As it says here somewhere, I’m here in Southern California. Real estate prices here have risen dramatically in the last year or so. And yet… we’ve got the same old neighborhoods we’ve always had. Or maybe there are changes, and locals just can’t see them from day to day (except the ‘holy-mackeral!’ real estate flyers). What changes should we expect to see? Why don’t we see more changes?
What do I mean by this? (he thinks out loud)… Uh, why don’t more property owners who can sell do so and move to, say, larger homes in other parts of the U.S.? Why do the new houses go up in the outlying areas of L.A., when there are some neighborhoods closer in that are, um, sort of “fixer-uppers”, but maybe cheaper?
I’ll grant that this may not be a GQ-type question; maybe no factual answers possible. (Mods, do what you gotta.) Still, it’d be nice to get some light on this, rather than heat.
Yeah, this isn’t what I’d call a ‘question with a factual answer’, so…
I’m guessing you’re under 30, right?
Somewhere around there people who have never found a reason to stay anywhere (as opposed to those who had the good/bad/whatever luck to be born with a great sense of ‘Home’) tend to stay where they are.
I moved 2,000 miles to be where I wanted to be at age 30, bought a home in 1982, and will not leave, no matter how much profit I could get by selling - currently more than enough to buy several nice houses in the town in which I grew up.
Call it ‘sense of place’.
May you find it - until I moved here, I never kept the same address more than 2 years. Life is what happens to you when you are busy with other things.
Hey, there might be some land-planning, sociology-type answers out there.
As I think about it more, I suspect that one thing that happens is that land-use density rises. Legally or not (gasp!), I suspect that more people rent out rooms, or larger families lower their expectations and move into smaller units, just to afford the mortgage - or rent, as the case may be.
I have been all over the world and I live in my favorite place. I have no intention of moving…ever.
I bought my home ten years ago. It’s the median priced home in my town. Sure I could have sold it when it doubled in price but since then it’s doubled again. It’s by far the best investment I have ever made. Why on Earth would I sell it?
I know of many who have taken these routes - next door is a small 2-bedroom, 1 bath. It has an illegal (yeah, GASP!) in-law in the basement. It and both bedrooms are rented to folks from the ‘old country’ (the parents and grandparent speak/spoke little English) - I have no idea where the family (3 generations, at one point) sleep. The house next door to it (identical floor plan, as far as I can tell, just from the front and back, plus the MLS listing) sold a few months ago (the old boy had died - his wife died about 6 years earlier). I will not divulge the obscene price, but a straight-line extrapolation of my property tax would show that they are paying over $900 a MONTH just in property tax - that’s about my mortage on my 1600 sq. ft. house vs. their 950 sq. ft. house. I have no idea how they pay that, plus a whatever mortgage they may be paying. Utilities here are cheaper here than in most of the US, but the expression 20 years ago was “we take the money up front (house price vs. monthly utility bills)” - that is now completely meaningless.
I have taken the position “they (prices) can’t keep up this appreciation” for about 20 years - the only actual dip was during the early 90’s - a few people who had done 5% down purchases in outlying areas mailed the keys to the mortgage company, but other than that 5-10% dip, the rate has just accelerated over the years.
Even the r.e. brokers have given up trying to make sense of it - they have cut their rate from the old 10% to 4-6%, and can make a killing on just that.
Rational ideas cannot come close to explaining this, and I gave up trying to understand years ago, and just watch dumb-struck.
I have no children (yes, I’m male, never married, and yes, I’d know, thank you) but some nieces and nephews could be forgiven for looking forward to my death.
Sometimes when people buy in as young people, and then the neighborhood grows in cachet, gets big trees, too many people move out into the burbs and then try to move back, etc and everything grows their property value, well, then they too have gotten older and richer and such. I mean, if they’re living where everybody wants to move, why on earth would they move out for “more house”? They’re probably in the same demographic as everybody trying to get where they are.
That’s a definate dynamic here - the people who bought the little in-town bungalows 30 years ago and the people who want to move into them now are the same sort of people. Why move when it’s where everybody wants to live?
That’s my attempt at a GQ answer, since “why on earth would I pick up and move somewhere where my money goes further? I live here!” is more IMHO. Not to mention that there’s probably a reason houses don’t cost a thing wherever “elsewhere” is. I also realize that my impression of this is orders of magnitude cheaper than when other people talk about “rising property values”. We recoil in shock when in-town three bedroom homes with more than one bathroom cost $250,000 - that’s absolutely highway robbery.
The property tax thing is another reason why someone in California would be reluctant to move. For those of you not familiar, Proposition 13 was passed in the mid 1970’s. It says that your poperty tax rate is set at something like 1.1% of the value of your home and can go up no more than some small amount a year. Unless you are over 65, if you sell and buy a new place you have to reset your basis to the higher amount.
The couple next door to me bought their place in the 60’s and pay around $700/year. I pay just under $3000/year. The guys who just bought down the block will pay close to $12,000/year. Our houses are nearly identical.
Oh, and I missed that you asked why people don’t move downtown to the fixer-upper neighborhoods - here we call that “white flight”. I’m lucky to live in a city with less of that than other places, but it’s still something of an issue - Irmo, I’m looking at you.
Also, when you have a situation like recently in the South when all the young families are descending upon you, they all seem to want cheap single-family homes, largely unavailable in the required quantities intown, so these subdivisions spring up like mushrooms in former fields and woods. Suddenly the schools are overloaded and building like mad and you get miles and miles and miles of cheap houses that all look alike that all have young children who all go to the same school. I suspect that that’s a pattern that follows wherever the families with young children are currently moving. I think it’s sad that these kids grow up never knowing people who live in apartments, or who don’t, you know, have little kids. Let alone the fact that these developments often don’t tend to be very economically, culturally, or ethnically diverse. But that’s what happens when those people do move out to where it’s cheaper. I wouldn’t want to live there, myself. (Got lost in “Lake Carolina” once. It was very creepy. I got turned around and then saw the same house eight times. “Oh yeah? Well my house has the front door window upgrade!”)
I noticed in Atlanta that the pioneers into the older potentially-lovely homes in town tended to be gay professionals - I assume because many of them have no children and it’s both easier to move to a dangerous neighborhood when you don’t have kids and because it’s expensive to fix up an older home. The areas made whiter and richer by the gay advance guard then became fashionable and everybody hip wanted to live there. I suspect this is also true elsewhere.
I think that Zsofia’s answer is pretty much there. But to put it in economic terms, houses in some areas have gone up in price because they are in demand. They are in demand because people want to live in those areas. People stay in those areas even though they could sell and buy a bigger house in a cheaper
area because the cheaper area is not as desirable.
In other words, your question is like asking why someone would pay a squillion for a Rolls Royce when they could sell that and buy 8 Suzukis. They don’t do it because they want a Rolls Royce.
Good point. Gay couples tend to not have kids. Childless couples, gay or not, have more income to spend on themselves becase they don’t have to pay for children. Also they don’t care if their nice house is in a shitty school system.
I too am puzzledby the huge run-up in real estate prices over the last few years. Where I live (outside of Boston, MA) prices for houses have tripled in the past 5 years. This is NOT normal, and I think that we are in for a big BUST in this market. Houses are being “flipped” i.e. sold back and forth-this inflates their pricing. What really amazes me: while all of this is going on, here has been only a smallincrease in the population…either the census numbers o are wrong, or there has been a huge amount of illegal immigration.
Of course, there is another explanation (I’d like your opinion): this country (the USA) is emptying out-people are moving from the interior to the coasts. You can buy a nice home in a South Dakota city for $100,000, or Iowa, or Nebraska…people don’t want to live in these interior states any more. You see towns in the mid-west states being completely depopulated…meanwhile, the coastal states grow in population. This is great oif you WANT to move from LA to Minot, ND! Of course, nobody wants to do that! :smack: