[quote=Reality][quote=flu]Here’s food for thought. If loan standards are still strict, what is allowing people to purchase expensive RE here in SoCal….
Or are we now assuming lending standards aren’t so strict….[/quote]
Here’s food for thought. There’s no inventory. Of course prices are high. It doesn’t matter how strict loan standards are, since not many buyers are needed who can qualify.
Or do you think this is a hot market? Would you say the market for gasoline was hot when the price was $5 per gallon???[/quote]
Well, you answered your own question.
Why is affordable inventory so low? Why aren’t people compelled to sell?
Do they need to?
Are they under financial distress?
Are their payments unmanageable?
Are people’s in those sketchy loans with rates resetting, making their monthly payments unbearable?
Or are most people in a historical low fixed loan payment for a long long time that won’t ever change? And with eventual inflation over 10,15,20,30 years, that fixed locked in fixed payment will get eaten away with inflation and/or a weakening USD?
Or are they even making payments? How many people own outright?
How many people put a lot down, versus barely anything down? Do they have a more skin in the game than those that recently bought with 0%-5% down.. Are the majority of the purchases done by people with more skin in the game or less skin in the game?
Are people’s property taxes rising so fast, their monthly operating expenses is outpacing their wages/income? Or is Prop 13 keeping that in check?
If older people are about to die, are there advantages to selling or more advantages to letting heirs inherit it as part of their estate? What happens to their heir’s cost basis? Is it stepped-up? What happens to depreciation recapture? Does that get reset too? What happens to their property tax basis and what does Prop 13 say about that? Is it carried over or does it get reset? What about estate taxes? Any possibility that might change and be more favorable?
Is it cheaper to rent?
How low can landlords lower their rents before they are red and losing money and have to sell?
