FINALLY - rents coming down, big time. (Orange: appointed, construction)

[killer2021]

Originally Posted by k374

I just got my lease renewal notice and my rent has increased by 17% Of course a year ago the rent did come down by 21% but now it is gone back up, that's ridiculous!

There are still lots of delusion landlords out there. The main ones I see who keep the prices high are the corporate landlords or large owners. If you rent from a small landlord or individual you'll get a better deal. For those owners it is either rent the place out or take a loss. The large owners and corporations have some capital to sit and wait for someone who is willing to overpay for the unit.

Now is the time to shop around. Your rent should have gone down 20%, not up 20%.

In most cases the coastal cities are further from job centers than areas that are much cheaper. The expensive coastal cities are expensive for much the same reason a Bentley is expensive. There is no consistency in terms of proximity to job centers, etc. Why is Lajuna Beach more than Seal Beach? The latter is closer to jobs.

the coastal cities are expensive because of the location, the ocean. Everyone is willing to pay top dollar so they can see the ocean. Likewise, OC still has alot of wealthy people who are willing to waste their money on the property. For the person who isn't rich they will settle for the best value properties.

[JohnG72]

Originally Posted by John23

I think eventually it will *all* get back in line with income. I don't see how home prices, or rents can stay above income forever.

-Two major areas have distorted things since the 80's and 90's (when everything was more in line with income).

Schools, which have collapsed at almost a 90 degree angle for the last 30 years (thus driving up prices in the remaining 20% of la which is good).And infrastructure which hasn't kept up at all with population growth (thus driving up areas close to jobs).

If there was decent infrastructure, many of these areas would even out.

-I think so cal real estate in the 80's and 90's was a hand off between baby boomers and the middle class. At the bottom of the market in the 90's, the baby boomers passed their real estate to other middle income earning boomers.

Who are they going to pass it off to in 2010-2020??!!? There's no one to pass the ball to. Indebted gen y'ers?!? These $600-800 k homes are going to keep declining, maybe for decades in real terms. Unless every millionaire in the world suddenly decides to come here and support prices in real terms.

Home prices cant keep increasing beyond the income or skill of the homeowner. Its going to take 10-15 years to completely unwind the 02-06 bubble.

It goes further than that. Bad loans were made again from 2007-2010. FHA, 3.5% down to people who couldn't save anything approaching a real downpayment. We are just starting the see the begining onslaught of those in the short sales in Long Beach that are happening in $350-500K condos that were about 40% overpriced. So basically you have the first set of Option loans that will hit super hard this year and next, then looking at 2012-2014, you will have a smaller, but still substantial, additional set of subprime loans that were not called subprime when issued, but are.

[EscapeCalifornia]

Originally Posted by killer2021

the coastal cities are expensive because of the location, the ocean. Everyone is willing to pay top dollar so they can see the ocean. Likewise, OC still has alot of wealthy people who are willing to waste their money on the property. For the person who isn't rich they will settle for the best value properties.

Except prices are still crazy in "coastal" areas where you can't see the ocean from your house without pulling up Google Earth.

[LittleCatherine]

Where are you guys finding these places?
I have been looking for an affordable place in South OC for what feels like forever- I haven't found anything near that affordable...

[EscapeCalifornia]

Originally Posted by LittleCatherine

Where are you guys finding these places?
I have been looking for an affordable place in South OC for what feels like forever- I haven't found anything near that affordable...

"Affordable" is relative. When a 2/2 apartment that used to rent for $2000/mo drops to $1800/mo, people think they're getting a bargain.

[bhcompy]

Originally Posted by JohnG72

It goes further than that. Bad loans were made again from 2007-2010. FHA, 3.5% down to people who couldn't save anything approaching a real downpayment. We are just starting the see the begining onslaught of those in the short sales in Long Beach that are happening in $350-500K condos that were about 40% overpriced. So basically you have the first set of Option loans that will hit super hard this year and next, then looking at 2012-2014, you will have a smaller, but still substantial, additional set of subprime loans that were not called subprime when issued, but are.

FHA isn't a bad program, it's not a subprime program, and there are significant costs paid upfront for mortgage insurance on top of the down payment. What originally costs 3.5% ends up costing around 7% after all of that and bank fees. Is the program abuseable? Yes, but every program is. And there is an upper limit on the price of the home you can purchase anyways, along with pretty solid requirements for income, debt, and late payments on debt(better requirements than conventional loans, at least until the banking industry stopped lending). The only thing that doesn't come in to play significantly is your credit score, though that has changed lately.

And for the record, saving up 150-200k for a 20% down payment isn't something many can do unless they remain childless and living at home well in to their 30s and also not be burdened by the mountain of college debt that accumulates in today's world.

[EscapeCalifornia]

Originally Posted by bhcompy

And for the record, saving up 150-200k for a 20% down payment isn't something many can do unless they remain childless and living at home well in to their 30s and also not be burdened by the mountain of college debt that accumulates in today's world.

One couple I know did exactly that. They both lived at home until they got married in their 30's. He's an MD and his parents paid for his med school.

[CAVA1990]

Originally Posted by EscapeCalifornia

One couple I know did exactly that. They both lived at home until they got married in their 30's. He's an MD and his parents paid for his med school.

See? Anybody can do it.

[bhcompy]

Originally Posted by CAVA1990

See? Anybody can do it.

Indeed.

Wish my parents would have paid for community college, let alone med school

[JohnG72]

Originally Posted by bhcompy

.

And for the record, saving up 150-200k for a 20% down payment isn't something many can do unless they remain childless and living at home well in to their 30s and also not be burdened by the mountain of college debt that accumulates in today's world.

LOL which is EXACTLY why homes are overpriced. A 300K home...of which there are very few of in OC, would be around 4.5x average household income for OC. A down payment would NOT be $150-200K, it would be $60K, a lofty but acheivable goal.

Anyways, its a mess, and the loans requiring no down are LOL bad for all the reasons the RE market is like it is in the first place.