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California is very expensive, but it isn't because everyone wants to live there. Nor are three billion people trying to live there.
OK, 3 billion trying to live there is an exaggeration. How about 300 million? I cut it by 90%.
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.
Quote:
Originally Posted by coldwine
California is expensive because it has high taxes that gouge the eyeballs out of business
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.
Quote:
Originally Posted by coldwine
It isn't real demand that drives the Californian housing market-- it's purely imaginary in the minds of creditors and owners. Which is why houses in San Diego and Los Angeles are impossible to sell.
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.
And you say "people can't sell houses" --- Whiskey Tango Foxtrot Then how is anyone selling their houses and why are prices high? 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... )
Yeah there's demand!!! For more affordable housing!!! lol Just watch what happens to places like San Diego when ARM's adjust and the new lending standards have really kicked in!! Last time I checked there is a 9 month supply of unsold homes!!! This housing phenomenon of late is different than anything California has seen .......and so will the bust be!!!
Hubby was just in our home town of SD on business and said there were 8 homes on our old street up for sale!! According to our neighbors..... they have been up for sale for quite some time!!!
I think there's enough supply now......why aren't people buying it up??? Hmmmm...............
This housing phenomenon of late is different than anything California has seen .......and so will the bust be!!!
I think there's enough supply now......why aren't people buying it up??? Hmmmm...............
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!
Another point is that there are plenty of investors always waiting to get a great price on property and let's just say they aren't waiting and salivating in North Dakota or Alaska. Caifornia is either in a sellers' market, a buyers' market or on the way to one or the other. If people aren't buying right now it is because it is either the holidays and/or they are waiting to see if the prices are going down.
Some real estate is just too valuable and in coveted areas close the sun and beaches with the only drawback really traffic, cost of living, and city crime well that t'ain't anything. Maybe a lot of folks that scream about California busting have never lived in snow, or year round rain and gray, or in humid, buggy areas. Maybe they have never lived in a really dull place with little to no stimulation, beauty or diversity. Maybe they've never lived in a really flat place. If one had, they would know Cailifornia has so-o much to offer in the way of terrain, climate, diversity and beauty and they would also know its value. Just some things to think about.
It is sort of like saying the gorgeous, talented, experienced, expensive prostitute with the subtle body odor won't get any business, especially if his/her price is coming down. Sorry for the analogy, but hey, we are all just human. We all like pleasure. It is just a matter of what pleasures and pleases us. In the end the investors know this, more then most of us do about ourselves.
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!
Your right I am young......37!!! lol. I'm not forecasting the end of the world...and I know about 90-92. This is a different dynamic......you can't compare this to that. Falling incomes and fewer job opportunites do not bode well for the middle class.
My in laws currently have a home worth 2 mill as well........many in there neighborhood are up for sale and guess what.......they are not selling!!! NOT SELLING!!! I know.........in a couple of years they'll be worth more and THEN they will sell!! That makes all the sense in the world!! Forgive me....
Another point is that there are plenty of investors always waiting to get a great price on property and let's just say they aren't waiting and salivating in North Dakota or Alaska. Caifornia is either in a sellers' market, a buyers' market or on the way to one or the other. If people aren't buying right now it is because it is either the holidays and/or they are waiting to see if the prices are going down.
Some real estate is just too valuable and in coveted areas close the sun and beaches with the only drawback really traffic, cost of living, and city crime well that t'ain't anything. Maybe a lot of folks that scream about California busting have never lived in snow, or year round rain and gray, or in humid, buggy areas. Maybe they have never lived in a really dull place with little to no stimulation, beauty or diversity. Maybe they've never lived in a really flat place. If one had, they would know Cailifornia has so-o much to offer in the way of terrain, climate, diversity and beauty and they would also know its value. Just some things to think about.
It is sort of like saying the gorgeous, talented, experienced, expensive prostitute with the subtle body odor won't get any business, especially if his/her price is coming down. Sorry for the analogy, but hey, we are all just human. We all like pleasure. It is just a matter of what pleasures and pleases us. In the end the investors know this, more then most of us do about ourselves.
Born and raised in beautiful San Diego.....but refuse to look through rose colored glasses because of the friggin weather!!
By the way ...investors are leaving for other states now.............guess we'll see what happens. They weren't buying during the summer either. I watch realtor.com weekly.....the same houses have been sitting there for months and months!! Lots of reducing going on too.
The friggin' weather here IS rose colored glasses . You'll have to excuse me, I have spent many years in Seattle and Portland, so I know how the climate can affect one's outlook AND IT CAN. This is part of why people move here too, but I digress . . . .
A house is only worth what it can sell for, so if a house isn't selling for 2 million it isn't worth 2 million. It may be worth 1.8 or 1.7. I bet if they lowered to those prices they would see it go. Shall we have them test this theory?
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.
One thing that is true right now is that the coast is not for the middle class, not if one is to come here and buy. But I don't shop at Barney's either. There is Nordstroms, or Macy's, or Target. or Walmart, so I'm not going to cry about those waiting for the holiday sales at Barneys. All of LA may not be for the middle class either, the supply and demand will dictate this. Don't you just love the power us American's can have with our feet?
...I know about 90-92. This is a different dynamic......you can't compare this to that. Falling incomes and fewer job opportunites do not bode well for the middle class.
Agreed. So the world's upper-classes will descend upon California as they always have. Yes, it's a slightly changed dynamic, but California is California and it's scarce. Just as FWGolfer said, investors are waiting to pounce on properties when they think the bottom has been reached. I give it a couple years, so you'll seem like you're correct during that time but then watch out for people like me who will come storming into Cali gobbling up bargains and driving prices right back up to where they were and beyond. It's the way things go.
Quote:
Originally Posted by shannon94
My in laws currently have a home worth 2 mill as well........many in there neighborhood are up for sale and guess what.......they are not selling!!! NOT SELLING!!! I know.........in a couple of years they'll be worth more and THEN they will sell!! That makes all the sense in the world!! Forgive me....
You're forgiven, I've been just as sarcastic. Yes, anyone trying to sell right now is doing so at a bad time. If they're forced to sell, it's tough for them and maybe they'll only make a 50% profit on the sale of their homes. No, I'm well aware of all the people who have 105% mortgages and that's part of the game to concentrate wealth. But there are a lot of wealthy people in the world and they'll keep coming to CA. Conspiracy theory much? Nah, I'm just talking about the way the game is played. Entice people to get into mortgages they can't afford and then eat their property out from under them. The rich will get richer, the middle class don't exist any more, and the poor are screwed unless they're smart enough to resist the temptation to fall for those "home improvement loans" and other schemes designed to impoverish them. Oddly, many of the most well-off people I know in CA today are people who made their money working in menial jobs who simply held onto their homes and didn't get over their heads in debt. They're the happy side of this otherwise bleak story.
We shall see how it all plays out, but I'm sure you'll appear to be spot-on for at least a year if not 2 or even 3! And by then we won't be in contact any more, just remember some guy calling himself "deeptrance" told you so when those values start shooting up again.
I actually agree with alot of what you said DEEPTRANCE and 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. And I hate to say it but Cali ain't what it use to be....take it from a native..(well until 7 years ago). Heck I actually wish properties didn't fall......my in laws are in their 80's (hubby 10 years older than me) if they were to die tomorrow we would be able to sell 2 properties...together it would be about 2.5 million!!! Gasp!!!
Gee they already have the 40 year loan ........maybe they will come up with the 80 year loan and your offspring can just take the loan over when you die...that way it can keep going and going and going!!!!! lol I guess we'll see.
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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.
Then how is anyone selling their houses and why are prices high? 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... 
)
. You'll have to excuse me, I have spent many years in Seattle and Portland, so I know how the climate can affect one's outlook AND IT CAN. This is part of why people move here too, but I digress . . . 
CA vs Austin
