Why California Home Prices are So High (Los Angeles, Orange: sales, real estate market)

[SOON2BNSURPRISE]

Originally Posted by Sydney123

Mandalay Bay? My b/f lives there. Docks right behind his house.

This is Seabridge one of Oxnards newest boat dock communities, but you know the area. Seabridge is near Wooley Road and Victoria. I remember back when they were building Mandalay Bay. I was a little kid but my dad had some involvement with that.

[Sydney123]

Originally Posted by user_id

The problem with the "Location, location", "great wheater", etc mantras is that they fail to explain the extreme fluctuations in California real estate. The location and weather haven't changed yet California real estate was much cheaper just 10~15 years ago and, if anything, the situation the state was better than today.

California real estate has become a speculative asset, those that got in years ago made out where as younger families and new residents have it tough. I think a lot of people fool themselves into believing that the prices are worth it.

Comparing housing prices now to what they were 10-15 years ago is like comparing apples to oranges. We're not in Kansas anymore Toto.
Climate "etc" are exactly what makes people want to live here (location location) and supply and demand is what fuels the higher costs of homes. People can still make money on real estate here if they're wise when they invest. The weather and location may not have changed, but the demand has and as demand has gone up... So have prices. Pretty basic economics. Fluctuation of prices has to do with the economy. When it's good people spend, when it's not people hold on to their money... More basic economics.

[SOON2BNSURPRISE]

In 2003 my parents sold their home for $338,000. That was within the 10 to 15 year time frame. Today you can but that home for less than the $338,000 range. Back in 2000 their home was maybe $180,000 or so. That is what they were selling for. Speculation moved the prices up a bit just in three years. Their realtor mentioned to them that prices had moved even further up a couple years later. In fact the people that bought their home ended up selling it in 2005 for $485,000. By 2007 homes had increased to the $600,000 range in their old neighborhood. Guess what happened by the end of 2007? Prices went down. By 2010 their old neighborhood had declined to the $240,000 range. I have seen homes in their neighborhood selling for just over $300,000 now.

Prices go up, prices go down. we bought a home in 2010 for $310,000. Earlier in the year a home sold behind us for $480,000. Down the street one sold for $440,000. On the other side of the street today an investor has a flip on out street that he could not get anyone to look at. He dropped the price to $399,000 and has people visiting the home all the time now. Who knows where the market is going. Either way, if it goes down further my wife and I want to buy another one anyway. I was hoping they would slide down again anyway. LOL

[user_id]

Originally Posted by Sydney123

Comparing housing prices now to what they were 10-15 years ago is like comparing apples to oranges. We're not in Kansas anymore Toto.

Its not like comparing apples to oranges, not that much has changed since 10~15 years ago and nothing has changed in terms of the weather, location, etc.

Originally Posted by Sydney123

Climate "etc" are exactly what makes people want to live here (location location) and supply and demand is what fuels the higher costs of homes. People can still make money on real estate here if they're wise when they invest. The weather and location may not have changed, but the demand has and as demand has gone up... So have prices.

People live in California for a variety of reasons, for example, most simply grew up in the state and not everyone thinks California weather is desirable. Citing "supply and demand" doesn't tell you anything about the dynamics of California real estate, for example, if California real estate is so expensive due to the weather why would it shift so often? The weather hasn't changed. Are people continuously changing their mind about the attractiveness of California weather?

Many issues effect the supply and demand for housing in California, over the last few years 30~40% of the demand for single family housing has been from investors. That is, investors are bidding up California homes so they can turn around and rent them to California workers and/or flip them for ever higher prices.

[user_id]

Originally Posted by SOON2BNSURPRISE

Prices go up, prices go down. we bought a home in 2010 for $310,000. Earlier in the year a home sold behind us for $480,000. Down the street one sold for $440,000. On the other side of the street today an investor has a flip on out street that he could not get anyone to look at.

Prices go/down so fast in California because California real estate has become just another speculative asset class, but unlike stocks, bonds, etc people have to live in homes. I think California real estate is pretty tragic or the average Joe.

[mysticaltyger]

Originally Posted by boathome

Why California Home Prices are So High



Moderator cut: snippet only, link would be nice

And here's a more recent article that says similar things, although it also includes areas outside
California as well:

Why Middle-Class Americans Can't Afford to Live in Liberal Cities - The Atlantic

Here's one that is specific to California:

The green gentry today often refer not to sentiment but science — notably climate change — to advance their agenda. But their effect on the lower orders is much the same. Particularly damaging are steps to impose mandates for renewable energy that have made electricity prices in California among the highest in the nation and others that make building the single-family housing preferred by most Californians either impossible or, anywhere remotely close to the coast, absurdly expensive.

The gentry, of course, care little about artificially inflated housing prices in large part because they already own theirs — often the very large type they wish to curtail. But the story is less sanguine for minorities and the poor, who now must compete for space with middle-class families traditionally able to buy homes. Renters are particularly hard hit; according to one recent study, 39 percent of working households in the Los Angeles metropolitan area spend more than half their income on housing, as do 35 percent in the San Francisco metro area — well above the national rate of 24 percent.

http://www.newgeography.com/content/...-class-warfare

[mysticaltyger]

Originally Posted by denverian

I don't really see this as the issue. The L.A. Basin is basically "built out". Where are you going to put more housing? Out in the desert? The side of mountains? If the L.A. metro area had the same density as the Atlanta metro area, you'd have housing stretching out solid beyond Palm Springs. But then I don't think the desert can handle that many houses. Not to mention, most people don't care to live in 110 degree heat all summer.

You build up. Los Angeles is relatively low density for a global city.

[StreetLegal]

Christopher Thornberg is a former UCLA economist who called California's housing bubble circa 2004/2005. He generally comes across as non-ideological which is one reason I think he is worth listening to.

The following is a link and a quote from a piece he wrote about a year ago on high home prices in California now:

"The state’s lack of affordable housing has a simple cause—a lack of housing construction. California has the lowest housing vacancy rate in the nation. And while it is home to more than 12% of the nation’s population and has a faster pace of growth than the nation overall, its share of all new residential permits is less than 8%.

The lack of housing construction in the state comes from the high cost and slow permitting process created by the California Environmental Quality Act (CEQA)—something that many state legislators strongly favor as they have more or less ignored what has been an ongoing cry for relief from the state’s business community. If you want cheaper housing, the best way is to create more housing."

https://beaconecon.com/blog/californ..._youre_reaping

[SOON2BNSURPRISE]

Originally Posted by user_id

Prices go/down so fast in California because California real estate has become just another speculative asset class, but unlike stocks, bonds, etc people have to live in homes. I think California real estate is pretty tragic or the average Joe.

Some of us average joe's don't plan on selling any time soon. Price fluctuations mean nothing to me. We will pay our home off and use it for what it is, a house. I prefer to invest in equities myself.

[Allergyvictim]

There is also something about building the houses in California which make it withstand
low degree earthquakes ,that engineering and construction I guess is expensive .
California is a destination to many retiring wealthy people etc
I don`t want to repeat whatever said above