The future of California will be with rentals:  California’s homeownership rate will remain stagnant for the next decade.

While indicators of the economy seem to be doing well, the homeownership rate in California is telling a different story.  The unemployment rate looks healthy, the stock market is still very high even with the recent correction, and people seem to be spending beyond their means once again with credit card debt solidly above $1 trillion.  Euphoria is oozing out of Taco Tuesday baby boomer beer guts and the saliva is dripping when they pull up their Zestimates on Zillow.  Yet somehow, the homeownership rate remains stagnant.  Millennials are living at home in record numbers especially in California.  The recovery started in 2009 almost a decade ago yet people aren’t out buying homes in droves (yet inventory is pathetically low).  The future of California will be with rentals.

Rentals will dominate the future

I know it is hard to believe but rentals will dominate the future of California.  Many of the larger construction projects coming online today cater to multi-family units.  In other words, apartments.  You have older home owners selling properties in a very low supply market.  So of course, even a turd of a house will look desirable to house lusting buyers.  The crap shacks that come across my email box are laughable.  At this point with such low inventory, home buyers have beer goggles when looking at properties and are willing to buy anything just so they can get in.  Yet the future is with rentals:


The homeownership rate in California remains near generational lows.  Take a look at the following chart:


Between 1991 and 2009 most building permits were for detached homes.  This was your single family building craze.  But starting from 2009, most of the building permits taken out have come in the form of multi-family units largely for apartments.  Builders realize that future demand is going to be in the form of renting.

Millennials and Generation Y also have an increasing tendency towards renting rather than owning.  Of course older generations think that everyone is like them and that at some point, they are going to get the McMansion bug.  But guess what?  Generations are different.  Smaller families, later marriages, and less job security are creating a very different generation.  And the rental trend is showing this as well.

So it actually comes as no surprise that those that want to walk in the shoes of the older generations now have to compete for single family homes in a very low supply market.  Here is what $500,000 gets you in Santa Ana:

santa ana

2518 W Stanford St,

Santa Ana, CA 92704

4 beds 2 baths 1,024 sqft

How are the schools in the area?


And this is for $490,000 and you get bars on your windows.  And Millennials in California are more prone to living at home:


“(OC Register)  Brown’s father, Greg, understands the economic forces keeping his daughter and his 25-year-old son under his roof. He also says it’s different, today, than what he experienced at the same age. After Greg Brown graduated high school, in 1980, he moved briskly through the typical young-adult milestones — finishing college and earning a master’s degree and marrying his wife by his mid-20s. Today, he’s a real estate contract manager.

The elder Brown said he’d like to see his kids move out, but doesn’t want to rush them out the door without a career and proper financial footing.

“Our expectations for our kids are probably in line with what we were expected to do,” Greg Brown said. “But we understand, for several reasons, for some millennials, it’s gonna take a bit longer. In some cases maybe a lot longer.”

This time it is different.  The fact that the homeownership rate is stagnant speaks volumes and builders are catering to the demand of renters.  The future of California and new household creation looks to lean to renters.

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385 Responses to “The future of California will be with rentals:  California’s homeownership rate will remain stagnant for the next decade.”

  • son of a landlord

    Doctor, you wrote “Millennials and Generation Y …”

    Millennials are Gen Y. You should have written “Millennials and Generation Z …”

  • Hmm 25 and still under his daddy’s roof? Sounds like his son is still in school, lazy, or just a snowflake. Even with a decent job, he could get roommates so that he doesn’t have to suck on moms milk at 25, pathetic! He should of got one of those STEM degrees and moved to midwest! I’m just a silly business major but I already have a career, diff generation.

    • I hardly see how moving in with stranger roommates is an advance in independence and achieving adulthood, than living with parents until you have some savings, and a solid job. In fact, multi-generational living was the norm in most societies until after WW1, when this country became extraordinarily affluent, and it became possible to make a good living not only without college, but without having passed 8th grade.

      It could be that the Age of Affluence is drawing to a close, and it looks to me like it truly ended a couple of decades ago as most people could only maintain the lavish lifestyles of the 60s & 70s by piling on personal debt. In other words, by faking it. It could be that multi-generational living will again become the norm, especially in expensive coastal metros where the average income does not even pay the rent on a one bed apt, let alone buy even a shacky house in a neighborhood like Santa Ana.

    • Living with your parents as an adult is a very smart thing to do. You save a ton of money. Save that money, put some in crypto and stocks and wait for a real estate crash or until prop13 gets repealed. When prop 13 falls house prices will crash. Once prices crash you can move out and afford a nice home.

      • With all due respect, and speaking as a Cali native, there is no way Prop 13 will be repealed in a way that causes a crash in house prices. A revision to Prop13 which will incrementally bring taxes up to fairer value, yes, but a sudden or sweeping change… not a chance, even MoonBeam Jerry would not do such a thing.

      • You have it all figured out Millennial !!!

        Ivy League arrogance with a community college education

        Banking on the repeal of prop 13 is like watching paint dry hoping the paint will stay wet.

      • $17-$18 billion is a lot of money? You’ve got to be joking, right? The governor’s proposed budget for the next fiscal year is $131 billion.

      • No tank in sight, how am I arrogant?
        I am not banking on a repeal of prop 13 but I certainly promote it whenever I get a chance. This law is just in place to benefit older generations and screw younger ones who are already having to pay for overpriced crapshacks. It should be the other way around. Older generations should pay way more property taxes and younger ones should get a pass.

    • There’s a strong argument that the older generation has benefited the most from the ongoing unprecedented economic welfare. The artificial inflation of asset (real estate and stocks) prices by Fed and government policies have shut younger generations, those with less capital, out of value investment opportunities. High housing, education, and health costs make it hard for recent graduates to save for a meaningful down payment or to buy into an expensive stock market. Even current home owners couldn’t afford their own bubbly-priced houses. Amazon with a P/E ratio over 500 is enough to make any investor queasy.

      • Our parents:
        * Had it better than any generation in history
        * Were raised on home-cooked meals
        * Mom stayed home and gave them attention
        * College was cheap. A fraction of what we pay
        * A degree (in anything) would land you a good job
        * Corporations kept you for decades
        * Stock portfolios and homes increased 4x in value
        * Retirement was a human right

        And they..

        * presided over the outsourcing of jobs…
        * …leading to the underclass’s opiate-drenched collapse
        * paid illegal immigrants to tend to their homes
        * fed us frozen pizza and fruit juice, no cooking
        * hyper-industrialized prison, healthcare, education, housing
        * bought plastic junk and used toxic cleaning supplies
        * triloscan soap, olestra chips, phthalate shampoo
        * prescribed antibiotics liberally, nuking our gut flora
        * gave children Ritalin, Prozac, Wellbutrin, Klonopin…
        * …pink slime, lead fillings, accutane, Snapple, Percocet
        * got divorces and bought sports cars

        Thanks boomers!

      • What a simplistic (simpleton) way of thinking this Barnie Panders!….. Is that all our public education system able to produce??!!!!….That tells a lot about teacher’s union and the future of this nation!!!…

        Compare that to the titans in critical thinking of the founding fathers!!! Where we started and where we are today!!!!…Sad….

  • Well Doctor, I never thought Id see it but you have finally admitted defeat. This time IS different, but you know its not bc the Mellennial’s want to rent. Its because the fundamentals are strong and prices are JUSTIFIED based on SUPPLY and DEMAND. Poof goes the bubble.

    • Lol berti, you forgot to take your pills old man. Crash is around the corner is what you meant to say.

      • Indeed. Things are different if you choose to take the blue pill (read only mainstream headlines). I remember such occurrence prior to the last downturn.

    • Bert,

      I was thinking the exact same thing, that the good Dr. is throwing in the towel. This is a good sign of a market top, capitulation. This very well be the “jump the shark” moment for California real estate.

      which I’ve been saying ofr 4 years….or more.

  • We are in the everything bubble, caused by a decade long central bank experiment. Interest rates are moving up and so is core inflation. I’m guessing we are close to the peak on house prices.

  • We are in the everything bubble, caused by a decade long central bank experiment. Interest rates are moving up and so is core inflation. I’m guessing we are close to the peak on home prices.

  • Thank you doctor for stating the obvious for people with blinders on. This is what I stated many times here – the quality of life for most people in SoCal will go down in more ways than just crammed in multigenerational housing.

    The fact that Prop 13 is maintained just exacerbates this condition. No, it doesn’t have to go to 3% but nothing or max 1% would be better than what it is now. That would increase mobility and all the cards will reshuffle. It would be a much better use of existing resources. An old couple does not need 4 bedrooms from the time they raised their children. Under the present situation the government pick winners and losers. This is not a free market but a feature found in communist countries.

    • TOtally agree flyover! Prop 13 must go

    • Proposition 13 locks in a property tax that’s 1 percent the purchase price of a home. After the first year, the tax cannot increase more than 2 percent of that original bill.

      Blaming affordability problems on Proposition 13 ignores the complexity of the housing issue, and the decades’ worth of policies that deter development and lead to demand that exceeds current supply.

      Proposition 13 makes home ownership much less costly than it would be if property taxes were still doubling from year to year, as they were prior to Proposition 13 in some parts of the state.

      If property taxes go up, housing prices may drop some, but you’re still going to have not enough homes from too many people and it’s still going to be a problem.

      If anything is to blame for the lack of affordable housing, it’s onerous building fees on development and overly stringent environmental laws like the California Environmental Quality Act (CEQA) which requires a detailed review on how it could affect the nearby environment.

      To comply with CEQA, a builder must make a report detailing the environmental impact of their proposed project which could take nine months to a year, and that’s not including any litigation that might happen. Stakeholders can also have their say in the process who are typically locals or community groups. The law was also written so that anyone can weigh in on a project, she says, no matter where they are. That means people in L.A. could comment on a project miles away in the Bay Area.

      • You’re misrepresenting the complaint. Nobody is saying that Prop 13 is 100% responsible for the CA housing affordability problem, although it certainly is a key component. People can stick their heads in sand all they want but it doesn’t change the fact that when you push back in one area, other areas are going to have to take up the slack. It’s not sustainable.

      • Samantha’s complaint regarding CEQA is the same critique we always hear. But let’s be real, very few environmental documents are ever sued, leading to the delays purported here. CEQA is critical in examining a project’s potential environmental impacts, requiring feasible mitigation, and ultimately disclosing the reasoning behind a public agency’s decision making. Yes, this process takes time and money, but we’re talking 6-9 months for the typical IS/MND and under 100k. CEQA is a false scapegoat

      • Samantha,

        First, I’m one of the most fiscal conservative guy you can find on this forum. I’m not for increasing the prop. taxes, I am for eliminating them completely or no more than 0.5%. That being said, I don’t think it is fair or constitutional to charge a guy 10 times more for the same services; that is communism where the government picks winners and losers.

        Second, while you are right in everything you said, my point was not that Prop. 13 is THE cause. My point was that Prop. 13 exacerbates the housing situation in CA. I agree with the intention and the spirit of the law but not with the wording. I agree with the cap on tax increases, but a house next door, of the same value, should enjoy the same low tax. Even better, cap all the prop taxes at $1,500/year like in Switzerland. After all, all citizens benefit the same from services provided by the local government. I did not see the schools, fire stations or roads in Switzerland suffering in any shape or form from the cap in property tax. I can argue that all of them are in better shape than ours.

        In conclusion, I am not for higher taxes – I am for no taxes or fair taxes (low taxes). There is nothing fair for somebody buying a house today to pay ten times more in property taxes than Waren Buffet on his 22 million dollar house. I understand your point of view of being frustrated with the liberals in Sacramento, but supporting Prop 13 in the current form is not fair for any property owner.

        If you don’t want to throw grandma to the curb, cap the taxes for all at $1,500. Why should some benefit more than others?

      • I love leftist logic. Increase property taxes and that will make housing cheaper. Cuz the money to pay for the higher taxes will be provided by the unicorn every homeowner in CA has access to, right? LOL

      • What’s leftist is as Flyover said a communist style approach of giving one guy a giveaway on the backs of other taxpayers.

      • Seen it all before Bob

        I agree that Prop 13 has a small effect on housing prices. The difference between grandma paying $2000 per year on a house she bought in the early 1980’s and her neighbor with the same tract house they bought for $!M with a high paying 6 figure job who can afford the 10K per year in property taxes and a $48K mortgage is minor. Grandma on SS pays 2K and new home owner pays 10K. A difference of 8K per year matters a lot to grandma and she should be protected.

        However the inheritance rollover of tax to grandma’s six figure salary son is ridiculous. Why should heirs inherit the same tax as the parent? I can see if it only if it is based on need. Also, if grandma sold the house before she died, she might pay up to 140K in taxes to CA and 200K in US taxes. After she dies, RIP, the six figure son inherits the property with the tax basis on the house at the date when grandma dies???? Why is that even close to being fair? CA and the US government now have to go up to 340K in debt for this. We all are paying for this.

        As far as environment impact reports, I think water, traffic and schools should be considered.

        1) Why is the government telling me I need dirt and rocks for a yard, rebuy my washing machine, toilets, dishwasher, shower heads, etc, when they are approving massive developments that are using all of this (my) water? Water availability must be fixed before new developments happen.

        2) Why would anyone approve a development when the roads and parking cannot sustain it? Why? Developer greed but we all have to suffer with no parking and 30 minute traffic jams. Put in buses or light rail to fix it and charge everyone in the neighborhood if they approve.

        4) Schools Again, don’t approve a large development without sufficient schools.

        5) Drainage and infrastructure. I live next to a neighborhood that wasn’t studied for drainage. 30% of the houses flooded and your tax dollars paid the bill at 10X after the fact to fix it.

        I’m not a NIMBY but when problems like those above happen, my tax dollars will be used at 10X the price to fix them without a reasonable study.

      • Seen it all before Bob


        There are a case in the 1980’s before Environmental Impact Reports in Santa Maria CA where a developer built an entire subdivision of higher priced houses on top of an old oil refinery site. People who bought homes there got sick and some children died. The developer pulled a Trump-move and declared bankruptcy and retired with millions into one of the newer gated communities out of state. I look at Trump and see this same greedy screw everyone for the bucks developer based on all of the Trump bankruptcies. I actually know someone who didn’t get paid by Trump for the work he did. A hardworking American who was robbed by our President. That’s why I didn’t vote for him. Political rant- off.

        You know who got stuck with the bill for these houses that had to be demolished? We all did. You can state “Buyer Beware” but a community will never leave an entire subdivision boarded up and vacant if it wants to survive.

        A little up front study to determine things like this benefits us all.

        Your comments make me think you are one of those naive young people. You can take that as a compliment.

      • What? Sean claims that very few projects subject to CEQA are ever litigated? Please, almost every project in LA is litigated under CEQA!

        Sean also claims that CEQA is critical in examining a project’s potential environmental impacts? No doubt Sean makes a lucrative living abusing CEQA as an environmental lawyer?

      • How true, places like Lassen and Modoc benefited from prop 13 and kept people in those places that are middle age. The coastal counties are the problem and the tech industry which refuses to set up shop in uncool places like Riverside County and stay in LA. Both LA and Riverside have less than the US average on college graduates but LA is cooler to the hipster tech people . The Democrats that run California support more population density housing which favors urban areas in economic development over rural ones. This is a great caused of the high rent, just looked at New York City which is based upon that model of high density it New York City has high rents.

    • Eliminating prop. 13 might bring down the cost of houses just a little bit but then the person buying that house will be hurting to pay property taxes….will have to somehow come up with the money for insane unconstitutional property taxes ON TOP of mortgage and other bills.

      As a millennial, it hurt to pay property taxes. Almost one whole month of pay went to property taxes for a year.

      Also, it doesn’t just stay the same, even with prop 13. Don’t forget that local projects can be put on homeowners to pay for thru property taxes. Why was I paying $50 per year for “Project water well #2” or something I don’t even understand??!!

      • Prop 13 may not directly affect the cost of the home but it does in other ways.. You HAVE to pay for government services. I grew up in the South Suburbs of Chicago and I saw my suburb prosperous, till a neighboring burb built a much better mall. It eroded the town’s tax base, because the only way to provide for all the town’s service was now property tax as the mall in my town went south.

        Over the next 20 years, the population fell by half because of the necessary increase in property tax. The declining population means those left pay EVEN MORE, because the services need don’t go down.

        Now 40 years later, my burb is a mess and the mall in the neighboring suburb is closed and that town is also a big mess.

        You have to pay for services, you do this through sales taxes or property taxes. Prop 13 is essentially rent control for mortgages which any Econ 101 class tells you, rent control is only good if you get in at the beginning and it cause all sorts of problems later on in the chain.

  • California has the highest poverty in the country, when taking cost of living into account. Poor people rent, CA has the most poor people per capita of any state, so it makes sense.

    As for the 18-34 living at home….this is what happens when you spend $200K for a Gender Studies degree kids. Don’t be that guy/girl. Get a degree in something useful like comp sci or finance and you’ll be just fine.

    • Live with you parents until 40, vote against prop13, put money in stocks, crypto and bank account and wait for the crash. Easy way to survive the bubble and buy a house on the cheap side!

      • Don’t forget praying to the tooth fairy.

      • son of a landlord

        Speaking as a tail end Boomer, born in the early 1960s … I don’t trust crypto. The kids might like it, but it’s not real money. It isn’t anything. It’s prey to hackers. It’s prey to manipulation. It’s uninsured and unprotected.

        The Jerusalem Post says “Israel is shaping up to be a hub for cryptocurrency swindling.”

        So crypto “swindling” is doable. In which case, it will be done.

        I expect crypto to collapse as a worthless, ponzi style, massive financial fraud.

        At least with real estate, you get a house. With stocks, you get equity. With CDs, you get FDIC insurance. What do you get with crypto?

      • Translation: Put off all milestones of life to (maybe) buy a home a nominal discount after taking into account further appreciation and inflation, if you’re lucky… Pretending you can time the market, much less KNOW how significant any correction might be is nothing more than arrogance. Nothing wrong with renting but don’t pretend you know more than any other armchair analyst here.

        I have one friend left in my friend group (ages 25-32) that still lives with mommy/daddy. Needless to say he hasn’t had a girlfriend in YEARS because lets be honest here, if you are still at home after 21 or so, you don’t have your life together. There is a point at which frugality becomes a detriment to your personal life. I’ll take a mortgage over being a laughing stock of society any day of the week.

      • No matter what you think about the crypto stuff it’s a FACT that the returns have absolutely CRUSHED real estate appreciation. Someone who took a decent sized bet just a couple of years ago could still sell those assets and buy many houses. Sounds like a lot of you missed out and have sour grapes.

      • What do you get with crypto?
        For starters a shit ton of return. Also, it pisses of older farts who don’t profit from the crypto bubble. These people want younger generations to further inflate the real estate bubble and the stock bubble. kids are fascinated with crypto because it’s a big fuck you to those people and because the returns are astronomically. It’s cute when you cheer about a 2% day for the Dow. Litecoin and ethereum made over 5000% last year.

      • son of a landlord

        Millennial, I keep hearing that the current real estate and stock appreciation are “not sustainable.” But do you think that an annual 5,000% appreciation of crypto is sustainable?

        People inventing ever more new crypto currencies is crazier than house flipping.

        The people behind crypt might make money. Most of the end users will be fleeced.

      • Son of a rent seeker says “I don’t trust crypto.” but what he really means is “I don’t understand crypto.”

        “it’s not real money” Money is whatever people decide to use as money.

        “It isn’t anything.” It’s a network of participants utilizing a platform for value exchange.

        “It’s prey to hackers.” It is not. Each participant is prey to hackers getting their passwords as is the same with accessing other financial accounts.

        “It’s prey to manipulation.” Degree depends on the crypto asset in question just like all other financial assets.

        “It’s uninsured and unprotected.” Generally uninsured like most financial assets yet anything is insurable for the right premium. Protection is as simple as using a strong password and not letting anyone else have it. Even an old fart can do that.

        “So crypto “swindling” is doable.” Why not? Swindling is already an established risk in all other financial assets.

        “What do you get with crypto?” An asset that someone is willing to give you something else for in exchange.

      • Excellent answers Soal glo!

      • Absolutely son of a landlord. The crypto bubble is still a baby. We have not even hit a trillion dollar market cap. Once we hit 10 trillion market cap or so I would start to unload and cash out. The masses have not even started investing in crypto. The institutional money is slowly moving in. Once your Uber driver starts telling you about the next hot coin you will know it’s no longer sustainable. That’s long ways from now. We are at the beginning with crypto.

        With real estate it’s very different. Everyone knows it’s way overpriced. The kids have no interest in buying a home and spending most of their money on an overpriced mortgage. They rather live with their parents and live a debt free life. Nobody Believes anymore that buying an overpriced crapshack is the American Dream. The younger generations don’t follow the old BS their parents believed in. So who are your future buyers that are supposed to support the bubble? Some mysterious Asian cash buyer who does not exist?

      • halfgenxhalfmillenial

        As a last year gen x by some and a first year millennial by others (1978) , saving for a house was extremely difficult. i bought my first home in las vegas in 2010 for 100k and saved saved saved until 2013 to purchase one in socal. I then purchased another in 2016 and i def know that I will not be purchasing anymore. my prop taxes in my first home in las vegas is 1000 dollars per year with a value of 275k. my home i purchased in 2014 has a prop tax rate of 5600 and my 3rd home has a prop tax rate of 10000. i spoke to the neighbor of my 2nd home whom he bought in 1981 and he pays 1200 per year. i also spoke to my 3rd home neighbor who bought in 2010 who pays 6000 per year on a prop now valued at 1.2 millions. prop 13 is ruthless for younger generations. if we are to be honest with ourselves, real estate in socal will not decrease ever by more than 40% again as that was once in a life time opportunity in 2008. since my parents own 3 houses and the prop tax on each home is less than 3k , there is no incentive for them to sell. why sell when rents are high , prop tax is low and social security draw is low. when the do pass (god bless their souls) and i inherit those 3 properties why would i ever want to sell. i can see selling my high prop tax properties but never the prop 13 inheritance. this is the rat trap of “high middle income to wealthy” preserving wealth and inequality among californians. if we were to repeal prop 13 , we might see a homeless population increase of the elderly who are stubborn and will not move. Some have no choice, where would they go? Some only have family in socal and will never leave. repealing prop 13 will drain the elderly savings on prop tax and because of that we would have to take care of the elderly, either it be your/ our parents or the states responsibility. Either way it is not easy to undo prop 13 without seeing heavy pushback and great consequences. dont get me wrong im not complaining about prop 13 but why would someone like me want to repeal prop 13 so that we can have equality for all. if you cant afford a home now, millennial is right, index funds, bonds, cash reserves and renting. does owning property make you feel better than renting. 30 years of debt is high stress but also high reward. just a point of view from someone on the other end.

      • son of a landlord

        Millennial: “Once your Uber driver starts telling you about the next hot coin you will know it’s no longer sustainable. That’s long ways from now.”

        Ah, no, we’re already at that point:

      • Nah, we are far away from this point.
        Coin Market Cap has the total network value of cryptocurrency at ~$480B. This is a long way from the nearly $3 trillion peak that the bubble hit. It was much easier for the lay person to buy stocks in the 90’s than it is for people to purchase cryptocurrency today. Additionally, issues such as storing private keys and the volatility of the asset class means many people are still staying on the sidelines.
        Just mark my words, crypto has not even really started yet. Watch the market cap over the next years. Stock market gains and real estate appreciation is a joke compared to what crypto will do.

      • Joe Schmo, why would people laugh about someone staying at their parents in his/her 40’s. Maybe older people think that’s odd but they never experienced a housing bubble like today when they were young. When they bought real estate was very cheap compared to now. I think it’s very smart to stay with your parents as long as you can and save a ton of money. Just wait until the market crashes. I never met anybody who laughed about millennials staying at home. It’s just what you do in California during a housing bubble. It just seems some old people are disconnected from reality and are somehow stuck in their 70’s mindset.

      • Seen it all before Bob

        I sort of agree with Millennial.

        I have a cousin-in-law who lived with mom through the 90’s, 2000’s, and 2010”s in LA.
        He never worked a day in his life and now is a house-multi-millionaire after his mom passed away.

        I fear for our society, but he has no heirs, but he found a way to make millions with the least effort. He currently lives frugally on mom’s stock 10-30% gains (about 30K per year which is more than he would ever make on Social Security) with no mortgage and mom’s 1300/year Prop 13 taxes. His effective rent is $100/month in LA.

        He wasn’t born with a silver spoon, but he isn’t a drain on society. He is just a practical unambitious only child person who was born into a family that was lucky and smart enough to buy a house in the 1960’s for 12K.

        Is this fair? If someone wins the 1M lottery, is that fair?

        Luck is luck and isn’t all of our goals to live comfortably for the rest of our lives?

        Someone who dies with 50M is no better off than someone who dies with 1M.

      • Sorry Bob, but your cousin-in-law sounds like a lazy, pathetic bum who grifted off the family for decades and has done nothing in his life. Zero accomplishments. Pretty shameful.

      • Sacramento Landlord

        Did you get a degree in gender studies, rayz studies, or social justice? There is a void in teaching logic (void in safe spaces), math (it’s too “rayzizt”) or science (ignore X and Y chromosomes)?

        We need to have liberals art colleges accountable for destroying the intellect of a generation, they need to teach conservative arts to Generation Z. The Millennials are wasted.

      • Got my degree in Agricultural Science with a major in avocados. The classes were packed with millennials and the tuition cost about 160k for 4 year degree but includes practical training in how to grow them and process them into a delicious toast. Included in the tuition costs were avocado toasts for lunch. Now I have to pay 14 dollars for avocado toasts!
        If avocado toasts were free millennials could easily save for a 200k downpayment. Unfortunately, there is no free lunch.

  • Housing To Tank Hard Soon!

  • I recently become 1 of 3 inheritors of a 3bed 1 bath home in Santa Monica, North of Montana Avenue. The home was purchased by my grandparents in 1955 for $16K. My parents inherited the home in 1975 and it was appraised at $75K. Back then we could barely afford to pay the taxes until Howard Jarvis rolled into town with his Prop 13. This actually made living a little easier. My mother has passed and now me and my sister and brother have inherited the home. We called Westside Rentals and they said it will rent for $7K – $7.5K per month!!!!! Prop 13 taxes are only $3.5K per year. It would sell today for land value at $3M.

    Given that me and my siblings are not in any desperate need for money, why would we sell?

    With baby boomers acquiring properties through inheritance, it is easy to rationalize to just sit back and collect rent….. rental rates will rise,,,, home prices will rise on the Westside (or at least be least prone to crashes when the next crash does happen).

    • You just won the lottery and you’re taking the payments over the lump sum.

    • Seen it all before Bob

      Dear QE Abyss,

      Congratulations on winning the CA Housing lottery.

      I am sorry for your loss.

      I know a few others who won millions in the Housing lottery.

      Their decision on whether take the lump sum was:

      Take the Lump Sum if:

      1) If you don’t live near the property to check on it, it is hard to rent it remotely without paying a property management firm to manage it with their fees.
      2) Take the lump sum if you think housing is in a bubble and will drop by 50% imminently.
      3) Take the lump sum if you will be arguing continuously with your co-inheritors about rent, improvements, rental management companies, tenants, and on and on. My wife and I have a small rental and we are always “discussing” what to charge and what to improve. I don’t think I could do that with my brothers and sisters.

      Rent it if:

      1) You have done an analysis and you see a better ROI in housing.
      2) You think housing prices will continue to rise.
      2) Management fees are reasonable.
      3) You love your co-owners dearly and never argue. Please see a lawyer about a contract in case one of the co-owners wants to sell in the future.

      • Seen it all before Bob

        Thinking about it a little more.

        1) Renting: Your share of the 7K/month would likely be approximately 2K/month after management fees and maintenance. You would be taxed on this at your income rate.
        That is 24K/year.

        2) Selling: Your share would be 1M tax-free since Trump abolished the death tax.

        Actually, if you sell immediately and pay a RE agent 5%, you will likely personally have a 50K capital loss on the house since the new basis is calculated at the time of your parents death. Strange laws that if your parents sold the day before they died, they would have paid 600K in Federal 20% Capital gains tax. Now Uncle Sam pays you for cost of selling. and never collects the 600K. If you think Prop 13 doesn’t make sense, the upgrade of the basis is even crazier.

        Can you take that $1M and invest it and make a hassle-free 2.4%?

        Sure, you can invest in the “safest investment in the world” 10 year Treasury Notes at 2.87%. Or wait until the end of the year and likely make nearly 4%.

        Of course, if housing appreciates at the same rate it has been, you would make much more in appreciation of the house.

        My Crystal Ball is broken, but being the crusty old barn owl who has seen it all before, I would expect a 10-20% drop in housing sale prices that may not recover for 8-10 years.

        Either way, you can’t lose.
        Sorry again for your loss and congratulations.

      • Lots of points for me and siblings to consider THANK YOU

      • CAN YOU PLEASE HELP ME DECIDE? I own a condo with $100k equity. I’m thinking of selling it now to buy a NEW construction home selling for $650k. My problem is the new home is only 1500 sq ft. so I don’t know if its even smart to buy that (i do not have a problem with a small house as that is what I prefer but $650?). The old houses they’re showing me are around the same price, some of the lots are huge but all of the houses need so much work. I’m thinking of just cashing out and then renting an apartment or just staying put, but I’m afraid to lose the equity. I read somewhere that home values might drop down 10-20%. What would you do?

      • I like a lot of what Bob has to say here. I was in a similar (yet different) situation at the bottom of the crash when my Mother died, leaving an unoccupied house in the Northwest that my Wife and I had loaned her for her housing, and a smaller house that she used for rent money that I inherited with my Brother. With 20/20 hindsight, we should’ve sold both at a huge loss over peak price, and brought our share down here. In QEA’s case, he has inherited a house here in a choice area that is in an area with rapid appreciation and may or may not be at the peak. I think that beach areas in SoCal aren’t a candidate for loss of appeal with the public. Prices may change with the economy, but the choice of the top dogs won’t change. What should have been obvious to me (that the rural inland areas were undergoing decline and that there would be no recovery) wasn’t at the time. Too much RE Kool Aid imbibed?

      • Seen it all before Bob


        My humble opinion is that if it is the right house size and neighborhood, you should buy but only if you are planning on living there for at least 10 years.

        If you see lifestyle changes that will happen before 10 years that will require you to move, don’t buy. You will likely take a loss for either tax purposes, or with rental parity (ie you could have rented cheaper).

        I think a house should always be a long term investment.

    • I’d sell. People in your situation (non-occupant owners) are going to be first in line for the dismantling of Prop 13. By then it’ll be too late as everyone will be rushing for the exit.

    • so is there no more state tax when u sell that n.montana house..after trump 2018 new bills…..

    • I buy none of the hype! ‘Cash in hand’ is winning the housing lottery … don’t be fooled! I’ve owned rentals, had good tenants, horrible tenants, had to sink lot’s of money back in, have had to weather declining markets, and am acutely aware of what happens when pocketbooks get stretched like they are all over the coastal urban areas of California! Clearing 7 figures off of people who have more money than sense is far better than risking a housing market set back, or dealing with having to deal with one horrible tenant!

    • QE, just like you I inherited a house but location location location. My Pop bought it after retirement, he was the third owner in 125 years, for $75k in ’99. Italianate mini-mansion, carriage house garage & shop, curb stunner, main drag of a quaint walkable town, with blue ribbon trout fishing ten minutes away. Stone foundation, solid beams, pristine woodwork throughout, tin ceilings, marble fireplaces, plus he put in insulation, modern mechanicals, and a quality metal roof.

      Hasn’t appreciated a dime. Taxes are >$4k/yr including Property, Village, and School. After two 100-year floods in a decade in some local towns, FEMA redrew flood maps and his house is now half on and half off the flood zone. So another $70/mo in mandatory flood insurance, which eroded all appreciation off the market value, even though the house has never been wet. Won’t rent for more than 50% of costs, and the renter population is sketchy at best.

      Pray daily to your wise ancestors.

  • More renters are good since modern careers and work require more mobility, plus young people living longer at home builds family unity and with our aging demographics, the elderly are better taken care of. And, maintenance is easier and usually done better by professional companies like Blackstone.

    Plus, because of technology, if one wants a home or RE for investment, cheaper and easier through stocks, 401k’s, etc.

    And, with still a shortage of low priced homes, still a robust housing market… a perfect time for retail bricks and mortar disruption……like some malls and retail space being converted to apartments, etc….more walkable communities, etc.

    Maybe sometime more people will understand quantum physics, and how finally the world is a living organism, a new paradigm, where even one thing in one part of the world affects everything… the invention of the smartphone in 2007.

  • Great article Dr. Housing bubble. Housing (especially in socal) has turned into more than just a place to live. Demographics, supply and demand, NIMBYism, Prop 13, etc all point to a rental future in socal. And you want to be on the collecting rent end, not on the paying rent end.

    Is low inventory still a myth? Just read the dam article, facts are hard to argue with.

    • Total myth. They are building everywhere you look. Meanwhile, adults stay with their parents to save money=less rental demand. Rents will soon fall. What we need is to repeal prop13. Also we need to reveal publicly how much each household pays in property taxes. If younger generations find out how they are screwed by this law it it will be history soon!

      • Millennial, the younger generations aren’t going to change it. The state of California is going to find itself in a financial bind so severe that “drastic” measures will have be taken. That’s how Prop 13 will meet its fate.

      • Milie, having a conversation with people like you is useless. You would tell me the sky is not blue and the sun does not rise in the east because of blah, blah, blah. Current low inventory relative to historic norms is a FACT, it does not matter what you call it or how you interpret it. Finding out what every residence pays in property taxes is not some deep dark secret, it is available to the public…just google.

      • “Just google”
        I rather see the media turn peoples attention on how prop13 is screwing younger generations and shift the voters focus on how prop13 needs to be repealed because older people in million dollar shacks pay less property taxes than a young couple buying an overpriced condo. I don’t see news articles showing how your neighbor pays a fraction of taxes compared to you for a similar home. The prop13 fraud needs to be exposed and explained the right way so people understand and demand it to be repealed.

      • Shhhhhh. Don’t give all the secrets away to Millie. As far as we are concerned how much everyone pays is private and no one I repeat no one should be allowed to find out how much someone else pays in property taxes. Imagine how horrible it would be if you could just put the address into the county treasurer’s website and see, or if Zillow and Redfin told you. That would be terrible. No, no, no, we must keep it a secret. We can’t let the Millenials find out how much we pay in property taxes. It would ruin everything if they knew.

      • Seen it all before Bob

        Millennial, I’d be careful what you wish for if you have living parents that own houses.
        There are easier loopholes that CA could target.

        These are more drastic ways CA could raise tax money.

        1) Like PA, they could charge a 4% inheritance tax on assets. ie if your parent’s house sells for $1M, you may owe CA $40, 000 when they pass on.

        2) They could also get rid of the biggest, most unfair loophole of them all in my humble opinion. When you inherit a house in the US, the basis is automatically stepped up to the value of the house at the time of your parent’s death. ie if your parents own a house valued at $1M house, you only pay cap gains tax in CA (14% for the highest bracket) on any sale over $1M. If CA eliminated this loophole, the entire 14% of $1M could be passed on to the heirs as a tax. $140K in taxes could be owed to CA if this loophole was closed. Currently, the tax on the entire $1M is lost to both the Federal and CA governments if the parent dies. Uncle Sam misses out on 200K and CA misses out on 140K.

        The extremes in differences between Prop 13 taxes from someone who bought in the 80’s compared to the neighbor who just purchased averages 8K per year. Pretty minor compared to the inheritance loopholes.

        In this world nothing can be said to be certain, except death and taxes. _ Benjamin Franklin

      • If you knew what you were talking about you would know this is public information. Look up on the Los Angeles County Assessor’s website, search the address, then it is also on the Treasurer’s website for the county. Learn what you need before making a stupid comment.

      • You guys misunderstood what I mean. It’s needs to published in articles, newsfeeds, studies etc how much more younger generations pay in property taxes and how the major tax burden is on us young buyers. We are being screwed so that older people pay next to nothing in property taxes. This needs to be addressed in social media. If millennials would understand how prop13 is a big scam to benefit those who don’t need it, the law would change. It needs to be marketed the right way to make a difference and spark outrage.

      • Millenial,

        When the older generation was paying high taxes their kids were in school, they were young and using all the resources. They paid 2% per year inflation since then.

        Now they are using practically zero resources, they paid there fair share.

        What property tax do you pay? Your $700 per month in your crap shack rental with 8 millennials living in 5 bedrooms.. in POS huntington beach?

        Millennials pay very little property tax.

      • We all can agree that prices in Cali are a rollercoaster.
        As an aspiring homeowner, why would you want prop13 repealled and increase volatility of your own cash flow?

      • Most people are fully aware of prop 13. Some were even alive when it passed. If you raise grandma’s taxes, then you yourself might be displaced later on in life. People are reluctant to see their own taxes go up given how high they are already.

      • Stupor man,

        I agree with you that taxes are super high especially in CA. Although I am against Prop. 13, I never advocated higher taxes for elderly. What I advocate is to cap all property taxes, for everyone, at $1,500/year. Based on the assessed value of RE in CA, plus the sales tax, plus the income tax, if the government would be run efficiently with the taxpayers in mind, there should be plenty of money. Also, the cap of increases per year in prop. 13 can stay. CA does not have a problem of not enough money, it has a problem of too much spending. That too much spending is a burden on the younger generation.

      • Cry me a river. The entire “these poor elderly people with fixed incomes” is total bull crap. When these people bought a home they did not pay ten times their annual salaries for a crapshack. Back than you could easily buy a home with one income. Their homes are long paid off and They love to brag about how good the housing bubble has been to them as if they had accomplished something. If you can brag about your one million dollar home you need to pay your fair share of 1.2% property taxes. We let these people stay in their homes and transferred the tax burden to new buyers who are already screwed by highly inflated property prices.
        If you want to stay in California but can’t afford a heavy increase in property taxes go out and work. You can be a greeter at Walmart while you sit in your wheelchair.

      • “You can be a greeter at Walmart while you sit in your wheelchair.”

        You are an ignorant, selfish, childish douche.

        In many cases, the house is all they have. It is not possible to live on social security by itself anywhere in southern California without a paid-off home and low property taxes. That equity is for the $4-5k/month assisted living facility they know they’ll need in the last 10 years of their lives. And here you are getting all jealous because you think they have some huge advantage. You’ve got youth, and they would gladly give it ALL up for that. How would you like to be completely out of money in your 90’s? Because that’s what many of them are faced with. That Walmart greeter in his wheelchair couldn’t afford an apartment, let alone a nursing home, and meanwhile your future is set thanks to your parents. So have some goddamned human decency.

        The question isn’t whether or not property tax laws need to be revisited. Of course they do. The problem will be in the transition. You can’t expect hundreds of thousands possibly millions) who own in expensive areas to suddenly sell and move to a house hours away that is “cheap” by today’s standards, with taxes they cannot afford. It isn’t their fault they got a good deal 40 years ago, their neighborhood turned wealthy, the economy turned against the young, and prop 13 enabled them to stay so long. In states with taxes based on current value, they see increases coming well in advance and have years to prepare. Doing it virtually overnight is out of the question and simply won’t happen, as much as you would love to see them suffer, even though their advantage doesn’t affect your taxes AT ALL. So get over it.

        Their catching a break also isn’t affecting home prices in any meaningful way. Look at the northeast. Those states have much higher taxes based on current value (well over 2% in some cases), and their housing prices are outrageous.

      • Seen it all before Bob


        You have the wrong target for Prop 13. Most states protect grandmas by freezing their property taxes.

        You should target the people who paid half-off in 2009-2010 for their houses. They are now paying half of the taxes of their neighbors who purchased a house this year.

        Of course, when your prediction of a half-off sale happens this year, you will be in the same situation and will have to double your taxes during the next cycle.

      • Oh dear Millennial, there are so many things wrong with your argument over Prop 13. You are aware that it was instituted to protect seniors with limited incomes from losing their homes due to the high property taxes. So you think that once the younger generations know how the seniors are ripping off the younger generation via Prop 13, that things will change? They will not and let me tell you why. Seniors are exactly that. Older than you, retired, with a lot of time on their hands. They are a large population and they have a lot of political influence – they have time to write to their government representatives, attend hearings in droves and make their needs known. The AARP is also not without influence. They’re a tough crowd to beat as they’ve lived through a lot worse than this. You start threatening to repeal Prop 13 and put a large number of them out on the street, you will be facing a battle the likes of which you have never seen.

        Secondly, it’s very clear that you’ve never met a senior on a fixed income. Someone who put in their 40 years only to see their pension get reduced or eliminated due to corporate takeovers. They’re on medication that costs them hundreds of dollars a month that is not covered by Medicare – something they’ve paid into their whole lives. Yes, many of them own homes they cannot afford to buy now – a lot of folks are in that situation, shoot, I have years until retirement and I’m in the same situation.

        What disappoints me the most is that I won’t be around to see what your life looks like when you are 75. One thing that time teaches us is that nothing lasts forever and that your financial situation can drastically change in a flash into a truly desperate situation. I hope it doesn’t happen to you, or anyone, but it might, and all your investments could be gone in an instant. Think that can’t happen to you? Talk to the people who lost EVERYTHING in the Thomas Fire and even though they were adequately insured, it still isn’t enough to rebuild. Talk to someone whose child gets cancer and the medical bills bankrupt them because of all the expenses that medical insurance doesn’t pay. People who invested well and thought they had a sufficient nest egg. You may very well become one of those seniors who you believe should GTFO, be a greeter at WalMart in their wheelchair or just become homeless. Ahhh, the tunnel vision of youth. In spades.

      • The cry fest has hypocrisy written all over it. Shocker, the people who benefit the most from the prop13 cry the loudest. You guys don’t want YOUR taxes to go up but wouldn’t admit it and hide behind the “poor grandma” argument. Good thing we have lots of renters ready to vote against this scam.

      • Millie, aren’t you going to inherit several houses from your parents? Guess you’ll be getting that sweet Prop 13 tax basis that goes with it. As much as I don’t agree with Prop 13, it’s not going anywhere. You honestly think renters will gain more power than corporations, wealthy people, lobbyists, the vast majority of middle/upper class, etc.

        Nothing to see here folks, just keep making that money in crypto and use it for down payment.

  • This was inevitable and was predicted years ago. With a sanctuary state policy welcoming more low-skilled laborers with open arms, some of the highest housing costs in the country, excessive taxes, and a outward migration of the middle-class, you have all the makings of a predominantly rental state. Add to that the new tax reform which further affirms full tax deductions for rental properties while capping and/or limiting the deductions for a primary residence. It’s a good time to be a landlord.

    • That is a clear picture of democrats in Sacramento creating a feudal state. Open borders, H1 visas and sanctuary state to create a race to the bottom in wages – that way you have feudal lords and serfs (the serfs are too dumb to understand that what the liberal lords are doing is not out of compassion for the poor but with a specific purpose to keep them poor). Comparative with housing prices in safe areas, what the serfs are earning after taxes, are slave wages with no hope of ever being in a better position. I have to give credit to the teachers union in CA for doing a good job of brainwashing/indoctrinating the new generation not only to accept their slave status (to the banks) but to accept their feudal lords with gladness and elect them at every chance they have to vote. That is an accomplishment those feudal lords from dark ages would envy.

    • “Add to that the new tax reform which further affirms full tax deductions for rental properties while capping and/or limiting the deductions for a primary residence.”

      Ironically this will be one of the talking points for selling to the public the dismantling of Prop 13 for landlords.

      • Yes Avi, eliminating prop 13 for rental property would be a good way to double rents overnight and literally blow up any affordable housing. Good idea.

      • Wheeling,

        That is not how rents are set. Any landlord in a free market will set the rent as high as the market will bear based on the type of renters he is targeting. That is regardless of his cost, rate of return or capital invested. The later determines if he makes a profit or looses money; however, a landlord who bought today is charging the same as a landlord who bough 40 years ago for a similar place in a similar area, regardless of their cost.

        The rent charged, unlike the RE prices juiced up by the FED, depends on the ability of the population to pay rent – actual wages in real life. I am a landlord and I have been a landlord for over 25 years, in all kinds of markets. Eventually, if the landlords have a very low rate of return or loose money, you will have a shortage, and you can raise the rents (there will be fewer properties for rent and fewer renters able to pay). However, that takes time; it does not happen overnight.

      • Getting rid of prop 13 would not cause rents to double. Landlords already price rents at the market rate so they could not increase. The value of the underlying asset will fall to match rental flow.

      • Flyover and Woody, your assuming that the property values will go down if prop 13 were repealed. That’s not 100% definite though. I don’t see it slowing down purchasers today who have to pay current market value on their new properties. Nor do I see any slowdown in states like Texas with some of the highest property tax percentages in the country, where properties are reassessed for market value every year and where they have one of the hottest property markets in the country and have been for years with continual double digit growth. I have been a landlord for almost 20 years in S. Cali and will say that in my experience inflation, over-population, and increased overhead equals rent increases and repealing prop 13 will not solve anything but will increase the costs of living. Sure there will be a short term increase of inventory as those that can’t afford it leave or downsize and they will be quickly replaced by those that can afford it. Basically repealing prop 13 will drive out the middle-class homeowners who are hanging on by a thread and replace them with more elites meanwhile increasing costs for everybody including renters all the while the state of CA can spend the increased revenue on programs to attract more low-income laborers to the state to keep wages down and rents up. Be careful what you wish for because you just might get it.

      • Wheeler dealer what’s going to go down is your profit margin. Good luck betting on things always staying the same!

      • Seen it all before Bob

        The way I see it is from m Mom’s perspective.

        He bought in 1975 and her current property taxes are about 1300 per year.
        No mortgage and 900 per year in insurance. That is about $200/month in expenses.

        If she moved to a senior living facility and rented her home to cover expenses,

        1) Her neighbor with a !M comparable home is paying $4500 per month in rent, or about 54K per year in rent
        2) If Prop 13 were revoked mom would pay 10K/year in property taxes or about 1K per month in taxes and insurance.

        If she decided to rent it, she would either have to take the hit on the extra 800 per month in the increase in taxes and her yearly income would decrease by 9600 to from 54K to 45K or she would raise the rent if possible to cover it.

        My points are.

        1) Buy a home early and pay it off.
        2) Prop 13 would be a burden, especially to the elderly if they wanted to stay in their homes. To someone who wanted to sell or rent it out, it would still provide a good income.

    • I just heard a stat that 30% of Orange County is foreign born. No wonder housing prices are going nuts with all that added demand.

      • Thank the liberals for promoting massive immigration legal and illegal, open borders and sanctuary cities/state. That is the reason for 30% foreign born. Repeat after me – liberals democrats are not your friends. They want race to the bottom in wages and sky high house prices and rents. That is the most obvious conclusion for anyone with 2 functioning cells. You don’t even need ECON101 to see the obvious.

        The pinnacle of this insanity is to see the people most affected by this – young people and minorities voting democrat ALWAYS. The rich democratic donors stand just to benefit from this stupidity. I’m glad I am not affected. This idiotic policy actually benefits me tremendously. However, that does not change the truth of what I stated.

  • So depressing. I hate California, loathe Los Angeles and am kicking myself daily for agreeing with my delusional wife to move here in my late 40s two years ago. Owning a home will never happen as long as we stay here. I never in my wildest dreams thought I would be renting at this stage in my life. And don’t even get me started on what we are paying for our outdated 1300 square foot 3 bedroom 1.5 bath home. $3,600!!!! Should have stayed in North Carolina. I feel so stupid!

    • Dude, you need to take charge here. Sounds like your wife is calling the shots. If you have no hope of ever buying in socal, why the hell would you move here in your late 40s from a cheap cost of living/high quality of life area. You don’t want to be one of those people who are eternal renters in socal. That is a recipe for disaster!

    • North Carolina is a beautiful state. Not only that but their economy is doing better and better and the housing cost in a safe area is a fraction than what the same house would cost in a CA ghetto.

      Yes, no place is perfect, but for any budget, the overall quality of life in North Carolina is way higher than CA.

    • Geez, 3600 a month! I pay way less. I live my landlord for the gift. The good news Mark, if you would buy you would pay way more! Why throw your money away if you can rent? Just invest some savings in crypto, make a killing and wait for the collapse! Also make sure you read up on prop13 and how it’s screwing younger generations!

      • Prop 13 is not “screwing younger generations.” It is benefiting long-term owners, which YOU will eventually be. If it does get repealed, in 30 years when you’re paying $2,000/month instead of $500, you’ll realize how short-sighted 30-something Millie was.

      • Crypto is not an “investment” in any sense of the word. It is a gamble, period. I have five figures in it myself, but it’s a small fraction of my portfolio, and at least I recognize that it’s a gamble.

        And please don’t say “buy the dip” again. That could be the single dumbest thing I’ve ever read on this site.

      • Of course it’s screwing younger generations. The tax burden is solely on them. Older generations pay next to nothing in property taxes but they are the ones that can afford higher taxes. When they bought a house it was dirt cheap compared to today. Back in the 70,80 and 90s a house did not cost more than 3-4 tines annual incomes. Nowadays it’s like 10 tines annual household incomes. Not only did boomers profit from the housing bubble they also benefit from low property taxes. That’s why prop13 needs to go and property taxes for older people need to be heavily raised. At least to what a young couple would have to pay (1.2% of current market value)

        As far as crypto goes. Of course it’s an investment and of course you should always buy the dips. You will probably soon regret you did not put more money in 😉

      • John D describes a ponzi scheme for the rest of us.

      • “Of course it’s screwing younger generations. The tax burden is solely on them.”

        The government collects other taxes, you know. Sales and income.

        “Older generations pay next to nothing in property taxes but they are the ones that can afford higher taxes.”

        With that gigantic social security check, I presume?

        “That’s why prop13 needs to go and property taxes for older people need to be heavily raised. At least to what a young couple would have to pay (1.2% of current market value)”

        Need to address the spending problem in Sacramento before we increase taxes by that much (like the $100b train from nowhere to nowhere). And then there’s the problem of hundreds of thousands of seniors losing their homes. Sounds cliche, but it will happen. What do we do? Give just those people a UBI?

        I would sooner meet halfway. Charge .06-07% (or whatever) for all. NO WAY do we automatically give the government more money when they already burn a good portion of what they get.

        “As far as crypto goes. Of course it’s an investment and of course you should always buy the dips.”

        If something has value, it’s an investment. We do not yet know what, if any, value crypto will have. Most variations will probably go away. One might end up on top and actually become a common payment method. I personally doubt it, but I’m betting (gambling) that it’s still got legs in spite of that.

        “Buying the dip” only works if you know where the upside is, which you don’t unless you can see the future. You can try to guess where the bottom of the dip is, then average down when you’re wrong, which works great when the long-term trend is up, but eventually it’s going to stop working. Unfortunately, you won’t know when it’s stopped working until that portion of your portfolio has been thoroughly pummeled.

      • John,
        “The government collects other taxes, you know. Sales and income.”
        And your point is?

        What’s up with all these older people (mainly boomers) bragging how they sit on million dollar homes but as soon as you mention higher taxes /prop13 repeal they whine like little babies and hide behind the argument “poor seniors on fixed incomes”.
        They love to blame the government for inefficiencies, illegal Mexicans and millennials but don’t own up to anything. On the other hand these people loooove government subsidies as long they benefit from it (prop13). They couldn’t care less if young buyers are screwed by highly inflated home prices and sky high property taxes as long nothing changes for them and as long as their home values keep going up on our expense. But as soon as their property taxes might go up to what millennials have to pay they cry you a river! Pathetic. Bunch of hypocrites. But that’s what they did their entire lifes, create the biggest debt burden in history, voted for these laws/politicians that benefit them….why not. As long as younger generations pay the price.

      • son of a landlord

        Millennial: But that’s what they did their entire lifes, create the biggest debt burden in history,

        A lot of that debt burden was to subsidize your fat ass.

        Didn’t you receive 12 years of free education? With free school lunches, breakfasts, and after school events? Followed by subsidized student loans, to attend subsidized colleges? Didn’t you benefit from any of government provided police, fire, sanitation, roads, and libraries?

        Or are you saying that you’ve been on your own since an infant? Pulling yourself up by your own baby shoe strings?

      • Conversation between a millennial (Millie) and a boomer regarding the 20Trillion debt burden.

        Millie: thanks for all the debt, don’t worry we got it covered and will pay it all back with interest!
        Boomer: ungrateful Millie! This benefited you as well!
        Millie: oh and I thought we are the ones being screwed here. How does it benefit me?
        Boomer: free Education!
        Millie: wait, you mean that useless high school degree that allows me to go to college where they charge me an arm and a leg for tuition? We exit college with a debt burden of 40k-100k. Have you not read about millennials and their struggles with student loans?
        Boomer: ungrateful! The tuition is subsidized!
        Millie: wait, weren’t California colleges tuition free until the 70’s. Somehow that changed to sky high tuitions that increase almost yearly. But….thanks for the subsidies!
        Boomer: ungrateful! Libraries!
        Millie: speaking of books….can you tell me why I could not rent the economics book for a handful of bucks? Why did I have to purchase version 367 for $250 to complete the homework and assignments? I thought I would be smart to buy version 366 for a lower price (I mean what can dramatically change within one year?).
        Boomer: ungrateful! The police!! Would you rather have no debt and be unsafe on the streets?
        Millie: mhm, you got a point here. And now that I think about it! Yes, the police kept me safe! I remember specifically how they set a trap to pull a bunch of cars over and gave them high dollar tickets! But they explained very well how this is to protect and serve!
        I guess the only time you would disagree with the police on this is if you are a black, unarmed teenager who gets shot 17 times.
        Boomer: ungrateful! The officer was fearing for his life!!
        Millie: mhm, somehiw I still don’t think we got a good deal here!
        Boomer: ungrateful! The trillions of debt keep you safe in this great country! The safest and greatest country in the world!
        Millie: Ah military spending! I agree! I specifically remember in 2003 how Colin Powell showed the UN Security Council specifics of the WMD in IRAK. Boy, imagine these terrorists would have used WMD on us. Puh, that was close and thank goodness we spend trillions on fighting that security threat! Wait, but they did not find any?
        Boomer: ungrateful! Do you really dispute our military is fighting and risking their life’s overseas to keep us safe in our country?
        Millie: I do agree! I mean imagine we would have terrorists in this great country mowing down students in schools or killing dozens with assault rifles at country concerts!
        I changed my mind! Now I do think we are well taken care off and all of what we have is just not possible without having 20trillion in debt! Thanks for the explanations and the subsidies!

      • son of a landlord

        Millennial: Boomer: ungrateful! The trillions of debt keep you safe in this great country! The safest and greatest country in the world!

        Who said anything about being grateful for the military? I know it’s easy to argue when you put words into your opponents’ mouths, but it’s more honest to argue against what an opponent actually said.

        I said nothing about being grateful for the military.

        Perhaps you forget that Boomers helped end the Vietnam War. And those 1960s antiwar protests are one reason the Deep State ended the draft, and remains wary of any conflict that might bring high American casualties.

        As for myself, I participated in the February 2003 antiwar march, a month before the Deep State invaded Iraq. What were you doing back then?

    • Why not move again?

    • NC is about as perfect a state as you can have. While not quite flyover level cheap, it’s relatively low cost and low tax. Pretty good weather. It can get muggy in the summer but it’s in the 50s in January, with 4 distinct seasons in most of the state. Beautiful beaches in Wilmington and the Outer Banks, mountains on the eastern side of the state. Duke and UNC are some of the best colleges in the country in the Raleigh-Durham area and have spurred a booming tech industry in RDU. Charlotte is the #2 city, after NY in finance. And within a 2 hr flight, you’re anywhere up and down the east coast from Miami to Boston.

      Why on God’s green earth would you leave that for the cesspool of California?

    • Mark, no marriage will survive a situation that is making one half of it so miserable, even if financial considerations did not weigh so heavily. But not only are you miserable, you are correct- it makes no sense for someone to remain in a high-cost comfortable life and buy a fine home an area he much prefers. You really do have to put your foot down at this point, and make your wife understand that the kind of lifestyle you had in NC is far beyond your joint means in LA and always will be. Most of all, though, you need to make her understand that she is making you utterly miserable, and endangering both of you financially; and that your relationship might not survive the stress. And it won’t.

      Good luck to you in this.

    • son of a landlord

      Mark: “our outdated 1300 square foot 3 bedroom 1.5 bath home.”

      That’s a decent sized house, unless you have many kids. It’s about what a house’s size should be.

      I live alone in a 690 sq ft, 1 bath, condo. Your house would feel very to me.

    • Seen this all before, Bob

      My daughter is in NC and loves it. Plenty of jobs and other than a little more humidity in the summer and a little snow in the winter, comparable to CA for weather.

      She only wishes Raleigh was closer to the beach. It is a 2 hour drive.

      If you can find a job, Bakersfield or Temecula are less crowded and comparable cost to Raleigh while less than 2 hours to the beach.

      • Unless it’s family or a very specific job there’s no point in living way out in Bakersfield or Temecula and paying California taxes when you could just live in a similar clime in another state with a better cost of living.

      • Seen it all before Bob

        LordBt, property taxes in NC average .9% and in CA, thanks to Prop 13, are 1%.
        Not much difference unlike Texas which averages 2-4 %

        NC and TX have much less expensive houses similar too Bakersfield and Temecula,
        Both Raleigh and TX are much further from the beach.

        TX has no income tax and NC has a flat 5.75% income tax. Compared to CA, TX residents are happy depending on the value of their hosue, but NC residents can pay more tax depending on income compared to CA.

    • There is more to Cali than just LA and SF. There are beautiful rural and semi-rural parts of S. California which have not been spoiled by over population and have more reasonable costs of living, problem is there are no jobs there.

  • Well would you look at that? The Doc finally came around! I’ve been commenting on this blog for a few years now and I’ve been preaching this years ago but hey, better late than never! The fact is that the US dollar is experiencing inflation at a much faster rate than usual and we can pretend that it doesn’t exist but that doesn’t make it go away. The only areas that it’s not accounted for is wages and food/consumer goods so to the average Joe, it SEEMS that this is a bubble when in reality, it’s the fair market value. Sure a rise in interest rates will negatively affect prices but it will stagnate them AT BEST until wages catch up which is right around the corner. You know what else is right around the corner? Automation! While this means that it would banish a great deal of people to rental land, it would introduce a great deal of new players to homebuying, namely the working professionals with jobs that can’t be automated. Those guys will be getting a hefty payday for their skills which means they will easily be able to buy into these prices. And last, an internet revolution is also right around the corner. If I could transfer hundreds of gigabytes of data a second why do I need to be physically present at my job? Can’t I move out of expensive silicon valley and work remotely from affordable Indiana? In the near future, you sure can!

    Let’s stimulate dialogue that goes beyond the indicators of past recessions and let’s look at the market for what it is which is a changing market in a changing world. I’m not saying “this time is different” but let me ask you this: do we live in the same world today as we did back in 2000? My new Chinese neighbors say “no, no we don’t.”

    • A true contrarian may take Doc’s capitulation as a sell signal.

      • If this blog was a microcosm of homebuying sentiment (which I suspect it is) then you’re absolutely right. When prices were reasonable a few years ago, barely anyone was active (an indication of low demand in home buying) and everyone that was, was crying bubble. As the years went on, more people participated and people were accepting rising prices as the new norm. Now the Doc averages 300+ comments on his blog posts and even he himself is beginning to indicate that “this time it’s different” a sign of massive demand buying into massive hysteria all over again. Buckle up, cause you ain’t seen nothing yet. Bubble starting in 3, 2, 1…

      • Keep dreaming new age. We heard this time is different and buy now or be priced out forever for the last few years! You got to be a bit more creative. Meanwhile we have historic low sales and interest rates are going up! We all know how that ends. Ship is going down.

      • New Age,
        I second your sentiment here…about this blog reflecting level of people’s desire to buy. It is getting very hard to buy, yet sentiment to buy is very high for a number of reason.

        I also think that desire to own RE is driving some people mad. Here is what I see:
        1) Comparison RE to crypto – well, crypto is different type of asset. There are also individual stocks that performed similar to crypto. Ideally, you want to have RE and crypto.
        2) prop13 repeal – as if this is going to help prices. Loser shit.
        3) All this talk about how california stinks and there are other places – why keep talking about, just move or stay where you are. Stop with this provincial cries about prime areas.

    • Yes we do. Shoveling cheap and easy credit into the economic system causes the same economic distortions (artificial inflation) now as it did 10, 20, or 30 years ago. The difference is that it’s now practiced on a global scale. Will the end result be different this time? Unless you believe that economic fundamentals have been permanently repealed, then no.

      • Yep. Once the credit bubble pops the inflation New Age describes will become all too obvious and then what? And that internet revolution? if a person doesn’t have to work at the site then why not hire from countries or areas where wages are not contingent on inflationary dollars. Lot of holes in this narrative.

      • The cheap credit is not so cheap lately……..

        Looks like a long term trend has formed and Powell is not worried 1 bit (so far).

  • I left Cali in 2015 after 31 years. I would rather saw off all my limbs than return.

  • I work for Uncle Sam and hope to take one more overseas assignment (to Canada) and then retire and move to Indiana where my daughter lives. Not sure if the housing market will tank or not. Been hearing that for the past 7-8 years now. Glad I bought when I came back to California in 2013. I always wondered why so many people never bought during the last crash in 08 or 09? By 2010-2011 they were already talking about the next crash. That always made me scratch my head. Anyhow, if a correction is coming, I hope it does not happen before I sell and move in the next year or so. I’m hoping to cash out 130K and save more while in Canada since old Uncle will be paying for housing while I am there…..

    • “I always wondered why so many people never bought during the last crash in 08 or 09? By 2010-2011 they were already talking about the next crash. That always made me scratch my head. ”

      These are left wing perma bears. Their goal is to destroy capitalism and agitate year after year – so far unsuccessfully luckily. But their propaganda is having some effects. Lazy millenials have bought into it. Hey why work, when I can vote for Bernie instead. It sounds nice doesn’t it? Sit at home playing video games all day, while Bernie taxes evil rich people to pay for your housing, food, transportation and health care.

      What could possibly go wrong?

      • Seen this all before, Bob

        Mr Landlord,

        I know several public school teachers who bought a house in 2009-2010 when prices in the Bay Area were half off. They were like Millennial and patiently waited for the moment.

        I know a few unemployed engineers who would have bought if they had a job and after losing half of their 401K, they had little confidence.

        I know a few who were perma-bears and thought the end of the world was happening and wouldn’t buy a house or stocks at any price because they thought prices would go even lower.

        I think you needed confidence and a job back then to buy. Public school teachers had both. Engineers and many others had neither.

      • Seen this all before, Bob

        And also, many of them never got a job that paid nearly as much as their 2006 job.

        These are the 99% who are waiting for the next election to vote for Bernie or another FDR candidate since Trump is failing to deliver on higher wages. The 99% can only live in poverty for so long while their President is actively trying to push down wages.

      • Mr. Tenant but could be a buyer

        More right leaning political rhetoric…yawn. Please do tell us how trickle down economics will work this time? Or how every Republican administration has left office with a recession for the Democratic party to clean up in the last 30 years.

      • What? I’ve worked in high finance for 30 years; one’s disposition as a perma-bull or -bear has absolutely NOTHING to do with one’s political leanings. As a general observation, bull/bear bias is driven by personal psychology (optimist v. pessimist), risk tolerance, asset class expertise (bonds v. equities), style preference (e.g., value v. growth), analytical schooling (fundamental v. technical), and a host of other factors that have nothing remotely to do with politics. As a specific refutation to your statement, two of the biggest so-called perma-bears on record are Peter Schiff and David Stockman, both staunchly conservative commentators. In fact, only a true (fiscal) conservative would grasp the idiocy — and ultimately dire consequences — of running staggering deficits, which are financed by fake money. Like those gentlemen, I am a conservative (on all fronts); although they missed the driving cyclical theme to follow the Fed on the path to asset reflation, they are not wrong that the kicking of the can will only result in wider and deeper pain at some point. Nuance is your friend. So is research.

  • People bring up Prop 13 as depriving government from funds. Has anyone ever seen how much is collected in property taxes and how much does it increase per year?
    I looked for this information and it seems to be kept secret, the state does not want people to know. I found some numbers for Los Angeles County.
    In 2017 the net Assessed value of Real Estate in the county is: $1,416,125,372,989. That’s $1.4 Trillion. This was a 6.04% increase over 2016. Most of the increase in assessed value is due to homes being sold and reassessed at the market value. That also means the amount of property tax collected increased 6%. They do not give this number, but if you use 1.2% tax rate, total taxes collected is about $17Billion, and the increase of 2017 over 2016 is almost $1Billion more collected.
    That is a lot of money, and 6% is more than inflation, population growth. Looks like Prop13 is working and providing plenty of tax money.

    • “Looks like Prop13 is working and providing plenty of tax money.”

      There is never enough tax money for CA politicians…

  • I’ve spoken with many baby-boomer property owners who will gladly tell you how much money Prop 13 saves them, and how great it is. Not one of them, not one, seems to have any recognition of the reality that their tax reduction benefit comes at a cost to all other persons.

    • Tax Reduction benefit? Orwellian on some of the comments here. Proper 13 on MFD & C&I will go first. Always willing to tax someone lese and not address mni pensions, teachers salaries and benefits, etc. Gov Brown just donated millions or was it billions

    • Taxes lost due to prop13 are recovered by the fact that prop13 is pushing up the prices of new purchases, so these losses are recouped by new owners.

      This shows how many holes you have in your “analysis”

  • IMO I think it will be difficult to repeal prop 13 through a vote because:

    1. Renters generally vote in smaller numbers than homeowners. According to statistics almost 80% of homeowners are registered voters compared to just over 50% of renters.

    2. Many renters think they will be homeowners some day and want to take advantage of prop 13 protections when they do.

    3. CA would have to restructure how they collect money for schools. If they remove prop 13 protections there is no way a single school bond is going to pass. Schools would have to be paid from the general property tax funds. Not impossible, but it would be a logistical nightmare dividing the money amongst all the different school districts fairly.

    4. Older retired people would be displaced in huge numbers. No way the bleeding heart liberals in Cali are going to force elderly people out of the homes they bought 50 years ago even if they will get big checks in return for selling.

    5. We already have some of the highest state taxes in the country.

  • Renters agitating for higher property taxes don’t understand the fundamentals of a business. When costs increase for a business, that cost ALWAYS – each and every time – gets passed on to consumers. Landlords are no different. Increase property taxes and that cost gets passed on to renters.

    This lack of understanding or rudimentary concepts in business is probably why you are still renting and will be forever.

    • The price you can get is determined by what your customers can pay. Clearly you’re in denial or have never ran a business. It’s called supply and demand.

    • Yup and since over 60% of homes are owner occupied the cost for them will go up. This will decrease their buying power and lower prices paid until equilibrium is reached.

    • You misunderstand prop13. It benefits older people and screws new buyers. What needs to happen is to even the playing field. Why should an old fart deserve to pay next to nothing in property taxes? This guy already has his house paid off and can easily afford 10-15k in property taxes per year.he certainly likes to brag about his million dollar crapshack Well, then he should pay his fair share. Don’t be a little pu*** and fear higher taxes. That’s the price of ownership.

      • There are plenty of elderly retired people today who live in homes they could not afford to keep without prop 13 protections. So are you going to be the one to tell them to scram and leave the home they worked their whole lives for and where they planned to spend their golden years because you want to raise their taxes and force them to sell to you?

      • What are you talking about? They can downsize, they already have a paid off house. Why should the government subsidize them? That has nothing to do with a free market. Of course prop13 needs to go. Everyone has to pay their fair share. If someone has to move because of property taxes they have no business being here in the first place. GTFO

      • Mille, I can’t wait until you get old. I can guarantee that you’ll be singing a very different song then. Trust me. I used to be just like you – screw the elderly! – but I grew up and now I know the truth. You, little boy, do not, and you won’t for about 30 more years.

      • Screw elderly?? They brag about the million dollar shack they live in and pay next to nothing in property taxes…., I am saying make these greedy old farts pay what millennials have to pay (1.2% of current market value). They are millionaires so what’s the issue? They can sell their home, downsize or move to Alabama. What’s wrong with that thinking? Why do they deserve government subsidies on the expense of younger generations? They already fucked this country enough (20Trillion in debt and BS wars).

      • son of a landlord

        Millennial: (20Trillion in debt and BS wars).

        Boomers aren’t responsible for the “BS wars.” Few Americans want those wars.

        We’re in the Mideast primarily to protect Israel. We have troops in Arab countries, “protecting” them, largely to ensure that those countries don’t turn on Israel.

        It’s not about the oil. The Arabs want to sell their oil. That’s how they make money.

        It’s not about “spreading democracy.” That’s just propaganda. If it was about democracy, we’d let the anti-Israeli Islamists win in the elections, if that’s what their people wanted. But we don’t allow it.

        We’re in the Mideast to protect Israel. The Israel lobby is very strong, and it’s tied to the Deep State.

        Note the media hysteria when Trump said “America First.” The panic that it meant abandoning Israel. Note the media approval when Trump attacked Syria, signaling that “America First” might apply to Europe and NATO and the UN, but that Israeli interests would always come before America’s.

        No American generation is responsible for our “BS wars.” No American generation controls the Deep State and its support for Israel.

  • Lets face it. Life is short. Why waste life living in a less than desirable area. Personally, the only areas of the country worth spending your life in are:

    1) Seattle
    2) Boston
    3) NYC
    4) LA/OC/San Diego

    That is the list. Everywhere else is just not worth it. In all of these areas, you need at least 1M to get into a decent enough home in a good area. That is the cost of living life in a desirable area. If you want to give up and move somewhere else, that is your choice. But, when you hit 50, you will be kicking yourself. And, if you decide to live in a desirable area, you can either buy now, or you can buy later and spend a whole lot more money. Those are the facts.

    FYI … I left the SF Bay Area off the list. It is dudesville up there. I would never ever live in an area with a shortage of girls. Never.

    • JT, you are completely off on your list.

      I lived for 15 years in Seattle in one of the best areas. The weather is REALLY bad (rains 10 months out of 12 till you feel suicidal) and the traffic is worse than in SoCal. A good job kept me there till I said enough is enough.

      I lived in San Diego and OC for some years – bad traffic and prices like in Seattle but at least the weather is good.

      I’ve been to Boston and NY – bad traffic, bad weather and high prices. I wouldn’t go there to give me the house for free – I have only one life and I wouldn’t live in any of those crummy places.

      So, if you can put up with prices and horrible traffic, only San Diego and OC can stay in the list. Most of the places in US are nicer and worth living than those on your list.

      • I disagree. The reason prices are high in all the places on my list is because people want to live there for number of reasons. And, the reason prices are low most everywhere else is because people do not want to live there. So, in my opinion, if prices are low, people do not want to live there, and you may be making a mistake by moving to a place with low prices. You might think you are getting a deal … but you might find big problems after moving there.

      • JT be trollin’. Folks in florida can appreciate, thats how you catch the big ones – and no snobby elites from JT’s list to deal with until they have one foot in the grave.

      • ya, terrible list, I went to college in Boston, lived in OC/SD for many years and you are way off broham. You couldn’t pay me to live in any of those places.

      • JT, thank you for clarifying. I think we are talking about 2 different things:

        You talk about desirability for a wage slave, that is someone in desperate need of a job. I’ve been there, done that when I was younger and trying to form a capital. Yes, I lived in some of those big cities, not because I wanted to live there, but forced by circumstances. As soon as I was in a position no longer to be a slave to a bank, I redeemed myself and moved to live free.

        I was talking about desirability in a sense of beautiful surroundings, environment, clean air, no traffic, no boss, good weather, in few words, quality of life. Like you said, “you have only one life, therefore live in a desirable area”.

        The word “desirable” you used has different meanings to different people and even for the same person is changing with age. That is the reason you have some people living in Jackson Hole, some in Aspen or Vale, some in Telluride, some in North ID or Montana and some in Hawaii. All these places to me are far more desirable than any of the big cities you mentioned. The prices in all of them are higher than most of those cities you mentioned even if they don’t have almost any jobs. People pay those high prices because they are desirable in a sense of quality of life.

        Even in WA where I live, Orcas Island has the median price double than Seattle and no jobs. However, the quality of life is far superior to Seattle; I lived in Seattle and I’ve been every year to spend time in Orcas Island. If I would have to choose between the 2, I would choose Orcas any time and like me there are millions of people and the prices there reflect that. Sometimes, a place is very expensive because it is very crowded not because it is nice or desirable. The places I mentioned are expensive not because they have jobs or are crowded; they are expensive because of natural beauty and quality of life they offer.

        Prices in Hampton are higher than Boston even if they don’t have any jobs. There is a reason for that – quality of life that Boston can not offer.

      • Jt is right and no amount of anecdotal evidence will disprove one big stat – people DO WANT to live in prime vibrant areas (mentioned by jt). For whatever reasons. Whether reasons (opportunity, jobs, family, coolness, right or wrong) – you personal opinion, but data speaks – prices are much much higher snd this is only because demand is higher.
        Trying to give a counter example about some small nice city is pointles, because it ignores real data

      • Surge,

        I did not give you any anecdotal evidence. I just gave examples that JT has holes in his statements where he is mixing “demand” and “desirability”.

        I never said that the big cities don’t have higher demand. That is a straw man argument. What I said is that big cities have higher demand because they are overcrowded. That does not have anything to do with QUALITY of life JT and I were talking about. That is the reason for high prices and traffic bumper to bumper (another negative in terms of quality of life).

        I agree with you and JT that there are more jobs in big cities and almost none in the places I mentioned. I already stated that before; so what is you problem?

        Yes, when I used to be a wage slave, I had to live in SD, OC and Seattle. Again, “desirable” for a wage slave, but not for me now (desirable when I did not have choices). DEMAND does not mean DESIRABLE all the time. Sometimes, they mean the same in the examples I gave you. Sometimes, they don’t mean the same thing (in the examples JT gave).

        Is it clear now? You talk about “demand” ONLY and I talk about “demand” plus “desirability”. Just remember – they don’t mean the same thing all the time, and definitely not in JT examples. Another example (not anecdotal evidence) is Calcutta, India. It has incredible demand for RE because it is an overcrowded city. It has ZERO “desirability” to live in a place like that. It is an extreme case so you can get the point (although I think I was plenty clear before). I just hate straw man arguments.

    • No thanks jt you can give up and stay left behind all squeezed in together with liberal ninnies!

    • Maybe you ought to pick one then, whoremonger.

    • “That is the cost of living life in a desirable area.”

      If those are the only places you find desirable, your problem isn’t money, it’s a socio-economic inferiority complex.

      “And, if you decide to live in a desirable area, you can either buy now, or you can buy later and spend a whole lot more money. Those are the facts.”

      Alternative facts.

    • jt, this is so true. Smaller places are nice, but…no ambition, no competition, all nice and steady, but in the end, people are more beautiful in the areas you listed, and it is much better for your health.
      You can live in cheaper areas, but what are you gonna do…take your saved money to the grave? Need to learn to earn more in more efficient ways. Prime areas are for winners.

      • How is California-big-cities smog/pollution/traffic/constant noise in the background good for your health?

      • If a software developer is telecommuting from flyover country because he LIKES the country/small town life (as I do), and also happens to own a 5,000sf home on ten acres there, I’d call him a winner. People who live in LA to give the appearance of success, buying Escalades with their HELOCs out of a desperate need to be accepted by their equally shallow neighbors, are not my idea of winners.

      • Surge, how are the majority “third worlders” in LA/OC more beautiful than those small towns like Aspen or Vale where there are no jobs? Everywhere I went in SoCal, I just saw ugly fat people. The statistics show that the majority of the population in CA is very impoverished and ruled by a small percentage of very wealthy crooked individuals like in the third world countries. All that smog and stress from high prices and traffic bumper to bumper is not too conducive to health.

      • If that’s the case then what is a loser like Surge doing there?

      • Flyover – you see only what you want to see and it is always a mirror
        This is why I see a lot of beauty and optimism in all places (even though I would not want to live there) and you see shit in SoCal

      • Surge, look in the mirror and read again your posts. Aren’t you the one who started to talk down your nose to us “deplorables” in flyover country? Isn’t your post showing the snob, elitist you are? If you can’t see it, read it again. Who is the one talking about provincial mindset?!!…

        I was just trying to show to you that there is another point of view, the view of coastal liberals from the flyover perspective. Why do you get so upset when someone is showing to you a different mirror?!…

      • You said word “deplorables”, I did not. I only said provincial mindset. I like to visit and enjoy places all over US, and in fact Flyover country is a bit deragatory term. Please read what I said. My only critique is why criticize a place/lifestyle if you already made up you do not want to live here. Why come to So.Cali RE blog and say how beautiful other places are? I mean you have every right to do so, but it reflects something about you. If you have determined that So.Cali is not good for you, it is more productive to focus on place that is a better fit. Its not different to say, this X-country is third world, no way it is worth living there. It is just not productive and nothing more than yap yap yap, like grannies (with low tax base) on street benches.

        There is a lot of dynamics in prime areas, LA especially, Yes, more poverty, but also more success and opportunity. You keep focusing on shitty aspects and how nice somewhere else is. fine.

      • Surge, as I said before, just because I moved away from Seattle, SD and OC, it doesn’t mean that overnight I’ve got a provincial mindset. In the last decade of my life I can say I became wiser not more “provinicial” in my thinking (see, you display the same elitist attitude). I still travel all over the world for business or pleasure, therefore, where I live it does not make any difference.

        Also, as I said before, I am free to come here on this blog the same way you are. Also, as I said before, I come here as an investor to collect and provide information. It doesn’t mean that I am investing now. It is not the ONLY blog I come to. Does that satisfy your curiosity?

        I’m not here to trash SoCal, but if I am provoked with elitist attitude I’m stating where the holes in your statements are. I know SoCal far more than you can imagine. I lived there in SD and many of the South OC cities when they used to be nice and clean and not invaded. I know there are few pockets with extremely rich people which don’t look like a third world country. However, that is more like 1% where the 1% live. Every city has them. My statements referred to average areas where average people look for houses.

    • Seen this all before, Bob

      I love living in my current location. Good jobs, decent weather, no natural disasters are lurking.

      I’m not telling where because it would make jt’s list and then everyone would move here and home prices would skyrocket, traffic would become unbearable.

      I hope I can keep my secret to my grave.

      That’s my troll for the day.

    • Seen it all before Bob

      “I mentioned are expensive not because they have jobs or are crowded; they are expensive because of natural beauty and quality of life they offer.”

      I agree Flyover. However there are still undiscovered places with no jobs that offer 1/4 off living expenses and no traffic (or jobs) that are just as beautiful as Aspen or Telluride.

      Shhh. Don’t reveal them because that is where I live.

      • Seen it all before Bob

        Sigh, the place I described is my second home. I still need to live in a place that has jobs for at least 8 more years.

        For less than 300K in mortgages, I can afford a second home in an ideal retirement place with no jobs to tempt me.

        Guess?? I don’t know anyone in CA with a second home. I hang out with the wrong crowd.

      • Well, you stated the obvious. There are billionaires from Seattle buying vintage homes where I live, spend 1-2 million in renovations and all this in a town without too many high paying jobs. Why do the do that? Because of the quality of life and because it offers something they can not find in Seattle – same reasons I live here after living in many cities in SoCal and Seattle. It is their free choice; they are constrained by circumstances like I was when young.

      • I meant they are “NOT” constrained.

    • Interesting list. I don’t necessarily agree with your list (I wouldn’t last in Seattle through one half of a rainy season), but I generally agree that there are a handful of places that are just heads and shoulders above the rest. It is true that you need to open your wallet to live in a “Tier I” city; after all, you get what you pay for. For some, though, life cannot be shoe horned into a simple one-dimensional axis, with place of residence being the only variable. People lose jobs; they get sick; their parents become frail; they want better schools for their kids; how about this one — they want to be free from the tyranny of overreaching state and local governments. I moved to OC circa 2000; I absolutely loved this place for a long time; at this point, I don’t know that I like anything about it (or, more generally, California) other than the weather. I’ve happily started exploring some other options, with no particular timeline. I’ll leave you with this thought: today’s “Tier I” cities won’t necessarily be tomorrow’s “Tier I” cities. (To wit: I grew up in Manhattan; if OC’s population growth continues at its blistering pace, I won’t need to stick around for another rat race.)

      • CallingBS, I enjoy your posts so much. Thanks for being a moderating voice among so many people who insist on their experience in navigating the housing market (or other markets) across their lives as bible. I won’t name names. The constant polarization and slandering as perma-bull vs perma-bear, winner vs loser makes this blog tiresome. Posts like yours that offer reason without judgement keep me coming back. Thanks! Just dropped in to say that 😉

    • Here is the opinion of Busy Bees about all these prime location on your list. Only Seattle is missing not because it is clean, but it is cleanER that the rest on the list. It shows how desirable these locations are.

    • Thanks, Laura. Appreciate the kind words. Best regards!

  • Don’t tell Millennial or he’s going to have an aneurysm. Even the idea of a split tax roll, whereby commercial and industrial property are assessed at market value, has now dwindled to 46% in the polls. Millennial is going to be 65 and finally get his dream home only to get taxed out at 85 😉

    The Public Policy Institute of California has tested the issue periodically and once found a fairly strong level of support among likely voters, but the most recent PPIC poll found it had slipped from 60 percent in 2012 to 55 percent in 2015 and just 46 percent now.

    • That’s cute! Thinking the public will get what it wants.

      • You might want to research how the California constitutional amendment process works.

      • You might want to research how ballot initiatives can be overturned by courts. You go first.

      • You might want to research how Prop 13 has already survived the Supreme Court. Face it dude, you’re an arm chair economist talking about a subject you don’t have knowledge on.

    • Erik, can you elaborate please? Why would I be 65 to get my dream home? I could buy right now but want to wait for a nice crash. You think it will take another 35 years until we see a real estate crash? Dude, if the bubble (for crypto, real estate and stocks)goes on for another 35 years I can buy ten dream homes along the way. Just a reminder crypto has appreciated a bit more than real estate. My litecoins made over 5,000% since last year.

  • From the comments I have seen, and from my situation of inheriting a home in Santa Monica, it sounds like I would be safe to rent it out for a year before selling.
    In other words, I dont expect to sell at the top of the market, but housing prices have PROBABLY another year or two before a crash.

    Comments welcome.

    • QE, don’t run for the exist at the same time with the crowd when someone screams “FIRE”. You can get trampled.

      Don’t be greedy and don’t be fearful – that is how you get rich and stay rich stress free. It served me very well so far. It is OK to leave few pennies on the table to change paper profits into real profits.

      This advise did not originate with me. When I was young I was not that wise, but smart enough to learn from other very rich people based not only on knowledge but a life time of experience.

    • Assuming the tax comments on here are accurate I would sell in a heartbeat.

      1mil invested vs 2k/mo cash flow is a no brainer

      1mil in the mid-west aka flyover could get you 10 properties with B+ area renters and collected 1k/mo. So; 2k/mo vs 10k/mo. and your risk is spread out over 10 properties vs just 1.

      I would sell.

    • Who knows? Who cares!

    • Why rent it out for a year and then sell it? That plan could turn out to be risky because 1) prices might come down and 2) Your renter might mess up your plans. As you know, California is too nice to renters. They can stay there rent-free for a while before the court throws them out. Also, they could damage the property.

      If I had such a property, I’d sell it as soon as possible. I’d take the profit and go invest in outside-Cali real estate or buy property nearby me so that I could check up on my rental properties.

    • Seen this all before, Bob

      You may want to spend some time or money to cosmetically update it if needed before you sell.

      I wouldn’t want to be featured on Christina and Tarek’s show as the best deal on the worst house they ever had.

      Otherwise, without knowing everything, I’d take the tax-free million and run.

  • “Our expectations for our kids are probably in line with what we were expected to do,” Greg Brown said. “But we understand, for several reasons, for some millennials, it’s gonna take a bit longer. In some cases maybe a lot longer.” The millenials are going to hang out until their parents are neatly lying in coffins and 6 feet under. They inherit whatever Assets accumulated and live off those assets until they themselves are are coffins. It’s too demoralizing to expect anything else out of the bubble economy.

  • I think the other reason to believe rentals will be growing steadily for the foreseeable future is to contain the rampant population growth to apartment complexes and leave more land available for walking or other services. Urban housing sprawls should be slowing down in favor of more localized multifamily complexes to keep from utilizing all land available when in reality we should be building toward the sky. There is a lot of land above we could be using but most small towns settle with two story complexes.
    I remember hearing on TV someone ask the question….Can we envision California having 100 million people? This was asked sometime back in the late 90’s. I would hate to see us there but with no population controls like China institutes I think we are on our way perhaps by the end of this century.

    • The cities have just begun a regression cycle. Sprawl will start getting popular again. People are already voting with their feet.

  • Since the concern about Prop13 keeps coming up I can only imagine what would happen if Prop13 ending tomorrow. What would the county assessors do or how would all the cities be reacting to this change? Would we see excitement from all the local governments start increasing those assessments to 3-5% annual increases a year or would they be realistic now in their assessments?

    After thinking about what happened back in the 70’s with the rampant inflation I would solely aim the blame at the FED. Since going off the gold standard all of sudden homes started getting pricey very fast within a decade. Our dollars became less valuable as a result. if the Assessors were not keen to see this inflation had nothing to do with people bidding up homes and was primarily driven by the FED why would we believe we might have the same effect if no Prop13 existed today? Is this situation any different than it was before? Should people on small pensions be forced to leave if they can’t pay property taxes on ignorant tax assessments?

    • Proposition 13 does not have to be eliminated completely. It can change to make it fair across the board. What about a fixed amount across the board? All people should benefit the same from libraries, roads and fire stations, therefore all should pay the same fixed amount – let’s say $2000-3000. If a property is very expensive, that means those people already paid massive amounts of taxes in order to have massive savings to pay for them. Switzerland is doing that and it makes perfect sense. They capped at $1,500.

      • I am not saying a whole repeal of Prop13, but primary residents should be considered as one benefit of Prop13. An across the board fix on the tax assessment is something I think would make better sense. It could eliminate a lot of issues with income disparity and making it fair for owners who bought on the high side. Cities need people to occupy homes in order to make it a stable environment for their citizens and provide essential services for the community. By standardizing the tax bill you might find more people willing to hang on to their properties longer knowing that their tax bill is in line with everyone else.

  • Why are many posting here even concerned about Prop 13. Anything which reduces the government’s ability to tax the middle class into poverty is good. Think of all the people who a few years ago could have bought that Santa Ana home for $200 to $400K. Would it be fair for them to have their property taxes doubled in a few years just because of a real estate bubble? Even recent buyers are protected by Prop 13.

    • Hey Gary I have an older car so I shouldn’t be paying as much in gas tax per gallon as my neighbor who just bought a new car. Even though we use the same roads I was there first so I deserve to pay less and when I give my car to my kids they should also get my sweet gas tax discount. Surely if we do that the state won’t increase taxes in other areas to help pay for my reduced gas tax rate.

    • Of course that would be fair. People like me who are trying to purchase a Jim for our families find themselves priced out. And if we manage to buy we have to pay for pmi and 1.2% property taxes based on purchase price. Repeal Prop13 will accomplish two things. The tax burden will no longer be on new buyers and people who live in huge mansions finally have to sell. We will have more inventory which will turn this into a buyers market and have some kind of fairness in terms of the tax burden. Prop 13 is a slap in peoples faces who are trying to buy a home!

      • New buyer, you are missing the point. Even if you bought a home today you would be protected by Prop 13 from future real estate bubbles. Think about my comment above concerning that Santa Ana home. If you had bought that home just 5 or 6 years ago, you would now be facing a doubling of your property taxes just because of the current real estate bubble. Prop 13 protects recent buyers as well as old buyers from crazy, Fed-funded real estate manias.

        Soon, the current real estate bubble will pop, and you will be able to buy a home for 30-50% less than now. Then you will be protected from rapidly rising real estate taxes when prices start to rise again. Governments should not get rich because of bubbles which they intentionally cause.

      • There is bo such thing as everyone is priced out…in the end, organic buyer will buy and there is enough of them to afford current prices (yes, stretch overleverage might be a problem)
        Why I say that…you cant have flippers flipping to flippers forever.

    • Gary, you are 100% correct in your thinking. I would go an extra step in limiting the government spending. If you pay let’s say $2,000 in property taxes, let’s give the same benefit to the younger generation. What you think is fair for you, it is fair for the younger once, too.

      Part of the property taxes go to the local county hospitals. The young people use them the least. Why should they pay more when they try to get married and start a family? Switzerland is fair in the way they tax property. I’m thinking of moving there. Other countries offer very low property taxes or no property taxes; however, Switzerland is beautiful and civilized and I can afford $1,500/year. Their schools, libraries, roads and fire stations are second to none. That shows that CA does not NEED higher property taxes from the younger generation – they just waste the money on illegals, sanctuary cities and state – in a word, stupid liberal pet projects. Switzerland does not have to do that. If they have extra money, and they always do, they spend them in healthcare. CA provides free healthcare ONLY to illegals.

      • Switzerland sure is nice in the greener areas but the cities have some cessy areas. Either way a still great country.

      • Switzerland is wonderful, worked in Geneva for a summer. where do you live now flyover, northern Idaho or spokane if I recall?

      • Norcalfella,

        I replied to your question before, but it did not get posted. No, I don’t live in the Spokane CDA area although both have some really nice areas.

        I don’t want to tell you were I live, because all the liberals will swarm like locusts to this new place where the conservatives have a slim majority. Then, I would have to move again because they destroy everything in sight.

        In Switzerland try to stay away from the french speaking side (it is like Quebec in Canada). Anywhere in the German or Italian speaking side is fine. I am not talking just about natural beauty but inhabitants, too. I don’t like politics in France and the french speaking side is strongly influence by France. The German speaking people in Switzerland have far more common sense than the French speaking ones. I like Interlaken the most. If I would move there, that is where I would go. I’ve been in most places in Switzerland.

  • Facing reality Prop13 is staying put for some while (7yrs?). Consider our politician/leadership/voting pool is still mostly boomers. As Millennials and Gen X fight a piece of ownership and Boomers stay put locking up equity. ENVY questions will push harder, why is Prop13 still around?

    Entitlements! No politician wants to touch this. What could a possible compromise? You cannot cut this off as Boomer and older retired Gen X with fixed incomes will be immediately underwater.

    1. Grandfathered property taxes – non-transferable at will. (Prop13 dies with you)
    2. Housing mobility and the locked up equity issue: Step down properties for retired only w/ Prop13, a factional property tax comparable to previous property. Qualifications: Owner occupied, step down house 70% market value of original. (unknown loan)

    This is just a thought. There has to be a safe way Prop13 dies off with boomers. Many Boomers want to downsize their property footprint, monthly expense and release equity from their properties, but cannot. Boomers need to release that equity now, give them an opportunity. CA needs money! Family creation doesn’t stop, it can stall with crap load of frustration behind it, people will vote with their feet. Housing envy, Prop13 will be the target.

  • Facing reality Prop13 is staying put for some while (7yrs?). Consider our politician/leadership/voting pool is still mostly Boomers. As Millennials and Gen X fight a piece of ownership and Boomers stay put locking up equity. ENVY questions will push harder, why is Prop13 still around?

    Entitlements! No politician wants to touch this. What could be a possible compromise? You cannot cut this off as Boomer and older retired Gen X with fixed incomes will be immediately underwater.

    1. Grandfathered property taxes – non-transferable at will. (Prop13 dies with you)
    2. Housing mobility and the locked up equity issue: Step down properties for retired only w/ Prop13, a factional property tax comparable to previous property. Qualifications: Owner occupied, step down house 70% market value of original. (unknown loan)

    This is just a thought. There has to be a safe way Prop13 dies off with boomers. Many Boomers want to downsize their property footprint, monthly expense and release equity from their properties, but cannot. Boomers need to release that equity now, give them an opportunity. CA needs money! Family creation doesn’t stop, it can stall with crap load of frustration behind it, people will vote with their feet. Housing envy, Prop13 will be the target.

  • Douchers like jt and Surge sure do like sniffing each others’ farts. Their idea of a land of winners has loads of mentally deranged homeless people shitting hep c piles on sidewalks in SF LA SD!

    • Seen it all before Bob

      LordBt, that is capitalism. And the game of Monopoly.

      The winners take all and the losers are out of the game.

      Out of the game means being homeless and living in a tent on the side of the Santa Ana River.

      It has happened before in the late 1920’s. and the voters voted in FDR for 16 years to fix this. He did with Social Security, Medicare, a living wage with minimum wage. These all have been neglected since then with Reaganomics, Trumponomics, etc.
      The cycle will repeat again.

      • Seen it all before Bob

        The only ting to stop it would be voter suppression of the homeless.

        In the 1920’s the compassion of the rest of the voters on the situation voted in FDR.

        Compassion? Maybe, but more likely homeless people setting up tents in the voter’s front yards and law enforcement looking the other way. Today, I think it would take a situation like this since the Republicans think that the homeless are just lazy, or mentally ill or drug addicted.

      • Not sure what crusty old bat is getting at but living in a city that has to bleach off shitpiles from the sidewalks is not winning for anybody.

      • Bob, read this article to understand that inequality per se is not the problem. If you have inequality based on free markets, then everyone is better off. The problem, like the rich poorer and the poor very poor, is when you have a central planned economy with a small group of people picking winners and losers. That is what you have in Mexico and Venezuela and that is what we get more and more, gradually, in US, since 1913.

        What we have in US real estate market is anything BUT free markets. The interest rate is totally rigged. Therefore, do not blame capitalism for socialist, collectivist, globalist policies.

      • LOL, was wondering how long it would take to blame Reagan for drugged out psychos shooting up and crapping in the streets who werent even born when Reagan was prez. I’m guessing those are your brethren and you may not be too far off from that same fate if your brain is so f-ked up that you blame some guy who ran the show 30 years ago – a time when the country was a lot nicer and with a lot less homeless than in the past 5 years.

      • My Uncle died of TB contracted while riding the rails from farm job to farm job in the FDR administration. He couldn’t keep his Dad’s farm because of the huge debt on it, so he hit the road (1933). There was another crash in 1937 conveniently after the election.

    • I truly suspect that your self-rightneous is fake. You come to real estate blog to preach about homeless and capitalism? Come on! Everyone here is dreaming about buying real estate, but it is just too expensive so everyone whines, moans and points fingers.
      If it is too expensive, move somewhere else, nothing wrong with that. If you want to live in prime areas, find ways to earn more money (or wait for you coveted crash). Whatever. If it is crappy because of cost, homeleness, etc… either move or start solving problems. You whine and point out flaws only because you are excluded from the club.

      Everything outside of prime areas everyone loves to discuss is a Province. Nice, good but province. Provincial mindset – discuss whatever is happening in the Capital (capital being prime areas).

      While I disagree with Millie about his financial strategy, at least I do not hear from him “Oh, let’s move to a cheaper area”.
      If your strategy is really to move, you should be visiting blogs for those areas, not blogs to bash on how bad your current area is.

      • Nah. Your shit stinks the same as everyone else’s.

      • Surge, of course you can’t agree with my financial strategy. You are the one who posted “price does not matter”, “paying principal is paying yourself” and “paying 200k down plus 1500 a month more than a renter is rental parity”. My strategy is to save by renting, maintain a debt free life and buy during the next crash. Our strategies are light years apart from each other.

      • Surge is so desperate to be seen as an elite that he comes to a provincial real estate blog to put everyone else down when he feels triggered. That’s living life in the crapital city.

      • Oh and I forgot the icing on the cake. Surge also explained in a brilliant way how your down payment makes you 10% annually. Thats right, I bet you didn’t know how you can make a killing with your down payment.
        Hey Surge, can you explain one more time how this works?

      • Lesson learned for me: dealing with trollers and losers on internet does rub on you

      • Provincial is a mindset, not location. Only provincial would look for a link with anecdotal evidence about how shity Somewhere is

      • Triggered snowflake losers like Surge sure can dish it but can’t seem to take it when called out for their assholism.

      • Surge pls don’t feel discouraged. You are the shooting star of this blog. Your statements made it into the top ten and see eye to eye to “this time is different”, “buy now or be priced out forever”, “it’s always a great time to buy”. Please keep it going. I know you said you are not a realtor but believe me when I say you should really consider being one. You have the right mindset to be a realtor and when you drop your lines any realtor company would want to have you under their belt.

  • Prop13…..isn’t it normal that older people downsize? Why do they need to stay in a five bedroom place? Well, because they can thanks to prop13!! The market is heavily distorted because of prop13!! If you repeal and replace prop13 boomers will downsize. We have low inventory in California and therefore higher price levels. Repeal prop13 and your inventory problem is solved and houses will finally be affordable for people who want to start a family!

    • I am against just “repeal”. I am for “repeal and replace” with a cap for prop taxes like in Switzerland. Make prop. taxes low for everyone. That would be fair. I don’t see anything fair to be taxed on inflation created by the FED.

      Some people scream for repeal, and I am against it.

      Some people want to keep it, and I am against that, too.

      Both proposals are unfair for one group or another. Cap it for ALL. That would be a fair tax for young and old alike and I’m sure both old and young would prefer a cap on property tax and get rid of bullet trains plans.

    • Seen it all before Bob

      Most states have a waiver on property taxes for grandma’s on fixed incomes.
      In my opinion, it is never fair to kick grandma who is on measly Social Security out of her house of 50 years because of taxes.

      CA has Prop 13 which does this but also extends to people who are in their 30’s and 40’s who may have purchased a house in the downturn of 2008-2010 and are now making 6 figures and paying half of their neighbor’s taxes who bought this year. These are the people who equalizing Prop 13 would make it fair.

      Most states still protect grandma. Even if grandma has a large house that she has lived in for 50 years so her kids can visit without sleeping on the floor.

      • Seen it all before Bob

        I don’t think it is fair to kick grandma out of her house of 50 years due to increased taxes.

        However, if grandma does decide to downsize and rent her house out for 7K per month while paying 100/month in taxes, the taxes should be stepped to the going rate.

        Also, when grandma passes on from this earth, the tax basis should be reset for the heirs in a year to allow the heirs to sell or decide whether to live in or rent the house. Unless the heir is a special needs who cannot work (I’ve seen that before).
        We don’t need Prop 13 dynasties.

      • Boby, that house you talk about is grandma’s. She can do whatever she wants with it. She already worked for it and paid taxes and paid for it after taxes. Why do you want to tax her twice? (in plain English, why should the government steal more from her after they already stole as much as they could before)? Why should the government goons be entitled to her house and what is a private property? Just because they have the force and you support it? Moonbeam was boasting recently for having a budget surplus after wasting money like there is no tomorrow.

        No, in other states the government does not give a break to seniors. They defer the taxes and take them when they die. I called that postponed stealing. If the mom worked sacrificing the children, it is just normal to leave to the children what she worked for and already paid taxes on. There is no need of another government leech at the end of her life to come and steal more just because he wants to abuse their power.

        I just really hate this thief, entitlement mentality. This society is just plain sick.

      • It’s also called deferred payment for services rendered and benefits conferred. Why not lecture businesses that don’t offer a senior discount about how they’re stealing from granny?!

      • Seen this all before, Bob

        Prop 13 was voted on and implemented to protect people from losing the house they are living in due to taxes.

        It was explicitly stated that when the owner sold the house. the tax basis would change.

        Some unfair things were slipped in.

        1) It protects Dynasties. Now, “Seen it All before Bob the 4th” can inherit the family castle and only pay $100/month for property taxes in the year 2050 while their neighbor is paying $30K per month due to inflation.
        2) Since it was intended to protect people living in the house, grandma’s house and all of her rentals should adjust when she moves out and rents it.

      • Boby, Prop. 13 was passed mainly to help the richest of the riches in CA who own the most expensive homes, most of the rental properties and most of the commercial RE. The grandma kicked to the curb is just the picture used for justification of their feudal mindset – to create a society of 0.01% super rich (overlords) and the rest simple serfs. That is what the liberals (and a good % of RINOs) ALWAYS do – appeal to emotions to people who lack logic and critical thinking and trick them into slavery and control.

        If they would care about grandma from the “goodness of their heart” they would give the cap in prop. taxes to everyone since all use the same services. I am all for that. And no, I am not supporting higher taxes for anyone. I am supporting lower taxes for ALL. What CA has now is a very feudalistic society. Importing millions of illegals is part and parcel of the same mindset. It is nothing intellectual in it; it is actually a very provincial way of thinking.

      • Flyover, you have my vote! Appreciate your posts!

    • Prop 13 is not a major reason why I now live in a home twice as big as I need. It is the high prices of smaller homes which keeps where I am. A home half the size of mine only costs about a $100,000 less–so why move? It would cost me about $40,000 to sell my home so I would only net about $60,000 (not counting possible capital gain taxes) which at today’s interest rate would yield me almost nothing.

      Everyone is fighting to buy the smallest, cheapest, dumpiest homes which drives up the prices of those home much faster than larger better homes. it is the compression of home prices, due to the Fed-induced mania, which stops me from moving.

      • Outside of foreign buyers. Where is the demand for 3000+sqft homes?

      • New home builders, are filling the market with homes that will become unaffordable when interest rates move to normal levels.

        This is going to create a compression effect in the housing market, where low priced homes want to move higher in value while homes at the top want to fall in value.

        The result of these two forces coming together will stifle the natural progression of appreciation and could create a slowly moving zone of home values that “never” change. Imagine a 10 year’s supply of homes worth $1,000,000 or more in an interest rate era that returns to 7-9%. If you own one of these homes, how many people in will be able to afford them?

        Yet if you own a low priced home, there will be a waiting list of ready buyers, meaning you can expect to get more for your home. Somewhere between these two points will be a compression zone where values get caught up in a twilight zone episode, potentially for a decade or more. In the end, all home prices will fall to affordable levels

      • I believe buyers today are more practical and prefer smaller homes with less maintenance and utility costs. When I say smaller I refer to sub 2000 sq. ft homes. Buyers today are more concerned then they used to be about the on-going cost and time of maintaining a home instead of trying to get as much sq. footage as possible. Quality vs. quantity.

      • “Everyone is fighting”
        Historic low sales, historic low homeownership rates, highly overpriced inventory, delusional sellers who think they find the last sucker who pays 50-70% above value…..those are some attributes of this current market. You got to be out of your mind if you Are fighting to buy an overpriced crapshack right now.

    • Instead of focusing why someone is not downsizing, focus on your own ability to earn more and get what you want in life. Debating about someone’s else activities is a loser stuff.

      And btw, older people can easily downsize w/o losing benefit for lower taxes. Look up prop60 before you post stupid comments.

      • Only losers like Surge are easy to trigger into calling other people losers.

      • I said loser stuff and you inferred “loser”. And adopted my screen name converted to a completed verb.
        But yes, I am triggered to call our loser behavior when I see one

      • It’s easy to call out a triggered loser like Surge when he says things are loser stuff.

  • Priced Out Forever

    Billionaire Investor Ray Dalio, who predicted the 2008 recession, believes there is about a 70% chance the next recession hits by Election time in 2020:

    • THat’d be fantastic. I hope it will be a massive one!

    • A massive recession before the 2020 election…source…CNN.


      • Every Republican president since World War II has been in power during at least one recession.
        We all know what happens if there is recession on Trump’s watch….it will be a great one. In fact the greatest one! Cause nobody is greater than him and does things better than him! No, my fellow republican friends I am not a libtard leftist trump hater. I like him as much as I like CrookedHillary.

      • Millennial, let me tell you from my experience of seeing lots of democrat and republican presidents come and go. They don’t have as much power as people think. Through carrot or stick (blackmail), they have to pretty much comply to the wishes of the Deep State. When Trump won I was happy just because Hillary lost without too much hope for better. He just surprised me for better in some areas and disappointed me in others.

        The biggest influence you can have is in the primaries, because that is where most don’t participate.

        Most of the economy is influenced by the FED (far more than the president). Most of the foreign affairs are dictated by CFR, TC, MIC, AIPAC and other Israel lobby groups for the defense of Israel. Most of the politicians have a big ego and they are there primarily to satisfy that ego. You and I are at the bottom of their priority list. If you understand this, then you are not going to agitate yourself too much at each election.

      • If no recession before 2020 election, 100% chance the Trump man gets reelected..source…Lord Blankfein.

    • Peter Schiff also called the housing collapse 11 yrs ago and he also has been saying we’ll get hyper inflation and a collapse year after year for the past 5 yrs.

      So just because you get one call right out of a hundred does not make you a psychic who can predict the near future. This economy is just starting to hit its stride, I think we have a few years of strong enough growth ahead. Mille will need to wait an extra couple of years for his so called crash

      • I really hope the crash won’t happen until a couple years from now. 2017 was a great year (especially crypto and stocks). Let’s have two more years like that and than a massive crash! That be fantastic-awesome-beautiful. 😉

      • Millie, things like crashes are really hard to time, and have this annoying way of happening when it’s least convenient for you. Like, maybe, the cryptos crash forever and all time, their essential worthlessness laid bare at last, just when you’re loaded up to your eyeballs and the house prices are finally breaking, too. ‘

        I know- I loaded up on TVIX a couple of years back in anticipation of the steep market drop I was so sure was coming in just a few days… just so our monetary mandarins could go out and buy another load of bonds to extend QE. You can imagine how that worked out, even moving as fast to exit as I could.

      • Success in stock market and crypto is partially driving RE prices. They move together.
        Timing market is base of your pyramid is taking care off

      • Laura,
        You prepare yourself for an upcoming downturn/recession/crash.
        I took profits over the year and build up my cash balances. Renting a cheap apartment allowed me to save and invest. I am ready to buy now but want to wait until the RE market crashes. 50-70% crash is my conservative projection.
        Generally, I never go all in on something. You dollar cost average.
        It does not matter if the RE crash happens end of the year. Next year or in five years. You just need to get the general trend right. 2001 (dot com bubble), 2008 (RE bubble), 2019 (everything bubble?) within a decade you see a recession and because the markets are artificially inflated the downturns will be more dramatic also.
        Pretty simple. Just hoard your cash and be ready when it happens. Worst thing you can do is tie up all your money in a heavily overpriced crapshack. If you do that you are out of options and can’t profit from buying opportunities. (Crypto, RE crashes etc).

        Dumb money always rushes in at the top. Huge opportunity for the smart money. You can’t fix stupid, just need to find a way to profit from it.

  • Those rentals being built are insanely expensive and not full. Millennials can’t afford that shit. It’s a scam.

  • Lets face it. Life is short. Why waste life living in a stressed out area full of bums. Personally, the overrated areas of the country not worth spending your life in are:

    1) Seattle
    2) Boston
    3) NYC
    4) LA/OC/San Diego

    That is the list. Everywhere else is likely more worth it. In all of these areas, you need at least 1M to get into a decent enough home in a good area. That is the cost of living life in an overrated stressed out area. If you want to give up and move there, that is your choice. But, when you hit 50, you will be kicking yourself. And, if you decide to live in a stressed out overrated area, you can either buy now, or you can buy later and spend a whole lot more money. Those are the facts.

    FYI … I left the SF Bay Area off the list. It is dudesville up there. I would never ever live in an area where jt did all the dudes. Never.

  • This will definitely impact the RE values in SoCal:

    If they get any bailout, then all states will run it in the same disastrous way in order to get bailouts.

    Would this impact the taxes for the young people? Would it impact Prop.13?


    CALpers near insolvency? Nobody saw that coming. Who would think boomers like to live large in an unsustainable way by creating more debt and liabilities?

    I have an idea. If you need more tax revenue just repeal the prop13 scam. Problem solved. Sure some boomers will cry you a river because poor grandma in her multimillion dollar crapshack has to downsize from 6 to 2 bedrooms but at least you keep CALpers going!
    The other idea, why not invest the CALpers funds in crypto?
    You have the option for astronomical returns and if it all goes to zero just have the public bail them out by raising taxes. Worked fine last time when we bailed out Wall Street.

    • Crypto is NOT an investment. At best it is a speculative (gambling) bet. Crypto does in no way cause economic growth.

      • I have to agree. At this point in time Bitcoin, crypto, blockchain have ZERO practical use in the USA. That may change in the future, but right now all they do is deplete energy. At this point they are speculative investments similar to gambling. With more ICO’s being introduced and more and more coins mined at ever increasing rates the whole sector is getting diluted.

      • Woody, a lot of old people want to think like that. They want millennials to invest in stocks and overpriced real estate. The US regulators just opened the floodgates for crypto. Many haters forecasted that the US will ban crypto but the opposite has happened. They embrace the tech and want to regulate it. Many other countries will follow what the US is doing.

        Personally, I like when people who have no clue talk about crypto and how it’s gambling. Spreading fear, uncertainty and doubt (FUD) is very profitable for me (buying the dip). Also, it’s way more fun to respond to those people by showing them how astronomical the crypto gains are. I don’t want to convince you to buy crypto. Please continue to say it’s a ponzi. My “ponzi” litecoins made 5,000 % year over year.

      • Wheelin,

        2008: we have an app for that
        2018: we have an ICO for that

      • Milie-machine, crypto currency returns have been fantastic, no doubt.
        And, yes the street is doing derivative trading on them.

        Stock market return was also so good

        It is extremely easy to feel smart about yourself in such a short timeframe of on-going success.

        It is also puzzling why are feel so cheated by previous generations and why you care so much about who lives where and what. Your financial success should carry tou through without need of wealth redistribution.

        Although your highly narrow range of responses makes me suspect you are just trolling or worse

      • Surge,
        “It is also puzzling why are feel so cheated by previous generations and why you care so much about who lives where and what. Your financial success should carry tou through without need of wealth redistribution.

        Although your highly narrow range of responses makes me suspect you are just trolling or worse”

        All I am saying is that prop13 is a scam and needs to be fixed. It’s obviously wrong that a millennial has to pay 10times more in property taxes than a boomer for the same services. The entire RE market is manipulated enough already.
        Give me one example why you think I am trolling?

      • Wealth redistribution. That’s what Prop 13 is.

    • “I have an idea. If you need more tax revenue just repeal the prop13 scam. Problem solved. Sure some boomers will cry you a river because poor grandma in her multimillion dollar crapshack has to downsize from 6 to 2 bedrooms but at least you keep CALpers going!”

      Grandma isn’t living in a 6-bedroom mansion. She’s living in a 1960’s 3/2, 1,200sf beach town bungalow where she raised several kids. You want her to use half her equity and half her social security check every month to “downsize” into a $450k house in the inland desert just so YOU can maybe, possibly (but probably not) get a slight price break on your first home purchase? How considerate of you. Thankfully there is no chance of that happening. Grandma gets to keep her equity and will probably end up spending the whole thing on assisted living and medical care by the time she leaves this world. I kinda like that it bugs you so much.

      A buddy of mine just paid off his condo, a foreclosure he bought for $70k in the 90’s. He pays less than $800/year in property taxes. His father is eight figures wealthy and he will get half of it. Am I jealous? No, I’m happy for him, because I’m not a petty, immature douche. In January of last year, I bought new construction built in a little valley with a natural creek running through it. No existing infrastructure whatsoever and outside of city limits. All owners are paying an additional 1% annually for the flood control, sewage, storm drains, etc., for the next 20 years. My property taxes total a little over $24,000/year, but I can afford it and the neighborhood is worth it. Do you hear me complaining about seniors getting a break? No, because I know that in 20 years my taxes will look like chump change compared to new buyers and it will have no effect on my retirement. Big picture, Millie. Stop being bitter. You’ll be happier for it.

      • Correction = $12,000/year. LOL

      • Naah, there are enough retired people who live in a house that’s way to big for them. They are millionaires on paper so I don’t feel sorry for them if they start paying their fair share. That’s how a society works. We don’t want to subsidize a few on the expense of younger generations. Millennials just need to understand what a s am this is that your neighbor pays 10times less for the same service than you. Nice they figure this out they will vote against i. The hiding behind poor grandma is pathetic. You just don’t want to pay your fair share. It’s understandable. Many boomers lived like that their entire life’s. Deferring the expense and liabilities to future generations. They spoiled themselves.

      • Yeah no pal, you’re not jealous… you’re nervous because you know prop 13 is getting closer to the sight hairs of Sacramento. Oh yeah it’s gonna happen and you know it. It’s not about grandma because the laws outside of prop 13 already take care of her with a deferred arrangement. You and your friend are greedy is all there is to it. It’s time for younger and disadvantaged people to stop footing the bill. 20 years is a good laugh. No way it’ll last that long.

      • Nice response Lordt B. Glad to see there are still people with common sense on this blog!

      • “Yeah no pal, you’re not jealous… you’re nervous because you know prop 13 is getting closer to the sight hairs of Sacramento. Oh yeah it’s gonna happen and you know it. It’s not about grandma because the laws outside of prop 13 already take care of her with a deferred arrangement.”

        You guys aren’t getting it. I’m not a fan of prop 13. Like you, I think it’s unfair, but only slightly. I think it’s MORE unfair to kick someone out of their home without warning. For that reason, it’s not going away overnight. Zero chance of that. Grandfather those people in. Like someone else here suggested, prop 13 dies with them.

        And if you think housing prices are going to tank once it’s gone, I remind you again to look at the northeast. Housing prices will correct, but not because of the repeal of 13.

        “You and your friend are greedy is all there is to it.”

        I’m greedy? Paying $12k/year in property taxes, not complaining about it (or anyone else’s), and that makes me greedy? Do you read what you type?

        “It’s time for younger and disadvantaged people to stop footing the bill. 20 years is a good laugh. No way it’ll last that long.”

        Everyone, including grandma, is footing the bill. California’s income from property tax is a tiny percentage of the total state revenue, compared to personal income tax and sales tax. You’re focusing too much on something that is really not that big of a deal – I guess because it helps your ego to have someone else to blame? The repeal of prop 13 WOULD ONLY HURT YOU FINANCIALLY. Your property taxes wouldn’t go down, they would only go up, and housing prices will not be noticeably affected. If you’re in your 30’s and can’t afford $400/month in property taxes, you have other problems besides “grandma”.

        It may not last 20 years, but I’ll take advantage as long as it’s around, as anyone with an IQ higher than a turnip would.

      • I wouldn’t get too excited for it if I were you, Millennial. When the facade comes off of that thing, it’s going to be bad for everyone with a declared residence in CA.

      • Of course I am excited about repealing prop13. New buyers are already screwed by highly overpriced RE and extremely high property taxes. When we repeal prop13 we no longer just pick and choose winners and favor older generations on the expense of younger ones. At least it will be bad for everyone. We need to hurt those who benefited the most from these housing bubbles in the past in an attempt to even the playing field. Also we are sending the wrong signal to those who benefit from bubbles. They credit credit and favorism even though they have not accomplished anything. That’s not how capitalism works. As an example, if you can’t afford your property taxes any longer you need to work (or work harder) or invest (for example in crypto). We need to stay productive and not favor laziness. People live longer and are healthier. They can work longer too.

  • Anecdotal here from my neighborhood (our kids are in the same class):

    Orange county

    850k listed 3 days ago. No open house today (Sunday) don’t think I saw sounds for it yesterday being open either.

    Already pending/in contract; on the market only 3 days.

    Have no idea what type of buyer (cash or loan) and I thought 850k was a fair price. Will be interesting to see if my wife can get more info and see what the final sales price was.

    Demand is there clearly.

  • Pictures from the CAPITAL (prime RE) where all the “deplorables” from the Province dream of moving to, and become debt slaves for 30 years (according to our blog elitists):

    Pictures speak more than a thousand words!….

    • We always had homeless people. It’s nice and warm here. Some people just don’t want to work for me. If we had 40,000 homeless people it might be a problem but having less than 10k sitting near the river is a nothing burger. As long as my prop13 taxes (a few hundred bucks per year) don’t go up I am fine and enjoy retirement in my paid off 7 bedroom home. Just keep the homeless further east so I don’t have to see them. It will be the problem of someone else later. Love my California!

      • Not a bad troll, but you should have called yourself “Retired Democrats’ Thought Bubble” because they would never say what you said out loud – they would instead ceaselessly virtue signal about how much they CARE and then outline a series of solutions destined to fail but that would ensure the misery continues or worsens – at considerable distance from them.

      • Retired Demorat

        Thanks. Good feedback. I will try harder next time.

    • So now local tax dollars are paying to rent rooms for homeless people in Motel Six? Unbelievable. If they didn’t make the state so accommodating maybe less homeless people would move here from all over the country? I feel for these people, I really do but where does it end? San Diego they had to power-wash the sidewalk with bleach because of Hep C outbreak from homeless people defecating on the sidewalk.

      Is this what a 1st world country is supposed to look like? It often feels like we are we in a race to the bottom and in this race there are no winners.

      • “Unbelievable”
        Why is that unbelievable? We should raise taxes to accommodate homeless people and build more affordable housing. If we need more rooms we need money to build it. I would say repeal prop 13 and gave these wealthy boomers pay!

      • “If they didn’t make the state so accommodating maybe less homeless people would move here from all over the country?”

        From all over the country? I would say from all over the world. That is the reason for overcrowding. That is what a sanctuary state and a sanctuary city look like. Did you thank Pelosi, Feinstein, Moonbeam and Shumer – all these democrat idols? They crucified Trump in MSM just for opening the discussion on illegal immigration. Not like I had high hopes for Trump with a congress full of treasonous leeches. He might want to do something but he is surrounded by too many traitors. If they wouldn’t spend tens of millions in witch hunting by Muller, maybe the money would be better used for homeless. But these controlling power thirsty leeches care less about the homeless.

      • “I would say repeal prop 13 and gave these wealthy boomers pay!”

        The property taxes that would be gained from long-term prop 13 beneficiaries amounts to a small fraction of one percent of the state’s tax revenue. Repealing prop 13 would only help government pensions, politicians, and unions, not the homeless, not infrastructure, and not young buyers. This is the CA legislature we’re talking about. They have a surplus right now – do you see any of it going to help homeless?

      • If prop13 gets repealed good things can be accomplished. For instance we need more affordable housing for young families. We could use tax subsidies to build homes for young buyers.

  • Hey millie, interest rates are up almost 25% in 1 year…

    25% !!!!

    yet house prices are up!!!

    what gives? check the historic charts bro when interest rates went up…. check em’ again.

    • Yes, it’s fantastic to see interest rates going up. That will put further pressure on housing prices. I expect to see a significant crash within the next two years. I am ready to buy. All we need is a 50-70% crash. Let’s wait and see.

    • Yes little correlation
      If rates go up, there might be price compression and even reduction
      But as long as there is no massive ARM reset triggers and no major economic/liquidity event, I do not see that RE will become cheaper. Some of the increased demand will be taken care by new rental buildings
      And no, boomers are exiting market at the same rate as always – its not like there is a due year when all boomers will suddendly exit market (just like millenials will enter market at the same average rate)

      • Rates started their upward trend around Xmas, so it’s a little too early to tell what affect it will have.

        Of course this is directed to common sense and open minded posters that like to try and have an honest conversation about RE/housing, not someone who wouldn’t believe that water was wet while swimming in a pool.

      • Dan, I think you mentioned you are a lender. You must have better visibility then, what do you see?
        I have read it was about 18month lag between rates rising and home prices reacting, which is plenty of time for many other immediate events to occur.

      • I have definitely slow down the past four to six weeks however on the purchase side because I do refinances as well I have not once had a buyer call to get pre-approved and when I quoted an interest rate in the mid-to-high 4% range decline to move forward due to the interest rate.

        100% of my business is conventional FHA and VA I don’t typically go into the jumbo Market because that is dominated by the big Banks so a half a percent interest rate increase in my loan amount wheelhouse which is 400k to 650000 is not a substantial increase on the monthly payment. 100-200/move difference is not enough to deter a buyer.

        That being said if rates continue their increase towards the 6%+ range that certainly may be a different story in my opinion. As much as Millennial does not want to hear this the number one complaint I have from realtor is not that rates are too high it’s that inventory is too low. Honestly I don’t care what graphs show or which data comes out, I am going by the boots on the ground that I deal with on a daily basis my realtor referral partners and the overwhelming majority describe the number one impediment to continued sales is the lack of inventory.

        Sorry Mille, until the supply side of the equation is dealt with no crash cometh.

        P.S. refinances have definitely slowed down no doubt

      • Dan,
        Nice post, it’s great to see interest rates going up. I can’t wait for the next years and to see the impact.

        “ As much as Millennial does not want to hear this the number one complaint I have from realtor is not that rates are too high it’s that inventory is too low.”

        That makes me happy. Suffering realtors is a good sign.
        As mentioned many times before, we have enough inventory. It’s akteady way to crowded here. What we need is an economic collapse. Once the recession hits people who bought high with low down payments will try to unload and sell their houses as fast as they can. During a panic house prices plummet and you walk in with your war chest and buy 55-75% below today’s prices. It will be very nice.

  • Remember? Remember when I told everyone that sometimes when mortgage rates go higher, prices also rise, if inflation is cooking. Many said I was crazy. But, this is bigger. A new tax law and higher mortgage rates in effect Jan 1. What happened? Prices move up more than 11% in the SoCal region. Biggest price jump in years. See how that works? It is all about rates and inflation. Not just rates.

    • Prices also moved up in other areas and some even higher than so cally. Seattle – DC – Vegas – SanFran all hotter movement than LAX.

      • If you are a long term investor, according to Case-Shiller, no metro area has gone up more than the LA area. Look at Case-Shiller. That index measures against 1991 and LA has the highest number of 270. SF is at 251. SD is 245. Seattle is 231. Miami is 228. DC is 222. Boston is 205. So while SF and Seattle has been doing better than LA recently, over the long term, LA is the highest appreciating market. I expect LA will maintain its lead.

      • Only a couple of decades ago most people thought the USSR would be our long term competitor and China was a long term joke. Well we know how that worked out. Your long term crystal ball is as defective as all the others. Time to face it, things change and so does the balance of value and power among our nation’s cities. Clearly, highly motivated and productive people are voting with their feet from the old to newer pastures across the West and South. It’s a big country.

      • son of a landlord

        Lordt B: Only a couple of decades ago most people thought the USSR would be our long term competitor and China was a long term joke.

        I’m old enough to remember Nixon’s trip to China. Even as far back as 1972, nobody thought of China as a joke.

        I doubt people in the early 1950s, during the Korean War, thought of China as a joke.

        I doubt people in the late 1940s, when Mao was fighting Chiang Kai-shek, thought of China as a joke.

        When I was young, it was Red China. A dangerous threat to Taiwan, and to India, and to Asia in general. Never a joke.

      • Jesus Christ stop dithering. You know what I’m talking about.

    • Rising interest rates = prices will go down. It’s always better to buy during high interest rates and get the house with a lower price than buying a house with an inflated price due to artificial low interest rates. You can always refinance later. I am hoping we will get around 7% mortgage interest rates. Everything above that would be a dream come true.

      • Someday, prices will fall. Maybe next week. Perhaps next month. Might not happen till 2020. However, that does not matter. Because you decided not to buy years ago, a drop in prices now will only partially cover the massive financial hit you took by not buying years ago. Financially, you will never recover.

      • Mortgage rates above 5% will crash the real estate market. I just read that they reached 4.65% so the end is near. By the end of spring, home prices will start falling.

      • Gary,

        In some cases/scenarios rates are above 5%.

      • “Rising interest rates = prices will go down.”

        Still wrong, and it will be wrong the next time you type it, too. High rates are a minor nudge to prices compared to other fundamentals.

        “It’s always better to buy during high interest rates and get the house with a lower price than buying a house with an inflated price…”

        I completely agree, if that’s in fact what is happening at the time (high rates with low prices). However, that is frequently not the case. You’re just as likely to have high rates with high prices.

        “…due to artificial low interest rates.”

        Not the only reason prices are high. Rates were higher during the last bubble.

        “You can always refinance later. I am hoping we will get around 7% mortgage interest rates. Everything above that would be a dream come true.”

        Be careful what you wish for. Rates may not be this low again in your lifetime. Better to use the lower price as an aid to paying the mortgage off sooner, and not focus on rates at all.

      • Higher interest rates are the best thing that can happen to crush the market. A few years ago people on this blog were saying we will never see higher interest rates in our lifetimes! Now they are saying we will never see low interest rates in our lifetime. You see how the dumb people on this blog use words like “forever” or “never”. It’s the old method of playing into people’s fears. If people are not fearful you can’t drive them into a bad investment position. Going back to interest rates: Nobody (who understands economics) doubts that artificial low interest rates pushed asset prices higher. Now, that it’s is about to change we will see lower RE prices in the future. Lower RE prices favor those who are looking to buy and those who already bought are bitter and try to tell you, you should by before interest rates are going up more. People who bought high don’t want to see millennials buy next door for half off. That’s why they try so hard to sucker you into buying high. “Don’t focus on rates”,”price does not matter”, “it’s always a good time to shop for your dream home”. It’s fascinating to me how conversations change over the years in these market cycles. People (and therefore markets) are so predictable.

      • Millennial — you’re absolutely correct there were several morons on this forum saying rates wouldn’t go up in our lifetimes only just a short time ago. On the other hand home prices have historically had periods of continuing to rise along with rates. We’ve never been more leveraged though so maybe it’ll be different this time. Then again supply has never been quite so constrained as now so maybe it won’t be different.

      • “This time is different”
        It’s the same spiel over and over. Dumb money gets in at the top (RE, stocks, crypto). Smart money waits until the crash and buys at a discount(55% for RE).
        Don’t be dumb….be smart, be ready and wait for a nice collapse.

  • Seen it all before Bob

    I know Millennial is semi-trolling us all. I am doing the same.

    I agree with Millennial (and Warren Buffet) to not buy until fear is high. It is outrageously exuberant now in houses and stocks.

    Given that, I’d still buy a personal house now if I could have the payments 30% of my income and given that 10-20 years down the road, I will be better off than most everyone else. Hey, with a 15 year loan, I would be living free in 20 years and with a 30 year loan, I will be sliding into ownership. Millennial might still be renting at 15K per month after his kind landlord passes away and raises the rent to market value.

    Investing before that, In my humble opinion, I would not buy a house, bitcoin, or an index fund for short term gains. Invest in stable stocks for the short term. Prepare for a wild ride in the next 1-5 years. Cash will be king unless Trump drives us into hyper-inflation. In the case of hyper-inflation, I will have bet wrong holding onto cash and short-term bonds.

    Even if I am wrong, and we go into hyper-inflation, like we saw in the 80’s, a leveraged house is the best investment for the long term. Mom’s house went from 45K to 200K in 10 years due to inflation. All the while, she made 9% in the bank while paying a 5% mortgage. Rents went from 500 per month to 2K per month and just kept rising. Poor renters during hyper-inflation. Wages never quite keep up.

    That is the situation I would like to be in by owning a house long term. Until I retire with a paid off house and 2K per year in Prop 13 taxes.

    Like I have said, before, my crystal ball is broken so someone on this blog will be correct, but I have no idea who that will be.

    • Bob, I generally agree with you. Except one thing…price of the home ultimately does not matter. In the end, what you have is a house if it appreciated 10x or 1x. It does matter on the front end when you buy, but if one errs and buys on higher side it will be a wash eventually. This is true if it is affordable PITI of course.

      And yes, a little bit of trolling is always good (guilty of it with my Province comments, but in every joke there is a little bit of joke)

      • It matters if you’re leveraged and are forced to liquidate at a loss. As DHB has reminded many times, the stories of the millions of foreclosed tend to go untold. This is where you tend to come in with a response about coastal winning or some similar unhelpful moronic bullshit.

        Regardless I’m all for buying actually. It normally takes risk to get anywhere and what Millennial doesn’t get is that SoCal is just a high risk area. He wants to sidestep the risk by focusing on the relatively poor value proposition but that’s also risky because he could just be holding out for a value level that never arrives in his lifetime.

    • Many boomers never learned to be financially responsible. They think it’s normal to carry debt your entire life and than at the end of the road they hope for hyperinflation to inflate their debt away. This will end in tears and many boomers will learn the hard way that when you get in debt you actually have to pay it back. Bailouts only work for Wall Street and banksters. In general, renters win by a mile during a Californian housing bubble. You conserve your valuable cash by renting and have the option to profit from crypto gains, stock market gains and RE crashes. Some people call you a troll for sharing this. I call it smart investing and common sense.

      • Seen it all before Bob

        Actually, Boomers bought personal houses. They were the wisest investments they ever made.

        The Boomers who did buy houses during local past bubbles 1970’s/80’s have now paid off their houses and are paying less than $200 per month in PITi for a typical 1960’s 3/2 tract house and are a short walk to the beach.

        There are even the extremes like Warren Buffet who bought a house in 1971 for 150K in S. CA that is now worth $11M. 150K was a very expensive house in 1971.

        The people who never bought that were renting when I was in my 20’s are now:

        1) Living in Flyover Country with either a mortgage on a much less expensive house or renting for $1000/month.
        2) Living in a trailer park in Bakersfield paying $800/month
        3) Living in a studio or one bd apartment or trailer park in Coastal CA paying $2000/month in rent .

        Who made the wiser decision over time?

      • Seen it all before Bob

        The second wisest investment they made was to buy 30 year T-Bills in 1984 at 13.8% interest. Hyperinflation was the Boomer friend.

        In fact Grandma gave me Savings bonds in the early 90’s that are still paying 4%. which is higher than my mortgage rate.

      • Yes, boomers should not buy homes and invest in crypto. Even though crypto was only available for the last few years. So the valid strategy for boomers would be rent forever, save money, and invest everything when it arrives at their retirement. Totally agree.

    • LordB, yes forced liquidation is the highest risk in RE. (as in any holding in general).

      Regarding my moronic statements about “winning”…yes I am guilty of that. Please allow me to make stupid comments about 2% of the time, I do need to vent towards those who whine about social issues on this blog.

    • Thanks for sharing. That’s great news for potential home buyers.

    • Interest rates are only part of it all.

      The central banks in US and Europe have stopped printing money. Japan is gonna stop in fall. The crashes of all these bubbles (housing, bonds, stocks) are coming! Who knows when the bottom will be for housing.

      Millennial sounds like he was a rebel as a kid and he is still rebelling….just that it might maybe not benefit him to have waited so long.

  • As I forecasted…..this is what happens if you have too much inventory and not enough demand. Rents are falling. Some RE cheerleaders called me crazy and now they are facing reality:

    • That article is referring to commercial real estate storefront owned by big landlords that price the rents exponentially High, and true they don’t have enough demand, but, I also think a large component to this is the death of brick and mortar do to as you know the huge surge in online retail. Brick-and-mortar with high fixed costs are not competitive with Amazon and the like.

      Pretty difficult to conflate this with residential rental housing prices Nationwide and more importantly in California going down.

    • Manhattan storefronts? you are such a troll!

    • Lord Blankfein

      You are talking Manhattan, this is a socal housing blog. And as we all know, inventory is very limited in socal. Limited supply and much demand…you know the rest!

      • Yep. But it shows how quickly rents can fall dramatically. It will be hard to decide during the crash. Should I buy a house at a 55% discount or should I keep renting if rents are even lower than what they are now. I’ll probably end up buying to diversify.

      • Lord Blankfein

        Millie, do you honestly think you’ll get a 50% plus discount in areas you want to live in. You may see that in Vegas, Phoenix, IE, Barstow, etc. History has shown that rents do not go down much in socal…if at all. I’ll keep repeating myself, increasing population, supply and demand, no more buildable land in areas people want to live in, no growth policies, Prop 13, RE investors coming out of the woodwork, etc.

        Here is a gem from the OC Register. What area in the country has seen that highest RE appreciation this century. Drum roll please…Los Angeles and Orange County at a whopping 171%.

      • It’s fair for Millennial to use Manhattan as a comparison. After all, most of you don’t hesitate to compare to NYC and other cities when it comes to how “world class desirable capitol of whatever” LA is.

      • “Millie, do you honestly think you’ll get a 50% plus discount in areas you want to live in”
        Of course I honestly believe that.
        Just wait and see. Have your cash ready when it happens.

      • Lord Blankenstein

        Lord Blankmind didn’t mention the ranking is based on Case Schiller data model. It would be actually useful to see Corelogic data used instead.

    • this is for commercial real estate.
      And even if it was for residential, yes, these are normal market forces…yeah lets drop a rent by 20%, from 4000$ to 3200$, does not increase affordability problem.

    • SacramentoLandlord

      So go get one… here is your opportunity Millenial! LOL! Your degree is worthless!

      • Absolutely! I need to diversify my portfolio. As soon as the RE market crashes by 55% I will buy my dream home. Maybe in all cash. Depends on how much crypto explodes this year though!

      • NoTankinSight

        The future for Millenial looks most likely something like this:

        1. Recession in 2020
        2. House prices drop 15-25% over 3 years and stay flat for another 3 years
        3. Millenial loses his job in the 2020 recession
        4. Cryptos are completely worthless long before 2020
        5. Millenial living at home, which is OK because someone in their 30s living with mommy and daddy is totally acceptable according to Millennial

        That’s the base case scenario

      • NoTankInSight,

        Allow me to ask for a clarification to understand your thought process here?
        You are forecasting a recession in 2020 and that I lose my job. That’s fine. So are you advising not to wait any longer and buy now or are you advising to wait until after the recession and buy then? If it’s the latter then we are on the same page.

      • I do not see an advice here, just a prediction (BTW, it could happen to anyone here)
        Point is, hypothetical 50% crash will be a result of liquidity crisis -> your stocks, crypto, all other investments will crash, because everyone will be liquidating everything. Your job is likely go as well. You will have neither funds nor confidence to go ahead and acquire RE in such scenario.

        Someone who is boasting $700/month saving due by renting is likely not in a position to benefit from such a crash, only get hurt. Not that $700 is a chump change, it just does not get you far with the RE prices.

      • Yep, 700 per month plus no liabilities plus the down payment. Renting really is a no brained compared to buying. If I would have bought I would have never been able to save and invest that much money. It’s not surprising that nobody wants to buy in this market.

      • NoTankinSight

        Millennial sounds like someone who has never been in the work force through a recession LOL

        buckle up, could be 2020 or 2022, nobody knows…. but it is comming

        House prices may be up 15-25% before they fall 15-25%

      • That’s your response? Okay 🙂
        I am excited for a recession. I hope it going to be more severe than 2008. I have lots of cash saved and zero debt. I could not be better prepared. Bring it on!!!

    • Millenial,

      I have to disagree and I can tell you from being in the trenches, not looking at statistics. I won’t mention area but I’m looking to help a family member rent in a decent area. A year and a half ago I was able to find a SFH for $3000, now anything similar to that or even in a less appealing area is listed for $3700.

      Rents won’t fall, they never do. I remember paying for a place 15 years ago at $700 a month, the same place is now $2200 a month.

      • Right now In California we have the most inflated housing bubble in history. Renting is a bargain compared to these highly overpriced crapshacks. People who own are trying to sell, rent two years and buy for 55-75% less. The way it’s looking right now, I am 100% certain it will crash by at least 55% during the next crash. We are overdue for a recession and even the most bullish re cheerleaders are saying there is no rental parity in California. Not even close. It’s pretty simple where this is going. Realtors on his blog try to convince the last sucker to buy before it all crashes down again.

      • There is really no use in having a rational discussion with millennial he has turned to fanaticism. Such an absolutist that cannot even acknowledge reality.

      • a good fanatic is always ready for an argument

      • Throbert Girth

        Millennial is right about a lot in my opinion. Will prices drop 55%? Probably in inland areas but not coastal…we’ll have to see. I also agree that we are far from rental parity, which means home prices are speculative and not driven by sound investment philosophy.

      • Lord Blankfein

        “People who own are trying to sell, rent two years and buy for 55-75% less.”

        Millie, I don’t know one person who would even consider doing this. I can see the conversation already, “Honey, let’s sell our house that we love and and can comfortably afford. We’ll get a cheap rental apartment in the ghetto for a few years. The kids won’t mind, they can make new friends. We’ll have to sell most of our stuff too, since the we are going from a SFR to a 2 bedroom apartment. We all know Prop 13 will get repealed, that gift won’t last much longer. After a few short years, we’ll buy back our primo coastal CA house at a 50% discount. Sounds good, let’s call the realtor.”

        Here is another gem regarding rents and home values that have skyrocketed in the South Bay. Millie, go buy a lottery ticket if you haven’t had a rent increase in years.

      • If prices drop 55%, who will benefit and how will it help you?
        Please think it through.
        There are 2 main scenarios why prices can fall so much.

      • Millie, yes, everyone who is owning is trying to sell now and rent for couple of years. Market is flooded with homes being sold by aspiring renters and RE bears.

      • Selling now, renting and buying again at a 55% discount seems like a fine strategy. No wonder so many are trying to do it. Problem is they can’t find a buyer who is willing to buy a highly overpriced house at the moment.

  • EverythingsGoingToBeAlright

    You all need to relax. Once whites are a minority in the USA (projections show this will happen some time before 2050) everything is going to be just peaches in America. That’s because everyone is the same except for skin color. Live it up boomers. You’ve been wonderful custodians of the USA. Go on vacation with those HELOCs. Enjoy watching those Africans playing basketball and football and chug that cheap beer. That’s one heck of a culture you have there! Congratulations!

  • More bullish bullish news on crypto:

    Where is Mr Landlord by the way? Hasn’t been posting as much lately. The Dow must be down again. He will be back when the Dow has a 1% up day.

    • son of a landlord

      You ignore your own prognostications. You said: “Once your Uber driver starts telling you about the next hot coin you will know it’s no longer sustainable.”

      I posted that Uber driver are already discussing crypto:

      So by your own (previous) claim, crypto is no longer sustainable.

      You also post: As soon as the RE market crashes by 55% I will buy my dream home. Maybe in all cash. Depends on how much crypto explodes this year though!

      So you’re betting on a 55% RE crash and a crypto explosion this year. Good luck with that plan.

      • I agree with almost everything you said except your article and a 55% crash this year in RE.
        Yes, crypto will explode this year. We are early stage and at the beginning of the cycle. Wall Street and Main Street haven’t even really started to invest in crypto. Regarding your article, the media will come up with silly headlines to attract readers. (E.g. bitcoin is dead – the media issued that headlines over 166 times in the past few years).

        Once your Uber driver etc starts giving you coin tips etc. you know what’s going to happen. We are far, far away from that. No article/opinion in this world can change that.
        Almost all media outlets agreed that Hillary will win. You saw what happened. Just because you read one article (or a hundred different ones) on how bitcoin is dead doesn’t make it true. That’s something you should have figured out over the years. If you haven’t figured that one out – it’s not too late. Just keep that article in mind and wait until you drive Uber the next time. Ask your friends and family as well. I almost guarantee their Uber conversations are not regarding cryptos. And no advice on the next hit coin will be given. Simply because the avg joe hasn’t started investing in it yet.

        Regarding RE, I am not buying unless the market crashes by 50% (well, let’s say 55-75%).
        Renting is simply so much cheaper. I am saying we are already or nearing the end of the RE cycle. It doesn’t matter if it starts going down this year, next year or in he next three years. You simply wait until the crash and buy at a massive discount.

        Don’t think there is any luck envolved. It’s just skill (of understanding cycles/peoples behavior) combined with patience.

      • Millennial that’s great you’re betting on cycles and consumer behavior but it’s at the expense of ignoring government and Wall Street behavior. The stage was set after the last RE crash to manipulate the absolute piss out of this facade of a market. You’re applying market fundamentals to something that no longer resembles an actual free marketplace. A meaningful correction of ~50% will not be allowed by those who control it. Systemic risk and too big to fail — were you paying attention to what happened 10 years ago?

      • Just wait and see. I am not buying until it crashes. Let’s say there won’t be any crash in our lifetimes anymore. Then: No crash no purchase. I rather rent for cheap and inherit the houses. However, the market crashes every ten years. So I simply have to wait a couple more years, pocket those crypto gains and buy 55% below today’s prices. Pretty easy strategy to get wealthy!

    • Seen it all Before, Bob

      That is an interesting article. The crap shack is worth 50 dollars but the land is worth 1.2 million.

  • GreenGroovyMom

    There is a tremendous shortage of entry level homes on the westside of LA that are for sale. And I mean NONE decent for under 1m. In Santa Monica, 1.7m is the new starter price IF you can find it, offer full price, ALL CASH and the developers don’t get there before you do. Obviously there is still money out there for RE, but I don’t get the frothy pricing at all. Even renting at ridiculous rental pricing makes sense unless you are in for the loooooong haul. You better get into a 3/2 right off the bat because trading up to a bigger place in the same area seems impossible.
    Will this pace continue? Some of the realtors I talk to won’t even take on another buyer…they have enough of those…its SELLERS and listings they need!

    • Sellers and listings? But, according to Mille there is no inventory problems there are thousands of properties to choose from in every zip code!

  • GreenGroovyMom

    There is a tremendous shortage of entry level homes on the westside of LA that are for sale. And I mean NONE decent for under 1m. In Santa Monica, 1.7m is the new starter price IF you can find it, offer full price, ALL CASH and the developers don’t get there before you do. Obviously there is still money out there for RE, but I don’t get the frothy pricing at all. Even renting at ridiculous rental pricing makes sense unless you are in for the loooooong haul. You better get into a 3/2 right off the bat because trading up to a bigger place in the same area seems impossible.
    Will this pace continue? Some of the realtors I talk to won’t even take on another buyer…they have enough of those…its SELLERS and listings they need!

  • Millennial — Lord B sure does keep repeating his exaggeration of high relative demand in LA. One thing he does have right is that there’s hardly any supply so not sure why you keep denying it. People are just not selling here because everything else is simply a more expensive non-upgrade replacement. When there’s only a few shitpiles available it doesn’t take many flies to make it look like a swarm.

    • Plenty of inventory. Flood of new houses and apartment complexes are coming to the market shortly. It’s not an inventory issue by any stretch. That’sjust what realtors tell you. The reality is greedy sellers are trying to unload their outdated crapshacks before the crash is coming. Once they lower their prices by 55% buyers will be interested in buying again. Until then you will see historic low sales. Nothing new here.

      • “It’s not an inventory issue by any stretch. That’sjust what realtors tell you.”

        The actual number of listings would tell you that, too, if you bothered to look.

        But you won’t, because you’re in denial of anything that conflicts with your fantasy world.

      • Sure, you can keep repeating the inventory is low myth or you could look at actual data. Another poster (woody) nailed it:

        The current supply of houses is in the normal range at just over 6 months. The only time the supply gets out of hand is during a recession. The low supply story is a complete myth.”

        Send me your zip code and I will send you 100s of open listings. How many houses are you planning to buy? Why are houses sitting on the market and nobody buys them? Because they are overpriced! Realtards know that so they come up with the inventory is low myth to somehow justify these insane overpriced houses. Come on buddy, it’s not that hard to understand.

  • Democrats whine about income unequality 24/7 and yet the places with the most income inequality are places with virtual 100% Democrat control like SF, NYC, Seattle. Solution of course: MOAR DEMOCRATS IN POWER!!!


    • Don’t you love the liberal “logic”?!!!….

      Another one: “Trump is a fascist”…”Trump should get all guns from the citizens”….The liberals are to dumb to realize their lack of logic “Trump is fascist for refusing to act as a fascist”!!!!

      Another one: “Before the 21, the young lack critical thinking to own guns”, but is is OK to vote when you lack critical thinking. Then we wonder why is the whole society sick and the “elites” voted in power are psychopaths.


    Study: Millenials fall for scams at higher rate than oldsters.

    But how can this be? Millenials are so hip and tech savvy and smart and stuff. They’re like the mostest greatestest generatiopn EVAH!!! Turns out all the triggered special snowflakes are also kinda dumb.

    “Move over, grandma and grandpa. Your Millennial grandkids reported losing money to financial scams last year than you did, new government data shows.

    In all, 40% of Americans in their twenties who reported fraud in 2017 indicated they lost money to the schemes, the Federal Trade Commission said last week in its annual databook of consumer complaints. The percentage surpassed the 18% of U.S. consumers 70 or older who reported they lost money to fraudsters last year, the FTC said.”

  • Prices just keep rising. Interest rate increases seem to have had no effect at all. People are paying higher 1 millions for older 3/2s on busy streets. I went to an open house on Sunday. The place was swamped. Price was 1.7M. Crazy stuff. Smells like inflation to me.

    • That’s because the so-called high interest rates today are still incredibly low by historic standards. Millenials think history started the day Obama was elected. They forget that people bought homes prior to 2008. In the early 80s mortgages were 15%. In the 90s, they were 8%. In the early 2000s 6-7% was the norm

      So today’s 4.5% 30 year fixed is still dirt cheap historically speaking, even if it’s a little higher than 3.75% of a year ago.

  • I’ve read through some of these comments looking for some insight as to our own personal delima. Feel free to give me your two cents.
    We are a family of 5 living in Bozeman, MT since 2011. Bought a house in 2015 for 320k with only 5% down. Husband is self employed graphic designer making about $125k a year, while I am at home with kids. While Bozeman is a really great outdoor community in the mountains and booming right now, I would love to return to my roots down in Ventura/Camarillo, CA. I know it seems like a crazy idea, but I just can’t handle these winters any longer.
    Wondering what you all would suggest about what to do with our house. My realtor said it’s worth about 430k right now. Wondering if we should sell it and cash out or sit on it while the market is hot and rent it out for a year or two? We plan to rent a place in CA.
    Thanks for any help…

    • Your $400K home in SoCal would cost $2M. With the savings, you can afford to take many vacations to the Caribbean during the long winters.

      • Tried that. Thank you. 🙂 The kids and I are ready to get out of here permanently. We’ve been good sports and tried to make the best of our almost 7 years here. We picked up downhill and CX skiing and so forth, but ultimately we’d prefer not to be cold 8 months out of the year. I’m even tired of walking the dog! Haha!
        Our house is nothing special. When I look at homes online in Ca, ours here is comparable to homes around 700k in Camarillo.

      • Don’t worry, that 700k property can be had for 250k according to millennial this time next year.

      • Dan got the right idea here. We are due for a recession in the near future. Interest rates are going in the right direction (up) and after an artificial run up in RE prices we will see a deep correction/crash. This is just based on fundamentals and healthy for the market. It’s pretty logical if you think about it. Millennials already decided not to buy and stay with their parents because there is little to no value in buying (we are far away from rental parity as many hardcore RE cheerleaders pointed out).
        The next generations will exit school with massive student loans and jobs are not even paying close to what is needed to purchase an overpriced crapshacks. On top of that you are getting hit with extremely high property taxes (1.2% of the purchase price). The older guy next door pays a fraction of what you are paying in property taxes thanks to prop13 (a scam).
        The ancient saying of “buying an overpriced crapshack is the American Dream” is long gone. (Back then they actually described it as a house).
        Nowadays, kids understand that the boomer mindset has gotten us nowhere but in a ton of debt (20trillion). So you want to do the exact opposite of what this loser generation tells you. They profited from these bubbles and left nothing but debt und unfavorable property laws. Once boomers die off less money gets sucked out of the system and inventory will explode. There is nobody left willing to overpay massively for these deteriorated crapboxes. The old 2mio crapshack can be demolished and a new house can be bought for a fraction of the price they ask today. So even if we don’t get a 55-75% crash soon there is light at the end of the tunnel. All you have to do is live with your parents or rent a cheap apartment and wait it out. The very last thing you want to do is buy an overpriced crapshack. You will regret that for the rest of you life.

    • The question you have to ask yourself is this: If you would have $430,000 today in the bank, would you buy for that price the house you live in today? “Why?” is irrelevant.

      So, if you sell you pull your equity out and you’ll be in the situation I described.

      • Flyover, Do you mind spelling out for me again the situation you described? Lots of comment(ers) on here to weed through.

  • Seen this all before, Bob

    Montana Lisa,

    I can understand being homesick and wanting to be closer to family. It is hard to beat the S. CA weather (except when it is rainy and cold for days or overcast for months. 🙂 ) I know a couple of people who returned a few years ago from TX due to the heat. They were from Santa Barbara but moved to Ventura because it was more affordable.

    This blog has a variety of opinions on housing prices. Most note that it is too high now for the average family to afford (Though people been saying that since back in the 1980’s) .

    As far as your house in MT:

    1) Do you need the equity to buy a house in CA?
    2) Look at Zillow for prior sales of houses like the the MT house back to 2009/2010. That is how far the house could likely fall again. Can you afford that?
    3) Look at the prior sales of any house in CA of sales prices in 2006 and 2009/2010.
    4) Plan on buying a house you will stay in for at least 10 years that has payments less than 30% of your income. Save 6 months of payments.

    The first house I ever owned in CA fell from 600K in 2006 to 350K in 2010. I could have almost bought it back in 2010 for what I sold it for in 1996. It could do that again but if you have enough income and savings, you can ride out any crash.

    Good Luck!

    • Yes, we would eventually need the equity to purchase a home in the future. We are planning on renting until that said crash. I’m just not sure when to pull that equity out. People here don’t seem to think there is going to be a crash anytime soon because so many people are still moving here. Prices are ridiculous for here. Bozeman continuously gets voted as one of the best places to live, so it’s not slowing down. But there has to be a crash, right? There was in 2009 and it has since recovered and is now surpassing. So do we sell this summer? Wait a year for more equity?

      • Lisa,

        I thought I would chime in here since most of the responses you are receiving are from people who obviously know nothing about your area. But then again, this is a Southern California housing blog.

        I’ve been going to Bozeman a lot lately. My boss bought a property in the Yellowstone club. The running joke now is the billionaires are chasing out the millionaires.

        I’ve seen Bozeman grow like crazy the past few years. Kudos to you for dealing with the winters. I was there for a week over Christmas and it was too cold to go outside or ski. One morning I woke up it was -20F. That being said it’s beautiful in the summer- mountain biking, fishing, etc.

        I think you are spot on about housing prices in Camarillo. You can find a nice, newer 3/4bdrm house in a good neighborhood/school district for around $700K. Camarillo is nice but the 101 is hell and has got worse since you left. So as long as you don’t have to commute on a daily basis it’s a good place to live (hence the lower real estate values).

        Again, I don’t think Bozeman is in any kind of bubble (at least not like CA). If there is a nationwide recession you might see a slight dip. Long term it’s going to continue to grow. Cost of living is still low in comparison coupled with low taxes. It’s turning into a premier resort town (think Aspen or Jacksonhole). If anything it’s undervalued.

  • As a loan agent I’ve fielded more A/E calls some days than borrower, prospective borrowers. In the last 3 weeks two separate A/E’s (don’t know each other) have called to say: 1) “I just finished my performance review and I need you to give me a loan, they are going to fire me.” This one in the business at least since we met in 1998, always been a producer at the top of both lenders he’s worked for. 2) “Lisa, this is the worst month I’ve had in the business and I’m on notice, If I don’t bring it in this quarter they are going to can me. Do you have anything (loans) you can give me?” From a VERY prominent lender, used him for years, says he’s been in the business for 30 years, if I have questions about guidelines and I can’t find it I call him always. One of the L/O’s in our office did $1mm net commissions in 2012, last year production, 11 loans, for the entire year.

    Just finished another c/o refi in March this year, got them into the home May 2015 for $889k, their appraisal came in at $1,289,900, less than 2 years from purchase and 32% appreciation in less than two years, for a 3/2 1180 s’f’ 58 age, 5000 s’f’ lot a new kitchen they did themselves, the size of a matchbox and they planted grass and a few shrubs in the backyard. Formerly looked like a dirt farm. SO they have about $400k appreciation in less than 24 months, 95124, good neighborhood, THAT is more than their combined earnings in the same time period.

    ANYONE that is so ridiculous to think this is not going to end badly is sadly mistaken imo. California is generally speaking an average of 8% annual appreciation, so we are having double appreciation in half the time. NO ONE is reporting the layoff’s and closing of mortgage companies, with very few exceptions, which is a loss of thousands of jobs. Also, in my small hometown the anchor department store with the only mall within 200 miles is closing, 17 Sears stores, etc.

    The Dow an average annual return is 7.7539% without adjusting dividends and inflation from 1921 to 2017, source; Since President Trump has been in office the Dow has been about a 31% gain in two years. Right in line with some zip codes in California, the Bay Area anyway. It always ends in one day is my recollection of how “it” unfolds, unwinds and flops onto the floor dead as a doornail. Once real estate falters, loses jobs, the rest is going to be REAL interesting again!

    IN 2008 ANGELO MOZZILO (countrywide pirate ahem, CEO) SAID, “I HAVE NEVER SEEN A SOFT LANDING” Even though he is a criminal, it doesn’t dismiss his experience in the mortgage lending business and he did a major stock cash in for himself “to put his kids through college” right before 2008 blew up.

    OR my favorite; “it’s different this time.” as Mark always puts it! Once everyone is off the crack pipe, they should shore up their bank accounts.

    Lisa M

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