The lack of inventory in housing: 5.9 percent fewer homes for sale in the U.S. than there were a year ago.

Everything is relative.  I’ve known a couple of wealthy people that live in nice neighborhoods but their home is modest to the area.  It is modest because even being wealthy, they live among even wealthier people.  So their Mercedes which is a fantastic car looks like a Pinto next to Ferraris and Aston Martins.  They actually feel as if they are not doing well but in reality are in the top one percent of the nation.  This is the current situation in the U.S. where crap shacks across the country suddenly appear better than they are because of a lack of inventory from a manipulated and distorted market.  Housing inventory is low in the U.S.  At open houses you see lemmings trying to make offers on beat up shacks waiving inspection rights just so they can “own” a property with a 30-year mortgage of course.  It is manic.  There is a sense of panic in the air.  You also have Taco Tuesday baby boomers living in inflated shacks trying to rent out rooms via AirBnB so they can go out to Whole Foods and buy some kale and raw milk.  Builders are not building because of NIMBYism policies in many cities around the country.  So what happens is millions of households become renters and those lustful enough to buy are diving in at what appears to be a peak.

The lack of housing inventory

There was a large miscalculation by many people in terms of pent up demand.  The notion was that baby boomers were going to sell in mass and Millennials were going to line up and buy.  What happened in places like California is the Millennial children simply moved back home to live with mom and dad.  Those that could afford to venture out on their own actually went into rentals for the most part.

Builders understand the risk and have largely built multi-family units to cater for the new rental demand.  New housing while picking up, is way behind the curve.  So we are now left with housing inventory looking like this:

market inventory

Source:  Zillow

The numbers look worse for entry level housing.  The number of entry level units dropped by 10 percent year-over-year.  This takes a direct hit to first time home buyers.  How about the large L.A. metro area?

la metro inventory

This is why even in areas with horrible schools and crime prices are climbing up.  The house humping cheerleaders are out in full force.  Places like Torrance are inflated once you dig into the actual structures and mortgage data on owners.  Yet this is a countrywide trend.

It is also a miscalculation to think Millennials will need homes that are the size built for larger baby boomer families.  This is why many baby boomers are renting out rooms or their entire place on sites like AirBnB.  The economy is better so Millennials are now out venturing on their own, right?  Wrong:

millennials-living-at-home

The number of Millennials living at home is at a record high.  Say you are a young hipster and want to buy a home.  You choose Echo Park.  Okay, let us see what we can buy:

echo park

1376 Echo Park Ave,Los Angeles, CA 90026

1 bed, 1 bath listed at 520 square feet

Flipper time!  I love the ad on this place:

“Just when you thought it would be impossible to live in your dream ‘hood- THIS pops up! This investor restored bungalow was purchased last year and it needed a bit more than a hug. Cut to this year, this home is being reintroduced to the world with a new foundation, plumbing, electrical, roof, deck, windows, tankless water heater copper gutters, appliances, and roughly 200 sq ft of basement flex space for someone to create the perfect work space, yoga studio, office, or whatever your heart can cook up! Who says you can’t have it all? This location provides the quiet you crave but is directly above Lassen’s, The Holloway, The Whisperer, Walgreens, Dinette & more. Just park and stay. No need to get in your car any time soon! Take in the views of the observatory and Hollywood sign from the deck off the master and let the magic of the city take over. This property is due to be completed in the next few weeks but open to pre-sale now. Make your appointment today!”

Aka, hipster lemmings make sure to call your mortgage broker so you can live in a 520 square foot home.  And just look at the price investors paid:

history

So it sold for $250,000 in May of last year.  Now it is listed at $539,000.  Did they really do $289,000 worth of work on a 520 square foot place?  Here is a surrounding view of the area:

street view 1

street view 2

Everything is normal folks.  And you wonder why we are having a political year like this one where the “system is rigged” message is catching momentum on the left and right.  Apparently people have caught on and don’t like the idea of a manipulated system.  Outsiders have all the energy this year.  It is interesting to see that anger is the energy fueling people this year – even though the stock market is near a record high and real estate values are also near record levels.  Of course most people aren’t gaining from this with the homeownership rate down near generational lows and rents eating deeper into budgets.  But if you want to buy, there are many happy real estate agents ready to assist!

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131 Responses to “The lack of inventory in housing: 5.9 percent fewer homes for sale in the U.S. than there were a year ago.”

  • I attended some open houses in IE and SD county over the weekend and they were packed. Had to park blocks away. As long as house-horny people keep buying the music will keep playing. Low inventory = high prices & high demand.

    • I attended some as well for curiosity. I attended an open on a heavy fixer priced well below current market and saw the same. It was like driving to an amusment park. Rubbing elbows trying to get from room to room.

      Then I went to some other homes priced higher, but in better condition and neighbourhoods. By my estimates they were slightly below current market value. there was only 1 or two other groups there. My conclusion is there are a lot of people that desperatly need to buy, but they can’t afford these prices. When prices drop then will rush in, but once they buy there will be no one left when the rest start to sell. For now its a stand off. Only lower prices will lead to sales.

      Housing to Tank Hard Soon!

      • I’ve been following this site for 4 years and it’s always been the same thing. Don’t buy now because the housing market is about to crash. Thankfully I didn’t listen to the ignorant, pessimistic individuals on this site. Since then I have purchased 1 home, sold it for a great profit and then moved up to a nicer home near the beach. You guys keep convincing yourself that the market is going to crash hard again and watch yourself get priced out for good. Better start looking for your next house out of state where you belong. Jason

    • I went to some open houses to to see what it was like. I went to a light fixer and there was traffic on the street getting there 5 minutes before the open house even started. Elbow to elbow traffic. This was priced way below the current market. I looked at a move in ready, but outdated home in a nicer neighbhrood for more money and there were way less people there. So I think we are seeing buyers ready to buy, but not at these prices. By the draw of people at the open houses I would say 10% – 20% lower and the buyers are there, but now its a standstill.

      Housing to Tank Hard soon!

  • BTW Echo Park is a sh*thole. Why anyone would pay $1000 per sq. ft. to live there is beyond me. Echo Park is like Mexico but with more Mexicans.

  • My favorite is the Donut shop down the street. Do a street view and head towards the main street.

    https://www.redfin.com/CA/Los-Angeles/1376-Echo-Park-Ave-90026/home/7055969

    The sign says “Donuts, Ice Cream, Hot Dogs, Cigarettes”. How classy. You can tell people coming to visit you when you move into your new half million dollar crapshack, “Make a left at the Donut/Cigarette store”. Or maybe “Pick me up a bearclaw and a pack of Kools”. It’s like living in a 3rd world country. Awesome.

    • junior_bastiat

      LOL! That covers all the major food groups for the average ‘murican nowadays.

      Lost all respect for messicans when they stopped selling pinatas in the form of animals. Now you have to buy some lame azz dodecahedron. Who wants to beat the h3ll out of that?

  • Younger generations have extremely fewer job opportunities, extremely low incomes, extremely low job security, extremely low pensions, extremely high education costs, extremely high healthcare costs, and are saddled with extreme debt.

    On top of everything else, they are expected to buy extremely overpriced real estate from the boomers? Something’s gotta give.

    • Yet listening to every Baby Boomer on this internet forum (and others), one would ascribe this rather depressing state of affairs to the whiny Millennials themselves, being that they are all “entitled”, lazy, and grew up with “helicopter parents” giving them a trophy for making 5th place in the spelling bee. Why can’t they just buy a house!?!

    • What boggles my mind is that these houses are selling at these crazy prices!!! How are people affording to get a loan for such a huge purchase!? Are the banks actually lending for these purchases at these prices!? Are these homes actually appraising at these prices?!

      Or are these all “cash” transactions!?

  • I happen to be one of those Realtors who is not impressed by a market that has been blatantly manipulated for the benefit of a few at the expense of the many. We are now reaping the fruits of the government’s labors to bail out a criminal financial sector. Instead of purging the system and allowing true price discovery to take place, the Fed and govt enablers made a deal with the devil (aka Wall Street) to keep the status quo in place. I view this as as probably the biggest coup in our government’s history. And what has it brought us???…markets that are rigged as far as the eye can see.
    Dr. Allan Meltzer’s recent remarks are probably some of the best I have seen yet explaining the policy errors that have have destroyed natural supply and demand fundamentals in our housing markets.
    “The Fed made massive purchases of housing securities to bail out the industry that produced the crisis.”
    “The chief beneficiaries of Fed policy gained from the rise in the stock markets. Speculators and short-term traders became a vociferous opponent of ending the very big increase in stock prices. What they fail to understand is that unlike the stock market the economy benefits from the rise in stock prices only if the rise in asset prices stimulates new investment. New investment occurs if investors see the lower price of new, current capital as a substitute for purchasing existing assets. This did not happen. Spending for new capital never increased in this recovery. Instead, companies
    bought existing assets, removing competitors.”
    https://confoundedinterest23.files.wordpress.com/2016/04/realtorunivspeakerseries_dr_allan_meltzer.pdf

    The end result of this charade is that we now have housing inventory levels that are abnormally low, and could remain that way until the stock market corrects and some of those asset holders are forced to liquidate, thus putting those stranded assets (houses) back into the market for actual owner occupants.
    Bottom line is that you don’t get a solid, sustainable housing recovery until you get real price discovery in the markets, something the govt and the Fed seem Hell-bent on preventing.

    • Yep, and unlike the last housing bubble, this one can go on for much longer. There is still a lot of room to drop interest rates and use creative ways to get people into large loans. We are looking at possibly the greatest fleecing of the middle and lower classes in history. There is an unfathomable amount of debt being placed on the working class and that money is going directly into the bank accounts of asset holders.

    • Completely agree. Between AirBnB inventory + the speculator crowd + the high net worth/foreign investment $$ + lender-held-assets foreclosed during 2009-2011, methinks there’s plenty of inventory available – it’s just not on the market.

      To the main post’s Author: Let’s re-examine the label/name calling: “‘NIMBY’ = homeowners, renters and other stakeholders concerned about our communities’ infrastructure, schools, traffic, parks, playgrounds, and transportation”.

      • People always point to NIMBYism as the problem that new houses don’t get build, but what has the Government or the Builders done to lessen the impact on the people already there; we have been told time and time again that your house is your biggest investment and the best way to store wealth. The fact is that those home owners need to be compensated for the impact; the Government and the builder benefits from new housing so why not give me a discount on my property tax or send me a check to help off set the impact of new development. My schools just got more crowded and so did my roads and my stores, not to mention now I cant water my lawn. I guarantee if home owners were paid, most people would be willing to have new houses built, and don’t give me the old argument that my property values will increase, they will increase more with out the development unless you already live in the ghetto.

      • Tried to watch a full episode of some stupid HouseHunter show. That’s all the older couple talked about was “vacation rental income”. It was somewhere nice, maybe the Key or the Virgin Island, something like that. But they talked about it like they would be having AirBnB renters in there most of time. It’s silly to think the entire 700K mortgage will be paid for with AirBnB profits. Wait till re-zoning, or a hurricane or a downturn. So dumb, a quarter million has to be most, if not all their worth.

      • Hotel California

        The Airbnb layer in all of this is underappreciated. Probably the biggest tightly intertwined example of tech and housing bubble 2.0. When recession hits hard, I have a feeling this are going to be the biggest group of naked swimmers in the housing sector. The traditional hospitality industry will no doubt be feeling nervously chuffed over it.

        An accelerating downturn would hit cash flow hard and it could be one hell of a shitstorm. Areas with the biggest concentration of these properties, look out. I doubt .gov will be there with a hand out for this group.

    • Sounds like an indictment of POTUS. I will recommend you to the re education camp and that will change your attitude. Things have been great under POTUS and Sen Clinton will give us another 8 years,

    • It is refreshing to read truthful posts from the real estate industry for a change. Thank you for providing your professional insights on this ridiculous, bloated, unsustainable housing market. I am sure it is not easy being a truth teller in your field.

  • “You also have Taco Tuesday baby boomers living in inflated shacks trying to rent out rooms via AirBnB so they can go out to Whole Foods and buy some kale and raw milk.”

    In my best Seinfeld voice:

    Who are these people???

    “Taco Tuesday”

    SHOTS!!

  • In places like central Escondido you can still buy a 3 bedroom house for $250K. No lines of eager young buyers there. Why? Because so many of the Hispanic neighborhoods are non-English speaking, the schools are all Hispanic kids, and gangs control the streets. These neighborhoods, which 30 years ago were mixed race, are now pretty much out of consideration for white or Asian buyers. So part of the reason the crap-shacks in coastal towns have gone from selling for $200 back then to $1million now, is that so many once pleasant inland places have become uninhabitable for anyone other than those who can handle a crime-ridden Spanish speaking ghetto. But there, what once sold for $100K now sells for $250K. No bubble there. White,and Asian, and responsible Hispanic flight crams all the productive law-abiding people into neighborhoods where there are other productive law-abiding people. The prices in the safe neighborhoods are not a bubble. Those are prices paid to sleep in peace without worrying about gunshots coming through one’s walls.

    • junior_bastiat

      Last 4th of July I ever went to was in Escondido about a decade ago. Was more like Tijuana. Said never again – this is no nation worth preserving. La Jolla wasn’t much better, just more indians than mexicans, but nothing but loud dirty people leaving a mess afterwards. Left Cali a few months later and never looked back!

    • apgoodbar@aol.com

      You sound like white, low class, Basic Trash.

  • Lack of inventory is function of lack of affordability

    In fact we have never had inventory over 6 months on annual months of inventory except from 2006-2011 which was more of a function of a housing bust and recession in the last 20 years since home price have taken off for existing homes

    The same thesis can be used for new homes which is up to 5.8 months and inventory from 2012-2016 is higher than any period of 1999-2005… with a lot less demand

    Selling equity in CA has been an issue for a long time, it was masked during the bubble years by exotic loans and now you have to earn it which means higher PITI cost for any move up buyer in CA.

    However, in core

    “Low Housing Inventory Lie Still Lives On”

    https://loganmohtashami.com/2016/04/08/low-housing-inventory-lie-still-lives-on/

    It’s even a bigger lie for new homes

    • The low inventory lie certainly holds true here in Houston. Since we don’t have zoning, any lack of development is self-induced. Builders are afraid to ramp up inventory because they know they will have to discount it when it doesn’t move quickly, frequently the case now as builders try to sell homes on marginal lots for which they overpaid.

  • millenial buyer

    Agreed, went to an open house a few blocks away from my rental this weekend for a rare condo in Santa Monica that was listed under $700k. I have never seen so many people packed into a 1000 square feet of space. I have said it before and I will say it again. Until businesses and companies begin to fail and layoffs start and people burn through their savings and have no choice but to sell or be foreclosed on the inventory will stay low and prices will stay high.

    • A lot of people older than 45 are being laid off and will continue to be laid off. These are the people that own homes. Often they won’t find that job that pays the same or more… usually take a pretty big pay cut. younger people don’t make enogh for these 600K + houses and also don’t have job security and lots of debt to buy these crappers.

      I am also a millennial buyer. hopefully after the change in government/elections things will slow and we can see a 10-20% drop.

      • You will definitely see a 10-20% drop during the next recession…

        The problem is you may see a 10-20% increase before then..

        Such is life in California

        The only caveat: keep your job in the next recession… you must remember to do that !!!

      • Unfortunately the FED does not want to see a 10% to 20% drop in housing prices nor a recession. Crazy but Japan has been implementing ZIRP and QE even though their unemployment rate (3.3%) is much lower than the U.S. (5%). One would thing they are in a recession now with NIRP and their huge QE. In 2009 during the last recession Japan’s unemployment rate spike to 5% and they thought that was really bad. The U.S. considers 5% unemployment rate as a pretty good number. But maybe now 5% would be a bad rate in the U.S.

  • Based on the traffic here in Corona, all the open houses should be busy. There seem to be a million people that come west in the morning and go home east in the evening every day. They should all be trying to move closer.

    Traffic keeps getting worse as well. Prices don’t seem to be going up much though, mostly sideways.

  • I even looked at areas in LA with very high crimes and poor school system and the houses there are selling for half a million on average.

    • It’s amazing that homes in South LA are selling for 400K+. I mean these are straight up hoods with the worst schools and rampant with crime, homeless, welfare recipients, section 8 housing, gangs and drugs. Check out this palace in Compton:

      https://www.redfin.com/CA/Compton/1829-E-Pine-St-90221/home/7360428

      The agent was moving so fast to get the hell out of there that some of the listing pics are blurry. Note the listing: Property is a MUST SEE ! ” Walmart will coming to this area soon”. The school ratings are 3, 1, and 3, but If a upcoming Walmart is not a reason to buy, I don’t know what is. Who cares if your kids are stupid and get jumped into a gang at least they will have affordable clothes for back to school.

  • nothing new. NAR will sell the dream at twice the price. same NAR did back in 2002-2008. cracks already appearing nationwide. 3.5% 30 year fixed means nothing when your employment is gone, food and utilities price double, and home worth 50% less. I said this in 2008-2011, same as today, FHA high balance loans will crash the housing market. larger losses, 100’s of thousands of dollars per unit.

  • I also attended some model homes in Corona over the weekend and it was packed. There was one model my wife and I liked and we inquired about. They said it was sold out until next phase. School district in the area was bad anyways.

    • The problem is with any new development is that people are trying to make money by being first to buy so they can sell a year later and make some money. Stagnate wages and a twisted view of housing has made this whole thing about making money. People don’t trust the stock market because they know it is rigged, so they are hoping to make some extra money in real estate, at least they can sleep in it and show it off to their friends. The best thing this country could is to be honest and tax housing like any other investment, no interest deductions, no exclusions on capital gains, no 1031 exchanges, nothing, maybe even put a sales tax on it like cars.

  • LOL this is too funny. Pre-sale? More like panic mode! They might have overextended and now want to make sure they sell sell sell!

    The reality is that there are many many people that can afford this but usually they are smarter with their money, I sure hope the buyer that is about to get “robbed” is one of those with enough money to absorb the loss when the market value of this shed crumbles. If not, well too bad.

    I really didn’t want to wait out the summer to buy but our income is not bad at all and we prefer to keep most of it, so we might just wait out till fall year.

  • I have $300K cash and would like to buy that house for $250K like the flipper and fix it myself.

    I am a DINK first time buyer planning on a first kid in the next year and am 30 years old.

    How the f*ck do I get on the inside and buy with the big boys?

    I feel like if I took my cash to a courthouse auction or where ever this house was eventually sold, I would get smoked by the HGTV veterans some how. My guess is that this was an inside short sale deal or pocket listing — good Dr housing or any loyal readers here, can you provide the source/location this $250K transaction took place at?

    TIA

    • Good question. I would like to know as well. We don’t have 300k cash but we have a good amount and our incomes combine is strong, I know we could get a loan for cash if we needed.

      I would also like to know if anyone has insight on buying land and building on it. I been reading about this for several months as well. There a few good lots in north Glendale/LA Cresenta but buying the lot is just the beginning…

    • fetty-wop, I wonder about this all the time! How do these flippers get these houses so quickly? I’m also wanting to get the worst house on the block, but I don’t stand a chance. I never see the original listing, just the flipped version going for sale.

    • The system is rigged. Read some Chomsky or even Krugman.

    • There are any number of ways houses sell quickly for less then market.
      * The buyer approaches the seller and makes a deal before the house is listed.
      * Bought at auction
      * Seller’s agent already has a buyer lined up (possible kickback situation)
      * Seller was in desperate hurry and jumped at the 1st hard cash that was waived at them. (I have actually seen this in person)
      There are other situations where houses get sold for less then market. But in most cases it’s a inside job.

    • Maybe you can go to the Than Merrill seminar they have been pimping on the radio and tv. I’m sure he will tell you how to buy that house and flip it.

    • The Oldest Millenial

      I went to this house. It is is at the near top of a long steep staircase. No street access. Crazy neighbors chained access to the stairs above. It was falling apart from termites. Literally falling part. If it is in decent shape now it is a full rehab.

    • Mellow Ruse: That’s the house shown in the article, un-photoshopped.

  • But why do you call all houses crap shacks? You told us not to buy but if we did we could sell at an amazing profit! Sorry Dr. you lose!

  • Nearly all of the homes for sale in my town, even the ones asking over $1M, are pending. They sell within weeks. Somebody’s got the big bucks. From what I see and hear, it’s the Chinese and film industry people, or people tired of Westside traffic. Now we have mega traffic.

  • Anyone else notice those are drawings, not pictures?

  • Most of the houses in Echo Park are so close together, the neighbors can hear you fart.

  • This bungalow ad says it all:
    “live in your dream ‘hood”- all hipsters want to live in the ghetto. “Hood” is Hip, especially to people who moved to Brooklyn, Oakland or Echo Park etc from Idaho. They get to boast to their friends back home how “edgy” they. Its all part of the hipster ethos.
    “yoga studio”- nothing like taking a stray bullet through your wooden walls while chugging a kale smoothie doing the downward dog in your $100 Lululemon yoga pants 😉
    Hipster lemmings indeed. I’m sure one of these monied “bohemians” will be dropping down some cold cash for a piece of this up-and-coming nabe before your next blog post…

  • I just sold a property in Denver (bubble market), to reinvest in Chicago (more a yielding market), and I can’t find anything that is worth investing in. Buildings are being snapped up first day. The artificially low rates are causing mayhem. This won’t be pretty when it ends.

    • @ Lucky:
      “Chicago (more a yielding market)”. Did you check the property tax bill on properties you are looking at? City of Chicago just approved a 700 mil property tax increase last fall – more to come as this bankrupt dump of a city is heading toward Detroit like crisis. Bond rating is one tick above junk status leading to folks moving out of the city and out of state. I would be VERY careful investing funds in City of Chicago now or in the near term.

  • Dazed and Confused

    Where are all the August 2006 bank foreclosed homes? You mean to tell me that all of those homes have already been sold? Hmmm…. Are Tarek and Christina hoarding them for new Flip or Flop episodes?

    • The banks are holding back on foreclosures until the houses appreciate in value and then they’ll foreclose on the people that were living there and stopped making mortgage payments years and years ago. It’s all about the banks making back their money on the original loans.

      They lobbied our elected officials and had the laws changed to allow them to do this!

      • Dazed and Confused

        The 90-day “mark to market” foreclosure policy was replaced with a new federally mandated foreclosure policy to sell at the 5 year mark or apply for another 5 year extension (allowing for up to a maximum 10 year hold) then they must be sold. So August 2006 was when the RE market started to crumble, making August 2016 the tenth year. So with roughly 5 million foreclosures still on the books, How come we’re not seeing more inventory? When are the banks going to forced to put all those 10 year homes back in to the fair marketplace? And wasn’t 2007 a very bad year too for the RE market? So shouldn’t we be seeing much more inventory?

      • funny thing is the Same banks will make new loans on those same over inflated, over priced units. but is will more likely be a FHA, Fannie, Freddie High Balance. so now instead of to big to fails asking for a bailout, it is now preapproved. so long as the FHA audit finds nothing wrong with under write. we have already bailout banks and countries with HARP refinance. take debt encumbered asset at 100%+ltv pay it off in full and put the new note under tax payer bailout programs. I believe it China’s debt that program paid off. they were heavy invested in the GSE’s prior to 2009.

      • I’m not so sure it’s the banks preventing more foreclosures from coming to market. I personally know multiple parties in LA and surrounding areas who bought during the height of the last bubble and haven’t made a mortgage payment in years. The banks are trying to foreclose for some time, but the borrowers always seem to have some type of delaying tactic, get Keep your Home CA involved, apply for modification, sue the bank for proof of ownership, declare BK, etc. etc. Every time they apply for a modification the process resets itself and they know this. Get Keep Your Home CA involved and the foreclosure gets paused. Get a lawyer and sue and the judge will put a stay on your foreclosure. It can take years and years to finally get the official legal foreclosure done.

  • Bora Horza Gobochul

    “Just park and stay. No need to get in your car any time soon! ”

    Right. This fancy Echo Park closet doesn’t even have a garage. It’s “street parking”, so “just park and stay” means drive around the block until you find a spot, then remember to move the car on street cleaning days. IF you still have a car; the LA Times crime map shows a lot of GTA and theft from vehicles.

    “Over the last three months, Echo Park averaged 2.9 violent crimes and 18.2 property crimes per week. ”

    The olace doesn’t even seem to have street access – just make your way through the alley/other people’s back yards, I guess.

    • Yes crime is bad in Echo Park. I personally know two people who’s Echo Park homes were robbed within months of moving in.

  • Aerospace is not good right now

    Anybody out there with info on Charlotte, NC or Phoenix market conditions? Just curious

    • Phoenix is a horrible place to live. It’s like living on the actual surface of the sun. Besides that there has been a huge influx of domestic migration over the past few years bringing with it increased crime and pushing up prices in desirable areas. It’s not as expensive as say LA, but not exactly cheap anymore especially in the desirable places like N. Scottsdale. Surprisingly water is cheap in PHX but the electricity bill in the warm months (9 months out of the year) can cost a small fortune due to AC.

      • Hunan: the cure for that is cost averaging your electrical bill so the payment is the same every month. It’s what I do in Tucson. No surprises in the summer.

        But I have to agree about PHX: too much like LA. And far hotter.

  • The kids are moving back in because they like their mother, it is like in Italy, we are very European.

  • Anybody can guess what’s the percentage of homes in the us owned by the foreigner just curious I think most of the apartment esp in west la are owned by Japanese Korean and chineSe and the renter are Americans something is wrong and more homeless are mostly white and black American illegal immigrant are provided with section 8 housing full coverage medical and the homeless are asking for a quarter

  • My apologies for the wording just stating the facts

  • postbubblesuccess

    A little over 4 years ago i bought for $43.5k. Listing for $129k this june. Will take take the first $125k that comes through the door. I also started a small business that’s doing good. My plan is to sell, buy a dolphin camper, and live near the beach for a few years until the market crashes and then jump in with cash and buy again. However, I’m starting to think that theres really no place to go in so cal anymore. Theres 10, 000 mexicans to anyone else and turning nice neighborhoods into ghetto slums is their life’s ambition, maybe to make em feel like their more at home. But this is the mentality that wont change or get better. These people are bent on turning america into tijuana. Tired of living in this foreign country called california. Even if you have millions you’ll still see gang members in your nice area cutting your grass and thinking about how he and his criminal friends can break into you home when your at work.

    • son of a landlord

      Despite the poor Mexicans, there will always be uber-rich pockets in SoCal. The Hollywood CEOs, film stars, rock stars, and various other uber-rich are not going away.

      And there should remain some middle and upper-middle class pockets as well. Apart from some well-to-do private sector folks, the government workforce keeps expanding, and govt work pays pretty well. Many cops, fire-fighters, DWP workers, bureaucrats, etc. earn six figures.

  • I am a millennial who foolishly bought a condo in VA Beach, regretted anchoring myself down and dealing with HOA fees (and crapshacktastic build quality). I sold it after a year and moved. I am renting now and realize how foolish I was to think renting was “throwing money away”, rather than it being a way to not get fleeced with today’s market/banking schemes. Life lessons learned….awaiting the market to tank in 5-10 yrs?? Wonder how much lower the Fed can go with market interest rates…-0.5, -1.0, or -2.0%?

  • Obviously, it is the fact that there are buyers, not the low inventory that is keeping this market alive! The question becomes … how much free cash is floating around out there to continue to buy over-valued ‘crap shacks’? Yesterday’s Apple results, last weeks Microsoft results, and Intel’s earlier announced layoffs, ought to give pause!

    • Great point. And if the big companies like Apple, Microsoft, etc. are not making as much profit as before and laying people off, imagine smaller companies or Unicorn companies that don’t even know the meaning of “profit”.

      It’s not a matter of if, just when, it will start crashing down!

    • Don’t forget Twitter!!

  • JNS as long as there are foolish buyer and as long as there is dumb people they will buy crap shacks

  • So much racism here. Those of you decrying the loss of your white utopias should head South. There are probably wide swaths of KKK land that would welcome you warmly.

    • jgd, if I head South, where exactly is this “white utopia”? I’m not aware of such a place, particularly to the south…

      Is it really “wide swaths of KKK land”?

    • I agree. I mean how could white people not want to live in “Barrios” alongside check-cashing places, liquor stores, laundromats, & store front churches, not even mentioning the gangs, crime, and drugs. I’m ashamed for you. And what this??? You want signs in English too? How dare you? This is after all the United States, you should learn to speak Spanish. Get with the program.

    • I thought Mexico was South of here. I’m confused.

    • Black Lives Matter, the Klan with a tan.

    • GJD, remember that everyone wants to live in white neighborhoods, even blacks. Once anything gets over about 20% black it goes downhill and turns eventually into Detroit. in fact: take a survey of countries people of all races would immigrate to, a white country, an Asian country and a Black Country. How many races (even blacks) would pick a Black Country?

      Asian neigrborhoods are okay, but remember they are insular and hate blacks and you can’t pull he racism card on them since they don’t care (and I’m stating facts and don’t care what anyone calls me).

      Mexican neighborhoods? No one else wants to live near them. But being around your own race and culture is natural, don’t know why it is such a big deal to acknowledge that.

      • “Mexican neighborhoods? No one else wants to live near them. But being around your own race and culture is natural, don’t know why it is such a big deal to acknowledge that.”

        Precisely why I suggested that The SOUTH (as in, the AMERICAN SOUTH) would suit you and “your own” perfectly, what with its awesome history of racial segregation and all.

        I have read this blog for years and am disgusted by the racist comments that have overtaken the comments here. Back in the day, there were a great number of intelligent and thoughtful posters here. It seems they’re gone and all that’s left is a group of people who spew hate toward anyone who isn’t exactly like them.

        I’d rather live next to a bunch of Mexicans than an ignorant, bitter racist.

      • The Barrios are simply the labor pool for the affluent! After all, who performs the landscaping, pool maintenance, cleans the homes, cooks the meals, and performs all that ‘off-the-books’ work for those living in the multi-million dollar high-end neighborhoods?

    • I agree about the racism here. Stop trying to turn a housing blog into a Mexican Hatred blog..

      • Len, people on the West Side are the most Mexicanphobic. They do not like it when we take the bus, or now the extension of the rail line with our extended families and camp out at the beach and the pier on the weekends. The people in Venice complain that our boyz make their property values go down. They also complain about our behavior in the schools. Reconquista is in full swing, with some set backs, to be expected.

      • I agree! Terrible. Why isn’t this site moderated?

      • Roses are Red
        Tacos are Enjoyable
        Don’t Blame a Mexican
        Just because you’re Unemployable

    • If they didn’t have a group to demonize, they might have to accept that their failures are the result of their own inadequacy. It’s best to just realize that their insults are admissions that they have little to feel good about, and be happy that your success kills them just a little bit, every single day.

      • Yup, just like Detroit. Our biggest problem is those jealous whiteys. After all, what have they ever done for civilization?

        Now who took my fresh cinnamon churro?

      • Just a fact that immigration from Mexico ruined quality of life in So Cal. It has nothing to do with racism.

  • smart people buy during the inevitable bust phase.
    all these people buying high, chasing after homes like they’ll never be able to buy again.
    fools and their money are soon parted.

    • Exactly.. In California, you have to play the housing cycle. Buy a few years into the bust and don’t get greedy like a lot of the housing bears did last time around, expecting another 40% drop after prices had already dropped 40%. Too many people missed the boat by assuming things would get worse or expecting that they had many years to buy at those low prices. Lesson learned and hopefully they take action this time.

      • Interest rates are currently near 0%, and investors are levered up. What can the government or Fed do to alleviate the next downturn? For that matter, will the government be so willing to bail out hedge funds and not so big to fail investors?

  • I know people in Los Angeles who earn good money and still have roommates, or are living with their parents at age 30+.
    It’s just really fucking stupid to buy right now.
    Save as much money as you can right now, and buy when the shit goes boom

    • Jim Taylor u still thinking that house will tank hard soon what a shame u all people to thnk that house will tank hard soon I bought last year and I sit in a 100k equity where in a world you can get 100k n a year you all fool

      • “I bought last year and I sit in a 100k equity”

        So why are you calling yourself homeless?

      • @Jed

        Sounds more like a tongue in cheek comment.

      • Your 100k is gonna be whipped out and you will likely be looking at 100 -200k in the hole soon. Glad you are happy now. Sell now or regret it later.

  • Lord Blankfein

    Don’t shoot the messenger. Per the OC Register, CA home prices up 5.6% in the last year, prices are at a 9 year high. Somewhere they mention lack of inventory.

    http://www.ocregister.com/articles/percent-713596-prices-march.html

  • Long time, sometimes. This blog is always a good read, but lately the post beneath have been extremely racist. Just because you can’t afford a home, or don’t want to overpay you blame a specific race. It’s sad, and embarrassing. You all act like Mexican is a disease. I hate to break it to you, but all of Los Angeles is a ghetto. Turn the corner on your cute little street in Santa Monica, Venice, Brentwood, or beverlywood and you are surrounded by homeless. You all are no better than internet thugs, Internet gangbangers. I guarantee you wouldn’t talk that way in front of a Mexican, or Asian, or African American. I promise you wouldn’t talk that way in front of me, automatic fade. Btw… I’m a poor educator with a home, no student loans, and ready to buy my second home once the tank hard begins. Hunan, I want you. #stocktonslap

    • You are right about the westside people being big time hypocrites. They are very intolerant people. That is why I prefer to live in east L.A. and take the Gold Line to the Santa Monica beach. I have experienced the racism first hand, so I know what I write about.

    • son of a landlord

      I guarantee you wouldn’t talk that way in front of a Mexican, or Asian, or African American.

      An Asian would speak this way in front of a black or Mexican. But the Asian would be speaking Chinese, so he’d feel safe doing so.

  • Buy now or be like Jim Taylor a shit ass

  • According to Zillow, Hispanic neighborhoods were still 24% below their highs nationally last year, while white neighborhoods were 8% below, and Asian neighborhoods were nearly 10% higher than before the collapse. So these are facts, statistics, not racism. Yes there are racist posts here, that’s all over any internet site. But the fact, not the opinion, is that if you neighborhood becomes Latino, you will have more difficulty getting a good price for your house. If it was simply a matter of immigrant presence, or color of skin, we wouldn’t see Asian neighborhood prices rebound so well.

  • Why you can’t blame them they make Los Angeles area a ghetto I bet if you flush them out the rent and house prices will come down most of stage homeless are either white or black specially here in Venice marina del rey go to are whee there is 7 11 and there is a lot of homeless people and what the government doing its nothing but refugee they have a free housing allowance free medical that bull shit working American we just paid taxes and no benefits from the city and the fed

  • GrooveMechanic

    Long time lurker of this blog. Love most of the commentary that goes on here but I’m going to agree that lately a lot of it has become the:

    “I’m a white dude, blacks and Mexicans are horrible, Asians are kinda ok as long as they keep to themselves, housing prices are out of control but I’m not leaving I just want to gloat that I got luck and bought at the right time and write things about blacks and Mexicans that I’d probably wouldn’t say in public and certainly never around an actual black or Mexican and he he he look at all my equity while you fight over crapshacks”

    forum.

    I mean the comments has always been tinged with racism (some more overt than others) and it’s certainly not everyone but it’s become more acute and blatant the past year.

    The keyboard courage has grown exponentially.

    • Do changes in the racial makeup of a neighborhood/city affect the value of the homes? If so, is it reasonable for those homeowners to show some concern about trends that may negatively impact their net worth? Is this something that can be discussed? How does a person go about discussing said topic?

    • Mechanic, you will never be able to afford a house. I know that my hood changed when the Mexicans moved into Compton and drove my people elsewhere.

    • junior_bastiat

      Wise people are just passing along their wisdom to younger generations – its a bad time to buy, and you don’t want to buy in a ghetto hoping it will get better. There are white and asian ghettos, but they are fewer in number and contain far fewer predators than the black and mexican ghettos. Thus, buying in a solidly middle class white/asian neighborhood will always result in a better investment over the long term. Once you have the money, the first thing you do is get out of the ghetto – just look at the rappers and guys who get paid to chase a ball around. Truth hurts sometimes, huh?

      • junior_bastiat

        I will also add one of the great realizations I’ve made in life is that very little attributed to racism is in fact racism. It would better be called culturism, because clashes tend to be out of cultural differences, which often correlate to race but are in fact different. Moreover, some people are just a55holes, but their actions are chalked up to racism because its easy to rile up the masses. I came to these conclusions as a distinct minority – caucasian – amongst mostly asians at work and where I live. At first I thought the differences were attributable to racism, because that is how we are programmed, but then I saw enough evidence to the contrary to develop my theories. A good example – take the most (supposedly) racist person you know, and then imagine him being offered a relationship (or just sex) by a super model of a race he supposedly hates. You think he would refuse? I rest my case!

  • I agree the forum should focus only on housing and what really happen on real estate but We cannot deny the fact that illegal immigrant refugee foreigner is really the reason why the house prices goes up in this economy and in current salary

  • @homeless most of the west la apartment are owned by Asians and most renter are Hong Americans so think a ok it Los Angeles is owned by foreigner Beverly Hills homes are owned by mostly rich Saudis where the the local Americans this day

  • Hey Doc; I have not seen a ‘Real Homes of Genius” post in a while…. will this do?

    here is one – which the listing agent calls “Fantastic Opportunty” sold for $436K a half year ago and now on the market for only $650K!
    semi rough neighborhood and busy Rodeo Road which is like a highway…

    http://www.trulia.com/property/3211798854-3556-Hillcrest-Dr-Los-Angeles-CA-90016

    The fact of the matter is that portions of the zip codes 90016 and 90019 will see an influx of buyers who are priced out of the Westside, [probably forever when you realize that decent homes West of LaCienega are pushing into the $800K – $1M price range). Therefore, all the people who want to be close to the Westside (beach, SM, Venice, MDR, etc) will accept living in parts of 90016 / 90019 (esp the Western edges of the zip codes with low crime) rather than move out to San Gabriel Valley or Inland Empire. ME INCLUDED!

    • QE: too nice, but I miss “Real Homes Of Genius” as well.

      I think the Echo Park house featured in the article would have to be one. DHB Certified.

      Links to pictures of the actual house are in the comments section.

    • That’s a rough neighborhood. High crime, bad schools, few if any local amenities. Unfortunately, it will be many years before that neighborhood gentrifies.

  • Get out of la now you just work to pay that crap house

  • I think we have become too politically correct as a society. It is a fact that a huge influx of illegal aliens has changed the landscape of many US cities, especially LA. It has affected schools, employment, wages, rents, taxes, and yes real estate among other things. Unfortunately it seems like it is almost taboo to speak about these things. If we do not recognize and discuss these things then how are we supposed to make things better for everyone? Why is it OK for Latinos to openly speak about taking over CA?

    • What would they gain by taking over CA? I guess we took it over before. However, wasn’t it just open land in the beginning that belonged to no one. Some other nation will eventually take over these countries on this planet or somewhere beyond. Nothing is permanent.

    • LAr you are right dumb politician need to flush out all the Mexican illegal immigrant here school are affected neighborhood real estate rent even the city budget section 8 housing gang killing that’s the real problem not the house inventory America need to stop accepting refugee illegal immigrant there a lot of American that is homeless and no jobs at all they should focus on helping this Americans first

    • I’m all for honest and intelligent debate, but let’s be honest: most of the posters here aren’t interested in intelligent discussion when it comes to illegal immigration. It is possible to discuss the impact of illegal immigration without resorting to racist tropes. Those of you pretending not to see the hateful and ignorant comments here are being willfully obtuse. The simplistic and racist statements made here are light years away from the intelligent discourse you pretend you are asking for.

  • I don’t know what to make of this:

    https://www.redfin.com/CA/Los-Angeles/2339-Hillcrest-Dr-90016/home/23121794

    Brand new construction on a tiny lot in a crummy neighborhood literally right next to the 10 freeway. I give the builder props on having a vision, but I’m not sure anyone else would be willing to spend 700K for that vision. It looks like a office building to me.

  • We are more likely to see a sustained, decades or more loss of dollar purchasing power than another spectacular housing crash. I would suggest that the next crisis will not mirror the last. After all our masters have every incentive to keep interest rates low for as long as the eye can see. It makes budgeting with a 20-30 Trillion debt and the accompanying interest payments more palatable for the politicians seeking power. Dot.com bubble, housing bubble and next up a national debt bubble to be solved with a currency sacrifice.

  • I don’t qualify for a 450k SFH….

    But I did qualify for a 850k 4 plex. How does that make any sense? I guess the income from the rentals makes up for something?

    • Andrew: I’ll bet the bank counts on rental income from other 3 apartments to pay most (or all) of the mortgage. Here in North a landlord is basically living for free if there’s 3 or more (similar than his own) apartments rented out, the income from those pays all of his mortgage.

      Of course they are also happy to lend you more money, but (hopefully) steady income from rentals is the point here.

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