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Are the Flippers Laying In Wait?User Forum Topic
Submitted by CricketOnTheHearth on October 23, 2009 - 12:16pm
We like to gloat over the "flopped flippers" who find themselves high and dry with an overpriced house they can't sell, but there has to be some number who successfully sold at or near the peak and then stayed out of the market for a while. These will be sitting on wads of cash, unless they lost it in the stock market in late 2008. In fact, I think we are seeing some of them now, coming out of the woodwork this summer to snatch the low-priced, now-affordable homes out of the grasp of poor schmoes who were just trying to buy a place of their own to live in at long last. I've been looking over a number of places to rent, and found that most of them seem to be owned by people who bought them to rent and have never lived in them. It makes me wonder how much of the housing stock out there is in the hands of people like these, who own 2 and 3 and even 10 properties, and rent them out, often to the selfsame people who would rather buy their own if they could only have a chance. Has it always been this way in Southern California or is this a new trend? It seemed to me very scarce back in my home town in the MidWest, where most people owned their own homes and those who rented, lived in apartment complexes. So when the rest of the market bottoms, will more of these so-called "investors" be jumping in there, with their all-cash offers, punking those of us who want to buy a place to live in, and forcing us to miss our chance and be renters forevermore? Or will the idea of buy-to-rent-out be thwarted by the current conditions in the rental market? As Calculated Risk points out periodically, vacancy rates have been climbing all over the country, including here, and it is forcing many landlords to lower their rents slightly. Mr. Mortgage or Dr Housing Bubble (I forget which) poo-poo'd the idea of the banks renting their REOs out for this reason, saying the banks would be renting into a renter's market and creating even more of an oversupply of rental property than there is already. Certainly one by-product of the sucky economy and high unemployment is that people (such as myself) will be moving in with roomates and sharing rent, thus opening up more vacant spaces in the rental market. Also due to the sucky economy, some 9% of the Mexican immigrants in SD County have left-- out of 300+ thousand total, this represents a decrease of about 1% of the county's total population. I think these workers were pretty robust at propping up rental rates, too. As a friend of mine from Poway once commented, "landlords love them, because they're quiet and pay their rent" and with 10 or 12 to a house, each sees a rental hit of only a couple hundred dollars a month. When 10 people can team up this way to rent a house for $2400 or $2600 a month, this puts upward pressure on rents. But now their jobs are drying up, and apparently some are leaving in search of greener pastures, or just home. This week I looked at a condo for which an ad has been posted on the mailboxes of the complex for weeks, asking $1540/month rent. Seeing the ad being there so long, just for grins I called the owner up and offered $1400/month. To my surprise, they showed interest in going as low as $1450. When I looked the unit up on Zillow, I found that they had bought it in 2003 for $270,000-- meaning with HOA and taxes, they need that $1540 to break even with rent-equivalent and at $1450, would be slightly "underwater". (Not necessarily in actual-cash-flow terms, that would depend on whatever down payment they used.) Similarly, one of the apartment complexes in the area has been offering rent specials as low as $1350/month on Craigslist (the manager was rather rude to me, though, so I don't plan to give them my business). This also implies to me some weakness in the rental market right now. So what do you think? Will flippers come out later on and battle with those of us who are just trying to buy a place to live in, or will the market fundamentals discourage them?
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weak price growth and rising unemployment vitiates against
flipping.
sure if you see a really cool warehouse and you want to put in
lofts sure, but expect it to sell at 200+/SF not 500+
sure foreclosed propertes that need some clean up you can
burnish and sell but the market is moving slow
The flippers/speculators have been out there in large numbers over the past year. We saw them coming back into the market in February of **2008**.
Yes, what you're worrying about has already been happening. This is where many of these "all cash" offers are coming from.
Though I'm a housing bear right now, and don't like programs that subsidize housing purchases for the poor (especially low down payment programs, and gimmicky interest rate mortgages), I DO believe home ownership should be a goal, as it does create more stable communities, and it can indeed provide a more stable living situation for many families. If the govt truly believed in affordable home ownership, they would eliminate Prop 13 protection for investment properties and second homes (possible exemptions for multi-family dwellings designed as rentals, and for SFHs that agree to rent control laws). Also, I would eliminate the ability to deduct mortgage interest and property taxes on rentals (but with the same exemptions as above).
There is no need for taxpayers to subsidize a landlord's profits, and that's what's happening with both Prop 13 and MID and property tax deductions.
My aunt bought 5 SFHs in the last two years with positive cash flow after taking in the rent, and paying tax. However, she is in for the long term. Not flipping.
all cash investors != flippers
a lot of flippers during the bubble bought homes with other people's money.
I think you need to differentiate between flippers and people purchasing to rent them out.
Flippers buy, spend some money to theoretically raise the sales price, and sell - in a short time frame. They don't plan to hold the house, their business model is get-in-and-get-out.
Landlords buy with a different criteria - they look at cash flow vs expenses.
What seems to be the underlying issue isn't whether they are flippers or landlords - it's that these houses are being bought by people other than you.
My only advice - keep saving. Keep looking for opportunity to purchase a good value. If you keep getting outbid - perhaps you can't afford the house. Or perhaps the person who bought paid too much. Either way - consider it a dodged bullet... You don't want to be in a house that stretches you too much. You don't want to overpay.
Being resentful to people who see opportunity and take it isn't going to change the system... just give you a headache or ulcer. Life's too short to give yourself self induced stress.
Flippers buy, spend some money to theoretically raise the sales price, and sell - in a short time frame. They don't plan to hold the house, their business model is get-in-and-get-out.
Landlords buy with a different criteria - they look at cash flow vs expenses.
What seems to be the underlying issue isn't whether they are flippers or landlords - it's that these houses are being bought by people other than you.
My only advice - keep saving. Keep looking for opportunity to purchase a good value. If you keep getting outbid - perhaps you can't afford the house. Or perhaps the person who bought paid too much. Either way - consider it a dodged bullet... You don't want to be in a house that stretches you too much. You don't want to overpay.
Being resentful to people who see opportunity and take it isn't going to change the system... just give you a headache or ulcer. Life's too short to give yourself self induced stress.
IMHO, speculation is fine when that speculation doesn't adversely affect people who have no control over these markets, yet need the goods/services from these markets in order to survive.
The difference between acceptable speculation and unacceptable speculation depends on whether or not the speculation involves a want or a need. Want to buy a billion dollars worth of MSFT stock (either for the dividend or capital appreciation)? Great! Want to speculate on whether or not the Giants win? Super! Gold, copper, Intel stocks, corporate bonds, etc. are all open for speculation, and I couldn't care less if people make or lose money there (as long as they don't ask me to cover their losses)
Want to speculate on the price of water, clean air, oil, housing, food, or other basic necessities? I have a problem with that.
Just MHO -- it's the socialist in me. ;)
Flippers buy, spend some money to theoretically raise the sales price, and sell - in a short time frame. They don't plan to hold the house, their business model is get-in-and-get-out.
Landlords buy with a different criteria - they look at cash flow vs expenses.
What seems to be the underlying issue isn't whether they are flippers or landlords - it's that these houses are being bought by people other than you.
My only advice - keep saving. Keep looking for opportunity to purchase a good value. If you keep getting outbid - perhaps you can't afford the house. Or perhaps the person who bought paid too much. Either way - consider it a dodged bullet... You don't want to be in a house that stretches you too much. You don't want to overpay.
Being resentful to people who see opportunity and take it isn't going to change the system... just give you a headache or ulcer. Life's too short to give yourself self induced stress.
IMHO, speculation is fine when that speculation doesn't adversely affect people who have no control over these markets, yet need the goods/services from these markets in order to survive.
The difference between acceptable speculation and unacceptable speculation depends on whether or not the speculation involves a want or a need. Want to buy a billion dollars worth of MSFT stock (either for the dividend or capital appreciation)? Great! Want to speculate on whether or not the Giants win? Super! Gold, copper, Intel stocks, corporate bonds, etc. are all open for speculation, and I couldn't care less if people make or lose money there (as long as they don't ask me to cover their losses)
Want to speculate on the price of water, clean air, oil, housing, food, or other basic necessities? I have a problem with that.
Just MHO -- it's the socialist in me. ;)
The logical conclusion then is to abolish private property, isn't it? As long as there is private property there will be some people excluded ... or are you going to have some extreme open door policy and be a different kind of property owner?
On the other hand, that Msft stock is going to go up or tank based on speculation by management on real estate,acquiring and utilizing finite natural resources, energy use,human capital, and a host of other things you think should be off limits.You are just speculating that other NON-SOCIAlIST speculators will do well for you. Microsoft is also non-discriminatory as to where their product is used. I am sure many cluster bomb factories get great deals on Microsoft products. While I don't mind entertaining the idea that hording real estate is not the most spiritual path that a person can take, when done with a reasonable application of character it can be at least as moral as Microsoft.
I think it is worse to speculate on paper gains which will be attached to some misery index somewhere and especially with the definite purpose of avoiding any real work or service to anyone.
I think you just have a quirky attitude about speculation in real estate for whatever reason.
It wouldn't be quirky though if you were an acetic of some kind but that doesn't seem to be the case.
Not sure what you mean by your last two paragraphs???
Anyway, my personal belief is that basic necessities should not be controlled by a handful of people -- whether it's real estate, water rights, medicine, food, clean air, etc. Private property is fine, but control of finite resources leads to problems with monopolies and manipulative speculation which can cause great injury to many people who are powerless to do anything about it.
I personally prefer finite basic resources that constitute basic necessities either be owned/controlled by a democratic government or heavily regulated by the government. Yes, this includes real estate -- a nation's most precious finite resource, IMHO.
Since when is RE finite? Have you've been to places like Fresno? The are flat developable land everywhere. Btw, owning RE is not a necessity. It's a luxury. People can rent.
CAR I usually agree with you on most points but cannot agree with you on the real estate aspect.
I do not believe real estate is a precious finite resource. It is affordable in pretty much every part of the country with a few exceptions. We choose to live in this vastly overpriced market by free choice. However that is our own choice right?
Similarly there are even affordable homes here in San Diego, just in neighborhoods that you or I do not want to live in.
If I go to the trustee sale to buy a home for cash and then resell it I am a flipper right? However does that make me some criminal? What have I done wrong?
If I am sick of getting 2% in a CD on my cash and I can buy a home at trustee sale and make 20% on it, shouldn't it be a no brainer to do the latter? Shouldn't I have the freedom of choice to do that?
I think that nobody is forcing anyone at gunpoint to live in San Diego and tolerate these crazy home prices. I don't like them and have been priced out of the neighborhoods I want to live in but I would much rather have a free market rather then having the government control/own housing.
Lest we forget it is the government that wants to reinflate the market.
Anyway, my personal belief is that basic necessities should not be controlled by a handful of people -- whether it's real estate, water rights, medicine, food, clean air, etc. Private property is fine, but control of finite resources leads to problems with monopolies and manipulative speculation which can cause great injury to many people who are powerless to do anything about it.
I personally prefer finite basic resources that constitute basic necessities either be owned/controlled by a democratic government or heavily regulated by the government. Yes, this includes real estate -- a nation's most precious finite resource, IMHO.
I sort of see what you are saying that you believe. I think you are treating real estate investor speculators as less valid without any reasonable dis-qualifiers compared to other speculators when there really is no argument for moral or social value distinctions, given current realities.
Nationhood is about controlling finite resources for the few more than any other institution in the world. Let's get rid of that. I think about the world back when there were real cultural differences and geography meant something more than what military or economic strategies could be imposed. Those days are gone. Why pretend we people of the world are different from each other anymore?
Of course there is a lot of undeveloped land in the U.S. Hopefully, we won't develop all/most of it, because it's one of the things that enables us to be self-sustaining (agriculture). Still, until we are able to colonize distant planets, land is indeed finite.
Yes, people can rent, but I'd much rather see a society where everyone has equal access to ownership, without the distortions caused by all the speculators -- be they flippers or land developers who control many thousands of acres in high-demand areas.
I do not favor the perpetuation of a system that enriches the landed gentry at the expense of everyone else.
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The ownership of land has historically conveyed not only social and economic power but also political power; the term "landlords" is instructive. Government has often, albeit to varying degrees and in varying ways, been controlled by the owners of real property. Such has been an institutional remnant of feudal and post-feudal societies in Europe and comparably in other continents. The distribution of property, largely in the form of land, with which the modern economy commenced, the lasting vestige of earlier social forms, has channeled the organization, operation and performance of capitalist and other modern economic systems.
http://findarticles.com/p/articles/mi_m0...
CAR I understand the frustration but what difference does it make whether it is land that is owned, or money, or energy, or water...
So should the guy who is a slacker get that same "opportunity" to own a home as you do? If not where is the line drawn? Should it be government that sets the magic line?
If EVERYONE has equal access to ownership, should everyone have equal access to everything? I am not so sure I agree that the "flippers" have caused this entire mess. Maybe it was the government pushing institutions to lend to people who could not buy in the first place? Do you honestly blame this entire mess on flippers and speculators?
Furthermore do you honestly think that the government is acting in YOUR best interest or in the interest of any Joe Citizen?
Look, the government had the opportunity to make the tough choice a few years back. They did not HESITATE to make the wrong choice.
I would urge you to review the link that Rich has provided on the home page that is the Socialism, Facism, Capitalism, link on Naked Capitalism.
Again, I agree with your frustration but I think it is misplaced and you are not really addressing that there are other cities you can live in with cheaper housing. I know it all sucks but...I am just finding it hard to think that adding yet another portion of the free market for the govt to become owner of or provide further regulation is a great idea.
I don't have an answer but I don't think that is the correct one.
Where there's a will, there's a way. If one can't afford the area one wants, guess what, there are other areas one can afford. One can also work harder/smart to accrue more money to buy the property they want. Yes, land is finite, but it'll be awhile before we use them up. Then we can always build up. Anyone can be landed gentry, if they have the smart, the risk appetite, and the luck.
CAR, do you feel that everyone is entitled to have a house in La Jolla at Temecula's price? If ownership is so important to those renters, they can always move to a cheaper area. There are plenty of other places that one can afford to buy on a minimum wage. I can't help but feel like you think everyone is entitled to these luxury.
"Equal access to ownership" does not mean slackers can buy La Jolla homes at Temecula prices. It would be ideal (IMHO) if a great majority of people could buy homes near jobs that can support them and their families in a middle-class lifestyle (not Hummers and big screen TVs)...wherever that may be.
SDR, you and I agree on the cause of the current problems (loose lending), but it takes the other side of the equation (speculation) to complete the destruction. If ALL buyers refrained from speculation and avoided taking on too much debt, it wouldn't matter how much money lenders were willing to lend...without willing borrowers, there would have been no housing/credit bubble. Unfortunately, greed exists, and **both** borrowers AND lenders have to be regulated because the actions of borrowers and lenders have potentially grave repercussions for society at large.
I'm probably not making myself clear. This is not about being bitter or upset because of our personal situation. We can personally afford almost any area in San Diego, but are **choosing** not to buy because I believe we still would stand to lose a lot of money in the areas where we want to buy. I'm talking about a theoretical situation, not a personal one.
I think most middle class families can buy a home near where they work now.
Well I guess we just agree to disagree. However there are flippers out there, alot of them. They are purchasing homes at trustee sale and reselling them. Personally I see nothing wrong with what they are doing. As for what has happened in the past, I guess I do not distinguish from flippers, speculators, people who could not afford a home but were qualified for them, or even the people who can afford a home and are choosing to walk away.
The biggest problem as we both agree was incompetence in the underwriting process, lending guidelines, fraudulent ratings of the securitized instruments, on and on we go right? To pick out speculation and flipping as a component of the equation, that if removed, would have prevented this situation, is just not an opinion I share. However it is only an opinion and I don't have raw data to sift through to see what fraction are speculation or not. Off the top of my head I would be willing to bet ya a dime that there were just as many dodo homeowners that ATMd there home as there were speculators. No statistics but just a guess.
Anyways I see lots and lots of people at trustee sales making money... I believe it is only a temporary thing but it is happening. Also I see alot of investment clubs and syndicates taking investors and pooling money, buying homes and making money. What about someone like Ramsey Su? He is an investor.
I guess I do not view the flippers as any more of a scourge then all of the other suspects.
CAR, Didn't you sell your house because you speculated that it would benefit you in the long run? You bought it for less than you sold it for and got rid of it for financial gain (protection against reversal in your equity position) ...or in other words, flipped it?
SDR,
Just read the article from Naked Capitalism, and it was excellent! Thanks for noting it, as I would have missed it, otherwise.
Agree 100% that we had the opportunity to finally do something to fix many of our problems last fall (2008), and I've been very frustrated ever since because no matter how many of us were calling/faxing/writing our representatives and other regulators, they made it blatantly obvious whose interests they served.
This quote from the NC article is right on target:
In fact, the big banks and sellers of exotic instruments pretended that the boom would last forever, siphoning off huge profits during the boom with the knowledge that – when the bust ultimately happened – the governments of the world would bail them out.
http://www.nakedcapitalism.com/2009/10/g...
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This is largely why I've come to have more socialist (very different from communist!) leanings. When a small group of wealthy people can easily gain control over finite resources that are basic necessities, they control the laws, the wealth, and the lifestyle of an entire population. People with this much power are **always** dangerous, because they will always seek to maintain and/or grow their wealth and power over these resources and the people who depend on them. IMHO, basic resources, infrastructure, etc. should be owned/controlled by "the people" -- or at the very least heavily regulated -- so that society is not decimated by the greed of a few, manipulative, powerful men.
Yeah I here ya....It is really really hard for me to sit and keep espousing the benefits of a free market when it is a consistent realization that greed ultimately corrupts and leads to the downfall of that same market.
I don't know man... doesnt seem like there is any way out... in the utopia that is socialism or communism or whatever "the people" never really had it well. In that same vein, there were those privileged few. Seems the same way with our free market as well.
Like I said... no easy answers my friend. My wife and I have done the same thing with our reps as well.
I wasn't intentionally trying to time the market. We had a growing family and needed more room (former house was under 1,300 sf), and wanted to move to a safer neighborhood closer to work. We had originally made an offer on another house, but backed out because of some issues during the inspection, and I wasn't comfortable with market prices. This was at the peak of craziness (spring 2004), and we sold our house within an hour of listing it, so needed to find a place to live. I knew prices were too high, and thought so since 2001. I also saw how people were taking on far more debt than they could ever pay off, and had a number of people tell me about their "great new mortgages" where they only had to pay 1.5% per month! That was obviously not going to end well (and yes, I told them so), so we rented and waited.
Even over this past year, I was perfectly able to engage in all the flipping, as I follow the market closely and could see where things were going, but refrained from doing so because I don't believe in it on an ethical level. I have looked into bulk sales, but mostly because I just want the inventory to come onto the market. It's frustrating to see the amount of manipulation going on because so many people are going to be harmed by it, IMHO.
I see, I do recall now that you mention it, that you solicited the group about joining up to make bulk purchases.
Submitted by CA renter on March 20, 2009 - 4:46pm.
Totally understand where you are coming from, SDR. It would be nice if we all could get an extra 12 hours a day to do this.
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BTW, for anyone interested in bulk purchases, while I think it's a good idea for us bubble-sitters to get into an investment pool, the poster above just registered today, so I would be very careful about e-mailing him/her without further research.
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While we're on the topic, anyone here interested in a bulk buying pool? Davelj, that might be directed at you, too! :)
BTW,Despite my esoteric diatribes, I do not have the Big Picture answers either. Maybe we really, as a species, are not sophisticated enough to have the answers, or put them into place. Maybe there are no answers and we only think there are. Probably we are something like a cross between a monkey and an ant.
I just posted that stuff to make a case for my own confusion about your "ethical" position on real estate speculation. The microsoft thing was another. You also claim to dislike the most constructive applications of socialism in real estate, namely assisting the working poor into ownership.
Like Adam says, there is a lot to be frustrated about. The manipulations at socializing the losses for the sake of banks makes it harder on the honest, hard working, small scale entrepreneur as well the would be "owner occupied" buyer. This will pass though.
I think you raise a good question on prop 13. While I don't want it to change ,it does seem fair/reasonable when it applies to aging homeowners but perhaps it is an unwarranted tax break to rental unit owners.
Like Adam says, there is a lot to be frustrated about. The manipulations at socializing the losses for the sake of banks makes it harder on the honest, hard working, small scale entrepreneur as well the would be "owner occupied" buyer. This will pass though.
I think you raise a good question on prop 13. While I don't want it to change ,it does seem fair/reasonable when it applies to aging homeowners but perhaps it is an unwarranted tax break to rental unit owners.
What I'm theoretically proposing would **help** the working poor own their own homes by eliminating many of the distortions caused by wealthy entities hoarding finite and highly desirable land. I think, theoretically speaking, there should be a cap on the amount of land that is controlled or owned by one entity/person. I do NOT generally believe in government subsidies for housing, because I believe affordability comes in the form of lower prices, not gimmicky rates/mortgages, or govt subsidies.
Yes, I am absolutely in favor of Prop 13 protection on a single primary residence only, with possible exemptions as noted above for multi-family and SFH rentals that comply with rent control laws -- so the benefit filters down to the low-income tenant instead of a landlord's profit.
What I'm theoretically proposing would **help** the working poor own their own homes by eliminating many of the distortions caused by wealthy entities hoarding finite and highly desirable land. I think, theoretically speaking, there should be a cap on the amount of land that is controlled or owned by one entity/person. I do NOT generally believe in government subsidies for housing, because I believe affordability comes in the form of lower prices, not gimmicky rates/mortgages, or govt subsidies.
Yes, I am absolutely in favor of Prop 13 protection on a single primary residence only, with possible exemptions as noted above for multi-family and SFH rentals that comply with rent control laws -- so the benefit filters down to the low-income tenant instead of a landlord's profit.
Isn't it a little ironic that you don't support government subsidies for housing, yet you absolutely in favor of prop 13?
Thanks, one and all for your comments.
CA Renter, I lean toward a lot of your opinions. Re the comments of AN, SD Realtor, and others, regarding how a person "should just save up", and "why should a slacker get to have a house"-- While these comments make sense in other parts of the country such as Texas, the Midwest, etc where the housing markets are more "normal", I am really wondering if they hold true here.
The median income in SD is $72,000/year at last reckoning, which implies a house price of $216,000 under "normal" mortgage debt ratios. In most parts of SD county that are anywhere near me, this will get you either an OK condo or maybe a little house in a skeevy neighborhood. In Texas or the Midwest, $216,000 will get you a nice to more-than-nice middle-class SFR, with a lot bigger yard than you can find around here. What I'm saying is that there are a lot of hardworking non-slackers in this county who are still priced out of decent housing. Yes, they can buy cheaper houses in outlying areas-- but the long commutes will eat up their savings in terms of gas and 2 hours lost out of their lives every day.
As far as people buying up houses here to rent out-- taken singly, each individual is innocuous. But how many of them are there in the aggregate in San Diego County, I wonder? Are there thousands? Does it mean that there are many more thousands (3X, 5X, ??) of people in the county who are being *forced* to rent because the dwelling they could have bought, was bought by a would-be landlord instead? How much inventory has been/is being soaked up by landlords, and is being held off the market to be rented out to the very same people who would rather buy the places? I suspect this is where CA Renter is coming from too.
I know the stat is that something like 45% of people in SD rent, versus 40% in other parts of the country, so maybe not that many houses are being "soaked up by landlords"... I have also read in the past that there is a shortage of rentals in SD county (read, apartments), so are all these "landlords" doing us a favor? Taking condo-converted apartments and turning some of them back into rentals?
Does it boil down to a shortage of housing here, and people fighting/bidding over the scraps that come out? I just don't see this kind of market happening in the Midwest. There it seems like houses are plentiful and cheap. Maybe it's because populations are stable/declining in most Midwestern cities, and SD county has been growing by a half million people per decade for the past 50 years. If so, why were SD/CA prices low until the '70's, and only then they started shooting up? What changed in the '70's? Why are housing prices of 6X, 7X incomes now the "new normal" here?
CricketOnTheHearth, Prop 13 started in 1978. I'm not sure if that's a coincidence or not, but I think that could be one factor. Just look at other states that don't have prop 13, like Texas. What is so different in Texas vs CA that cause CA property to run up faster here than TX? Why can builder build a $100-200k house over there and still be profitable while they can't do that here? Price is determine by supply and demand. Increase supply above the demand and price will fall. Why control demand while you can easily increase supply? I think it's retard that you limit how many house a person can buy. Limiting the amount of property a person can own is almost like limiting how many car a person can buy, or how many trip a person can take, or how many pollutant a person can create. In CAR's mind, clean air is a limited resource just like land.
CAR,
Well anyway, you specifically said you did not like low downpayment programs for poor people. I can't figure out how to align that with your concerns for them or your socialist views.
Anyway, I know I should drop it and I will.
Sorry Cricket but it is not just "here". Go to Los Angeles and try to live on the west side. Go to the bay area. Trying to compare the coast of California to anywhere other then the coast of California is simply not realistic. Housing is so expensive here because people payed to live in those areas.
I feel like I am missing something. Please point out why I feel like the laws of supply and demand dont apply anymore?
AN,
Have you ever been to Texas? Nothing but land there, as far as the eye can see.
California has approximately 91 people per sq. km., and a total population of 36,756,666 living in 403,931.96 sq. km.
Texas has approximately 35.88 people per sq. km., and a total population of 24,326,974 living in 678,051.12 sq. km.
http://www.worldatlas.com/aatlas/populat...
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Personal Income Per Capita in Current and Constant(2000) Dollars By State: 1990 to 2005:
California is #9 in 2000, and #11 in 2005
Texas is #23 in 2000 and #27 in 2005
http://www.census.gov/prod/2006pubs/07st...
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Some history on Prop 13 (and why I vehemently support it):
In 1966, after an assessors' scandal, the Legislature enacted a reform bill (AB 80) to keep assessments at a uniform percentage of market value. As a result, during the 1970s, when real estate values escalated rapidly, so did home assessments.
By 1978, with home ownership threatened by escalating property tax bills, the fate of Proposition 13 was sealed. The tax revolt was born, aided in part by the release of new assessments just prior to the election showing large increases in assessed value for many taxpayers.
http://www.caltax.org/research/prop13/pr...
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California's housing market has historically been much more volatile than markets in other states. Just as we've seen this past decade, speculators, "investors," and immigrants (foreign and domestic) have served to drive up housing costs for native and long-time Californians. In response, California residents passed Prop 13 so that residents could no longer be "priced out" of their own homes.
This is where I strongly support private property rights. If you bought a single, primary residence, no speculator or new resident should be able to tax you out of your own home.
Like adjustable-rate mortgages, variable propery tax rates/costs make budgeting nearly impossible. Under Prop 13, buyers **choose** their tax payments when they buy a house. If all buyers were smart enough to budget for the full PITI payment, perhaps they'd learn not to overpay for their properties. They should not offer to pay a certain tax when they purchase, then complain about it later on, when the taxing authorities make they comply with their agreements.
Prop 13 protection for seniors and other prudent buyers does not bother me. It does bother me when we allow tremendously wealthy people to buy up all the homes, then force people to rent from them so the wealthy can secure a stream of income. Prop 13 effectively subsidizes their **profits** which is something I am very opposed to.