Why would you buy a home here in CA? (Los Angeles: rentals, crime)

[JackSparrow]

Fine, you want on topic:


"Why would you buy a home here in Ca?"

X. Traffic laws are favored for better driving conditions.
Y. Motorcycling laws are better than any other state.

That worded in a way you can understand?

[ness]

Originally Posted by JackSparrow

Fine, you want on topic:


"Why would you buy a home here in Ca?"

X. Traffic laws are favored for better driving conditions.
Y. Motorcycling laws are better than any other state.

That worded in a way you can understand?

Why?

1. Good rate of appreciation on your home (if you pick the right neighborhood and house)
2. For some reason everyone wants to live in SoCal, so I don't see values plummeting the way some are predicting
3. Nice neighborhoods with historic homes (not all of LA of course)

[monti]

It's not a flyover state

I can make 8x what I could in Minnesota for film related work

There's no place else in the world quite like CA

[CLQ]

I don't see why first time homebuyers would buy a home here when they won't be experiencing the same appreciation before the boom. It is simple buy low and sell high. It won't get much higher until inflation catches up and more see the equity potential. There still some deals with foreclosures and desperate situations but not enough yet. It is better to park the money elsewhere and let it grow rather than dropping the majority of one's monthly income on a modest 1000 sf 3bedroom 1950's home that cost over half million and be stuck in it for at least 3 years.

[ness]

Originally Posted by CLQ

I don't see why first time homebuyers would buy a home here when they won't be experiencing the same appreciation before the boom. It is simple buy low and sell high. It won't get much higher until inflation catches up and more see the equity potential. There still some deals with foreclosures and desperate situations but not enough yet. It is better to park the money elsewhere and let it grow rather than dropping the majority of one's monthly income on a modest 1000 sf 3bedroom 1950's home that cost over half million and be stuck in it for at least 3 years.

Sure we aren't seeing the same 30% increase that we were seeing in the boom, but many areas still have a rate of appreciation of 6-10%. I guess if you can find another investment that will give you that return AND give you a place to live then by all means don't buy a house. BUT....if you are making 7% on your money AND having to pay $1,000+ a month in rent (to someone else) I'm not sure it makes sense from a financial aspect.

I know a lot of people feel exactly the way you do......it's just a stance that I've never understood.

[Zinnia]

I tend to agree with Californialeavin... we lived there in the 80's ago in first in LA then in San Diego... in hind site we shouldn't have left, we would probably be set now... but we had to. As it was the real estate prices were high then, the recession hit and it was hard to live as and jobs were hard to find. With 2 small children in tow we had to think of them... we just couldn't make a go of it.

500k for a home is ridiculous!... for a shackish type 1000 sq feet house, and a yard the size of a postage stamp? Thats CRAZY! BUT I know why living in California is so appealing.. I love it and would move back in a minute if I knew I could make it.
I just want to know how in the heck did it get so bad? I have asked that question before but haven't gotten a good answer? Guess its just greed... and if people are stupid enough to pay that kind of price for a house like that well... what more can I say... To each their own...

[CLQ]

Originally Posted by ness

Sure we aren't seeing the same 30% increase that we were seeing in the boom, but many areas still have a rate of appreciation of 6-10%. I guess if you can find another investment that will give you that return AND give you a place to live then by all means don't buy a house. BUT....if you are making 7% on your money AND having to pay $1,000+ a month in rent (to someone else) I'm not sure it makes sense from a financial aspect.

I know a lot of people feel exactly the way you do......it's just a stance that I've never understood.

Sorry Ness but times have changed. I'm talking about if anyone buys right now. I can guarantee that across the board that there will not be a 6-10% return annually. You may get that return if you put in the costs to fix it up but that can make it net loss after the cash outflows. It's better to put your money elsewhere and rent the house that you want rather than buy a little starter home that leaves very little money for investing elsewhere. It makes perfect sense when you put the numbers together. I have created a spreadsheet to decide whether to buy or rent. What I don't get is why people would buy a starter home on a down market? Especially a little 1000sf home for over half mil. I can see if people plan on staying in it forever and make their starter home their dream home which is rarely the case. Most people move up after several years. The goal is to build equity and pay as little as possible to do so. It is not a good time YET.

[EscapeCalifornia]

Originally Posted by Zinnia

I tend to agree with Californialeavin... we lived there in the 80's ago in first in LA then in San Diego... in hind site we shouldn't have left, we would probably be set now... but we had to. As it was the real estate prices were high then, the recession hit and it was hard to live as and jobs were hard to find. With 2 small children in tow we had to think of them... we just couldn't make a go of it.

500k for a home is ridiculous!... for a shackish type 1000 sq feet house, and a yard the size of a postage stamp? Thats CRAZY! BUT I know why living in California is so appealing.. I love it and would move back in a minute if I knew I could make it.
I just want to know how in the heck did it get so bad? I have asked that question before but haven't gotten a good answer? Guess its just greed... and if people are stupid enough to pay that kind of price for a house like that well... what more can I say... To each their own...

Agreed. I want kids but can't see how the heck we can afford them with a $500k+ mortgage hanging over our heads and we can't wait 10 years for our incomes to catch up to the debt we already have. I know if I stayed in California, I'd be a paper millionaire in a few years but what's the point? Having equity in a house doesn't make the payment less and you can't spend the equity without borrowing even more money and paying even more interest every month.

I also know that houses in the rest of the country may only appreciate at the rate of inflation, making the real appreciating rate just about zero. And you know what? I'm OK with that if it means actually being able to sleep at night and some day pay off the mortgatge.

[CLQ]

Mortgage woes expected to worsen in 2008:

Mortgage Woes Expected to Worsen Through 2008: Moody's - News - MSNBC.com

2.5 million default loans are expected to default and a huge percentage in California. $460 billion in default loans during the remainder of 2007 and 2008. $1.4 trillion at serious risk of default.

My brother is trying to sell his house again at the same price he offered in 2005. He had too many offers and got scared and pulled it off the market. Now, he has not had one offer and it has been sitting on the market the entire summer.

Just check out ziprealty.com and watch how long the homes are sitting on the market. Sellers will be forced to drop their prices if they really need to sell soon before it drops further.

Also, if you don't believe me, Warren Buffet stated the California housing market is dire.

I don't believe homes will drop close to pre-boom but once again inflation, or salaries, need to catch up before experiencing significant appreciation. There are more stringent qualifications now on loans so those that can't afford won't be able to buy unlike what happened before where lenders stretched people to the limit.

This market has the potential to be like San Francisco where prices remain on the higher side. Hopefully in result downtown is developed into a more metro city like NYC with condos, shopping, Time Square, restaurants and the Meat Packing District like Sex and the City. That would be exciting.

[ness]

Originally Posted by CLQ

Sorry Ness but times have changed. I'm talking about if anyone buys right now. I can guarantee that across the board that there will not be a 6-10% return annually. You may get that return if you put in the costs to fix it up but that can make it net loss after the cash outflows. It's better to put your money elsewhere and rent the house that you want rather than buy a little starter home that leaves very little money for investing elsewhere. It makes perfect sense when you put the numbers together. I have created a spreadsheet to decide whether to buy or rent. What I don't get is why people would buy a starter home on a down market? Especially a little 1000sf home for over half mil. I can see if people plan on staying in it forever and make their starter home their dream home which is rarely the case. Most people move up after several years. The goal is to build equity and pay as little as possible to do so. It is not a good time YET.

I think you have to invest the way it works for you....and everyone is different. BUT I have seen many friends get caught in the trap where they rent and rent and rent and spend their disposable income on nice cars, stuff, etc. and in the end...once their rent has increased a few times....they regret not buying a home. I guess I just always feel its better to put money in your own pocket rather than someone elses and that's just how I've always operated. Most friends of mine in the area pay 1,300+ for rent a month while my mortgage is 1,600 a month. Doesn't make sense to me why someone wouldn't want to pay $300 more a month for a house.