pure nonsense! Market prices are what they are, there's no disputing it. Yeah, right now there's a little dip in the market. Happens on a regular basis. It will bounce back and I'd back that statement with cash (if only I had some... )
Yes. This is true. And this is why housing prices have fallen, and the bubble has burst. It was illusory profit, nonreal money, poor credit standards... Whatever you want to call it. However, a store cannot be compared to a house. The monetary valuation is so completely different that comparable market structures do not exist. I don't have to close my store if my exceptionally wide variation of revenue-generating goods have prices that need to be adjusted; I cannot say the same thing for a house, which is either sold or isn't. There's one price, one product, one good with a house.
It will bounce back only once the next generation of idiot investors waits for a clueless twit to come along. Speculative buying is evil.
I've studied quite a lot of economics, and I have to say: Retake your economics courses, because "econ 101" is meaningless. Even when bolded. Microeconomics 101 is a better classification. Furthermore, at least from my perspective, this involves a lot more accounting info than anything.
There are no options and it is an honor in those fields to be employed in either NY or LA.
Yeah, that's true. And I attend one of the best undergraduate/graduate programs in the nation, for all three areas (business/law/engineering), not just one. I had ten friends that graduated from law school last year, went to California, and not a one of them is there anymore.
I don't know anyone who even tried to make it in NYC.
It's just so expensive, I don't want those cities to eat my best earning years away. NYC definitely isn't my thing, however New Yorkers may feel about their city, but California has to offer me more than sunshine and beaches to excuse what it will do to my investment income.
They may need these professions to survive, but if they keep charging those prices they sure as hell won't be getting them from us. I can earn just as much in Texas or Florida sans the mind-numbing taxes!
Ummm.... rent? I just spent a few weeks in LA this summer and looked at some rentals. Prices were comparable to Austin for equivalent quality and location, but salaries are higher in LA.
But that's just my experience. Haven't lived there longer than 3 months at a stretch and that was in a rental in Studio City, nice place up on a hill with a great view, shared a 3/2 with a brilliant woman from Morocco and we split the $1200 a month down the middle. Sweet! That was just 3 years ago.
The discrepancy between renting and owning in CA is mysterious to me. I guess it's based on long-time owners who have low mortgages or they're taking tax deductions on their losses while waiting to sell, who knows...
I guess I should have clarified. What I meant was this: how do you afford to raise a family and build equity in something so that you don't have to rent for the rest of your life when junk houses cost an arm and a leg?
Anyone can afford rent here, look at the people who live 3-4-5-10 families to an apartment. It can be done. It just isn't done lastingly. And I imagine quality of life in such a situation ain't that great.
Not even 300 million people want to live in California. I'm the only person I know, literally, that actually would consider moving there...
My obviously silly exaggeration was based on a global survey of where people in OTHER countries would live if they could live anywhere, not a survey of just the people you happen to know. I bet 300 mil is probably accurate but it's really pointless because they can't get here and the don't know what they'd find once they got here, it's all based on the allure of Hollywood and surf and Disneyland, etc.
Quote:
Originally Posted by coldwine
Right now California has far too many speculative buyers, which means construction has produced too many houses.
Right. Same thing that happens in every hot real estate market. So the market corrects itself. Kinda like how Google and Yahoo and Amazon have all recovered in the wake of the shake-out, so the CA market will shake out, but again I'm making BAD ANALOGIES as you pointed out so well below:
Quote:
Originally Posted by coldwine
...a store cannot be compared to a house. The monetary valuation is so completely different that comparable market structures do not exist. I don't have to close my store if my exceptionally wide variation of revenue-generating goods have prices that need to be adjusted; I cannot say the same thing for a house, which is either sold or isn't. There's one price, one product, one good with a house.
And for many more reasons, my analogy to a store was absurd.
However, the differences are somewhat telling in that a store usually carries things for which there are many substitutes. I agree with your analysis, in the short run, about price elasticity of demand in California and that it's in a relatively elastic phase, but it won't bend too much. CA real estate, far from being a commodity, is extremely scarce relative to its long term supply and demand. In the short run, you're correct, there's an over-supply. But this is very typical if you look at any housing cycle, whether national or local. When I moved to Austin in 1990 it was just coming out of its 4-year bust during which it held the top spot in the nation for those "see-through" office buildings with over 50% vacancies. They rushed things. Now look at Austin. Every new highrise is pre-sold before they get the cranes in place. And prices are shooting up. I never foresaw this because I looked around me and saw nothing but endless Texas sky and land as far as the eye could see. In other words, no scarcity. Yet to be in CENTRAL Austin is now scarce and in high demand.
Such will be the turning of the tide in Los Angeles and other CA cities. When? It's all speculation, isn't it... But one thing's for sure, there's a lot more built-in natural scarcity in CA than there is in TX. So it will continue to be among the highest priced places in the world. If climate changes or the government collapses or something, then all bets are off. But ceteris paribus prices are going to rebound within a few years. And not just because of "stupid greedy speculators." Some people, like you and me, kinda like the place. It doesn't suck to have nice weather all year, be able to go to the beach, have every imaginable culture at your doorstep, and see those dramatic mountains (when it's not fogged or smogged in). I dunno. Just chit chat, don't take me so seriously, OK?
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Keeping up with the Joneses
Keeping up with the Joneses -- Part Deux
) can make it here, if only because they're prettier and smarter than everyone else. It's Hollywood BS, which we (and everyone else with access to cable) have been eating up since the 20s. So somehow, if you can't make it here, you're less than good.
Then how is anyone selling their houses and why are prices high?
)
