Los Angeles housing mania is back. But without loose lending...bubble, or new reality? (Santa Clarita: low income, sale)

[Finper]

Originally Posted by Mr_Geek

Here's who buys houses in LA county:

1. The well off (100k+ salary and then some)
2. The foreigners (then they rent to Americans)
3. Families living 10 under a roof and more (5k/month mortgage isn't much split amongst 10 adults)
4. The savers (been saving for that downpayment for a decade or more)
5. Those with questionable bankers and are bad at finance (borrow more than they can afford and are house poor and end up getting foreclosed)

I'm closest to #4 but by the time I have 20% down, I'll need way more.

Thanks mr Geek.... it'd be interesting to see percentages

[thelopez2]

Originally Posted by Mr_Geek

I think this is a bubble. We are above the prices from before the last bubble. I hope it bursts soon in dramatic fashion.

Why do you care, do you enjoy people suffering?

[Jamesdeen]

Originally Posted by thelopez2

Why do you care, do you enjoy people suffering?

Because he doesn't own property and wants to buy. But then if there's a drop will he actually have the stones to buy then?

If it drops 10% will he buy or wait for 20% or 30%? Catching a falling knife is a lot easier said than done and hindsight is always 20/20.

This is why the average person should not try and time the market. Instead buy when you can afford it. If you wait for the perfect moment you will wait forever and be stuck by analysis paralysis and full of regret.

[69Charger]

There is too much demand for a crash. A job loss recession could set up falling prices, but will the average person have a job, or a larger down payment, to buy then? Will competition be fiercer for lower prices?

History shows even if they fall, they will go back up. Better to retire with no mortgage, rather than renting.

[thelopez2]

Originally Posted by Jamesdeen

If it drops 10% will he buy or wait for 20% or 30%? Catching a falling knife is a lot easier said than done and hindsight is always 20/20.

This is why the average person should not try and time the market. Instead buy when you can afford it. If you wait for the perfect moment you will wait forever and be stuck by analysis paralysis and full of regret.

Exactly

[thelopez2]

Originally Posted by 69Charger

There is too much demand for a crash. A job loss recession could set up falling prices, but will the average person have a job, or a larger down payment, to buy then? Will competition be fiercer for lower prices?

History shows even if they fall, they will go back up. Better to retire with no mortgage, rather than renting.

Average buyer can't compete with cash buyer during a downturn.

[jm1982]

Originally Posted by 69Charger

Writing love letters, bidding $100,000 extra: Buying a Southern California home is 'insane' - LA Times

It's like 2006 all over again, love letters et all, except lending is TOUGH! Housing shortages are rampant. The whole world wants to live in El Lay.

I don't think it's a bubble, lending and Chinese money laundering (lol) is pretty legit these days. Lots of Tech moving in, warehouses, logistics, Aerospace bouncing back...

It's just plain ol expensive Wilbur.

Lending is tough relative to 2006, but it's gotten looser versus 2009 or so.

Regarding the Chinese they don't seem to invest in every neighborhood but definitely in areas like the San Gabriel Valley.
They definately have been investing heavily in CA and in the U.S in general. L.A Times had an article about it just yesterday.

Few areas in America haven't seen Chinese investment - LA Times

At some point the market will drop. Just like last time most probably won't realize until it's too late. Once the headlines are out and the average person finds out then it's usually too late.

I think the idea that 'lending requirements are stronger now' might be giving some a false sense of security that prices won't go down.
Like some other posters mentioned if you are buying a house to live in forever or for a long time (lets say 20 years) it's not going to matter as much really if there's a dip in prices or a crash.

Also I read that article people paying $100k over list for houses in Glassel Park. I'm wondering if they purposefully listed it low to get people into a bidding war. Most homes seem to go for around list or a couple percentage more or less these days.
My place is in L.A in the valley, but not in a hot/trendy area. It seems like some of the houses are sitting for a bit but that could just be a 'normal market'. I don't think homes are going under contract in hours unless it's some sort of amazing deal.

[DawnW]

Originally Posted by Jamesdeen

Because he doesn't own property and wants to buy. But then if there's a drop will he actually have the stones to buy then?

If it drops 10% will he buy or wait for 20% or 30%? Catching a falling knife is a lot easier said than done and hindsight is always 20/20.

This is why the average person should not try and time the market. Instead buy when you can afford it. If you wait for the perfect moment you will wait forever and be stuck by analysis paralysis and full of regret.

We had friends who didn't buy in 2000 because they were sure there was a bubble. Prices had just gone up quite a bit from the 1998-1999 prices

Now that $190K house in Pasadena (1998 prices) that went up to $280K in 2000, is worth $800K or more.

I didn't keep in touch with them and often wonder if they are still even in LA.

[Perma Bear]

Originally Posted by Jamesdeen

Why do you say someone making 250k a year can't buy something for 900k- 1000k?

Dual income professional older millennials/ young gen X buying their first homes. Gen Y is the largest generation currently alive.


From the 2017 NAR report.


One consistent finding for the last four years of reports has been that buyers 36 years and younger (Millennials/Gen Yers) is the largest share of home buyers at 34 percent. Sixty-six percent of these buyers were also first-time home buyers. The largest cohort in America is growing up and becoming more traditional in their buying habits. This year’s report saw an increased share who purchased in suburban locations and who purchased detached single-family homes. Forty-nine percent of buyers 36 years and younger now have children under the age of 18 in their home, 66 percent are married couples, and 13 percent are unmarried couples (the largest share of all generations)

https://www.nar.realtor/reports/home...ational-trends

You mean 1% or less of the population is buying literally every single home? I don't know but that doesn't sound very sustainable.

[CA4Now]

Originally Posted by thelopez2

3% down on 800k SFR home, I'm interested to know where and how.

Or why. Can you imagine doing this? You'd be paying off your principal only for eons...