[kev374]

I agree that we are re-inflating an even bigger bubble and the next bubble is going to be much more severe than the last one…perhaps leading to a Greece style crisis.

Well, nobody cares, times are good now so enjoy. My guess is that the good times will continue 4 or 5 more years.

If you are smart you will cash in your home at just the right time and walk away a rich man. Most don’t have that foresight however blinded by their greed they will be certain that their homes are going to reach a zenith so high that above it will only be outer space.

[kev374]

Zillow says my friend’s home in Aliso Viejo (Orange County) has gone up from a low of $273,000 over a year ago to it’s current ZEstimate of $406,000 LOL! and it’s still rising.. Good for him I guess…

[kev374]

[quote=The-Shoveler]Average U.S.A. home price went from 29K in 1973 to about 125K in 1990.

[/quote]

Current median home price is $213,500 so we’re very close to the touching the top of the biggest home bubble in history, we should get there if this mania continues for a year or two…

http://ycharts.com/indicators/sales_price_of_existing_homes

There was just a report that since 2007 median household incomes in the US have FALLEN 4.4%. LOL!

[kev374]

My income now is the same it was in 2006, I haven’t got a raise in 7 years…infact wages in my field have gone down 10% so i’m actually doing good to have maintained my payscale.

Those who are getting fat raises – well count yourself lucky because even getting a raise at all has now become unusual.

BTW, the FHA has become a massive sham and nothing more.. it has taken over where subprime left off!

[kev374]

The wealthier end of the spectrum is not buying $500,000 homes as these homes are in ghettos like Buena Park and Anaheim. The wealthier households buy in Irvine and Tustin Ranch which have average home prices close to a million dollars.

We are talking about half a million median in solidly blue collar neighborhoods like Buena Park and Orange. Especially Orange, not sure what is going on there because the demographics there are all Blue collar yet homes are way north of half million.

[kev374]

When I read these sob stories of how everyone is suffering I just laugh. The median home price in Orange County is currently $550,000…over HALF A MILLION DOLLARS for the 50th PERCENTILE!!! What should be the median household income be then? If you take the typical ratio of limiting total home price to 1/3rd of gross yearly which is considered the metric most financial conservatives use, the median household income county wide should be $183,000/yr.

Also considering that a $550k home would need a 20% down amounting to a pretty staggering $110,000 in addition to closing costs AND move-in expenses AND financial reserves the total would be cash on hand of $150,000 or more.

So, do you expect me to cry tears for the median household that is earning close to $200,000 and has $150,000 in savings?

Apparently people are not only buying these homes in droves, both the media and economists calls the market as being in a state of “historic affordability” relative to incomes. So, incomes must be staggeringly strong which is in direct contradiction to the sob articles of poverty you have posted.

Now, IN ADDITION, not only are people buying these homes in droves, they are also spending money at a brisk pace – the restaurants here in Orange County are all packed and have you eaten out lately? It has become shockingly expensive to eat out and yet the establishments are all packed. If incomes are not fueling this then what exactly is?

[kev374]

All reports indicate a very strong economic recovery with strong job and income growth. This has been fueling the strong 30% increase in home prices just within the last year. The expert economists are saying that prices will rise albeit more slowly at a rate of 10% a year for a couple more years before tapering off at a more modest 5% a year.

At the forecasted rate I predict a median price of $1 million in Orange County with San Diego county perhaps a bit below that 🙂

This poverty stuff is hogwash…it just isn’t reality for most people who are doing really well. People with rising home prices are spending, some are even taking out home equity and spending.

Right now if you are not doing very well it’s your own fault.

[kev374]

yes, but the properties I am seeing are NOT cash flow positive so I am wondering HOW on earth are investors buying them. I am thinking they are just speculating on future price or rent increases that may not pan out. This is quite a big risk.

For instance, the rents in Orange, California for a 2bd, 950sqft condo with garage is around $1400/month. To be competitive this is what you need to expect…no more.

2bd condos with 1000sqft have asking prices north of $250,000 and some are even asking $300,000. Just do the math… $250,000 with 20% down, $200,000 financed at 4.6%, $1025 PI, $210 property taxes, $100 maintenance, $275 HOA = $1610 and that is in a perfect situation, what if the property remains vacant for a few months of the year? And HOAs and property taxes rise with inflation as well.

For investment it does not pan out at current prices.

[kev374]

well, when I move out I would like to get the inspection done and discuss any expenses right then and there so we can dispute the condition of it as we are looking at the issue.

What I am concerned about is that after the inspection is done they come back later and say “oh, X needed to be replaced so it’s $XXX”, then it’s just a “he said, she said” situation! I could take pictures but who is to say when those were taken etc. I doubt they would hold up in court.

I think it’s fair that if it’s not picked up during the *MOVE OUT* inspection then too bad for the landlord, just like if I do not pick up something in the *MOVE IN* inspection then the landlord can say I damaged it.

[kev374]

[quote=HLS][quote=kev374]Interest rates have dipped again from 4.6 to 4.29%[/quote]

Kev, with no disrespect to you, it is RIDICULOUS to refer to an article like that about interest rates. [/quote]

HLS, I know interest rates move day to day but what I am trying to highlight is the trend. A statement was made here that interest rates are going to rise going forward. What I am saying is that the rise in interest rates was triggered by the Fed’s statement that they are going to taper by end of the year.

Now, the Fed has indicated that they will provide as much stimulus as needed to suppress interest rates if it affects the stock or housing markets.

If the Fed does taper and the housing market starts declining then the Fed will simply start buying bonds again sending interest rates down. What is preventing them from doing that infinitely?

[kev374]

[quote=SD Realtor]Really now…

So the OP is saying that every active listing in Anaheim or in Fullerton under 400k is actually already sold… Even though they are active.

Yeah ummm…. right….[/quote]

SD Realtor, virtually ALL the listings I found on realtor.com are in “Backup Offer” status. The 1 house I found a week ago the realtor told me to come down only if I am making an offer otherwise not to bother since they already have 20 offers on it…do you know how ridiculous it sounds when realtors tell me to make an offer on something I haven’t even seen? And they will refuse to show me the property unless I make an offer…LOL!

[kev374]

Unfortunately I am not seeing a rise in inventory in Orange County…perhaps the situation is different in San Diego. Interest rates have dipped again from 4.6 to 4.29% I believe so perhaps the rise in interest rates was just an overreaction to the Fed statement that they will taper but now they have made it clear they WILL NOT taper and will keep buying bonds indefinitely as needed.

http://www.cbsnews.com/8301-505123_162-57592198/u.s-30-year-mortgage-rate-falls-to-4.29-percent/

[kev374]

one question – what would happen if the Fed kept interest rates between 4.5-5% indefinitely? What kind of negative repercussions would we see? Whom would it affect?

[kev374]

[quote=The-Shoveler]
It would be very expensive for the average Joe six pack is what I am referring to,

Also to local Gov’s[/quote]

But, the government would not let that happen now..would they? Both the markets and average Joe six pack have been led to believe that our government will print as much money is necessary to keep all markets from falling. As we saw, just the mere suggestion of the Fed slowing down the printing caused an uproar. The markets will MAKE the Fed keep printing, the Fed has no other alternative – keep printing or suffer a huge crash in which everyone will lose their shirts, the economy will completely tank, houses will be lost left and right, jobs will be lost etc. etc.

[kev374]

[quote=ocrenter]Since you are from OC, let me know which OC city you like the best, I’ll do my best to give you the SD equivalent.[/quote]

Thanks!
My target areas in OC were Orange, Fullerton, Brea, Yorba Linda.

[Author]

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