Or a certain fault line gives a burp. Land goes up, land goes down. Nature 101.
But a warm climate and being able to drive to a beach (eventually) are worth it.
Just like on the Gulf Coast, another version of Paradise.
I wonder what’s going to happen to those fantastic real estate investments once the realities of Americans’ Sun Belt fixation begin to set in.
Here in Melbourne our prices aren’t quite as crazy but apparently we have some of the most unaffordable housing in the world.
$700k+ (so the reserve is probably around 750k) for a place that’s unliveable as-is. In my neighbourhood 400k will get you a 2 bedroom townhouse, a nice 2 bedroom apartment, or maybe a fixer-upper 2 bedroom house with no carpark and no backyard.
Rents are going up too, so lots of renters who are trying to save for a house deposit are getting shafted twice.
[QUOTE=scotandrsn]
I have younger co-workers, and I have absolutely no idea what they are going to do when they feel like buying. I couldn’t imagine breaking my own back right now to get into a house I couldn’t afford just to watch its value slide down with the market.
[/QUOTE]
Some of my co-workers panicked and bought “just to get into something.” One bought a condo conversion and is having a number of problems she can’t get the builder to fix; plus the builder can’t seem to sell the rest of the condos so is dropping the price. Which means, of course, that she’s watching the “value” of her condo dropping.
Another interesting problem - for the people who bought starter homes in southern California when prices were only moderately insane - what do you do if you want to move up to better housing? There’s that increase in the value of what you bought - but the better stuff has gone way up in price too. Factor in the real estate agent’s commission and there’s a question of whether you’d be able to afford something equivalent to what you have now.
Same potential problem come retirement, if you want to stay in the area.
That home “investment” might not seem so sweet if you’re locked into it.
Ho do young, first time buyers do it, anyway? The average home price in America is $339,000. So if you avoid risky, no down, variable rate loans and stick to a straight, 30 year fixed rate mortage with 20% down, that’s over $65,000 in cash, not including closing costs. How long does it take new college graduates, with education loans to repay, to save that kind of down payment? I am amazed anyone under the age of 40 can buy a house at all.
[QUOTE=Jackmannii]
Another interesting problem - for the people who bought starter homes in southern California when prices were only moderately insane - what do you do if you want to move up to better housing? There’s that increase in the value of what you bought - but the better stuff has gone way up in price too. Factor in the real estate agent’s commission and there’s a question of whether you’d be able to afford something equivalent to what you have now.
Same potential problem come retirement, if you want to stay in the area.
That home “investment” might not seem so sweet if you’re locked into it.
[/QUOTE]
Agreed. Before people jump up and down because their house is worth “3 X what we paid for it!” that will only really pay off if they move and start renting again or move to another lower priced market. They forget that prices are relative and while their house went up 3x it’s value so did everbody elses. And I’m not sure why people think equity = free money? Equity is more like collateral for loans that you still have to pay back and still have to pay interest on (and note the interest is tax “deductable”, not tax “refundable”, big difference) and again equity is only worth something when you either cash out a house or move to a lower valued market.
Well, as a young, potential first-time buyer (hopefully not in a place like California, though) I am hoping that the subprime market will completely collapse, causing a ton of foreclosures and flooding the market. Of course, I don’t have any loans to pay (aside from a small amount of credit card debt which I can clear or almost clear by the time I’m out of grad school), meaning that any money I make in a job can go into saving for said 20% down payment.
[QUOTE=AudreyK]
But then you find yourself living in northeast Ohio. 
My SO is from there. I’ve visited, and it’s nice. Lots of green. Can we have some of your unused land?
[/QUOTE]
Actually, just last night I got an OK to my offer on a 4 bedroom, 2 bath bungalow with a big yard and all the trimmings.
No way I’d ever be able to afford that in Burbank.
So I’m glad to be here.
[QUOTE=Epimetheus]
I’m not talking about rent. I am talking about buying a house somewhere else. Obviously nobody is going to try and argue that renting is smarter.
[/QUOTE]
In Switzerland, 70% of people rent.
Maybe the Swiss are bad with money, what do y’all think?
[QUOTE=Hampshire]
Agreed. Before people jump up and down because their house is worth “3 X what we paid for it!” that will only really pay off if they move and start renting again or move to another lower priced market. They forget that prices are relative and while their house went up 3x it’s value so did everbody elses. And I’m not sure why people think equity = free money? Equity is more like collateral for loans that you still have to pay back and still have to pay interest on (and note the interest is tax “deductable”, not tax “refundable”, big difference) and again equity is only worth something when you either cash out a house or move to a lower valued market.
[/QUOTE]
Thank you. The way homeowners and realtors talk about equity like it’s capital, I thought maybe I was missing something.
[QUOTE=Nava]
In Switzerland, 70% of people rent…
[/QUOTE]
In Soviet Union, apartment rents you!
[QUOTE=Fear Itself]
Ho do young, first time buyers do it, anyway? The average home price in America is $339,000. So if you avoid risky, no down, variable rate loans and stick to a straight, 30 year fixed rate mortage with 20% down, that’s over $65,000 in cash, not including closing costs. How long does it take new college graduates, with education loans to repay, to save that kind of down payment? I am amazed anyone under the age of 40 can buy a house at all.
[/QUOTE]
Well, you’re looking at the AVERAGE price. That means at least half of all homes are selling below that price. Here in Metro Detroit, you can get a nice starter home for less than 150K if you shop well.
No downpayment loans might be risky, but there are a slew of low-down loans (5%) that are not bad at all. Sure, you pay PMI for a while, but that’s better than trying to come up with a 30K downpayment while still slogging through college debt.
[QUOTE=crazyjoe]
Well, you’re looking at the AVERAGE price. That means at least half of all homes are selling below that price. Here in Metro Detroit, you can get a nice starter home for less than 150K if you shop well.
No downpayment loans might be risky, but there are a slew of low-down loans (5%) that are not bad at all. Sure, you pay PMI for a while, but that’s better than trying to come up with a 30K downpayment while still slogging through college debt.
[/QUOTE]
No, you’re talking about median price.
If there were three homes on the market, 100K, 200K and $1.2M, the median price is $200K and the average price is $500K.
Very important in understanding income numbers, since an increase in average income might be the result of the rich getting richer, while a rise in median income might well be better for Joe Average.
[QUOTE=Voyager]
No, you’re talking about median price.
If there were three homes on the market, 100K, 200K and $1.2M, the median price is $200K and the average price is $500K.
Very important in understanding income numbers, since an increase in average income might be the result of the rich getting richer, while a rise in median income might well be better for Joe Average.
[/QUOTE]
Well, reading the article, it appears it was misquoted anyhow, the median price is 239,000 not 339,000. But it is the MEDIAN price, not the MEAN price, as you are speaking about. Mean and median are both regularly used to represent averages, which is why it’s important to ask which one is being used in your discussion.
[QUOTE=crazyjoe]
Well, reading the article, it appears it was misquoted anyhow, the median price is 239,000 not 339,000.
[/QUOTE]
Quibble all you wish, for a $239,000 home you would still need $47,800 for a 20% down payment. How long would it take the average (mean, median or mode) new college graduate to save that much, while paying back college loans, plus rent and monthy expenses?
[QUOTE=Hampshire]
People forget that the housing market (just like any other commodity) is based on supply and demand. That’s supply and demand, not supply and necessity. The reason houses are so damn expensive in SoCal is because apparently there is enough demand for million dollar houses that people will keep selling them for a million until people stop buying them.
.
[/QUOTE]
Also I’m sure population plays a huge role. We have twice the population in L.A. that we had a generation ago, and everyone still wants to live as close to the water as possible. Which is understandable, because that still seems to be where most of the jobs are, meaning shorter commutes, it’s where almost all the worthwhile attractions and cultural resources are, and anything that makes living in SoCal worthwhile beyond not having to shovel snow in February. Nobody wants to live inland, and they only do it so they can afford houses, it seems. Some wag once mocked that the only thing ‘imperial’ about the Inland Empire is Dairy Queen and Burger King. And I still need to be convinced he was wrong.
[QUOTE=Fear Itself]
Quibble all you wish, for a $239,000 home you would still need $47,800 for a 20% down payment. How long would it take the average (mean, median or mode) new college graduate to save that much, while paying back college loans, plus rent and monthy expenses?
[/QUOTE]
Here’s a list of some average starting salaries by majorThey range from $30K to $55K
I’ll just choose $45K as an average, which is a bit high, and assumes an even division of majors, but I’ll assume no raises to make up for it. Double it to $90K, because no single 20-something college graduate needs to own his own house. No reason a couple of college graduates couldn’t save $10K a year on that income without too much trouble, which puts a house 5 years away. If they were really motivated, I’m sure they could do it in 3.
[QUOTE=Spectre of Pithecanthropus]
Nobody wants to live inland, and they only do it so they can afford houses, it seems. Some wag once mocked that the only thing ‘imperial’ about the Inland Empire is Dairy Queen and Burger King. And I still need to be convinced he was wrong.
[/QUOTE]
Pah. You couldn’t pay me to live in LA County, much less the city. I’ll take the Inland Empire any day (you can keep San Bernardino of course. That city is a cesspool.). It’s a pain to drive in to Dodger Stadium, this is true. But the Quakes are 30 minutes away, and cost 1/10 the price of decent seats in Chavez Ravine.
[QUOTE=crazyjoe]
Well, reading the article, it appears it was misquoted anyhow, the median price is 239,000 not 339,000. But it is the MEDIAN price, not the MEAN price, as you are speaking about. Mean and median are both regularly used to represent averages, which is why it’s important to ask which one is being used in your discussion.
[/QUOTE]
Right, and they can show very different things, as I demonstrated. Around here, most reporters use either indiscriminately. They get the numbers from people who understand the difference, but the reporters themselves don’t seem to. It wouldn’t surprise me at all if your source used average incorrectly - and my statistics book equates average and arithmetic mean.
[QUOTE=iamthewalrus(:3=]
I’ll just choose $45K as an average, which is a bit high, and assumes an even division of majors, but I’ll assume no raises to make up for it. Double it to $90K, because no single 20-something college graduate needs to own his own house. No reason a couple of college graduates couldn’t save $10K a year on that income without too much trouble, which puts a house 5 years away. If they were really motivated, I’m sure they could do it in 3.
[/QUOTE]
Your absolutely right. And with a 4-year degree you graduate around 22-23 years old. Five years after that your 27-28 years old. Get married, buy a house, and start a family in your 30’s.
I don’t know how young people who get married when they’re 21 and have 2 kids immediately can make it these days. Seems like they’d be stuck in a hole they could never dig out of.