Posted on 08/31/2002 1:48:38 PM PDT by Jordi
For example, I earn $100k a year, which is more than 95% of California's population. And yet the most expensive house I could finance would be about $300,000. The average house in my area is $500,000-odd. And I live in the "cheap" Valley; the Westside, where I'd much rather live, is pricier still.
I don't think the average homeowner in LA would be able to buy their house back today. And that scares me, since it means either incomes have to grow to match home prices, or home prices have to collapse.
The latter seems more likely. On the other hand, I've thought this virtually since the day I moved to California, and yet home prices have increased enormously since then.
I'd love to hear people's thoughts about this, since the present situation simply doesn't make much sense.
D
One that already has equity in other real estate to be transferred to the new property.
Can you say, "Condo"?
That's not the complete explanation, though. A lot of people can trade up using their appreciated real estate prices as equity for their new homes. That also helps bring down the amount actually financed.
I don't know if it's sustainable or not. The prices simply reflect the demand, and somehow people are scraping together the money to buy homes there. I don't quite understand it myself.
I've lived in housing markets where the prices were collapsing rapidly, and anyone who doesn't believe it hasn't been there. I couldn't afford to move to Southern California, because I'd want a similar house to what I have now, and I'm not going to spend several million bucks to get it.
Just sold a gorgeous 1.5 acre lot with house on South Mountain with astounding views for only $169,900.
Home has jacuzzi, soaring ceilings...but that view is worth the price of admission. (I'm a Realtor)HagemanGroup.com
As time goes by, those houses are more likely to appreciate than overpriced homes closer to DC. Companies which locate offices closer to where their actual people live are going to have an easier time hiring and retaining good workers
But expectations have changed. My parents thought 3BR1BA was fine. I am happy with 4BR2BA2PR. Younger people seem to want either more BRs and BAs or to be closer to city centers (or maybe both).
We're a rich society. When is enough enough?
Unfortunately, even that modest, humble need is pretty darn expensive nowadays. Like $650,000 expensive, if you're lucky, $850,000 if you're not. If you can even find one.
What I really need to do is increase my earning power. (I'm working on it, honest!) Or wait until the crash.
D
(*) Surprisingly, the identikit subdivision is not only boring, it's expensive. The general market obviously doesn't agree with my love of 1920-1950 "character" homes or sophisticated architect-designed contemporaries. See ArchitectureForSale for cool houses.
Southern California does have an outstandingly rich and diverse economy, which is what makes housing here so expensive. Well, that and our legendary rigourous winters, where the temperature can plunge into a positively arctic 50s during the day.
My understanding is that markets in your neck of the woods can collapse when the oil industry does badly, since oil is such a substantial percentage of your economy. This doesn't strike me as a danger in Southern California.
The problem with Southern California is the high cost of housing and this has definitely made many companies look elsewhere for expansion.
On the other hand, as Joel Garreau's 'Edge City' points out, a company rarely moves far from where the CEO wants to live, and - let's face it - this is a great city for CEOs. If you're paid a million bucks a year, it's tough to beat the great restaurants, the recreational opportunities, the wonderful variety of architectural styles to choose from, and the prestige.
But those below your level are going to suffer, even the $100k guys.
D
condo payment + association fee >= house payment
(for the cheapest house in the area).
And, I might add, no portion of the association fee is tax deductible.
Be sure you've checked all your options before going condo.
D
Ha, ha. I don't deny it, but to some of us in other parts of the country, the mishmash out there looks rather odd.
Confession time: I loathe uniformity. I visited a mediterranean subdivision in Pacific Palisades and it almost made me cry, to see all those uniform boring designs without any heart behind them.
This is my main problem with Orange County. It's richer and shinier than LA, and the government is run about 1000% better, but the housing is too uniform. I love Lido Island, which has a lot of different styles, but entry level pricing is pushing $1 million now, and for a boat dock you're talking about $3.5 million and up. Ouch.
D
It's going to be increasingly difficult to build new single-family homes in California because of the no-growth movement out there. I believe that Gray Davis has already announced that California has built its last freeway, ever.
This should keep upward pressure on housing prices, although there certainly is some economic limit out there.
You live around there, don't you? Would you tend to agree?
He has a bunch of policy prescriptions at the end of his book, including variable road pricing based on demand. Personally, I think this would increase the cost of driving to too high levels, while giving our governments a boatload of cash to waste, neither of which I consider to be particularly desirable goals.
I think he was mostly spot on, but road pricing annoys me as a concept due to both low costs and privacy implications for the modern toll collection systems.
I certainly wouldn't consider Gray Davis the last word on any subject, for fairly obvious reasons, but I suspect he's correct, at least for Southern California. The reason is that I think it will be politically impossible to displace anyone from their homes.
Freeways into undeveloped regions are another matter entirely, of course.
D
What Houston lacks is charm. It essentially has none. It's functional, and if the market demand is for a fast food restaurant or an office complex in your area, that's exactly what is going to happen.
The congressman who replaced veteran Bill Archer in Congress, John Culberson, has made it his number one goal to do something about the freeway entering it from the west. We call it the Katy Freeway, but you probably know it as the Santa Monica Freeway. It's a bottleneck because of the explosive growth of the city to the west.
He championed an expansion of the freeway from its current three lanes of thruway in each direction to 24 lanes in total, wide enough to land a Boeing 747 on with plenty of room to spare. Groundbreaking will start in a few months unless the last-ditch efforts of the coalition of leftists stall it.
It is going to be a combination of unrestricted lanes, HOV lanes, and toll lanes, the first time a toll lane has ever been included in part of the interstate highway system. It's a way of rationing access and paying for the project.
I'm not keen on the toll lanes, although I'll glad use them at times if they are substantially faster than the other lanes. The concept is actually quite consistent with the prevalent attitude around here of providing what the market demands.
Interesting link, by the way. I've bookmarked it for further reading.
I think it would make sense to reduce confusion and combine HOV and toll lanes. Having separate lanes for each is going to be difficult for the consumer, I think.
In poking around Malibu real estate, I can certainly say that narrow winding hillside streets do add to charm, and wide ones subtract from it. It's a pity the former are so impractical, and not just for regular traffic - fire equipment takes a real beating, and as you know that's a big concern around Malibu.
Christopher Alexander's masterworks 'The Timeless Way of Building' and 'A Pattern Language' are fascinating because they give ideas for building charm. They are best read together even though that's about a $100 hole in your wallet, even from Amazon. The problem is that they effectively create a parallel view of society, with no big box stores and significantly lower use of the automobile.
I'm not at all clear on whether Alexander's ideas could work in a world that feels a real need for big box stores and SUVs. I don't have any great love for either, but I know the US as a whole has embraced them. I do know that if and when I design a house of my own or have one designed, Alexander's ideas will be very much in use. The books are well worth reading despite their utopian idealism.
Joel Garreau's Edge City is the most reality based book on urban planning I have ever read; he went out and decided to understand how things really worked. It's quite a ride. Unfortunately, what it seems to say is that Edge City lacks charm and is unlikely to find it any time soon.
If I wanted to find a property with pleasant surroundings and a nice view, where would I go in Houston? I would guess that since it's fairly flat, a waterfront property would be my best choice. I'm very curious to see a real world comparison between LA and Houston real estate prices. I don't think it will serve LA very well :-(.
D
Scenery is not Houston's strong point. While the soil is typically rich and tropical plants are both common and beautiful, it is very flat. There are no places where you could build "overlooking" Houston. Your view is going to be blocked by the closest building to you.
Most of the upscale neighborhoods are built around golf courses and man-made lakes. There are some fairly large lakes in the area, and they are considered the prime location for those who value a scenic view.
ColdwellBanker has a housing price calculator which currently is moving to a new web address, so I can't link it, or even access it. But the example that it provides is that a home in Houston worth $150,000, would cost $508,000 in the Hollywood Hills.
A $150,000 home in Houston is certainly above average, although it's not going to be on the lake or the actual golf course. But a $508,000 home in Houston is likely to be on the lake or golf course, have a swimming pool, tennis court, four-car garage, and at least 6,000 square feet.
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