Measure S and L.A.’s Future Development – Taco Tuesday Baby Boomers fight to live in a real estate world that no longer exists.
Rental Armageddon hits the ballot boxes in March for Angelinos. One measure that hits particularly close to home is Measure S, dubbed the slow growth measure and sought out to curb large scale development. Now as you are aware and we’ve noted before, Los Angeles County is now a renting majority county. Most of the people that live in the area and haven’t purchased are priced out in terms of owning a home. So it should come as no shock to Taco Tuesday baby boomers who bought “back in the day†that large scale development is going to be the future even if it interferes with them getting lit mid-afternoon. Measure S lost because most people rent and don’t give a crap about your crap shack in Culver City or any other West L.A. hood. In other words, L.A is going to get even more crowded and sardine packed.
Measure S and L.A.’s Future Development
For many of us Los Angeles is our home and the engine of Southern California. But the future belongs to the young. And the young are broke and can’t afford sprawled out crap shacks that really are not utilizing space efficiently. I know you want to have a yard for your hyena puppy and the ability to paint your walls magenta all for the nice sum of $700,000 or $1 million but the reality is, most in the county can’t pay that. They are fine with an apartment or a condo.
Most are going to rent:
It is interesting who is voting for Measure S:
“(Los Angeles Times) When people like me bought their home they didn’t think there would be a skyscraper next door to them … because zoning was supposed to protect them,†said Carole Miller, a Mid-Wilshire homeowner who supported the ballot measure. “City Council has been taking all this money from developers and everybody knows it.â€
The support for Measure S was couched as a way to curb city corruption with developers but come on now, L.A. is in desperate need of more housing. And the housing that will fit the economic needs of current inhabitants is more high density rentals, not crap shacks that aspire to be on the next HGTV show. I know it is nostalgic to think of when you bought your home back in the Leave it to Beaver days but things have changed:
“This is the L.A. of Taco Tuesday Baby Boomersâ€
In 1950 L.A. County had 4.1 million people. Today we are at more than 10 million. Development is going to happen because many of the voters now have no vested interest in protecting small enclaves of crap shacks that they can’t afford. I’ve talked about this many times but people seem to have this weird NIMBYism that their little area is somehow immune to the forces of economic nature.
L.A. will continue to develop and will move forward on the path set forth by rental Armageddon. This wasn’t always the case. In fact from the 1980s to around 2010 the majority of households in the L.A. metro area owned:
This is just the way things are moving. So you have 2.3 million adult children living at home with their parents in California because they are too broke to move out and rent, let alone buy. So why would these people vote for Measure S? I would imagine these people would vote no as to have the chance of having more housing stock to rent from. What would curbing development do? Traffic already is horrendous but put more restrictions and you get something like San Francisco where craziness is the trend of the day and prices are out of reach for more mere mortals. This is simply a battle of the “I got mine so screw you†Taco Tuesday baby boomer mentality.
Sorry folks, L.A. traffic is going to get worse but at least you’ll get more apartments. Look on the bright side, we’re not too far away from autonomous self-driving Uber cars so you can have your tacos while getting lit and not having to fret much about traffic.
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191 Responses to “Measure S and L.A.’s Future Development – Taco Tuesday Baby Boomers fight to live in a real estate world that no longer exists.”
Well, that $2 million Santa Monica townhouse’s sale fell through. It’s back on the market: https://www.redfin.com/CA/Santa-Monica/941-11th-St-90403/unit-2/home/79038512
How long will you wait for a price drop that may never materialize? Many thought that once interest rates rose, prices would drop. But, that did not happen, Instead, interest rates rose and house prices rose again.
The FED has a strategy to save the economy by forcing home prices much higher than 2007 levels in the overwhelming majority of zip codes. At this time, there are too many zip codes with prices lower than 2007. So, the FED will continue to have an interest rate policy that supports higher and higher housing prices. The FED also knows it can raise interest rates and home prices will continue to rise as long as they do not raise them too much.
Waiting for a home price drop is fighting the FED and that is dumb.
Housing market price corrections don’t happen over night. It is a very illiquid market and it takes about 6 years to fully correct.
JT, Look at these graphs and see for yourself why you are wrong:
http://www.zerohedge.com/news/2017-03-08/its-1937-all-over-again-weak-gdp-soaring-inflation-and-fed-hiking
Just because the FED was forced by Obama to keep the rates low for too long, does not mean they can do so indefinitely. Now they have to make up for that delay; or I should say they will be FORCED to do it because of the inflation. Remember Volker and the 80’s and the 20% mortgage rate. What? Do you think Volker did not understand the consequences of his rate hikes? Yes, he did; better than anyone else and he still did raise them. Many things in life you don’t do because you want to but because you do not have a choice.
Do you think that the FED will let their gig blow in their face? Do you really think that the sharks from the FED will act like those clowns in Venezuela?
There is about 6 months delay between the raise and the effects on the economy. Wait till we get few more raises and add another 6 months and then we can talk. Directly or indirectly all RE price increases are associated with 8 years of zero rate.
In the past, interest rates and housing prices have moved independently of one another. In fact when you look back over the past say 40 years there is very little evidence of one variable affecting the other. You would think rising interest rates would cool off a hot housing market, but this has not been proven as a truth. But hey, this time could be different.
https://www.forbes.com/sites/billconerly/2012/12/18/when-mortgage-rates-rise-will-home-prices-fall/#7186a7855881
Your reference points out the vast disconnect between housing and economic reality! I’d say everyone has been warned!!!!
In the past, prices of homes were a lower multiple of income as well. What has made up the diff? Debt. So it stands to reason that rate movements are more meaningful now than they were 40 years ago.
Have to keep in mind that the new “Make America Great” administration in Washington is for deregulation of banks and financial institutions including repeal of Dodd-Frank. If this comes to pass along with regular interest rate hikes we are likely see a reemergence of sub-prime mortgages, interest only loans, and other creative finance tools to help people qualify even at higher rates and keep the dance going for some time. I truly believe that our new president will do everything and anything within his power to keep the housing market afloat since it is his family’s bread and butter. I do think there will be a adjustment sooner or later especially in super bubbly cities like LA & SF, but I don’t see it happening in the immediate future and I am in the camp of it being in the 20% range. There are too many people sitting on the fence who will jump in and prop the market up at the 1st sign of weakness and increased inventory. I just don’t see a catalyst for a complete meltdown, at least not YET.
WheelinDealin,
What happened in the past is irrelevant to the present. The economy we have today does not have any resemblance with the past when we used to be the manufacturer of the world.
US used to produce real wealth. Today the economy is propped up by low interest to avoid collapse. The amount of debt we have today is staggering. I don’t buy into the narrative that debt is irrelevant. If the government would print the money it would be less dangerous. However, it is the FED ( a private banking cartel) doing the printing. The US taxpayer is in total slavery to this banking cartel just to service the interest from a smaller and smaller wealth creating machine. At the same time the wealth creating machine was gutted from this country and shipped overseas.
Today, most of what is left from US economy is dependent on the debt and interest, more than ever before. Keep dreaming that interest is irrelevant till you see what is going to happen.
Geez Flyover, only heavy-duty Reynolds wrap for you.
@WheelinDealing
Trump also advocated taking advantage of the previous housing downturn even though RE was his “bread and butter” business. Any good businessman knows when to ride a wave instead of letting it drown them. The issuance of subprime and other exotic loans started several years ago. Eventually, the credit cycle, which we are closer to the end of rather at its beginning, will choke it off due to the inherent risks.
How long will you continue to try to convince people to get off of the fence? Many also insisted that the Fed couldn’t wouldn’t raise rates, but it’s happening. Nobody including you knows the Fed’s strategy for sure.
So, do you believe the CPI published numbers? Do you believe that the FED will wait to be faced with a situation like in Venezuela? What they say now and what they did in the past is good enough indication of what to expect. It is not just my opinion. The vast majority of economists and investors believe that we are going to see a series of rate increases. Do you?
No. Not Sure. Probably.
“to save the economy by forcing home prices much higher”
LOL, that may be one of the most illogical assumptions i have ever read. If higher home prices can save the economy how did that very same “plan” almost destroy it in 2008?
the strategy can not both save and destroy.
“How long will you wait for a price drop”
JT, I can easily wait 30-40 years if needed. Or, I never buy and inherit the house(s). By renting I save tons of cash, stay flexible, have no liabilities and can live a debt free life. There is no reason to buy an overpriced crapshack.
However, when the next crash happens and prices drop 40-60% I feel like I HAVE TO BUY because it will probably be closer to rental parity or even cheaper than renting.
As you mention with inheriting houses, you have full downside protection against a rising market since you are going to get free house(s) in the future. For a lot of people this is not the case, so waiting to buy is not without risk for them.
Dirk Nowitzki hit 30,000 points. Oh ya, First.
Congrats to the greatest Dallas Mavs. 2010-2011 championship is one of the best events in my life.
The entire mode of life that opponents of Measure S are struggling to preserve, which is the suburban template with its low-density, auto-dependent sprawl, is obsolete and becoming increasing unaffordable for most of our country’s population in any case. That’s why low-density, post WW2-style suburbs are losing value relative to urban neighborhoods in every major urban area in the country, and suburbs that want to succeed going forward are remaking themselves into “small town” type areas with a mixed use downtown core oriented to a rail stop or other public transit. And, as more young people in especial find themselves forced to choose between owning a car or having a decent place to live, there will be more impetus for high-density, transit-oriented development. This won’t be a matter of choice- it will happen because it will be the only way people can preserve a decent standard of living.
That is one possibility. Another possibility is the general availability of the self-driving car in the next 15-20 years causes a mass migration to the suburbs not seen since (and possibly exceeding that caused by) the general availability of the car. Combine that with improvements in high-speed telecommunications (particularly wireless communications), improvements in solar and energy storage, and improvements in telecommuting tools, and it becomes more possible to maintain a high standard of living even in a rural area.
And I do hope we always get the choice, because the idea of living in a small apartment with a bunch of other people in a high-density urban environment does in no way is my idea of a “decent standard of living”.
Less we forget that it was the auto industry that killed the mass transit/trolley system. I wonder where our cities would be today if the mass rail still coexisted today? I think if cities can be more walkable to work the whole idea of building highways would probably shrink. We have to stop thinking the car is the solution. It’s mass rail/transit that will help change the cities in my opinion.
The automobile won over because it enables freedom and independence. Mass anything relies on dependence.
To Getting Out: I never felt so dependent in my life as when I lived in a city where I was almost completely auto-dependent. St Louis was, in my time there, a high-crime, auto-dependent city with skeletal transit and a dearth of essential services within a safe walk from my apartment. I was a slave to my car, my car loan, and the local auto repair shops who mauled me every time I took that thing in for a major repair. Cars are space-guzzling money pits that suck money just sitting still, especially if you happen to love urban life. It would cost me a minimum of $100 (if I’m lucky) to park anywhere near my place, and insurance would eat about $50 a month more for a minimal used car.
Having since become spoiled by living in a city where the trains run every 4-10 minutes, 24/7 and there is an abundance of relevant retail and services within a quarter-mile walk or short bus ride, I can say that I feel far less helpless and dependent than in my car-owning days. And if we ever have a real Weimar moment and I need to “bug out” of Chicago, a bike with a trailer will get me out a lot faster than a car on clogged interstates- if you’ve ever witnessed outbound traffic after a major sporting event, you can just imagine how easily a city with 2.6M people in it and 8 M more in the suburbs could evacuate out over our highways.
Who in their right mind would chose to live in a corrupt bankrupt Democrat entitlement plantation like Chicago where crime, horrific weather, and high taxes are endemic?
Only someone from the Chicago Chamber of Commerce would claim that Chicagoland trains run every 4-10 minutes, 24/7.
http://www.huffingtonpost.com/olivia-cole/5-problems-with-cta_b_5288579.html
http://wgntv.com/2017/01/12/westbound-south-shore-train-service-suspended-due-to-weather/
http://chicago.cbslocal.com/2017/01/12/freezing-rain-ice-cause-many-delays-on-metra-trains/
Correct what I said, I meant that the proponents of Measure S are fighting to preserve. I wish we could edit our comments- sometimes type too fast.
Damnit I have all the fixins ready to go, and in light of the fact that while my life experience is much more like a X’er would experience, because of my birth date I am a Boomer so I was going to have my own little Taco Tuesday here.
But instead I went to Mountain View and ramen. Expensive, but epic, ramen.
Castro Street was inundated with techbros, and I actually had trouble finding a restaurant that looked like it even had a place to sit! Hence, the ramen place I went to, which is newish and not as accepted at Maru Ichi which has been there forever.
And … well, you don’t have to ask a techbro about his life, his aspirations, his plans, because just like you don’t ‘have to ask someone if they do Crossfit; they will tell you, I got to listen to tons of Techbro humblebragging about their housing hunt. And, MIT has a jazz band, who knew?
Later, on the street, I actually heard one techbro tell another techbro, loudly, that “You can’t go wrong with real estate, because it always goes up!”. In so many words.
Of course by a bit after nine, the street was nearly deserted. We really go to bed early around here.
What’s it cost to eat out at a Ramen place at the center of the Google zone? When I was a grad student nearby 35 years ago (earning about the equivalent of your stated income) I could rarely afford to eat out.
It was a bit over $20 with tip.
Back in the day, I didn’t eat out much. I didn’t smoke (still don’t) didn’t drink, mended my clothes (well still do) I was extremely low-cost.
Electronics is such a ghetto’ish pit that I’m looking to break out, so I need to cut out such shenanigans and may have to spend some time being street homeless to get where I’m going.
Great! Humblebrag. Just sold my tech startup and doing community work helping the impoverished realize their dreams and working with like-minded techbros on some microloan small business investments.
Would you like grilled cheese with that? Its GOURMET!
epic ramen on castro st? ok then…
Maru Ichi is at least legit. This was at Izakaya and it was awesome except for the most important thing, the noodles themselves. The noodles were like school lunch spaghetti. I’ll stick with Maru Ichi.
But yeah you’re gonna spend some money, there’s no TK Noodle on Castro Street.
The Doctor is exactly right when he says the baby boomers have a “I got mine so screw you†Taco Tuesday baby boomer mentality.
My parents are exactly like this to an extreme, even to their own children. Heck, I have been out of this house since 18, off the college dole since 22 and I now make almost $200k and have my own family. Yet they still go out of their way to express this sentiment whenever possible, as if they are the victims of some kind of millennial conspiracy.
Old farts on this forum, please explain. I don’t view my kids as parasites.
My father once bragged to my sister, my wife, and I that he had done so well in his life that he was able to put his kids through college.
My sister collected herself before I could and reminded him that I had taken out loans to pay for 4 years of college and I was currently paying her tuition.
“My father once bragged to my sister, my wife, and I that he had done so well in his life that he was able to put his kids through college.”
My dad thought I was so bright, he called me ‘sun.’
Can’t help you with explaining. Because even though I am a boomer, I didn’t get everything I ever wanted, never expected to, and I’m not out to screw you. (Side note: I’ve never owned a house and actually prefer renting as would anyone who did the numbers.)
I don’t think “generations” are a meaningful concept, since all categories are artificial. But for our purposes I’ll use the word when I say that I don’t hate other generations. Except when they generalize about mine.
“I’ve got mine, screw you” is the American way. Hell, I’ve got people with some serious money in my family. From what I’ve been able to gather, they helped each other out to go to college, start businesses, etc. For some reason that all broke down in my parents’ generation, mid-1930s models, with them “screw you I’ve got mine” became the Lord’s Prayer.
I don’t know why toxic narcissism became a way of like with the Silent Generation, and I’m sure it’s am important question.
The US has become a very shitty place and it’s only shittier from here on, folks.
You are so correct and it sucks that this is the way it has become.
Alex is part of the “me first” generation who demands that others give to him while he sits on his lazy rear end whining.
@Samantha…my thoughts exactly. He projects much and often.
I think that is a generalization that people from the “Silent Generation” are all tightwads but given that, my parents were tightwads. They were raised by parents who had no money during the Great Depression so they picked up all of those fears and spending habits. Their parents didn’t have money so they told their “Silent Generation” children, become a welder/machinist/plumber/electrician like me or join the army for the GI Bill if you want to go to college. Even though the Silent Generation had 100X the money and income than their parents, they picked up the same habits. Free coffee and cookies and the bank? They were there. Free tacos on Tuesday? They were there. Kid want to go to college? They should go out and work for it (or join the army). The only other comment I have is: “You can”t take it with you”. Sadly, when our Silent Generation parents pass on, the kids discover the house that mom and dad bought in Santa Monica for 20K in 1965, is now worth 2M. They likely also discover over a 1M dollars in CD’s in the local bank that serves cookies making 0.25% interest. The Silent Generation was cautious given their parent’s history, so they didn’t invest heavily in their kid’s college education or with them buying a house(1988 quote “I bought my house for 20K, I don’t think it is a good idea to spend 180K in Santa Monica now. It is not worth that. I won’t help you make a foolish decision.” Note that in 1988, Bubble was not even a term used. ) You can’t take it with you. I still like Free Tacos at happy hour though. Some things have been passed to the Boomer Generation.
Increasingly they are finding out that mom and dad gave the house to the bank through a reverse mortgage so they could buy one more time share week. I remember being told how smart they are with their masters degrees and how they are the haves not the have nots. Well, fact is they are broke and own nothing. It’s an odd world we live in.
Son of silent generation parents. They have largely been allergic to spending money their entire lives, although in my case they get a fetish for collecting things at different times and then end up with 5 armoires, 20 different (and each odd in their own way) chairs, glass fishing floats, crucifixes, the list goes on and on. Its like a “hunt” to them, and they pay pennies at the flea markets for them. They have so much they didnt have the space to store it all.
Friend is also a son of silent gen parents, and he said when his Dad passed they found his house filled with bags of old newspapers. Never threw a single one out.
Unfortunately, Junior Kai, this is correct. My Silent Generation parents had stuff piled 6 feet high in the kid’s rooms and the garage since it was such a good deal at the Thrift Store or at Ross. Also, when the neighbors re-did their kitchen cabinets, the old ones ended up in our parent’s garage and back yard since even though they were dated, they were too valuable for the dumpster. Admittedly, I have to fight this urge. I am a child of the Silent Generation.
I’m a tightwad. I own my place F&C, and debt-free and put my both chillrens through masters degrees (one is now in second year of law skool in UK – her 3rd year tuition I paid to her in advance – I don’t like “owing”)… and I like Del Taco for the taco night special. I wonder why people bash tightwads. I could have retired at 45 yo & that was AFTER the divorce. A Return to Thrift is coming; $4 of debt for each $1 of GDP growth (and GDP is overstated – real GDP prolly declining even with the death explosion). When the debt starts to implode, we will get the Shock Doctrine USSA.. Alot of you tightwad bashers are going to be forced into austerity. BTW, I spent most of yesterday prepping the garden for this years massive tomato crop and canning festival. Yes, canning. 🙂
The amount of development in the pipeline in LA in astounding.
here are a couple links
http://urbanize.la/
http://www.ladowntownnews.com/news/report-finds-big-downtown-growth-in/article_b815e2ae-039b-11e7-a3f2-1f109d9c5b1e.html
and updates on over 100 projects, just in DTLA
http://www.ladowntownnews.com/development/downtown-development-the-latest-info-on-downtown-projects/article_ca6e00dc-f863-11e6-812c-9fb87ab40bd3.html
The amount of development in the Bay Area is astounding. No empty field is safe. They’re demolishing McDonalds’s to build massive housing.
There will be probably more mix commercial and apartment living in one building going forward.
Multi-famageddon is at hand…..
They can turn the mega apartment complexes into giant Section 8 sanctuaries used to house the illegals and ME refugees.
California -Armageddon is coming.
That is why prices will collapse under the weight of over-development through over-speculation. This has already begun in several other over-priced markets.
Hey can you cite what other markets you are referencing?
GH: “Flyover, you’re living in an alternative universe if you think Donald Trump has a cooler head than Hillary Clinton…or anyone, for that matter.”
Well, it is called “reading comprehension”. I did not say “he has”, I said “let’s HOPE he has”. Big difference.
With Hillary, I know she was “nuts” for pushing war with Russia, along with 6 globalists stooges who own over 90% of the media. Trump did the right think seeking normal relations with Russia if he can. What he is going to do, I don’t know. Do you know for sure????… Therefore, I am just HOPING he will do the right thing to stay out of war with Russia; or any war for that matter. I think we already spent trillions on wars and our economy is crumbling.
I hope you are able to understand it this time. I know that ideology and partisanship can cause blindness and deafness!!!!….
Flyover,
Since I doubt HRC ever said, “I am in favor of nuclear war with Russia” I suspect you mean that her willingness to stand up to Putin would inevitably lead to the same. This seems like a pretty dramatic oversimplification to me and suggests that any of the US/Soviet confrontations during 50 years of the Cold War were also rash miscalculations. Are you saying that the risks of nuclear war are so great that complete appeasement of Putin is the only reasonable approach?
Apolitical,
It is called “straw man argument”. I did not say anything in your argument. Trump did not say he will do everything Putin wants. What he said, is that as much as possible there is more benefit for US to pursue mutual respect with Russia. The sanctions were in place and still are after 2 months of Trump. I agree with those. From that to beat the drums of war is a long way. If you disagree with this that means you did not watch the MSM prior to elections.
Also Crimea was always part of Russia or under the control of Russia. Just because Khrushchev added it to Ukraine for administrative purposes (still under the control of Russia) does not mean that they were no longer interested in Crimea or they decided to give a gift to Ukraine. Also, Crimea is needed by the Russian fleet like air (the only port in Russia without freezing in the winter). What? Do you think that US in the place of Russia would have given up on the only port for winter and for the Navy without a fight? Don’t get me wrong. I am not a friend of Russia; I only had to suffer directly because of Russia imperialism and communism for decades. That is the reason I am here today. However, I am a realist and I do know the history of Crimea very well. The people living there are Russians and they speak Russian.
For now it is the US fighting imperial wars and US with military bases in over 140 countries, not Russian military bases, in case you did not notice. If Russia would start an empire building like before 1990, I would be the first to condemn it. However, for the last 30 years they pretty much minded their business even in the face of US breaking all promises of NATO enlargement. Right now Russia is surrounded like in a vice.
The reason I agree with the sanctions is because the Russian interference in Ukraine, not Crimea. However, Crimea was and is Russian territory and their NAVY was always in Sevastopol. I am from Eastern Europe and I know very well the history and dynamics and geopolitics of that area. Trump might be goofy in other areas but at least in respect to Russia, Trump was the only adult in the room.
What I hope I implied was that a willingness to stand up to Russia is not necessarily equivalent to courting nuclear war – an accusation you repeatedly have laid at the feet of Clinton. While I’m not necessarily a fan of her hawkishness, comparing that with Trump’s recently stated desire for our military to greatly “expand its nuclear capability†– reversing decades of arms reduction – makes me think that she was not one more likely to lead us to nuclear brinksmanship.
Flyover, this isn’t a political discussion from me, and, in fact, I tend to agree with most points you make on this blog (outside of Trump.) I just don’t understand how you think that Trump is anything other than what he’s exhibited to me my entire life as a Gen-Xer. He was a narcissistic, power hungry, media whorish bully in the 80s, 90s and now. That’s not changing, and his first couple of months as president hasn’t shown us anything different. Granted, being attracted to bullies is a long known phenomena, so it’s no surprise that terrible people occasionally make it to the highest levels of office.
I’d sooner vote for you for president, simply based on some real estate opinions in this comments section. lol
I agree. Flyover would make a shitty president, but he’d not be any worse!
You’re focused on the man while others are focused on his actions. Big diff.
I’m focused on the man and his actions. Both are embarrassing.
GH,
It is hard, almost impossible to separate the RE discussion from politics when prices, especially in SoCAl are driven mainly by politics rather than free markets.
For example, the measure S has everything to do with politics and nothing to do with free markets.
But I will try to stay away from politics unless I am challenged with political statements. I am not a Trump fan and I did not vote for him. I don’t like his personality but I am surely happy that Hillary lost. There are lots of both democrats and republicans I don’t like and the list is long: i.e. Romney, Bush, McCain, McConnel and of course Hillary. In general, I don’t like statists/globalists regardless of the political color. For me, they are the true enemies of personal and economic freedom. I was not born here, but freedom is was attracted me here. I also don’t like the international banking cartel trying to enslave all mankind via a one world central bank and one currency. From that to total enslavement there is no obstacle. They can create all the money they need to buy or kill any politician standing in the way of total totalitarism. You can say bye to democracy at that point.
For me, communism, socialism, fascism are all different forms of statism – a small group of people enslaving the rest. I hope that with this clarifications you will avoid in the future attacks based on my political views. Yes, I agree with Trump on trying to normalize relations with Russia and I agree with him on illegal immigration. I don’t like imperial wars and I agree with legal immigration.
Flyover, you sound like you have nurtured a well rounded liberal arts education. Probably on your own, unless you attended college decades ago.
The apartment buildings built during the past five years have all knocked down affordable buildings and replaced them with apartments that cost more than twice as much money to rent. Salaries have not gone up anywhere near enough to cover that increase. How are people who can’t afford a home supposed to pay a 4000+ dollar a month rent?
That’s the point of voting down measure S. More apartments mean more competition, which in turn will ease the housing crisis and bring down rents.
But that isn’t going to happen. Look at the Bay or NY as an example. If apartment stock increases while single family housing stock stays the same, the value of those houses will remain higher, especially when these ‘millennials’ have their children and get tired of the upstairs neighbor throwing parties at 2am.
I don’t see how traffic can possibly get worse, and in 10 or 15 years when they start rolling out special lanes for autonomous cars it could get better.
The real reason for LA’s terrible traffic is Prop 13. If Prop 13 just capped property taxes at 1% and left it at that, it would have been fine. But a lot of the Taco Tuesday people are paying $1000 per year in taxes for that near $1million crap shack.
If your job is in Burbank, but your prop 13 house is in Anaheim, you have extra incentive to fight the traffic to save several grand. Otherwise you would have put a for sale sign on the thing and moved further north. This causes just as many traffic problems as density. Prop 13 is great for capping tax rates, but the inflation protection permanently plants people in their little region.
JR,
You are correct about unintended consequences of Prop 13. There are many of those. If they would allow portability of that, based on house assessed price difference, that would help.
I understand why Prop 13 passed – it doesn’t make any sense for someone who worked the whole life and paid mountain of taxes to be kicked to the curb by tens of thousands in taxes. It is also unfair for the young people to pay ten times as much as the parents for prop. taxes. I agree with the spirit of prop. 13 but not with the wording.
What they should do would be something similar to what they have in Switzerland. Everyone pays different prop. taxes up to a ceiling of $1,500/yr, regardless of the property value. They still manage to have excellent schools, good roads, good libraries, good fire stations and police. Also they don’t have to pay taxes like in CA – to the federal and then again to the state. Of course they don’t have to support millions of illegals, which was the point Trump made in his campaign. The rich people profit from the mass of illegals living in poverty and the millennials pay for them in taxes.
Sacramento does not have a revenue problem, but a spending problem. Why should the millennials support so much spending on the illegals???!!!! Warren Buffet with his house at 11 million and $2,200/yr in property taxes obviously is not supporting the illegals.
CA should modify the Prop 13 and make it maximum $1,500/yr sliding down depending on the value of the property. That would help most of the middle class and millennials. It would help traffic problems, housing shortage, etc., etc…..all the unintended consequences of Prop 13. Then, force all the politicians to live in a straight jacket and avoid all stupid spending they are so well known for.
I think that’s a good plan. I would generally agree with it. But it would need an inflation adjustment as well, because in 20 or 30 years $1500 will be a gallon of gas or a pack of gum. It’ll be like the old Lira or some third world currency.
I think we may need a Prop 13 for sewer bills these days. Are they lining the sewers with gold? Or maybe all the Taco Tuesday pensions are being passed through our bill for that.
JR, I agree with indexing for inflation, but ONLY the published CPI. They claim it is a “true” number although like everything coming from the government it is “fake”.
That only rearranges the deck chairs on the titanic. Can’t stop human migration for long in the face of better alternatives. CA residents will pay with their wallet, time and frustration, or both. No free rides.
Many parts of Switzerland is beautiful and pristine. But they pay the price in so many ways other than property taxes. Much the same in how Prop 13 completely distorts the picture.
Getting Out,
It is true that higher standards of living will always be a magnet for immigration. However, it doesn’t mean you can not stop it or significantly decrease it if there is a will to implement existing laws. Look at France, Germany and Switzerland. The first 2 did not have the will to stop it and the 3rd did have the will. In Germany you will be put in jail if you try to say to Merkel what is common sense in regard to illegal immigration – that you balkanize the country and create tensions for decades to come. Freedom of speech in Merkel Germany is like under totalitarian regimes of former communist block. There are almost no illegals in Switzerland although they have one of the highest standard of living. I should say, that is the reason they have a high standard and it is pristine – they block almost all illegals from getting into the country with no WALL. Why? Because they have the will to enforce their laws, which is not the case in US or other EU countries.
Yes, they have a higher costs of living than other places (no slave labor), but no poverty because they have high incomes and very low taxes (low taxes because they have a high taxing base and low social spending). Over all they are better off than citizens in other EU countries or US. I still believe that the Swiss citizens are very well educated and very pragmatic and with much common sense, something which most of our politicians lack. Instead of spending money on empire building, they spend them for education. Instead of PC, they discuss openly and say things the way there are – like massive illegal immigration is a drain on the middle class and serves only 0.0001% with slave labor. Our new president was demonized for stating this obvious fact which is plain common sense. The swiss laugh at the stupidity displayed in our MSM.
The Swiss are taxed out the wazoo. Every minor step out of line is fined into the stratosphere. Great place to visit but residents pay the price with their freedom. Just saying there’s always a cost to bear…even in coastal CA.
I made this exact point a week or two ago on here.
So these salivating developers start with high end rentals for the next two years as interest rates increase and the rental markets soften. Then we get $700,000 crap condos, worse congestion, more refugees and illegals, longer commutes, and more frustration. But at least we don’t have $700,000 crap ‘SHACKS’ or “rental armegeddon”. Hell, there will even be fewer boomers and taco Tuesdayers. What a bright future!!!!!! Since there are so many savvy investors here I know everyone will be out buying their bicycles now before the prices go up because it will be faster to get around by bike than in a car. And the wheels on the bus go round and round…
I am glad measure S failed. This means large portions of SoCal will become packed with development. Nasty. The coastal locations with back yards will even become more precious and rare. This means the price action on coastal locations will shoot higher and higher and higher and higher …
Rarity in an inhospitable environment is a losing proposition. People will sell out to developers because the costs of the conditions will erode the value of staying put. Municipalities will put the screws to these owners with onerous regulations and development. A back yard becomes less valuable for its intended use as it becomes less private with tons of windows looking down and building blocking sunlight. A driveway becomes less valuable for its intended use as the street it abuts to is ever more crowded and restricted. You can’t have your cake and eat it too.
Change will eventually come by rezoning areas that are not normally confronted with big developments. If developers build in order to reduce the beauty of having a large private backyard then that would certainly speed up the process of getting rid of the excesses of old construction that technically needs to go in my opinion. Plumbing/electrical standards in old buildings are just waiting for a facelift or a tear down.
“shoot higher and higher and higher and higher …”
Yawn
If Measure S encourages replacing single family homes with multi-unit developments, the reduction of supply could cause even more price appreciation on the remaining single family homes. I haven’t been a bull for a while, but supply and demand do effect prices.
It will but those properties will become less enjoyable to live in. As the cost increases the use value in these assets’ utility will decrease. The neighbors’ desires will increasingly be at odds and the situation will become untenable for the holdouts.
The neighbors’ desires will increasingly be at odds and the situation will become untenable for the holdouts.
Not for all the holdouts. The uber-rich in Bel Air, Brentwood — the hills in general — will be able to keep out the riff raff. Not only do they have the money, but the hills are an untenable place for high rises.
Even more so than today, the rich will live in the hills, overlooking the poor in the L.A. basin and SFV.
Then they wouldn’t be holdouts because we’re talking about areas where the development will take place.
Well….when the nationwide mentality is paying the same price for light as regular and it is nothing more than water or air added or $1 + for bottled water from only Gawd knows where then I guess this crap is to be expected….It’s just that Californians appear to be in lead in the game of going nowhere fast in the super lane.
Our civilization started dying when we started paying for bottled water (70’s?). At first it was Perrier, but that was mineral water from France. Nothing sadder than watching a cashier making $10 an hour reach for a Fiji water. You worked a half hour for water.
Of course all of this will equalize. Real Estate is 100% dependent on wages and salaries, period, except for the 20% weather premium in coastal CA. However even with that premium we’re way out of balance.
“Real Estate is 100% dependent on wages and salaries, period”
bull fucking shit. It hasn’t been that way in a decade or more.houses are 10X the average income in all of southern California. It’s only on the internet where everyone makes over $200K a a year…..I know business owners that don’t pay themselves that much.
Can someone explain this person’s taco meme?
It’s really aimed at boomers who cannot afford to move from their homes, but they have no excess money, so they take advantage of low prices on Tacos, and the many places that sell them cheaply on Tuesdays.
Voter turn out was 11 percent. certain groups get their members to vote. That’s what settled proposition S. I happen to also be against it. but I’m sure many homeowners were shocked at the landslide.
We are closing on a property in Rancho Cucamonga next week, and I’m telling you lending is tight. 5% down, we got a 4.2% rate with 800 ficos. But they went through our W2’s with a fine tooth comb, we had to document all down payment income, pay off small credit card balances, basically be perfect.
Dodd Frank.
This is not funny money, we saved for years, and the underwriting was tight. They didn’t tell us a specific number but we got approved, tightly, at a purchase price about 3.5X income.
We’re excited! Blessings to all you current lookers!
To Realist
Congrats on the move to RanchoCucamonga! I was in a very similar boat to you last year
Good for you @ The Realist! Its a good feeling and that is NOT a lot of money to put down, so good for you there.
Interest rate is nice too…but you obvs. are pretty good candidate with 800 FICO score. Enjoy homeownership…and regardless of what the yahoos on this board say…its a damn good feeling to be a homeowner and NOT paying rent to someone else. Cue the ‘paying rent is not throwing money away, its smart cuz I can move,save more money, blah blah’ folks…but they would rather be homeowners too, so screw them. Congrats!
It’s very interesting to me that a significant amount of boomers don’t encourage younger folks to save their money and even accuse us of being hypocrites (we say we rather save money than buy an overpriced house but in reality we want to be a homeowner is the claim). Maybe its because these boomers never experienced a debt free life? Maybe its just normal for them? For my part, I strive for freedom, financial peace and happiness. Yes, many Americans associate freedom with military operations in the middle east (chasing non-existing weapons of mass destruction for instance). But to me, the biggest threat to freedom is a mortgage lender and that huge debt burden when buying an overpriced shack. I would have hoped, boomers tell you “from my experience its a very overpriced market and I would not make that commitment until the market corrects”. Something along these lines…..but no, they advise you to buy now. Is it just selfishness? Financial stress is a major reason for marriage problems and affects your health and overall well being. Why over leverage yourself and be a debt slave? There is no connection between being a homeowner and therefore a happier person. My grandma always encouraged me to save money but boomers do the opposite. They want you to spend and foot the bill so the music keeps on playing. I hate to say it but from my experience, do the opposite of what most boomers advise you to do and you have a high chance of being on the safe side. Pretty sad.
yeah, now he’s paying rent to a bank.
p.s. My X bought right around this time in the last cycle……sold it last year for $30K under purchase price. good luck is all i can say…….and that’s what it is….luck
Funny, My depression-era grandma is the one who told me to shit or get off the pot. She also helped us. I have 25 years till I hit 62, so it’s just the right amount of time to get it paid off by retirement.
Sure mumbo, we’re renting from the bank for a while. But I was renting from a landlord before, and the out-of-pocket costs for us are now less than $200 more than they were while renting.
Prices are not going to go down under Trump, they’re only going up for the next couple of years. After his Shenanigans, manipulations, and more debt, we will see what happens. Maybe they will come back down again, but I’m confident that 25 years down the road they will be equal to or up from where they are now, and I’ll no longer have a mortgage anyway.
@mumbo_jumbo
I’m always interested to see what happens if you stick around for 10 years, even at a loss. So I looked at an example where you would sell 10 years later at a 30k loss.
Look at this $520k “crapshack”:
https://www.zillow.com/homedetails/5632-Pennswood-Ave-Lakewood-CA-90712/21177143_zpid/
Seems like a small starter home with low crime, good elementary school, in a nice looking suburban ‘hood.
10% down Mortgage at 4.68%, WITH PMI;
P&I: $2422
Taxes: $450
PMI: $230
Insurance: $42
Total Payment: $3,143 – OUCH! For a crapshack…
Rental rate: $2,350 per zillow estimate. I looked around the area, not much for rent, but seems like it would indeed rent for that. Might be due to schools or neighborhood.
After 10 years, mortgage principal is down to $376,958. Assuming selling for $490k and 5% in fees: proceeds are $465,500.
After accounting for downpayment, this buyer after 10 years and selling at the 30k loss is now richer than they were 10 years ago by: $36,542
Now let’s rent the house for 10 years at $2,350: that person is poorer by $282,000. BUT, they paid $793/mo less to rent than they did to buy. So assuming they kept and saved that, that’s $95,160. So really, they are only poorer by $186,840.
Recap:
Buyer: Up by $36,542
Renter: Down by $186,840
Now this doesn’t take into account:
home maintenance/repairs;
tax deductions on mortgage interest and property tax;
rent increases/decreases;
and the investment appreciation of the renter’s savings.
In my personal experience, the tax deductions of buying have given me enough to take care of my maintenance. Of course the deductions go down with time, though. And I’ve found rent goes up over a period of 10 years more than it has gone down, though they do go down in the recessions shortly. Another factor is the PMI could possibly go away after about 7 years.
So on the simple calculation the renter is down by $150k vs the buyer, to turn the $793/mo savings into $150k they’d need to get a return of 8.6%…
The rest of the factors are sort of up to luck, aren’t they? What will rents do? Will prices fall by more? What if they sold without the 30k loss, breaking even? What if we go back to ZIRP, or even NIRP? What if they start pushing 40 year mortgages (they are already transitioning to offering 72-month car loans frequently rather than 60-month)…etc etc
However, it looks like a case where selling 10 years later at a 30k loss may not have been such a bad thing huh? Weird.
Cue the so happy with not renting that I find myself on the housing bubble blog contradiction.
@ARM
“Recap:
Buyer: Up by $36,542
Renter: Down by $186,840”
Hey Arm, thanks for the calculation. I am trying to follow. Can you please tell me how you get the 36K?
By looking at the mortgage calculator and using your numbers it looks like the buyer paid about 96,592.44 in princpial, 195,404.16 in interest, 32,640.00 in insurance ($230 PMI and $42 homeowner insurance) and about 54,000.00 in taxes over a period of ten years.
Would you agree with that?
@Realist:
“Funny, My depression-era grandma is the one who told me to shit or get off the pot.”
Depends on the context that she meant by that, right? That does not mean she was against saving money. Maybe she just really had to go to the bathroom and you were taking too long in there.
“Sure mumbo, we’re renting from the bank for a while. But I was renting from a landlord before, and the out-of-pocket costs for us are now less than $200 more than they were while renting.”
You are only paying 5% down, pay taxes, PMI, interest and principal and the sum cost you only about 200 more then renting the same house? Hard to belief, but okay, good for you and good luck!
“Prices are not going to go down under Trump, they’re only going up for the next couple of years. After his Shenanigans, manipulations, and more debt, we will see what happens. Maybe they will come back down again, but I’m confident that 25 years down the road they will be equal to or up from where they are now, and I’ll no longer have a mortgage anyway.”
AH, there is the crystal ball again….and I thought you are a realist.
@ARM
“10% down Mortgage at 4.68%, WITH PMI;
P&I: $2422
Taxes: $450
PMI: $230
Insurance: $42
Total Payment: $3,143 – OUCH! For a crapshack…
Rental rate: $2,350 per zillow estimate.
After accounting for downpayment, this buyer after 10 years and selling at the 30k loss is now richer than they were 10 years ago by: $36,542
Now let’s rent the house for 10 years at $2,350: that person is poorer by $282,000. BUT, they paid $793/mo less to rent than they did to buy. So assuming they kept and saved that, that’s $95,160. So really, they are only poorer by $186,840.
Recap:
Buyer: Up by $36,542
Renter: Down by $186,840
However, it looks like a case where selling 10 years later at a 30k loss may not have been such a bad thing huh? Weird.”
Weird is one way of describing this example. Lol. I have heard of funny money before but FUNNY MATH is a new one to me. And not a good one btw.
You are telling us a buyer who pays ~800 bucks more a than a renter per month and sells the house after ten years for less then what he bought it for and paid 52k down is way ahead of a renter after ten years? That’s the funniest post I have seen here so far. At least there is a slight chance of hope for you because it seemed “weird” to you. Let me help you….don’t do the math by yourself! download a buy/rent excel spreadsheet and plug in your numbers…It might rock your world so have someone close by in case you collapse.
The old “paying rent to the bank” line.
When 35% of your mortgage is principal, you are paying that to yourself. Unlike renting, your costs are essentially fixed for a long time. Unlike renting, you get to keep any appreciation for the property. And unlike renting, nobody is going to leave a note on your door telling you that your lease won’t be renewed and you need to start looking for a new place.
Congratulations Realist. Enjoy your home!
Lord Blankfein, “The old “paying rent to the bank†line.”
Its true of course. By signing a contract to purchase a home you a renting money from the bank (unless you pay in cash). The bank owns it and charges greatly for it (compounded interest). A renter gets a far better deal by paying a private landlord. Renting money from the bank is far more costly because the bank has high overhead costs and labor rates (resulting in fees and higher interest rates). For instance, a bank has to pay out large bonuses to its banksters and has high costs for big fancy towers in downtown areas. A landlord can easily give you a much better rental rate than what the cost of home ownership would be. Renters save tons of cash unless there is a housing crash resulting in rental parity. (Def. of rental parity: Rental Parity is a mathematical relationship between rental rates and property values where rent is equal to the monthly cost of ownership.)
“When 35% of your mortgage is principal, you are paying that to yourself.”
Yikes. Not sure if you have bought a home before but let me assure your monthly payouts for PITI goes out the door. Its burned/gone. Nobody knocks on your door to give you 35% back each month. Yes, you build ILLIQUID equity over time, but the cost for it is much higher than if you rent the house. A renter has much more cash in the bank because a renter pays much less than a buyer per month. The equity a buyer is building is not guaranteed. Remembered that PURCHASE PRICE DOES NOT EQUAL VALUE. Just because you overpaid for a house does not mean you will find a buyer at the time you want or have to sell! The buyer has to hope the bubble continues, plus he/she has to pay for repairs, upkeep/maintenance and often a horrendous HOA/mello roos. And don’t forget the extremely high transaction costs. I would advise you to try a buy vs rent calculator (excel spreadsheet). You will quickly realize that your statement above is just a cheap sales pitch.
@Lord Blankfein
“Unlike renting, your costs are essentially fixed for a long time.”
– Except for unexpected repairs, such as roof repair and plumbing problems. Property taxes can be reassessed, and insurance premiums can go up.
“Unlike renting, you get to keep any appreciation for the property.”
Unless those “homeowners” take out HELOCs or reverse mortgages like many are doing.
Oh well, renters will just have to settle for appreciation of other types of liquid and dividend-paying investments. Having so much money that they can throw some of it towrs paying rent. Boo hoo hoo.
“And unlike renting, nobody is going to leave a note on your door telling you that your lease won’t be renewed and you need to start looking for a new place.”
Funny, I hear that prospective tenants are demanding concession from landlords in overbuilt markets. When everyone thinks that being a landlord is the new get rich quick scheme, a rental glut is inevitable. And, unlike homeowners, renters don’t become unwilling landlords when relocating for a new job.
@Dude, Millenial,
For the buying, the $36k richer was just a comparison to the starting point. For example if the buyer started with savings of $52k, after 10 years selling at a loss he’d end up with the $36k above that $52k by subtracting the principal from the sale price minus realtards commissions.
But you’re right, I’m retarded because for the renter I should have forgot about all his payments and only looked at him as having paid rent + saved $700/mo (thus comparing directly to the buyer in terms of only monthly nut)… so in fact after 10 years the renter would have $84k saved from those $700/mo. So he’d be over $50k above the buyer whose net worth went up by only $36k…
I wanted to calculate for the sake of curiosity and had a tired morning without coffee – I was really surprised thinking something must be wrong! Sorry guys!
And just think, if you were a foreigner with a suitcase full of case you wouldn’t of had to do any of that.
Arm, I really enjoyed your post – I love me some number crunching!
But, without weighing in on buying or renting, have you properly incorporated the interest component into the buyer’s cash outflows over the 10 year period (i.e. the non-principal portion of monthly payments not recovered upon sale of home?)
Shhhh…total costs of taking out a mortgage plus the opportunity costs of a hefty 20% down payment are inconvenient facts in the real estate industry narrative.
Realist: I never got a mortgage without any alien anal probe, ever. Even with 20% down and 10- years at the same job
So I was amazed that so many were getting liar loans and other exotic minimal paper contracts during the bubble.
@ Brian: ignoring the spending habits and philosophies of my Baby Boomer demographic was one of the smartest financial decisions I ever made.
No mortgage, credit or automobile debt for quite a few years now.
And no piles of old newspapers and multiple armoires either.
Dweezilsfv, nice! You are a smart one.
I dont blame baby boomers for the problems were facing in the west with housing. I blame the oligarchs and finance.
However Im beginning to read and see a backlash against them from millenials and generation x’s in online comments and discussions with people. The younger generations will not pay for the boomers state pensions( not sure if you have them in the us) and healthcare.
Is anyone else noticing this?
Cromwelluk,
The division in the society is done on purpose. A divided society is easy to manipulate. Let different sections fight against themselves; if not, if they are homogenous, they organize easy and they throw off the bankers yoke of debt and slavery. Look at Iceland with a homogenous population – in 2008 they organized easily and threw off the House of Rothchild yoke. How many banker prosecution did you see in 8 years following 2008 in US? Exactly – ZERO.
Now, look at these 2 completely different cultures trying to mix in France, Germany, Sweden especially and EU in general – muslim culture with western culture. They mix like iron and clay.
Back to US, the MSM is working hard to divide the society in men vs. women, gays vs. straight, millennials vs. boomers, black vs. whites, liberals vs. conservatives, etc.. Does “divide and dominate” meme rings any bells? It is well known for over 2000 years. Was the US society ever more divided than today??? I doubt.
That is how the 0.0001% stay in power in steal all assets from the 99.99%.
Flyover, I would vote for you. Thanks for your posts!
Brian: “I would have hoped, boomers tell you “from my experience its a very overpriced market and I would not make that commitment until the market correctsâ€. Something along these lines…..but no, they advise you to buy now. Is it just selfishness? Financial stress is a major reason for marriage problems and affects your health and overall well being. Why over leverage yourself and be a debt slave? There is no connection between being a homeowner and therefore a happier person. My grandma always encouraged me to save money but boomers do the opposite. ”
As you already noticed, there are honest boomers and dishonest boomers; same as millennials. The human nature never changes even if the technology does. The points you made above are very valid and as a boomer I stated those all over again on this forum. You already saw the reaction when I stated the obvious.
The advise you received from your grandma is true and valuable. The only problem with that advise today is that we no longer have money. Gold used to be money back in her days – a medium of exchange and a store of value. The dollar today is just a medium of exchange not a store of value – a fiat currency. What worked for me over decades, was to always carry a very small amount of debt, the payment never more than 10% from my income. It was used as a hedge against inflation for investing in real assets (RE). I know that in theory it was stupid and people still believe I am stupid for doing that if I believe that RE goes up. However, success is not measured ONLY in money, but like you said, quality of life, too. Money are units of measurement only for wealth not a successful life. Success means far more. Money are a means to an end not the end itself.
If you get too much debt, you are correct that your family life will suffer to the point of divorce. It is better to go in life like a turtle rather than as a rabbit. In the end you win. Big debt means lots of stress and lots of stress means ruined health and ruined marriage. I have been married only once for 24 years and my marriage life is as good as in the first year, while raising 4 children. The oldest is almost done with medical school.
Having the right principles are far more important in life that how much money you make. Long term they are conducive to success in all areas of life – family and finance. With the right foundation everything stands. With a rotten foundation everything crumbles. I know that I am stating the obvious but for most people today that is no longer obvious.
Flyover, this statement, which I agree with, is exactly why I can’t square the circle of our discussion above.
“Having the right principles are far more important in life that how much money you make. Long term they are conducive to success in all areas of life – family and finance. With the right foundation everything stands. With a rotten foundation everything crumbles. I know that I am stating the obvious but for most people today that is no longer obvious.”
The advise you received from your grandma is true and valuable. The only problem with that advise today is that we no longer have money.
It’s advice and not advise.
Advice is a noun.
Advise is a verb.
I wouldn’t say it’s just Boomers experiencing backlash, but Boomers would be the cut off point for a group to experience the last of economic good times in this country.
Pensions have been horribly mismanaged, with CaliPERS discount rate 7%+. Basically unsustainable. On top of that, you have greed at every level with pension spikers soaking the funds for more than what they were paid when they worked.
Then you have NIMBY’s who put Measure S on the ballot; they basically don’t care that generations after them are struggling to find affordable housing and paying as much as 40% of their income to put a roof over their head.
Millennials are squeezed at every point possible, yet are categorized as “snowflakes.” They have the highest student debt of any generation, housing is back to peaks, and the most exposed by employers practice to categorize everyone as ‘independent contractors’ with no benefits. Now with the market grossly overpriced, Millennials are being told they need to double their savings for retirement (https://www.washingtonpost.com/news/get-there/wp/2017/01/09/millennials-may-need-to-double-how-much-they-save-for-retirement/?utm_term=.6f664abf6bb0)
I know you can’t categorize all Boomers as part of the problem or claim that they haven’t had their own hardships, but it’s easy to understand why there is such frustration for younger generations who are being asked to foot the bill.
Thanks for your comments everyone.
Flyover: Plutarch said “An imbalance between rich and poor is the oldest and most fatal ailment of all republics.â€
JJ: The crazy thing for me is. How can people not see the future? All the student debt, rent and lack of pensions. How can it not end badly?
Doctorhousing bubble: love your articles 🙂
@Cromwelluk
“Those who cannot remember the past are condemned to repeat it.” — George Santayana
The Western world resembles a modern day version of Rome. TV’s, the Internet, and unconditional welfare are today’s bread and circuses. All while the top .00001% consolidate power globally.
Wrong.
Millenials DO want to live in suburbs!
http://www.latimes.com/business/la-fi-millennial-homes-20170303-story.html
LBC
And this is exactly why you can buy a single family home now and will be safe in the long run. Nobody actually wants to live forever in a 1bed/1bath rental. Folks only do that as long as there is no other alternative.
Its a boring article. They fail to discuss the upcoming economic global meltdown and housing crash. Home ownership rates are historically low. Unless there is a severe crash home ownership rates wont change. House prices are way overpriced. America is broke. Middle class is disappearing. There will always be bogus studies or manipulated statistics by the NAR. Its all make belief reality to pretend everything is awesome. How else would you lure in the last sucker before it all crashes down again?
Then which asset is better in an “economic global meltdown”? The housing market in places like the San Francisco Bay Area tracks the stock market very closely anyways, so putting your money in stocks instead doesn’t really make a difference. A lot of people in the Bay Area have $500k to $1.5MM sitting around from equity compensation or startup exits that happened during the boom of the last 5 years and buying land is just as good an asset as anything else. In an absolute economic doomsday scenario like currency devaluation land btw. is even safer than cash.
Per Wolf Richter.
The largest donor in Washington is the National Association of Realtors
http://wolfstreet.com/2017/03/08/financial-sector-2-billion-campaign-contributions-lobbying-biggest-spenders-real-estate-not-banks/
These scumbags headed by Lawrence Yun lobbies hard to keep the housing prices high.
Bill Gross has gotten it wrong often, but this one’s worth a read because of the global nature of the (lack of) liquidity.
Bill Gross says another credit crisis could be just around the corner:
http://www.marketwatch.com/story/bill-gross-says-another-credit-crisis-could-be-just-around-the-corner-2017-03-09
This company will give you 50% of your down payment in exchange for 35% of your appreciation.
http://www.latimes.com/business/la-fi-home-equity-investments-20170106-story.html
https://www.unison.com/
I don’t live in the city of L.A., so S was not on my ballot. I am a baby boomer and a homeowner. I share your disdain for financial aspects of the Million Dollar Crapshack phenomena. These houses clearly aren’t worth what people are willing to pay for them. There will be sobs and tears when the Fed pulls the rug out from under this insanity. But, I part company with you on the idea of turning L.A. into another Manhattan. The crapshacks, as you call them, have survived at least a half dozen earthquakes and aftershocks. That’s more than what can be said for the apartment complexes in Northridge during the Northridge earthquake. I think further growth and higher density in Southern California will end in a natural disaster.
The whole measure S thing is BS IMO. Does anyone think that they are building “affordable” housing in LA? Hell no! The land is too damn expensive. They build luxury condos, high-end apartments, and Super-Target stores for baby-boomers to shop at. That’s where the money is.
True, but I think they still build more section 8 housing than they do stand alone 2-4 bedroom single family homes. I guess we are supposed to consider 2-3 bedroom luxury condo’s starter homes now….
What is a matter with The City. We have culture and you folks in L.A. are, well, just Philistines. That is right, just no culture. You come up here and you know that you are in a completely different world. We keep the prices high, so your kind can never move here.
We will admit you guys do have more bum piss and dog shit on the streets per capita.
I know both places very well. LA has it all over “the City.” Culture in “the City” is stepping over a used condom on the sidewalk and a used hypodermic needle in the gutter, with a 3 million dollar house five feet away that’s 15 feet wide with a one car garage.
Now, LA has all this too, but it’s also big enough to get what you want, and superior weather. Even the pilates is better in LA, and that’s what’s really important.
Of course Thurstan is an LA person who’s trolling and likely a Dodgers Fan as well.
liking baseball is typical of a Philistine. In The City, our class likes the arts, culture, baseball is for the working class, needed, but not admired.
Jobs report does not end well for Housing affordability. Interest rates will be hiked but it also extends the fake great economy and housing prices will keep going up.
Job report is a good news for housing. This would encourage Fed to increase interest rate .. and many more times in 2017
higher interest rate basically would mean higher monthly payment… less affordable housing…. means more downward pressure on prices..
it’d take a good recession to bring down prices.. unless recession never comes…
I invite you to stand by your convictions and buy as many properties as possible before you’re priced out. Of course, do consider that jobs are a trailing economic indicator. Higher interest rates and borrowing costs lead to better economic numbers? Doubtful.
I voted Yes on Measure S because current zoning allows for lots of building. The problem is that developers don’t want to build 5 story buildings. They want to build mega sky scrapers like Hong Kong.
If I wanted to live in Hong Kong or Manhattan I would. I hate the crowd that cheap rent attracts. Whittier anyone?
One thing I wonder is, how will the building affect wages? If we build more and more people come here will the jobs follow? A lot of companies in the midwest and texas couldn’t make a living here because of all the regulations.
Not that anecdotes outweigh statistics but it does not appear to me that most young people aren’t able to afford rent. Nearly every young person I know with both college and no college education rents in San Diego, they don’t live at home with their parents, or at least not for long if that’s even an option. The majority of people here are transplants and couldn’t live at home if they wanted to. You can still afford rent with a low paying job, you just have to have a roommate or a working spouse.
The thing is even at 30 with 6 figure jobs, a lot of us are no surprise still renting…. The housing market here is currently incredibly unfriendly in many desirable areas. Entry level homes are bid up and mostly require an $80k or more down payment to dodge PMI. At least some first time home buyers are biting the bullet and just putting down 10% so they aren’t left bone dry after their purchase since emergencies are a lot more expensive with a home.
If you are willing to commute 30 miles both ways to work in San Diego county you can buy a condo or small home for pretty cheap and live in a semi poor area undergoing gentrification. But most of us with new born babies prefer a more normal commute and a neighborhood with well funded and ran public schools since that saves so much money down the road.
Average California Boomer Life:
Owns a $700k-1.5mil home they paid less then $300k for and possibly a 2nd home they rent out for $3-4K a month and/or a second or third vacation home at some lake,mountain,beach or other post card area
Has a brand new car & 2nd decent used car and possibly a weekend classic cruiser car
Has a boat,RV or some other recreational weekend vehicle(s)
Makes plenty of money to support their life and great benefits at whatever job they have with or without college degree
Takes 1-3 major vacations a year to Hawaii, Europe, Mexico,etc. plus lots of Tahoe or Vegas weekend trips
Lives a pretty damn sweet life and thinks all millenials are losers or just lazy
Average California millennial or Gen Y life (18-39) life:
50% Rent an overpriced apartment or crapshack for $2-4K a month for 50-80% of their income from a boomer or
lives in a 250sq ft studio for over $1k a month or lives with 3-6 room mates like a college student indefinitely
Other 50% just lives with and takes advantage of their boomer parents for free or for like $300 a month and doing the dishes sometimes
Works full time job and possible 2nd or 3rd weekend/night job and can’t afford cost of living or
Has college degree and $200k in student loans and waits tables or makes $80k a year or less when home values are 10-15 times those salaries
Maxes out 2 credit cards to take 1 vacation a year, gets the occasional weekend Tahoe/Vegas getaway when they call in fake sick to their 2nd weekend job and max out another credit card
Owns a high mileage used car or bankrupts themselves trying to look cool driving a new car with $400-500 a month payments while living with their boomer parents or 6 room mates
Spends any possible money they have left over each month on trendy clothes and $10 drinks at some trendy crap hole with their friends and the occasional tattoo
Pretty much condemned to a mediocre existence that they are in denial of even if they make $100k a year but makes it look their life is totally awesome on Instagram and Facebook
I wouldn’t say that’s an average boomer, but one thing is for certain, so many boomers look down their noses at millennials, as they call the Geek Squad to fix their Compaq computer tower from 2006, who tells them to update their anti-virus by going into a window that they forget about five seconds later, as they are half in the bag.
It’s always, “Hey snowflake! Suck it up buttercup!” As they sit around in their Tommy Bahama shirt. “We had to work for it!” Yes, yes, you worked in a wheel balancing center in 1979 as you finished your degree, I know it was hard work that summer. Totally dismissive of an entire generation, as if everyone is smoking pot and playing video games.
What kills me about the boomers I work with is that they’re so technologically lost they would never be hired where I work. They’re legacies. They are good writers, I’ll give them that. Then they have to use that Dragon software to get it typed out because back in the 80’s a secretary typed their stuff up on the Wang, or the PS2.
What I’m saying is, Boomers write well, but many don’t have the remotest skill-set for what would be hired in their place, and a lot of the ones who are still working need to STFU and be more humble..
What about generation X?
It might be slightly exaggerated but for the most part I agree with you. But wait a minute! We were told by marketwatch and the RE perma bulls that this will be the year millennials go out and buy houses in droves, right? Or was that last year? Anyway, it does not sound like it will be this year. But hey, the good news a new year is only 9 month away. Next year will be the year when millennials go out and buy the crapshacks! Next year for sure! LOL
Not to mention the full time job is typically 60-80 hour work weeks for a “professional” job. No sense of career even in a “good” field, as corporations continue to “optimize” workload and resources. Oh, as a millennial if we don’t like it, we are told there are hundreds of candidates willing to do it, which is true. In short, corporations and high loans have millennials and Gen-Y’s by the balls. And this is coming from someone who earns a decent salary. On top of that, overvalued crap shacks from boomers, and boomer mentality that all is well….actually all is awesome and millennials should be in awe of the genius boomers for their leadership, “vision” and creativity.
Priced Out, Have hope. You will get there.
My comments in 1986 with my first job.
1) How can I buy a 250K house when I only make 30K?
2) Why do my coworkers have 5 weeks of vacation when I only have 2 weeks? They get to go on nice vacations but I struggle to take care of my baby.
|The big difference I see are:
1) Since my college education was funded completely by a minimum wage job, I don’t know how Millennials handle this without huge loans or parental help. I did live at home during college.
2) I didn’t buy in a housing bubble. Don’t do it until your mortgage is less than 40% of your income.
3) My Silent Generation parents didn’t help at all. Even though they were sitting on a 40K Prop 13 house, a million in the bank, and a lucrative pension in the future. Most Baby Boomer parents feel the need to help. Including us.
4) I resisted the temptation to buy a fancy foreign new car. The money went into the mortgage.
I am not in the pension generation so it remains to be seen when I can retire but the outlook is good since my fixed expenses like a home are relatively cheap 25 years after I bought it.
In my humble experience:
|Time cures many financial hardships. With most jobs, you get promoted and make more money so the mortgage burden is alleved. Also most jobs give you more vacation over time so as the kids get older, you get to go somewhere tropical.
I make 200k a year in socal but can’t make a call to decide
I am lucky to have a job but I am not sure if I’d have this job after few years
In private sectors there is no job security
More so in technology field where younger workers are preferred over old ones like me who is 43
There is absolutely no job security and I see flight of jobs big time in technology field
Scott – save save save that money!! Tech is indeed a bubble and I see people leaving it for sexy things like food service because they pay better.
Don’t buy toys or even a car if you can avoid it. Buy a used Trek 520 bicycle and then you can brag about your Trek 520 (they are a bit of a “cult” because they’re a good bike, and one of the last frames Trek made in the US).
Stack away that money, become “that frugal bastard”, you’ll thank me because if you’re in tech you’ll thank me on your 40th birthday.
Scott – Oops, correction, you’re already circling the drain as far as tech is concerned. But not too young to find something Government and Unionized.
“…I see people leaving it for sexy things like food service because they pay better.”
Just because one homeless guy you ran into in your warehouse district is an antisocial crackpot who can’t climb higher than $10/hour beginning help desk work does not make it a statistic.
No matter how often you type it, you’re still wrong.
You totally nailed it. Awesome……..simply awesome!
I don’t know if this is a stereotype, but we give our Millennial tenant a good deal on rent because he takes care of the place and pays the rent on time. He has a truck, a car, 2 snowmobiles, a motorcycle, 5 mountain bikes, a small sailboat, and a pool table in the garage included with the apartment. Even though none were bought new, I don’t think he is suffering. Most apartments don’t have a garage so he thinks he is getting a great deal for his toys. I certainly don’t have as many toys. I think sometimes that I’m enabling him to not buy a house.
@PricedOut:
You are delusional to think the “average” CA boomer lives the lifestyle you mentioned. This may be true for the top 10 to 15% who reside in coastal CA. The top 10 to 15% of Millennials will also be successful and own houses, fancy cars and have a nice retirement.
I do agree that the current generation will have to work harder than previous ones. The old excuse of “we have so hard compared to our parents” wears thin after a while.
The people I work for are “above average Boomers” and are slaves to a too-big house full of too much stuff, are “never not working” and thus have to take expensive vacations, house is falling apart and needs constant maintenance, the guy works his main job and a couple of side jobs at all times, they have *no* savings and are presently burning through an inheritance the wife got, and each takes a handful of pills a day – pharmacy trips to refill on pills are as common as shopping for food. Their fleet of cars needs constant maintenance with an occasional swapping out of one as it wears out.
American Dream? More like American Treadmill.
What the hell kind of job is it where you get promoted? 1960s IBM? The only way to get promoted since 1990 or so has been to job-hop. With the exception of government and unionized jobs.
Even at McDonalds you get promoted to a manager after a year or two of hard work in the trenches.
I really doubt that. I’m pretty certain to be a manager at a McD’s you need a 4-year degree and I don’t think they get paid much more than the regular employees. A person would be better off running an illegal tamale business.
The Chinese are having trouble paying for their Australian real estate purchases: https://www.businessinsider.com.au/suddenly-almost-80-of-chinese-buyers-are-struggling-to-settle-on-their-aussie-apartment-2017-3
China is making it harder to remove money from the country. Good news for American and Canadian home buyers?
Stories like this came out of Canada last year as well. Rather than all consummating RE deals entirely through cash, investors/speculators (Chinese or not) were buying on margin.
These facts also make it questionable that “all cash” buyers will jump into the market at the smallest drop in RE prices.
The article refers to “off plan” property, which is highly speculative. They are basically selling developments that have not been built yet and giving the buyers sweetheart financing deals. Investors buy them thinking they will have big appreciation by the time they are built. Often times these developments never get completed and people lose deposits. It’s a gamble, and a risky one.
I remember back in the 80s when Japan was booming and the Japanese were buying up US real estate, and I, having grown up in Hawaii and no friend of the Japanese, voiced my concern to a friend of mine* who said, “Remember, foreign-owned property can always be nationalized”.
*That he was a friend tells you he was *not* Japanese lol.
@Alex in San Jose. No offense but you are hella lame. You complain about salaries in tech (which STILL reports higher salaries than other industries), about being pushed out of the business, about the exodus of tech workers to minimum wage jobs, about no opportunity…sounds like you are bitter party of ONE.
You say you want a cheap home in Santa Monica? A real estate market with one of the highest costs per square foot in the COUNTRY? How crazy unrealistic are you? You just shot your credibility in the foot…
I tell my kids that working hard and getting ahead is what they need to do. And guess what? It works!! They get promotions AND raises.
You must of been an employee with zero likeability and provided zero value.
I’m sorry your ‘dreams’ were dashed…you need a personality change maybe more than a zip code change…
I was exaggerating a little but overall I’d say 80% or more boomers own their house and have a less stressful life than the younger generations. There are always exceptions and I was being a little silly but really overall most under 40 years old who don’t come from a family with money are never going to own anything in California unless they have an extremely high paying career, got in the market during that last 2008 drop or inherited their parents home at some point.
Nothing totally wrong with renting and I do alright financially and have a good landlord like the poster above who treats his tenant well but this site is about buying property, not that it could always be worse and at least you have an apartment. My point being that something is way off when you can make give or take $100k a year and have zero chance to buy a home or condo. I am in the Bay Area so I am probably double jaded because the values really are that ridiculous and I am contemplating moving to SoCal when I save some more money because in some cheaper areas there a crap shack “only” costs $400-550k and I might have a chance if I can find a decent job.
@pricedOut
” never going to own anything in California ”
What are you talking about!? We all know the market is overheated/overpriced. It’s bubble 2.0. Why do so many of you have a drive-through mentality!? Instead, you should Live frugal and save money! The last crash JUST happened a few years ago. Live frugal for the next 10-15 years and buy when it crashes again. 10-15 is nothing compared to the 80-90 years of life expectancy. Californians have no patience. It’s either door one: buy now or door two: die as a life long renter. What about door three as an option: Live below your means, don’t keep up with the joneses, prepare your own meals, buy only used stuff! save money and wait for the crash! If you put your happiness into temporary things, your happiness will be temporary. Just look at recent buyers of overpriced crapshacks….it’s exciting at the beginning because you can run around and tell your friends and family. but soon after you experiences being house poor and secretly miss being a renter (flexibility, much more money in the bank, less stress and fear of losing everything, etc.). Opening your eyes is not easy to do when it comes to housing because Boomers and other generations are working hard to brainwash millennials. Just look at the incredible amount of sales pitches and bogus reasons why you need to buy now.
2 good reasons to buy RE in CA before it is too late:
http://www.zerohedge.com/news/2017-03-12/16-reasons-not-live-california
This article below shows that there is no relationship between interest rates increases and purchase of RE (according to JT), except the graph which speaks more than a thousand words:
http://www.zerohedge.com/news/2017-03-12/who-hit-brakes-bank-loan-creation-suddenly-tumbles-five-year-low
This article does not take into account a new increase coming this month. We’ll see again the effect 6 months later after the lag time passes.
What do a California real estate market crash and a 7+ California earthquake have in common?
Neither is a matter of “if”, …..but “when”.
US real estate is being used to park “hot” and in some cases illegal foreign capital in US real estate courtesy of the NAR’s exemption from anti-money laundering regulations.
In Feb. 2016, the Treasury’s FinCEN enacted “GEOGRAPHIC, ANTI-MONEY-LAUNDERING, TARGETING ORDERS of 2016”. Apparently, the program worked out so well, in August 2016, it was expanded to cover the rest NYC and SoFL, in addition to the LA, San Diego, San Fran Bay Area, and San Antonio regions. Regarding the expansion, on July 28, 2016, I put out a note entitled “7-28 Hanson…Higher End Real Estate’s Coup De Grace…Heads-Up,.” copied at the bottom of this note, highlighting what I perceived to be the fall-out.
Everybody assumed this program would end organically last month, but it was renewed for another year, which wasn’t widely reported.
THESE STATEMENTS BY INVESTIGATORS ARE OMINOUS, especially considering that “foreign and domestic fraud and money laundering” was one of my “four pillars of unorthodox housing demand”, over which I have pounded the table for the past several years.
“We don’t come across [money laundering in real estate] once every 10 or 12 cases,” John Tobon, U.S. Homeland Security Investigations Deputy Special Agent in Charge for South Florida, told the Miami Herald in January. “We come across real estate being purchased with illicit funds once every other case.”
“FinCEN said that 30 percent of reported transactions across the nation were linked to buyers who had been flagged by banks and other financial institutions for suspicious activity.”
https://mhanson.com/blog/
Samantha – We’re shocked, shocked we tell you, to find out gambling may be going on in this casino!
Looks like the Real Estate Armageddon is near.
I had not heard of 2400 for studios in Manhattan ever…ever as in 2007 either!
This is a new low and prolly a sign of times to come.
https://www.bloomberg.com/news/articles/2017-03-09/manhattan-rents-decline-for-every-apartment-size-even-studios
Will Measure S cause a similar glut of apartments in SoCal causing the hungry house humpers looking to become landlords to step back ? Thoughts ?
Same thing would happen in LA if they actually knocked down some decrepit buildings and built some nice affordable apartments with parking and amenities. Problem is whenever they try to tear down some old building in LA that’s many years beyond it’s use, it turns out that Marilyn Monroe farted there or James Dean used the can there once and now the entire building is protected for all time. It really is pathetic how LA throws around “Historic Preservation” status.The only place I see real progress is in downtown. But it’s still gross IMO and I would not want to live there.
This is nothing to do with the post, really, but this pisses me off. The hideous tear-down next to the dumpy apartment I’ve called “home” for the last two years here in El Segundo has just hit the market, for $950,000. Nobody buy a developer is going to buy it at that price, and they’re just going to tear it down and put up MORE apartments, further dragging down the quality of life here in Southern California. WTF… when is it finally going to be enough? I know it’s already well past that point for me; I’m hanging in there, walking distance from work, for a nice pension, but honestly I don’t know if I’m going to be able to last that long.
https://www.zillow.com/homedetails/123-Loma-Vista-St-El-Segundo-CA-90245/20391976_zpid/
$950k is super cheap. But, I see why. Right across the street from a gas tank farm. Junk
I have patience but I really don’t see values coming down that much, especially in the Bay Area, there just isn’t enough inventory. If we do get a 10-20% drop in the next 10-20 years then inflation will cancel out most the difference and higher interest rates will make the monthly payment just as stupid and unaffordable as buying now.
What the younger generation needs is reality to come back but that is never going to come back and what I mean buy that is my girlfriends parents payed $95k for their house in the Bay Area in 1983, now it is worth about 1.3 million and it is just an average non fancy deluxe crapshack but it’s close to SF. Reality would mean that $95k in 1983 is equal to paying around $220-225k now with inflation. That is affordable but is that house $225k or even $300-400k just because it’s near SF,NO! It’s $1.3 frickin MILLION Dollars!!!! You have to be wealthy to buy that crapshack now. Another boomer I know payed $150k for their house in the same town in 1990 and now that house is valued around $850k which is equal to $280k today so the value is 3-4 times over what it should be with inflation. Add the housing shortage,tech boom, foreign money,rich kids and all the factors up and the average CA person is totally priced out even with a good job or even couples with decent jobs. Houses have always been more I premium neighborhoods and it’s understandable to see LaJolla, Malibu and Hillsborough have high priced real estate but what has happened now is there are no more cheap neighborhoods especially in the Bay Area, you will pay almost Hollywood Hills prices to own a dumpy crapshack in a hellhole like San Bruno, it’s just ridiculous but there seems to be no end in sight, just more people fighting over these places and outbidding each other.
@PricedOut, “10-20% drop the next years”
Maybe RE bulls hope for a 10-20% drop the next years. Everything less then a 40-60% drop is not enough to get me off the couch and look at open houses. I see only positive things in the current bubble….you save a ton by renting and you get to laugh at these overpriced crapshacks and talk about it on the internet. I wouldn’t mind if the bubble goes on another ten years or so. By the rate I am saving money each month, I can probably buy the house outright by the time we get the 40-60% crash.
I feel proud that we’re doing things the “right” way by saving and keeping a responsible amount of debt. I like DHB for the cathartic group laughter and exasperation at the situation. But there is nothing positive in this bubble for me. We are extremely vulnerable as renters in a “hot” neighborhood, where people are scrambling to get “in” for the schools. In our case, we need to secure our child’s placement in this school district because he is disabled and this is by far the best area for his needs.
This bubble makes me really anxious and sad.
Meri,
“We are extremely vulnerable as renters in a “hot†neighborhood, where people are scrambling”
I am not sure I am following. Have you done a buy vs rent comparison? There are great tools (Excel templates) available. My bet is, your monthly rent is much lower than what you would pay if you rent it from the bank. Without seeing some numbers its hard to make a judgement. You seem to be emotional about the bubble and housing prices. We all live in a box. You can choose to rent the box from the bank and be liable for repairs and upkeep or you choose to rent it from a landlord (less stress and save money).
Its a no-brainer to rent until the market crashes. If there is a crash you might find a situation of rental parity where it makes more sense to purchase a box. Plus, when you are house shopping you have to deal with all these lying realtards and crooks (lenders). No fun at all. I would rather choose to go to the park with my kids instead of making all other parties rich during the transaction (in a bubble seller gets much more than what the box is worth, realtard gets a high percentage of the overpriced box and lenders/banks make a killing on fees and interest rates.)
The reality is that we are in a rising interest rate environment. Three fed increases are expected in 2017. Mortgage rates should be around 5% by the end of the year. Inflation is expected to rise substantially. When taking in all these factors, it’s safe to say that without some kind of decline in housing prices you will get less house for more money in the immediate future. I’m not trying to influence anyone to buy or wait, I’m just stating the obvious.
Wheelin you almost got it right. Let me help you.
“The reality is that we are in a rising interest rate environment. Three fed increases are expected in 2017. Mortgage rates should be around 5% by the end of the year. ”
Yes, preferable, mortgage rates would be closer to 6%.
“(…)you will get less house for more money in the immediate future.(…)”
Nope, correct to say is, sellers will get much less money and have to keep reducing prices when interest rates rise. Hopefully, the rate hikes will happen this year and hopefully we get a deep recession and panic. If investors start to panic and unload their RE prices the market will crash. Lets hope we get a severe recession, stock market collapse and housing crash. That would be the time to celebrate.
Hmmm, went to a few open houses in San Diego this weekend. Packed! Even the realtors seemed surprised by the huge turnout this early in the spring season – they ran out of flyers early in the time block. And most people seemed to be well to do, professional young families with fancy cars.
Oh great to hear. Maybe the RE bulls were right, this is the year when Millennials go out and buy in droves. These house shoppers probably paid their student debts off early. Looks like everything is fine then. Housing to skyrocket in spring!
Well, I can only guess it is the very wealthy dual-income types that are interested in these homes. I just got the feeling that there is a huge population of frustrated would-be buyers who flock to these open houses. It is so depressing because eventually, SOMEONE pays those prices and the market continues onward.
I wasn’t sure if the other families were like us – just sort of there out of curiosity. But in the end, one of the homes was pending by Tuesday and the other was SO popular that my bet is the price will go UP.
Not really…fancy cars and well to do looking does not mean good credit !
Are we heading toward another subprime mortgage crisis?
http://www.cnn.com/2017/03/14/opinions/risk-of-another-housing-crisis-poole/index.html
Well then we should expect this house to close fairly soon. Since demand is so high, the buyer probably paid at least 10% over asking, waived all contingencies, promised to feed all alley cats and birds, and paid all cash.
I attended Open House for this Santa Monica house last Sunday: https://www.redfin.com/CA/Santa-Monica/1101-Cedar-St-90405/home/6775174
At the Open House, the realtor told me she already had 13 offers, several of them all cash.
Interesting that this remodeled house has heavy steel doors. I wonder if it’s because it’s only a few blocks south of the Pico District, Santa Monica’s worst area.
Even so, it’s already Pending. No real backyard, but it’s a big house, nicely remodeled. I wonder what the final purchase price was?
So they are pricing it almost 30% more than 8 years ago, or $45k per year increase for every year they owned it… I think they will get it and the metal doors are an architectural feature…not for security or they would lose the glass insert in the middle of the damn door.
Santa Monica is crazy…everything is overhyped and overpriced and flys off the market in 15 minutes
Aren’t you glad we have trump now? What a terrific health care plan he came up with. Healthcare fixed. So easy and of course so much better than obamacare. We can stop talking about housing bubbles now. Go out and buy. The housing market will be great again just like everything else that trump touches. Nothing can go wrong as long as trump is on our side.
Trumpster – I heard on the radio about the plan. A 60-year old making $26k a year, will have to pay $14k a year to have health insurance. That’s just to have it. To actually use it will cost a lot more of course.
I hope to be out of the US by then.
the problem of that 60 year old is he doesn’t make enough money. He needs a real estate license so he can sell overpriced shacks in Santa Monica to JT, Son of a Landlord and groovymom. The 60 year old will soon be rich and everybody wins. Trumps healthcare plan is terrific. World’s best plan and an important piece to make america great again. I can feel the greatness in the air already.
PricedOut,
It always seems darkest before the dawn.
WATER! That is the hiccup in all those development plans! How long will you Californian’s continue to say you are so environmentally conscious, yet steal more and more water from surrounding areas, force more electrical power to be imported, all so you can have your latte’s? Typical bunch of hypocrites!
Well, we could start collecting/conserving all that rain water we got this year…but most flows into the ocean. Most other developed countries are harvesting rainwater but we don’t need that here in California. We are busy enough with keeping the housing bubble going.
Why not get out and leave all of the calcrap behind?
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