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Eugene
ParticipantSo, about those fundamentals …
Case in point: Monarch at Scripps Ranch (east end of Mira Mesa Blvd)
Last November, some guy got himself a 2br/2ba 1300 sf condo in Monarch for 380K
http://www.zillow.com/HomeDetails.htm?zprop=71328118
And you can get a comparable condo across the street for 330-350K.
http://www.redfin.com/stingray/do/printable-listing?listing-id=1283984
http://www.redfin.com/stingray/do/printable-listing?listing-id=1390379For simplicity let’s assume 5% down and 5.5% rate.
Down payment – $16.5K
Mortgage – $1777
Property tax – $275
HOA – $325
Tax deduction – $427 (assuming 25% bracket and maxed-out itemized deductions)
Monthly cost – $1950What will a condo like that rent for?
http://www.forrent.com/apartment-community-profile/999903912.php
Starting at $2200/month, apparently.
In other words, you can buy a condo in Scripps Ranch TODAY and it will be cheaper than to rent an identical condo.
This does not address a more interesting question, why would anyone pay $2200/month to rent a 2-bedroom condo in Scripps Ranch when you can get a 3-bedroom house in Mira Mesa for $1800, because apparently there are enough suckers or else they wouldn’t be charging those rates…
ParticipantIn equilibrium, rent ~ monthly carrying costs (mortgage, property tax, insurance, HOA fee, less typical mortgage interest deduction ) On the way down, house prices are likely to overshoot.
Assume 20% down payment for upscale/move-up houses and 5% down payment for low-end houses. During the boom new homebuyers used to put zero down, but today zero-down loans are less common. Very few potential new homebuyers have enough cash to put 20% down on a house in SoCal.
Richest people will occupy most attractive houses. In many areas there are fewer houses than households. In this situation poorest households have no choice but to rent.
Some parts of the country are more attractive than others. People living in attractive areas choose to spend larger fractions of their incomes on housing rather than to leave (the “sunshine tax”). In an attractive area, both house prices and rents will be higher in proportion to income than in an unattractive area. The list of attractive parts of the country includes Hawaii and most of coastal California (from Napa and Sonoma to Santa Barbara to San Diego). Inland areas are generally unattractive, with a few exceptions.
ParticipantIn equilibrium, rent ~ monthly carrying costs (mortgage, property tax, insurance, HOA fee, less typical mortgage interest deduction ) On the way down, house prices are likely to overshoot.
Assume 20% down payment for upscale/move-up houses and 5% down payment for low-end houses. During the boom new homebuyers used to put zero down, but today zero-down loans are less common. Very few potential new homebuyers have enough cash to put 20% down on a house in SoCal.
Richest people will occupy most attractive houses. In many areas there are fewer houses than households. In this situation poorest households have no choice but to rent.
Some parts of the country are more attractive than others. People living in attractive areas choose to spend larger fractions of their incomes on housing rather than to leave (the “sunshine tax”). In an attractive area, both house prices and rents will be higher in proportion to income than in an unattractive area. The list of attractive parts of the country includes Hawaii and most of coastal California (from Napa and Sonoma to Santa Barbara to San Diego). Inland areas are generally unattractive, with a few exceptions.
ParticipantIn equilibrium, rent ~ monthly carrying costs (mortgage, property tax, insurance, HOA fee, less typical mortgage interest deduction ) On the way down, house prices are likely to overshoot.
Assume 20% down payment for upscale/move-up houses and 5% down payment for low-end houses. During the boom new homebuyers used to put zero down, but today zero-down loans are less common. Very few potential new homebuyers have enough cash to put 20% down on a house in SoCal.
Richest people will occupy most attractive houses. In many areas there are fewer houses than households. In this situation poorest households have no choice but to rent.
Some parts of the country are more attractive than others. People living in attractive areas choose to spend larger fractions of their incomes on housing rather than to leave (the “sunshine tax”). In an attractive area, both house prices and rents will be higher in proportion to income than in an unattractive area. The list of attractive parts of the country includes Hawaii and most of coastal California (from Napa and Sonoma to Santa Barbara to San Diego). Inland areas are generally unattractive, with a few exceptions.
ParticipantIn equilibrium, rent ~ monthly carrying costs (mortgage, property tax, insurance, HOA fee, less typical mortgage interest deduction ) On the way down, house prices are likely to overshoot.
Assume 20% down payment for upscale/move-up houses and 5% down payment for low-end houses. During the boom new homebuyers used to put zero down, but today zero-down loans are less common. Very few potential new homebuyers have enough cash to put 20% down on a house in SoCal.
Richest people will occupy most attractive houses. In many areas there are fewer houses than households. In this situation poorest households have no choice but to rent.
Some parts of the country are more attractive than others. People living in attractive areas choose to spend larger fractions of their incomes on housing rather than to leave (the “sunshine tax”). In an attractive area, both house prices and rents will be higher in proportion to income than in an unattractive area. The list of attractive parts of the country includes Hawaii and most of coastal California (from Napa and Sonoma to Santa Barbara to San Diego). Inland areas are generally unattractive, with a few exceptions.
ParticipantIn equilibrium, rent ~ monthly carrying costs (mortgage, property tax, insurance, HOA fee, less typical mortgage interest deduction ) On the way down, house prices are likely to overshoot.
Assume 20% down payment for upscale/move-up houses and 5% down payment for low-end houses. During the boom new homebuyers used to put zero down, but today zero-down loans are less common. Very few potential new homebuyers have enough cash to put 20% down on a house in SoCal.
Richest people will occupy most attractive houses. In many areas there are fewer houses than households. In this situation poorest households have no choice but to rent.
Some parts of the country are more attractive than others. People living in attractive areas choose to spend larger fractions of their incomes on housing rather than to leave (the “sunshine tax”). In an attractive area, both house prices and rents will be higher in proportion to income than in an unattractive area. The list of attractive parts of the country includes Hawaii and most of coastal California (from Napa and Sonoma to Santa Barbara to San Diego). Inland areas are generally unattractive, with a few exceptions.
ParticipantI consider myself deeply in a hole because I didn’t short homebuilders and didn’t short Countrywide. Other than that I’m OK.
BTW there’s talk about emergency Fed meeting going on right now and a possibility of either a sharply lower opening or an emergency rate cut before market open tomorrow.
ParticipantI consider myself deeply in a hole because I didn’t short homebuilders and didn’t short Countrywide. Other than that I’m OK.
BTW there’s talk about emergency Fed meeting going on right now and a possibility of either a sharply lower opening or an emergency rate cut before market open tomorrow.
ParticipantI consider myself deeply in a hole because I didn’t short homebuilders and didn’t short Countrywide. Other than that I’m OK.
BTW there’s talk about emergency Fed meeting going on right now and a possibility of either a sharply lower opening or an emergency rate cut before market open tomorrow.
ParticipantI consider myself deeply in a hole because I didn’t short homebuilders and didn’t short Countrywide. Other than that I’m OK.
BTW there’s talk about emergency Fed meeting going on right now and a possibility of either a sharply lower opening or an emergency rate cut before market open tomorrow.
ParticipantI consider myself deeply in a hole because I didn’t short homebuilders and didn’t short Countrywide. Other than that I’m OK.
BTW there’s talk about emergency Fed meeting going on right now and a possibility of either a sharply lower opening or an emergency rate cut before market open tomorrow.
January 15, 2008 at 4:44 PM in reply to: Anyone else think SoCal economy is headed for a big tailspin? #136437ParticipantGet ready to see the brats junk their overpriced Hummers and BMWs for pennies on the dollar to survive
Hehe
BMWs should be relatively safe. BMW sells its cars in the US at a huge discount. They depreciate a lot, too.
A 3-4 year old BMW X5 (blue book $25k) would sell for $50k in Moscow. Even after transportation and tariffs, it almost makes financial sense to buy used BMWs in the States in bulk and ship them to Russia.
Hummers are a different story.
January 15, 2008 at 4:44 PM in reply to: Anyone else think SoCal economy is headed for a big tailspin? #136638ParticipantGet ready to see the brats junk their overpriced Hummers and BMWs for pennies on the dollar to survive
Hehe
BMWs should be relatively safe. BMW sells its cars in the US at a huge discount. They depreciate a lot, too.
A 3-4 year old BMW X5 (blue book $25k) would sell for $50k in Moscow. Even after transportation and tariffs, it almost makes financial sense to buy used BMWs in the States in bulk and ship them to Russia.
Hummers are a different story.
January 15, 2008 at 4:44 PM in reply to: Anyone else think SoCal economy is headed for a big tailspin? #136672ParticipantGet ready to see the brats junk their overpriced Hummers and BMWs for pennies on the dollar to survive
Hehe
BMWs should be relatively safe. BMW sells its cars in the US at a huge discount. They depreciate a lot, too.
A 3-4 year old BMW X5 (blue book $25k) would sell for $50k in Moscow. Even after transportation and tariffs, it almost makes financial sense to buy used BMWs in the States in bulk and ship them to Russia.
Hummers are a different story.
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