Housing bubble part 2 (Irvine, Orange, Corona: rentals, houses, neighborhoods)

[JohnSoCal]

Originally Posted by DocGoldstein

Won't be as bad as 2008. I suspect the Gov't has lost its taste for massive bailouts and welfare programs for speculators. Also I suspect the people who will get hosed the most are those in OC, LA, SFBA, and other areas where the bubble only slightly deflated. Those in Phoenix and Vegas, where the market has bottomed to near construction cost will probably be able to escape without too much damage.

The San Francisco Bay area does not fit in the same category. There has been a housing shortage in that area for years because of lack of new homes. It is a matter of supply not meeting demand. What keeps pushing up their housing cost is the boom in high paying Tech jobs. There was a drop in prices when the dot.com crashed in 2001 but prices recovered very quickly.

The housing crisis of 2008 was caused by the subprime mortgage problem. This was a result of people buying homes that they were not qualified for. The fault lay with the government forcing the lenders to relax their standards so they could push the concept that everybody should be able to buy a home. The borrowers themselves were also to blame for knowlingly buying homes that they couldn't pay for. Lastly the lenders share some of the blame as well. Another factor causing the crash was people using their home like an ATM to buy toys. They kept refinancing, taking money out as prices soared.

This scenario will more than likely not be repeated as hopefully we have learned our lesson. Our area was one of the hardest hit in the country with prices falling 60-70% from the peak in 2005-06. Of course we also saw the highest increase in prices from 2002-05. One year, prices went up 52%. Home prices here have definitely gone up in the last year but I seriously doubt that they will reach the levels of 2005 in the foreseeable future.

[DocGoldstein]

Originally Posted by JohnSoCal

The San Francisco Bay area does not fit in the same category. There has been a housing shortage in that area for years because of lack of new homes. It is a matter of supply not meeting demand. What keeps pushing up their housing cost is the boom in high paying Tech jobs. There was a drop in prices when the dot.com crashed in 2001 but prices recovered very quickly.

Well true, there is a huge anti-development sentiment here. But that being said, employers have their bottom lines as well. They have to attract workers to the area, and if they have to pay every QA analyst $120,000 in salary just to make life affordable for them, they'll take their jobs elsewhere, and in fact, many CA companies have done just that.

[JohnSoCal]

Originally Posted by DocGoldstein

Well true, there is a huge anti-development sentiment here. But that being said, employers have their bottom lines as well. They have to attract workers to the area, and if they have to pay every QA analyst $120,000 in salary just to make life affordable for them, they'll take their jobs elsewhere, and in fact, many CA companies have done just that.

I was an Independent Software Design consultant in Silicon Valley for many years even though our permanent home was in San Diego. We also owned a home in the Bay area as well as San Diego. The difference in pay more than offset the higher COL in the Bay area plus I preferred the work environment in SV.

[DocGoldstein]

Originally Posted by JohnSoCal

I was an Independent Software Design consultant in Silicon Valley for many years even though our permanent home was in San Diego. We also owned a home in the Bay area as well as San Diego. The difference in pay more than offset the higher COL in the Bay area plus I preferred the work environment in SV.

In 2011, 254 companies moved 50,000+ jobs out of the state:
2011 total: 254 companies leave California | moved, companie - Business - The Orange County Register

That was a 26% increase over 2010.

Companies first and foremost are concerned about making money, and part of that equation is the cost of hiring and attracting talented individuals. Because of the COL, it's simply difficult much more expensive to do that in the Bay Area. The SFBA is in the middle of a web 2.0 boom right now, but I'm old enough to have lived through the first web bubble, and know that it could easily happen here again.

[DocGoldstein]

I'm guessing CAVA gave up on his theory since he never came back to try and at least back it up with some data or evidence.

[CAVA1990]

Originally Posted by DocGoldstein

Well, if your theory is that higher income buyers are buying homes, where are they coming from? Orange County is already a high income area compared to the national median. Where would these even higher income buyers come from?

Well the median household income of my county in VA is about 40% higher than Orange County's so we'd be one possible source of folks like that. I'm sure there are plenty of folks coming from other more affluent places.

[pacific2]

Originally Posted by CAVA1990

Well the median household income of my county in VA is about 40% higher than Orange County's so we'd be one possible source of folks like that. I'm sure there are plenty of folks coming from other more affluent places.

Orange County's median household income of $75,762 is not terribly high, so current OC buyers may be those who earn well above the median.

[CAVA1990]

Originally Posted by pacific2

Orange County's median household income of $75,762 is not terribly high, so current OC buyers may be those who earn well above the median.

Yes, exactly what I was arguing. In comparison, my county's median household income is $108,000. The county next door's is $120,000.

[pacific2]

Originally Posted by CAVA1990

Yes, exactly what I was arguing. In comparison, my county's median household income is $108,000. The county next door's is $120,000.

People often forget that there are a lot of poor folks in Orange County.

[DocGoldstein]

Originally Posted by CAVA1990

Well the median household income of my county in VA is about 40% higher than Orange County's so we'd be one possible source of folks like that. I'm sure there are plenty of folks coming from other more affluent places.

Do you have data to back up that claim that they are coming from VA, or other affluent counties?

Most data shows that California's population is actually flat or retracting in many counties because of unaffordable housing and lack of jobs:
http://articles.latimes.com/2011/nov...-move-20111127