When is the Next CA Housing Price Collapse Supposed to Happen? (real estate market, public schools)

[2sleepy]

Originally Posted by lostsoul359

I am a CA native and I love living here. I will be dragged out after I die inside my house in California.

Me too. I lived in Nevada for 14 years and the day my husband retired we put the house up for sale and moved back to California

[T. Damon]

Originally Posted by MtnSurfer

I guess normal is a relative thing when you've lived in CA most of your life or are native. Here's what normal is to me as a native:

1. Beautiful mountains, coastline, deserts, national parks, etc...
2. Great weather even in the winter which enables maximum time to spend enjoying the outdoors
3. Too expensive to own along the coast without overextending
4. Fires/floods/droughts occasionally - some years worse than others
5. Too many people on the roads and crammed into the most popular areas near coastal urban centers (LA/OC/SD/SF)

These haven't really changed especially with regards to the housing market. Although we experience the cyclical RE peaks and valleys, normal still means too expensive along these nicer coastal areas. Of course some still manage to pull it off. And in 20/20 hindsight we should have bought something (even if subpar) after the crash. Now it's totally ridiculous again which of course is perfectly normal, same as it ever was. I don't see that kind of market correction coming again for a very long time.

Derek

Originally Posted by HereOnMars

You're right. Normal is relative, depending on where you live in California. Guess I should have actually asked, "Define normal."

I haven't lived in the bay area since the age of nine so what you describe about the prices isn't relative to me. Although, even here, prices aren't what they used to be. I should have stated that "normal" (in my area) is that home prices aren't jumping 30, 40 or 50K a month like they were back in 2005. I recall hearing a news report back then where only 3% of Californians could afford to buy a home in the state ... any place in the state. That was shameful.

There will be another decline, at some point. Like you said, and Ultrarunner has noted many times, real estate is cyclical. Ups and downs, just like the stock market. I suppose if we look at buying a home the same as we do about stocks, the old saying - buy low sell high - would apply. The problem with buying and selling and buying again in California is that every time you buy at a higher price, your property taxes are adjusted to reflect the new purchase price. At some point, for some people, THAT is a big factor as it adds to the monthly costs. I hope you're able to catch that low wave someday. I do feel badly for those who want desperately to buy but just aren't able to right now.

I’m not exactly a native, but grew up and lived almost exclusively in CA all over the state since the mid-sixties when I was still a toddler and like you Derek, I mostly love it. I have seen most of my immediate family create a lot wealth here just buying real estate, as well as lose more than a bit here and there. Those of us who have stayed and rode it out have mostly greatly benefited, those who have moved away have much larger houses in the south, but they aren’t worth that much, $250k or so, nor do they appreciate compared to most parts of CA, (and they have to live in Mississippi- whoa!). Another of my brothers sold a decent sized but never updated ‘80s tract house in Pleasanton 10 years ago for $800k to help fund his early retirement at age 50.

It seems the fundamentals of the economy are fairly solid and lending practices have been tightened up considerably, but mostly there is still a housing shortage in those areas of the state which are still very desirable because a combination of economy and physical characteristics. I don’t place that much credence in Zillow but today it declares that my modest little house has increased $71k, in a month! And there hasn’t been any sales nearby that would have necessarily explained that, it’s just demand and lack of supply in this neighborhood. I definitely see a cooling of the market but it doesn’t seem like a crash is imminent in most of the coastal urban slice of the state.

Because this was bought as our starter house in a “transitioning” neighborhood at the very bottom of the market 22 years ago- prices about the same as 10 years earlier during the previous slump in ‘86 - (completely dumb luck on our part), we have unrealized gains that would only be considered if we sell. But we have a sweet, historic paid off house in now an amazing neighborhood and city that we love. It’s far from perfect but great weather, fun city, beaches, deserts and mountains nearby and low property taxes makes it pretty hard to beat.

Now if I were in the market today for my starter house in those same desirable areas I could see that goal as being essentially unattainable. There is no way we could afford our house today with a 1 in front of the price we paid for it, even as we make a bunch more money than we did we we bought it. Salaries have not even kept up with RE increases in most areas in the state. So those very real fundamentals that many folks are feeling will likely pull down prices in some areas of the state. But so far it seems there are enough making some good coin that are yet feeling bullish about their future here.

[aslowdodge]

Timing is perhaps the biggest issue of how desirable it is to live in California. If you are paying high rent or are trying to buy a house in one of the coastal metro areas because you work there, then it can be a struggle financially which can greatly diminish the joys of livinf there.
Now if you got in earlier and bought a house it’s a completely different story. Housing may be much less of a burden as well as having built up the equity. It’s one thing to have $2000 a month payments and $500k equity versus having to try to save $200k or more cash for a down payment and have payments of $6,000 a month.

[MtnSurfer]

Originally Posted by aslowdodge

Timing is perhaps the biggest issue of how desirable it is to live in California. If you are paying high rent or are trying to buy a house in one of the coastal metro areas because you work there, then it can be a struggle financially which can greatly diminish the joys of livinf there.
Now if you got in earlier and bought a house it’s a completely different story. Housing may be much less of a burden as well as having built up the equity. It’s one thing to have $2000 a month payments and $500k equity versus having to try to save $200k or more cash for a down payment and have payments of $6,000 a month.

Yeah, and sometimes that's in the same neighborhood!

The retired gentleman we lease our beach house from paid $66K for it in the 1970s. It's now worth over $1 million and is pure cash flow as a rental among others he purchased in the same area back in the day. By contrast our neighbor across the street who was renting decided to buy the house next door. It sold for $1.2 million and was built in the 60s. That kind of house payment would not work for us although we do have a really sweet deal on our lease (way below market). The owner has never raised the rent in 10 years. Makes it hard to leave actually, especially when you wake up to this just from this morning:







Or sunsets like this:







California RE is all about timing in these coastal communities. But when someone hits it right they get a really amazing place along with prop 13 tax breaks for the long run.

Derek

[aslowdodge]

Why not just stay then for as long as you can on that sweetheart deal? Bank the savings for retirement?

[MtnSurfer]

Originally Posted by aslowdodge

Why not just stay then for as long as you can on that sweetheart deal? Bank the savings for retirement?

Haha, I've thought about it and that's what kept us so long already. That and the awesome location. But its time for us to move on at this stage after raising kids here. My wife would really like to own a place of our own again and not be renting indefinitely among other things.

Derek

[aslowdodge]

Originally Posted by MtnSurfer

Haha, I've thought about it and that's what kept us so long already. That and the awesome location. But its time for us to move on at this stage after raising kids here. My wife would really like to own a place of our own again and not be renting indefinitely among other things.

Derek

So it’s just you two now? I hear you on owning your own place. Still looking at the northwest or sacto area?

[MtnSurfer]

Originally Posted by aslowdodge

So it’s just you two now? I hear you on owning your own place. Still looking at the northwest or sacto area?

The kids are all approaching college age and the oldest really likes a few campuses we've visited while in WA this summer including UW (UDub). So we'll see. The others will be in high school and the public schools are better in the areas we're looking compared to equivalents around here. Sacto was the other option for more affordability while remaining in-state. Though we're leaning more toward the PNW for a variety of reasons.

Derek

[Tool Shed]

Inventory is up nearly everywhere. It has started already.

[DKM]

Originally Posted by MtnSurfer

The kids are all approaching college age and the oldest really likes a few campuses we've visited while in WA this summer including UW (UDub). So we'll see. The others will be in high school and the public schools are better in the areas we're looking compared to equivalents around here. Sacto was the other option for more affordability while remaining in-state. Though we're leaning more toward the PNW for a variety of reasons.

Derek

I suggest touring it now instead of the summer. Good high schools can be found in any state so moving for that wouldn't make sense.