How much house can you afford? (Los Angeles, Orange: sale, landscaping, neighborhoods)

[JohnG72]

High prices are not an overall benefit.

Expensive housing means less money going into other areas of the economy.

It really has nothing to do with if you own or not.

I'll also note that as an owner, higher prices are meaningless unless you are actually intending to sell.

[Vascodagama]

Originally Posted by Dunmovin

What's "true value" other than what people will pay for something?

That's correct ... what someone will pay for it and what a bank will loan based on appraisal.

[Charles]

Originally Posted by JohnG72

I'll also note that as an owner, higher prices are meaningless unless you are actually intending to sell.

I'm always intending to sell.

And, high prices aren't meaningless. The higher the houses sell for the higher the property taxes and the higher the property taxes the more money for government services for me.

Also, the higher the prices, the wealthier the buyer and wealthier buyers are beneficial as neighbors to me due to all the positive correlations with the wealthy: more educated, less in need of government services, bigger consumers, lower crime rates.

So, I'll repeat what I wrote earlier, if you're "in" you want prices to rise.

[JohnG72]

Originally Posted by Charles

I'm always intending to sell.

And, high prices aren't meaningless. The higher the houses sell for the higher the property taxes and the higher the property taxes the more money for government services for me.

Also, the higher the prices, the wealthier the buyer and wealthier buyers are beneficial as neighbors to me due to all the positive correlations with the wealthy: more educated, less in need of government services, bigger consumers, lower crime rates.

So, I'll repeat what I wrote earlier, if you're "in" you want prices to rise.

Thats not at all correct. Actually borders on a troll post.

[joerankinn]

Originally Posted by Axxlrod

You bring in $450K/year, and you're asking an internet forum how much you can afford? You can't figure that out yourself?

Maybe he just wanted to look for others' ideas and what they an say about it. It is not that bad. We can still give out out 2cents. Why not? We can help with some too. Good luck tho.

[proudmommy]

Originally Posted by JohnG72

Thats not at all correct. Actually borders on a troll post.

What percent of homeowners would answer "no" to this question: "Do you want housing prices to rise?"?

[Axiom]

Originally Posted by proudmommy

What percent of homeowners would answer "no" to this question: "Do you want housing prices to rise?"?

Agreed, but that doesn't mean there's a sound thought process behind that desire.

I'm with JohnG72 on this one. Rapid house price inflation actually becomes a drag on economic growth.

If people are using 50% or more of their income just to make their mortgage payment, they don't have much to spend on anything else.

Of course the wild card in Orange County is the California HELOC mentality. Appreciation on paper did indeed funnel tons of extra cash into the economy. That turned out well.

IMO the only people who really benefit are those who sell their house at inflated prices and don't buy again, downsize, or buy in a less expensive area.

Contrary to what many people seem to think, sitting in a house and waiting for price inflation to build equity so you can sell and move up doesn't do much either, at least if you stay in the same area.

[Charles]

Originally Posted by Axiom

Rapid house price inflation actually becomes a drag on economic growth.



IMO the only people who really benefit are those who sell their house at inflated prices and don't buy again, downsize, or buy in a less expensive area.

Contrary to what many people seem to think, sitting in a house and waiting for price inflation to build equity so you can sell and move up doesn't do much either, at least if you stay in the same area.

Who said anything about rapid (or unhealthy) price appreciation? As a recent purchaser, I now want prices to increase - that's all.

And yes, I agree with the two lower sentences. It is practically a myth that home appreciation allows people to "move up" because everything else is appreciating too - and if proportionally, the amount the target house goes up is higher - and the property taxes are higher too. It is really tough to move up.

Basically, like you wrote above, "moving up" means moving out to a cheaper place, having a significant increase in salary, or coming into money (gift).

[00molavi]

I have bought 18 months ago, the prices might have gone down by 3-5% where we are, don't mind it much. Two reasons, one I can ask them to reduce my taxes. Two, I am thinking about a rental apt and the drop helps me. I am not planning to sell for at least another 12 years, so that is it.

[Axiom]

Originally Posted by Charles

Who said anything about rapid (or unhealthy) price appreciation? As a recent purchaser, I now want prices to increase - that's all.

Well, I was referencing the rapid and unhealthy price appreciation Orange County experienced in recent years. Yes, prices are down from the most insane highs, but are they where they would have been if they had steadily increased in a more normal 3% - 6% range during the bubble years instead of posting all those double digit increases?

I know this is anecdotal, but I ran the numbers on a house in my neighborhood that has changed hands several times in recent years. All were equity sales and appear to be well within the range of comps. That house averaged 11.28% annual appreciation over a period of 10 years. How in the world is that kind of year over year appreciation sustainable? Were wages increasing at that rate? I think not.

Coldwell Bankers 2010 Home Listing Report concluded... "Most expensive state for real estate: California real estate is the most expensive and the state dominates the top of the list claiming 14 spots of the top 25."

So does it really make sense to want prices to continue to rise when people are already paying more for housing here than anywhere else in the country? Not if you want what's best for the economy in general, at least IMO.

I think we may have to agree to disagree on this one.