CA Homes, Affordable Yet? (Mission Viejo, Aliso Viejo: apartments, foreclosed, condominium)

[kettlepot]

Originally Posted by Charles

Why did this happen so dramatically in Southern California (as compared to Houston or Denver or Atlanta or Salt Lake City...)? Cost of lending was lower and credit was easy there too.

In the cities you mentioned, (Denver, Atlanta, etc) there was always a large supply of buildable land nearby that acted as a brake on the increase in prices. People always knew that the if prices rose high enough the supply of housing would become available.

Coastal Southern California has very little buildable land left, so there was not as much prospect of increased supply coming online. The result of this lack of buildable land along the coast was the large population growth in areas like the Inland Empire, and sure enough in response the overbuilding occurred.

This lack of buildable land will also act as a floor on housing prices in the LA basin, Orange County, and coastal San Diego. While the inland areas still have further to drop, the coastal areas are starting to show signs of bottoming out. You will probably see average home prices continue to decline, but don't assume that it will necessarily mean prices are dropping near the coast. More and more, the coast will become home to the upper middle class and the poor. Modest earning folks will either have to downsize their homes or move to the edges of the metro area, just as they have done in the NYC area.

[Charles]

Originally Posted by kettlepot

In the cities you mentioned, (Denver, Atlanta, etc) there was always a large supply of buildable land nearby that acted as a brake on the increase in prices. People always knew that the if prices rose high enough the supply of housing would become available.

OK, Got that part. Increasing supply would under most circumstances stabilize price on increased demand.

Originally Posted by kettlepot

Coastal Southern California has very little buildable land left, so there was not as much prospect of increased supply coming online. The result of this lack of buildable land along the coast was the large population growth in areas like the Inland Empire, and sure enough in response the overbuilding occurred.

OK, Got that. Lots of homes built inland to accommodate increased demand because no buildable land in the coastal areas. Too many homes were built.
But overbuilding would do the opposite wouldn't it? Wouldn't overbuilding lower house prices, not raise them? Housing prices in IE went up.

Originally Posted by kettlepot

This lack of buildable land will also act as a floor on housing prices in the LA basin, Orange County, and coastal San Diego. While the inland areas still have further to drop, the coastal areas are starting to show signs of bottoming out.

I understand this too - but it sounds like it explains why coastal SoCal housing prices will remain relatively buoyant - may be true -makes sense.




What I read was 1) No coastal land available, 2) More houses built inland - in fact too many and, 3) Coastal housing won't drop too low.

But (maybe it's me, it's early, my coffee isn't hitting me yet) I don't see the tie in to my original question of why the huge price increases which occurred everywhere in SoCal including coastal areas in the IE - as compared to the rest of the country.

[Soccersupporter]

Originally Posted by cobmw

What difference will the cost of homes be when there are no jobs?

With unemployment skyrocketing in CA I doubt prices will hit bottom for a while yet. CA also has the economic crisis of the state let alone the nation to get over too. The near future does not look too good for CA. I hope things improve since all of my family is still there. Second thought maybe they should just move out here where unemployment is still low and housing is still moving and affordable.

[Soccersupporter]

Originally Posted by Charles

OK, Got that part. Increasing supply would under most circumstances stabilize price on increased demand.



OK, Got that. Lots of homes built inland to accommodate increased demand because no buildable land in the coastal areas. Too many homes were built.
But overbuilding would do the opposite wouldn't it? Wouldn't overbuilding lower house prices, not raise them? Housing prices in IE went up.



I understand this too - but it sounds like it explains why coastal SoCal housing prices will remain relatively buoyant - may be true -makes sense.




What I read was 1) No coastal land available, 2) More houses built inland - in fact too many and, 3) Coastal housing won't drop too low.

But (maybe it's me, it's early, my coffee isn't hitting me yet) I don't see the tie in to my original question of why the huge price increases which occurred everywhere in SoCal including coastal areas in the IE - as compared to the rest of the country.

Huge price increases were because of greed. People that were buying houses during the boom in CA were not intending to live in the houses for more than a few years. It was all about making money quick.

People laughed at my wife and I for staying in our house in Irvine for over 25 years. We raised our family put 2 of the 4 through good colleges, enjoyed raising family. When it became obvious the market had topped out we took our money to a more affordable place to live a simplier less stressful life.

[Charles]

Originally Posted by Soccersupporter

Huge price increases were because of greed. People that were buying houses during the boom in CA were not intending to live in the houses for more than a few years.

Why weren't people in Atlanta and Houston and other cities doing this?

[flo2900]

Originally Posted by Charles

Why weren't people in Atlanta and Houston and other cities doing this?

b/c the cities you mentioned are not desirable....for lots of ppl So Cal is the place to be!

[Soccersupporter]

Originally Posted by Charles

Why weren't people in Atlanta and Houston and other cities doing this?

I don't think any areas in our nation were quite like CA, especially SoCal. People could make $100,000 to $200,000 in a few years at the peak of the housing boom in CA. I also think it was fueled by the hype that CA is the only place to live. I myself was pretty blind to the obvious, that there is life outside SoCal. Once we dared to entertain the thought of leaving and investigated our options I our eyes were opened. I think if people are open minded they would come to the same conclusion we did. Life is too short to be caught up in the hype of CA. It is a great place to live but it has it's downside and now not much of an upside unless you are living lifestyles of the rich and famous.

[flo2900]

Originally Posted by Soccersupporter

I don't think any areas in our nation were quite like CA, especially SoCal. People could make $100,000 to $200,000 in a few years at the peak of the housing boom in CA. I also think it was fueled by the hype that CA is the only place to live. I myself was pretty blind to the obvious, that there is life outside SoCal. Once we dared to entertain the thought of leaving and investigated our options I our eyes were opened. I think if people are open minded they would come to the same conclusion we did. Life is too short to be caught up in the hype of CA. It is a great place to live but it has it's downside and now not much of an upside unless you are living lifestyles of the rich and famous.

I too was sold on Houston for a while and went there 2 times to visit and look for houses. Very impressed with their homes and kicked back life style, but now that homes dropped here in SoCal by 50% in some areas Texas is not a good deal for some. If one can pull off buying here in socal at half price and sold in `06 at "full" price why move to TX ?

[KaraG]

I remember watching affordability in OC going down to 11% and common sense would tell you that unless you were in the top 10% of income earners, you shouldn't be buying the average house there. But no, the mortgage companies came up with the creative mortgages, no interest, no money down, in fact, they gave buyers $10-20,000 cash at closing to furnish homes or pay off credit cards. They had to do something to find new buyers since so few could qualify normally. And the mortgage folks made a ton of money signing people up for these loans, homeowners saw their equity go up and kept doing refi's to take out cash.

I was a new home researcher for several years there and I watched times where developers had waiting lists of buyers for new homes and prices would go up $50,000 in one quarter. I also watched last year as developments shut down before they were finished with many vacant homes and lots.

It didn't make sense, but there were very few people waving warning flags. We always used to say it was the big elephant in the room in California - no one wanted the craziness to stop because everyone was making money (including government agencies). BTW, we happily rented during our stay in CA and then bought when we moved out of state.

[Soccersupporter]

Originally Posted by flo2900

I too was sold on Houston for a while and went there 2 times to visit and look for houses. Very impressed with their homes and kicked back life style, but now that homes dropped here in SoCal by 50% in some areas Texas is not a good deal for some. If one can pull off buying here in socal at half price and sold in `06 at "full" price why move to TX ?

Why move to TX? Well paying cash for a new 3500 sq. ft. home on a quarter acre lot and putting $200,000 in the bank had something to do with it.

But to be fair we also moved here because our daughter gave us our first grandchild with another on the way. Too good a deal to pass up for us.