Los Angeles County is massive. It is also a renting majority county. L.A. County is the least affordable county based on price-to-income ratios. And when things get out of control, all of a sudden every area is gentrifying and every property is one step away from being a Taj Mahal. This summer the housing hounds have been released and all of a sudden real estate is the greatest deal in town. Housing can do no wrong and for those priced out, you must dig deep in those wallets and make that bet! You only live once! Carpe diem. No one ever regretted buying California real estate aside from all those that regretted buying California real estate. Today we’ll take a trip to Huntington Park. According to the real estate gods, gentrification should be happening in every niche of L.A. County.
One of the biggest pitches about buying real estate is the inevitable buildup of equity overtime. Of course the data usually used shows people staying put for 30 years instead of the real world figure of an average of 13 years. Lives change. People move. Jobs come and go. Millennials are largely staying with parents and there must be a way to get them out. In the Bay Area, you always hear politicians saying something like “it is hard for a teacher or fire fighter to buy a home†but rarely mentions that the typical crap shack will cost you $1.2 million. Since when did “middle class†jobs demand living like a millionaire? But never fear. The wonderful ideas of a mania are now popping up left and right like incredibly low down payment loans and a new one, crowd funding your down payment.
The latest homeownership rate figures show an interesting dichotomy to the housing market. While prices are up, the homeownership rate is down. And down significantly. The homeownership rate is now at levels last seen 50 years ago (the latest figures are the lowest in a generation – each update seems to bring a new low). This flies in the face of all the house humping that is being pushed out into the market. What we do know is that Millennials are simply not buying numbers in any “pent up demand†form. In fact, a record number of Millennials are living at home with at least one parent. The data is interesting since the drive is being pushed by older Millennials, those that should be buying. Younger Millennials are likely in college accumulating back breaking levels of debt. There has been research showing that student debt is a hindrance to buying a home. So are we simply creating a new generation of boomerang kids?
Most housing reports leave out examples of what you are actually getting for with your money. That is understandable but the press does a poor job of looking beyond the overall trend. Maybe if they showed a picture of the property, they would actually knock some common sense into people. They can still ask questions like “how much did you pay for that crap shack?â€Â That might be a starting point. Instead, what you get is a play-by-play commentary of where we are at. The market today is inflated and we are living through a rental revolution. The stock market has been on a non-stop move upwards since 2009. We have yet to face any small correction and as many people are seeing this year, expect the unexpected. One easy way to see the mania in the market is to look at small homes for sale and how they are being pitched. Today we take a look at a small home in Orange.
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