Seriously, how do people qualify on 500,000 loans with 80,000 incomes? (Los Angeles: real estate, apartment)

[EscapeCalifornia]

Originally Posted by sheri257

Well ... some people are qualifying. Maybe they make a lot more than $80K or, maybe they have a lot of cash and little to no debt but ...

In September:

184 houses in Irvine sold for $580K on average
55 houses in Costa Mesa sold for $514K
139 houses in Huntington Beach sold for $608K

DQNews - California Home Sale Price Medians by County and City

So somebody's qualifying for these mortgages

Most likely, its people who've been in the market for a long time. A $600k house isn't that expensive if you bought your first house for in 1985 for $100k and have been rolling the equity forward since then.

[Charles]

The LA Times real estate section has a neat little tool that shows sales price differences in the past year. (It is down right now but try later....) Look for "SoCal housing data by ZIP" on the right side of this page:

FULL COVERAGE: SOUTHLAND HOUSING MARKET - Los Angeles Times

[sheri257]

Originally Posted by Charles

The LA Times real estate section has a neat little tool that shows sales price differences in the past year. (It is down right now but try later....) Look for "SoCal housing data by ZIP" on the right side of this page:

FULL COVERAGE: SOUTHLAND HOUSING MARKET - Los Angeles Times

Remember when you were talking about how much California home prices rose during the boom ... and how there wasn't a great explanation for it?

These recent fires reminded me of what happened back in late 2003 ... there was another series of huge fires that took out 5,000 homes across the southland from San Diego to the inland empire.

I also remember prices skyrocketing after that. I'm sure it wasn't totally because of the fires but ... if you take 5,000 homes out of inventory literally overnight ... that's got to have an impact.

Can't help but wonder if these recent fires will make the market tighten up as well.

[KaraG]

I wonder how many of the people qualifying for homes now are just downsizing. I don't know how an average young couple could qualify now. I think that will be the next huge problem for the market there.

And you have to be careful when renting a home there now, with so many landlords losing their rental homes to foreclosure and the tenants being forced to move unexpectedly. Our grown children are buying homes in other states now, like we did.

[Charles]

Originally Posted by KaraG

And you have to be careful when renting a home there now, with so many landlords losing their rental homes to foreclosure and the tenants being forced to move unexpectedly.

There was a thread or two on this exact same subject

//www.city-data.com/forum/calif...-mortgage.html

[bhcompy]

Originally Posted by EscapeCalifornia

Most likely, its people who've been in the market for a long time. A $600k house isn't that expensive if you bought your first house for in 1985 for $100k and have been rolling the equity forward since then.

see, thats the thing. rates were being driven up by boomers selling their houses and moving up to nicer ones while the young and houseless had to resort to crazy loans to even get their foot in the door before they get left behind

[eclipxe]

Originally Posted by sheri257

Remember when you were talking about how much California home prices rose during the boom ... and how there wasn't a great explanation for it?

These recent fires reminded me of what happened back in late 2003 ... there was another series of huge fires that took out 5,000 homes across the southland from San Diego to the inland empire.

I also remember prices skyrocketing after that. I'm sure it wasn't totally because of the fires but ... if you take 5,000 homes out of inventory literally overnight ... that's got to have an impact.

Can't help but wonder if these recent fires will make the market tighten up as well.

It was about 3000 homes (A little bit of fire perspective | L.A. Now | Los Angeles Times)

I doubt the impact was too great, but I might be wrong. The first thing to consider is that 3000 homes doesn't correlate to 3000 homes out of the inventory. We only consider a home in the "inventory" if it's for sale. If we assume that the 3000 families all purchased new homes, there would be a great reduction in the supply, however what happens to the land and homes that are rebuilt? Those will feed right back into available inventory (if the family chose to buy rather than rent).

So while the fires in 2003 might have had a small impact on demand, it really can't compare to the influence that easy financing and reduced lending standards had.

Realtors like to boil the market down to "location, location, location". Economists know the real mantra is "financing, financing, financing". The ability to secure loans vs. income/debt is the single most important indicator of how real estate markets behave price wise.

You don't realize home appreciation because of fires. You realize home appreciation when:

1. Unemployment drops
2. Wages rise
3. Inflation rises
4. Financing becomes easier (lower interest rates, easier financing terms, less restrictive borrower requirements)

You realize home depreciation when:

1. Unemployment rises
2. Wages fall
3. Inflation falls
4. Financing gets tighter (20% down, higher credit standards)

Every market will have fluctuations due to localized events (fires, earthquakes, natural disasters in general tend to depress markets), however the fundamental price trends are directly tied to the 4 indicators I mentioned above.

Do you disagree?

[eclipxe]

Originally Posted by sheri257

Very slowly in Irvine at least. 4 percent down from last year isn't much of a price drop.

Irvine average and median listing prices

Trulia shows a 14% drop in Irvine. I don't discount the data set you presented, but what is their bias and method of calculation?

[BRinSM]

i think this time around, the fires are going to have an adverse effect on housing prices in the region. the recent news coverage of the fires is going to make the danger from wildfires much more real to the people who might have been considering buying homes in foothill communities that are open to brush/wilderness. There are many, many areas in socal the are susceptible to fires (ie, Thousand Oaks, La Crescenta, Santa Clarita, inland south OC communites, Temecula, the list goes on and on). I have no doubt potential buyers in these areas may reconsider homes in fire prone neighborhoods.

[eclipxe]

Originally Posted by BRinSM

i think this time around, the fires are going to have an adverse effect on housing prices in the region. the recent news coverage of the fires is going to make the danger from wildfires much more real to the people who might have been considering buying homes in foothill communities that are open to brush/wilderness. There are many, many areas in socal the are susceptible to fires (ie, Thousand Oaks, La Crescenta, Santa Clarita, inland south OC communites, Temecula, the list goes on and on). I have no doubt potential buyers in these areas may reconsider homes in fire prone neighborhoods.

Nonsense, everyone wants to live in Orange County/SoCal! Look at all the demand and price appreciation!

/sarcasm

;-) Sorry, I just think the blind optimism and assumption from some people that "EVERYONE" wants to live in OC/Coastal Cal means prices won't go down further is ridiculous. I admit, I really like OC but I know many, MANY people that can't stand the area...shockingly I even know people that prefer the mountains to the coast! Absurd I know!