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surveyor
ParticipantRegulated areas…
The more regulations there are in a specific location, the more expensive housing is. California regulations are much more onerous than other states, and so there is a built in premium. True, Bakersfield, Inyo, and all these inland cities of California do not have $500k homes to the degree San Diego does, but they also do not have the same regulations as La Jolla.
As for the cost that regulations add to a property, I do not believe it is in the $100k (maybe in the coast communities) and up but certainly I have seen regulations add an additional $30k to $60k to an SFR. Certainly in places in the coast where you cannot lower the per unit cost using economies of scale, an additional $100k is believable. $200k? Probably not.
I am not saying that these regulations are the only cause of expensive housing here in San Diego and California. However, it is one factor that will continue to keep home prices up in California.
ParticipantRegulated areas…
The more regulations there are in a specific location, the more expensive housing is. California regulations are much more onerous than other states, and so there is a built in premium. True, Bakersfield, Inyo, and all these inland cities of California do not have $500k homes to the degree San Diego does, but they also do not have the same regulations as La Jolla.
As for the cost that regulations add to a property, I do not believe it is in the $100k (maybe in the coast communities) and up but certainly I have seen regulations add an additional $30k to $60k to an SFR. Certainly in places in the coast where you cannot lower the per unit cost using economies of scale, an additional $100k is believable. $200k? Probably not.
I am not saying that these regulations are the only cause of expensive housing here in San Diego and California. However, it is one factor that will continue to keep home prices up in California.
ParticipantI thought this quote was particularly interesting:
“In fact, California has brought the housing affordability crisis and the resultant slower growth on itself. California’s strict and bureaucratic land-use regulation has driven the price of developable land through the roof. At the same time, areas with more liberal (yet environmentally sustainable) regulation have managed to preserve housing affordability. Median home prices are about $150,000 in Dallas-Fort Worth and Houston and $175,000 in Atlanta. There are similar, even lower, prices in many other areas.”
If there’s something that will keep California/San Diego housing higher than most other areas, it will be this fact outlined above.
ParticipantI thought this quote was particularly interesting:
“In fact, California has brought the housing affordability crisis and the resultant slower growth on itself. California’s strict and bureaucratic land-use regulation has driven the price of developable land through the roof. At the same time, areas with more liberal (yet environmentally sustainable) regulation have managed to preserve housing affordability. Median home prices are about $150,000 in Dallas-Fort Worth and Houston and $175,000 in Atlanta. There are similar, even lower, prices in many other areas.”
If there’s something that will keep California/San Diego housing higher than most other areas, it will be this fact outlined above.
ParticipantI thought this quote was particularly interesting:
“In fact, California has brought the housing affordability crisis and the resultant slower growth on itself. California’s strict and bureaucratic land-use regulation has driven the price of developable land through the roof. At the same time, areas with more liberal (yet environmentally sustainable) regulation have managed to preserve housing affordability. Median home prices are about $150,000 in Dallas-Fort Worth and Houston and $175,000 in Atlanta. There are similar, even lower, prices in many other areas.”
If there’s something that will keep California/San Diego housing higher than most other areas, it will be this fact outlined above.
ParticipantAN:
Oh it’s been broken since forever!
My “rant” was not really directed towards this thread specifically, just something that’s been needing to be said for awhile now…
ParticipantAN:
Oh it’s been broken since forever!
My “rant” was not really directed towards this thread specifically, just something that’s been needing to be said for awhile now…
ParticipantAN:
Oh it’s been broken since forever!
My “rant” was not really directed towards this thread specifically, just something that’s been needing to be said for awhile now…
ParticipantMisconceptions of real estate
There are a lot of real estate statements that are being bandied about that do “tend” to be true, but like newtonian physics, those statements tend to break down in extreme circumstances.
“Housing always goes up.” – Yes, this tends to be true, BUT the caveat is that you have to own it for at least 10 years. As we can see, living in a house for a couple of years does not guarantee that the house will fetch its original price.
“They’re not making any more land.” – Another true statement, HOWEVER money tends to travel in the direction of easiest resistance. Alex made the statement that there is no land left in coastal San Diego and to a certain degree he is correct. There is only small minor in-fill development left there at best. However, coastal San Diego has an escape valve through inland San Diego and then on to Riverside. So while it is true that coastal San Diego will probably hold its value well as compared to other parts of San Diego, that does not make it immune to lowering housing prices. Still, I will say that the amount of capital required to even build a shack in coastal San Diego is so high and it is so difficult to build there that it might as well be left to the extreme rich. Processing through the coast commission is an exercise in the inefficiency of government.
Lastly…
“Everyone wants to live here.” – An employer I know just received an application from Washington state and we were both puzzled because the job he applied for is a pretty low paying albeit skilled job. There are others also I’ve seen who have been moving in here and I am sure there are lots of others who are leaving. Still, San Diego is a good place to live but in extreme circumstances (like the high cost of living) this “everyone wants to live here” statement tends to break down.
Anyways, my two cents worth. I don’t take offense to a lot of people saying these statements and most everyone of us shouldn’t but we should at least note that in extreme circumstances, simplistic rules and statements can break down and be wrong. It helps to know the reasoning behind those statements.
ParticipantMisconceptions of real estate
There are a lot of real estate statements that are being bandied about that do “tend” to be true, but like newtonian physics, those statements tend to break down in extreme circumstances.
“Housing always goes up.” – Yes, this tends to be true, BUT the caveat is that you have to own it for at least 10 years. As we can see, living in a house for a couple of years does not guarantee that the house will fetch its original price.
“They’re not making any more land.” – Another true statement, HOWEVER money tends to travel in the direction of easiest resistance. Alex made the statement that there is no land left in coastal San Diego and to a certain degree he is correct. There is only small minor in-fill development left there at best. However, coastal San Diego has an escape valve through inland San Diego and then on to Riverside. So while it is true that coastal San Diego will probably hold its value well as compared to other parts of San Diego, that does not make it immune to lowering housing prices. Still, I will say that the amount of capital required to even build a shack in coastal San Diego is so high and it is so difficult to build there that it might as well be left to the extreme rich. Processing through the coast commission is an exercise in the inefficiency of government.
Lastly…
“Everyone wants to live here.” – An employer I know just received an application from Washington state and we were both puzzled because the job he applied for is a pretty low paying albeit skilled job. There are others also I’ve seen who have been moving in here and I am sure there are lots of others who are leaving. Still, San Diego is a good place to live but in extreme circumstances (like the high cost of living) this “everyone wants to live here” statement tends to break down.
Anyways, my two cents worth. I don’t take offense to a lot of people saying these statements and most everyone of us shouldn’t but we should at least note that in extreme circumstances, simplistic rules and statements can break down and be wrong. It helps to know the reasoning behind those statements.
ParticipantMisconceptions of real estate
There are a lot of real estate statements that are being bandied about that do “tend” to be true, but like newtonian physics, those statements tend to break down in extreme circumstances.
“Housing always goes up.” – Yes, this tends to be true, BUT the caveat is that you have to own it for at least 10 years. As we can see, living in a house for a couple of years does not guarantee that the house will fetch its original price.
“They’re not making any more land.” – Another true statement, HOWEVER money tends to travel in the direction of easiest resistance. Alex made the statement that there is no land left in coastal San Diego and to a certain degree he is correct. There is only small minor in-fill development left there at best. However, coastal San Diego has an escape valve through inland San Diego and then on to Riverside. So while it is true that coastal San Diego will probably hold its value well as compared to other parts of San Diego, that does not make it immune to lowering housing prices. Still, I will say that the amount of capital required to even build a shack in coastal San Diego is so high and it is so difficult to build there that it might as well be left to the extreme rich. Processing through the coast commission is an exercise in the inefficiency of government.
Lastly…
“Everyone wants to live here.” – An employer I know just received an application from Washington state and we were both puzzled because the job he applied for is a pretty low paying albeit skilled job. There are others also I’ve seen who have been moving in here and I am sure there are lots of others who are leaving. Still, San Diego is a good place to live but in extreme circumstances (like the high cost of living) this “everyone wants to live here” statement tends to break down.
Anyways, my two cents worth. I don’t take offense to a lot of people saying these statements and most everyone of us shouldn’t but we should at least note that in extreme circumstances, simplistic rules and statements can break down and be wrong. It helps to know the reasoning behind those statements.
ParticipantFrom Wikipedia:
Conforming loan limits
A conforming loan is a loan that meets bank funding criteria.
Because of its stake in the mortgage market and because of its history, Fannie Mae and Freddie Mac each year set the limit on what constitutes a conforming loan, based on the October-to-October changes in mean home price, above which a mortgage is considered a jumbo loan, and typically has higher rates associated with it. This is because both Fannie Mae and Freddie Mac only buy loans that are conforming, to repackage into the secondary market, making the demand for a non-conforming loan much less. By virtue of the laws of supply and demand, then, it is harder for lenders to sell the loans, thus it would cost more to the consumers (typically 1/4 to 1/2 of a percent.)
Limits for Alaska, Hawaii, Virgin Islands and Guam are 50% higher. Virgin Islands was designated a high cost area in 1992 and Guam in 2001.
Prior to 1984, second mortgage limits were the same as first mortgage limits. Subsequent legislation reduced the limits to 50% of first mortgage limits. Fannie Mae had no second mortgage program before 1981.
ParticipantFrom Wikipedia:
Conforming loan limits
A conforming loan is a loan that meets bank funding criteria.
Because of its stake in the mortgage market and because of its history, Fannie Mae and Freddie Mac each year set the limit on what constitutes a conforming loan, based on the October-to-October changes in mean home price, above which a mortgage is considered a jumbo loan, and typically has higher rates associated with it. This is because both Fannie Mae and Freddie Mac only buy loans that are conforming, to repackage into the secondary market, making the demand for a non-conforming loan much less. By virtue of the laws of supply and demand, then, it is harder for lenders to sell the loans, thus it would cost more to the consumers (typically 1/4 to 1/2 of a percent.)
Limits for Alaska, Hawaii, Virgin Islands and Guam are 50% higher. Virgin Islands was designated a high cost area in 1992 and Guam in 2001.
Prior to 1984, second mortgage limits were the same as first mortgage limits. Subsequent legislation reduced the limits to 50% of first mortgage limits. Fannie Mae had no second mortgage program before 1981.
ParticipantFrom Wikipedia:
Conforming loan limits
A conforming loan is a loan that meets bank funding criteria.
Because of its stake in the mortgage market and because of its history, Fannie Mae and Freddie Mac each year set the limit on what constitutes a conforming loan, based on the October-to-October changes in mean home price, above which a mortgage is considered a jumbo loan, and typically has higher rates associated with it. This is because both Fannie Mae and Freddie Mac only buy loans that are conforming, to repackage into the secondary market, making the demand for a non-conforming loan much less. By virtue of the laws of supply and demand, then, it is harder for lenders to sell the loans, thus it would cost more to the consumers (typically 1/4 to 1/2 of a percent.)
Limits for Alaska, Hawaii, Virgin Islands and Guam are 50% higher. Virgin Islands was designated a high cost area in 1992 and Guam in 2001.
Prior to 1984, second mortgage limits were the same as first mortgage limits. Subsequent legislation reduced the limits to 50% of first mortgage limits. Fannie Mae had no second mortgage program before 1981.
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