[quote=kev374] . . . I am looking at solidly blue collar neighborhoods like Buena Park, California where asking prices for entry level single family homes, many of them 30+ year old homes, less than 2000 sqft, are north of $500,000. Are home prices north of half a million dollars in blue collar neighborhoods sustainable? If so, why? The current figures indicate Buena Park has a median income of $58,000 yet has a median home prices of almost 7.2X at $420,000. Realistic? Sustainable?[/quote]
kev, it is sustainable and will continue to be sustainable because your “statistics” don’t tell you that the median income includes a very large portion of retirees who paid 1/10th or less of $505K in the 40+ yo areas. But the house they bought THEN is very likely not the same house NOW (which is ostensibly “worth” $450-$525K). It has likely been remodeled one or more times over the years and/or has had many replacements, including the installation of newer, more modern systems.
This is the case in EVERY well-established town and city in CA and the disparity in incomes of adjoining neighbors is more pronounced in coastal counties. It is due to Prop 13 and its progeny, Props 58 and 193, which have a chilling effect on potential listings, leading to higher asking and sold prices. A dearth of listings in the most convenient areas like Buena Park (read: very well-established), along with the historically low fixed mortgage rates of recent years, pushed the prices up to what you see today.
The buyers in Buena Park today making $90K+ are getting a lower fixed interest rate than buyers of any generation before them. Today’s buyers making ~$100K and today’s renters making ~$75K in Buena Park are averaged in with today’s retirees in Buena Park with as low as $15K annual incomes to arrive at that $58-71K median income. Yes, you read this correctly. A retiree owning their own modest home outright in a coastal CA county can actually live on a modest SS income if they don’t use too much water for landscaping, have a ~$400 annual tax bill, have basic cable or “rabbit ears” and have “lifeline utilities.” They may not be able to waste a lot of gas driving around or travel too much, but they can easily live in their home until they become incapacitated or pass away. If that retiree’s partner and co-owner is still alive, their collective monthly SS might be $25K, which would allow them to occasionally travel to visit relatives where they will stay free. These are residents who have little to no other income besides SS and there are many millions of them. A very high proportion of them are homeowners.
In addition, many of these retirees have current annual property-tax bills ranging from $400 to $800 (yes, hundreds).
Thousands of well-established communities in CA have extremely low-income homeowners living a *comparable* lifestyle to their worker-bee neighbors except for the typically newer vehicles and electronics owned by the worker bees. The retired homeowners’ income levels skew the income levels for the community which “seems” to be too high-priced for its “median” income level but it is actually not given the composition of actual wealth (equity) of its longtime residents and current buying conditions.
For example, some of these retirees may have purchased their home new for $33K in 1975 and qualified for it with a $8-$12K annual income at a time when 10% fixed mortgage interest rates prevailed. Everything is relative.
If you haven’t read thru this recent thread, please do. It explains the reasons behind what you are complaining about better than I can:
kev, I really believe you can find a suitable property to buy in the inland OC areas you have been looking in. I don’t think you’ll end up with “buyer’s remorse” for buying in any of the locations you’ve posted about here. Convenience wise and proximity to job centers, it doesn’t get any better, especially in the price range you are shopping in. These are way better-located communities for the money than can be found in established, urban SD at that price point. Have you made any offers yet, and, if so, what was the result?
