The Real Estate boon. How has it affected you?

[L.A.dweller]

Please share your experience as to how you have been affected by the real estate "bubble" in California.

Here is mine: BF and I (25, 21 yrs old) rented a house for the first time. We took over someone's lease and had only been there for 5 mo's until the owners decided to sell. Most likely they had this intent to sell it but never made us aware of it. The house was a tract house in a "complex" in which all houses are modeled the same. This wasn't some grand lot with a big back yard. It had a small little garden and no space to roam (if you wanted a dog it had better be a small one). They got $400,000 for it. I can't really blame them for screwing over us tenants. I would have made the same decision (cash out).

Now, we have moved to an apartment complex in Woodland Hills. New managers came in the day after we signed a lease. They are selling all the units as condos for $300,000+. There are over 1,000 units!
They gave us a 90 day notice to either buy or move out when our lease expires. Nice huh?

I'm worried that other apt's are going to raise their rent after finding out about 1,000+ people having to be relocated.

If you've made a killing through real estate please be considerate when you post. I on the other feel screwed.

[TwentyFive]

1. And they can easily avoid paying tax on the capital gains.

I am renter who knows somebody who has millions in real estate....they haven't paid a dime in income tax since Bush's tax cuts went into place. They increase their net worth every year...told me the wonders of 1030 exchanges and other tricks. Also, she drives a new $50,000 Suburban that she wrote off 100%....didn't cost her a cent.

Maybe we can get the laws changed to give us renters a break....but not with * in office.

[Mr. McD]

2. Our house has more then doubled in value

since we bought it. We have been in it just over 10 years. No plans to sell though. :)

[DBoon]

3. Same here - we are now the "poor white trash"

on our street. The only ones who mow their own lawns.

[jdots]

4. i live in Calabasas about 5 miles away

We are the poorest people here,the market is clutteres with houses that idiots want a million $ that cost them 150,000 to 5000,000$....some are selling,but who has 8 grand a month ? the big sellers are in the 2&1/2 mill range swell this meens republicans,like the ones who plan on selling 1,000 condos for 300,000 $ that whole builing cost maybe 4 million to construct
since there are only jobs in the Med co/drug fields and a few producers/hip hop stars of sports stars this bubble will pop with a bang. The gated community paranoids are just a few big pay checks away from loosing it all.This sounds really negitive but i know some of these fools that are in over thier heads and think a W sticker is going to save thier asses.This was a nice little town 15 years ago before the gated crap started,Woodland Hills was nice and had jobs,now the real estate sharks are kidding themselves.I am sorry but this country used to have fair rents and jobs.Free market economy fuck this and the greedy bastards who think they can tint thier windows so dark they don't see thier own famillys pushing grocery carts looking for a safe place to sleep..............jeez you got me going on this but it pisses me off to friends suffering out of work or way under employed.

[L.A.dweller]

7. Once the bubble pops

there are going to be some big headaches out there. I'll respond later to your post, I've got to go to class.

[CrispyQ]

5. I'm not in California, but the influx of Californians have

certainly affected the Colorado market!

We live in an itty bitty house that we could probably sell for $200K in about 2 days. Gasp!! It wouldn't even hit the MLS book, cuz there just aren't many properties in Boulder county for under 200k.

While all our friends have been ramping up their lifestyles & buying bigger & bigger houses (a few with 125% mortgages!) we've stayed where we're at (15 years) & paid off our house. Good thing, too, cuz a week after the election - yep, exactly one week after - my husband got laid off. Fortunately, with a little frugality we can survive on my part time wages. I have friends who would be majorly fucked if one of them was laid off.

I'm sorry to hear about your housing woes. It really sucks when you find an apartment you can afford & they go condo. $300K for an apartment? That's insane! But what's more insane, people will buy them! Good luck to you!

[L.A.dweller]

6. Thanks, that is nice of you

Yeah, the whole apt/condo thing just amazes. But they are taking advantage while the market is hot.

[no_hypocrisy]

8. No way I can live in the town where I grew up. Homes were going for

$75,000 tops in 1975 in northwest Bergen County in New Jersey. (Average salaries were under $10,000 per annum.) Now a Cape Cod goes for $335,000 with a little bit of land. Even if you take over your parents' home, you'll have to give it up because the municipal taxes are over $10,000 (thanks to * and cutting off federal aid to towns, counties, and states).

[luxpara]

9. Horrible story - just happened to me

and my husband. We live in Davis, but we need to move to Sacramento soon. So, we thought we could own a house in a crappy area for under $200,000.00 there. Well, our Realtor finds one and we meet her there. Pretty cute on the outside but the listing says it's 749 square feet. Well - what can you get for so little money in CA anyways. The topper is that the house was red-tagged by the city of Sacramento as uninhabitable - the roof had fell in and the whole back of the house had slide off.
Still $200,000.00 - with other possible buyers milling around it.

NO FUCKING WAY!!!

The bottom will have to drop out soon, no one can afford this!!!

[slackmaster]

21. The bottom does not necessarily have to drop out any time soon

More likely there will be a wave of foreclosures and bankruptcies in 3-5 years as people who took out adjustable rate mortgages get hit with massive payment increases. That plus higher rates will force prices down, but in terms of affordability that is always working against steadily increasing earnings. The job market is strong in much of California right now - here in San Diego Co. unemployment is in the low to mid 3% range.

[Silver Gaia]

23. Good grief!!!

What part of Sacramento was this house in? Jeez, that's a horrible story... and a rotten realtor, IMO.

I know what you mean, tho. I moved here 6 years ago, and was hoping to get settled in and eventually buy a home. Then..... the "boom" hit this area like a ton of bricks. Very, very discouraging unless you already own your home. We'd like to buy the house we live in, and know for a FACT that the landlord bought it for under $50,000 as a fixer-upper the year before we moved in. Fat chance he'd sell it now for under $350,000, tho. I guess, from the stories being told here, we should thank our lucky stars that he hasn't done so. ::: knock on wood :::

Demographics of whole neighborhoods are changing, too. My husband and I drive through Land Park on the way to Sac City College several times a week, and have noticed a trend over the last year or so especially. This is an older, established area of very nice, high-end homes. There are MANY properties each week going on the market. And MANY of these obviously aren't being bought by owners with plans to live there. As soon as the houses sell, the "For Rent" signs pop up. Now, I don't have a problem at all with renters. That isn't the point here. I AM a renter myself! My point is that what was once an established neighborhood of owners is gradually becoming a neighborhood of renters with what we figure are absentee landlords, and I just don't think this bodes well for the community. Not that the renters are at fault, but landlords aren't always as keen on the upkeep as owners are. Kind of a bummer... and I hope we're wrong.

[cliss]

10. The average selling price for a house in Portland

was $225,000 last month. There are lots of bulldozer projects that sell for $150,000. Gold-plated garbage, in other words.

It's au understatement to say that the Portland area is overpriced. It's absolutely ridiculous. In the meantime, we have the country's highest unemployment rate at 7.2%. Something's gotta give, and it's the mortgage.

In the meantime, I will be patiently waiting in the wings, saving up a nice chunk for a big down payment when the market crashes. Take my word for it, it will crash.

I really feel sorry for all the people who are trapped in high mortgages.

[Silver Gaia]

24. Hey, cliss...

I'm also waiting patiently. But my patience is wearing thin.

[mitchtv]

11. bought a house w/ 4 acres in Sonoma valley in'85

smaller, 1100 sq ft witha 1 acre cabernet vinyard for 130k and put a lot into it, everything had to be replaced, including undergound water system, well,roof landscaping etc sold it in 2001 for 500k minus 6% real estate comm., bought a house new 2000 sq ft in Coachella Valley for 220k is now worth 420k. Sad thing is the summer here is dreadful and we want to move to the city-LA, but can't afford it.

[L.A.dweller]

12. IMO, Los Angeles

is unhealthy (there is a correlation between the air pollution and cancer), overcrowded (and more are coming), and expensive. The valley can get hot although probably not as hot as Coachella.

[mitchtv]

13. you spend 3 months indoors here

air conditioning all the time $4oo/month. drivers are criminally incompetant and crime is out of control, If you are a gay couple however you must be careful where you live. How I long for a nice fog bank and/or rainstorm.This is an area for the rich and everything is very high.

[L.A.dweller]

14. You mentioned fog bank

so it seems that would like to live on the coast. Is that correct?
It's not my intention to put your dreams down but I think the coastal areas are expensive too.

[mitchtv]

15. well the fog extends quite a way in.

I know "the coast" is out of reach, and as an out gay, Riverside is foolhardy. We almost bought a house in Hillside Village( partner is MexAm and has family there), but the "new house" we picked was a little too shoddy for 400k.. The yard , however was great. persistence is the key, and contacts, and not being in a rush.

[Semi_subversive]

17. Try Sacramento for fog

There were two days last week where, from my office, I couldn't see the Wells Fargo building across the street until 8:00. We usually don't get this bad until the tule fog strikes in January. I remember not seeing the sun for 19 days straight one year. I'd have to drive 20 miles from my house up to Auburn to see the sun.

As for home values, I paid $77,000 for my 3bd/1ba home on a nice lot in 1984. Now it's a 5/2 and could go for $325,000. It's got to peak somewhere.

[99Pancakes]

16. Dear LA Dweller

I used to live in LA, so I know of the hassles down there.

I now live in Bakersfield, 2 hours north of LA in the very southernly part of the San Joaquin Valley. Oil and Agriculture are big here.

People from LA and the Bay area are coming in here like cockroaches buying property to rent because it is the least expensive area in CA. I live in a house now with my husband, but prior, I had lived in a huge apt. complex for 7 years. About year 5, an LA Big Bucks bought the property and the rent went up for 3 months in a row ($20, $25, $35)!!! I was so Hot!! I went in to confront the manager, and the new owner (a plastic Wall Street looking B---) was there. I really got in her face. She argued back saying they had to make their rent match rates of surrounding area. BS!!! I told her it was GREED. I called her GREEDY!!. Then I turned to the landlord and said, with Ms. Queen of Face lifts standing next to her, that I would absolutely MOVE if she raised my rent one more time. (for the next 2 years, my rent did not go up). Ha! I had researched a little on rentals, and the saying goes that it's better to have a good renter than risk pissing the good ones off and going months without income trying to re-rent the place out (and then possibly ending up with a bad tenet)

[L.A.dweller]

27. Thanks for the funny story!

So many women here look SO fake
and full of nips and tucks.
It is pitiful.

On a side note, isn't rasing the rent in 3 mo's illegal?

[Piperay]

18. The house my parents bought for twelve thousand in 1954

in coastal LA County is now worth about $800,000! :wow: It is just a CA Ranch style track house (now mine), nothing special but that is what some people are paying for the houses around here. :crazy: :shrug:

[Ernesto]

19. In '86 I bought 5 acres near a nuke plant for 29k

I knew a vote was coming that could close Rancho Seco, Sacramento's troubled nuclear power plant. Well that hunch was my "lottery". Withen a year of that closure, my land was worth 125k. IN 18 years of busting my ass (while holding down a job or 2), I built a place that is worth close to a million.... My advice is to buy wisely, work your ass off and to get started while you are young & dumb and won't take no for an answer.

[slackmaster]

20. What evidence do you have for a bubble?

Prices have cooled off and sales slowed down a bit, but there is still only 2-3 months inventory of single-family homes on the market here according to a prominent analyst I know. The average over the last 25 years is 5-6 months inventory.

My analyst friend expects prices to actually level only when the 30-year mortgage rate hits 7%, and drop only if it hits 7.25-7.5%.

Affordability is low, but there are still plenty of people who can afford a home. You are in the early stages of your working lives and aren't making nearly as much as (according to statistics) you will be in your 30s and 40s.

To answer your original question, I bought my house in San Diego 10 years ago next month. It's tripled in value. I refinanced in May 2003 when rates were near the absolute bottom. Now I'm paying 4.75% on a 15-year fixed, on schedule to be debt-free at age 60. Even with a big line of credit available for emergencies I'm at about 35% loan-to-value, so getting credit would be super easy for me; ironically people tend to be the most credit-worthy when they need it the least.

I suffered for several years being unable to get into a home of my own. I understand what you are going through. I had asshole landlords and rent increases and the whole nine yards from the early '80s when the job market sucked until things all came together in 1994. Of course my marriage started to fall apart after the financial crises that kept us going were all over. :P

Stick to your guns, keep making and saving as much as you can, and sooner or later conditions will be conducive for you to buy real estate. I didn't own a home until I was 36 years old.

[L.A.dweller]

26. I would expect to own a home

in my 30s or so. Right now I am focusing
on graduation in May and will be applying
to grad schools soon. I do not doubt that
I will be able to afford a home in the future
but currently the housing market in the area
is expensive. It will take years of saving
to accomplish buying and I will do so. But
right now my feelings are to flee to the paradise
of Oregon.
Yes, even Oregon appears to me to be paradise.
From the view of this microcosm (the SFV) is
full of pollution and a growing population.
I will be taking a trip up there this winter
to get a feel for the weather. I need to
determine if I can handle it or not.

[Momgonepostal]

22. We're in Modesto, supposedly a cheap part of CA

A few years ago were were renting a unit in a triplex. We'd been there for 4 years when a "For Sale" sign went up in the front. Days later, they had a buyer, who turned around and raised our rent 33 percent, but refused to make any improvements. All three of us renting there moved out as soon as we could. Landlords suck.

We ended up buying a small condo for $79K. This was 3 years ago. Today, a unit near ours in the complex is listed at $189K. We could probably get a bit more for ours since it's a ground floor unit with no one above us. There's no way we could afford to buy it today.

It's cool to have all that equity, but since we've lived there, my husband has lost his job and has been working as a temp. We've outgrown our place, but can't afford to move. I'd like to sell and leave the state, but haven't yet convinced my husband that's the thing to do.

[Xithras]

28. Modesto hasn't been "cheap" for years.

Once the Bay Area people discovered that we were in commuting range, our prices shot way up (I'm in Salida, grew up in Ceres & Newman), and that began a decade ago (the Manteca Bypass was widened into a proper freeway in 1993-1994, which slashed the Modesto/Bay Area drive time).

BTW, if you want to stay in the area, home prices are still reasonable if you move beyond the reach of the commuters (Delhi, Livingston, Merced), or to one of the towns well away from the freeways (like Hughson). Modesto has changed from the farmtown that it was 20 years ago into a real urban area, and the prices reflect that. Move out of the urban sprawl and you can also escape the nutjob home prices (to an extent).

Or you can do like I did...buy a few acres of empty land in another state and sit on your currently equity building houses until you can afford to build your dream home. I own several hundred acres of land in northern Nevada, a few dozen acres in Oregon, and I'm looking at an empty hundred acre spread in Montana. When I'm ready to retire, I'll cash out the equity in my current home and use it to build my dream home on one of these pieces of land.

Of course, if you really want a change of scenery you can always try Alaska. You can still buy land with road access, reasonably near the cities, for as little as $5,000 an acre (and for as little as a few hundred bucks an acre if you don't mind getting REALLY remote). I actually tried to buy an undeveloped 250 acre lakefront spread for $200,000, but lost it to another buyer. The deals are certainly there for those willing to brave the weather.

[MindPilot]

25. I've done OK

I bought a nice older 5-bedroom 2-story full-street-to-alley lot near downtown San Diego in '96 for $195,000. I could sell it tomorrow for $700,000. In my neighborhood, the for sale signs don't seem to stay up more than a few hours. I have no clue who is buying these places; I certainly couldn't afford my house now.

[Biased Liberal Media]

29. It's what caused my DH to move us to WA (Where he grew up)

I grew up in Monterey/Salinas my entire life and due to the inflation of rent and housing prices we just couldn't make it out there. My family is out there still and I miss them, but my father finally just got a mortgage and owns his own condo. I'm very happy for him.