How are homes affordable in Cali ?

[oilcan]

My wife has been watching Flip & Flop lately. I watched a portion & see that a 3 br/2 bath Cape Cod in a crowded neighborhood ,built in the 50's will bring $750K +. The buyers were happier than hell to make a bid. These homes, elsewhere can be taken for $40K +/-. I know, its Cali, but really?
How does this make economic sense when these folks make incomes that simply could (should) not sustain such a purchase?
I'm pretty conservative and I don't get it.

[RKDinOKC]

When I was looking at homes I asked the relator how people could afford the homes way out of my budget. She said they were in hock up to their eyeballs.

[ckelly78z]

That's why so many Cali residents can live there as long as they work.......retirement ? not so much! The house/10 acre property with creek/woods, and all the big barns I have paid off, are worth about $150,000 in nowheresville Ohio, but i'm sure over $1M in California.

I like the slower pace, nicer people, and changing seasons as well, so i'm staying right here for another 25 years.

[Jim Richards]

Buy a house that needs some work that you can/will DIY. Sell it after a while for more than you bought it. Use the proceeds to buy a better home that needs some work. Improve it. Sell it after a while for a profit. Keep this up over time. Of course, there's more in the details.

[Deschodt]

In my case I'll tell you.... I bought a house that was 1/2 the size of what I owned in FL and in terrible condition, for more $. Fixed it... I'm still pissed off that I can change light bulbs by raising my hand instead of having to use a ladder (well technically they are LED and never need changing but I hate low ceilings)... BUT.... My kids play outside all year, no bugs, we are 20min from a beach and 3h from skiing, we have mild seasons, I have a view because I'm not at 10Ft altitude, and the property already went up 300K in about 4 years... It's all give and take. I miss my FL house, its 12ft ceilings and huge garage... I don't miss the bug guy, the AC guy, the gonzo electrical bill, and the flat land...

In summary, yes it's nuts, but it's consistently nuts where you'll almost certainly get your $ back in the end... As for retiment, I never understood the FL argument, unless you live in a shack, property tax there can be 2x that of Cali (I should know, I remember the bill - 2.2x% vs 1.1%)

[sammyg2]

Cape cod is way the hell over there! (pointing to the right and upwards a little).


Serial, my 3br 2ba on 9000 sq ft lot in a decent Orange county neighborhood is worth around $700k.

But I bought it for $190K and it's basically paid for. It's pretty easy to afford paid for.

Taxes are only $3200
YEAH PROP 8!


When I bought it I was totally sweating it tho, wondered how I was gonna make that payment every month. That seems like a long time ago.

[oilcan]

The piece of crap I saw was a normal cape cod. Only described as a home described as "Californian"
B.S. OK, you bought years and years ago. You have no answer to the question.
I'm happy you are doing well.

[craigster59]

I was just talking about this with Hugh R on Saturday. Town homes in our area are going for $550k with a $600 a month HOA and even more with Mello-Roos (an added monthly tax on newer construction to build infrastructure). It's crazy!

[vash]

my first house, i just about crapped myself. i think the first four monthly payments were soul sucking, but the fifth.got easier. it improved after that. why? i think i got use to dumping 40% of my paycheck into my house..and i got raises.

i kept working and accepting crappy night shifts that offered plenty of OT. i got by.

i think in general, pay is higher here. it doesnt match housing cost, but it is a step in the right direction.

i sold that house. took the major profits and bought another home..only slightly more expensive. i get paid more now and my wife works. so it was a no brainer.

i hope when i sell, it is worth a lot more. and then i buy somewhere else. cheaper..maybe a $40k cape cod somewhere..not in cape cod.

[aschen]

they are guaranteed to appreciate at 15% per year, you can just buy much more house than you can afford and sit back and get rich.

[Jim Richards]

We bought our house when the market in SoCal tanked.

[BeyGon]

Originally Posted by sammyg2

Cape cod is way the hell over there! (pointing to the right and upwards a little).


Serial, my 3br 2ba on 9000 sq ft lot in a decent Orange county neighborhood is worth around $700k.

But I bought it for $190K and it's basically paid for. It's pretty easy to afford paid for.

Taxes are only $3200
YEAH PROP 8!


When I bought it I was totally sweating it tho, wondered how I was gonna make that payment every month. That seems like a long time ago.

what is Prop 8

[Jim Richards]

It's only 60% as good as Prop 13.

[Bob Kontak]

Originally Posted by aschen

they are guaranteed to appreciate at 15% per year, you can just buy much more house than you can afford and sit back and get rich.

You can buy an old scubby rubber workers house in Akron for $15K that was $40k in the early 2000's.

I lost $100k on a $250k nice house, nice hood in North Canton, counting moderate improvements.

Location, location, location. Not effing "regular" Ohio. AKA "A fly over state".

[oilcan]

Thanks aschen. That's, at least, is a partial answer.
But that does'nt answer how the hourly people afford & other folks live in that economy ? And I guess that is my question.
I'm no social activist by any means. I guess my question is, how does that economic system work?
Talk about the have & have not's.
Suggest who to read who might enlighten me.

[pitargue]

Silicon Valley house prices are way beyond what y'all are talking about. Million dollar plus homes in some areas are a knock down and build a new house type of deal. There's more expensive and less expensive. Depends on the area.

BTW, a realtor friend told me that people that pay these exorbitant house prices in cash are usually from mainland China.

[sammyg2]

Originally Posted by BeyGon

what is Prop 8

Prop 8 was years before prop 13, but you are too young to remember that




You know what I meant

[Bob Kontak]

Originally Posted by oilcan

Thanks aschen. That's, at least, is a partial answer.

oilcan, anything in green font means sarcasm. He is simply making a statement about the promises made about real estate appreciation.

[Jim Richards]

oilcan, to add on to Bob K's earlier comment, you have to live in an area that other people want to live in, and preferably where job opportunities are expanding. Demand will drive prices up over time. You didn't say where you're at now, but if it's an area like where Bob described, you're not going to build equity that way. And building equity in past / current homes is what lets people that aren't high end earners afford to purchase increasingly more expensive homes.

[sammyg2]

Originally Posted by vash

my first house, i just about crapped myself. i think the first four monthly payments were soul sucking, but the fifth.got easier. it improved after that. why? i think i got use to dumping 40% of my paycheck into my house..and i got raises.

i kept working and accepting crappy night shifts that offered plenty of OT. i got by.

i think in general, pay is higher here. it doesnt match housing cost, but it is a step in the right direction.

i sold that house. took the major profits and bought another home..only slightly more expensive. i get paid more now and my wife works. so it was a no brainer.

i hope when i sell, it is worth a lot more. and then i buy somewhere else. cheaper..maybe a $40k cape cod somewhere..not in cape cod.

That's basically what i said, but he didn't consider it an answer.


OK so howz this for an OBVIOUS answer:
$750k houses are not starter houses even in Ca.

If you ain't rolling in dough you start with a cheap fixer-upper farther out of town were you have to drive an hour but houses are $350k.
And you work your way up.
People make a lot more money here than in BF Egypt.


When I bought my house I was making $16 an hour. That's almost minimum wage here now.
It was just as hard to afford a house then, the numbers have just gotten bigger.
Nothing's really changed.