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kev374
ParticipantI think a lot of the Java work is going to the offshoring Indian firms.. Infosys, Wipro etc. because they have a large pool of “programmers” that can do that stuff.
Participant[quote=flu]
I remember not to far ago, you were mentioning how ridiculously high rent prices were.And then also, you were considering moving to Atlanta.[/quote]
You’re partially right. Rents are high in certain places because the market seems to be divided into two groups – recent investor landlords and long time landlords. These properties that are seeing a runup in rents have been taken over by recent investors and they are trying to jack up the rents like crazy. However there are also landlords who have owned the property for ages and are more interested in keeping rents low and having low turnover. There are plenty of deals to be had if you look more closely.
Let me give you an example I found on craigslist:
http://orangecounty.craigslist.org/apa/4872478029.html
Now, the rent in Irvine is supposed to be north of $2000 for a 2bd per the media and “common knowledge” but the above 2bd can be had only for $1475. A friend of mine owns a 2bd as well in the heart of Irvine and he rents it out for only $1550.
There are also plenty of places charging over $2000/mo for similar apartments (similar in terms of size, location and quality of facilities).
There is a HUGE disparity among properties in the rental market just like there is a HUGE disparity in the price people pay for new cars. One person may pay invoice and the other person may be $5000 over MSRP because they are not able to negotiate and research. The spread can be as much as 30% of the cost of the new car which is simply amazing but many people simply pay it because suckers exist whether it be renting homes or buying cars.
My own case is that I recently moved. My old apartment complex was purchased by an investor who immediately jacked up the rent by 25%. I told the investor that they can go F themselves and moved and i’m glad I did because I found a much better deal. However they know that many people stay put for a while because moving is difficult. But just because people don’t move immediately does not meant they will not eventually.
Now regarding the market for purchase that is not the case at all. People throw all sorts of statistics around but the bottom line is this. MYSELF and many many people I know with various types of jobs are able to afford to rent comfortably in Mid and South Orange County but are absolutely unable to buy because the cost of buying an equivalent place is 2X or 3X what it would cost them in rent. In my opinion that is a concerning disparity and not sustainable.
It is common fact that first time buyers have been completely absent from this market solely due to sky high prices. That is not what I call a normal market. And to say that incomes are supporting these price levels is laughable.
Marketwatch recently had a piece where they stated that half of American homeowners can’t even afford the current house they are living in which is a pretty telling statistic:
http://www.marketwatch.com/story/over-50-of-americans-struggle-with-home-affordability-2014-06-03
The claim is that renting and owning are somewhat in parity. That is pure nonsense. First one needs the downpayment. If the downpayment is going to be 5% then the mortgage is going to be higher. A 2bd that rents for $1500/mo. has a list price of around $500,000 in Costa Mesa, CA with HOA fees of around $350/mo. That is the typical listing.
Now compute: 5% down on $500,000 is $25,000, plus closing costs, probably $35,000 out of pocket to start with, then PITI alone on $475k at 4% is $2270, plus $350 HOA, that’s $2620. Oh yes, I have not added PMI as well. In addition all the maintenance that comes with owning a home, who is going to pay all that? When all is said and done you’re looking at over $3,000 or double what a rental can be had for – not even close to parity. If you had to move and rent the place out your cash flow would be highly negative.
Plus owning has a MAJOR disadvantage of the inflexibility of it. If there is a life situation when renting you can simply give your notice and downsize or move out to another area which you can’t when buying. This necessitates that one has a huge buffer for unforseen circumstances, how many first time buyers have that much in reserves?
The truth is that the market is being solely supported by investors/speculators and move up buyers. This is solely because interest rates are at ridiculously low levels and there is no money to be made anywhere else for investors. Once interest rates rise to a more historic level of 7-8% (which may take a while) the rental market is not going to look attractive anymore and capital is going to flee from the housing sector and housing is going to be collateral damage.
People act like houses are intrinsically worth the ridiculous sums that investors are willing to pay for them. No, investors don’t care a damn whether it’s a house, a tulip, gold, silver, copper or whatever the heck it is that can make them some money. When the asset can no longer make them money they will just trash it and move on to the next asset that can generate them an income.
Shiller himself has stated many many times over that housing over the long term just does not generate that great a return compared to the overall market. Even now we are at the tail end of this speculative runup and I am seeing strong signs that it is fizzling out.
Without continued investor support I doubt this housing run-up has any steam left in it and all I see is a downward drop.
As for various predictions by economists, just look at UCLA Anderson’s forecasts during the previous housing bubble. They were saying at the time that the prices were sustainable! LMAO! They were 100% wrong and this is supposed to be the best business school in the country? Laughable.
ParticipantAll I can say is that reading these comments here about rents being sky high all I can say is that I must be lucky to have a spacious terrific 750sqft 1bd within such close proximity to Newport Beach and a good sized 1 car garage paying only 1200/mo.
My buddy must be luckier than me because he has a very similar apartment in Huntington beach, just a block from the beach, with a garage at $1300/mo.
A few other friends are lucky as well… one has a 2bd 1100 sqft place close by and pays $1525.
We are all exceptions to the rule of course, as rents are crazy high in line with mortgages on houses here that are listed at $500,000 for a 1000sqft shack…according to the media and the economists.
ParticipantRich, my claim is substantiated by the salaries in my industry and the rents around the South Orange County area. Rents are not that much higher at all. In 2005 I moved to Lake Forest renting a 1bd there for $1,250/mo. The current rent for that exact unit, 10 years later, is $1,345/mo., it has increased 7.6% in a decade which I hardly call substantial!
However, now I live in Costa Mesa and pay $1,220/mo. for a larger apartment with a garage and I am only blocks from Newport Beach.
You can give me your statistical data all day long, which is what Economists do, but it does not match the reality on the ground. I am giving you actual data with my specific case.
I work as a Sr. Software Engineer, been doing it since 1997, pay in my industry has not increased since 2005. I am making $2,000/yr more now compared to my 2005 pay. And I am topped out in my payscale, I see job listings paying even less than what I am making for the same experience level.
You claim pay has increased substantially, let me then send you my Resume and we will see if you can get me a job for substantially more money than my 2005 income 😉
My data is real world, on the ground. Sure, it applies only to the tech industry but let me know in which other industries has pay substantially increased in the last decade?
ParticipantThat being said, Rich Toscano, the brilliant and very well-respected owner of this blog, has some information that can be found on the home page of this site indicating that housing prices are not in bubble territory at this time. There is no doubt that prices are high, though, and Rich’s graphs and data will show you how today’s market compares to markets in the past.
I hope Rich is only referring to SD real estate. Here in Orange County things are in a full fledged bubble. Even Trulia rates OC as 20% overvalued and they are usually conservative.
And finally for concrete proof..my friend bought his condo in Ladera at the very peak of the last bubble for $600k and sold it last month for $585k.
So, Rich is saying that we are not in a bubble this time but somehow prices are back to where they were at the peak of the largest asset bubble in the history of the United States? Respectfully, His argument does not make much sense to me.
I hope Rich can substantiate his claims. I bet he will say something to the effect of inflation and rents but that is nonsense. My rent is lower now than I was paying in 2005 and in a nicer area.
ParticipantTotally agree… if it was the standard in 90s and before and the housing market did just fine then why is it suddenly necessary to go to 5% down? It makes no sense.
In addition I also think that those who have 20% saved up have demonstrated the discipline required to save and be financially responsible.
ParticipantI see prices creeping down slightly…is this the start of a big slide or something just seasonal which will shoot up again next Spring?
I see we are at a point where investors have exited the market, inventory has gone up tremendously and I am seeing price cuts since homes are simply languishing on the market untouched.
Where is the market headed from here? If interest rates creep up due to QE exit that can only depress the market further?
Is it advisable to wait a bit to see where things go?
ParticipantI have heard liver problems like cirrhosis is not a risk unless the drinking is extremely excessive… for instance a 6 pack nightly for 20 years or so. You really cannot get any liver problems from 2-3 drinks a night.
Participantdrank 4 beers and a little shot of whiskey yesterday… yikes! That is way too much for me but it’s occasional. Usually drink around 2 beers, that’s it. I don’t consider it excessive.
ParticipantTwo interesting videos to add to this conversation, since we are on the topic of marriage and feminism anyway…
https://www.youtube.com/watch?v=TU1isJvsTCw
Men on Strike..apparently…
Participantdrank very very rarely before age 32, who can blame me.. the only thing I knew back then was Miller and Corona!
Then suddenly started up when someone introduced me to good beer – all the delicious Belgian and German brews! Slowly discovered others as well reds, ambers, doubles, triples etc. and the marvelous craft breweries right here in California. Suddenly I understood how people could love this stuff so much 🙂
These days I will drink 2 beers a weekday, 4 a day Fri-Sun. I don’t find this too excessive although a doctor may disagree.
I know some that drink 6-12 beers a day, that is clearly excessive.
Drinking is fun, it relaxes stress and loosens you up. Stress is a killer as well so it’s got to wash out somehow. The one problem with alcohol is that it increases appetite which means potential weight gain.
I am super physically active though so no weight gain for me, I hike 12-16 miles every weekend and go to the gym thrice a week doing 1+ hour intense workouts…
ParticipantThe alternative is that housing prices will fall due to lack of demand… since incomes are not rising the demand has to be created somehow.
Participant[quote=scaredyclassic]here’s the reality kev…and i hate to be harsh, but ypu need to know… women want to have children with the best possible men. the really good looking, super studly successful ones….and you’re not him. [/quote]
What the heck are you talking about. There are a line of women wanting to have kids with me..they are just not the women I want to have kids with.
Both my ex’es wanted to marry and have kids with me ASAP. I was the one who broke it off. My ex before my current ex even proposed to ME…complete turnoff but she ASKED ME to marry HER.
When I said I am not meeting women, I meant I am not meeting the women that gives me the 100% confidence to marry them and have kids, it’s always women who have a ton of baggage and not obvious baggage but the type who seem very normal on the surface but you find out only months or years later that there is some serious issue.
I don’t know what exactly you are implying, whether it is an insult to me or not. I do consider myself successful, educated, financially stable and socially presentable. In addition I have a ton of diverse interests and personal accomplishments in many of my hobbies. In term of male appeal I certainly would consider myself much higher than median.
In any case, this post was about my ex and her ridiculous baggage. When did it become about my dating appeal…LMAO!
And for the record, I know tons of women, even gorgeous attractive women, who have children with men I would consider complete trash. So please, your comment is absolutely ridiculous!
Participant[quote=scaredyclassic]In terms of risk, from guys point of view marriage just seems wildly risky.[/quote]
Someone once told me that the person you marry is the single most important risk you take in life because the wrong choice has the capacity to utterly destroy you.
If you haven’t see the CNBC special Divorce Wars you should see it…
http://www.dailymotion.com/video/xi7vjj_cnbc-originals-divorce-wars_news
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