Millennials simply can't afford to live in OC (Riverside, Irvine: Home Depot, military)

[saibot]

Originally Posted by Nico24

I guess reading all of the comments below about something needing to happen for another big crash...I guess no one considered a pandemic...

The pandemic hasn't caused a big crash. Quite the opposite.

[Racer46]

Originally Posted by saibot

The pandemic hasn't caused a big crash. Quite the opposite.

True, the prices are going up at about double the % of what they were prior to the pandemic.

[k374]

Real estate nationally is in an epic bubble but not interest rate adjusted. What I mean is that the price is correct for current interest rates, but that presents a huge rate risk. If for some reason rates have to rise sharply due to inflation expect Southern California Real estate prices to permanently crash 40-50%. And there is a real risk that rates rise. Not saying it will happen but it's possible and represents a huge risk.

Most recent buyers will be bag holders... many will just do jingle mail like they did in 2008 which will cause a tsunami of foreclosures. With no recourse loans in CA buyers simply do not care... they've learned from 2008, simply squat for 24 months for free and then mail the keys to the bank. Heck with Covid even better, nobody can touch you.

Which is why I wouldn't touch SoCal real estate with a 10 foot pole....too much risk with prices predicated on ridiculously low rates.

[Jdawg8181]

Originally Posted by payutenyodagimas

I didn't say you live with your parents forever. I said when you are starting..so that you could save when you are not earning that much yet.


I also said, its not good to be still living with your oldies or having roommates when your are already in your 30s

I don’t live in California but I do live in the New York City area which is comparably just as expensive. This right here is key! I lived with parents for 4 yrs after college & bought my own house @ 26 on LI. It’s not impossible & in fact for me it was quite easy. (I was making $54,000/ yr at the time). The prob is most millenials want to get out of their parents house ASAP & then get stuck in a perpetual renting Or living paycheck to paycheck situation

[New Englander]

Originally Posted by k374

Real estate nationally is in an epic bubble but not interest rate adjusted. What I mean is that the price is correct for current interest rates, but that presents a huge rate risk. If for some reason rates have to rise sharply due to inflation expect Southern California Real estate prices to permanently crash 40-50%. And there is a real risk that rates rise. Not saying it will happen but it's possible and represents a huge risk.

Most recent buyers will be bag holders... many will just do jingle mail like they did in 2008 which will cause a tsunami of foreclosures. With no recourse loans in CA buyers simply do not care... they've learned from 2008, simply squat for 24 months for free and then mail the keys to the bank. Heck with Covid even better, nobody can touch you.

Which is why I wouldn't touch SoCal real estate with a 10 foot pole....too much risk with prices predicated on ridiculously low rates.

My thoughts match your understanding, however (and with all due respect) we haven't been right thus far, have we? I am in a slightly different situation where I am based on the East coast, however, looking to buy a second home (most likely Condo/Townhome) in Laguna, so I don't have the same time pressure as others.

The last time I was in OC (2019) for an extended period of time, I was outbid every single time, because I was not willing to go as high as others. In 2020, I held off thinking that maybe the pandemic might cool things down, however, it had the opposite effect on real estate.

With Powell/Fed making a commitment to keep the interest rates low through 2023, I am not sure if we're going to see that higher interest rate environment anytime soon. I do agree all this government spending has already increased inflation, whether the official numbers reflect it or not. So we'll have to see how it all plays out.

My assumptions may be incorrect. I really feel bad for those who are looking to purchase right now, it's a super challenging market fraught with risks, as you stated above.

[TimTheEnchanter]

Originally Posted by New Englander

With Powell/Fed making a commitment to keep the interest rates low through 2023, I am not sure if we're going to see that higher interest rate environment anytime soon. I do agree all this government spending has already increased inflation, whether the official numbers reflect it or not. So we'll have to see how it all plays out.

My assumptions may be incorrect. I really feel bad for those who are looking to purchase right now, it's a super challenging market fraught with risks, as you stated above.

And increased energy costs are adding to inflationary pressures along with the minimum wage upticks. The "official numbers" will remove any sector that makes the "official numbers"look bad.

[New Englander]

Originally Posted by TimTheEnchanter

And increased energy costs are adding to inflationary pressures along with the minimum wage upticks. The "official numbers" will remove any sector that makes the "official numbers"look bad.

Spot on. The 'official numbers' are hardly reliable for this very reason.

I may not have an idea of where the economy is headed, however I do know for certain that savers have been decimated by all of this: the continuing, low interest rate disincentivizes savers from keeping funds liquid, while the 'real' inflation rate erodes purchasing power.

This increase in asset pricing is due to investors chasing yields, engaging in riskier, speculative behavior. If the interest rates were to rise 200-300 basis points, this economy will enter significant turbulence, which is why K374 is absolutely correct about the interest rate risk.

[Gaylord_Focker]

OC is expensive yes

[DKM]

Houses that were 800 to 900 in my area 4 years ago are now 1.1 to 1.2. Same in OC?

[mr_california]

Originally Posted by Jdawg8181

I don’t live in California but I do live in the New York City area which is comparably just as expensive. This right here is key! I lived with parents for 4 yrs after college & bought my own house @ 26 on LI. It’s not impossible & in fact for me it was quite easy. (I was making $54,000/ yr at the time). The prob is most millenials want to get out of their parents house ASAP & then get stuck in a perpetual renting Or living paycheck to paycheck situation

I had a similar experience to you. I saved every penny I had and stayed with my parents until I was 25. I made $44,000 the year I bought my first house. It was a piece of junk, but it was all I could afford, and instead of blowing my money every weekend, or taking vacations, I used all of my money to fix the house and made a nice profit 3 years later when I sold it.

I see millenials who I work with. They all have room mates, and they make enough money to pay rent and go out on the weekend. No prospects of buying a home in the San Francisco Bay Area. Do I feel sorry for them? Not one bit. They all have fancy phones, they spend $20 on high end cocktails when they go out and they eat our for every meal. Of course they can't afford anything.