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I think the supply/demand situation in Coastal California is so much different that no matter what we do in Phoenix it will never be the same. Let alone for the climate + blue water port advantage. And MN is right our local economy is much better, diverse and more sophisticated than ever before.
I was just responding to your comment about the Phoenix area being second tier, and more boom/bust in comparison to certain large markets. Our economy has definitely become diversified in the last 10+ years, but there is still room for improvement ... especially if the Phoenix market shows any indication of taking a substantial hit when recessions or corrections occur. With our growth rate & population rank, we really need to strive to become a tier 1 metro with even better diversification.
I was just responding to your comment about the Phoenix area being second tier, and more boom/bust in comparison to certain large markets. Our economy has definitely become diversified in the last 10+ years, but there is still room for improvement ... especially if the Phoenix market shows any indication of taking a substantial hit when recessions or corrections occur. With our growth rate & population rank, we really need to strive to become a tier 1 metro with even better diversification.
I believe you've mentioned in the past that your son is starting out as a doctor as is his girlfriend. They live in the Mission District of SF. If this is the case their combined income is likely in the 500k range and will go up in the coming years. Great. If they want to stay in the Bay Area, that'll work. If they want to move to another equally expensive area of the country...that's fine too.
They are now married. They are buttoning up on their fellowships. They will bring in around $750K out of the gate. And that won't go very far. CAN will tax the crap out of them, a nanny, 8% interest on a "starter" home, overpriced rent, etc.
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Originally Posted by john3232
But what about couples in the 150k range?
The couple will then rent. Either an extremely small spot, not so nice spot, or they get a roommate. When they were making $75K each during years the 1st two years of slave labor residency (or exactly your $150k example), they had one car, took public transit, biked to spots, had a "roommate" via shared laundry with the owner upstairs, and they STILL paid $3500 a month in rent. They ate at the hospital for free (a cafeteria per diem), and still saved $15K-$20K a year as a couple.
If they lived in Mesa at $150K, they would be saving more money. Notice how I didn't say they would spend more money.
The hundreds of thousands in equity are not earned equity from paying down the mortgage or improving the house . Most of it is from appreciation. That is easy equity!
Of course! That didn't need to be said. My point was 40% own, and another high percentage have a lot of equity (however they got it). That's called wealth! Easy or not. If someone has a lot of equity, that means they are not going to walk. Furthermore, inventory is much lower than predicted because people are not selling a home with a cheap mortgage rates. This is a LOT different than 2008 with liar loans, leveraged up to their eyeballs, etc.
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Originally Posted by Texas100
They were bought mostly during a much more affordable time. Now folks who bought at the peak during the last 2.5 years. There are about 200,000 properties or about 10-15% of inventory that will likely end up under water.
Again, that didn't need to be said. It seems you assume that people who bought "during the last 2.5 years" didn't pay cash with their CA, WA homes. 40% of them paid with cash. And a lot of people bought at peak with hundreds of thousands of equity. Sure, some hoods and age groups will be upside down. Some will walk and apply downward pricing pressure. 1st things 1st. This red-hot PHX job market needs to tank before your skewed prediction comes to a head. For the next couple of months, there will be pressure on the RE values. If I bought right now, I would do so by knocking on the door of owners explaining why their home with a lot of equity needs to drop after they let go of their agent. And to give me a call. Someone will bite. So yes, it is a bad time to buy right now at "retail". I've always waited for the deal and I am pretty good at negotiating. It's "easy" equity.
Listen. We agree that housing is overpriced. The FEDs bought mortgage-back securities to heavily subsidize mortgage rates. Even well after bidding wars were going on with housing all around the country (especially on the West Coast).
My theory was the FEDs wanted to get at your savings and net worth by inflating everything. There is no way they are THAT stupid to not understand that housing prices were getting way out of control on their watch! Now with inflation, the 34 trillion dollar debt feels about 30% less. https://www.usdebtclock.org/ . the FEDs got in my wallet by a solid 30% by way of my buying power.
Meanwhile, most items are a solid 30-35% more. To assume that housing is going to drop hundreds of thousands is not realistic unless the FEDs punish people with even higher rates. And when inflation stops there will be pressure to drop the rates. Or putting it another way, I do not see your oversimplified reasoning coming to fruition. If the housing market crashes, there will be other reasons that we don't yet know about.
The problem is how we use exceptional people to justify inequalities and hierarchies. Throughout history, truly exceptional people didn’t necessarily have to be rich. They were just really good at something.
So get out there and be exceptional! be a power couple! start a business! work smarter! you can do it, If I can do it then so can you! guess what not everyone is exceptional, start a side hustle! great advice from the exceptional to the less exceptional. Fact of life not everyone will be really good at something.
I can remember when there were ways to get into a house even for the less exceptional, the taxi driver, the average Joe, we found help, and loans on rural property, We were persistent, we bought a starter townhouse (the owner carries the loan, with a balloon payment due after 15 years )
" But EVERYTHING is expensive right now. And yes, the "average" person just might be in trouble because their mortgages and rents are expensive. When you look through the lens of a person in the Have category, it's not nearly as bleak as you claim. Don't shoot the messenger. "
Right when you are in your 20s and you are not well paid, and you are not exceptional, you don't have a sought-after college degree, you are not yet at your peak earning power, DON'T SHOOT THE MESSENGERS! no matter what it takes save for that Down payment to get into home ownership, build that credit, get out of dead-end jobs, you can do it!
well maybe not in PHOENIX .....
Throughout history, truly exceptional people didn’t necessarily have to be rich. They were just really good at something.
A good electrician or AC vendor who starts their own business and easily earn six figures in the Valley.
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So get out there and be exceptional! be a power couple! start a business! work smarter! you can do it, If I can do it then so can you! guess what not everyone is exceptional, start a side hustle! great advice from the exceptional to the less exceptional. Fact of life not everyone will be really good at something.
Personally, I've experience more failure in life than success.
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I can remember when there were ways to get into a house even for the less exceptional, the taxi driver,
And I remember when an in-law apartment in SF was $210 and house was under 250k. I bought property in the Phx metro because I was priced out of SF and San Diego back in the early 2000..
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Right when you are in your 20s and you are not well paid, and you are not exceptional, you don't have a sought-after college degree,
Sounds like me, I graduated from SF State and worked as a temp.
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DON'T SHOOT THE MESSENGERS!
Please don’t.
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no matter what it takes save for that Down payment to get into home ownership, build that credit, get out of dead-end jobs, you can do it! well maybe not in PHOENIX .....
The problem is how we use exceptional people to justify inequalities and hierarchies. Throughout history, truly exceptional people didn’t necessarily have to be rich. They were just really good at something.
So get out there and be exceptional! be a power couple! start a business! work smarter! you can do it, If I can do it then so can you! guess what not everyone is exceptional, start a side hustle! great advice from the exceptional to the less exceptional. Fact of life not everyone will be really good at something.
I can remember when there were ways to get into a house even for the less exceptional, the taxi driver, the average Joe, we found help, and loans on rural property, We were persistent, we bought a starter townhouse (the owner carries the loan, with a balloon payment due after 15 years )
" But EVERYTHING is expensive right now. And yes, the "average" person just might be in trouble because their mortgages and rents are expensive. When you look through the lens of a person in the Have category, it's not nearly as bleak as you claim. Don't shoot the messenger. "
Right when you are in your 20s and you are not well paid, and you are not exceptional, you don't have a sought-after college degree, you are not yet at your peak earning power, DON'T SHOOT THE MESSENGERS! no matter what it takes save for that Down payment to get into home ownership, build that credit, get out of dead-end jobs, you can do it!
well maybe not in PHOENIX .....
Earlier, I mentioned that x% of people cannot do it. So we agree that not everyone can do it. The system is set up that way. Based on your typed words, I put you in the smart category.
I look at competition differently. Analogy: The joke where a bear was threatening a couple of friends. The first man immediately opened his backpack, pulled out a pair of sneakers, and started putting them on. The second man looked at him and said: “You’re crazy! You’ll never be able to outrun that bear!” The 1st man said "I only need to outrun YOU!"
So you don't need to invent a new category, be a superstar, etc. Just work smarter and harder than the competition. Rest assured the 26-year-old electrician working for $160 moonlighting building his business isn't a brainiac! He's not "exceptional." He's willing to work hours after a hard day's work to set himself up for life (future business owner while working full time for the "man". The guy washing my windows has great follow-up skills and a can-do attitude. He is over $200K... Washing WINDOWS!
If that's below you, I misjudged your abilities. No one is going to convince you to believe in yourself. So you are where you are. Now. If you have some debilitating health or mental issues or crazy responsibilities (taking care of your wife/dad or ______). I get it. In summary, you have tossed in the towel and are busy justifying why you are where you are.
Right when you are in your 20s and you are not well paid, and you are not exceptional, you don't have a sought-after college degree, you are not yet at your peak earning power, DON'T SHOOT THE MESSENGERS! no matter what it takes save for that Down payment to get into home ownership, build that credit, get out of dead-end jobs, you can do it!
well maybe not in PHOENIX .....
I'll be the first to admit that wages are not keeping up with cost of living. The average 20 something absolutely can't afford to mortgage a house these days ... however, the average 20 something has more choices today than before. There was a time when many parents wanted their kids out of the house when they reached the age of 18 to 21 ... AND, many young people in that age bracket couldn't wait to be away from their parents and on their own. Get a job, rent an apartment, get married, and save for a down payment on a house. That's the way it was, but that's not really how it is now.
Anymore, many young adults still live at home with their parents or other family members, even well into their 30s. Some of them don't even help out with household expenses, despite having an income source (be it a "dead end job" or a promising career). Marriages have also decreased quite noticeably, and families aren't pressuring their adult children as much to get hitched. Young people these days have it much easier in this regard, despite the housing market being out of reach for many. Those who prefer to be on their own often reside in apartments for an unforeseeable amount of time, and aren't under much pressure to buy a home. This is the reason for the upswing in apartment construction over the last few years: the demand is high. I personally would like to see more ownership, but I just don't see that happening anytime soon.
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^^^
Based on your typed words, I put you in the smart category. 
