[quote=FlyerInHi][quote=HLS]The housing market is a HUGE part of the economy in this country and correlates with the general mood of the country and a sense of wealth & security for many.
The govt has stepped in to create a market for mortgage backed securities along with govt subsidies, guarantees and insurance.
If there was no financing available for houses and
buyers had to pay cash, is there any doubt that houses would sell for less ?
If 50% down was required, they would sell for a bit more. If 25% down was required, prices would be even higher and when you get to almost nothing down, the prices become inflated.
What’s ironic is that the responsible ALL CASH buyer who has worked hard and saved to buy a house,
has to pay the same price that someone with crappy credit and no down payment has to pay.
[/quote]You’re assuming that all else is being equal.
If there was no financing, the building industry would not be as huge, as you put it. There would be lower economies of scale and costs would be higher overall.
We now have large builders who can technically put up thousands of houses very quickly.
We need financing to generate economies of scale for constructing the commodities that houses are.
I think that zoning, building codes, and lack of supply of new houses, have much more to do with prices.
There’s a “housing establishment” that’s used to doing certain things that acts to protect its way of life. If we had innovative prefab houses and looser zoning restrictions, house prices would drop.
If you could put a prefab container house in your backyard, you could rent it out to a single tenant who would enjoy a nice modern, comfortable space.
Creative thinking can help solve the housing shortage very quickly.[/quote]
The problem here is that, historically, “prefab housing, mobile homes and RVs” have only been allowed in very specific micro areas of the county. And over the years, many of those areas have banned them with rezoning (and the “rent control” which accompanied many of these parks). Yes, “prefab houses” in SD County are built only in specific subdivisions or “parks,” governed by HOAs. The owner of the “prefab” house typically DOES NOT OWN THE LOT! They often still have to pay “space rent” + HOA dues. The NCC USED to have several small mobile home parks right along the coast where today the vast majority have been sold off due to zoning changes. South County used to have several more mobile home parks than it currently has. The parcels of some of those sold-off parks are now zoned commercial.
A person or family who feels they need to “live on the cheap” this way cannot expect to live on the coast, at least not “permanently.” In San Diego County, they can expect to live in Otay Mesa, unincorporated East County or Inland North County. There are only a handful of parks in the City of San Diego, the largest being in Otay Mesa or bordering it.
All of these types of cheaper housing are abundant in many flyover states which consist of mostly plains. If this is the way a family feels they have to live in order to survive, then those places are the best places for them to move to, imho.
I disagree with HLS that the “responsible cash buyer” has to pay the same as the FHA/VA buyer for the same house. In CA coastal counties, the negotiated price between an all-cash buyer and a seller is entirely dependent upon the desirability of the micro-area the property is situated in along with any recent nearby sold comps.
This is assuming a “traditional sale” free of lender approval/involvement.
