Why are new California homes so expensive?

[Anonymous]

Borat, you have a point. Buenos Aires, San Jose de Costa Rica, Santiago or Rio for that matter are a little more sophisticated than your home town of Almaty, though. There are no goats on the streets (but there is a whole lotta dog poop)…

[mixxalot]

I am thinking of looking into a home in Brazil or Panama. Both are now fairly stable countries in Latin America and dirt cheap to buy nice property close to the beach compared to California. Plus I love Latina women they fabulous for a guy like me who speaks Spanish and Portuguese!

I am thinking of doing this in like 10 years after making some trips down there to check things out in more detail. Why work until I am ready to drop dead at 70 when I can retire like a king in my mid 40’s and have great weather and gorgeous women? I would avoid Mexico and Argentina however as they are not that stable per recent events. Costa Rica and Belize are other possibilties that offer solid government that is democratic and friendly to ex-pats.

[lindismith]

Why work until I am ready to drop dead at 70 when I can retire like a king in my mid 40’s and have great weather and gorgeous women?

Just try getting something done in a developing country though. It will drive you crazy! Everyone has to be paid off, and never mind the work ethic – we work the hardest here, and it shows.

As to why CA homes cost more, I would like to add that our labor costs are higher. Minimum wage here is much higher than other states, (like TX,) subsequently everything related to labor costs more, and when we’re talking about skilled labor, rates easily get way beyond minimum wage.

Another factor is Workman’s Comp insurance. As a manufacturer, it’s my second highest bill after my rent. Can you imagine what kind of rates builders pay? Astronomical. Arnie’s helped a bit, but they’re still way too high.

[PerryChase]

Why work until I am ready to drop dead at 70 when I can retire like a king in my mid 40’s and have great weather and gorgeous women?

You’re right about that. I think that Chile is also a stable country on the way up. I have to go and check it out. There’s a Chinese saying that you need “parameters” for everything in life. That is one needs higher levels of certain qualities to compensate for defects that one might have. If a woman lacks beauty, she’d better have a pleasant personality. If a man is not handsome, he’d better be rich. I find foreign women beautiful and pleasant. Beautiful American women (of all races) are demanding and stuck-up. It’s all relative but once you’re experienced great service with delicious food, you don’t want to return to the old bad restaurant. (Alright, go ahead, lay it on me for generalizing).

Lindi, I’m not sure that builders pay high WC rates. Most of them subcontract their work out so it’s “out of sight, out of mind.” The building industry, like agriculture, would not do well without immigrant laborers.

[Anonymous]

Mixxalot, ten years is a long time. Maybe you will change your mind…

[powayseller]

Workers’ comp is a high cost, definitely. I asked several of the subs who worked on my house in 2005 (after Arnie’s reform passed) about their WC costs. Every single guy said he paid 30% (or 35%, can’t remember now), of wages! So for every $100 he paid his worker, he had to pay an additional $30 to Workers’ Comp. Now, this isn’t just for a big employer. Even the driller and the painter with just 2 employees had to pay that same rate.

Remember docteur’s posts about his entitled land that he just sold a year or so ago? It took him 15 years to entitle that land, and God blessed him by making the timing so that he finished the process right at the top of the market and retired very nicely off his work. But that is an incredibly long time to get some land entitled.

So those are just some of the higher costs. Then you’ve got zoning restrictions, environmental laws, etc. Is some of that offset by non-payroll employees, i.e. illegal Mexican labor?

The sunshine tax just means that people in CA don’t get paid more to make up for these higher costs. Our higher living costs are a form of tax for the priviledge of the sunshine. After seeing all those freezing people chopping ice off their windshields in Oklahoma this week, I was glad to be in sunny San Diego.

[mixxalot]

If a woman lacks beauty, she’d better have a pleasant personality. If a man is not handsome, he’d better be rich. I find foreign women beautiful and pleasant. Beautiful American women (of all races) are demanding and stuck-up. It’s all relative but once you’re experienced great service with delicious food, you don’t want to return to the old bad restaurant. (Alright, go ahead, lay it on me for generalizing).

I agree and since I am neither rich, tall or handsome as a man, I need options. I have lived and traveled across Latin America and Asia and love the people and culture. Its not perfect but the food is good and weather as nice as San Diego for a bargain price. I plan to make visits and do research on how to purchase property in next few years. I may buy a place in San Diego IF prices EVER go down which seems unlikely for a long time due to speculation and low interest rates and easy credit financing. By 2012 we may have realistic prices once again. I agree about the sunshine tax, I am currently looking for a new IT tech job and find companies are very stingy and want to pay peanuts for employees in San Diego given the high cost of living here. I had an argument with this jerk investment financial advisor partner at a large brokerage firm recently who does not believe real estate in San Diego will go down. He kept saying it will flatten out and be a soft landing not a crash.

[mixxalot]

I like Costa Rica but its very expensive now compared to Panama or Brazil.
I may buy in Brazil as I like the beach and parties. Panama is great too because its close to the US and now that Noriega is in prison the government is stable. Since I do a lot of IT computer freelance work, Panama currently is best bet to remain close to work in the USA. Also looking at Belize which is very stable country and fairly close to the USA as well.

[kev374]

I had an argument with this jerk investment financial advisor partner at a large brokerage firm recently who does not believe real estate in San Diego will go down. He kept saying it will flatten out and be a soft landing not a crash.

well, it is still the majority opinion that if prices slide it’s not going to be more than 5% at most. When I make the case that prices will indeed fall upto 40% I get laughed at. Yes, we’ve had a 125% appreciation, unprecedented in history so I don’t know why it’s so hard to believe that an equally unprecedented downturn cannot take place?

Homeowners are in absolute denial because for many people a big decline in values is going to reduce their net worth to nothing and that is too much for them to digest.

They would like to believe that they are so financially savvy for having bought a home that created so much wealth when infact they are financially illiterate and cannot comprehend the fact that RE market is cyclical and has always been like that.

In the early 90s prices went down 30-35%, this time it is far worse with so many more aggravating factors (excessive home equity borrowing, exotic lending, speculators etc.).

[masayako]

surveyor,

I don’t agree fee is a major factor, if at all. It simply cannot explain the sudden jump in price between 1998-2005.

Two factors as I mentioned before:
1. People worry to get price out, that’s why they buy high.
2. Builder realize factor#1, that’s why they sell high.

IT IS AS SIMPLE AS THAT, folks, don’t kill your brains for it.

Very simple example, I visit the damn open house myself:
2002, San Marcos – 3334 sqft $565,000
2005, San Marcos – 3334 sqft $778,000

Do you think the environmental fee jump by over $200,000 in 3 years? 😉 I don’t think so. Builders want money like everyone else on this planet, so they charge more $$$ for the great demand.

Masayako

[Borat]

It is same in Kazakhstan. In 2000 there was big demand for pitchfork to protect against gypsy and price of pitchfork go to over 2 U S of A dollars. Normally a pitchfork cost half bucket of goat milk.

[powayseller]

kev374, you make a lot of sense. In the early 90’s we had pretty big price drops, and that was based on houses that were bought with 20% down, rental property purchased with 25% or 30% down. This time, we have more air (half of homes bought have 0% down) and bigger jump. If the last bubble rose 20% and fell 20%, then why can’t this bubble that rose 170% fall by 170? (Numbers are approximations,but you get the point)

Previous bubbles fell by about the same percentage as the rise. So should this one. If you say otherwise, you have some explainin’ to do.

[sdrealtor]

Hey Luuuucyyyyy,
You got some splainin to do PS! Don’t you understand basic math? If house go from 100 to 200 that is 100% increase. If house go from 200 to 100 that is 50% decline.

Just another example of not looking before you leap into doggie doo doo. BTW, where did you see that “half of homes were bought with 0% down”. You got more splaininnnnn to do!

[powayseller]

sdr, I know that a 20% rise combined with a 20% drop gives you a lower price than you started with. But I made a mistake in assuming prices were lower, because they were not.

I took Calc I – Calc V, Linear Programming, and calculus level Physics in college, and got A’s in all of them. So I don’t need any help in something as basic as percentages.

I read once that men who have no power at home bully their employees and people on internet forums. A real man knows he is in control, and treats others with respect. When he feels belittled by his family or boss, he takes it out on others. Does any of this ring true for you?

[sdrealtor]

Not even a slight ring. My family is full of mutual respect for each other. Now on to the points. You were wrong and I gently poked fun at you. Take your lumps and move on, there ‘s no need to break out your college transcripts.

You still didnt answer my question. Where did you get the half of ALL buyers bought with 100% financing that you used so flippantly?

[Author]

Posts