Real Homes of Genius: Tiny home in Echo Park: 1 bed 1 bath 480 square feet listed at $1,000+ per square foot.
There is an interesting aroma in the housing market that is now placing many sellers in the position of having to lure buyers. The easy days of listing a crap shack for $700,000 and getting multiple offers will get more challenging as potential lemmings buyers wake up and realize how much they are plunking down and what they are getting in return. I’m not sure if people really think it through when they take on a 30 year mortgage. They focus on the monthly nut and when hormonal juices are roaring, the desire to buy can overpower the brain’s mechanism for common sense. For many folks with beer budgets and champagne tastes, there is the HGTV small home movement. Basically you will be living in a closet in your city of choice. Instead of people realizing that there is an alternative of renting, many are deciding to take the plunge into incredibly small properties. Today we focus on a 480 square foot property in Echo Park.
Do you hear the echo?
Los Angeles is a massive market with 10,000,000 residents. We have hundreds of cities and insane levels of traffic. Of course, most of the folks in L.A. rent but the desire to buy is massive especially for people entering the family planning stage.
Many homes in L.A. were built decades ago, some are nearly a century old. The home we focus on today was built in 1923.  You know what else was going on during this time? Prohibition. Thankfully you can get sloshed in 2015 and you will likely need to be hammered when you look at what is selling in the market.
1251 Elysian Park Ave, Los Angeles, CA 90026
1 bed 1 bath 480 sqft
This is an incredibly small property. 480 square feet is really small. Let us first look at the ad:
“Seller is MOTIVATED! Charming property in the heart of Echo Park with endless possibilities! This home is easily accessible off Sunset Blvd,. close to freeways, shopping, and restaurants. Tons of outdoor space, including a large rooftop patio with beautiful city views. This 1 bedroom, 1 bathroom home allows for possible expansion as it sits on an LAR4 lot. Property has been recently painted, it has lots of mature trees and plants, and is gated completely for security and privacy! Great space for writing or artist retreat, plenty of space to plant an organic garden, enjoy lovely indoor, outdoor living in the city! (Buyer to verify zoning, square footage, and all permits as part of their due diligence.)â€
Always pitch potential. The ad is definitely hinting at someone upgrading here and that will cost you a pretty penny. Take a look at that beautiful view:
You can see parts of downtown L.A. from your roof. Awesome. Let us look at the Google Street view:
Nice to know the A-Team is in the neighborhood. This is a congested area. They are trying to pitch this to the artist type here with the “organic†and “writing or artist retreat†talk. Given traffic noise I doubt it. You’d be better off going to the free public library.
Let us look at pricing:
Someone was asking $525,000 for this place back in November! That is $1,093 per square foot. Of course they had to drop the price down to $499,000 which still puts this above $1,000 per square foot in Echo Park for crying out loud. The fact that this place sold for 5 times since 2000 and is up for sale again should tell you something. People don’t want to stay here and if it were such a great retreat, people would stay put. Keep in mind this sold for $90,000 back in 2000.
The current Zestimate on the place is $371,280. So pricing is all over the map here. But hey, you can get a great view of downtown while cramming into this place. All you need is to commit half-a-million dollars and you can get 480 square feet of pleasure in Echo Park. Sanity is restored in 2015.
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140 Responses to “Real Homes of Genius: Tiny home in Echo Park: 1 bed 1 bath 480 square feet listed at $1,000+ per square foot.”
Wtf.
If you buy this place your probably going to need the A-Team. I know two people who bought separate residences in this area and both were broken into and robbed within one month of them moving in. I can’t imagine spending 500K to live in a shoebox in Echo park. It’s like living in Tijuana, but with higher taxes.
But mustaches, food trucks, and “art.”
Si se puede!
It’s understandable why this is happening. All those highly paid people sitting in those skyscrapers are wondering “Why do I have to drive to Santa Clarita, and this trash gets to live next to my work?”
So they are flipping the script. Let the trash move out to Hemet, and let me live by my job and the city!!!
The Realist = The Realtor Shill
A great article on the chal!enges faced by the ECB:
http://www.marketwatch.com/story/as-europe-starts-to-crack-the-ecb-plays-wait-and-see-2015-01-05
Hi Doc;
Although the zoning is LAR4 for multiple units, [such as apt bldg or triplex], not much can be built onto 2300 sqft of land, esp, with some requirements for parking….but in this town a savvy developer could get the parking requirements waived and splash a 4-plex onto the property.
On the other hand, I can see how it will sell for +/- $450K to an owner/occupier given the cost of new 1 bedroom apartment rentals in downtown LA. (a nice 2 bedroom apt in downtown LA is about $2K per month.
related article:
lets not underestimate the demographics of LA, LA, LAnd. Since Y2000, downtown LA population has tripled with median income of $98K and avg age of 34.
http://www.globest.com/blogs/trendczar/multifamily/Los-Angeles-Apartments-for-Millennials-351819.html
I have a quick RE question –
My neighbor just sold their house $100k under what they paid in 2007, and there was a short sale on the 2nd mortgage. (I found this out reading the MLS listing)
He told me they closed on their new house and get to move early next month. The new home is cheaper than the house they sold, so I assume more in line with their income which is why they are moving to begin with.
But I’m confused. How can you short sell a home and buy a new home? Shouldn’t their credit take a hit? Shouldn’t they be using money to pay the loan they are short selling? Something just doesn’t seem “right”
The person I bought my house from did something similar. He had bought after prices fell 33%, not realizing that prices would fall another 55%. He lists his house as a short sale, but keeps making mortgage payments to keep his credit score intact. He buys a much larger house in a better neighborhood by taking out another mortgage. As soon as the deal is done, he stops making mortgage payments on the first house to qualify for the short sale. To make this work, he had to buy first and then sell. I would be surprised if someone managed to do it in the opposite order, but given that large organizations tend to be bureaucratic and slow, I guess it might be possible with a bit of luck.
Another play going on is the portfolio loan angle where credit rating plays a minimal if any role in loan approval. There are a variety of packages available at higher interest rates with 20-30% down. I’m not talking hard money, I’m talking rates about 1 to 1.25% above par and no points. If you have 20-30% down you can probably get a deal done. I personally was approved for a portfolio loan last year – 5% 30 yr fixed, no points, 20% down, 10% asset pledge from 401K, no pre-pay penalty. The biggest hurdle for most people will be the downpayment, but for anyone who has not been paying their mortgage and saving that money or otherwise can put a chunk of money together, they can get a deal done.
BTW, I was approved for my loan despite being 2.5 yrs delinquent on a rental property mortgage at the time, and with the rental property 2nd mortgage being charged off. So there are pretty decent deals available with zero waiting period.
This whole story to me just screams how rockstar California really is. Why is this house so much? I’ll tell you why.
There is a TON to do around it.
Tomorrow, it’s going to be in the mid 70’s at the beaches. You can wake up, drive to Big Bear and hit SNOWSLOPES, then at lunch head down to a beach and be surfing 70 degrees at DINNER. It kind of makes me orgasmic just thinking about that. How can you not be head over heals in love with that?
♪ ♪ This is a fantasy land, a playground, a place of dreams. <3 Cali 4 life
You go to Big Bear and back by noon if you fly with a helicopter. On freeways (I mean parking lots) it might be night by the time you get there.
Your comments hold water ONLY for people who never lived in SoCal. You can not move those 10 milions people around as fast as you say.
Be a Realist…!!!!
It was possible to surf in the morning and ski at big bear at night in the early 80’s and before less people
ben, it’s just as easy to do it today. I don’t know where you are getting all this debilitating gridlock from. Only on the Westside.
You should change your name to “The Delusionist”. All I can think of while reading your comment is the hours and hours sitting in traffic to possibly reach one of the destinations you mention, let alone two.
LA -> Mountain High in Wrightwood @ 6am will probably take about 90 minutes.
Wrightwood -> Santa Monica @ 1pm will probably take about 2 hours.
Santa Monica -> LA @ 9pm will probably take about 30 minutes.
I guess the next holiday is Haters Day, and I bring nothing but realism.
Lets make it easy and stay in Big Bear, you hit the slopes at 8 am when they open and leave at 11. That a few good runs you’ll get in. It’s 120 miles to Hermosa Beach, that’s about 2 hours. One hour to make it to San Bernardino down the slower mountain road, and one hour on the freeway going 80.
Don’t you dare tell me there will be traffic going 210/605/105 to Hermosa at noon, because I DO IT and there WILL NOT BE. All the traffic heads OUT of the city, not into it, and it doesn’t start until around 1:30 or 2 pm anyway.
Even on top of all that, you could still ski til noon. Leave, get stuck in a SigAlert, make it to the beach by 4 pm and still be there at dinner.
You could leave L.A. between 5 and 6 am, be at the slopes by 8, rinse wash repeat above.
Everyone on this board is a hater, why even live here if you don’t love it? Why are you on this board? Why aren’t you freezing in Atlanta or Dallas tonight? Why are you you lying to yourselves?
Hours and hours in traffic, psshh. Maybe in L.A. proper, I’ll give you that. Get out into the suburbs and avoid the 91, you’re fine. The only delusions here are from you.
Hey Realist clown, I live here because my family came to L.A. over 100 years ago and it’s my home. Why are you here?
L.A. is just a place in California–it’s not the “Promised Land” or the greatest city in America. Until relatively recently, the cost of living here was reasonable.
I come to this website to laugh at the idiots who are participating in this insane RE bubble, although there seem to be lots of insane RE bubbles all around the world. But to argue that the insane prices in California are justified because this place is “special” just shows how dumb you are.
Go ahead and drink the KoolAid or whatever, but except for the mild winters, California really isn’t special. Trendy hipsters from out of town notwithstanding.
Realist,
My preference for winter is to be in Hawaii. Much warmer water and more natural beauty. That’s why I spend my winters in Hawaii. No traffic here in Kona and I can be at snow on Mauna Kea in less than 2 hours.
There is so much you can do with the money if you don’t overpay for a crap shack in SoCal.
flyover,
there is no snow on Mauna Kea right now, and it rarely happens. Then when it does, you need your own 4 wheel drive to get to it. And then you have to be mindful of the scientists up there at the observatories as well.
No thanks.
SoCal is the only true place to surf and ski in the same day.
The problem is that everyone here must be a trust fund baby! Most people have to work and they barely make enough in L.A. to pay their rent/mortgage. They spend an average of 50 minutes or more each way getting to and from work. Then on weekends, they are too busy still working in order to afford groceries! So who cares if you can ski in the morning and then go to the beach in the afternoon … most people do neither!
“there is no snow on Mauna Kea right now”
Realist,
Again you did not state the truth. I saw the snow yesterday with my own 2 eyes. Both on Mauna Kea and Mauna Loa.
In the end, I care less about snow. That’s why I like to spend winters in Kona.
Only reason you’d want to try and fit all that activity (skiing, surfing, and the driving between them) into 1 day would be because you’re too busy working to pay your insane mortgage and rarely get a day off, LOL!
I love all of the exceptions and particulars around timing and place that has to be made in order for said beach and ski on the same day to work out. In other words, it’s not a realistic scenario for the vast majority of the people who the SoCal hubris committee is selling to, you know, the ones working during the week to make ends meet for their overpriced crapshacks.
No one has to love a place to live in it. If you can’t handle hearing otherwise, too bad. By the way, this board is all about pointing out how ridiculous this place can be, so yeah, that’s why we’re here, because solving our problems doesn’t happen through convincing more people to hide their heads in the sand. I bet you are well aware of that, so maybe coming on here and posting exaggerated tales is just what gets you off.
Siggy, it’s called “a plan”. It doesn’t matter where you live or what you do, you need a plan to do it. There is nothing exceptional about leaving at certain times to accomplish 2 events that are spaced two hours apart.
Perhaps you are just a horrible driver?
I’m glad you brought up the concept of planning, because that’s one of the primary problems with L.A. traffic. Most of the time, one cannot set practical expectations due to the unrelenting volatility in congestion outside of the typical traffic patterns. Does this also happen in other places? Yes it does. Does this happen in L.A. by an overwhelming margin more than most other places. Yes it does.
Which leads us right back to the point. The planning has to be done within a strict set of inflexible parameters that are unrealistic in most folks’ circumstances.
It would be one thing if the ‘surf and ski’ rhetoric had all of its necessary asterisks attached, but it never does until it gets drilled down in a debate.
Must be new here. Surfs flat tomorrow by the way. And that 70 temp made the man made snow a bit slushy. Also from that house it’s away to the beach and even farther to one that’s not ghetto.
Look at the back of aaa magazine. Was cool 50 plus years ago. LA is a fucking dump. Drive from the most northern point to the most southern pt of the city. Now let’s drive from the most western pt to the most eastern pt. Taco carts and illegal aliens the entire drive. It’s third world. I have leaved in SoCal my entire 50 years. I’ll drive to canters after seeing a shit gig at the whiskey, maybe bust out a oki dog. Try to go back to ’79 punk days. It’s third world man. Even down here in OC innocent kids get killed in Anaheim and Santa ana on a regular bases. Hey take your family down to the famous Hollywood blvd. complete crap hole. I don’t think you’ve been here long. New people use the term “Cali”
Sure, much of L.A. is a dump. All major, first-class cities (including New York City, which I’m familiar with) have dumpy areas, some of them extensive.
But L.A. is great if you can afford the prime areas.
As much as I like Socal, I have no desire to snow ski and surf in the same day. Or snow ski and then dine near the ocean in the same day. Do people really move here to do that?
We have some of the best weather on the planet. That is ***part*** of the premium associated with our high housing prices.
I’ll guess some Wealthy Guilty LA Dusty Liberal Parents might buy it for their Adult Snowflake, who perhaps graduated from film school/fashion institute, or is a wannabee entertainment industry type eager to experience a gritty urban lifestyle with LA hipster friends. When things get a little too “real” in the neighborhood maybe Snowflake can retreat to parents house in the ‘Bu for the weekend to decompress. Mom and Dad’s money made decades ago readily available to support Adult Snowflake’s LA lifestyle for years to come. Plenty of hosts, plenty of parasites. Just my humble opinion.
A little bitter, are we?
Bitter? No. Laughing? Yes.
Did I hit a nerve? Please accept my apologies.
I WANNA BE AN ADULT SNOWFLAAAAAAAKE!!! BWAAAAAAA *screaming adult tantrum* Hilarious comment! I used to live in Malibu but sadly I was nobody’s snowflake. The 40+ surfers still sponging is def the norm out there. Yes, the beach is gorgeous but it takes 2.5 hrs to get into the city on a Sat night. It’s actually just a cow patty town w/a view. It’s a great place for retired people. They roll up the sidewalk at 8pm and God forbid you want a coffee or dinner. The snowflakes and the surfers can have it. Yeah the crime in the city sucks giant rhino wang but I’m not ready to go to bed at 8pm so I’ll take the crime over the ‘Bu. Why look at water that turns your feet black if you step in it? Gross.
It is only a short walk to Doger stadium!!!
I’m sorry, this place was too expensive at $187 per square foot. Until people realize that housing is now intrinsically tied to Wall Street securities and derivatives they will never understand why these prices go the way they go, just like a bubble up up and away, and burst the way they burst. Free market principles no longer apply. other than The Realist’s comment, about people’s dreams and desires. And reality will win out in the end. The reality is people dream of California specifically Los Angeles or San Diego.. They always have and probably always will. The only way that will change is if it turns into Detroit. again, that has much more to do with Wall Street than Main Street, even the ones paved in gold in California.
SoCal has been turning into Detroit since aerospace and manufacturing left in the early 1990’s.
http://www.latimes.com/opinion/op-ed/la-oe-governors-california-poverty-job-creation-20150106-story.html#navtype=outfit
“…inflation-adjusted median household income in L.A. County drop to $54,529 in 2013 from an equivalent of $61,544 in 1990….”
SoCal is going through boiled frog syndrome. The most of the people living here do not see what is happening as massive debt and leverage is used to paper over and hide the gradual SoCal decline.
Interesting…I will have to ask my Dad about that. He used to work in aerospace. In the high desert we still have aerospace jobs. CA is in many ways the backbone of the military plane industry and the space program. We have NASA on Edwards Air Force Base and a Flight Research and Test Center there as well. We also are the home of many entrepreneurs in the private sector of commercial space exploration. I would not write us off yet.
Manufacturing? The loss of those jobs is a nation-wide problem that is not specific at all to CA.
CA is crucial for the nation’s food supply. Most crops are raised here. The drought has taken a big chunk out of that, but hopefully things will improve.
We are also the FIFTH largest economy IN THE WORLD comparing to actual NATIONS. No other state can claim that!
You seem to be confusing short term trends with long term viability. CA will always be important to the nation. We are the perfect place for all kinds of jobs due to the mild weather and fantastic scenery. Tourism and the movie/TV industry are just a few of those.
As far as manufacturing jobs, all politicians of the whole nation need to get their collective heads out of their collective asses and bring those jobs home. The whole nation is suffering from that, and I see no difference on that between Red states and Blue states and if anyone thinks that Romney would have fixed anything then they are delusional. All you have to do is look at HIS business dealings!
Mary you are delusional. California’s economy is going down the toilet. The aerospace and defense industry has been gutted. With the C-17 line going down in Long Beach, there won’t be any major weapons systems being built here.
Agriculture is no longer a major economic force like it used to be, and the drought has blown the bottom out of the industry. Tourism? Yeah right, like hotel and fast food workers contribute much to the economy.
Depending on where you look, California is more like the world’s 8th or 10th largest economy.
California has one of the most hostile business environments in the country. We have the highest costs for labor, litigation, environmental regs, taxes and just about everything else–companies are leaving the state at a record pace.
We have the largest number of illegal immigrants who are uneducated and have little prospect of having children who will lead the way to a technology based future. The ONLY group of immigrants that is making a positive impact are the Asians (primarily Chinese) who are coming here for work and education. But you can’t float an economy on Chinese immigrants.
Cailfornia has the largest prison population of any state. We have more people on welfare than any other state. In short, we have a HUGE population of slackers and criminals and people who are at the bottom of the education/socioeconomic ladder.
That’s the future of this state. And with the Democrats holding the state government in their grip, nothing good is going to change.
@Mary wrote: “…We are also the FIFTH largest economy IN THE WORLD…”
No Mary. The last time California was the 5th largest economy in the world was maybe when you were a teenager in the 1960s consuming large quantities of hallucinogenic substances.
California is the 10th largest economy in the world based on nominal GDP, just barely ahead of India and Canada.
http://en.wikipedia.org/wiki/Comparison_between_U.S._states_and_countries_by_GDP_%28nominal%29
If you go by consumer purchasing power, California could easily drop to 12th or lower.
California, much like Detroit, has been in a gradual decline for several decades.
Without knowing specifics on the aerospace industry, I won’t go there.
“Manufacturing? The loss of those jobs is a nation-wide problem that is not specific at all to CA.”
That is true, although the rate of the loss in CA relative to it’s former base is significant enough to be called to attention.
“CA is crucial for the nation’s food supply. Most crops are raised here.”
That is often misstated and overstated. CA continues to lose its relative importance to the nation’s (and world’s) food supply due to competing overseas agriculture. Think garlic from China, avocados from Mexico, and almonds from Morocco, just to name a few. What globalization giveth, globalization taketh.
It must also be noted that the “nation’s food supply” goes beyond just what is produced in CA. Americans consume a lot of starches and protein that come from other states. Animal feed crops are largely grown outside of CA. The nation’s grain belt farmers sell significantly to the global market as well.
“We are also the FIFTH largest economy IN THE WORLD comparing to actual NATIONS. No other state can claim that!”
While you’ve been schooled on the ranking by the other commenters, there’s a larger problem with the claim being made. California’s geographical size as defined by its political boundaries is what makes the difference. A much more impressive claim is the output of a political boundary with regard to its per capita input factors. This goes both ways, as the claims about how many prisoners we have also must be taken into account relative to the general population if we are to be honest.
“You seem to be confusing short term trends with long term viability. CA will always be important to the nation. We are the perfect place for all kinds of jobs due to the mild weather and fantastic scenery. Tourism and the movie/TV industry are just a few of those.”
Short term trends are all we have that’s immediately apparent. Long term viability is simply a guess until proven correct or otherwise.
Two words that should set off any skepticism radar are “always” and “never.”
“Perfect” and “fantastic” are un-empirical subjectivity. Tourism and increasingly, entertainment, are hardly unique to California.
“As far as manufacturing jobs, all politicians of the whole nation need to get their collective heads out of their collective asses and bring those jobs home.”
If it were only that simple. Welcome to globalism in the modern era.
Gentrification !!!
see what the locals have to say
https://www.youtube.com/watch?v=xDrTD32aUPo
I like one of the YouTube comments: ” Gentrification? I think it means I can’t afford to live there :) “
You forget to mention the 1970’s parkay floors. There are 32 pics on the listing, with the majority being of the exterior and that “Fabulous” roof deck. I must admit the exterior is much nicer then the interior. The interior reminds me of a apartment I rented when I was in college. Except that apartment was larger. The exterior landscaping looks good for such a small lot. I’m sure some hipster will buy it up. I mean it’s got a red door, red fence, and red porch. It’s a hipster trifecta!
“It’s a hipster trifecta!” Aren’t you forgetting something Hunan? In NONE of the pictures do you see a guitar standing in the corner or a bowl of citrus ANYWHERE. Let’s stick to the facts sir. And I didn’t see an artisan cheese store, craft beer bar or dog bakery anywhere in the immediate vicinity.
Some sellers are getting desperate. I’ve seen some houses with:
* A ROW of guitars in a guitar stand.
* A CELLO set against a wall. (For when a guitar just isn’t BIG enough to move a house.)
* Drums sets. (Which, again, take up more space than a mere guitar.)
Some houses even come out and say: “Live like a rock star”: https://www.redfin.com/CA/Woodland-Hills/4253-Morro-Dr-91364/home/4212155
Son,
That’s a very nice house. Perfect example of California Dreamin’
And I see the sale is pending. Another rockstar livin the dream
Don’t forget that scooter with the sweet rims parked in front on the street view image.
Realist,
A nice house, yes. But is it worth the $900,000 asking price? For Woodland Hills?
Plenty of nice houses in L.A. The issue is, are they over-priced? In a bubble? Or will these prices remain high, and even continue rising, in the longterm?
Don’t forget vintage hi-fi/electronic equipment, manual typewriter, mismatched flea market furniture and faux taxidermy. A fixie on the porch, and/or a Subaru (especially if Snowflake Children are involved) in the driveway completes a Hipster Tableau.
I work a few miles down the road from this place–I’m right on Sunset Blvd. I know this area well. Echo Park is the HOOD. Over the last 10 years you see more and more out-of-towners (i.e., white people hipsters) moving into this area. It’s a hoot because they wouldn’t recognize the hood if there was a red flag flying over the neighborhood.
This entire area has been a crappy neighborhood for 50 years. Until you move out all of the poor south-of-the-border residents, it’s going to stay that way. The schools are worse than bad and, like a previous poster noted, if you move into the neighborhood with your trendy furniture and pricey gadgets, you’ll be burglarized within a month. And your car will be stolen.
Ah, but the wonders of living in L.A. where you can hit the beach and the slopes all in the same day! NOT! How many people on this board actually have lived in L.A. for more than 3 years?!
For the most part, MOST of L.A. is just an endless dump of cheap homes where the most interesting thing in your neighborhood is the local strip mall. Why people are willing to pay outrageous prices to live here is beyond me.
Because its the weather and entertainment capital of the world. 80 degrees, in January, in America and not humid. 🌴🌎🎉ðŸ¸ðŸ¡ðŸŒƒðŸŽ¦ðŸŽ¢ðŸŽ¨ðŸŽ¬
The Realist…True great weather is a powerful tool when relocating that said, after the great weather settles into your mind then the negative’s of Cal. come calling. I think as your name says The Realist, the real world living sets in that CA. is not a good place to call home anymore for most folks.
zzy…I also the same thing for the very overhyped Manhattan. the prices paid for these apts in relation to what you get ie lousy weather, views of what side of a brick building 100 years old. Traffic so bad why own a car, and overpriced food makes me wonder why rich people are suppose to be smart yet so dumb to buy the hype of NY City, like the ugly duckling, keep saying they are cute you began to believe it?
I’ve a friend who lives in a Manhattan studio co-op. He likes living in Manhattan because “it’s the city that never sleeps.” He can go anywhere, at any time of day or night. He likes the Irish pubs, the Greek diners, the bodegos, and just walking the streets.
He’s in his 50s and has never had a driver’s license. Subways, taxis, and the LIRR are all he needs.
Fast forward a year or so into the bust and this would make a good investment property at the right price because of the zoning. I could see a creative developer turning it into a 3 story post modern bachelor type pad. I remeber seeing a similar design for a place with a small foot print in Sierra Madre once…
But this brings us back to the how and why of Bubble 2.0. All natural price discovery mechanisms are FUBAR. This allows idiots like Realist to ascribe theoretical data to price movements that cannot be justified empirically. What we are seeing in the freeze in transactions over the last year is real market fundamentals coming to bare. In the absence of NINJA loans and likely even if they returned) there is nothing that can prop up these SFH price levels on marginal, non uber-prime properties. The rents, mortgages, hot money loans, REIT funds, etc. that have supported the current run up are all dying out justas the FED is about to tighten. Last year was a small decline in prices but a dump in volume. With no volume or increasing prices you have no momentum to sell into. As I’ve said before once things go flat a bubble cycle is over. Now that we can see that they have actually declined, the only argument is at what speed the downturn will proceed because it has already begun.
I am concentrating on buying myself a house in that bust, not investment property.
Hopefully the bust will be so hard, it will incapacitate investors still in a position to buy, and leave the market open for single family buyers. I nearly threw up when looking back over some of the comments in Doc’s entries of a few months ago. Many existing investors need to be broken and destroyed by the market for their greed, and their belief and expectations in forever house price inflation and forever boom and forever QE/bail-outs.
Sean1
August 9, 2014 at 8:31 am
I have a friend who for the last 25 years has been purchasing rental properties in SF. I think he said he had about 50-100 units. He constantly complains that he can not raise the rent and that the older buildings are very costly to fix. $100K elevator repairs, etc. So when a renter leaves he can raise the rent, and the rent often doubles or triples. It took him 25 years to get to this position buying a building every few years. But now that the rents are going up, he has become a very wealthy man. 100 units at $2500-3500 month on properties that are 50-75% paid off. At the end of the day he earns about $100k month on these units.
When he hears bubble comments and people talking about the bubble, he just laughs it off. He said those are the people who don’t understand how to make money. It’s not about a short term gain, it’s about build wealth over decades.
In the next 20 years those rents will be $4000-6000 month. He will have 200 units and the rest of us will be blogging about the impending bubble of doom.
“Housing to tank 2034!â€
While I do agree lower home prices would assists consumerism, the market is speaking for what prices should be, as a capitalistic market does. Now however, if the “massive crash” so many hope for happens, will they themselves be in a position to buy? That’s the question.
Dude up in Bake-o said he’s getting laid off from the oil patches along with hundreds of others. He said he does not like $4 gas, but it kept him employed. Food for thought.
Realist: This is not a “capitalistic market”. It is highly manipulated. Have you not noticed this?
“While I do agree lower home prices would assists consumerism, the market is speaking for what prices should be, as a capitalistic market does.”
Yep. That about removes you from being taken seriously in any discussion on this blog. For like… ever. Even more hilarious is I pointed out in my comment how price discovery is being artificially and desperately repressed. I said it last year, the trolls are reminding me of 2007. The question is will 2015 mirror 2008. The first part of the equation is already in, sellers are capitulating on asking prices. The second will be the FED raising rates. The third is going to be how quickly and with what velocity the specuvestors and REITs liquidate. I always look to more macro trends and while small enclaves of prime surely will stay elevated, I suspect the inland areas and lower tiered areas of LA and OC proper will see fairly quick price action. The specuvestors are living on credit and once the bill comes do I don’t see anything that can stop a relatively rapid rush for the exits once the math confirms no hope.
I doubt anyone will buy that place for the price they are asking … over $1,000/square foot But, California has become shark infested once again and the feeding frenzy seems to be recurring all over again! When people are caught up in this, they forget about the basics of real estate, location, location, location. Go to the nicest neighborhoods … Malibu is almost $1,000/sq ft and Newport Beach is over $900/sq ft. By comparison this home shouldn’t even be selling for the L.A. County average of about $430!
You would be surprised at who would buy that pile of crap.
Rationality goes out the window when it comes to housing in SoCal. The Mediterranean weather seems to cause loss of common sense and brain failure to SoCal home shoppers.
Which only proves and affirms the obsession with SoCal and it’s trendiness
Stumbling through life feeling rather sorry for myself for not being one of the brighter light bulbs in society and then reading this article and wondering who might be the ones paying +++++ $’s for this P.O.S. ………Life Is Good
I’ve always consoled myself with the aforism: “The next bext thing of doing something brilliant is not to do something boneheaded”.
Right next door to Dodger Stadium, and in the traffic pattern for it as well. I guess the acres of asphalt count as “Tons of outdoor space” …
According to Realist, you are just jealous because you can’t ski in the morning and enjoy the surf in the afternoon like he does.
Traffic…??!!!! that is an illusion. It’s all in your mind. If you would be a Realist like he is you would understand the Reality like he does.
I’m intelligent enough to plan the proper routes and drive times, yes.
Funny how “Realist” is trying to deflect the debate into one about planning. Planning is the primary thing you can’t do well in L.A. due to some unplanned and unexpected bullshit always happening to screw up traffic.
Realist,
There is no planning you can do in LA in terms of traffic. You know when you leave the house but not when and if you get to the destination. I’ve been there done that.
I told you, the comments you make is ONLY for people who never lived in LA area. Those who lived there agree with me (I lived there for years). No amount of planning can tell you when you get to the destination because the traffic is bad, very bad or stopped. It is like that on all freeways and it doesn’t matter which way you go or when you go. I drove like that even at 11 PM when no accident happened.
Let’s face it – it is a fact of life. As the Realist you are, admit it; at least in front of those who live/lived in LA area.
Flyover, all you need is Waze and Google maps traffic. You can find how busy the routes are, and the best ones.
Realist, Google traffic maps are unreliable. Their information is not current. I’ve tried them and been misled.
Whoever said that this “realist” is delusional had it nailed. Waze and Google Maps? What a joke. Those are at best, tools in the sense of a survival foil blanket in sub-freezing temperatures. I do live here and commute in this mess on the weekdays. I also drive on the weekends to various destinations all over L.A. and the larger SoCal area. So here’s how it goes, you check Google maps and “plan” a route, then once you’re on the freeway there’s some change in the traffic that wasn’t there when you set out. So you keep checking Google maps and half the time it shows yellow or even green where you’re at a dead stop. Then there’s Waze, which has to have one of the most idiotic user interfaces ever in a map application, and to make matters worse it sends you down rabbit holes and after dealing with a million stop signs and stop lights, you might as well have just remained on the freeway. The final cherry on top of this are all of the Waze reported incident trails on Google Maps indicating one actual incident but due to the trail, you’ve no idea exactly where it occurred. Yeah, it’s all about the “planning” that didn’t take place to address the transportation realities of the region.
The stupidity here in the CA bay area seems to never end. I would agree it would take a real “genius” to buy that taco stand.
Considering that the Bay Area is home to more geniuses than any other place on Earth, perhaps they are onto something the Average Joe can’t grasp.
You best believe the ghetto bird is hovering over this joint 24/7. What a slum.
The home we focus on today was built in 1923. You know what else was going on during this time? Prohibition.
Lol, but age of property wouldn’t be such a factor if it were a well built home in the first place. Instead, that is just a horrible box (imo). Also that’s very red everywhere. It would look better, for me, in a ‘racing green’ paint finish; white and racing green.
For the UK you had many lovely houses built in these eras. Jacobean (1603-1625). Stuart (1625-1714). Georgian (1714-1811). Regency (1811-1837). Victorian (1837-1901). Edwardian (1901-1914) – a massive building boom age, with many gorgeous houses built.. arts and craft and details – influenced by Edward VII and his love of the good life (in sharp contrast with puritanical values of Victorian ideal). Then 1920s building boom with many poor quality houses built – too many speculative builders throwing them up quickly for profit. 30s slightly better builds due to more regulation. Break for WWII. Late 40s stock pretty poor. Slow 1950s, with less money about, some decent stock built (I rent one). 60s ok-ish basic stock. 70s very flairy 70s style stock which looks well dated now but at least has space. 80s smaller and flimsier. Same for 90s, but smaller still. 00s… move to boom, newbuilds getting McMansion style, mid 00s-to now the over-use of glass.. big windows “look at me” in my modern house.
I’m not suggesting go back to older eras, but lot of awful stock been built, that has little design appeal. Too many US shack houses. Need to be replaced, with much better quality homes, at lower prices.
Realist is just a troll so please ignore.
So were is Jim? Kinda miss the predictions!
@itsme Jim threw in the towel for a while, claiming his predictions would come true… just not in 2014. The real estate economists that I found predicted a 4%-5% rise in 2014 and predict a 0%-4% rise for 2015. I could not find any legitimate economists who predicted a crash for 2014.
stay tuned
Tell me which “legitimate economist” (that is an oxymoron if I ever saw one) predicted a crash? EVER? The “legitimate economists” do not believe in bubbles hence they do not predict crashes. EVER!
What were your economist buddies saying in 2007? Just curious.
“Tell me which “legitimate economist†(that is an oxymoron if I ever saw one) predicted a crash? EVER? The “legitimate economists†do not believe in bubbles hence they do not predict crashes. EVER!”
Or more like any economist with any sense knows better than to make predictions.
Real homes of genius in mid-cities.
Hi Doc; get a load of this one. Sold for $371K in April and now with $100K in lipstick, asking price is $649K…
http://www.trulia.com/property/3134237120-2334-S-Redondo-Blvd-Los-Angeles-CA-90016
and another
sold for $485K in April 2014, perhaps $100K of lipstick, nto sure. now asking $679K
http://www.trulia.com/property/3151352751-2020-S-Genesee-Ave-Los-Angeles-CA-90016
Sold for $396K in April, now $100K in lipstick…
asking price is $649K
http://www.trulia.com/property/3157225484-1943-Hauser-Blvd-Los-Angeles-CA-90016
The Genesee Ave home is being sold by an AMATEUR flipper — he forgot to remove the bars from the windows!
Or simply too lazy or didn’t have enough in the budget to remove the bars.
All come on folks, these prices are just chump change for the Millennials. There are millions of these kids who went to Harvard, USC or whatever and had mommy and daddy dish out $350,000 cash for their education. They grew up in a million dollar house and have already traveled to Europe so many times that they get bored when you say “Paris”.
These highly skilled kids come to L.A. and find $175,000 jobs working in the “industry” as producers, directors, editors and production assistants. There’s such a shortage for good talent at the studios that they are going BEGGING.
In fact, I just drove by two on my way into the office this morning and they had “Help Wanted” signs out!
So for a hipster couple grossing $300,000 a year, these prices are a steal! What could go wrong here? It’s the image, the weather and the freeways where you can cruise from PV to the Hollywood Bowl in 35 minutes driving your Mercedes in the car pool lane.
L.A. is like the “I Love L.A.” video–so cool and what not. And if you don’t make good six figure salaries, you should leave town and move to Buffalo or Lubbock, Texas. And leave room for all the cool and rich people.
After all, this IS Hollywood.
I can’t tell if you are being sarcastic or not. Poe’s law. If you really believe all that then you need to have your head examined.
He is sarcastic.
Now you’re getting the hang of this! 🙂
CA is dreamy. Now that everyone can have a license and EBT regardless of legal status, traffic will improve and everyone will be well fed. Paradise City indeed!
All right California bashers, let’s start a thread right now. Somebody referred to us as boiling frogs, so please take this opportunity to enlighten and educate us on all the benefits to NOT living in SoCal. Please include wages, taxes, weather, entertainment, and anything else you see fit that can beat “Package California” and all that it offers in its one package.
SoCal is a great place, as is the rest of CA. I live here. But it isn’t problem free and I think that is what most of the people on here are objecting to, even the ones who live here. To plunk down a huge chunk of change for a tiny older house in a bad neighborhood makes no sense. Only fools and the young would see this as a good deal.
I would rather live in a safe neighborhood and skip the proximity to beaches and ski-areas. And if someone REALLY wants that kind of place, wait for the right deal. I have elucidated my views in another post. I do agree that commuting to a job sucks. And as I said before I do not agree with the whole-sale bashing of CA. But you are definitely NOT a realist.
I, for one, would buy in coastal Cal. but not at current prices. There are too many negatives for the current prices. For lower prices, yes – like ’97-2000.
Not everything in Cal is bad. Where it is nicer, it is so expensive, it is not worthed. For the same amount of money you can have so much better lifestyle somewhere else. Just my 2c.
“Only fools and the young would see this as a good deal.”
Those are people. And people is what it takes to keep something going. So young and foolish or not, it still = the same outcome. The beat goes on.
Yes!
Lets here it…If its that good were you are we will all up and move there in a NEO second..
Now that the Texas economy is hitting the fan at 200 MPH..do you think some of those poor soles might be making plans to come back to So Cal?….. I bet they are already looking at homes on the web and trying to figure out a way back which must look impossible right now compared to what they have been used to and what they might have sold for…
In reality…if it was SO GOOD elsewhere we would already be there….
One thing I have learnt in being here for 25 years, there is always work no matter how bad the economy is, you just have to be prepared to make it it happen for yourself.
For starters, not being around the cult of narcissistic L.A. obsessed elitist snobs such as you. Aside from the possibility that your simply trolling for jollies, anyone with your demonstrated level of ignorance on this board has obviously never left home to live elsewhere for any amount of useful time. Had you, you’d know better than this hyperbolic nonsense.
Do you claim that there are no benefits to living outside of SoCal?
Just because you don’t have what it takes to hang with the big dogs, don’t hate Siggy. In actuality we can all tell from your tone that you really only hate yourself. And that’s sad.
“Do you claim that there are no benefits to living outside of SoCal?”
On an individual city by city basis, I’m sure there are separate benefits. But as a collective, there is NO CITY on earth that rivals L.A. for availability of entertainment, weather, and culture.
Just because you’ve never left home to experience the rest of the world, don’t make up exaggerations, Realist. In actually we can all tell from your comments that you’re just trolling. And that’s pathetic.
“On an individual city by city basis, I’m sure there are separate benefits. But as a collective, there is NO CITY on earth that rivals L.A. for availability of entertainment, weather, and culture.”
In other words, you don’t have any actual experience to back up your subjective claims. And that’s sad.
Benefits to LEAVING California:
* Great weather. SoCal has crummy weather. (I’m serious.) Way too hot. No seasons. I miss crisp autumns and snowy winters. Year-round temps in the 20s to 50s is ideal for me.
* Lower taxes.
* Fewer state debts and obligations (i.e., future pension payments).
* Lower cost of living (i.e., more house for the money).
* Cars actually move when on the freeways.
That said, there are BENEFITS to SoCal:
* Many entertainment & cultural events (if only the freeways weren’t so jammed).
* Friendlier people than in some parts of the U.S. (at least in my experience).
* Many friends & acquaintances already live here (a subjective matter, but relevant to my situation).
I hear ya on the weather thing. Some people like boring sameness, and that’s great for them. Many people enjoy dynamic climates where seasonal changes provide definition to the year. Agree on the heat thing here. Humid heat has its issues and so does the oftentimes dry-acrid hazy heat we get here. And those Santa Ana winds do a number on the allergies and generally make the air feel like crap. Then there’s being able to almost taste the benzine and particulate contaminants in the air on many days, yum.
No Mexicans
RACIST
ban this guy
Well, I’d been living in LA for 15 years, I’ve been following this blog for 6 years, and I’ve been living in Portland for all of a week and a half, and I’m kicking myself for not leaving LA sooner. For $600 less per month (and Portland prices are bubbly, too) than our 2300 sq. ft. ranch in Northridge (or even less than our 1200 sq ft home in Hollywood Hills,) we’re renting a turnkey, 2300 sq ft Swiss/Tudor home that is both close in town and in a K-8 public school district that is rated a 10. We can walk to coffee, restaurants, bars, etc, and I’ve talked to more friendly neighbors in the last week than I have to my Cali neighbors in the last 3 years. Drive an hour in any direction and you have wine country, the ocean, Mt. Hood, Colombia River Gorge, etc., and traffic is relatively non-existent. You could probably go to the mountains, beach AND wine country in one day here, and still be home for dinner, although I’m not sure of the motivation for such a thing.
Of course, I’m in a unique position in that I make six figures working from home and I can live anywhere, and I don’t like when it’s much over 70-75 degrees, so YMMV. I also like the underground music scene, and I still make music and art, so this may or may not apply to everyone, but I can’t imagine move my back to LA, despite our family living there. My 3 year old son will thrive here in Portland, and I’m relieved to be out of the suburbs after our Northridge experiment.
In all fairness, please report back after the “honeymoon phase”
GZ: Well, I’d been living in LA for 15 years, I’ve been following this blog for 6 years, and I’ve been living in Portland for all of a week and a half, and I’m kicking myself for not leaving LA sooner. For $600 less per month (and Portland prices are bubbly, too)……
Hope you are happy with your decisions GZ. I just dropped the streetview guy onto a random road in Portland and lovely tree-lined roads of good looking housing stock, with well maintained gardens, kids out riding bikes. Pretty dreamy looking.
I personally know nothing of the area, other than recalling Intel is a big employer. A quick look at Zillow and the decent housing stock is still… on the expensive side imo.
_____
Jan 8, 2015. Grand Theft Auto VI should be in Portland, argues these real estate experts
…As far as strip clubs, Portland is known to host the most strip joints per capita out of every city in the country. How many adult establishments would that be exactly? Only a mere 81. “Portland would be the perfect city for the next Grand Theft Auto,†Movoto’s Clark Teft wrote. “It has the personality, the intrigue, and frankly it might be more fun to visit Portland digitally and not risk running into all those college friends who are trying to make the rest of the world move there.â€
http://venturebeat.com/2015/01/07/grand-theft-auto-vi-should-be-in-portland-argues-these-real-estate-experts/
The only thing I SOMEWHAT agree with Realist on is that it sucks for people to commute to Los Angeles just to save money. I live in Antelope Valley, which is a lot further away than Santa Clarita, a long drive through the mountains. People buy houses out here to save money, but get exhaustion, broken marriages and child abuse in return. That is because of the stress of commuting two or even three hours a day ONE WAY. Last I heard we have the highest rate of child abuse in LA county.
I used to commute as far as Santa Clarita and that was okay but that was 30 years ago. A less stressful way to go is the train, but it still takes a couple of hours just to get to Union Station. In a more recent job I did that once a month for a meeting, and that time I just mentioned did not include walking and using the subway to get to Wilshire Blvd.
We need a bullet train to make commuting more feasible . Who knows how long that will take!
But this dinky house isn’t a solution either. You should really think before making any large purchase and this is obviously overpriced and in a bad neighborhood. One thing I notice these days is the lack of patience. Everyone wants “instant everything” To find a good deal on any large purchase requires the ability to wait for the right deal. Know what you want, and be flexible, but not TOO flexible. It sounds like the previous owners on this place regretted the purchase! Notice what has driven up the cost is not because the house is worth that much, but because idiots have decided TO PAY that much!
There will never be a bullet train. Even Jerry Brown — the bullet train’s biggest cheerleader — allows that the current plan is for “mixed rail,” with only some of the train to be high-speed.
Vanpool solves all that. I see the vans at aerospace companies in the South Bay cramming the parking lots. Cheap, sleep, problem solved.
These comments crack me up. 🙂 it’s so true though. A similar thing is happening in Denver, where we live, on a smaller scale (obviously.) price per square foot is insane…at least by Denver standards, where incomes are not keeping pace with housing costs. Last week–just to amuse ourselves–we visited a 700 square foot bungalow for 500k. WTF? Oh, but it’s so chic! So close to restaurants and nightlife that you won’t be able to afford anyway because you’ll need two jobs to afford your mortgage payment. Sure did want to buy a home, but not planning on it anytime soon with so much overpriced trash on the market.
Did I hear someone say ‘market manipulation’ ?
Obummer will announce a cut in FHA mortgage insurance costs for first time buyers.
https://confoundedinterest.wordpress.com/
excerpts here:
“(Bloomberg) -By Clea Benson and Jonathan Allen- As part of an effort to expand homeownership among entry-level buyers, President Barack Obama will announce a cut in Federal Housing Administration mortgage-insurance premiums during a speech in Phoenix tomorrow, according to three people with direct knowledge of his plans.
The annual fees the agency charges to guarantee mortgages will be cut by 0.5 percentage points, said two of the people, who asked not to be identified because the White House hasn’t yet made the announcement.
The FHA has been increasing premiums since 2011 to offset losses caused by defaults on mortgages it backed after the housing bubble burst. Housing industry participants have said the increases in annual fees, which are now at 1.35 percent of the loan balance, are squeezing first-time homebuyers out of the market. The annual fees were just 0.55 percent in 2011, before the increases.
The FHA’s insurance fund, which required a $1.7 billion draw from the Treasury Department last year, posted its first positive balance in two years for fiscal year 2014.
The agency is required to keep enough cash on hand to cover all projected losses in its $1.1 trillion portfolio. The fund must also maintain a cushion of 2 percent of its value, a level it isn’t projected to reach until fiscal 2016.
Private mortgage insurers, which compete with the government program, slumped on the news. Philadelphia-based Radian Group Inc. dropped 3.2 percent to $16.01 at 9:57 a.m. in New York. MGIC Investment Corp. fell 2.3 percent, and Essent Group Ltd. declined 2.7 percent.
Radian climbed 18 percent last year after more than doubling in both 2012 and 2013 and had said it benefited as private companies gained market share from the government.
So, the FHA is going to cut the insurance premium by 0.5 percentage points in attempt to expand market share at the expense of private mortgage lenders. FHA purchase applications have been steadily declining since April 2010 despite declining FHA interest rates….”
Just in time for flip inventory that’s been languishing for months on end to be liquidated and the more recent onslaught of short sales to get moved off the books.
I live in the 56 corridor area in San Diego and values are now back up beyond the 2006 peak across the most of the area. What we have seen in the area is an ongoing influx of professionals – engineers, tech, medical and legal – and entrepreneurial types moving in with their families. Unless you get some combination of Qualcomm shutting down or UCSD and Scripps hospitals shutting down, I find it hard to see where a RE crash is going to come from. There is not a lot of open buildable space left in the area and demand continues to exceed supply. You could have bought a house in my neighborhood at the “insane” peak in ’06, worst possible timing, and still have six figures in equity today and be almost 1/3 of the way to paying the place off.
Across SoCal there was a very sharp pull-back in values beginning in about 2008 that continued for a number of years. How many on this board bought during this big dip? If you did not buy, why not?
I have lived in SoCal for almost 25 years and I have seen an absurd amount of money flying around this region. There are a lot of people making a lot of money and/or have accumulated a lot of money and/or have been gifted a lot of money. And there has been an ever-increasing inflow of international money as well.
Real Estate across the coastal southland is a golden long-term investment. I have owned properties since ’92 and never once did I feel like it was cheap or I was getting a steal. It always hurt and it was a struggle early on but man what a great call I made to suck it up and now I am golden. And I’m no genius. But I am continuing to bet on SoCal real estate.
I am no shill and I am not suggesting that anyone run out and buy that Echo Park shack, but in general I see no reason why homes in good areas are not going to be valuable and increase in value over the long term. If you are sitting on the sidelines, why didn’t you buy in 2008-2012? What are you waiting for? If you do not have the resources to make it happen, there is a big country out there, hit the bricks. But if you are waiting for some big crash in quality real estate, good luck.
Falconator – I am guessing the high price is for the land the house sits on? I am guessing if that house burned down the material and labor to re-build that house has to be less than $150k.
Falconator,
Perhaps some of us did the math in 2008 and found that it was cheaper to rent. I will be happy to buy when I can buy the same house I rent at parity. The housing market is terminally broken. Not just quality properties but low quality properties.
So true, rents are cheaper on a monthly basis in the so-called “prime” areas. It’s been that way for years. I don’t get the point of asking people why they aren’t buying now unless the inference is buy now or be priced out forever. If it’s not buy now or be priced out forever, then what’s the rush? Especially in a job market where mobility is becoming increasingly more valuable and long-term gigs aren’t to the level they were 25 years ago.
In my personal experience of buying properties (4 since ’92 and looking for #5 this year) it has always been pricier to own than rent. Others may have different experience. Nevertheless, in my area of San Diego your decision not to buy in ’08 but instead rent results in missing out on approximately $400,000 in new equity due to increased valuation, plus being 7 years into paying off the property. To each is own.
Because of this blog, i missed out on buying a home after the housing collapse when prices dropped 50%. That was my fault. I should have trusted my instincts. Instead, I listened to people here who said prices would fall further. My advice is, if you want a home and can afford one, then buy one. I just did and I love it. Yes, Im paying through the nose but it’s worth every frickin’ penny.And if prices fall again..then they fall again. Eventually they’ll come back up. And no, Im not a realtor/tard.
They will always trend up in SoCal, this is the weather and entertainment capital of the world. It’s 80 degrees out again, and -25 in the interior. Everyone wants to live here and BE here, and you sir are a winner.
Fred, quit blaming others for your mistakes. You make decisions based on comments left on anonymous blogs? WTF?
How about taking responsibility for you own actions. And using some common sense. Since when is buying a house such a big deal? Buying houses that are horribly overpriced and literally hanging yourself for the rest of your life because of the perception of “homeownership” leads the lemming right off the proverbial cliff.
This can be seen all over the world. Funny how everyone who buys crap shacks for 5 times their real value always thinks that “it’s different here”.
Since when did the housing option called “renting” or buying in a cheaper location NOT become available to you in the land of the free and home of the brave?
I believe I made it quite clear that it was my fault..when I said “That was my fault”
Also, the home I didn’t buy BECAUSE OF THE ADVICE ON THIS BLOG EVEN THOUGH I SAID AT THE BEGINNING THAT IT WAS MY FAULT is now worth $250,000 more today than it was when I should have bought it. So what the hell are you talking about? Crap Shack? Maybe. But it’s now a $650,000 Crap Shack.
Hopefully fred won’t find himself forced to sell in a down market.
fred, it’s still a crap shack. You seem to miss the point. Or, that was your point and why you’re mad. It wasn’t about buying a home, it was about the $650,000!
Seems that’s the reason you’re crying in your beer. Here’s a hint, you only really lose when you get greedy. But don’t feel bad, the whole world is going down the drain because of greedy people.
It’s as old as the Bible. Yet it’s “different” this time….
LOL!
When prices dropped 50%, you should have done the math no matter who’s saying what. That’s the only logical way.
I’m not buying now, not because of blogs like this, but because of the simple fact that it doesn’t make financial sense. Financial sense to me means if either my wife or I lose our jobs, we can still pay the mortgage… Right now this is only possible if we don’t eat.
L.A. has never had any “culture”. That’s because L.A. is a young city and for most of its existence, it was just a provincial town that had farms, orchards and Hollywood.
Even after WW II and the population boom caused by the war and the aerospace industry, homes were cheap and plentiful. But the place didn’t have any culture except for the aircraft and automobile heritage and the local quaint agricultural landscape.
Hollywood was just an illusion (and still is today). I grew up in West L.A. in a house that cost $12,000 in the mid 50’s. All the neighbors were working class folks; gardeners, factory workers and such.
Even in the 1960’s it wasn’t expensive to live in L.A. and the place still didn’t have any culture. L.A. was just an endless suburb–there was no central place and outside of the Hollywood Bowl and Disneyland (which most natives hardly ever went to), L.A. wasn’t all that interesting.
And the same hold true today. This real estate bubble has nothing to do with L.A. since it’s going on all over the world and in places that most certainly AREN’T like L.A. The bubble has been propelled by the notion that homes are an investment and not a place to live.
Well, look what happened in Tokyo. The houses in my old neighborhood are now selling for over $700,000. What’s going to happen to all of the dummies who bought those $12,000 stucco shacks (1100 sq ft) on tiny lots? What kind of future incomes are going to be necessary to keep these ridiculous values propped up?
Are idiots like the real estate shills on this board suggesting that everyone in L.A. will be making $500,000/yr down the road? There are thousands of homes just in my old neighborhood with the original owners still living in them, and they will be passing away over the next decade.
Who is going to buy all of these homes at these unrealistic prices? Sorry, but the wages of the population will never support even the current price levels. And everyone knows this.
And L.A. still won’t have any culture or unique vibe. It’s just an endless anonymous suburb not unlike a thousand other cities in this country. The only difference is, homes in most other places won’t sentence you to life in mortgage prison.
“The bubble has been propelled by the notion that homes are an investment and not a place to live.”
Nailed it on the head! The scary fundamental part is, it’s fueled by greed. And greed does not stop at real estate so I’m scared of where we are headed as humans. I guess the rapture will hit all the bubble states first!
I’m afraid that this may not end well. With Europe going belly up and Russia acting like, well themselves (as in drunken corrupt SOBs). The Islamic barbarians causing trouble everywhere and the Iranians itching to get their A-bomb, what could go wrong?
And we haven’t even gotten to China. Overvalued everything paid for with money that is being held up with huge levers. The good outcome is that we could just have a couple of real wars break out, as in WW III, except it will involve lots of countries with no discernible battle lines.
Mass civil chaos in southern Europe and who knows what in China/North Korea/South Korea and Japan.
No one living today has experienced REAL all out World War. Maybe this is just what we need. We could start by having our own version of urban warfare right here in the streets of American cities.
Who was here during the Rodney King Riots? That was like a game of tennis compared to what’s coming down the road. Just remember that Americans have more guns and ammo now than at any other time in our nation’s history.
Greed, breakdown of the respect for the law and people acting like animals. Check.
All kinds of back outcomes could be our future.
You get around zzy. You’re as sharply intelligent, and funny, as Trelaine, from original Star Trek (Squire of Gothos).
You grew up in West LA, you talk about the houses in your old neighborhood in Tokyo (and the prices there, selling for over $700K), the culture in Vienna, the opera…
I don’t disagree with you on many points, but LA is not putting in any claim for Capital of Heritage and Refined Culture and Origin of Classical Traditions.
LA is young and fun and excitement + many associated advantages for some, but I agree with you re debt, opportunities, over-pricing. You ask how house prices can be supported at these levels… well so far it’s be interest rates floored and loads of QE, and investment companies buying up, together with global investors goosed by cheap money, and believing savings are going to be wiped out…. I hold out in hope there will be a reckoning and house prices will crash back in low-mid-high prime.
zzy/aka: The Squire of Gothos/Trelaine: And they’ll all get the big bucks as in six-figure salaries to pay for their $850,000 crap shack homes. Which are right next door to the El Salvadorian family of 12 making a household income of $20,000/yr.
Brain: No, not my old neighborhood in Tokyo, I’m talking about my old neighborhood in West L.A.! The prices now are closer to a million dollars than $700,000. I only have relations in Tokyo.
My point is that it seems that every other person goes on and on about how GREAT L.A. is and it’s just B.S. I know this town like the back of my hand and L.A. has never been a GREAT place like the real shills here want you to believe.
What really made L.A. great in the old days (post WW II) would not even be recognized by the people buying homes today at these ridiculous inflated prices. The things that made L.A. great were all of the things that L.A. isn’t today–low cost of living, down to earth people with unpretentious jobs and aspirations, and cheap and affordable leisure activities like those provided by the beach, parks and a drive up the coast highway.
We used to fish in the Marina del Rey where Fisherman’s Wharf is now–there was nobody there at night and we’d fish right there. F-4 Phantoms used to take off daily from Hughes Airport and helicopters constantly buzzed overhead because they were built there.
In those days you could race through Decker, Encinal and Tuna Canyons with your car and not see anyone else on the road. Mulholland Drive was empty most of the time and you could blast down it from the 405 all the way to Hollywood.
Those were the days…
But L.A. isn’t Tokyo but people here think that house prices should be like those in Tokyo. Tokyo is a great city and L.A. will never be 1/10th as interesting or have the culture of Tokyo. L.A. is just a boring American suburb. But the property bubble that hit Japan and Tokyo are also one of the key factors in destroying Japan.
Even with property values plummeting over the last 20 years, the costs of housing in Tokyo is still outrageously high and young people can’t afford to live there. Japan’s demographic time bomb has gone off and people aren’t getting married and having children. One of the biggest factors in discouraging young people is the high cost of housing and living which is a result of the RE bubble.
Unlike America, Japan doesn’t have lots of land or space. With all of the problems Japan has, the bubble years is also causing a social disaster, not just an economic one.
So, if people here think that the sow’s ear called American crap shack houses and neighborhoods really has the intrinsic value of property in places like Tokyo, well they are just plain stupid. And look what the bubble brought Japan. A disaster.
Sooner or later the cheap money and asset bubbles will burst worldwide and just hold on to whatever. It’s already beginning with the commodity markets crumbling on all overleveraged ventures based on Biblical proportion greed. The music is going to stop one day and so I hope you people who bought your $800,000 crap shack 1950’s modern stucco boxes are going to be happy.
What is “everyone” going to do for a job if they were to relocate to this “Fantasy Land” city called L.A.? That’s right, they can be personal trainers and PA’s and hang out at trendy neighborhood coffee houses.
And they’ll all get the big bucks as in six-figure salaries to pay for their $850,000 crap shack homes. Which are right next door to the El Salvadorian family of 12 making a household income of $20,000/yr.
The streets are filled with homeless people who have come here from “everywhere” because it’s easy to be a homeless person in L.A. It doesn’t snow! And the trendy hipsters give homeless people $20 bills just to show how generous and humane they are (you know, it’s cool to give to the poor when you make $250,000/yr.
For the folks with slow minds on this board, this is all sarc.
I don’t know what land you live in, but I see Fortune 500 companies hiring university grads and paying good bucks for smart talent. That’s what keeps the income levels up in the city, and the home market moving and the BMW leases moving.
Fortune 500 companies are hiring university grads and paying good bucks for smart talent– in places other than SoCal. Large companies like Toyota have been fleeing the state for years!
Realist, you need to stop drinking the kool-aid it appears to be rotting both your teeth and your brain. You obviously have absolutely no idea what you are talking about.
“I don’t know what land you live in, but I see Fortune 500 companies hiring university grads and paying good bucks for smart talent.”
-The Realist
California in general has a toxic attitude towards big business. Can you say “Toyota”? With a few exceptions (Google and Silicon Valley), big business is leaving CA for greener pastures in the likes of Texas and other tax-friendly states. CA tax code and liberal agenda is VERY non-friendly to big business. More businesses are leaving California then coming in and they are taking thousands of jobs with them. Even the entertainment industry is finding greener pastures in Canada. I’m sure that if the majority of the players didn’t live here, the entertainment industry would leave too. Hell, even the adult film industry is leaving for Nevada due to CA red tape and politics.
“Joseph Vranich, an expert on corporate relocations, has counted more than 200 major companies with tens of thousands of employees that have left the Golden State over the last four years.”
More here:
http://dailysignal.com/2014/05/08/california-leavin-businesses-politicians-state-denial/
The thing I’m trying to wrap my head around, many of the very well read people on this board, mock people saying “This time is different” with all the insane buying — yet, the same well-read people are also saying that ‘this time it’s different’ — and that renting has become the smart thing to do.
If things haven’t really changed, then buying is the wise decision over the long term. And it’s not really even a close call.
Seems like you should be saving your ducats for a down payment on something somewhere and buying it as fast as you possibly can. There may be some fluctuations, but the overall trend is up. Anything else is trying to time the market, a fool’s endeavor.
What is in the word “bubble” that is so hard to understand? As in “Housing Bubble”? And do you really want to be a person who buys a bubble house?
Or, if you have the time or inclination, go lookup the Japanese real estate bubble/crash/deflation/economic/social/mess which that nation experienced and resulted in a wiped out generation or two/three/forever.
Why does a person need to buy now? What possible reason is there to buy an inflated crap shack that will always be in a crappy neighborhood with poor uneducated people and children?
Why not just pick up and move someplace better? Even if you are from L.A., there are plenty of housing options. And besides, how many households can afford even the median priced home in a halfway desirable area? What about affording the mortgage and also saving for retirement and the kids’ college fund?
I saw a story today that said that the vast majority of Americans don’t even have the cash to afford a $1000 medical emergency bill. How many people who have bought homes in the last 5 years in this town are stretched to the limit?
They’re putting all their income into a crap shack house and sweating bullets that they’ll stay employed in an unstable world economy. How’s the stress level? But living in L.A. in an inflated bubble priced 1950’s stucco box makes up for mortgaging your life away!
Hey, maybe they remind themselves at night that their retired neighbor paid $35,000 for exactly the same house they just bought for $750,000!!!! Yippy!
Boy, that must make one feel good, especially when property tax time comes as it is in a few weeks! Ain’t Prop 13 wonderful? So go ahead and buy a bubble. Bubbles never pop….
Depending on circumstances, renting remains to be the most practical option for some. That’s the same as it was during the last run-up in home prices as it has been in the current run-up. I don’t know how that’s claiming it’s different this time.
Interesting reading from the OC Register:
Housing shortage pushing home costs out of reach. They mention something about supply and demand.
http://www.ocregister.com/articles/housing-647037-county-orange.html
Texas tops California in ranking as most overvalued housing markets. WTF? How can that possibly be?
http://www.ocregister.com/articles/texas-647038-energy-hilts.html
I THINK THE REALIST DUDE IS SIGNALING A MARKET TOP……ACTUALLY I SHOULD SAY SCREAMING.
who played his role on this blog in 2007? the name escapes me but the verbiage is almost exactly the same
Well, if you want to burn money in the Silver Lake area, just off Sunset, you can spend nearly $800K on this 672 sf redone-to-the-tits gem: http://www.redfin.com/CA/Los-Angeles/3637-Effie-St-90026/home/7060554. That’s $1,148 per sf. Multiple offers within the first 24 hours on the market. Read it and weep. Silver Lake still seems to have a lot of high end flips and all-cash offers. I guess if you have the money and want to live in the area, but don’t need a big home … this is your perfect house.
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