Housing bubble part 2 (Orange: jumbo loan, brokers, neighborhood)

[CAVA1990]

Originally Posted by pacific2

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

Is it that or do jobs there just pay less (also fewer well paying jobs and a less educated populace) than in other places? That's how it was when I lived there.

[pacific2]

Originally Posted by CAVA1990

Is it that or do jobs there just pay less (also fewer well paying jobs and a less educated populace) than in other places? That's how it was when I lived there.

OC's poverty rate of 10.9% is less than the CA rate of 14.4%, but that means that a lot of people, about one in ten, are quite poor. Those who are less educated, of course, run a greater risk of being impoverished.

I haven't checked to see how OC's educational levels stack up against the national average, but in general, Orange County ranks higher than CA; and no surprise, with a corresponding lower level of poverty.

[pacific2]

Just looking at the median household income level for a given region can be misleading. For example, Newport Beach’s median household income is only $108,946 with a surprisingly high poverty rate of 7.2%, but homes sell and the median home value during the last census period was $1M.

So, obviously, the people who can afford to buy in NB make well above the median.

[Marv101]

Toss in sky-high housing prices, gasoline prices which are substantially higher ($3.60 here in LA vs. $3.05 in Dallas-Ft. Worth), and bound to soar, and it's easy to see why people are leaving the state.

Almost four million more folks have left the state over the past two decades than have moved into the state as Joel Kotkin pointed out in the WSJ last spring.

Don't forget about the hefty plunge in the population of children in this state due to the current birth rate which is some 1% below the replacement rate of 2.1 children per household, another demographic disaster courtesy of our clueless Governor.

Toss in Gov. Moonbeam's 'Gravy Train to Nowhere' boondoggle while our schools and roads continue to crumble, and it's no wonder that people are leaving.

When the 'projected' $6,000,000,000 in new revenue from the recent passage of Prop. 30 misses the actual revenue by 75% or thereabouts, look for Brown to propose another tax hike by the end of this year.

Promise!

Insofar as the 2013 edition of the housing bubble is concerned, read all you need to know at Dr. Housing Bubble Blog. about the current situation in Irvine & Corona Del Mar.

[pacific2]

Slightly OT, but it looks like Newport Beach’s extremes in income make it, on paper, appear to be less financially sound than say, a place like Rancho Santa Margarita where more people are probably clustering around the median, with fewer extreme outliers in either direction.

NB’s median household income of $108,946 is just a tad higher than the comparable $104,167 figure for RSM.

NB’s median home value during the last census was $1M vs. $571,500 for RSM.

Still at 7.2%, NB’s poverty level is more than twice that of RSM (3.1%). NB has more multimillionaires, but also a greater percentage of people who have trouble scrapping two dimes together, than does RSM.

If part of a community’s stability can be measured by home-ownership rates, than RSM’s 72.4% would make it seem to be a less economically “volatile” area than NB, since it’s home-ownership rate is only 55.1 percent.

Musings.

[CAVA1990]

Well keep in mind that NB is a lot older and has a lot of long time residents and retirees who don't need to make that much money. Their house payments are low or homes are paid off. RSM residents haven't been there long enough for that.

[pacific2]

Originally Posted by CAVA1990

Well keep in mind that NB is a lot older and has a lot of long time residents and retirees who don't need to make that much money. Their house payments are low or homes are paid off. RSM residents haven't been there long enough for that.

Poverty is poverty and even if the house is paid off, people still have to eat, buy clothes, purchase gas for the car, pay auto insurance, pay property taxes, maintain the home ....

In fact, although there are far more retirees in NB, RSM has a slightly greater percentage (87.9% vs 81.5%) of long time residents, or people who have lived the same house for at least one year.

[CAVA1990]

Originally Posted by pacific2

Poverty is poverty and even if the house is paid off, people still have to eat, buy clothes, purchase gas for the car, pay auto insurance, pay property taxes, maintain the home ....

In fact, although there are far more retirees in NB, RSM has a slightly greater percentage (87.9% vs 81.5%) of long time residents, or people who have lived the same house for at least one year.

Would UCI students living on Balboa Island during the school year have anything to do with that? Most of them probably have poverty level incomes as well.

[pacific2]

Originally Posted by CAVA1990

Would UCI students living on Balboa Island during the school year have anything to do with that? Most of them probably have poverty level incomes as well.

What about UCI, Irvine College and Saddleback students who live in RSM? They probably add to that city's poverty rate. I think someone would have to look at the full census data in order to identify the poor.

FWIW, I did a quick check of three other beach cities (Laguna Beach, Dana Point and San Clemente) and they all have poverty rates of at least 6-7.4 percent, but without sizable student populations.

[ohboywhatamess]

Originally Posted by GoldenZephyr

This is true, the market is very unusual right now with higher numbers of investors than in the past. We are friends with someone who is assistant controller for a company in Malibu that has over $600 million in funding from the Alaska Permanent fund and they are gobbling up huge numbers of homes and turning around and renting them. Most of their buys are all cash and they have over 9000 SFR's under management.

As another poster put it, its hard to generate yield on money these days so the investment market is hotter than ever before.

Some neighborhoods are going to be transformed with all the rentals that are being created. Families may want to consider other environs if they want lower cost of living/quality of life. There are good places in this country outside of CA that you can raise a family without being a perpetual debt slave.

This is definitely a new bubble, the question is how long can it last, I say as long as interest rates remain low, prices will climb, when (if) rates really begin to climb, then prices will moderate and fall. Two reasons, interest rates are making homes cheaper, even as they rise in price, two, if better yield is to be had, investment money will move on to other options. Right now, unfortunately RE is one of the best places to park money. Which is sad, because when Realtors and sellers get arrogant and smug, everyone loses. A flat to neutral market (<2% appreciation) is the healthiest option for everyone in the long run and I say that as a homeowner. Rapid Real Estate "appreciation" is nothing more than inflation. Everyone pays more and "owners" think they are rich because they have "appreciation" then go even more into debt and the cycle repeats.

There are a TON of houses being sold to investor companies. Houses are being sold to these companies without ever having to go on the MLS. Many realtors call investors FIRST before even making it public.