The California and Texas Connection: California Exports Its Poor to Texas Due to High Cost of Living.
California is a high cost of living state. That goes without saying. Yet the level of affordability oscillates up and down with the whims of the bubble economy. As of today the state faces a rental Armageddon trend where many families simply cannot afford to purchase a gorgeous, sturdy, and well-designed home (just kidding, most can’t buy a 700 square foot funky looking crap shack). Whenever people even hint at the expensive nature of California the yelling begins with “then move out!†or “buying always makes sense!†which seems interesting since the housing market really got out of control in many metro areas starting in the late 1990s as Wall Street injected its casino antics into the industry. And many of those that protest the loudest are usually Taco Tuesday baby boomers living in granite countertop paradise that wouldn’t have a chance affording their home today if they had to pay current prices. But in reality, many are moving out. From 2000 to 2015 more people left California than moved in from other states. The biggest destination is Texas.
The Grand Migration
The math on the grand migration out of California is interesting. Here is the data from 2005 to 2015:
-2.5 million people living close to the poverty line left the state
-1.7 million moved in from other states near the poverty line
This equates to a net loss of 800,000 people.
-Net gain of about 20,000 residents earning $100,000 or more
The exodus is very clear on a map:
“(SacBee) Not surprisingly, the state’s exodus of poor people is notable in Los Angeles and San Francisco counties, which combined experienced a net loss of 250,000 such residents from 2005 through 2015.
The leading destination for those leaving California is Texas, with about 293,000 economically disadvantaged residents leaving and about 137,000 coming for a net loss of 156,000 from 2005 through 2015. Next up are states surrounding California; in order, Arizona, Nevada and Oregon.â€
It should be no shock that the biggest line item on any household budget is housing (rent or a mortgage payment). And in Los Angeles, you have a ridiculous number of people paying nearly half of their income just on rent or a mortgage payment. That is a big problem especially when you want to plan for other expenses or want to put something away for retirement.
The map above is rather clear in how the trend is unfolding. While those lower income families have no chance of owning a place in California or the rent is eating away at their income, in Texas these families have a chance not only to save some money but to potentially own a home. I’ve talked with older families here in California where that opportunity once existed (not too long ago) so this is their frame of reference and many are angry that their adult “children†cannot afford a home without them gifting a giant down payment (which cuts into their Taco Tuesday outings and ability to booze it up on happy hour). So the current environment is really new.
You also have the option of doing mega commutes:
“The choices facing millions of low-income workers trying to rent in California’s urban centers are stark, Hershey and others said. They can commute from far-away locales.
“People are having to move so far away from their jobs – driving two or three hours,†Hershey said.â€
I know of many that take on these mega commutes into LA and OC just for work. The fact that you are wasting away days of your life in a car is difficult to stomach and isn’t good for your overall health. So the choice for many especially those with lower incomes is to leave the state. The data is very clear. People do vote with their feet.
So the question many have to wrestle with is what is that crap shack worth to you? For a large number leaving the state is an option, for some it is mega commutes, and for others it is to mortgage yourself to the hilt.
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218 Responses to “The California and Texas Connection: California Exports Its Poor to Texas Due to High Cost of Living.”
Isn’t there already a housing bubble in Austin?
We looked at buying a small place in Austin as an investment…this was 4 years ago. Prices were pretty high then for what you got, but the real kicker was the property taxes…In Texas, you are assessed different percentages by county…so Travis Co. was like 3% on the purchase price. People don’t talk about it very much, but since they are known for low business and sales tax thats what gets the headlines….until you buy property! They always make up the tax somewhere!.
Made the investment really not worth it for us. At least CA has that advantage over TX!
Doesn’t matter as much if it’s a higher property tax % is if the cost basis is much lower. Ultimately, it’s how much in $s you pay out, not some %.
Hey what do you know… a tax system which effectively counterbalanced a non-local rent skimmer… which increased the odds that an actual end user purchased a property. No groovy Prop 13 gravy there.
+1 in being all for any system that discourages purchasing by anyone other than someone who actually intends to live in their property. Competing against every wannabe landlord and flipper sucks ass.
Yellen bucks have permeated the real estate market nationally. Dallas and Austin are among the many recipients of this asset reflation program.
So, what I understand from this article is that the poor run away from the socialists republic of CA (liberal paradise) and move to a red state to vote for the same liberals who ruined the previous state. They did that in Colorado, too. It never occurs to them that they are the problem, they try to run away from their problem and keep ending in the same problem – something like many illegals do when they run from the south.
The poor people from the other socialists paradise of Venezuela can not run anywhere. There, the lack of critical thinking and bad decisions at the voting box caught up with them – they run out of other people money.
When they go to a red state they continue mooching on the federal taxpayers money and the liberals from CA say that the red states receive more than they pay in taxes. However, those mooching still vote liberals even if they are in a red state. I doubt the ranchers from TX who vote conservative wait on the taxpayers to pay for their living expenses.
Now, you can start throwing eggs and tomatoes my way!!!!….I am used to that.
The only reason I can think of to move to flyover country where there’s no jobs, is to buy some arable land cheaply and homestead. You’d better have some experience or be prepared for a few rough years. Plus you have to come out to flyover land with an RV you can live in or be prepared to buy/build housing. If you come out with an RV you can build a sort of shelter over it to mitigate the extreme temperature swings seasonally and also daily.
Get a few acres preferably 10-20, with some source of water, raise almost all of your own food, and have some online presence for a trickle of money to you can bring in maybe 10 grand a year, and it may beat living under a bridge in California if you’ve been pushed off of the grid here.
~”
The only reason I can think of to move to flyover country where there’s no jobs, is to buy some arable land cheaply and homestead. You’d better have some experience or be prepared for a few rough years. Plus you have to come out to flyover land with an RV you can live in or be prepared to buy/build housing. If you come out with an RV you can build a sort of shelter over it to mitigate the extreme temperature swings seasonally and also daily.
Get a few acres preferably 10-20, with some source of water, raise almost all of your own food, and have some online presence for a trickle of money to you can bring in maybe 10 grand a year, and it may beat living under a bridge in California if you’ve been pushed off of the grid here.”~
You need to get out of San Jose and see the rest of the country, aka “flyover country”. It is huge, and there are all sorts of climates, economic conditions and social situations.
But before you do, you need to know this: It takes money to live anywhere. You will still have to buy fuel for your vehicle, pay taxes and spend money like crazy on all kinds of things to be able to perform that idealistic “living off the land”. The ROI is years away even if you can swing it.
To afford this “back to nature” wetdream, you will either a) be independently wealthy or b) have a job in the local community. Take Tennessee for example. There are tons of lots for sale back there for “dirt cheap”. Why? Because there is no work there. Beautiful, scenery, lovely weather, no effin’ jobs.
I have a good friend who moved his family from San Diego to Tennessee a couple of years ago. He worked in SD as a Toyota certified Master Mechanic. In Tenn. all he could find was doing counter work at Autozone for minimum wage. Get the picture?
I personally just this year became a political refugee in AZ after selling the house in SoCal. I just could not take the loss of my civil liberties at the hands of the altruist-collectivists in the Legislature and Governor Moonbeam. As a TTBB I bought a 10 yr old travel trailer for less than $10k, spent $16k installing solar and lithium batteries and now I can live just about anywhere for next to nothing, while traveling this great land you call…flyover country. Enjoy your time in Kalifornia.
Raising your own food is overrated. What percentage of your budget is food? Homesteading is almost a synonym for grinding poverty. Knowing that in advance can save a lot of trouble.
Alex,
How many times do I have to post data that shows how wrong your closed-minded view is? My county’s unemployment is running at 2.9%. Please watch/listen to video in link:
http://www.kbzk.com/story/34934803/job-service-works-to-match-employers-with-employees-in-gallatin-county
Cheers.
As a RN, I moved from Seattle/Tacoma to Northern Idaho. With 35 years of experience, I was at the top of the salary schedule for staff nurses at my old hospital. I was able to obtain employment in my chosen specialty, on day shift, at a hospital in Spokane. I took a 5 cent an hour cut in pay. While my commute is 25 miles longer, it only takes about 15 more minutes due to less traffic congestion. We did very well selling our residence in Tacoma and purchasing in lower cost Idaho.
You say there are no jobs in flyover country. But I see physicians, lawyers, marketers, computer people, service industry jobs, farmers, loggers, ranchers and miners. We even have colleges and college professors. We do not have the ocean ports, the railroads are very big here. Burlington Northern has a big freight yard in my little town. Oddly enough, my decades long insurance agent (who I thought was based in Bellevue, WA) telecommutes from Sandpoint, ID.
Life does exist outside of the coastal areas.
I would have thought Texas provides far fewer welfare state giveaways to poor brown people than the socialist nirvana of California. Are you suggesting the poor brown people are such idealists that they move away from their welfare paradise just to export their ideology by voting blue in a red state? Good thing that TX is so gerrymandered after the Tom DeLay years that no Democratic vote will make any difference there until all the good white folk are swamped by the Latino demographic tsunami in another decade or two.
I would imagine smart Democrat ideologues who wanted to influence national voting trends would move to purple states where their votes could have disproportionate effect. Of course anti-slavery folks (the bleeding heart liberals of the 19th century) tried that once by moving en masse to Kansas in the 1850s – a similarly polarized time in American politics. Read about Bleeding Kansas and the run up to the Civil War to see how well that turned out.
The Sacramento Bee didn’t bother to mention how many poor illegals and refugees from other countries moved into California? Don’t believe everything that you read in The Sacramento Bee–it’s basically a Democrat propaganda site full of fake news.
Your opinions are not facts. The problem is not the poor, the problem is the demand for real estate is bought up by the ultra-rich and the poor do not have the income to stay. That’s pretty common sense. Also, more people are on welfare in the red states than the blue states by a wide margin. That’s a fact. IMO, these low IQ people vote against their benefit all the time because they are fed a bone of hate and divide, and they eat it up because they don’t have the necessary intelligence to see what they are doing. It’s hilarious to see them complain about Obamacare leaving. I, for one, have no problem reducing welfare and govt support because it would take away the dependence from meth taking, uneducated hillbillies prevalent in the South.
your post is racist
This just in: facts are racist.
Liberals are the most racist people you can find. If you are not a liberal, you are a “deplorable”. This is not my opinion, by the way. I heard it from another racist politician. The liberals are tolerant only with their own “tolerant”; otherwise they become intolerant. Freedom of speech is ONLY if you agree with them – ask Merkel – if you don’t agree with the socialist Merkel you should be put in jail because any criticism is called “hate speech” and they took care to have a law against that. In US, they don’t put you in jail for “hate speech” yet, but if you tried to criticize the TPTB or contributed to the wrong politician, the IRS will call you and put you in jail. It was more round about than in Germany. And just when we were supposed to have out own Merkel, Trump happened.
Let me guess, you also believe college tuition and healthcare cost are being driven higher by the “ultra-rich”
This is the equivalent of how the North American indians were unable to fight off progress. We just plowed through without any disregard who was living there. Now that land parcels became the standard homesteads allowed new owners to essentially have the right to kick anyone out that crossed their border. In addition, it has made not only us an enemy of the indians but enemies between each owner.
MR. SOUTHWEST is not only racist, but he’s also ignorant. Over one third of the US welfare recipients live in California (aka Commiefornia).
California is a welfare queen.
http://www.cnsnews.com/commentary/terence-p-jeffrey/354-percent-109631000-welfare
http://www.nationalreview.com/article/302148/california-americas-welfare-queen-nash-keune
Flyover, I’m not a liberal so feel free to bash them all you want. The answer is not bashing the poor for circumstances brought on to them by politicians and the ultra-rich that keep them divided.
Samantha, you are ignorant, and I’m not surprised at all by this.
First of all, your sources are National Review and CNS News. LMAO.
This is partly the reason why you stay ignorant. Perhaps get sources from a more objective media, and to be fair, MSNBC, CNN, and others are just as bad. But since you rely on them so much, let’s just see what your CNS says about the states with the most federal aid out of respect to population.
http://www.cnsnews.com/news/article/michael-w-chapman/top-10-states-rely-most-federal-aid
The 10 states receiving the most in federal aid as a percentage of their general revenue, in order, were:
Mississippi, 42.9% federal aid as percentage of general revenue
Louisiana, 41.9%
Tennessee, 39.5%
South Dakota, 39.0%
Missouri, 38.2%
Montana, 37.4%
Georgia, 37.3%
New Mexico, 36.6%
Alabama, 36.1%
Maine, 35.3%
Only an idiot would say a state with one of the biggest populations turn around and say the problem is welfare in the state because it has the highest net total. The south is by far more dependent on welfare. Sorry to burst your fantasy that has been brainwashed your entire life. You’re not special, only a mere genetic mutation.
“… they run out of other people money.”
While true by itself, commentator readily forgets that US has run out other people’s money decades ago and has been lending trillions since then.
The only difference is that US is able to have loans in dollars, i.e. home currency with value which FED can directly devalue at will. And have been doing so much that FED stopped publishing the actual amount of devaluation.
“There’s no inflation if we don’t publish the inflation numbers”-ideology.
Can you imagine being in such a state of despair that you really contemplate moving to Texas?
That being said, a guy I know of (friend of boss) moved to the South, turns out he’s a rabid Jesus-freak so I guess he and the South deserve each other.
Dude your comments can be so deluded it seems you’ve lost all sense of olfactory objectiveness from the soylent cal crap patty crumbs you’ve been subsisting off of. The main thing my colleagues in Texas aren’t saying is that they feel priced out forever which counts for far more than your snooty cal crap bottom feeder insults do.
I for one prefer to live where there are jobs, and where meth and opioids are not a way of life. Not to mention the kooky religiosity that’s the norm out in the boonies.
But, as mentioned, if you buy arable land out where it’s cheap, and can do something online for “cash money” you could make it OK.
Alex, then why haven’t you found a well paying job there yet? You have the skills and intelligence, yet you’ve consigned yourself to living in some “artist’s space” and scraping by.
Not a dig. I know you have a certain philosophy, but I think your biggest enemy may be yourself.
Alex, “kooky religiosity”? California is the birthplace or headquarters of many kooky cults and religions. New Age, crystals and shamans, neo-paganism, Scientology, Jim Jones, Heaven’s Gate, the Manson Family.
But of course, when you say “kooky,” that’s your bigoted term for Christian, isn’t it?
I for one prefer to live where there are jobs, and where meth and opioids are not a way of life.
Right. No meth or opiods in Los Angeles, Portland, Seattle, Miami, Washington, New York, or any coastal city. No crack, heroin, Valium, pot, Prozac, or any other kind of drug. I guess that’s why the coastal cities have no gangstas or organized crime.
That’s bullshit because half of the time you’re saying tech jobs pay next to nothing up in cal crap highlandia where cracked out bums were formally high flying technocrats.
FWIW I moved to Indiana precisely to get away from people like you.
Hey man congratulations on getting out!!!
Alex sounds like his religion is socialism/communism and a rabid Marxist freak. He deserves to live with the illegals and H-1b visa holders in the turd world shyt hole city of San Jose.
Funny, seems like mostly people want to stay near-ish to California. But some people want to get as far away as possible and choose Maine.
The big mistake … people pretend that their home is just a roof over their head. They think your home is not an investment. That causes them to make the mistake of not buying a home because they do not see it as an investment. If they correctly saw their home as an investment, they would have done what done whatever hey needed to do to get into a home. As long as they treat it as a roof over their head, they make the mistake of yelling bubble for every strong market and they sit it out.
Owning one’s primary residence is an investment but it also provides a service, it puts a roof over the head of your and your family. There is value in that beyond the actual cash price.
Typo:
If they correctly saw their home as an investment, they would have done whatever they needed to do to get into a home.
It would be the biggest mistake to buy during the bubble peak (now). Buying a house is the worst investment unless you buy after the crash. A house is a money pit. It pays no bills and cost much more to rent. Plus you have high transaction costs and cost for repairs.
I’m building a house with a homebuilder, done this fall, well aware that prices are very frothy. 240K for a 100K household in a suburb of Atlanta (Doraville) close to international cuisine and transit works out for me. I’m well aware that prices could crash, but I’m happy to secure the lot and customize the house.
Besides, it will recover if it does crash, and if it crashes, I can lower my payment with lower rates. You have to look at each situation and not make blanket statements.
“and cost much more to rent”
Not on my planet. Renting is about 1/3 the cost. The best part is when something breaks and i call the old landlord and say “the water heater just stopped working and we need that fixed…chop chop” While he was there i mentioned that with all the rain we’ve had i noticed a few leaks in the garage and told him this place needs a new roof…..he grumbled a little and rolled his eyes.
I told him sorry i spoiled your Sunday when he interrupted the movie i was watching to tell me it was fixed.
And the fucking lawn? that’s his problem too, I’m certainly not going to be cutting that shit.
Enjoy your overpriced over hyped bank rental…..that’s all you’re really doing, renting from a bank…..WHICH IS CHARGING YOU TWICE THE PURCHASE PRICE FOR THAT PRIVILEGE. And then you rent the land from the state.
Mumbojumbo, I meant to say it cost much more to buy than to rent. I agree with everything you said about the advantages of renting versus buying. Unless the market drops by like 50% I am not buying.
Real estate has been a Boom or Bust scenario for decades now. It is stupid to buy at or near the peak. When house prices drop below the average metrics like house price to household income, price to household debt levels, etc, that is the time to buy.
jtroll everybody… here every post for your enjoyment… but the house can’t afford free drinks, so you gotta buy your own… jt won’t vouch for your tab… but has no problem with trying to make you feel like an asshole for being careful with your money
I’m convinced that JT is just trolling this board. His posts may as well be taken straight out of the RE propaganda playbook.
Not a troll. Because of the FED, I am long term bullish on real estate. But, I do recognize eventually there will be a big price drop when the recession hits. When will that happen? No one knows. Rest assured, the price drop will happen and those that bought before that drop will take serious damage. But, when that price drop happens, the FED will be fighting it. They always do. So, even if you get unlucky and buy just before the drop, if you wait 10 or so years, time will bail you out of your mistake and life goes on. You see, the FED has your back and their goal is to generate inflation which make a real estate investment golden over the long term.
That same inflation also increases the cost of ownership. It’s funny how nobody has got time to wait for jumping in, yet no problem waiting 10 years if not more to be made whole again on a bubble top buy mistake.
It is normal for a buyer to worry that they bought the bubble top. Statistically, about 15% of buyers will buy the top. Those buyers can have a 10 year wait to break even. When you buy, you keep your fingers crossed hoping that you did not buy the top. It takes about two years before you know if you made a mistake or not.
So what you’re saying is that we need to buy now and wait two years to find out if we’re not priced out forever. Absolutely fucking genius plan Sherlock.
No mistake sitting out an obvious bubble market, regardless of what any real estate industry shills may say to the contrary. A house is just a place to live. While it may also be an investment for some, a house can also be a burden to others. Home prices don’t always go up, particularly when central banks have turned global housing markets into a worldwide casino.
There are a number of Texas markets where renting is probably a better option than buying.
Yeah, we’re renting a close-in house in Portland in one of the best school districts, and it would cost about $800 more per month, plus $135K down, to buy the house we’re in.
We’d love to finally “settle” and buy a place, but I can wait to see what happens.
The waiting is the hardest part. Where do you put your money while waiting for the bubble to burst? CD’s paying 0.2% interest, Bonds paying 1%? Both are losing money to inflation. Housing and Stocks are both on a bubble but are both giving the best return.
You aren’t looking very hard for better CD rates, Bob. I just set one up for 1.6% 2 years. Not great but not even close to 0.2%
Not the first I’ve read this and the claim is not backed up with data unless one only looks at those bank whores JP Morgan Chase or Wells Fargo
Bob, inflation can not last too long because the bond market (3x the size of the stock market) will implode. What is going to happen to the derivative market (555 Trillion dollars) then?!…. Even a small increase in interest will detonate this “weapon of mass destruction” (the derivative market) – to quote Warren Buffet.
Given what I know and what you know, I believe that cash will be king very soon regardless of what the FED say or want. At this point, the FED is cornered – doom on them and us either way – if they raise the rate or if they leave it like it is. I believe that we’ll see 2 more increases this year and 4 more next year. Just watch the fireworks!…
After the bubble busts, then will see again dramatic moves by the FED. For now they increase because they are way behind the curve and the longer they wait the more dramatic the collapse. At this point in the game they just try to find the course of action for the least damage, but they don’t have any good options. The time to raise the rates was in 2012 when they were trying to reelect Obama.
Inflation? Dude, you can leave the money in the bank there is no inflation. Groceries, electronics, clothes….everything gets cheaper. Sure we are in a stock and housing bubble but the crash will take care of that.
Dweezilsfv, do you mind sharing which CD that is? Dumb question….are there CD’s you cannot trust?
Waiting is hard = Nothing pays like patience.
Waiting = independent thinking
We need a return to a savings rate that is worth relying on if not investing. These micro interest rate changes by the FED don’t appear to be spilling over to small banks. CD’s seem to be the only item that has a better return.
I have a feeling that this continuous rise in the market maybe signaling the end to growth for now unless there is some magical item Trump administration is going to propose.
Flipping homes might be a harder thing to come by for investors and realtors.
Back to monthly income streams which will likely be rent, interest on savings/CD’s and Dividdends if any IMO.
Johnnie-
Ally’s and Barclays have great cd rates. FDIC insured.
@ Johnny: Capitol One 360 [formerly ING]. Another is Ally Bank and various credit unions. Here in Tucson, that’s Hughes Federal Credit.
Bankrate.com is a decent site, but there are several.
They don’t “pretend”. That’s exactly what it is and why they should buy if they think it’s what they need.
Buying a personal residence as an “investment” is real estate talk for cheerleading a house horny couple into buying the biggest house they can [barely] afford with the biggest loan possible.
That’s speculation, not investment.
The only time I have ever read anything that suggested that believing a house is just a roof over one’s head results in people not buying is your claim right here. What an absurd statement.
I don’t think I am the only one who has purchased a house or condo without “investment” as a motivator. Roof over my head, locked in payments, no threat of eviction unless I don’t pay the mortgage, autonomy and independence from a landlord.
In other words value and stability. “Investment” never even entered into the motivation. And it’s never prompted me to buy either.
Homes are only ‘investments’ as long as they are appreciating in value! Once the other shoe drops, they are like boat anchors and take those who dwell within down like the Titanic!
Actually houses are investments, and like any other investment, they can go up or go down. Over the long term, odds are in your favor that they go up, but nothing is certain in this world.
This jt guy is such a clown. It’s consumption if you’re consuming it and investment if you’re renting it out. Two completely different scenarios.
JT, have you heard about the 7mio people who lost their homes during bubble 1.0? That happened here in America. You think these 7 milo might disagree with you that buying an overpriced house during a bubble is an investment? In fact, they probably believe it’s the fastest way to poverty.
JT – Houses are not an investment.
Many studies have shown that over 30 years it is better to rent and invest the saving into the stock market.
Also, if you have to sell a home for a loss, you cannot write the loss off as an investment loss.
I live in flyover land. My house has appreciated on average, over the 18 years I have lived in it at 1.7% YOY. That is less in inflation and way less than the DOW. The house has appreciated 45k but my expenses over this time is 50k. (new roof, painting, carpet). If I sold now I would actually have a net loss.
Billman, the problem is you can not tell if we are in a bubble or not. Only after a bubble bursts can you say it was a bubble. If you think we are in a bubble, then you should not buy. However, two years from now, if prices are even higher, then you will know today was not a bubble.
My opinion … I don’t think we are in a bubble, but eventually be in one.
JT, it makes zero sense what you said: “However, two years from now, if prices are even higher, then you will know today was not a bubble.”
I think you have no clue what you are talking about.
The very def. of a bubble is inflated prices until it pops: A housing bubble is a run-up in housing prices fueled by demand, speculation and exuberance. … Speculators enter the market, further driving demand. At some point, demand decreases or stagnates at the same time supply increases, resulting in a sharp drop in prices — and the bubble bursts.
so, the bubble might go on for a a couple of years until it pops. 2009-2012 was a good time to buy but than the market was manipulated and artificially propped up with cheap money. When the party ends it all crashes down to 2009-2012 price levels or even lower.
Fact. Billman. Nearly everyone who purchased a home in coastal areas of Los Angeles or Orange County has a profit. The majority have a huge profit, big enough to fund a retirement. Unfortunately, many missed out. And, the many are determined prices will crash again and this time they will get in. Possibility you missed a once in a lifetime opportunity. Your kids might get a shot at the next crash.
These realtor/investors and hedge funds can only spin this show on for so long. Whatever JT is saying is likely propaganda being forced on us until the shoe does finally fall off. Almost a signal of what is yet to come IMO.
JT, you just make up stuff and call it facts. You are the Trump at housingbubble.com…..truth by proclamation/alternative facts. Your statements are just propaganda. Maybe, when you start providing some data/web links to prove your so called “facts” we start taking you seriously.
The vast majority of the “economically disadvantaged” will be forced to be life long renters, even in places like Texas. Buying a home isn’t a priority. Making your next rent payment and putting food on the table is likely much more important. Even with the poor migration from CA, the population here keeps increasing and the forces of supply and demand are seen first hand.
A RE market crash will come one of these days. And Jim Taylor will be right. I would put money on the fact that most people simply can’t put their lives on hold for the long term in hopes of buying at the bottom. There are no signs of tanking in sight!
Good ol’ LB. Can’t see the trees from the forest due to tunnel vision.
Claims that subprime and exotic loans play little or no part of the current cycle — Yet Quicken Loans and other FHA brokers run commercials daily.
Claims that prices are up because of high demand and low supply — yet organic demand is at multi-decades low, and there is plenty of inventory of over-priced residences.
Mocks renters — and yet ignores the multitudes of HELOC’s or reverse mortgages that make homeowners lifetime debtors.
Ignores the fact that prices and rents have hit a wall and actually falling in several over-priced markets — What, is the So Cal market truly different this time?
And for some reason, he’s still on this board preaching instead of actually buying properties.
“Claims that subprime and exotic loans play little or no part of the current cycle — Yet Quicken Loans and other FHA brokers run commercials daily.”
Subprime and exotic loans are not a factor in desirable parts of CA. The all cash and large downs have been proven time again. Where is your proof on subprime and exotic loans?
Claims that prices are up because of high demand and low supply — yet organic demand is at multi-decades low, and there is plenty of inventory of over-priced residences.
Again, supply and demand is probably the biggest factor when buying in desirable parts of CA. Anybody who refutes this simply doesn’t get it. And no, I don’t need to explain anything here.
Mocks renters — and yet ignores the multitudes of HELOC’s or reverse mortgages that make homeowners lifetime debtors.
I mock renters? That’s crazy talk.
Ignores the fact that prices and rents have hit a wall and actually falling in several over-priced markets — What, is the So Cal market truly different this time?
Is that a fact or your opinion? Home prices in desirable parts of CA are still rising and so are rents. Those are well documented facts.
And for some reason, he’s still on this board preaching instead of actually buying properties.
Just like you, I am interested in RE. I have said many times I am not a buyer at current prices. Give me a 15-20% correction and I’m in. Please keep the personal attacks and mockery to yourself.
There have been quite a few posts here about how sub-prime mortgages are once again contributing to the rise in housing prices. It was my understanding that non of the major banks are giving out what I consider sub-prime mortgages. I know BofA and Wells Fargo advertised a 3% down last year, but you had to have decent credit and qualifying income. Is any reputable financial institution actually giving out mortgages these days to people with bad credit and no proof of qualifying income?
Lord B.,
Look at what happens to the RE (rentals and RE prices) in New York (Manhattan) in the most prime area of the nation – they are in free fall. Google it and you’ll find tens of articles on the subject in all media (left and right). Are those people poorer than those on West LA?
At this point in the cycle all people are leveraged to their eyeballs – poor and rich alike. I can argue that the rich are even more leveraged than the poor for the simple reason that it was easier for them to borrow than the poor. If they have the debt on the house or their commercial property it matters less. If the banks don’t want to refinance the commercial property because the banking system freezes, will they try to sell the house? I don’t know. But leveraged people will become desperate and desperate people have poor choices. It is a fact that most rich people are very leveraged at this point.
It’s well established by now that rents are falling in the biggest metros.
“Subprime and exotic loans are not a factor in desirable parts of CA. The all cash and large downs have been proven time again. Where is your proof on subprime and exotic loans?”
Huh, no. Not letting you change the narrative from general real estate to just “desirable parts” of CA. Proof? Too afraid to look it up for yourself? “FHA loans made up 22% of all mortgages for single-family home purchases in fiscal 2016, up from 17.8% in fiscal 2014 but below the 34.5% peak in 2010, FHA figures show.”
http://www.usatoday.com/story/money/2017/03/12/concerns-riskier-mortgages-sprouting/98954348/
“Again, supply and demand is probably the biggest factor when buying in desirable parts of CA. Anybody who refutes this simply doesn’t get it. And no, I don’t need to explain anything here.”
There you go with “desirable parts” shtick. You do need to explain your sudden fascination with “desirable” areas.
“I mock renters? That’s crazy talk.”
In the worst way….with bad generalities and conclusions. Pride goeth before the fall.
“Is that a fact or your opinion? Home prices in desirable parts of CA are still rising and so are rents. Those are well documented facts.”
Trying keeping up with the real news once in a while, and not just the happy, go lucky headlines.
“Just like you, I am interested in RE. I have said many times I am not a buyer at current prices. Give me a 15-20% correction and I’m in.”
Huh? Are you a bear all of sudden? You’ve jumped both sides of the fence. If “desirable areas” are solid, why expect a 15-20% correction? Unless you’ve changed your position again and don’t care about “desirable” neighborhoods.
“Please keep the personal attacks and mockery to yourself.”
You consider me calling you out on your statements a personal affront?
We are not talking about “the biggest metros.” We are talking about LA/OC in particular and there have been recent article in both the LA Times and OC Register that rents are at an all time high and are expected to increase again this year. And look at all the anecdotal evidence of bloggers here complaining about their high rents. Why is this so hard to comprehend.
Los Angeles is one of the biggest metros. It’s always a good blast how you run toward the coastline whenever the sun starts to shine truth on your narrative. For every LAT OC Register shill piece you offer there’s a multiple of other sources showing that rents are coming down even in Los Angeles. If you really thought rents were on the up and will continue to go up in any sort of meaningful way then you’d be busy buying that beach close rental now getting started on the road to riches even sooner rather than here trying to convince the doubters.
I absolutely give up with some of you guys. I could tell you the sky is blue and the sun rises in the east and you would still find ways to argue against it.
Keep your ear to the ground and your powder dry, you never know when the next opportunity may present itself.
“I absolutely give up with some of you guys. I could tell you the sky is blue and the sun rises in the east and you would still find ways to argue against it.”
It must be a crushing blow to find out that some people are allergic to your mis-information and flip-flopping.
I don’t know what passes for sightings of tanks but I see a hell of a lot more homeless around these days in Cal. This picture is getting uglier to look at.
According to people I know who have told me, there are lots more homeless *everywhere*. Hawaii, Nevada, you name it. There’s something going on that’s akin to “enclosure” which forced the peasants off of the land in England, giving rise to the original proletariat. It used to be that if you worked, you could afford to live under some kind of a roof. Maybe in a rooming house, but indoors, somehow. That informal social contract has been broken. A lot of homeless people work. In fact, the homeless people who are easily identifiable as homeless are just the tip of the iceberg – most homeless people take great care to not look homeless, because they have jobs to hold onto (sleep in their cars or in shelters or in homeless camps) and can’t afford to look homeless.
Looking homeless is a big hassle, because now you can’t go into many stores, people won’t let you use their restroom or even give you a cup of water (there are no drinking fountains in my town, San Jose, and with drinking water costing $8 a gallon, much of the panhandling downtown especially on hot days is to buy water) so it’s best to stay “stealth”.
The ones you notice are the very bottom rung, the most beaten down, those who have given up hope.
And yet instead of the needed socialist revolution, we’ve voted in Cheeto Hitler. Go figure. It might be a bumpy ride, kids.
Alex,
Since you are so bent for a socialist revolution and at the same time you want to move to Israel, I wish you good luck on both. You may have a socialist revolution in Israel.
Since I lived decades under collectivists/socialist and I understand what those people from Venezuela go through, could you please spare US with your bolshevik bent? I would take the “Cheto” anytime rather than Chavez. You might want to move to Venezuela. They are as collectivists/socialist/bolsheviks as you like them. Please go ahead and have a taste of what you wish. If the government has the power to provide everything, it has the power to take everything – not only your food but your freedom and safety, too.
You talk based on theory and propaganda. I am talking from experience. My experience is not unique to me; it was the experience of hundreds of millions of people who lived under collectivists governments, regardless of the culture or continent and is spelled TYRANNY. The poverty and tyranny go hand in hand.
That’s true alex, it is taking place all over, but it didn’t come to be overnight and you know what else?… If cal crap patty land is the special snowflake exception so many try their little hearts out to make it be, it wouldn’t also be happening there at the same time! So you tell me broski, what’s the primary difference between your pasture full of petrified cal crap patties and the other side of the fence? Higher prices, that’s what.
Flyover – I’m going to have the best of both in that Israel was founded as a Socialist country, and in the whole country the most pessimistic counts show maybe, *maybe* 1000 homeless people in the whole country, with a population of 8 million. Compare and contrast any city in the US with a population of *one* million, will have about 10,000 homeless people.
Alex, in Israel they don’t have that many homeless because they have the same policy like “Cheeto” – they built a wall against illegals (apparently it works for them), they don’t allow any illegals in the country and they have a very strong vetting process for all who come legally – any difference from what Trump says????!!!!….for that, they are accused of being fascists and this week they already had a document at UN accusing them of that. Also, they like others to pay for their defense and imperial wars (US is paying for most of that). I don’t agree with Trump for paying for Israel’s wars – see, I don’t agree with Trump in everything.
Also, in regards to your comments about Russia: I didn’t come from Russia and my parents, grandparents and I had to suffer greatly because of Russian imperialism in Easter Europe. Also, Russia NEVER had a democracy regardless of who was in power (czar, communists or oligarchs). What they call democracy was always a sham. I am not a racist like you accused me and I don’t have anything against any race. I would have preferred Ben Carson as president instead of Hilary or Trump (one is black and the other 2 are whites). Not like Carson was perfect, but in my humble opinion better that Hilary, Trump, Obama or McCain. See, I don’t care about the % of melanin, but about the person’s character – some have more flaws than others.
“And yet instead of the needed socialist revolution, we’ve voted in Cheeto Hitler.”
Obama was the socialist revolution, and all those homeless people showed up on his watch.
I have commented here once in 2011 and stated that house prices will increase slowly but no crash in the near horizon… nobody believed me because everyone here was talking about interest rate going up, shadow inventory popping up, why buy now, prices will drop again etc since then I sold my house in 2015 that I bought in 2009 (made $$$) and then I bought another house in 2015 with %20 down and price already increased another %25.
Here is my prediction for the housing market. House prices will keep going up slowly till 2020 to 2024 then we might see a %20-30 drop but it won’t be like 2008 all over again. (Baby Boomers are still in charge of key government positions and won’t let another big crash happen in the next 8 years)
If you are buying a place to live then just do it instead of waiting like you have been doing since 2007! Yes houses are expensive so everything else.
If in the Fed and government threw everything, including the kitchen sink, at the RE market to stop its fall in 2010-2011, pray tell what other measures would they have up their sleeves to stop another fall despite ongoing record cheap and easy money? Be specific.
We are not in 2011 anymore so past is the past what Fed did or didn’t do is irrelevant right now. We cannot change what happened in the past but we can control NOW.
You have been waiting for a market crash since 2011 and it is not happening so wait longer and blame Fed for easy QE?? Fed will never make a rational decision because it is the right thing to do! Please give me a break.
Fed is Private and it is interest doesn’t lie with average Joe. Fed will pop this bubble ( pre-planned-orchestrated) again when the time comes till then praying hoping is not going to help you at all.
Plans are in place for the next crash in FED vault. Do you think Ben Bernanke and other Fed members didn’t know about the upcoming crash? You are too naive if you think Fed didn’t planned the crash landing in 2008. Ben Bernanke and other members knew it years before and pre-planned all the actions for the benefit of Ultra-Elite. I am confident that today Janet Yellen just like her predecessor Alan Greenspan is setting the stage for the next orchestrated crash in front of our eyes.
@TR
You’re preaching to the choir in your response. But I ask you again, what can the Fed and government do to counter the next downturn, as you expect them to?
TR,
So, according to you, in 2009-2011 the FED did NOT want to rebound the RE, but this time they will…!!!!!….classic mistake of thinking that the FED is omnipotent.
Boom and bust is what the FED practiced for over 100 years. They harvest the wealth produced by the peasants in both situations. Nothing new. When they buy, they like to buy for pennies on the dollar. They can not do that in this market of stratospheric prices.
I fully agree with you when you say Boom and bust is what the FED practiced (more like Pre-planned-orchestrated) for over 100 years.
What brings you back this way?
I never left. I just don’t like to comment for every post or don’t have time for it . I will probably comment again around 2020ish when the next bubble pops
How convenient for you.
TR, You were right once 5 years ago. Quit while you are ahead.
I was right in 2009 then 2011 then again 2015 I will be right again around 2020ish
You did your homework, TR; the big crash was largely due to stated income loans and speculation, neither of which is present. Orange County affordability is 23% which is worrysome, but I believe that: Baby Boomers have been in their homes for awhile and can make their payments. The percentage buying $700,000 homes are 30 somethings earning $140,000 per year, again not a problem – so, in your opinion, do you see a bubble that I am missing?
“You did your homework, TR; the big crash was largely due to stated income loans and speculation, neither of which is present.”
More erroneous statements. The crash, like previous busts, occurred because high prices were sustained by cheap and easy credit, regardless of the qualifications of the borrower. This is proven by the fact that 1) the majority of bad loans were prime, and not subprime, and 2) prices in countries with no subprime lending crashed as well. Cheap and easy credit has led to today’s speculation where 30% of homes were purchased by investors in 2016.
“Orange County affordability is 23% which is worrysome, but I believe that: Baby Boomers have been in their homes for awhile and can make their payments.”
Until they take out HELOC’s and reverse mortgages.
“The percentage buying $700,000 homes are 30 somethings earning $140,000 per year, again not a problem – so, in your opinion, do you see a bubble that I am missing?”
What percentage are you referring to? If your claims that very few subprime loans existed, then these 30-somethings would have to come up with a $140K down payment — highly unlikely for many in that demographic. Conversely, private home ownership is at decades low. This means that investors, speculators, and flippers made up a large portion of the buyers during the current cycle.
Huh? We are a couple in our 30s making north of that with a huge downpayment. But we still are not buying the crap on the market. Just because we can doesn’t make it wise to do so.
Jack your right on this; the big crash was largely due to stated income loans and speculation, neither of which is present. It is harder to get a loan today then 10 years ago
I don’t see a bubble today I do see a price correction in 5-7 years.
@TR
“Home flipping hits 10-year high in 2016”
http://www.housingwire.com/articles/39523-home-flipping-hits-10-year-high-in-2016
What were you were saying….?
Even people in the South Bay face “mega commutes” into L.A. My parents’ neighbor recently chose to take an early retirement because his commute, after being constant for 20 years, essentially doubled during the last 10.
He’s putting his 3/2 on the market soon and hopes to get 800k, if anyone is looking! Last I heard, his roof fascia had to be replaced due to termites. Don’t recall seeing or hearing any construction, though. Maybe the new paint reverses termite damage?
If he’d stick it out a little longer there’s going to be trains from anywhere to everywhere and air conditioned bike lanes so no more worrying about commuting. It’ll be even more sweet for homeowners because we’re going to get all the money to pay for it from the poors who aren’t leaving the state. Winning! No tank in sight!
I know from experience that there are certain aspects of life that can be better over there, but it is certainly no paradise.
Day-to-day suburban life is comparable anywhere, but the humidity and mosquitoes over there are ridiculous. The threat of a hurricane is also more prevailing than earthquakes.
And most people are nice, but there is a segment of the population in Texas that has a serious attitude and ego problem.
Can confirm all of this. After having a child in a one bedroom San Francisco apartment, moved to suburban area of DFW. After having a second child who just wanted to be outside but would get eaten alive by mosquitoes in less than 5 minutes, we moved back to a Bay Area suburb. The living is similar, just a lot less killer bugs. I will say for the most part, people are much nicer in Texas, and way less shady characters, but I enjoy outdoor activities and it seemed like there were only about 30 total days out of the year where you wouldn’t be miserable in Texas for such recreation.
Crazy thing is, we made enough appreciation in two years on our house in Texas to afford us 20% downpayment for a wonderful house back in California. Reverse migration worked out well for us as we are in a home we will be completely happy living in for the next 30 years. We tried to look for rentals, but they would have all been more per month (after of course we put down almost $100,000 on our house).
But Texas is great, California is great, Tacos and happy hours are great.
Even in 2012 this blog focused on how overpriced the market was. Los Angeles will always be pricey but that is because people like it here, be proud of that. I will choose to buy when my salary allows it. If my salary goes up or if housing goes down. I will also keep a close eye on the Case-Shiller Los Angeles Home Price Index. Either way I am not going to be a slave to my debts. Debt is good, abusing debt is bad. I am a millennial who uses debt, have never paid interest on any credit card ever.
Housing has become like oil in 2007. I remember a liberal teacher telling the class “George Bush caused this gas crisis and gas will never go below $4 a gallon.” I love looking back on stuff like that. But just like Oil, something big will happen that some will see but most will not. Those who say housing will not go down again are just plain stupid. Back then it was George Bush and Oil today it is Trump and Housing. It is so funny how history will always repeat itself because people forget it. A lot of people will get burned but the world will keep turning.
After Trump is in office for a while people will start to blame him for high housing prices (it makes no sense but people will do it). They will claim he is using his presidency to make the trump name larger and more powerful. Lets set the date for 2.7.2018.
Buy now or forever get priced out! Seriously buy buy buy people, they weren’t making more oil and they sure as hell ain’t making more land. Well… until they start building vertical at least.
For eight years the FED gave us a monstrous bubble because they were suppose to make the statists/globalists/collectivists look good. They kept rates at zero with only a symbolic raise of 0.25 for the whole presidency of Obama.
Now that Trump is in power, regardless of the hard data, they raised the rates every quarter till the whole bubble will busts. Then, blame it on Trump, obviously. The GDP is decreasing every quarter, the wages are going down and the FED is raising rates; of course, “all data dependent”…:-))). Next quarter, I expect a new raise. Just wait for about 6 months to see the effect. I am not surprised. I expected this. What surprises me is how shameless they do it. They put lots of trust in the deep state made up of traitors.
Hey, follow JT advice and buy now the best investment of your lifetime.
I don’t believe that the Fed is raising rates because of Trump. More likely because they foresee the end of the credit cycle followed by the inevitable recession. They’re terrified of being unable to lower already historically low rates any further during a downturn. Unfortunately, they’re several years behind schedule.
If and when the Republican majority is voted out of power, it will be because they, like previous Democrat majorities, would have done nothing to address the concerns of main street. To my displeasure, Trump is flip-flopping and praising the job numbers produced by this unsustainable economy.
I agree with that. What I meant was that the FED was supposed to raise rates a lot long time ago. They didn’t do it to make the collectivists look good and enrich their buddies. Another point I was trying to make is that the raise or lack of it is not “data dependent” as they claim. And it is not because of “noise in GDP”. What, 0.9% raise instead of 1.2%? …and raise the rate when the GDP goes down?…just a sham!…
From my point of view they can raise it to 10%. I am ready and prepared to take advantage when they do.
This is very snarky, but why are all of these poor people leaving the liberal utopia of CA where you can eat bonbons while on welfare checks?
Bob, they are like locusts. They elect stupid politicians, destroy one area and then they move to the next. The cycle repeats till there is no green in site.
Seen it – it’s actually pretty hard to get onto welfare and food stamps in California because they know there are jobs out there you can. Out in flyover country, welfare and food stamps are very easy to get, and to stay on, because there are no jobs and nothing to do. It’s pay for a bit of food of face a monstrous crime rate.
I guess that’s why hardly anyone in California gets welfare or food stamps or EBT cards.
That’s exactly what the “haves” stereotyped the migrant workers in Steinbeck’s “Grapes Of Wrath”. A bunch of dirty locusts who wanted to work but couldn’t make enough money with a job to survive. They eventually voted in FDR who made the whole country a liberal utopia. At least until Reagan. The cycle repeats.
We had FDR after the last Depression who promised to help the locusts with social programs (SS, Medicare) and infrastructure programs with the New Deal. Germany had Hitler who didn’t promise social programs but promised to make Germany Great Again by funding jobs through a military build-up which led to a great war and the ultimate destruction of Hitler and Germany. The cycle repeats in the US differently this time. I hope the results aren’t the same.
Perhaps you should look up facts as opposed to your opinion. The states with the highest amount of welfare recipients are Oregon, Louisiana, Tennessee, and West Virginia. These are the people dragging down our country but lack of intelligence and wanting so bad for the answer to be someone that doesn’t look like you because that’s what you were told without research leads to comments such as your own.
How many poor people in those states vs. California? California might only be one state, with some very rich people — but it has way more poor folk.
He must have been blinded by the serene vista of the Golden State Advantage!!! https://www.ebt.ca.gov/caebtclient/login.jsp
Excuse me… Golden State ADVANTAGE!!! This moronic state is so hilarious even the poors can be subliminally fed the Cali dreamin’ imagery in the checkout line every time they whip out their card at the Southgate Market or 99 ranch! If only there was a subway to the vista!
In other words, the liberal policies of CA create jobs and make people who want to work want to move there? This is causing an issue because the demand for housing outstrips the number of people who want to live there and have jobs with livable wages.. This isn’t what the Republicans are telling me. They claim states like Kansas are utopias that offer jobs because they offer lower corporate taxes and individual taxes. People, Kansas is not doing well. Trump thinks the same. We are all doomed.
“In other words, the liberal policies of CA create jobs”
The liberal policies of CA send the jobs outside the state. They are definitely not what create jobs. You may ask any private employer and you will hear the same thing. It is the weather attracting capital required for jobs and very rich people who want to enjoy that weather. They come DESPITE the liberal policies.
Fucking up governing a state is not a partisan issue. California has plenty of problems and appropriately addressing housing demand is one of them. Its not secret and it is definitely the fault of the in power politicians which are Democrats.
You can also find plenty of examples of mismanaged states held by Republicans. Finding a way to fuck over your populace is not bound by one ideology.
California is not known for its welcoming business environment, though I am certain there are exceptions. The nice thing about tech work is it doesn’t butt up against environmental regs since all we do is sit at computers all day.
Seen it all before Bob – Yep. Kansas Governor Brownback has had a hard time cleaning up the big spending spree that the two prior Democratic Governors left in their wake. Specifically Kathleen Sebelius. He is doing his best to balance the Kansas budget again
by having to cut all the over spending that was created by the Sebelius government. Nobody likes the person who has do to dirty deeds even though they are required to keep house from burning down.
Nobody realizes she hid pension deficits and etc. Parkinson almost went to jail because of her.
“Kansas failed to adequately disclose its multi-billion-dollar pension liability in bond offering documents, leaving investors with an incomplete picture of the state’s finances and its ability to repay the bonds amid competing strains on the state budget,†While the troubles brewed under Democratic Gov. Kathleen Sebelius and bounced to Parkinson, Kansas began reforming matters in 2011 following the election of Republican Gov. Sam Brownback.
Owning a home is not a Right. It is a Privilege.
Tell that to the government, which continues to encourage ownership by the economically unqualified and over-speculation by investors through cheap and easy credit.
^^^^ This. Perfect, concise and true.
And tax incentives…
Toyota moving jobs out of Torrance to Texas certainly contributed to the exodus.
Are we heading toward another subprime mortgage crisis:
http://www.cnn.com/2017/03/14/opinions/risk-of-another-housing-crisis-poole/index.html
The bigger issue will the debt crisis in many sectors of the economy, including corporate, financial, tech, Wall Street, etc., and not just subprime. The world is awash with debt that continually needs to be sustained by cheap and easy credit. Higher interest rates will hurt far more than the subprime segment.
bingo. Debt is not a problem as long as it is servicable (P&I or at least interest payments are paid).
Housing prices are supported by wages and thus disposable income. Low interest rates mean the same monthly payment can leverage a bigger loan. Higher interest rates mean lower leveraging.
TR is predicting slow increases in housing thus he is predicting wage growth too. If interest rates rise faster than wage growth….housing will stagnate though. Wages have risen the past 5 years and so has housing.
But…..if the FED can get inflation up to 4% then housing and wages could rise in tandem.
@Ru82
“Housing prices are supported by wages and thus disposable income. Low interest rates mean the same monthly payment can leverage a bigger loan. Higher interest rates mean lower leveraging.”
Wages have been relatively flat while prices have grown exponentially. The two have been almost mutually exclusive during the current and previous “boom”. Thus, RE price growth have been supported primarily by exponential debt growth (over-speculation).
“TR is predicting slow increases in housing thus he is predicting wage growth too. If interest rates rise faster than wage growth….housing will stagnate though. Wages have risen the past 5 years and so has housing.”
Accrediting price growth to wage growth has been a bad bet for somewhere close to 20 years.
“But…..if the FED can get inflation up to 4% then housing and wages could rise in tandem.”
The primary type of inflation the Fed has been generating is lifting asset prices. It cannot create the new innovative industries required to replace jobs displaced by globalization and technology. Thus, the widening wealth gap between the elite .0001%, which owns the assets, and the 99.999% (you and me). Asset inflation != wage growth
Prince of Heck: It cannot create the new innovative industries …
Something innovative is always new. Thus, it is redundant to say “new innovative.”
You should instead just say “new industries” or “innovative industries”.
@SOL
I graduated from the Redundant School of Redundancy for the Chronically Redundant.
Hi,
Reading these comments and articles. Texas always seems to be the place that people mention about moving to. Occasionally I read about Portland. Can I ask why not Florida, or New England and Dakota? Im from the UK and genuinely interested.
Thanks
Portland and Seattle have much in common with California cities like Los Angeles, San Francisco, and San Diego.
* All those cities are on the West Coast.
* Even if not all of them are actually on the Pacific Ocean, all of them are waterfront. In the case of Seattle, Puget Sound. In the case of Portland, the Willamette River.
* All of them have beautiful, varied, outdoor recreational spots.
* All of them have a mild climate.
* All are culturally and politically liberal elitist. By which I mean, it’s the kind of place that artsy, hipster, yuppie, liberal sophisticates like. (San Diego is more conservative, but not compared to places like the Deep South.)
Thus, white middle class and upper middle class liberals, if they can’t afford California, they often feel comfortable in Portland or Seattle.
Like Alex in San Jose, many of these Californians are prejudiced against “flyover country” conservatives.
As for Texas, Arizona, and Nevada, these states share Southern California’s desert climate. (Though I hear Texas is more humid.) So in that sense, it’s like L.A., in terms fo climate, only cheaper. And you can find pockets of liberalism in these places.
“Prejudice” means to “pre-judge”. Trust me, I did not pre-judge flyover types, I lived out there for several years and they really are mouth-breathing loons.
IF you are a white conservative Christian, they are no problem. If you are anything else be prepared for grief. The funniest is, if you are Jewish they *will* eventually ask about your horns.
Texas is very cheap in some areas and has tons of jobs, often time people can cash in their equity in CA and buy a home in Texas for cash or close to cash as possible so they have a very small mortgage. There are cities in Texas that are very expensive but you can get a lot of Real Estate there for and get buy on a small income.
Portland is very nice, coastal, lots of rain, weather is different than Texas, it is closer to Bay Area/North Ca Weather. Portland has gotten a lot more expensive in recent years but it is beautiful there, except that hipster crowd that caters to homeless and crime. IF you leave Los Angeles to run away from the crowded, dirty, and infested with crime areas, you don’t really want to end up in Portland with the same issues.
Florida is also very beautiful, the Weather there is great but you have to get used to it. Many people do move to Florida because most of them are from the East coast. It’s very hard to leave CA if you are from here and go to the other side of the Country. At least in Portland/Texas you are on a 2 hour flight away. Florida is another world compared to CA.
I love New England but weather is rough in the winter. I been to Boston, New Hamps, Maine, all over. I love it but I would only live there if I had the type of money that would allow me the flexibility to leave and live elsewhere during the winters. If you love small towns, New England can be amazing.
I never been to the Dakota’s but you probably do a lot of fishing there. I would probably move to Indiana/ East Michigan before I moved to the Dakota’s.
Remember the biggest thing is being able to get a job wherever you move to. Texas/Florida I think those places offer more job opportunities than smaller states.
The people move everywhere, not just TX. Depends on many factors and which ones are more important to you: climate, cost of land, jobs, family or friends, taxes, political climate of the state, natural beauty, etc. Sometimes is a combination of factors with each person having a different ranking for those factors.
Portland has rain all the time, is super crowded (at least on freeways) and it is a poorer sister of Seattle and with more drugs. Seattle is more sober and way wealthier; just as rainy and with bad traffic. It has more class among the big cities (which are not to my liking, I like smaller towns). There are way more job opportunities and good pay in Seattle pretty much for any field (comparative to Portland). In Portland you pay income tax and in Seattle you don’t. In Portland you don’t pay sales tax and you do pay in Seattle.
In TX, the property taxes are very high but RE prices are lower. You don’t pay state income tax. The weather is very bad for the most part. Wages are lower than Seattle. WA state has far more natural beauty and VERY diverse in terms of climate and geography, comparative to TX. Still, the beauty is in the eyes of the beholder.
I hope that helps.
Good Question
The answer is probably because the climate and culture are more comparable and familiar
It is a big difference in climate between CA and TX.
Thanks for all the information everyone. I know it probably seems abit unusual about someone from the UK being interested in California property. Its just I see alot of similiar problems in the UK.
you all come on over to Kerrville and me and Kinky Friedman will put an extra slab of genuine free range grass fed organic beef in the stoker for you all.
To the guy that mentioned property tax in Texas…it’s true, they are very high here, but remember you are basing that tax on a house that costs 1/2 the price or less of a California home so the net result is not that much different……Oh and we have no…Zero…nadda state income tax here. What is California’s state tax now? Yea, it’s not even close. Not to mention it costs me about $75 to register my new car. Is Cal still basing it off price? lol what a ripoff. The worst thing about Texas is the weather. Period.
Good point, and a good reason the WORKING poor are leaving Clownifornia for places like Texas. They see better cost of living, more job opportunities, and less future liabilities that they will be paying for (i.e., all the parasites, both at the bottom and those on the top in government). The people making 100K+ that moved to Cali are chasing the bucks but will often find the cost of living and taxes will chew up the gains versus what they made in their previous state. They’ll likely leave after this current bubble bursts unless they’re one of the few lucky ones that makes out from an IPO or realizes its a bubble and doesnt scale up their lifestyle.
It’s not just housing costs. In 2000, the legislature in Calif passed SB400, doubling CALPERS Pensions which now is costing taxpayers not only salaries with pensions but an an additional 8 Billion a year and climbing. We have now a privileged class to support that will raise state income tax to a huge amount. Texas has no state income tax. CALPERS is the reason we have no state funds to fix Oroville Dam and much more. Then we have the High Speed Train debacle. California has some weird priorities and most is abuse by Public Employee Unions.
Those public pension plans are amazingly unfunded and ready to implode across the nation. Dallas police had a run on theirs and wants the taxpayer to bail it out.
Such is what happens when you promise a 7% return and have 1% for a decade.
This is going to get real ugly, Stan. And not just in CA
The Fed’s prolonged ZIRP policies played no small part in this fiasco. Robbing from the middle class to reward the speculator class in a the casino-style economy.
you will never guess what those loyal servants of the great state of CA do when they get that fat check……They move to a low tax state and funnel all that CALPERS cash to other coffers. I would love to see an audit that shows the % of disbursement checks that go out of state.
The public employees should not have union. Period.
There is no reason for the government employees to be unionized. If they don’t work for profit there is no incentive for the government to abuse the employees or to provide unsafe work environment.
The public employee union is a gang to use the force of the state and rape the taxpayers because they can. All taxpayers should be against public employee unions and all politicians who support them.
Why people think we’re in a bubble, is beyond me. Can’t it just be an expensive, desirable city?
And why people think there are no jobs in flyover country, is also beyond me. It’s not the glorious life that some people portray it as, but it’s also not the trailer trash festival that other people say it is. It’s just a regular old place to live
Thank you. East and West Coast snobbery. CA native and never subscribed to the idea that only liberal elites mattered.
Realist, lets be realistic. It is a price increase if a city displays increases in price due to higher incomes and more better jobs. What we witness is a RE bubble in ALL industrialized countries due to actions of central banks and do not have anything to do with income increases or people feeling better off financially.
The actions which caused this bubble will cause a reverse (bust) when removed. That will make it plain for all to see that it was a bubble. I feel it even in flyover country – percentage wise the same as in SoCal but in absolute values on a smaller scale. There is too much CURRENCY/DEBT chasing the same RE.
It’s not just beyond you. 7mio foreclosed people had no idea they were buying into a bubble. Every game has losers. If you don’t see the loser, you might be it.
Is it 300% more desirable than it was in 2010? There isn’t 300% more weather but there is more crowding and traffic congestion.
The wild card is Yellen and the Fed. They are mostly Democrats, and they could try to spoil the Trump party by raising rates too much just to cause an economic problem before the midterms. The Democrats will do anything to get back into power, even if it means hurting American with too many interest rate increases. If the Fed goes too far with rate increases, it will hurt your 401K and your real estate values. The Democrats are not to be trusted.
“The Democrats will do anything to get back into power, even if it means hurting American with too many interest rate increases. If the Fed goes too far with rate increases, it will hurt your 401K and your real estate values. The Democrats are not to be trusted.”
A crash does not hurt, it offers opportunity. It brings back a more realistic price level. That’s great for all Americans. We need 10% interest rates and an economic crash.
“The wild card is Yellen and the Fed. They are mostly Democrats, and they could try to spoil the Trump party by raising rates too much just to cause an economic problem before the midterms.”
What the Government needs is a big bout of inflation of the 1970s wage inflation sort, not just asset bubbles. So they can pay debts like those state pension liabilities with cheap dollars. Yellen’s interest rate increases may attract foreign yield chasers which will bring in more dollars from abroad. Trump’s proposal to lower the tax rates on US corporations to repatriate foreign earnings will also bring in dollars from abroad. This money will help finance Trump’s infrastructure and wall programs. [SIABB: Trump’s wall is more like a Maginot line than anything Hitlerian!] Most of Trump’s spending will be in flyover territory, of course and presumably will drive up wages… That is if all this actually works and we don’t have a deflationary backlash again.
Isn’t this the plan? La La land loves their low wage help … gardeners, housekeepers, nannies, etc. but the rest are becoming a nuisance. Heck, having to roust those homeless camps and providing socialist state welfare is getting expensive! California only wants you if you have a spare $1 million or more to buy a home, you can afford a Tesla, are chic, or have memberships to the spa! It is so wonderful to be a socialist liberal when you have more money than sense, can tell the world how poorly the huddled masses are treated … just as long as they don’t try to set up a squatters camp in your neighborhood … actually having them leave and go somewhere else is even a better idea!
At least in Texas, where it seems fatty foods are their drug of choice, at least in the rural parts, they are closer to Dr. Nowzardan, from My 600lb life-
https://www.tlc.com/tv-shows/my-600-lb-life/
Born and raised on So. Cal. beaches in the 60’s – 70’s. Moved away years ago for my career but was a frequent visitor to check in on parents. While the weather is great, I can’t comprehend why anyone would intentionally stay in the arm-pit that the L.A. area has become! Having said that, please don’t migrate to those undiscovered places, one of which I found and spoil it too! I like my 2.5 acres, my boat, my lake, and the absolute stunning scenery, my little brewpub, my coffee house … ! Oh, on second thought, California is a lovely place, all kinds of amenities …. stay there!
Again with the lake! You’re like JT with his beach houses.
So serene, but I don’t know if I would like it too much. I’ve never lived anywhere but Socal, although I have traveled throughout the southwest states, but I just can’t imagine being anywhere but here. Weather is a BIG deal. I can’t stand the winter of the north and north east. Been to Texas and Florida a few times, there’s no way I can permanently live in that humidity. I heard the Northwest rains a lot, what a bummer. The plain has no natural features and I’d put myself at risk of tornado. So all that left for me CA, NV, and Arizona. When CA goes underwater I’d relocate to Nevada or Arizona, but for now I’m enjoying the year round 70 degrees. I’m 10 minutes away from the beach and 1 hour from ski resorts. I can eat any ethnic food and have access to all sorts of goods because everything is imported to the Port of Long Beach. Labor and materials are so much cheaper that I was able to build extension and renovate for a fraction what it would cost elsewhere. No religious nuts neighbors. In California with so much to do we don’t have time worrying about neighbors.
No jobs in flyover country. We are all gun toting religious fanatic rednecks. It is terrible, stay in California. We do not want you here to share in our ignorant misery. All of us are on meth, none of us is has an education. No one travels. Hang tight to your stereotypes. As one person I know said about living in Utah after moving from Sacramento, “We traded gang banger neighbors for Mormons.” Tough life here.
You forgot to say that we live in trailer parks and we don’t have teeth. There. I completed the picture for you.
Now all people from SoCal will stay there and don’t spoil other places, too.
Sammy714 in response to CNN piece:
Having been in the mortgage industry for almost 20yrs, I can say with great confidence that we’re not even close to where we were in ’07. Mass defaults on loans had a lot to do with unqualified borrowers and loan products that almost guaranteed failure.
Then- No income, no assets, low…low credit scores (talking 500 fico score), NO PROBLEM!
Now- MUST fully document income, assets, and have a fico score above 580 for FHA, 620 conventional
Then- Borrowers qualified based on start rate for adjustable rate loans and the huge margins caused almost certain default at the first adjustment.
Now- Borrowers often qualify based on margin + index, and more often than not it’s margin + index +2%. In addition, the margins today are far, far lower than they were leading up to the crisis.
Then- Lenders could use their local appraiser buddy known to “push” values when they needed to get a loan done
Now- No direct contact with the appraiser is allowed, it’s a random selection process, and appraisers are almost given incentive to come in below market value, not above.
I could go on for days about this, and I didn’t even touch on 100% financing being a thing of the past or that negative amortization loans don’t exist, but the point is that mortgage loans are NOT easy money anymore and the terms offered to borrowers are much, much better.
On the other hand, Fannie/Freddie still need to be addressed. They are unable to properly capitalize as a result of the fed sweeping their balance sheets. THAT is a much bigger problem. You think it’s bad with Fannie/Freddie? Just WAIT until they don’t exist…then try to get a loan.
Nonsense. The subprime crisis may have garnered headlines, but the primary issue has always been high prices unsubstantiated by local incomes. The majority of bad mortgages were prime. Subprime was not an issue in other countries that experienced the same bubble. The underlying factor back then was cheap and easy credit encouraged by Central Banks. The same forces are in play right now, leading to another period of mass over-speculation. The participants may be different this time (investors instead of retail buyers), but the results are the same.
My experience has been the same. There is much talk here about sub-prime mortgages fueling current housing prices, but from my experience it is much harder to get a mortgage loan today then it was in 2006. I find none of the major financial institutions giving any loans, even collateral loans without legitimate proof of qualified income. Back in 2006 you could just sign a paper stating how much you made, no proof required. I have recently noticed significant growth in the “Hard Money” lending market. I assumed this is due to new internet joint venture sites and people trying to capitalize on the current market to get higher yield on investment money.
Le builder, the fake appraisal at full value is still common. There is no law against it…..lenders get their appraisal buddy to appraise at full value and when it’s being questioned they say “an appraisal is an opinion”. Happened to me just recently. The seller accepted my offer but when the real appraisal came in it was 30k less than asking price. The lender, my realtor wanted me to use, quickly said HIS appraiser appraised at full value…..oh really….. An appraisal I did not request and saw no documentation for. And it was appraised exactly at full value?! Bullcrap…. Nothing really changed much…..it’s bubble 2.0. I could go on and on but most people know that this ship will sink soon.
Billman,
It is illegal for the borrower to pick the appraisal in an federally related transaction. Please provide the name of your Realtor… Seriously! My guess is you got an honest appraisal then cooperated with your broker in getting a made-as-ordered appraisal. There is NO incentive to come in low on a sale, other than a appraiser calling it honestly and ethically. if you paid for the appraisal, you are entitled to a copy of the report.
One problem is clueless buyers. Say you were paying $500k and the appraisal comes in at $470k… cough up the extra $30k or make the seller eat all or part of it, or walk on the deal; either way – own your decisions… The overlooked part of your post is that YOU had already established the sale price with your accepted offer.
You should rent.
QQQBall, Thanks for your reply! Maybe i was not clear enough, so here is exactly what happened. My realtor sent on my behalf an offer letter which the seller accepted. I did not chose the lender my realtor wanted because i found a lender with less fees and a better interest rate. My realtor hated me for it because he insisted i should work with this preferred lender. Anyway, the lender i chose ordered an appraisal (which i paid for) and it came in 30k less then the price on the accepted offer. Therefore, i tried to get the seller to reduce the price but seller declined. So, i was ready to walk away but my realtor said that the lender he preferred had an appraisal at full value. I was very confused about that, because i did not order that appraisal. So i called the lender and asked about the appraisal. All they told me was that they have an appraisal at full value. I asked a lot of questions like can you show me documentation, the date when this was appraised and who paid for the appraisal. They said, they can answer the questions and show documentation when i pay for the appraisal. So, I assume this was a fake/made up appraisal just to get my business. You are saying this is illegal? Any thoughts are much appreciated. In the end i did not trust these lenders and stopped working with that realtor as well.
Re: appraisers. In my experience, appraisers whether randomly selected or not are just as eager to push a sale of a property through as the next person. It’s to their benefit that the real estate market remains hot.
Actually, the Dallas/FtWorth area has some very nice areas. You could have a nice life and live in a great area for 500K. Lots of nice looking women in Texas … certainly much better women situation than the Bay area. I would take Dallas/FtWorth over the Bay area … easy call.
If California wanted to solve it’s cost of living problems, for real and had a true two party political system, with a true opposition point of view on all issues, instead of the fake one party system it currently has which offers no opposition to anything which all originates from within itself, no alternative solutions permitted – then instead of building high speed train going north to south and wasting all that money on big union jobs, benefits and pensions that come as a result, then that same money would be put to other uses, such as high speed or semi-high speed dedicated commuter rails running east to west on a regular daily basis so that people could move into Central Valley in the north and Inland Empire in the south, but still commute daily between work centers on the coast and affordable housing areas inland. But no, that will never happen, not under the current political situation which lacks any opposition to just a one party only solution that benefits those who influence the political decision making and the politicians who personally benefit by implementing it. Thus that is how it will be from now until the end of time and California will become a rich person’s game only, middle class gone and only rich who own it all and poor who are enslaved to the rich as the servant and lower working classes who earn salary to pay it back to the rich, who own all the housing stock. Watch and see how this turns out for the future of California, this is my prediction based on decades of living there and seeing it unfold in front of my eyes.
When we had a “true two part system” in CA I seem to recall the result was that we could never pass a budget by the deadline and nothing much got done – kind of like the gridlock over the past 6 years in DC. The problem (there as here) isn’t the lack of an opposition, but that both parties are so polarized that any compromise is regarded as treason by their fellow party members. Under such circumstances quasi-one-party rule – as we now have both in CA and DC – is likely to be more effective at getting things done. Whether you like the things getting done (either in CA or the US as a whole) depends on which absolutist camp you belong to.
A lot of people think that a mega-commute is a good option. I did the mega commute to Valencia a long time ago, and twice a day I would feel my soul being raped as I went through the Newhall Pass. I would get out of the car, as stiff as a 90 year old. Jack-In-the-Box curly fries at the end of a off ramp just wasn’t worth it. Like pouring hot oil on my sedentary arteries and then going to the gym. Vicious cycle. The only thing I learned is that the weather is hotter and the stucco is newer.
One theory I heard posited recently is that peoples outlook with respect to jobs and cost of living could improve more if we encourage more mobility. In other words encourage people to move to jobs and not wait for jobs to appear that suit their skills in a city or town where they are struggling.
We’ve got 50 states and lot of options worth exploring if one town, city or state is failing to provide you with opportunities. But I also tend to side with more conservative folks in my desire to live near where I grew up. But it takes a bit of dumb luck that opportunities in your area and your skills line up perfectly to meet your needs for high quality employment.
In short it is not necessarily surprising or bad thing that people not make a great living in California are leaving in greater numbers. It may be a bad sign for Cali but it is probably good for the people if they move somewhere where their skills get them a better living. Though I wouldn’t jump to the intimidate conclusion that all those leaving are, poor, dumb or liberal exclusively.
I find the election return maps of California to be incredibly interesting. The Palisades are just as dark blue as Pico Rivera. The wealthiest neighborhoods are just as blue as the poorest. Ultimately, you can’t have that. The very wealthy do not have the same interests as the very poor. Both groups vote Democrat for diametrically opposed reasons. The wealthy want to increase the country club dues to keep a lid on the population. The more hidden costs the better. They want the cost of living higher to expel the riff-raff.
The poor want freebies, freebies and more freebies.
There is no more middle class. So what you’re going to have in the future of CA is a poor population more and more upset that the big money Democrats aren’t “taking care of them.” You’ll eventually have a European style Social Democrat Party emerge, that will split the current Democrat block. When these people leave for the socialist party, the Democrats will become the new center-right party. The Republicans will die away, as they should, as they have been useless Whigs in CA since 1988.
Because Democrats and Republicans both support tax loopholes for the very wealthy, and the same imperialist, globalist foreign policy, very wealthy Democrats vote that way largely for ideological virtue signaling. To signal that they support:
* Feminism/Abortion Choice.
* Gay/Trans Equality.
* Environmentalism/Fight Global Warming.
* Diversity (i.e., virtue signaling that “I am not a racist,” while not having to actually live among all that Diversity.
Like the poor Alex, wealthy Democrats sniff their noses at those “Christian rednecks.”
Voting Democratic is their way of feeling good about themselves, even as they aggressively take as many tax deductions as any wealthy Republican.
Voting Democrat only “feels good” for the coastal wealthy because they’re still calling the shots. Perfect example the $15 per hour minimum wage. That was only passed in Sacramento because enough signatures were put on a prop to get it passed anyway, with or without the Democrats. So they abruptly got in front of the bandwagon to take credit. It never would have happened without a proposition that they knew would pass. The minute the poor start dancing to the tune of a true socialist, is the minute the coastal wealthy liberals will become more reactionary than any redneck Republican in a trailer park.
JR, it is a fact of life that both, the rich and the poor feed on the middle class. All the actual work of producing wealth is done by the middle and upper middle class. The very rich (0.0001%) propose tax increases (wealth transfer) on the rich and upper middle class, but never on the very rich; the very rich always include loopholes for themselves specifically. They give crumbs to the poor to buy the votes (like bread and circus in ancient Rome). The bulk of the wealth transfer is to the very rich (0.0001%). Eventually you have only very rich and all others equally poor, like in Europe and CA. I am upper middle class, I travel often to EU, and most of their upper middle class can not afford what I can (because of their massive taxation and high prices). It reminds me a lot of the communist block where I grew up where you have the supper rich “communist members in Politburo” and the rest EQUALLY poor.
For this reason, throughout history the real class fight is between the 1% (or stretched to 5%) and the 0.0001% – ALWAYS. The rest are just peons without even knowing what is happening – they don’t have access to the secret intelligence. The new paradigm we live in is a little bit more complex because you have 2 fights at the same time – the rich vs. very rich and the globalists vs. the populists. Someone unpredictable like Trump is murking the political water.
Personally I am more afraid of the globalists because there is no other place to run. That would be TOTAL TYRANNY – collectivism/bolshevism on a global scale (people are the same everywhere). Most of the wars we see today have this goal of globalism, directly or indirectly. When I say globalism I am not concerned with truly free trade but their main goal of one central bank with one currency. At that point, the crooked bankers will control all governments and politicians everywhere. The voting will become meaningless and there will be no true representation; an EU on steroids – a hired (not elected) bureaucracy and politicians bought or blackmailed by the central bank. Bringing mass immigration and allowing illegals in both US and EU is part of this globalist agenda: to bring down wages and dilute the social safety net the country can afford – SLAVERY. As long as the picture is clear, you can see that both the Democrats and Republicans games make perfect sense. I see some conservatives who see the picture and try to do something in vain (like Ron Paul). The rest of the Republicans and Democrats are just puppets in the hands of the globalists and the FED – bought and bossed around.
Flyover maybe you would be happier back in Russia, don’t worry the USSR is gone, the “White Russians” have won, it would be your paradise under Putin. He has critics killed, environmental laws are nonexistent, it’s capitalism all the way. You’d love it. Why suck up to Trump when you can go right to the source?
I generally agree with you. Back in the 80’s my relatives were trying to support family in an eastern block country. Usually the things that were sent to them were stolen in the mail by the time it got to them. As far as California is concerned, anyone who is right wing or even right of center needs to come to the conclusion that in this state the Republican Party is a damaged brand like the Ford Pinto ore Firestone Tires. It’s never coming back. It really has more to do with social issues than anything. This is a very liberal state, as I am liberal as the day is long on social issues. And one crazy GOP Senator who wants to ban marijuana or something like that destroys that brand in this state. Even the CA GOP is as useless as teets on a bull. Most of them are war hawks near military bases. Another thing that doesn’t fly here. In a bizarre way, the best thing that can happen to fiscal conservatives in this state is to be put under another brand. No Don Draper could ever fix the Republican brand in CA.
Social issues have little to do with how Democrats came to completely control California. Democrats busted open the borders and flooded California with millions of illegals, green card holders, and H-1B visa holders. One third of the US welfare recipients live in California. Democrats make sure they vote. Democrats keep promising their voting base ever more entitlements and freebies to keep their free shyt army on the Democrat’s bankrupt entitlement plantation.
Flyover claims there aren’t many people on welfare in the liberal utopia of CA. Most have jobs brought on by liberal policies (ie the Republican utopia of Kansas with the liberal utopias of LA, SF, Seattle, Austin, …….). My question below was why are poor people moving to Texas when they could live on welfare bonbons in CA?
I am amazed that home prices have been going up to the extent that they have. I just noticed that for those of us who are self-employed, it is almost impossible to get a decent mortgage. Some of us literally have to pay cash if we want to buy anything, which sucks.
This is not the time to get into debt when not only are prices so high but also when economic conditions point to an imminent peak.
If you are self-employed, or working for straight commission, or as an independent contractor, you simply have to live as far below your means as you can manage, and accumulate as much cash as possible. I learned the hard way long back, that you cannot live like a tenured employee who can somewhat depend on that monthly salary coming as long as he shows up for work and does his job.
But that is good. When you know you are absolutely on your own, you tend to live a lot more prudently, and manage your money more carefully. If you are smart, you will end up in a much better financial position than the salary serf who lives in fear of layoffs because his whole paycheck is committed to his towering debts, for the next 20 years out at least, and who is paying a 5 to 20% premium in the form of interest for everything he buys because he lives on his credit cards.
But it’s hard to keep that thought in sight when you are competing with mortgage borrowers for what little real estate is for sale, and they can borrow twice as much as you can.
the homestead in texas is way better than the homestead in cali,the creditors cant touch your home.i can’t believe some people are saying a house is not a investment,tell that to people who own homes in cali,nyc or texas for several years.i own a house in the heights area houston texas,my mortgage is only $76,000 and i bought before gentrification came to the area.the heights is one of the priciest hoods in houston,i have my homestead and my mortgage per month is only $569.00 per month!i can sell this house way below wholesale and still get six figures,jt some of the beautiful women u meet in dallas are not only natives but some of them are from nyc,miami,cali,etc.in houston i met some hot women and some of them are from miami,cali,nyc,overseas or from different parts of america.
I used to work for a mortgage company. You may be safe from creditors taking your house, but it you’re late on your mortgage payments TX is the easiest state to take a house. So unless you own your house outright, it’s the mortgage holder that has the homestead.
Yep, I work in mortgage and Texas has the shortest foreclosure timeline of almost any state. Once the notice of default is filed it takes 90 days to foreclose. Compare that to New York, which has a timeline over 1,000 days because every case has to go through the courts and has multiple opportunities for delay. There are a lot of institutional buyers of mortgages that won’t even touch loans from New York, but Texas they love. It’s like repo’ing a car. LOL…
Bad news for Taco Tuesday Baby Boomers:
https://www.chowhound.com/post/taco-johns-claims-ownership-taco-tuesday-49-states-961846
I for one got the fixins just today and plan to have an awesome Taco Tuesday, maybe we on the board here can pull off some kind of a SimulTaco and send pics/invites to the constipated suits running “Taco Johns”.
Hey! I was a regular at a Taco Tuesday Happy Hour at a local bar near UCSB back in 1986. Free Tacos and cheap drinks and packed with 20-something Baby Boomers. No way this was invented in 1989. I’ll have to testify.
To give an idea of how this whole Taco Tuesday thing works, I had a friend who lived in Huntington Beach. His father, who’d served in WWII, had observed that there was no way his kids were going to own a house unless he he did something. So, he got my friend, his brother, and his sister, into a house, each being 1/3 mortgage-holder. This went OK, his sister was functional and had her own place, but paid in, and his brother was nonfunctional so he had a place to work on junk cars and take drugs, and my friend had a place to work on semi-junk motorcycles, and all went about as happily as the whole thing sounds like it would.
The house wasn’t that big but was on a lot at the end of a cul-de-sac so it was shaped like 1/3 of a pizza and had a hee-yuge back yard. I’m sure it’s worth over a million now.
So because my friend was an airplane mechanic, a notoriously low-paying field (almost as bad as high tech, which I did) and his brother didn’t contribute much, and my friend’s wife likewise, they were house-rich but they had some definitely lean times. To give an idea, I remember them going to Church things because there were free hot dogs. They’d have been all over free or cheap tacos. I remember their befriending the manager of a “Cattleman’s” restaurant, and ate for free there a lot, and even dragged me along.
Even as an electronics tech, I was making almost as much as the whole bunch of ’em together, and looking back I wish I’d funded more beer and pizza because I was into motorcycles at the time and I liked hanging out with the guy.
They were textbook Taco Tuesday Baby Boomers. Got a house because that’s a Baby Boomer’s birthright, it seems, but poor otherwise so would happily live on cheap tacos if they could find them.
Your reply caught my attention because I’m from Huntington Beach. Aircraft mechanics are “notoriously low paid?” I am a pilot for a major airline based in L.A. I make more money driving planes but have my A&P IA. I charge $110/hr to turn wrenches when I do work on the side (mainly for fun on cool aircraft). Our mechanics at the airline make $49/hr which translates to 100k/yr (without overtime) plus good benefits.
Check out this 782 sq ft 2/1 on a 2250 sq ft lot that’s less then 100 feet from the 10 freeway. You too can enjoy sitting on the porch of this 1925 crapshack in a gang-infested ghetto of LA while you listen to gunshots, wave at the commuters on the 10 freeway, and get black lung while you watch the local kids get jumped into a gang while attending the prestigious Johnny Cochran Middle School. All this for the low low price of 510K. It’s only $652 a sq foot. Who’s ready to make an offer? This opportunity won’t last.
Any crapshack is a great investment. Invest today and be rich tomorrow. You can only win by buying now. If you wait you lose out. Be a winner, not a loser. What are you waiting for?
Here’s the link:
https://www.redfin.com/CA/Los-Angeles/2301-S-Palm-Grove-Ave-90016/home/6899515
Buy now and hold on tight till you can make it to the next greater bubble.
Which have a feeling with millennials on the horizon, may be a long time…
Or until bread costs $10 a slice should the Fed decide to inflate asset values through additional financial engineering.
What a little crackerbox, er, *crack* – erbox?
Around where I am there are places right by the railroad tracks, Oh boy, choo-choo! Better like trains.
When I was a kid in New York City (in Queens), our backyard faced the Long Island Railroad tracks. My sister and I loved it. Every time we heard a train coming, we ran to our window to see what kind it was.
There were three kinds. A passenger train with silver sides. An older model passenger train. And a slow-moving freight train (my favorite).
Looking back, I suppose that made our house cheaper. But as kids, we thought it was great fun living next to trains.
This blog is funny. Lots of people upset over the price of “crap shacks” thinking it will be 2008 all over again. I got news for you folks. The number of people pouring into this state is epic. You are talking about foreign investors who are not tied to our local economy and are mostly paying cash. If the prices do plummet 40% next year these buyers will jump into the market and snap up the properties for cash just like in 2012. Unless you have several hundred thousand in the bank to compete you’ll be beat out. And if you do have that kind of cash now then go ahead and buy now. In the long run it will not matter.
Everyone needs a place a live. Your primary residence is not an investment- it’s your home. It does not matter if the price goes up, down or sideways. Your payoff will be in 15, 20, or 30 yrs when your mortgage is gone. Buy what you can afford and hold it forever. If you need to sell that far in the future I can tell you it will not matter what you paid today.
The population is only going to increase and the inventory will remain low. I’ve had the privilege to travel to many international cities and see what our future looks like. If you think it’s expensive here take a look at Shanghai, Moscow, Sydney… Your L.A crap shack is a bargain.
–You are talking about foreign investors who are not tied to our local economy and are mostly paying cash.”
“almost 80% of Chinese buyers can’t settle on the Australian apartments they have bought off the plan and wish they could walk away from the contracts….”
https://www.businessinsider.com.au/suddenly-almost-80-of-chinese-buyers-are-struggling-to-settle-on-their-aussie-apartment-2017-3
But I thought that were buying with cash?!
–If the prices do plummet 40% next year these buyers will jump into the market and snap up the properties for cash just like in 2012. Unless you have several hundred thousand in the bank to compete you’ll be beat out. And if you do have that kind of cash now then go ahead and buy now. In the long run it will not matter.
Interest rates are going up, and credit is getting tighter. The Yuan is falling in value, and China is cracking down on capital flight.
–The population is only going to increase and the inventory will remain low. I’ve had the privilege to travel to many international cities and see what our future looks like. If you think it’s expensive here take a look at Shanghai, Moscow, Sydney… Your L.A crap shack is a bargain.
There is plenty of inventory. The problem is affordability as speculators have driven prices of traditional middle class properties sky high. But feel free to buy as many properties as possible before prices take off again.
“I’ve had the privilege to travel to many international cities and see what our future looks like. If you think it’s expensive here take a look at Shanghai, Moscow, Sydney… Your L.A crap shack is a bargain.”
“Hong Kong Housing Prices to Fall a Further 10%, Nomura Says”
https://www.bloomberg.com/news/articles/2016-08-30/hong-kong-housing-prices-to-fall-a-further-10-nomura-says
“Hong Kong Homes Face 20% Price Drop as Banks Raise Rates”
http://www.millersamuel.com/press/hong-kong-homes-face-20-price-drop-as-banks-raise-rates/
Anybody volunteering to be the first catch a falling knife?
Today I checked at Sigalert around 5:30 p.m. The 405 was solid red, from around LAX up through to the 101 interchange. Both lanes.
The speed of the cars was 5 to 6 miles an hour.
Thank God I don’t take the 405 during rush hour. How much more crowded can L.A. get? We don’t have the infrastructure to transport the people who are already here.
That tells me that RE in SoCal will become less attractive unless people have their own helicopter or they like spending half of their life in bumper to bumper traffic at 5-6 miles/h. I know that I hate that and that is the reason I am attracted ONLY by small towns. I have only one life and the quality of it is important to me. Being stuck in traffic, for me is torture not something desirable. I know that people put up with that for money, but money are a mean to an end, not the end goal.
“This blog is funny”. Yes, funny, entertaining and prevents people from making a big financial mistake (buying an overpriced crapshack).
“And if you do have that kind of cash now then go ahead and buy now. In the long run it will not matter.”
….that’s terrible advice. I will do the opposite and wait until the crash happens to buy at a 40-60% discounted price.
“If you need to sell that far in the future I can tell you it will not matter what you paid today.” Oh boy, you are obviously not a numbers guy. Have you heard about rental parity and opportunity costs? You might as well burn your cash in a bonfire if you really think it does not matter what you pay today.
“The population is only going to increase and the inventory will remain low.”
Any proof? Anything? Just your crystal ball…i see…
“I’ve had the privilege to travel to many international cities and see what our future looks like. If you think it’s expensive here take a look at Shanghai, Moscow, Sydney…”
By travelling to Moscow you saw our future….LOL! Listen up people, a guy from California traveled to Moscow, saw our future and tells us we need to buy now. Got it! Where can I sign? Needless to say I am not impressed by your travels. I lived overseas for >20 years. So what? In case you don’t know that either….its a GLOBAL housing bubble.
“Your L.A crap shack is a bargain”
So what are you waiting for? Buy as much as you can and get rich! Put your money where your mouth is and buy now!
My point is your primary residence is not an investment. It’s a place to live. If I bought tomorrow and prices declined (according to YOUR crystal ball 40-60% so you can buy cash) tomorrow it wouldn’t change anything for me or anyone else unless you were forced to sell. If you bought during the last peak and held onto your home it wouldn’t matter today.
The problem is no one knows when this decline will happen. Prices have already surpassed the last peak. Will they go up another 40% and decline 20%? Will they go up 20% and decline 40%? Who knows. But if housing tracks at least historical inflation then in 20 or 30 years it will not matter.
Yes, rental parity is an interesting concept. I bought my first townhome (now an actual investment since I don’t live there) in Huntington Beach in the late 90s at 8% interest. It cost a lot more than rent at the time and I wasn’t making much money. I had to rent out two bedrooms and drove a POS car. I’ve held onto the property, refinanced at lower rates when they declined and never pulled out cash. I held onto thru the dot com bubble, the Great Recession and whatever you want to call what we have today. The city has developed the downtown area like crazy. A couple blocks away they are leasing studio apartments starting at $3000/mo. I have raised the rent systematically over the years. It has never gone down but my fixed costs have as I refinanced and if you take inflation into account. The rent will continue to increase and will cash flow nicely in my retirement. It’s worth a small fortune today but I have zero interest in selling it.
You want evidence the population is increasing? In 2013, the Department of Finance released a report that Los Angeles was the fast growing county in the state. The state itself grew by the highest rate in nearly a decade. We are pushing 40 million people now.
Lol. It gets better and better.
“If I bought tomorrow and prices declined (according to YOUR crystal ball 40-60% so you can buy cash) tomorrow it wouldn’t change anything for me or anyone else unless you were forced to sell.”
Lets look at the numbers. Lets see if you still believe the price you pay today does not matter.
Person A (you) buys at the peak. 500k purchase price, 10% down. 4.65% interest rate. 30y conventional. Your cash outflow each month is 3,2K (principal, interest, PMI/insurance and taxes)
Person B (me) waits until the crash and buys at 40% less. 300k purchase price, 10% down. same rate/loan. My cash outflow each month is 2,1k PLUS my downpayment is 20k less then yours.
Notice a difference here? Maybe it becomes even clearer if you look at my savings over the 30years: In total person A pays 824k. Person A pays 537k. Your opportunity cost is the difference because what you pay more then me is tied to the house. My savings (cash in the bank) can be invested and earn interest. So really, the difference between A and B is even higher if you take opportunity costs into consideration.
“The problem is no one knows when this decline will happen. Prices have already surpassed the last peak. Will they go up another 40% and decline 20%? Will they go up 20% and decline 40%? Who knows. But if housing tracks at least historical inflation then in 20 or 30 years it will not matter.”
I don’t need to know when the crash happens….all I need to do is wait and save while I am waiting. I am getting paid for waiting because there is no rental parity anymore. A renter saves cash each month which can be invested.
“Yes, rental parity is an interesting concept. I bought my first townhome (now an actual investment since I don’t live there) in Huntington Beach in the late 90s at 8% interest. (…) It’s worth a small fortune today but I have zero interest in selling it.”
There you have it. In the late 90s the median house price was NOT 10-12 times what the avg. household income was. You get that? Compared to nowadays, house prices back then were dirt cheap. You profited from the housing bubble and want it to go on. Millennials had no chance to profit from bubbles yet. In your mind, it was a stretch back when you bought but you made it work. So your advice to younger generations is to buy now, don’t worry about the inflated price and keep the bubble going. I doubt you would follow your own advice and pay today’s prices though. You certainly like how the book value of your RE keeps going up as long as someone else has to pick up the slack. And that’s why younger generations look forward to an economic meltdown and older generations don’t.
“You want evidence the population is increasing? (…) We are pushing 40 million people now.”You said “The population is only going to increase and the inventory will remain low.†You don’t know if that will continue to happen. For example, we are due for an earthquake. After a severe earthquake people rather move away. One reason why inventory is low is because boomers have no interest in selling the RE they obtained for a bargain. Your taxes are locked in at a ridiculous low rate. (prop 13). You tell younger folks to pay today’s prices but on the contrary you don’t want to sell and pay today’s prices for another house. But things can change rather quickly. Boomers are retiring in droves and downsize. Tax laws can change. An economic crash will help to get money out of the system and increase unemployment. That will quickly help to increase inventory. Remember 08? And that was not even a real crash. Billions of dollars were quickly pumped back into the system to keep it from collapsing. Hopefully, it really collapses next time.
The existing home sales tumbled in February. So much for those saying that higher interest is not going to affect RE on the downside. Now wait few more months to see the effect of the interest increase we had last week.
http://www.zerohedge.com/news/2017-03-22/existing-home-sales-tumble-nar-warns-prices-becoming-increasingly-unaffordable
What is going to happen after 3 more raises they plan this year and 4 more next year???!!!!…Of course the RE bulls will say that is going to affect prices ONLY about 10-15%. I think the bubble will be burst. The bubble was caused by low interest rate and it will burst because of hike in interest rate.
Thanks Half-story.com. Here’s the other half:
“On the other hand, as the NAR itself admits, affordability has collapsed which together with too little inventory of homes for sale, meant that buyers and sellers were unable to meet in the middle, leading to the 3rd worst month in the past 6 years, the lowest since September 2016.”
When both existing home-sales decrease and inventory dramatically increases wake me up. Then we’ll have something to talk about.
There’s no inventory shortage, only an affordability crisis. The former is a myth perpetuated by the sell side even as a deluge of new construction adds to inventory. The latter is caused by speculators that has driven private ownership to all time lows.
Texas is hell. The only reason I stay here is so my wife has access to her doctors at Houston’s Texas Medical Center.
We have four seasons: drought, sizzle, hurricane and blue norther.
And God hep you if you are poor in Texas, since no one else will.
@ Prince of Heck
Blames FED, Obama, Trump, Economy, Interest rate, Labor rate, Middle class, Elite, Speculators, Big Banks, Flippers, Dollar, China, Japan and more but himself for not taking a risk when it was a great time to buy in 2009, 2010 and 2011.
He will be right once in every 18 to 22 years…
18-22 years? How do you come up with that? The bubble might burst next year? I hope it will go on for a little bit longer though. Saving tons of cash by renting. When the bubble pops I probably can buy in cash. One thing you need to remember TR is that in 2009-2012 some folks just graduated from college and wanted to travel instead of being a debt slave. But the good news is that every bubble bursts. All you need is a bit patience.
@TR
I’m so flattered to live inside your head rent-free.
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