California Home Sales up 65% (San Francisco, Santa Monica: renters, buying, per square foot)

[motoman]

Originally Posted by EscapeCalifornia

Even now, house prices are so far beyond people's actual income levels that even $500k for a 40 year old tract house in the Valley is a joke. If a household brings in $80k, they can honestly afford maybe $250k or $300k at the most. Now without the crutch of easy credit for anyone with a pulse, the housing market is finding out that people in LA don't really all make movie star pay.

I could kiss you. You are one of the few that actually understand basic math.

I'm sure you've seen my posts on this thing about the housing market. As you said, it's pretty simple. If you make a certain income, you can only afford so much house. Pretending you can double or triple that ratio is just lunacy.

"What? You mean I could never afford a house before, but now, even though I make only $50,000 per year, you say I can afford a $500,000 house? Where do I sign?"

That example of the folks making $165,000 per year that can't afford their house. I am sure you realize, but I am stating for the rest of the readers, that they are in the top 5% of wage earners in the entire country. Meaning that 95% of the population makes less than they do. And THEY can't afford their house.

So what that means for the rest of us is that well, you're seeing it. Kaboom.

Economics 101.

[Charles]

Southern California home prices continue to slide - Los Angeles Times

[JonathanLB]

haha, hey most of us in the film industry don't make that much either! It's a tough business.

This was my argument with some of these condo projects downtown as well. I'm an investor in three downtown L.A. condo projects, and a home-owner in one of those. I made a good amount of cash on the first two. The third, in this market, just opened up and it's a tough sell. I said almost two years ago when the market was still solid that I didn't understand how, in downtown Los Angeles, which is going to be fantastic in several years (like 5 years-plus) but isn't there yet, they were going to ask $600 to $700 per square foot. This isn't Manhattan yet. Maybe one day but not now. You can't ask $700,000 for a 1,000 sq. foot condo, that's just insane! But what did I know, I was just a young adult, they were real estate experts. Now that building can't sell its units at their $600-700 sq. ft asking price, so I guess I did know something after all -- common sense!!! Haha. Fortunately I got in with my condo at just less than $400 per sq. ft., so while the housing crisis and downturn has certainly eroded some of my home's value from its highs, it hasn't and won't ever go below what I paid because when I bought the condo at pre-construction prices, I got a reasonable deal. Unfortunately, a lot of other people weren't so lucky. In our building now you're going to be lucky to get $500/sq. foot. It's more common you'll see units sold around the $450 range per sq. foot.

[streetscenes]

Originally Posted by EscapeCalifornia

Even now, house prices are so far beyond people's actual income levels that even $500k for a 40 year old tract house in the Valley is a joke. If a household brings in $80k, they can honestly afford maybe $250k or $300k at the most. Now without the crutch of easy credit for anyone with a pulse, the housing market is finding out that people in LA don't really all make movie star pay.

The reason sales have picked up is that there are now lots of homes in that $250k to $300k range, a couple of years ago they did not exist. There is also lots of inventory under $250,000 or even under $200,000. With all of the doom and gloom talk in the media there are still: 1) people with money for down payments, good credit and a desire to buy a home and 2) banks with money to lend if you have good credit and money for a down payment.

Overall values may still drop 20% but that will be due to the top of the market loosing value. The lower end of the market is at or near it's bottom.

[JakeInSoCal]

I New It! And yet I got quiet a bad bashing.

[timelesschild]

Originally Posted by streetscenes

The reason sales have picked up is that there are now lots of homes in that $250k to $300k range, a couple of years ago they did not exist. There is also lots of inventory under $250,000 or even under $200,000. With all of the doom and gloom talk in the media there are still: 1) people with money for down payments, good credit and a desire to buy a home and 2) banks with money to lend if you have good credit and money for a down payment.

Overall values may still drop 20% but that will be due to the top of the market loosing value. The lower end of the market is at or near it's bottom.

Where are these houses between $250k and $300k? I haven't seen them yet... I dunno, maybe they won't get that low where we need them to...

[EscapeCalifornia]

Originally Posted by timelesschild

Where are these houses between $250k and $300k? I haven't seen them yet... I dunno, maybe they won't get that low where we need them to...

Palmdale, Corona, Victorville, Compton.....

[timelesschild]

Originally Posted by EscapeCalifornia

Palmdale, Corona, Victorville, Compton.....

See, that's what I thought.... they've got to fall some other places too!

[kettlepot]

Originally Posted by motoman

Remember that the 1990s California housing bubble took 5 years to bottom. We're only a year or two into this correction, so we have a way to go.

Perhaps things are different in LA, but in San Diego we are in the 4th year of this correction. We are very near to the R/E bottom here. I would expect the market to decline one more year, hitting bottom in 2009. When values will rise again, I don't know. Probably not for several more years after the 2009 bottom. Still that 65% rise in home sales volume is an indication that we are entering a new phase in the R/E cycle. We are no longer at the beginning of the beginning; we are at least at the end of the beginning.

And while a 500k Valley tract home may seem overpriced for a middle class family, a 300k condominium is not. It is the condominium that is the new starter home in Southern California, just as the two-family home, aka duplex, is and has been the starter home in Staten Island and around the outer boroughs of NYC for generations. Coastal California is not a land of wide open spaces. In the future, middle class families will move up to a single family home; they will not start in one.

As for when to buy versus rent, ConsideringLA has a ratio of 14x yearly rent. I've heard a ratio of 17x yearly rent. I don't know what the proper ratio is, but I wanted to point out that I've heard 17x yearly rent is a buy signal, 27x the yearly rent is a sure fire sell ratio, and that 22x, is the typical ratio for California R/E.

[streetscenes]

Originally Posted by timelesschild

Where are these houses between $250k and $300k? I haven't seen them yet... I dunno, maybe they won't get that low where we need them to...

Don't know if the following will be legible but a quick search in Van Nuys found almost 50 listings under $300,000. These aren't the nicest properties and probably not in the nicest areas, but you have to start somewhere. One of the things we forgot recently is that we can't all live in some fantasticly designed and decorated house, especially if it's a starter home. Curse HGTV.

Single Family
MLS # ST P Address City/Area TG# LP/SP BD BA SF
08-321649A9 14540 HART ST Van Nuys/ Lake Balboa532A5$224,9002177
F1782147A 16618 Bevis Avenue Van Nuys - East/ SFV East South (ES)531J6$227,500211068
F1786769A 16742 Sylmar Avenue Van Nuys - East/ SFV East South (ES)532A6$229,900211262
F1784583A 18134 Willis Avenue Van Nuys - East/ SFV East South (ES)531J2$248,600431618OCR
S531091A8 15246 Marson Street Van Nuys - East/ SFV East South (ES)531H3$251,90021819OCR
F1782304A 1814654 Erwin StreetVan Nuys - East/ SFV East South (ES)531J7$255,000321170OCR C08141119A18030 Lemona AVVan Nuys - West/ Out of Area531H2$260,000211146MRM F1766318A315209 Marson StreetVan Nuys - East/ SFV East South (ES)531H3$260,000421054OCR F1787405A06440 Longridge AvenueVan Nuys - East/ SFV East South (ES)532D6$260,00021806OCR F1785164A715134 Leadwell StreetVan Nuys - East/ SFV East South (ES)531H4$264,900321247OCR F1780366A26500 North AQUEDUCT AvenueVan Nuys - East/ SFV East South (ES)531G6$265,000211294OCR 22109208A126424 Dempsey AveVan Nuys/ Out of Area531G6$269,000311141GLEN F1772226A115508 Saticoy StreetVan Nuys - East/ SFV East South (ES)531G4$270,000211273OCR 08-267317A27455 LEESCOTT AVEVan Nuys/ West Van Nuys531C4$275,000311090CLAW F1770555A57656 Kester AvenueVan Nuys - East/ SFV East South (ES)531J3$275,500321323OCR F1774301A166627 Bevis AvenueVan Nuys - East/ SFV East South (ES)531J6$279,900421773OCR F1778266A16960 Tyrone AvenueVan Nuys - East/ SFV East South (ES)532A5$280,00021985OCR F1785606A615109 Cohasset StreetVan Nuys - East/ SFV East South (ES)531h4$280,000221234OCR F1782713A87007 Natick AvenueVan Nuys - East/ SFV East South (ES)531J5$284,900321162OCR F1786859A116930 Willard StreetVan Nuys - East/ SFV East South (ES)531D2$284,900321246OCR F1779629A67749 Balboa BoulevardVan Nuys - East/ SFV East South (ES)531D3$288,500421310OCR 08-318551A916836 COVELLO STVan Nuys/ Lake Balboa531D4$289,90021820CLAW 08-322579A115852 SALOMA AVEVan Nuys/ East Van Nuys561J1$289,90031.751326CLAW F1776370A1114723 Lemay StreetVan Nuys - East/ SFV East South (ES)531J6$289,900321317OCR F1763234A96540 Columbus AvenueVan Nuys - East/ SFV East South (ES)531H6$290,000211263OCR 08-310741A1116818 COVELLO STVan Nuys/ West Van Nuys531D4$295,00021873CLAW 08-305095A117509 COVELLO STVan Nuys/ West Van Nuys531B4$297,300321218CLAW 08-304285A1713732 LEADWELL STVan Nuys/ West Van Nuys532C4$299,000221511CLAW 08-313315A1017159 SATICOY STVan Nuys/ West Van Nuys531C4$299,000311102CLAW F1775975A114045 victoryVan Nuys - East/ SFV East South (ES)532b6$299,00021828OCR F1779981A17013 Costello AvenueVan Nuys - East/ SFV East South (ES)532B5$299,000311020OCR F1780262A614224 Cohasset StreetVan Nuys - East/ SFV East South (ES)532A4$299,000421428OCR F1785683A16246 Halbrent AvenueVan Nuys - East/ SFV East South (ES)531H7$299,000311156OCR F1787490A1515506 Covello StreetVan Nuys - East/ SFV East South (ES)531G4$299,000421318OCR F1761714A116906 Matilija AvenueVan Nuys - East/ SFV East South (ES)532C5$299,900321433OCR F1764103A413754 Wyandotte StreetVan Nuys - East/ SFV East South (ES)532C4$299,900321310OCR F1765296A213550 Hartland StreetVan Nuys - East/ SFV East South (ES)532C5$299,900211021OCR F1781212A146737 Sunnyslope AvenueVan Nuys - East/ SFV East South (ES)532C6$299,900221460OCR F1783396A815215 Covello StreetVan Nuys - East/ SFV East South (ES)531H4$299,900321313OCR F1786325A56616 Vesper AvenueVan Nuys - East/ SFV East South (ES)531J6$299,900221301OCR P657521A86558 Nagle AvenueVan Nuys - East/ SFV East South (ES)532D6$299,900321188OCR 08-311147A216600 COVELLO STVan Nuys/ West Van Nuys531D4$299,999321596CLAW F1743776A2014916 Hartland StreetVan Nuys - East/ SFV East South (ES)531J5$300,000321606OCR F1781183A517147 Saticoy StreetVan Nuys - East/ SFV East South (ES)531C4$300,000311073OCR F1781924A87026 MURIETTA AvenueVan Nuys - East/ SFV East South (ES)532B5$300,000311012OCR F1783546A57447 Blewett AvenueVan Nuys - East/ SFV East South (ES)531F4$300,00021900OCR

sorry for the mess, I cleaned up the first part of this list so you can get an idea.