The housing madness is back permeating throughout the Westside of Los Angeles. Culver City is back on the radar for having a home built during the Great Depression selling for a price that is even higher than prices seen during the peak of the bubble. It is an interesting market in the sense that sales are not all that high relative to the action on the price front. Much of this is low inventory low interest rate fueled mania in SoCal. The Fed and banks are milking this for everything they got and QE3 is there to provide the fuel. Whenever the Fed gets involved however you can rest assured the market is going to overheat like an old Chevy on a blistering hot day. The movement in prices is dramatic in nearly every corner of Southern California. The only issue is that household incomes are not moving up. Today we salute you Culver City with our Real Homes of Genius Award.
It is still amazing how few people realize how subsidized the housing market really is. I have talked to people that walked into a too big to fail bank, received a government-backed mortgage yet assume this is somehow the “free market†at work. Even after pulling up their loan on a public Fannie Mae database they still want to believe they are participating in a free-market. Why? Ultimately it is a direct benefit to their bottom line. The housing market lost any free-market label post-Great Depression. Plus, that bank is only able to function courtesy of rewriting accounting rules and trillions of dollars in emergency loans. For over a generation the loans that were made were conservative, required a large down payment, and came at a time when household incomes were rising. We can argue the merits of government-banking intervention (i.e., the Fed with QE3, mortgage interest deduction, etc) yet the market is now fully addicted on all these external factors. A Pandora’s Box has been opened and now every action that is taken is more extreme and more permanent. Yet the housing market of today is nothing like the one many baby boomers grew up in and eventually purchased. Demographics and stagnant incomes will create different variables for the housing market going forward.
The hipster mania continues in Silver Lake. Southern California is such an interesting place especially when you roam around Los Angeles. The entertainment industry being so close must create a slow moving cloud of manic optimism and apocalyptic failure whenever bubbles emerge. The oscillation between decline and bewildering dashes to purchase has been going on for well over a decade. People again seem to be fine that household incomes are stagnant yet somehow rents and home prices are all rising up. Did you notice gas prices in SoCal? They’re inching close to record levels. Notice the cost of the quality colleges in the area? Not exactly cheap. Of course all of this is being financed with easy money courtesy of Big Ben Bernanke. I had to post this property in Silver Lake because it shows the madness of the current market. Today we salute you Silver Lake with our Real Homes of Genius Award.
The California housing market is back to being a flipper’s paradise. A combination of low mortgage rates and incredibly low inventory is providing a very fertile ground for current sellers. I was having a talk with someone about the Irvine housing market and how quickly homes are selling. Irvine is a very interesting market in that a large portion of sales come from the condo segment. You also have a good amount of international demand for the area. The current demand for housing in Irvine is very reminiscent of the days of the housing bubble. I’m reminded of some of the international buyers coming to new developments with cash in hand to buy places before they were even up. Bidding wars are common and buyers are now offering bids even over the asking price. Why? Inventory is very low and sales are increasing. So if you are looking to buy in this market expect insanity and gear up. Let us take a look at the market more in depth.
Subscribe to feed
