laserjobs
Premium
join:2004-05-02
Las Vegas, NV
 ·Cox HSI
1 edit | reply to sholling
Re: So Cal housing bubble ready to pop?
said by sholling  : For the last 3 years I've watched friends urge a young family to wait for the bubble to burst, and they've listened. Three years ago they could have bought a 20 minutes from work 1300sgft 3 bedroom 2-1/2 bath townhome in my tract for an affordable 160k-ish. Sadly they believed the naysayers and continue to pay $1,000/mo in rent for an 800sqft 2 bedroom 1 bath Pico Rivera home for their 3 kids - just slightly less than their house payment would have been. These homes are now going for $350-390k and they are now stuck being renters for life. The fundamentals in the market were not changing at that point so how could a bubble burst? We now have the interest rates moving upwards creating a change in fundamentals, this is how a bubble bursts. If interest rates stayed the same we would have a slow down in the market with a soft landing and prices staying around the same due to supply and demand created by affordability. Since the fed decided to put gas on the fire created on the tech crash by lowering interest rates we are in worse shape than before since we now have to stave off inflation by raising interest rates.
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dogma
Premium
join:2002-08-15
Boulder City, NV
| reply to sholling
Don't need to zillow it, heck i live 4 Blocks from it.
-Backstory: When I departed that house, it was at the bottom of the California RE market. Everybody was hurting. I found the home I live in now, a "better" home, that was a foreclosure. Got in for taking over the payments and a promise to pay $60K in 5 years. That was 12.5 years ago, and the value has gone up 500%.
The old house I bought in '89 at $265K, which fell to $193K in '92, is now worth $700K +/-.
Don't get me wrong. We all have to live somewhere. Owning a home is a great, if not the best long term investment...and I agree, loooong term.
This issue is we all have "investment windows". Meaning if we risk a commitment, we need to be able to really afford that risk for that period of time. ALL the risk need to be looked at. All the what if's.
said by sholling :
On top of that in 30 years you will be in the position of having no house payment or rent and paying just $40-50/month in property taxes while your too-smart-to buy friends are paying an adjusted for inflation $1500 for an apartment and eating cat food.
This is assuming they have no other investments. |
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aztecnology
O Rly?
Premium
join:2003-02-12
Murrieta, CA | reply to dogma
Why we're in a bubble, easy reading...
»piggington.com/bubble |
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dogma
Premium
join:2002-08-15
Boulder City, NV
| Excellent link. Well supported facts.
said by this article :
Home prices have been driven to current levels not by fundamentals, but by ubiquitous optimism, a complete lack of risk avoidance, a staggering amount of debt accrual, low lending standards, an enormous increase in market participation, widespread misconceptions about what drives home prices, and an utter dependency on continued price gains. Southern California is experiencing a classic speculative bubble.
If prices were to permanently flatten out right now, given current wage growth, it would take over 16 years for home prices to get down to the historical average of 9 times income, and 23 years for prices to get down to the historical post-boom low point of 7.5 times income. Keep those figures in mind the next time someone tells you that home prices "will just flatten out for a while until incomes catch up."
A big bet if one buys in today. From the graph (with dogmas investment windows), things may not look Rosy for a while. |
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jinjimbob
Troy Mcclure
join:2001-11-13
| reply to hopeflicker
said by hopeflicker :said by jinjimbob :A reason why the costs of buying a house are going up is that the costs of building a house are going up. I don't see any bubble outside of NorCal/NYC. I dont think it's the costs are rising that much. I think it's DEMAND. How come we dont see the astronomical prices in places like Arizona or Nevada. What's the average cost of a NEW home there? what, maybe 3 to 5? $300 to $500k, but the land is cheap.
Yep they, the labour costs, building material, and a big one is permit costs, school mitigation fees etc..
A building permit used to be so the building was built properly, but now they are part of a city income.
Look at your house insurance, mine went up 10% this year, costs more to replace the house. |
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jig
join:2001-01-05
Hacienda Heights, CA
| reply to dogma
the last 3-5 posts are interesting, but i'm wondering how inflation fits in. it could be a pretty heavy handed equalizer in a reasonably short amount of time. and i'm not sure that graph takes inflation into account properly by (i think) seeming to assume it's factored out by dividing out income.
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A man compounded of law and gospel is able to cheat a whole country with his religion and then destroy them under color of law. -Ben Franklin |
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supertbone
join:2002-04-04
Pleasant Grove, UT
| reply to dogma
As a person who works for the collections division of a major national lender. We are preparing for some serious issue this summer when ARMs will be adjusted. We have been hiring like mad trying to deal with it. Beside ARMs, more people are falling behind in their mortgages than before. It is sad, some people may lose their homes.
In a personal note my co-worker who is trying to sell her condo is having trouble selling it as several people have backed out of escrow. Many new tracts are seeing that people are backing out of contracts for new houses. |
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Bill
Light Up The Halo
Premium,VIP
join:2001-12-09
clubs:
| reply to dogma
»www.forbes.com/lists/2006/7/Rank_1.html
Several LA and Orange county cities made it on the list. The highest ranking LA/OC city was Newport Beach (92662) with a median sale price of $2,397,500  |
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