It is long-standing government policy to maximize home ownership, but is that really a good idea?
Irvine Home Address … 30 GRAY DOVE Irvine, CA 92618
Resale Home Price …… $909,000
{book1}
Here comes the action
Here comes at last
Lord give me reaction
Lord give me your chance
You should follow me down
In satellite towns
There’s no colour and no sound
I’ve been ten feet underground
I gotta get out of this satellite town
Black and White Town — Doves
I don’t know who the blogger is over at Finance My Money, but the posts are excellent. Below is an exerpt from Housing’s Treacherous Path: From 44 Percent
Homeownership to 70 Percent. The Levittown Dream and Nothing Down
Madness. How a Nation lost its way with Homeownership.
The cookie cutter planned community madness started with Levittown
after World War II. These towns were built in communities in New York,
Pennsylvania, New Jersey, and Puerto Rico. The communities were built
with speed and efficiency. It is interesting that the communities
started out as rental units and within two days 2,000 units had been
rented. With demand surging the properties were then sold as purchase
units with the help of the Federal Housing Administration (more on them
later).
Levittown is now used in a derogatory sense to highlight massive
cookie cutter suburbia. Many people in these communities actually
enjoyed their towns but critics were everywhere. Yet we went from
Levittowns to McMansion Villages with the twist that homes were bigger
for ever smaller families. Once the credit markets were freed from any
shackles by deregulation banks pushed the limits on the borrowing
population. That is how places like California saw home prices triple in less than a decade.
The problem with believing that homeownership is part of the
American Dream is that it misses the fundamental economic question. By
labeling something a dream it makes it harder to confront with factual
data. This reminds me of the parents that let their kids audition for
American Idol even though they sound like a cat in heat. Many people
should not be homeowners and that is okay. Yet politically this must
be like kryptonite because who in the world is going to want to pop
that dream? Can you imagine being labeled the anti-homeownership
candidate?
This insistence on allowing the homeownership dream to permeate the
country has pushed the homeownership rate to unsupportable levels:
Now during the Great Depression homeownership dropped to 44
percent. It is also the case that during this time many loans were
also based on 5 year balloons which made it hard for many to borrow,
especially in the bank failing environment of the depression. Yet
after that bump, homeownership increased from 1941 all the way to our
housing peak in 2005 reaching a peak near 70 percent. Yet very few
even bothered to ask if this was even good for our economy? Clearly it
wasn’t.
{book4}
I discussed this issue in The Great Housing Bubble:
Before a policy can be formulated, there needs to be an open
discussion of the goal of maximizing home ownership. Owning a home has
become synonymous with the American Dream. Every Presidential
administration has had the expansion of home ownership as one of its
goals. The tax code is structured to give tax breaks to home owners to
encourage home ownership. The idea of home ownership is deeply embedded
in our culture.
Managing the rate of home ownership is analogous to managing the
rate of economic growth. It is not the policy of our government or the
Federal Reserve to maximize economic growth. Instead, the Federal
Reserve balances economic growth with inflation and tries to manage
economic growth to keep it on a sustainable path. This policy grew out
of our painful history of economic cycles of boom and bust. It was
realized that economic growth must be tempered to a sustainable level
to minimize the damage of economic downturns. Similarly, the rate of
home ownership should not be maximized. Home ownership will never reach
100%, and this should not be the goal of housing policy. Just as
economic growth is tempered by the rate of inflation, home ownership
rates are tempered by the rate of default of mortgage loan programs.
The harsh reality is that a certain percentage of the population
lacks the desire, discipline or responsibility requisite to be a
homeowner. There is a percentage of the population who do not want to
be homeowners. Many people require mobility to pursue career
opportunities or other goals. Some people like the freedom of renting
and do not want the responsibilities of home ownership that go beyond
monthly payments. There are some people who simply do not make housing
payments consistently. This group is not capable of sustaining home
ownership. There may be opportunities for policy initiatives to
increase education to make this group smaller, but there will always be
some people who cannot or will not do what is necessary to keep a
house: make their payments. There is a percentage of the general
population who should be renters.
There is a natural, sustainable level of home ownership. Home
ownership rates in the United States increased markedly at the end of
World War Two as the 30-year fixed-rate mortgage became the commonly
accepted vehicle of home finance. In the 60 years that followed, home
ownership rates stabilized between 60% and 65% through good economic
times and recessions and interest rates ranging from below 6% to above
18%. Subprime lending demonstrated that increasing the home ownership
rate through the widespread use of lending programs with high default
rates is inherently unstable. Managing the home ownership rate is not a
subject of governmental policy. Any legislative initiative to
specifically limit home ownership rates would be politically
unpalatable; however, either a market-based initiative or a legislative
initiative that prevents the widespread use of loan programs subject to
high rates of default rates would effectively manage the home ownership
rate and prevent painful declines in that rate. Home ownership rates
decline as homeowners become renters, a painful process known as
foreclosure.
Do you think we should be using the GSEs to put people into homes when they can’t sustain ownership? That is what we are doing.
Irvine Home Address … 30 GRAY DOVE Irvine, CA 92618
Resale Home Price … $909,000 
Income Requirement ……. $188,432
Downpayment Needed … $181,800
20% Down Conventional
Home Purchase Price … $1,215,500
Home Purchase Date …. 12/13/2006
Net Gain (Loss) ………. $(361,040)
Percent Change ………. -25.2%
Annual Appreciation … -9.6%
Mortgage Interest Rate ………. 5.01%
Monthly Mortgage Payment … $3,908
Monthly Cash Outlays ………… $5,630
Monthly Cost of Ownership … $4,350
Property Details for 30 GRAY DOVE Irvine, CA 92618
Beds 3
Baths 4 baths
Size 2,717 sq ft
($335 / sq ft)
Lot Size 4,481 sq ft
Year Built 2006
Days on Market 1
Listing Updated 12/11/2009
MLS Number P713959
Property Type Single Family, Residential
Community Portola Springs
Tract Lasc
According to the listing agent, this listing is a bank owned (foreclosed) property.
Portola Springs beauty! Three bedrooms upstairs- each with their own attached bath! Downstairs comes with charming court yard and living area- kitchen boasts stainless steel appliances, and granite countertops. Come see this one this weekens as it won’t last!
There are a few IHB readers who have told me they looked at properties over $1,000,000 in Portola Springs in early 2007 and after reading the blog, they decided to wait. Today’s featured property puts those families about $350,000 ahead of the purchaser of today’s featured property. Based on the purchase date, my early analysis posts came out two months too late. Sorry.
This property was purchased for $1,215,500 on 12/13/2006. The owner used a $972,160 first mortgage, a $121,520 HELOC and a $121,820 downpayment. The downpayment may explain why he held on so long…
Foreclosure Record
Recording Date: 09/18/2009
Document Type: Notice of Sale (aka Notice of Trustee’s Sale)
Foreclosure Record
Recording Date: 06/12/2009
Document Type: Notice of Default
The lender, US Bank National Association, bought the property back for $887,826 on 11/12/2009.
I hope you have enjoyed this week, and thank you for reading the Irvine Housing Blog: astutely observing
the Irvine home market and combating California Kool-Aid since
September 2006.
Have a great weekend,
Irvine Renter
It appears as if 26 Grey Dove isn’t gonna be very happy.
http://www.redfin.com/CA/Irvine/26-Gray-Dove-92618/home/7203696
Recent sales in the neighborhood:
22 GRAY DOVE
Dec 13, 2006 ~ Sold ~ $1,485,500
Nov 25, 2009 ~ Sold ~ $1,055,000 ($430,500 Less)
46 DEER Trak
Dec 21, 2007 ~ Sold ~ $1,308,500
Oct 06, 2009 ~ Sold ~ $965,000 ($343,500 Less)
51 GRAY DOVE
Dec 26, 2006 ~ Sold ~ $1,231,500
Oct 02, 2009 ~ Sold ~ $1,025,000 ($206,500 Less)
I don’t know who we should pity the most, the suckers that bought at the top of the market, or the knife catchers who bought at a perceived discount.
Why on God’s earth do Portola Springs cookie cutter 2700 sq ft, postage stamp lots sell for over 1M?. And some of these places sold for close to 1.5M at the peak.
Is there any antivenom for this Kool Aid, or is it immune to all known cures?
This is down right insanity.
So, any idea of what portion of licensed drivers have cars which are paid off, leased, or are currently making loan payments?
It’s interesting to me that auto financing moved from 1. Paying cash, and 2. Purchasing on monthly payments, to also including 3. Leasing.
I’m pretty sure that auto leasing moved the ratio of car owners down for a long time. Then, in 2008, the number of new leases dropped. Does it strike anyone else as odd that adding a leasing category for cars made people happier, and that there were no big Federal incentives to try to stear people back to ownership?
No, I never looked at the issue from that perspective. It does seem pretty silly when you look at a house as purely a consumer good like a car.
my company car plan included a nice European sports sedan this year for the first time. Word is this auto company wanted the lease business as the retail lease rate had fallen off the cliff.
Andrew Carnegie said “own what appreciates, and lease what depreciates.” Cars are famous for depreciating once driving off the lot. Real property also depreciates, but is not as famous for doing so — at least rental property. New construction appreciates nicely.
What kind of a working man would buy this house in this economy? $188,432/year? Is it a physician, lawyer? I am curious to know the professions that are making over $150K.
Several technical engineering fields on a mid/senior level; chemical, petroleum, software.
$150K is really not that much anymore.. I always thought that if me and my wife together made over $200K we’d be stinkin’ rich… Hah!
Now, $400K, now you’re talking… I might be able to move from my Hondas to Acuras…
I don’t believe the government gives a rat’s rear end about ‘homeownership’. What it really cares about is debtorship and maintaining a society of odedient workers. Putting someone into a 30 year mortgage is an extremely effective manipulative device.
Furthermore, this debt slavery that they push on us makes their partners in crime very happy as they get to collect interest payments and become filthy rich for doing very little work.
Whenever I hear a politician use the word ‘homeownership’ I actually hear ‘debtorship’.
The 30 year mortgage is a perversion and a crime against the people of this country.
Bring back 50% down payments and 5 year mortgages. Stop letting Wall Street run casino games with people’s mortgage payments. Enough is enough already.
You should read “The Divine Right of Capital” by Kelly and Greicher! It makes a compelling comparison of today’s wealthiest 1% to the nobility of old.
Why would anyone put 50% down into something that large of a purchase?
Especially if real estate is not a good place to “invest”.
I Hate it when I agree with AZ, but he is right. Government interference in the free market produces nothing but inefficiency and paid for those it purports to help. People need to educate themselves on what money is and is not. Debt is only money because the government has decreed it so.
This post seems to dwell mostly on the group that can’t (or won’t) maintain payments, and therefore shouldn’t own.
What about people for whom it just doesn’t make sense to own? I think that’s a large group that includes a lot of current owners, especially in high-cost areas like OC.
Here’s MY scenario, if anyone thinks I should BUY in my beloved neighborhood, let me know why:
I pay $2500/mo. For a 4 bedroom, mid-century modern, pool home. It’s not perfect, but has a remodeled kitchen, new flooring, etc. 11,000 sq. ft. Lot, driveway for 3 cars. The landlord pays for a weekly Gardner and Pool Guy.
These homes are still selling in the low 700’s TODAY.
We talk about buying all the time (guess we’ve been brainwashed since childhood about The American Dream!).
But why buy this 50-year old home for $700,000 and pay PITI plus gardening, pool, fix-its, and future maintainence???
If my landlord doesn’t renew, I think I can just cart my things down the street, since there always seems to be atleast one for rent… Anyone think I should buy it???
If it was a half million or so, buying would probably make sense, assuming you plan on sticking around for at least five years. But for $700k, renting is probably the best option.
Now, on a newer home, buying might actually make less sense at the same price, since Mello Roos and HOA fees would almost certainly be higher than any increase in maintenance costs for the older home.
Now, if you plan on staying put for a very long time, ten years or more, buying might make sense, even at $700k, because at some point rent will increase, but your mortgage payment would remain stable (and after 30 years, go to zero). Plus, at some point, the value of the house will increase (although not soon-my thinking is that prices will remain basically flat for five years or so).
I’m in the same boat – although my house is probably not as nice, it’s nice enough. No pool but nice view. I live in Carlsbad. My rent is very good compared to what I see for similar houses – $1800. The house is a rental and isn’t kept up like the owned homes around us. which irks the neighbors no end.
But, alas no pool. But the beach is 3 miles away.
Right now this home would probably go on the market for approximately $650,000. No way would I trade my rent for a mortgage on this house.
OrangeRenter,
Sounds nice … Where do you live? Any homes for rent on your street currently?
Homes in the neighborhood are mostly owner occupied but there are some rentals around. I live up the hill from La Costa. But, like I point out, my rent is lower than most – average rental is probably $2600.
Larry,
it’s an “Eichler” home (see: eichlersocal.com or google Joseph Eichler). We LOVE IT (which is why we keeping dreaming of owning, but can’t make sense of it).
The homes are unique, for sure, so I guess you need to be an Eichler fan to appreciate them and probably why the prices are so sticky!!! Still 700+ while surounding neighborhoods in Orange are now 4-500.
As for rentals, I always search keyword Eichler on craigslist, and there seems to be about one a month coming available. Most of then less than mine (2100-2300).
I think one of the main reasons for the government to encourage home ownership is that it encourages stable communities, people who put down roots, which results in less crime, people who care about their communities, etc.
But this only works if people buy and stay put. If everybody treats their houses like a temporary thing and attempts to flip it after two years, this fails.
This also partially explains why the government is trying to keep people in their homes via loan mods and the like.
Yes, this is exactly why the Government has these policies. I question how effective they are because in renter dominated societies of Europe, they do not have the problems we are seeking to avoid here by making everyone a home owner.
I wonder if anybody has done a statistical analysis of crime levels vs. levels of home ownership and to check to see if there’s really a strong correlation or not.
Most criminals are age 17-34 and low net worth.
Net worth = Assets – Liabilities
So it is important if mortgages are underwater or not.
H.R. 2529 (Neighborhood Preservation Act) passed by the House on Jul 29, 2009:
Background:
On May 20, 2009, Rep. Gary Miller introduced H.R. 2529, the Neighborhood Preservation Act. The bill proposes to address the persistence of foreclosures and unsold housing inventories. Specifically, the bill would temporarily permit a bank or mortgage servicer to enter into a long-term lease for properties acquired through foreclosure with an individual or the prior homeowner of a foreclosed property. Under the bill, the prior homeowner would have the option to lease the property with the choice to buy back the home. As I understand it, current legislation prohibits federally regulated banks from doing this.
The bill would also enable the lender to sell the property within five years into a more stable market, and thereby potentially recover all or part of the loss that would otherwise have occurred with an immediate sale in a saturated market.
I’m unable to find anything more recent about this. Anyone know of any new developments?
For anyone interested in digging deeper into the surfdom analogy I recommend this website. It is a very good read. The article I recommend is from James Quinn called ” A Bold New World” He sites works that were written in 1931 and from James Orwell, it is uncanny how this is actually happening right now in our world.
http://www.financialsense.com/editorials/quinn/2009/1214.html
BTW, Financial Sense is a great website with some fantastic writers with current econo info.
BRAVE NEW WORLD 2009
“Orwell’s 1984, written in 1948, is the other famous dystopian novel of the era. Huxley had visited America during the Roaring 20’s and his experience provided the character for the novel. He was outraged by America’s out of control materialistic egocentric society. He witnessed youthful superficiality, commercialization, sexual promiscuity, and a self centered culture.”
I wonder if Huxley visited Orange County?
In his Brave New World Revisited, written in 1958, Huxley clearly laid out the dangers of consumerism:
“Consumerism requires the services of expert salesmen versed in all the arts (including the more insidious arts) of persuasion. Under a free enterprise system commercial propaganda by any and every means is absolutely indispensable. But the indispensable is not necessarily the desirable. What is demonstrably good in the sphere of economics may be far from good for men and women as voters or even as human beings.”
“Consider a simple example. Most cosmetics are made of lanolin, which is a mixture of purified wool fat and water beaten up into an emulsion. This emulsion has many valuable properties: it penetrates the skin, it does not become rancid, it is mildly antiseptic and so forth. But the commercial propagandists do not speak about the genuine virtues of the emulsion. They give it some picturesquely voluptuous name, talk ecstatically and misleadingly about feminine beauty and show pictures of gorgeous blondes nourishing their tissues with skin food. “The cosmetic manufacturers,” one of their number has written, “are not selling lanolin, they are selling hope.” For this hope, this fraudulent implication of a promise that they will be transfigured, women will pay ten or twenty times the value of the emulsion which the propagandists have so skilfully related, by means of misleading symbols, to a deep-seated and almost universal feminine wish — the wish to be more attractive to members of the opposite sex. The principles underlying this kind of propaganda are extremely simple. Find some common desire, some widespread unconscious fear or anxiety; think out some way to relate this wish or fear to the product you have to sell; then build a bridge of verbal or pictorial symbols over which your customer can pass from fact to compensatory dream, and from the dream to the illusion that your product, when purchased, will make the dream come true.”
“Great is truth, but still greater, from a practical point of view, is silence about truth. By simply not mentioning certain subjects… totalitarian propagandists have influenced opinion much more effectively than they could have by the most eloquent denunciations.” Aldous Huxley
“Facts do not cease to exist because they are ignored.” Aldous Huxley
“In their anti-rational propaganda the enemies of freedom systematically pervert the resources of language in order to wheedle or stampede their victims into thinking, feeling and acting as they, the mind-manipulators, want them to think, feel and act. An education for freedom (and for the love and intelligence which are at once the conditions and the results of freedom) must be, among other things, an education in the proper uses of language.”
Buy now or be priced out forever.
They are running out of land.
Prices only go up.
IrvineRenter,
You hit the nail on the head.
RE is doing the same thing.
Selling a dream with false premises.
Owning a home. RE is land and a house, not a home. Slavery is illegal in the US. A home – family, are they selling a family?
With continued refinancing to high debt, the payments never end.
It’s back to the company store ecomony. Another day and another dollar deeper in debt. O’ St. Peter, I can’t go, because I owe my soul to the compnay store….(i.e., bank and govt.). the govt and marketeers have created the illusion or delusion with the people. The house of cards is collapsing and the people are cry for the govt, who created the mess, to create a new program to prop-up the house of cards.
The common working American does not have much disposable income. Housing, insurance, child care/support and taxes take the lions share. In the great depression and old commie states, food took the lion’s share. The masters have learned that people will shop and wait in line for food. But waiting in line long lines allowed communication and organized revolts, e.g., Poland and E. Europe. Food can not be allowed to inflate when the people cry for total govt control.
Interesting info about Huxley.
I don’t know if Huxley ever visited Orange County, but some native from a very non-materialistic, non-egocentric island in the South Pacific did (as well as other U.S. locations)and had some interesting observations on how the Orange County and other U.S. natives live–some positive, some not so good.
http://www.travelchannel.com/Video_&_Photos/Video_Detail?lineupId=52446021001
IrvineRenter –
How can say that government has these policies in place to maintain ‘stable’ communities?
I would like to agree with this theory on the surface but when you think about how perverted the idea of homeownership has actually become, it does not add up.
When someone makes the statement, ‘I am a homeowner’ it does not even dawn on me that they do own their home. I immediately assume that the person is paying a 30 year mortgage.
How can somebody call themself a homeowner when what they are really doing is renting money for their current home? More of a ‘lease to own’ arrangement – certainly not worthy enough to call oneself a ‘homeowner’.
I am all for stable communities and true homeownership – just not the perverted form of it that is forced upon us and that which the general public accepts as status quo because of what they have been made to believe through incremental changes to mortgage lending.
A 30 year mortgage is just as ludicrous to me as a 40 or 50 year mortgage. It’s merely the institution that originated the beginning of the monthly payment social engineering by big finance disguised as another phoney affordability program.
If the government really wants to promote homeownership then why not give tax incentives that benefit those with 100% equity? Why do they only pretend help the debtors? HMMM
Back in the 1950s when the 30-year mortgage was heralded as an innovation, people used to believe they did not own a property until the debt was paid off. Servicing debt was not part of their mindset. People would celebrate with mortgage parties when they could burn the note and the mortgage documents. Someone reported in the astute observations recently that banks do not know what to do when someone makes the final payment on a mortgage — it is so rare.
It’s funny you bring this up. It made me think of how many people I know who are retired, and use a chunk of their social security check servicing mortgage payments.
Prior to the 1960’s, families were clearly more concerned with stability than we are today. These are the young adults and children of the Great Depression.
Interesting thought.
I have just paid off my CountryWide/BofA mortgage.
I’m wondering what I’ll get after the final payment (must be) made by BofA wire transfer.
If they can’t supply my original mortgage, do I have any recourse. It’s in contract that I get it back on final payment! Any thoughts..
Wow, that is one rabbit hole I never thought to go down. I have no idea what your recourse would be if they failed to produce the mortgage once you paid off the note. Are you damaged?
Congratulations on paying off a mortgage (I am assuming you did it through amortization and not through sale); it is a very rare accomplishment.
realize the place profiled today is bank owned but are agents now trying to sell million dollar homes with a few clicks of their cheap camera phone.
nice. must be nice in Irvine since it is so easy to sell.
With the lack of employment, is stability just another name for stuck at the same job?
With renting, you are much freer to move for another job.
RE Dream:
For REA, Banker, Lender Service life high on the hog.
For CA owner who refinanced a first and took out 5X the value of the house and walked away: 10% expense to cover capital gain tax and money in the pocket to pay cash for a new house.
For 2003-2006 buyers: The twightlight zone or financial nightmare.
For taxpayers and children: the bills for the party.
What dream are you living.
Any else realize that woodbury east and portola springs are right next to what will,in the years to come, be major freeway/roadways. You could argue that they the 133 and 241 already are major freeways. The number of commuters on the 133/241 increases every year and will continue to increase.
Million homes right next to a freeway + association fees + mello roos. What a deal!!!
Some background on landownership…
The United States government owns 30% of all land in the United States right off of the top. But more than that, Fannie Mae and Freddie Mac owns half of all outstanding mortgage debt or about $6 Trillion worth. Harder to get a handle on is how much of the still remaining mortgage debt is owned by banks that by virtue of receiving TARP money are run by the Government. If the bank that you owe your mortgage payment to is run by the government then your mortgage is basically government owned. The States also own land, one of the guvernator’s ideas in California was to sell state parks to the fed. As State budgets get worse there may be more who start to think that is a good idea. I think it would be safe to say that very near 50% of land in this nation is owned by the Feral Government. Hmm, so is it safe to say that Our government is our landlord? Then that makes us, what? surfs to the government?
Thoughts???
Big Brother has arrived.
I had not stopped to ponder how the Government’s tentacles have ensnared so much private real estate. Thomas Jefferson and Andrew Jackson would be appalled.
The government is currently much less involved with people’s daily lives in many different ways than in the past.
Nixon initiated wage and price controls.
The maximum income tax rate was over 90% in 1944-1945 and 1951-1963, and 70% or higher every year between 1936 and 1981.
Carter deregulated air travel and Clinton removed many restrictions on banks, the second of which has been blamed by some for the current mess.
Alcohol was banned between 1919 and 1933.
The United States was very close to a communist country during World War II, with the government having a major say in almost every aspect of business. (Rationing of goods and services, wage and price controls, major industry taken over for war production, very high taxes, etc.)
I could go on, but it is naive to think that this period of time is unusual in the level of government involvement in people’s lives, unless you exclude all of the 20th century prior to Reagan being elected.
So the argument on this whole thread has been:
– Government owning land is bad
– Government increasing home ownership is bad
– Loaning people money/long mortgages to buy homes is bad
– Banks owning land is bad
So the basic theme I get from this whole thing is that no one likes it whenever anyone else owns property.
It may sound the way you describe, but at the root of it, IMO, many people on this blog are upset at what they perceive as changing the rules in the middle of the game!
Nothing like a reductio ad absurdam.
OT – are there any message boards / forums discussing real estate in southern california?
In particular, I’m considering buying in South Bay (e.g. Torrance, etc.) but I’m wondering if it’s overpriced? $900k for a 2000 sq ft, 4 bd/3bt SFR seems pretty steep.
But I’m interested in any message boards discussing southern calif residential real estate in general.
Ryan,
I live up in the South Bay and the prices in most of the good areas (Manhattan, Hermosa, Redondo, nice parts of Torrance and El Segundo) are super sticky. Some areas are only down 15% from the peak of 05/06. I personally think this area is way over priced, but then again I think it will weather most real estate storms the best.
The South Bay has a lot going for it. Convenient location to job centers, the beachs, good schools, great climate, close to LAX, downtown, Hollywood, etc. Also, many of the houses are older here so you didn’t have bloodbaths like Ladera, Talega or some newer parts of Irvine. Torrance also has a very big Asian population with Toyota and Honda headquarters here, this definitely keeps prices up.
To answer your question regarding the 900K house. I think prices will drop in the next 2 years when the government isn’t propping up this market. Unemployment is also a wildcard, no one knows how bad it will get. I could see that 900K house be 750K very easily. However, I don’t see that house increasing in value anytime soon (5 to 7 years or more). Good luck
Ryan, I too have been biding my time in the southbay. The beach cities have maintained their value better than almost any area in southern California. In my neighborhood prices are still 600 to 750 dollars/sq-ft! That being said, I think there are signs of reality setting in. The less desirable properties like condos and single family homes in less desirable neighborhoods are not moving. Rents have dropped 10 plus percent due to the highest availability in 20 plus years.
I agree with wheresthebeef’s post, I expect southbay prices to come down 20% over the next 5 quarters. The sales numbers from February and March will be interesting indicators.