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Jazzman
ParticipantHaha! Not sure where you got your $ per sq ft for Poland. Very difficult to compare countries when it comes to square footage. European homes are traditionally smaller. Manhattan is crazy expensive. London is stupid expensive. What’s the difference?
San Francisco x 4 more expensive
http://sanfrancisco.cbslocal.com/2014/05/20/how-much-more-does-it-cost-to-live-in-san-francisco-bay-area-than-other-cities-sf-real-estate-housing-prices-expensive-cheap-cost-home-mortgage-income-salary/Londonium, the most expensive city in the world
http://www.theguardian.com/uk-news/2014/sep/23/london-overtakes-hong-kong-worlds-most-expensive-cityChina, the bubble has burst
http://blogs.wsj.com/chinarealtime/2014/05/05/chinas-property-bubble-has-officially-popped-report-says/Canada, the most over-valued RE
Canada has the Most Overvalued Housing Market in World [Chart]
Participant[quote=FlyerInHi]jazzman, compared to the rest of the world, US housing is still relatively cheap.
If there’s a crash, wouldn’t it happen in China first? Or maybe in the UK? Or New Zealand or Canada?
We should have some warning before the crash hits our shores?[/quote]
Some part of the US are relatively cheap, but I don’t think there is any disputing that New York, and CA—especially the Bay area—are way over-valued. I read an article a short while back that claimed the high end has broken the sound barrier in recent years. What was once considered an expensive home for say $2m now sells for several multiples of that. London is set for a correction. Canada’s is probably way past due, and China is a special case being disconnected from the Anglo-sphere and under state controls. The UK and US are usually in lockstep on many things but I don’t know whether statistically things usually happens first in the US, or the UK. I think it is logical that where prices did not fully correct after the crash and have since been propped up, and then some, by whatever means things will revert to their proverbial mean at some point. If it does happen very gradually, we may not notice it, but the long term effects of that slow puncture are what worries some.Participant[quote=FlyerInHi][quote=Jazzman]
My view is that RE has been highjacked in many places and these places share things in common. They tend to be English or Asian speaking, major metropolitan conurbations, with an industry that drives it and a government that accommodates it. In other words, a culture has been built up around it. [/quote]You’re on to something… but when will it all unravel?
If you’re mobile and retired, then you have more choices… But what if you must live in London or Hong Kong? Your only choice is to live in a closet.[/quote]
Yes, that is right and I make that point. My view is rent is a better all round choice. If listings are still only 50% of what they were in peak times, then choice, or lack thereof, alone would be an incentive to wait. On the other hand, there must be a good choice of rentals now.
When will it unravel? Everyone is terrified of trying to answer that question. Nobody wants to look stupid. There is huge vested interest in not letting it unravel, and many talk of the new normal; low rates, high price earnings etc and I’ll admit you don’t hear many convincing arguments to oppose this view. But that doesn’t mean there aren’t any. It might just mean we don’t know what the causes will be. Pure psychology, insurers suffering prolonged low rates, Grexit, Ukraine/Nato escalation, bond bubble, China housing/stock market crash, inflation/sharp rate rise, or something else we haven’t been keeping an eye on. However, to capitulate to forces when you know them to be wrong will not serve you well in life. If markets continue to climb, or even settle at current levels and you remain ‘priced-out’, you cannot blame yourself. You used the information available to you and made a rational choice. You are a normal, sensible human being. Strike that, You are a smart individual.
One final point I would make is that we have become accustomed to comparing current valuations with the bubble. After a tsunami a 20′ swell might seem like a ripple. The bubble was an extraordinary event. If it hadn’t happened, and we still found ourselves where we are today, would we be yelling “crazy bubble'” prices? I think we might very well be.
ParticipantBG, if we take ‘over-rated’ to mean ‘perceived poor value for money’, then I think it is not only SD that is over-rated. If you can buy a similar home for half the price elsewhere, the implication is there must be twice as much on offer; better schools, better homes, better jobs, better weather, better cultural facilities etc. Those are all difficult things to quantify, but most will have an inbuilt value-o-meter.
My view is that RE has been highjacked in many places and these places share things in common. They tend to be English or Asian speaking, major metropolitan conurbations, with an industry that drives it and a government that accommodates it. In other words, a culture has been built up around it. We know when it started, when it got out of hand, the consequences, and the continued disregard for it. I find it useful to view current trends through that prism. Others clearly find it irrelevant arguing that homes now represent good value ie, they are affordable as measured by income and rents. But why then do they continue to debate it unless they are a little insecure in their beliefs. If one thing has defined RE over the last decade or two, it is insecurity. The problem faced by many is they don’t have a choice. Complacency and ignorance feeds the beast. Homes remain over-valued.
The OP’s choice of home is a prime example of the home-fest culture. It clearly is not a mansion, and the +$1m price tag is incredible. It is a tract home with no individuality, no personality, packed with ‘pseudo-designer” finishes, surrounded by featureless, arid land. If you paid the asking price for that home you are fool by my accounts. Corporations are telling us how to live, what colors we should like, and even what views we should enjoy. If you are smart enough to make enough money to afford that price tag, you should be smart enough to know that it is not worth it. I feel sorry for anyone who can’t see that. Strike that …I don’t feel sorry for them at all.
ParticipantThanks for that.
ParticipantIt is odd for an outsider like myself that the “gun culture” never enters this debate. And how ironic that a car was used in one of these now widely publicized unfortunate incidents. The argument goes, ‘why ban guns when cars kill more people?’
The question arises as to whether these events are on the rise, or are just getting publicized more. Is there some faintly fascist element lurking in the dark recesses of these apparently demented individuals? Or does media portrayal manipulate us into inventing such notions? Or do we need—in a warped kind of way— these kinds of apparently mal-adjusted individuals as an antidote to criminal sociopaths? A civilized society should tackle the immediate cause. It should remove the guns. It can then start to seek alternative solutions in social causes without the fear or armed confrontation and consequent unnecessary loss of life. If the net benefit saves only one life, then it is worth it. You would say that if it was your child.
If you don’t care and find it entertaining TV, then society should make you question your place in it.
ParticipantService is good, food portions are obscene, weather is sunny yes, but dry which is why there is no green, Freeways are a nightmare. Soda refills are a bad idea. That stuff is pure chemical and sugar. California girls are friendly, which I suppose is appealing. CA life style is good, but not for the reasons stated above in my view. But you are being ironic, yes?
Participant[quote=bearishgurl]I agree with svelte, here, as it applies to CA. In buying an SFR in CA, you actually own the land your dwelling sits on. Like it or not (and regardless of what your local assessor says), THE VALUE OF THE LAND is what boosts property value in CA coastal counties. The closer to the coast your property sits, the higher your land value is in relation to your overall property value (market-wise) REGARDLESS of what the assessor says on your tax bill. This is ESPECIALLY TRUE for those properties situated within TWO MILES of the coast!
[/quote]
That seems a rather archaic way of looking at things, and a bit reminiscent of old conveyancing when agricultural values held sway. It isn’t the actual intrinsic value of land that boosts or undermines prices, but the lack (supply) thereof. It is not just the ground surface, but the space above it when occupied by a structure, which itself has intrinsic—and currently market inflated value—that determines value. A preference for living by the coast adds a premium due to cooler temperatures and better air quality. The land, in the mean time, remains the same; pretty useless for growing anything. But i guess you were implying all that.Participant[quote=bearishgurl]I spend 4 hrs a month just cleaning up after trees … planted on the City’s easements … no less. Sometimes I have to borrow an additional 90 gal yard waste can for the job. Homeownership can be ugly … a LOT of work. Not for the faint-hearted …
However, I don’t believe in HOAs. I don’t want to pay dues for the privilege of being told what I can and can’t do with my property.
You can’t have it both ways….
The good thing is, the City maintains their own trees (just not their fallout). Trying to get them out here in a timely manner is another matter, altogether, however …[/quote]
I used to think HOAs were the biggest rip-off out there. They do, however, have their redeeming features: collective responsibility for exterior maintenance, low cost insurance, security, lock up and leave, aesthetics. In the latter case, post 2000 produced some architecturally pleasing structures, and it is good that you can’t do what you want with your home. Most are clueless when it comes to design, which is why swathes of even upmarket neighborhoods resemble a bric-a-brac store. In fact, condos are my number one choice for investment at the moment. I believe more and more people will live in them, and they will be centered around community living.Participant[quote=KristopherSD]Hello again,
Any thoughts? Should I just buy now and remodel as I go along, or possibly purchase a flipped home since I currently won’t have the needed remodel savings? My plan makes the most sense to me, but i’d love opinions.[/quote]
In your own words, RE is “over-heated” so why would you risk your capital? Whatever your estimates for remodeling, play safe and double it. Stay well within your limits in every sense. A home that needs remodeling isn’t always priced accordingly. Best laid plans of mice and men.
March 25, 2015 at 1:05 AM in reply to: State of the economy and affect on housing in S California #784146Participant[quote=FormerSanDiegan][quote=rockingtime]Since you have lot of money for cash down, I’d say invest in some good relatively safe place to get you 4-5% return.
In couple of years, when and if the interest rates hit high, I am sure the prices would come down
Real estate prices in CA are cyclical in general and if anyone says otherwise, please look at the history.
Of course no one knows the future..[/quote]
If you look at the history of housing prices and interest rates you will note that the periods of interest rates increasing (notably mid 1960s to 1980, for example) coincided with home price increases.
SO, higher rates does not necessarily equate to lower prices. In fact, historically it has been the other way around. Higher interest rates generally track over the long run with higher inflation.[/quote]
It may be difficult to show a direct relationship. Some argue rising rates first impact demand, but supply and demand then influences price. A more recent debate focusses on the effect that prolonged periods of monetary easing has on the housing market. These researchers seem to have found a corelation:
An exogenous 100 bps decrease in the short rate results in about a 50 bps decrease in the long rate on impact, and an increase in mortgage loans to GDP of about 0.5 percentage points. Yet the effect of the initial shock keeps building over time, and by year four there is about a 3 percentage point increase in the ratio of mortgage loans to GDP.In light of the response of long-term rates and mortgage lending, one might expect house prices to increase in response to an exogenous decline in interest rates. The bottom-right panel shows that this is indeed the case. A fall of the short rate of 1 percentage point builds up over time and leads to a 4% increase of the house price-to-income ratio after four years. (Or alternatively, an exogenous increase results in a sizeable decline instead.) Various robustness checks and sample splits further strengthen our core result that monetary policy has indeed a powerful influence on households’ willingness to take bets on the house. https://agenda.weforum.org/2015/02/what-history-teaches-us-about-house-prices-and-low-interest-rates/
Interest rates have been declining consistently for many years. In the last 20 years, the 30 year fixed rate mortgage has halved. House prices in San Diego, on the other hand, have increased 180% over the same period. So while price and interest rate indices mat not track each other precisely, there is more than coincidence at play here. And it’s probably not without good reason that imminent central bank tightening has everyone on tenterhooks.
March 23, 2015 at 3:57 PM in reply to: State of the economy and affect on housing in S California #784116Participant[quote=bearishgurl]
Hahahahahaha, scaredy :=D. I well remember your months/years? of musings on here during your “overthinking” period before you finally purchased your current home.
I also remember all of Jazzman’s musings during and after his failed search up and down the state for a suitable CA retirement home. As I recall, 90% of his search occurred at the very bottom of the market (2010-2011?). As far as he’s told us, he still hasn’t purchased a CA home and I’m unclear if he still wants to. In any case, that train has long ago left the station.[/quote]
Ah! BG is back. Not sure the train ever arrived. I’m not looking in CA for the time being, thanks, but I’ll be sure you let Realtors (including you) know, if ever that changes.
March 22, 2015 at 12:45 PM in reply to: State of the economy and affect on housing in S California #784068Participant[quote=wallers]ok thanks everyone! great info. I think I am going to rent and see how this all plays out.
From all the info here and everywhere generally speaking it seems prices will either remain somewhat the same/maybe a bit up for sometime and things will trudge along or go down. So financially it might be prudent to wait and see with minimal risk of a continued large price increase (buy now or be priced out forever!). Plus there is the possibility of staying calm and being rewarded for waiting for lower prices.
On the personal side I like being a homeowner. But if I can’t get what I want perhaps than maybe it’s not a great idea to buy anyways.[/quote]
If I was in your shoes, I’d probably be doing the same. It’s a huge commitment so you have to be comfortable with it.
ParticipantThere really is nowhere else unless cost savings and weather are the motivators, or you want adventure. It’s not that the grass is not greener so much as it’s just a different hue. ‘Swings and roundabouts’ as they say.
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