California real estate prices, how do you stand it? (San Diego: renter, month to)

[CaliRestoration]

Let's be honest. If you weren't a home owner in California before 1974, or you don't have a 7 digit salary, you and your progeny will forever be homeless or bankrupted by rent.

[SOON2BNSURPRISE]

Originally Posted by CaliRestoration

Let's be honest. If you weren't a home owner in California before 1974, or you don't have a 7 digit salary, you and your progeny will forever be homeless or bankrupted by rent.

But yet lots of people end up buying homes in California. Maybe not in some neighborhoods but in many places regular working class people can buy homes. I live in Oxnard and homes are bought and sold all the time. Anyone that buys a home benefits from Proposition 13. Many of us home owners buy and keep our homes. That is what my wife and I have always planned to do. Many others do the same thing.

[Californiaguy2007]

Yup I know...That's why I mentioned the Central Valley area as probably the last remaining affordable region of CA.

Originally Posted by jm1982

Fresno and some other areas are much more affordable than L.A

Fresno, CA Real Estate & Homes for Sale | Trulia

Like a fraction of the price.
Unemployment rate doesn't seem too great there, but if you have a decent job or business there then it doesn't really matter.
Could be a great value

[nmguy]

Originally Posted by CaliRestoration

Let's be honest. If you weren't a home owner in California before 1974, or you don't have a 7 digit salary, you and your progeny will forever be homeless or bankrupted by rent.

CaliRestoration pretty well sums it up. I bought my first house, in Palo Alto, in 1970 for $24,500. When we had kids, we upgraded to a larger place, which we eventually sold for $300k when we got divorced. I bought my third house for $150k in 1981 and sold it in 2003 for $751k. I now live in Eastlake home with a manageable monthly payment and no debt.

I'm a retired teacher. Without real estate investments, I'd be renting and be saddled with various debts. I am living comfortably because of good timing and luck.

[Finper]

I live in OC and get confused when people say there is a housing shortage that's why prices are so high... All I see are houses here suburb after suburb tract after tract and Irvine co is building like crazy in Irvine. Now I do not see a lot of for sale signs so maybe that's a reason but can't believe there's a lack of housing in so cal

[seain dublin]

Originally Posted by 13Bulldog

It'll take more time, but people are already leaving. The South is the new cool.

It's not cool with the horrific humidity.

[jm1982]

Originally Posted by nmguy

CaliRestoration pretty well sums it up. I bought my first house, in Palo Alto, in 1970 for $24,500. When we had kids, we upgraded to a larger place, which we eventually sold for $300k when we got divorced. I bought my third house for $150k in 1981 and sold it in 2003 for $751k. I now live in Eastlake home with a manageable monthly payment and no debt.

I'm a retired teacher. Without real estate investments, I'd be renting and be saddled with various debts. I am living comfortably because of good timing and luck.

This is why I always think it's kind of crazy when people say they are fine just renting forever.
People say things like they will invest that 'extra money' they would be spending on a mortgage and property taxes, maintenance,etc in other ways , usually the stock market through an index fund ,etc.
But I rarely see people really coming out ahead that way. If you look at retirees now in L.A , the networth of homeowners is going to be a lot higher than renters.

It seems like too risky of a move to never get into the housing market. Also if one can't afford to invest in their local market, there are still opportunities to invest further out , Central California for example or even out of state , with the right property management.

There are even quite a few people that give financial advice telling people it's a bad idea to buy a home.

This is a pretty well known 'personal finance' blogger guy .
He's claiming that investing in 'low cost funds' decimate the return on real estate


The surprising myths about investing in real estate

He leaves out a lot of facts , one huge one is that rent goes up, sometimes a lot as we've seen in L.A..even with rent control one's rent will still go up about 3% , and also if you are under rent control it's not a guarantee that you can live there forever as we are seeing recently with long time landlords deciding to develop their property rather than rent for below market rates.

If you have a fixed mortgage that amount stays the same, which is a pretty amazing thing if you think about it.

[jm1982]

Difference in net worth between renters and homeowners is massive

"Every three years the Federal Reserve conducts a Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).

In a recent Forbes article the National Association of Realtors’ (NAR) Chief Economist Lawrence Yun predicts that in 2016 the net worth gap will widen even further to 45 times greater."


2016: Homeowner

[CA4Now]

Originally Posted by jm1982

This is why I always think it's kind of crazy when people say they are fine just renting forever.
People say things like they will invest that 'extra money' they would be spending on a mortgage and property taxes, maintenance,etc in other ways , usually the stock market through an index fund ,etc.
But I rarely see people really coming out ahead that way. If you look at retirees now in L.A , the networth of homeowners is going to be a lot higher than renters.

One has no idea, though, what their stock portfolios are.

There are even quite a few people that give financial advice telling people it's a bad idea to buy a home.
This is a pretty well known 'personal finance' blogger guy. He's claiming that investing in 'low cost funds' decimate the return on real estate: The surprising myths about investing in real estate

He's just telling people to be realistic.

He actually has some pretty valuable information there, such as, "while others might urge you to buy a house — “rates are so low right now!” — I hold you to a higher standard. I insist you do more than take catch phrases (“I hate paying my landlord’s rent every month”) and truly understand how real estate works.

For example — if you pay $2,000/month for a mortgage, how much TCO (total cost of ownership) will you actually pay? Would it surprise you to learn that you’ll pay 50% more than your monthly mortgage in additional costs?

Most people would be shocked. But they take their shock out in the form of denial, not further digging. And 3 years from now, they’re saddled with a purchase that they feel cheated about…because they never took the time to learn how it works.

I’m not saying real estate is a bad purchase for everyone. But the vast majority of buyers do not understand how the math works…on the biggest purchase of their lives."

He's right.

[Electrician4you]

Originally Posted by TurcoLoco

Alternative, as ewww as it may be, is also the only feasible option unless you got the "Big Bucks".
Besides, I think even the prices post recession were unreasonable. For me to even consider buying a house in CA without inherting large sum of $$ or winning the lottery, the house prices would have to come down to pre-2000 range.

And at one time they got damn close. In fact they did drop. But I remember you couldn't give a house away in 08-09. I was trying to buy because I knew it will go back up. But banks didn't want to deal with me and realtors were clueless on what to do.

Originally Posted by CA4Now

Unless you bought in 2007 and sold in 2009....or during any of the other times that the housing bubble burst in the past few decades.

We bought a house in the early 90s. Two years kater the house list 1/3 of its value. We kept it. FF and now that house is worth 3x what we paid for it, it's been converted in a rental, and has insane cash flow. If you save and have the ability to get past the slow time you can make more later. The problem is most people don't have the finances to do that.

Originally Posted by CaliRestoration

Let's be honest. If you weren't a home owner in California before 1974, or you don't have a 7 digit salary, you and your progeny will forever be homeless or bankrupted by rent.

There are PLENTY of 400-550 k town homes and single family houses for sale. I get market updates from when I was house shopping.

Originally Posted by Finper

I live in OC and get confused when people say there is a housing shortage that's why prices are so high... All I see are houses here suburb after suburb tract after tract and Irvine co is building like crazy in Irvine. Now I do not see a lot of for sale signs so maybe that's a reason but can't believe there's a lack of housing in so cal

Irvine is building a lot of multi use high rise apartments. The tract housing is all pre planned. The other problem is construction labor. There is a shortage of TRAINED tradesmen.

Originally Posted by jm1982

This is why I always think it's kind of crazy when people say they are fine just renting forever.
People say things like they will invest that 'extra money' they would be spending on a mortgage and property taxes, maintenance,etc in other ways , usually the stock market through an index fund ,etc.
But I rarely see people really coming out ahead that way. If you look at retirees now in L.A , the networth of homeowners is going to be a lot higher than renters.


It seems like too risky of a move to never get into the housing market. Also if one can't afford to invest in their local market, there are still opportunities to invest further out , Central California for example or even out of state , with the right property management.

There are even quite a few people that give financial advice telling people it's a bad idea to buy a home.

This is a pretty well known 'personal finance' blogger guy .
He's claiming that investing in 'low cost funds' decimate the return on real estate


The surprising myths about investing in real estate

He leaves out a lot of facts , one huge one is that rent goes up, sometimes a lot as we've seen in L.A..even with rent control one's rent will still go up about 3% , and also if you are under rent control it's not a guarantee that you can live there forever as we are seeing recently with long time landlords deciding to develop their property rather than rent for below market rates.

If you have a fixed mortgage that amount stays the same, which is a pretty amazing thing if you think about it.

From what I personally saw as I screen tenants, most do not save. Some make great money but don't have the finances for the fish and first month, and too many bills/debt. Remember I see the credit sheet so I see their debt and know their income.

Renting can be great IF you truly invest the difference and your investments keep up to the rent raises.

We purchased a house a while back. Our mortgage (comparing today's rent prices) would be 50% of going rent for a like property today. Literally. So by simply buying after a while rents surpassed my monthly payment. And as time went on it gave us the ability to literally reinvest 1/2 the money that we would be putting in a LL pocket into OUR pocket. So we were able to save and buy another house. There are very few people who can make renting work (financially speaking),