The Big "California Housing Prices" thread (was:Home prices are not going down, so why stay if you can't afford it? (Los Angeles: low income, real estate market)

[JJonesIII]

Originally Posted by MtnSurfer

One of the problems with this in relation to this post's premise is that unless one can buy their own home 'and' save for retirement they are not really living or living wisely financially speaking. The observation that many are living paycheck to paycheck without saving for retirement is probably true. However, CA isn't the only state where folks live paycheck to paycheck. So this isn't necessarily a 'CA' specific phenomenon or problem. This pattern happens in the poorest states as well as the richest where wages can be relative to the region one lives in. In those poorer states the residents could move to an even cheaper location out in the boonies and potentially save more for retirement just like here. It just so happens that CA has one of the highest housing costs in the nation. That is in the more large urban areas (LA, OC, SD, SF, SJ) and nicest coastal areas (Monterey, Carmel, SB, SLO).

I don't however subscribe to the notion that residents cannot live a perfectly happy lives in CA 'without' ever owning a home. There are other, better ways to invest one's money than residential real estate. So its not like everyone should move who cannot buy a home. The RE market is very volatile and should never be one's sole source of retirement planning. Would it have been a good investment for those to buy after the crash? In 20/20 hindsight, yes, of course. However is it always a good time to buy? Absolutely not. Look at the millions who walked away from their homes including their down payments. And some retirees prefer to rent because there is less upkeep and hassle than with home ownership including large unexpected repairs.

That said, would we like to purchase a home again? Sure. But is necessary? No, its a nice to have more than a gotta have. I prefer investing in other ways for retirement which provide a better yield over time. For us its a matter of choice, rent in a beautiful coastal area while still saving for retirement or buying somewhere inland or out of state and doing the same.

Derek

But it is one where moving to a lower COL area can afford one a better lifestyle. The haircut you will take in salary will not be commensurate with the change in the COL (at least that's what I've seen from people I've known that have made the move). Most have even stayed the same in a lateral transfer or dropped by no more than 30% and the COL difference is usually closer to 50%. If you're already in a low COL and living paycheck to paycheck, there's not much you can do other than improve your job skills.

If you plan on staying in a home for 20+ years, I can pretty much say with conviction that there is never a bad time to buy in San Francisco and the history supports that. Most people that bought in the 90's beat the return on the stock market thanks to leverage. The people that walked away had no equity in their homes because of the ridiculous exotic loans available at the time (0% down, interest only, negative amortization, etc).

[stablegenius]

Originally Posted by 1AngryTaxPayer

I'm surrounded by people at work like this. They can barely make rent, are one paycheck away from digging into retirement funds. For what? Just to say you live here?

I really feel like that's a big part of it, including some people on city data who'll defend California to their grave. I doubt everybody here can truly afford it. I know some can, but not all... I've got a friend just had a baby. He's in a tiny 3 bedroom rental. He's got a good deal sure, but as for affording a mortgage, it's going to be a while for them. When I moved he was so self righteous as if I was making the worst decision in the history of decisions, and yet, here I am a year later and I've saved so much money it's laughable.

[stablegenius]

Originally Posted by sdlife619

I’m a Millennial as well, an older Millennial however and my views towards CA has changed a lot I just the past year. I used to be a hardcore Dem for years, but seeing how things have become increasingly hard to survive, the lack of true real wage growth, taxes that affects everyone, high gas prices, and honestly a future that is catering to ONLY the wealthy in CA has made me wonder if the politicians really want to help the “common man”, but instead they make policies and pass laws that hinder growth and make even more difficult for people to make ends meet.

I’m over it.

This is great. If a dem like you can wake up and see what's going on, hopefully others can as well. I'm waiting for the "turning point" in California when people finally wake up and throw those Sacramento bums out of office, but it hasn't happened yet. I told my wife, maybe we can move back, but I have to see how the governors race goes in November first.... If Newsom gets elected, the state is hosed.

[JJonesIII]

Originally Posted by stablegenius

I really feel like that's a big part of it, including some people on city data who'll defend California to their grave. I doubt everybody here can truly afford it. I know some can, but not all... I've got a friend just had a baby. He's in a tiny 3 bedroom rental. He's got a good deal sure, but as for affording a mortgage, it's going to be a while for them. When I moved he was so self righteous as if I was making the worst decision in the history of decisions, and yet, here I am a year later and I've saved so much money it's laughable.

This. And they'll accuse you of just being negative even though this is purely a financial situation for many and applies to anywhere with a high COL.

Congrats and nice job!

[CA4Now]

Originally Posted by JJonesIII

Most people that bought in the 90's beat the return on the stock market thanks to leverage. The people that walked away had no equity in their homes because of the ridiculous exotic loans available at the time (0% down, interest only, negative amortization, etc).

Many people who lost their shirts in residential real estate at that time did not have exotic loans. They just bought at the wrong time. The housing bubble back then burst in 1989, so if you bought in 1990, then tried to sell in, say, 1995, you were SOL. And if you HAD to sell (e.g. job transfer out of state), then you had no choice but to lose....heavily.

Sometimes it's no one's fault; it's just bad luck.

[stablegenius]

Originally Posted by sdlife619

a future that is catering to ONLY the wealthy in CA has made me wonder if the politicians really want to help the “common man”, but instead they make policies and pass laws that hinder growth and make even more difficult for people to make ends meet.

Those policies p*ss me off as well, but to some extent I understand why they are doing it. People just keep.on.coming to California and I imagine they are trying to slow growth down. If they don't it would look like a scene from blade runner in a few years. That being said, there are probably better ways to deal with the growth issue than to trample common man's freedoms and livelihood.

[JJonesIII]

Originally Posted by stablegenius

Those policies p*ss me off as well, but to some extent I understand why they are doing it. People just keep.on.coming to California and I imagine they are trying to slow growth down. If they don't it would look like a scene from blade runner in a few years. That being said, there are probably better ways to deal with the growth issue than to trample common man's freedoms and livelihood.

Yep, but as you said, it is a way to prevent growth. Kind of like putting up an artificial fence but doing it with money instead of wood.

[expatCA]

Originally Posted by JJonesIII

Yep, but as you said, it is a way to prevent growth. Kind of like putting up an artificial fence but doing it with money instead of wood.

It is what is being done. Be rich or poor or be priced, face high fees and taxed out.

[aewan68]

There will be another recession and the next one might not be as mild as people think it will be, judgeing by how people are going deep into debt and lot's of credit card debt, 6 year + car loans and etc., spending habits of a fool, what do you think will happen when it all goes up in smoke?

https://www.forbes.com/sites/billcon...ext-recession/

https://www.forbes.com/sites/johnmau.../#1dad47769b97

If any of this comes true, it's anyone's guess what may happen.

[JJonesIII]

Originally Posted by aewan68

There will be another recession and the next one might not be as mild as people think it will be, judgeing by how people are going deep into debt and lot's of credit card debt, 6 year + car loans and etc., spending habits of a fool, what do you think will happen when it all goes up in smoke?

https://www.forbes.com/sites/billcon...ext-recession/

https://www.forbes.com/sites/johnmau.../#1dad47769b97

If any of this comes true, it's anyone's guess what may happen.

If only everyone would believe a Henny Penny like John Mauldin, he might get rich with his perma-bear investment strategies, lol.

https://investingcaffeine.com/2010/0...ho-cries-wolf/

I can't tell you how many ridiculous, gibberish filled scare columns I've read like this (and I laugh every time). I've heard this from the recession dreamers since 2014. And while they were screaming that we were heading for the 2nd coming of the Great Depression, the market has climbed some 40+%. None of the Henny Pennys take into account the tighter lending standards and the strength of buyers with plenty of equity in their homes. Not to mention cash buyers with 100% equity. The likelihood of a repeat of 2008 is slim at best and no one ever gives a legitimate justification as to why that would be. And if home sales take a 25% haircut, you're still not any better than if you had just bought a few years ago in the first place (at prices most of these people living paycheck to paycheck couldn't afford anyway).