Do you think housing prices are STILL going down in California? (Compton: low income, good credit)

[GracieJJ]

Man, i wish prices round santa clarita fell a little quicker. All the waiting is killing me. They say 2009 market will hit bottom, will that also be true to homes in CA in general or is it a late effect here?

[katenik]

i won't read all the whole thread to see if this has been mentioned, but i heard the stats in this article reported in the news today:

UPDATE 1-So. California April home sales surge on low prices | Markets | Bonds News | Reuters

make of it what you will.

[motoman]

Originally Posted by katenik

i won't read all the whole thread to see if this has been mentioned, but i heard the stats in this article reported in the news today:

UPDATE 1-So. California April home sales surge on low prices | Markets | Bonds News | Reuters

make of it what you will.

That's interesting. People are looking at a $385,000 house as a bargain, simply because at one point it was $505,000.

Let me ask you (not you specifically, just whoever is reading this), would you pay $2,500 to $3,000 per month to live in one of these houses? That's what you'd have to charge, at a minimum, to cover your costs on a $385,000 house. Again, you'll need to make close to six-figures to be able to afford it.

How many of you make $100,000 per year?

I am just saying that even at $385,000, on the whole, these houses are still overpriced.

[JTGJR]

Originally Posted by motoman

Let me ask you (not you specifically, just whoever is reading this), would you pay $2,500 to $3,000 per month to live in one of these houses? That's what you'd have to charge, at a minimum, to cover your costs on a $385,000 house. Again, you'll need to make close to six-figures to be able to afford it.

Are you including property taxes and insurance in your calculations? Remember, that $385K purchase will result in approx $325K mortgage including closing costs and impounds. That will put the mortgage-only payment in the $2000-2200 range.

But I'll agree that you'll still be more comfortable with the cost the closer you get to $100K income. Perhaps you underestimate the number of people who DO make better than $100K. Especially in 2-income families. Maybe you can start a poll on the board- could be interesting

[sheri257]

Originally Posted by motoman

The price decline is unprecedented because this bubble was unprecendented.

Not really. During the Great Depression we saw the same crazy interest only loans with balloon payments, etc. Yet prices dropped 30 percent, not 50.

I'm not saying it will be the same thing this time but ... this obviously doesn't look anything like the '92 crash where the price drops were slow and gradual.

[goodbyehollywood]

Originally Posted by motoman

That's interesting. People are looking at a $385,000 house as a bargain, simply because at one point it was $505,000.

Let me ask you (not you specifically, just whoever is reading this), would you pay $2,500 to $3,000 per month to live in one of these houses? That's what you'd have to charge, at a minimum, to cover your costs on a $385,000 house. Again, you'll need to make close to six-figures to be able to afford it.

How many of you make $100,000 per year?

I am just saying that even at $385,000, on the whole, these houses are still overpriced.

No question they're overpriced, but it's a lifestyle choice. A lot of people in premium-priced markets are accustomed to allocating 50% of their income for housing, especially if they don't have kids. That's just the reality of living in certain areas. People have been doing it in NYC for years. L.A., D.C., etc., have just joined the club. Prices were in the $300Ks in Santa Monica back in 1997; they're in the $800Ks now and not dropping very fast. People who pay those insane prices aren't necessarily rich. Many just make sacrifices; others make questionable choices.

[JTGJR]

Rightly or wrongly, I'm beginning to hear "analysts" saying the bottom is within the next few months. 22% increase in home sales (mostly foreclosures) from March to April, but still far below last April.

So, all you folks trying to time the bottom, start paying close attention.

[motoman]

Originally Posted by sheri257

Not really. During the Great Depression we saw the same crazy interest only loans with balloon payments, etc. Yet prices dropped 30 percent, not 50.

I'm not saying it will be the same thing this time but ... this obviously doesn't look anything like the '92 crash where the price drops were slow and gradual.

Actually, after World War I, prices fell over 30% in real terms. The gains during the Great Depression, which were simply gains off of the bottom following WWI, were simply given back by the early 1940s after the start of World War II. See the graph I posted a few days ago: "A History of Home Values".

You can't compare today to two World Wars, with a Great Depression squeezed in. Not to mention the utter lack of sophistication of the financial markets during that time relative to today. The two simply aren't comparable. The leverage levels achieved during this boom are unprecented in the US.

[EscapeCalifornia]

Originally Posted by JTGJR

Rightly or wrongly, I'm beginning to hear "analysts" saying the bottom is within the next few months. 22% increase in home sales (mostly foreclosures) from March to April, but still far below last April.

So, all you folks trying to time the bottom, start paying close attention.

Are these the analysts who were predicting an impending crash as far back at 2003 or the analysts who saw the median price at 8x the median income in 2006 and saw no end to the appreciation train?

This could be the approach of the bottom or a dead cat bounce that'll lure more suckers to their financial doom.

[motoman]

Originally Posted by goodbyehollywood

No question they're overpriced, but it's a lifestyle choice. A lot of people in premium-priced markets are accustomed to allocating 50% of their income for housing, especially if they don't have kids. That's just the reality of living in certain areas. People have been doing it in NYC for years. L.A., D.C., etc., have just joined the club. Prices were in the $300Ks in Santa Monica back in 1997; they're in the $800Ks now and not dropping very fast. People who pay those insane prices aren't necessarily rich. Many just make sacrifices; others make questionable choices.

How do they get qualified for mortgages? Those kinds of ratios aren't even allowed.