Los Angeles is the most unaffordable place to rent with renters spending nearly 50 percent of their income on rents: San Francisco is the most expensive place to purchase a home.

When I made the claim that Los Angeles is the most unaffordable place in the nation to rent a few people shouted out by saying that San Francisco and New York were more expensive.  Of course, these people didn’t bother to look at the data or understand what being unaffordable means.  What it means is that based on household incomes in Los Angeles and current rents, people spend a larger portion of their income on housing.  This is why Los Angeles is undergoing a rental Armageddon.  The cheerleader brigade simply thinks that because rents have risen that somehow this equates to buying.  But here is the thing; most can’t buy and sales volume reflects that.  In fact, many young households are relegated to living with mom and dad because they don’t even have the means to pay the rent let alone buy.  The trend is clear in Los Angeles: higher home prices, higher rents, more young adults living at home, and those that do buy spend a massive amount of their income on the mortgage.  Take your pick in this speculative market.  What is apparent is that many households in Los Angeles are living on the razor’s edge of financial insolvency.

The most unaffordable rental market in the country

Los Angeles is unique from San Francisco and New York in that we still have a market dominated by single family homes with yards.  This allows for people to live in sardine-like environments with streets looking like used car lots.  Try pulling that off with a small apartment in New York.  But more importantly, households just don’t earn as much in L.A. County.  The numbers are irrefutable.

First, let us back up the statement with hard data:

rental prices on housing

Los Angeles leads the way in being the most unaffordable rental market.  Renting households (the majority of households) spend nearly 50 percent of their income on rents.  In San Francisco and New York while rents are higher, households also make higher incomes.  Simple math.  So how are these future “buyers” of Los Angeles going to save large down payments for that $700,000 crap shack?  The answer is they don’t and this is also reflected in very low sales volume relative to the big price increase.  You also see a big portion of buyers in some areas being foreigners, big investors, and the HGTV flipper crowd.

The most unaffordable place to buy a home is San Francisco.  Let us look at how much home buyers spend on mortgage payments:

amount spent on mortgages  

The percent of income spent on a mortgage between 1985 and 2000 is represented in blue. The red bars represent the current percent of income spent on mortgages. Jim Dalrymple II via Zillow data

Now imagine what the charts would look like based on 2015 data?  So much for the notion that these are households with so much disposable income that they can afford homes with no issue.  The above chart merely shows what we’ve been discussing; households that do buy are merely one minor recession from being in foreclosure.  It doesn’t matter that you have a 30-year fixed rate mortgage at a low rate if you lose a job or your income gets slashed.  These households, both renters and new buyers are maxed out.

Even the most expensive county in SoCal, Orange County is seeing a big rise in inventory:

inventory oc

This is the highest level of inventory in many years.  With the market softening and inventory up, buyers don’t have to rush out like lemmings just to squeeze into a crap shack.  Are there homes that sell with feeding frenzies?  Of course.  But there were suckers in 2006 and 2007 that dove in at the peak.  People like to forget about the 1,000,000+ California homeowners that bought and were flushed out when the correction hit (most of these foreclosures were on boring 30-year fixed rate mortgages).

What surprises some people when they email me with questions about buying a home is that I usually tell them to go ahead if they meet the following 4 items:

-1.  Don’t spend more than one-third of net income on your housing payment (rent or mortgage)

-2.  Will there be significant changes to income when you buy?  Like a kid on the way with mega daycare costs?  Run the numbers with this in mind for the first item.

-3.   Are you willing to stay in the place for at least 10 years?

-4.  Do you have at least a 10 percent down payment (ideally 20 percent) and one year of expenses for an emergency fund?

Yet from the data above, you realize that people are pushing close to half of their income on rent or housing payments.  You also realize with the tiny slow down this year in prices that HGTV lusting buyers want to see non-stop appreciation year-over-year.  They believe their own hype.  They feel that home prices can only go up and when they account for a price correction, they only see a tiny change (yet are totally okay with double-digit jumps for seemingly no logical reason aside from animal forces).  In other words, people love the mania but can’t deal with the comedown.  Like an addict, they can’t envision the withdrawal.

The numbers are clear and that is L.A. is the most unaffordable place to rent and one of the most expensive places to buy relative to what local households make.  For many, they are simply squeezing every disposable penny they have into rents and mortgage payments.  And this is during a record 6-year bull run in the stock market and another massive run in home values.  Do you want to see where the momentum is heading?

price momentum

Just do the math: that $700,000 crap shack with a 10 percent increase is going to be $770,000 (an annual increase that is more than the gross median household income for L.A. County).  Yup.  Totally sustainable.

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145 Responses to “Los Angeles is the most unaffordable place to rent with renters spending nearly 50 percent of their income on rents: San Francisco is the most expensive place to purchase a home.”

  • Dr. HB,

    What comparisons to other American cities miss is that Los Angeles is more like a third world city than an American one. Many LA households are populated with 3 or 4 generations together with 2 or 3 wage earning generations contributing to the housing cost.

    The “typical” married working couple family that shoulders all housing costs by itself exists only in the most affluent Los Angeles neighborhoods.

  • Third-world hellhole. Pardon me, “sanctuary city.”

  • People are willing to spend up to 50% of their income to live here because they don’t like to live by the crackers in Atlanta GA where they would spend half that amount. People like L.A. because you can speak Spanish here and feel comfortable, unlike Crackerville. In reality, people do not spend 50% of their income on housing because there are two, three, or four family units in a dwelling. Most cities do not enforce the occupancy limits because that would be racist and discrimination against Latinos because we like multi generational housing and family. This is something that Anglos don’t understand. Let’s face it, Anglos just don’t understand our Latino culture in L.A. and southern California. California is the golden state for us. Northern Mexico, we call it. Yes, the people in the SF Bay area pay the bills(the govt benefits) because they have the high reportable income. Life is good for Latinos in L.A. We like it.

    • Asian families also tend toward multi-generational. LA’s high housing cost is hardest on all but the wealthiest Anglo nuclear families who lack enough wage earners under one roof to afford living there.

      I don’t expect LA’s housing costs to drop because of this demographic difference. LA is different from other American cities.

      • at least most asians do not live in poverty nor do they populate the prison system like other colored people – the model minority

        i have asian friends who are multi-generational in one house but they live in torrance fullerton irvine etc

    • TRUMP for President!!

    • how many of you latinos live in poverty, numbers and percentage wise

      how many of you latinos suffer from diabetes because of poor health

      i’d rather be poor in mexico del sur than be poor in mexico del norte

      • The Drug Cartels in Mexico are like ISIS. That is one reason why we come here. We are like the refugees that go to Germany. We also come here to work. Gov Brown invited us.

    • Anglos understand perfectly fine…and we don’t like it. We enjoy streets that you can actually park on. We prefer autonomy from our parents, and the privacy and independence that comes with that. We prefer areas with less population density, where it’s quieter, has less crime, and nicer homes.

      So feel free to squeeze as many people into a home as you like. Trust me…we don’t want to live there anyways.

      • I lived in Westchester near the LA airport for about a year, and from my observations, yes we anglos don’t want any Mexicans around except for the Mexican nanny, gardener, housekeeper, etc!

      • No….I don’t mind Mexicans living by me, but I prefer affluent mexicans that have assimilated. It’s a socioeconomic problem, not a racial one.

    • Yes, Los Angeles is just like Mexico, but with more Mexicans and higher taxes. Los Angeles is a 3rd world country.

      • no, Hunan, Los Angeles is similar to Mexico, in that it is Mexican, but it is not just like. In Mexico there is the ISIS like Drug Cartels and lack of government benefits. Gov. Brown invited us to come, we are like the EU refugees. Obama invited the Central American children to come. Obama does not understand the difference between Central Americans and Mexicans. But that is another story.

      • Maria, once you turn the US into Mexico with the same problems, where you going next? Canada?

      • son of a landlord

        Maria, you were coming long before anyone invited you. And you’ll keep coming even if Gov Brown were to say, “No more.”

        Some Mexicans are okay. But we don’t need racists like you.

      • Hunan, I am going to assume you are Chinese. An assumption based on your first name. I get a kick out of one set of minorities attacking another set of minorities. The Chinese have their own set of problems. I have a very radical idea, instead of each minority group pointing out another minority group’s problems, why not just be humble and solve our own problems? I am of Indian heritage and we have our own problems as an ethnic group. Let’s stop throwing rocks at each other’s windows.

        Also Maria you are out of line in calling people from Georgia and the South “Crackerville”. Get a life please and stop stereotyping people.

    • son of a landlord

      Maria: “… they don’t like to live by the crackers in Atlanta GA … People like L.A. because you can speak Spanish here and feel comfortable, unlike Crackerville.

      Thanks for the anti-white, racist slurs, Maria.

      Actually, I’ve been to Atlanta a few times. It’s a majority black city. Black cops, black taxi drivers, black store clerks, black hotel managers, even black maids.

      So if you’re seeking racist slurs regarding Atlanta, “cracker” is not the correct slur. The racist slur you’re looking for begins with an N.

      (Of course, I don’t think those blacks in Atlanta would feel comfortable speaking Spanish either.)

      • Among some Georgians, the term “cracker” is used as a proud or jocular self-description. Since the huge influx of new residents into Georgia from the northern parts of the United States in the late 20th century, “Georgia cracker” has become used informally by some white residents of Georgia of Scot-Irish and English stock, to indicate that their family has lived there for many generations.

        However, other Georgians find the term highly offensive and insulting: “‘Cracker’ has a murky history but generally describes poor whites. The slur is widely considered an insult among white southerners. . . . . for plenty of rural, white southerners, “cracker” is a demeaning, bigoted term . . . the equivalent of redneck.”

        The “Cracker Party” was a Democratic Party political machine that dominated city politics in Augusta, Georgia, for over 25 years, and exerted considerable political influence for roughly four decades after its 1946 defeat.

      • Anyone want to bet that poster “Maria” is not Hispanic? The troll/poster is looking to rile up even more of the vitriol against Hispanics.

        Please don’t feed the Troll.

      • Relax everyone. Maria is a troll.

    • i bet you do

    • Atlanta is mostly black so it’s hardly Crackerville. LA is beanerville. It’s one big dirty barrio filled with human trash that even Mexicans don’t want. Multi-national companies have had manufacturing plants in Mexico for decades so there is work there for those who want it. The Mexicans that come here are mostly the lazy ones that can’t make it in Mexico. They crowd into houses and apartments like sardines and make the streets looking like used car lots filled with their beaner cars. Those who do work usually do it under the table and don’t pay taxes while also also collecting entitlements paid for by taxpayers.

      • Dude I can count the times I’ve smelled a smelly Mexican once. Smelly fellow whities, pee yew! Tons of times. And what’s the deal with how we treat our shoes? Everyone else has clean shoes, and we wear these nasty dirty things.

        The magic word in the barrio is Limpia, wash. Cleano-o cleano is the word, they sell friggin washboards in the Mexican markets, and mama or abuelita scrubs the clothes. It’s a shame otherwise.

    • It’s selfish and child abuse to have 10 kids like a Mormon wetback and raise them in poverty in the barrio

    • Has no one speculated that Maria’s post is a sarcastic post written by a non-Mexican person? That was my first impression when reading it. All of the replies seem to be taking “her” seriously.

      • Actually I’m gonna bet Maria is legit. I know Hispanics who talk ant think this way, and they are right.

        Like the wife of the guy I work for. I’m a typical whitey, parents kicked me out to sink or swim or starve at 18, or rather I got the hell out because I was tired of pulling g not only my own weight but my parents too. Sink or swim, Social Darwinism.

        Well, the wife of the guy I work for, has to!d me they’d never leave me in the lurch. She’s Mexican. She’s to!d me this an intimate more times than my own mother did because my own mother told me this never. She’s told me this so many times, I’m beginning to believe her. “We Spanish people don’t do that!” She always says.

        I’m too old to work for a boss, but I will work for a friend. They are friends. I have become something of a member of the family.

        I’m all for the browning of America.

    • I suspect a troll. I don’t believe “Maria” is Latina or probably even a woman. C’mon, if you’re going to impersonate a Mexican don’t go for the most obvious names. Also, I don’t know any Mexican or Mexican-Americans that use the term “cracker,” myself included.

      I know there are cultural differences between the way people live that might not be pleasing or comfortable to others. I’m Mexican-American but my family has been in the US long before the border existed so I’m probably very American in my lifestyle i.e. don’t want to live with my parents, like my privacy. I am however, a pretty tolerant person who enjoys living with people of other cultures. I’ve always lived in mixed Asian neighborhoods and some of their cultural habits were perplexing to me when I was younger but overall, I learned to appreciate the diversity of Los Angeles. That’s why I stay here in Los Angeles and my family has been here since the early 1900s (they came from the Southwest). There are many non-monetary benefits to be open, flexible and accepting of other cultures.

      I don’t understand why if people want a lily-white, monocultural neighborhood they don’t move to another city or even another place in California that is more reflective of that? Why try and makeover culturally diverse neighborhoods where people are tolerant of others and their cultural habits i.e multigenerational housing, backyard parties, when most of the country is monocultural and very vanilla?

      Anyways, this is my first time commenting here. I really enjoy this blog and the insight provided by other commenters. I hope to be able to buy a house one day, not as an investment but to create foundations in my community and work to make my neighborhood better for everyone. Cheers!

      • WeDontMakeThoseDrinksNoMore

        Claudia, I find it fascinating that you describe yourself as “a pretty tolerant person who enjoys living with people of other cultures” then use terms like “lily white”, “monocultural” and “very vanilla”. Yikes. Terms like “very vanilla” and “lily white” don’t sound too flattering, tolerant or inclusive to me, but what do I know.

      • Carlos from Oxnard, the Newport Beach

        I hear that you would like to buy a house. You come up to Oxnard and I can get you into a place where you can hear the sound of the ocean. You will feel welcomed here. I show the homes on the weekend, but during the week, on many days, I go out on my boat with the good Captain Morgan.

      • it’s always fun to feed a troll a little to blow off some steam especially when i can hear mexican polka music on my evening walks. my former grade school is now 100% latino and when i was there in the late 70’s, it was about 33% latino?

      • son of a landlord

        I don’t understand why if people want a lily-white, monocultural neighborhood they don’t move to another city or even another place in California that is more reflective of that?

        Lily-white? Monocultural?

        1. “Lily-white” is another anti-white slur. It’s a sarcastic way of suggesting there’s something wrong with an all-white area.

        There are plenty of all-black or all-Asian areas in the U.S., yet no on calls these neighborhoods coal-black or banana-yellow.

        2. All-white does not mean “monocultural” — unless you believe that culture is genetic.

        An all-white neighborhood can be culturally diverse, in that there are many political views, religions, and social interests.

        You can also have a multi-racial neighborhood that’s monocultural, in that nearly everyone is a liberal hipster.

      • Ben I love that music! I love the tuba!

      • Thanks for sharing your reactions to the language I used. I didn’t mean to be offensive. I know that I am sometimes a little defensive because I read stories about people saying horrible things about my community and the ethnicity I belong to (a la Donald Trump). In fact, I read those things here on this page sometimes, things I find pretty derogatory. However, I don’t want to add to that bad energy so I apologize for using offensive terms.

      • Oh, and thanks Carlos! I’ve always loved Ventura County, folks up there are really friendly and I like the laidback vibe. However, I’m really invested and involved in my local community so I’d like to stay and continue my work. But you never know, things could change. Thanks!

      • Using the term “troll” is racist. A troll is a supernatural being in Norse mythology and Scandinavian folklore. It is like using Jesus’s name in vain. Please refrain from using this offensive term.

      • son of a landlord

        Olaf, I hear that trolls eat human babies. Are you saying that’s just a racist stereotype?

        I also hear that trolls live under bridges. Is that true? And if so, is it because trolls prefer the under-bridge lifestyle, or are Swedish crapshacks prohibitively expensive? Are rents much cheaper under bridges? What’s the average list price for a bridge just outside of Stockholm, as opposed to the price of a crapshack within Stockholm city limits?

      • Son of a Landlord, I think that I will “go Viking” on you. But then again, you dump on Mexicans, so why not the Vikings. You need to attend a diversity and multi culturalism class at Cal Lutheran in Thousand Oaks so you will be more culturally sensitive.

    • Furthermore, the idea of an extended family that is multigenerational is one that has been with most of human society for most of recorded (and perhaps unrecorded) history. It is only the advent of the industrial-capitalistic cultures of the west that have elevated the nuclear family to the place of ultimate primacy and importance, to the exclusion of uncles, aunts, grandparents, in-laws, cousins, etc., . . . and also trained us to think that this is some kind of an “advance” or some kind of “improvement” over what existed before.

      Not to mention that part the reason that humans were able to ultimately become the dominant species on earth is because they learned how to cooperate with each other within larger groups.

      So, I see the fact that Latino (and other immigrant) families share housing as a strength, and not as a weakness. I know it goes against the “Leave It to Beaver” post-war familial ideal that has been with us for some time, but so what?? Is that really so great?

      My hunch is that by doubling up, these families are able to SAVE money and resources, and ultimately support one another better–both emotionally and materially.

      Tell that to Anglos and you’ll probably get blank looks on their faces, as they’ll have little concept as to what is being talked about (full disclosure: I am NOT a Latino. Nor am I an Anglo. Although I am a caucasian.)

      BTW, the reason California is so expensive is that so many people want to live here. The reason other places are less expensive is that fewer people want to live there. It’s very simple: It’s called “supply and demand.”

      And though I said it before on other posts, I’ll say it now more succinctly–there’s a cosmopolitan culture that exists in California that doesn’t exist in most other places–especially the cheaper places–in the country. I can’t put a price tag on that culture. All I know is that I’ve spent many years living among the rubes in the cheaper, “heartland” areas. Now that I’m back in L.A., living among diversity, among people that can read and can think, and who aren’t provincial and ignorant and closed-minded in their mindsets, you couldn’t pay me enough money to go live among the rubes again.

      • More Enlightened:

        Different strokes for different folks. I dislike living with any more people than necessary. The more people in a house, the more often you get sick (colds/flu and more), have arguments about petty crap, have to help them with this or that, etc. As I stated in another post, I enjoy living with only my wife and child. We visit with others whenever we want, and when we are done, we come home and relax. We don’t have to be around 10 other people whenever we are home. To me, living with only one’s immediate family is invaluable, even if it costs a bit more. Thankfully, we can afford it without issue.

        Regarding your cosmopolitan vibe from CA, I suspect that the honeymoon period will wear off at some point. There are plenty of idiots here, just like there are everywhere. The idiots may be slightly different, but they’re still idiots.

        I pretty much live in So Cal for the weather and immense amount of stuff to do. If somewhere else existed in the U.S. with those characteristics for less money, I’d move tomorrow. Unfortunately, that place doesn’t exist to my knowledge.

      • Mexicans don’t live in multigenerational households because they place it at a higher value than the immediate family unit. It’s because they’re POOR and have LOW STANDARDS of living.

      • You’re so enlightened you resort to name calling because it’s open-minded to label people as “rubes.” It’s so wonderful here in SoCal that instead of being out there soaking it up you’re here on a housing skeptic blog trying to convince the rest of us. Your actions contradict your claims.

      • Responder, you suspect that the “honeymoon will wear off soon?”

        What a joke.

        I was born and raised in L.A. and lived here for most of my first three decades of life.
        Then I moved away for twenty years, and for most of that time I lived mostly in “red state” rubeville.

        Came back to SoCal in 2013. I would have come back sooner except for certain personal issues in my life that needed to be attended to first.

        Responder, I hate to break it to you, but there ain’t no “honeymoon” going on with me. Rather, within the circles I move in L.A., every day is virtually one in which I feel my gratitude for living among relatively enlightened and cosmopolitan people I realize that in spite of all of L.A.’s problems–and there are many–this is probably one of the relatively more sane, enlightened, and forward looking areas in the United States. Not to mention, that place is filled with creative, educated, and talented people that know what’s going on in the world, and one is freer to think and live the way one wants to.

        Son, it was quite presumptuous for you to say that I’m on some kind of a “honeymoon” with L.A. That’s B.S. Coming back to L.A. after living in various cultural and intellectual $hitholes in this country for years, I see clearly what this place has to offer relative to other parts of the country, e.g., the midwest, most of the South, Texas, D.C., and even New York City. For all of its faults, L.A. is still one of the best things going in these here United States.

        Sorry you don’t feel that way, but go live in Texas, or in Tennessee (with the exception of Nashville) and see how you like living with cretinous, know-nothing, gullible, authoritarian rubes with closed minds, who barely know how to read . . . and rarely do. If you think it’s so much better (certainly it’s cheaper) in those places, then my suggestion is go move there.

    • I left LA to get far away as I can from the Mexican community and I have a cousin whom is Mexican do the same. LA has gone downhill due to the Latin culture of litter the streets, foul the air, write on walls, houses, buildings, trees, railroad crossings etc., Gangs, language idiots whom have no idea of english and of course the BS govt. take that most Mexicans eat up vs. citizens. LA will turn into Ensenada soon and the only blow hole will be how fast homes go down in that rat hole….

      • Been a while since I’ve had to drive thru LA (live in another state FAR away that is 100x better, including the weather) but I recall driving on the freeway for the first time in a long absence to visit family and noticing the exit signs covered in razor wire and graffiti. Stay classy LA! Of should I say GFY LA!

    • Paul - ( not a Realtor )

      Just a note – I live in a very nice area of the San Gabriel Valley and we have our own “Crackers” here – the guy across the street from me is a bona-fide Redneck and acts like one also.

      People live in So.Calif to get high paying Jobs — but the competition is fierce and alot of people will just keep trying to rise up the ladder .. this generates competition for Housing and for Rentals .

      • Paul gets it. It’s primarily about the money and as the costs increasingly outweigh the benefit, people choose competing alternatives. SoCal and L.A. don’t exist nor compete in a vacuum.

  • That last graph is VERY telling. The only other drop that large was back when the last bubble burst, and the drop in the late 80’s. And BOTH of those drops continued and were quite large. It’s only a matter of time for the YOY increases to reach zero, and then turn negative. And once they do, the headlines become “House prices falling,” and the entire psychology of the market changes.

    And the second bursting of the bubble will be even worse than the first. Plenty of us still have horrible memories of the last bubble bursting, so when it happens again, you can bet people will be scared out of their mind.

    And this is all assuming there are no major geopolitical problems, or that the stock market doesn’t crash into oblivion, or who knows what China might do.

    • “Plenty of us still have horrible memories of the last bubble bursting”

      i bought a house in ’91, was upside down for 9 years, which is how i thought bubble 2.0 (this is really bubble 3.0 IMHO) was going to play out, it didn’t. I never thought that people would be able to live rent free for 48 months.

      -4. Do you have at least a 10 percent down payment (ideally 20 percent) and one year of expenses for an emergency fund?

      A back of the envelope calculation puts that number at about $110,000 @10% down…..never gonna happen.

      • “A back of the envelope calculation puts that number at about $110,000 @10% down…..never gonna happen.”

        If someone can’t save $110k for a down payment, how are they ever going to save enough to retire? Apparently retirement is “never gonna happen” for those people, either.

      • Saving $110k? I’m guessing only 5% of the population can do that by the time they’re 30. It’s gotta be crazy low.

  • The most interesting things about browsing listings is checking its sales history to see if it suggests the seller is cashing out before a dip in prices. I notice a lot of them bought 2010-2013 and are looking at nice little pay day.

    It’s ironic that those hoping for a crash to get property at discounted prices (relative to current prices) would get there pom poms out for another bull run. Buyers want prices to go down, but once they become owners, they cheer on the bull run. I don’t want runs or crashes. I want stability and affordability. And it is in many regions, but owning prime real estate has always been a pipe dream for most of us, has been that way for a while. It shouldn’t be a game of musical chairs.

  • I lived in Costa Mesa for several years, and I agree, its a pretty good place if you are Hispanic because the family sticks together. Mom stays home and manages the budget, dad goes to work with a lunch mom packed, refried beans and tortillas and nopales and such, and you can get all over orange county, as spread out as it is, by bicycle. The Santa Ana river trail cuts through orange county diagonally like a bike freeway, its great.

    My fellow whities bitch about “the Mexicans” but I tell them, they get by because they live like we did in the 1950s. Look at what old magazines etc you can do from then, there was tons of chatter about budgeting and making pot roast. I was born in the 1960s and my mom made a lot of our clothes herself. Look at all the adults riding bicycles in those old days, not spandex clad clods on zoom machines but regular old guys wearing fedoras riding what we call cruiser style bikes these days.

    My parents were not considered poor but they grew up almost amish compared to what people consider their birthright now.

    • got any ideas on how we can make it that good for everybody?

      • Yeah. Be frugal, frugal, and frugal. One car in the family, or no car if possible. Everyone who can works, kids have paper routes or some way to bring n money, like I sold art.

        These days you’ll have to be the frugal weirdos, acting like the norm 50 years ago.

        However unless you get 5 or more people all working and laying in, you won’t be able to buy my 1960s childhood house on white oak Street in Costa Mesa.

        I lived there again in the 1980s and fellow whities were living 4 to a studio apartment.

      • Alex in San jose: I agree with being frugal- my wife and I are frugal (within reason). But I draw the line at making your kids work to help pay the bills (such as a paper route as you suggested). Don’t have kids if you can’t afford them. Kids need a childhood, and they only get one shot at one; they have the rest of their lives to work. Don’t make them spend their formative years working a mindless, dead-end job because you screwed up and had a kid you can’t afford.

      • son of a landlord

        Responder, having a child work for money is part of childhood. It’s a Good Thing.

        When I was a child I raked leaves, delivered the Pennysaver, sold stuff door-to-door (greeting cards, chocolate, seeds), all to earn money. I also “sold” parking places. (Many kids in our neighborhood rented out our driveways during nearby events, because public parking was limited.)

        I enjoyed working and earning money, even in grammar school.

      • son of a landlord: It sounds like you wanted to work, and I’m speculating that you were able to keep the fruits of your labor. I don’t take issue with that. Except that I would never allow my child to go door to door (for any reason) these days.

        If a kid really wants to work, that’s one thing. But if a kid is required to work in order for the parents to pay the bills, that’s pretty despicable in my opinion. People who can’t afford kids (without government assistance) should not have them in my opinion. In fact, this would probably solve many of the world’s problems.

      • Responder while we fell into deep poverty, I maintain that by age 14 kids want to work. Let the kids keep what they earn and put it into a fund formcolle or trade school, is my ideal. I’ll admit I felt a bit cheated that I was earning and buying dinner at age 15 but at the same time I felt kind of proud to do it.

    • We used to own a condo in Costa Mesa when it was a nice community where it was safe to ride a bike. Now much of Costa Mesa has become a dirty run down barrio of Mexico. Gangs like the Vario Little Town Gang have taken over and it’s unsafe. If the men do work, most of them work under the table and pay no taxes. Their wives and/or girlfriends get welfare and other entitlements as do their children.

      • That’s how all the white people in Costa Mesa I knew lived!

        I was unusual in that I worked a job, with lots of overtime. The white people I knew lived lives that were marginal as hell. The Mexicans all had jobs in machine shops and so on.

        Note to Maria and others, once you are in California you are Mexican. From Argentina? Doesn’t matter, you’re Mexican now!

        I lived on placentia avenue in Costa Mesa which was considered a rundown area.

      • If Alex from San Jose is white, it sounds like he doesn’t have good judgement and probably had drug issues if all the white people he knew from Costa Mesa had marginal lives and were either unemployed or on welfare.

    • I do think there’s some truth to this, and I’m guilty of it, myself. My wife and I are slightly frugal, considering our income, but we still let too much money fly out the door on luxuries that my parents never would have considered. Of course, being frugal also makes me hesitate buying a house over $500K+, even though our income says it can work, and we do draw the line at living in a multi-generational household.

    • Costa Mesa is going through a big change now. The homless are being removed.
      Soon Banning Ranch (Newport Beach) will overtake the poor of Costa Mesa west side.
      In 10-15 years the barrio of Costa Mesa will be a memory

      • Gentrification rears its ugly head again, I guess. I’m sure I was around a fair number of gang members whenmi went to get my fried mushrooms or zucchini strips at PK Burger, but they did not bother me.

        So now its all yuppie moms at Airplane Park?

        I liked the scruffy old west side, “We Take The Dent Out Of Accident” place and the boat, maybe maybe more junk, yards.

  • This is a great summation of the current state of affairs that will ultimately bring down this country.

    “My parents were not considered poor but they grew up almost amish compared to what people consider their birthright now.”

    • It’s hard to compare being “poor” now versus 50-60 years ago when folks at the poverty line today have cars, DirectTV and cellphones.

      • Touch tone telephone was a big deal. It cost about $10 or $15 a month which was expensive but keep in mind it was for a family of 7.

        We walked to school. Fun and games cost somewhere between free and cheap. The library was a big deal. I always tried to have a pocket knife because it was the meta toy, something I made toys with and boy did I!

        I just turned 53 a few days ago, I’m not that friggin old. Options have become perceived necessities.

      • son of a landlord

        Alex, I’m 54. I remember touch-tone phones. My father refused to buy them because they cost more than dial tone.

        My family had only black & white TV until the early 1980s. My father saw no need to upgrade to color while the B&W set still worked. Only after the B&W set finally broke did he get color.

      • Son of a landlord…. Touch tone was a fleeting thing, most of the time it was no phone, or dial, and we were at one time on a party line. At times there was one operational phone forma cluster of three or four houses.

        I have no idea why anyone is nostalgic for the 1970s. That 70s Show baffles me.

      • You think having a cell phone or direct TV is a material difference?

        I can tell you the difference between poor then verses poor now.

        A poor full time minimum wage worker in 1975 earned enough for a clunker car, an apartment in a so so part of town, with a phone, with a TV and received full medical and dental benefits from their employer.

        Today that full time minimumum wage worker earns enough for a bus pass, can’t afford a place without a roommate, and qualifies for Obamacare, dental FORGET IT, qualifies for an Obama phone and food stamps.

    • WeDontMakeThoseDrinksNoMore

      “My parents were not considered poor but they grew up almost amish compared to what people consider their birthright now.”

      Yes. We are fast becoming a world filled with narcissists and victims. Many folks life expectations far exceed their skill set, or their financial/social realities. I’M SPECIAL! I DESERVE THIS. Never ending babble about workouts, latest diet, meals, vacations, remodel, redecoration project, latest tech gadget, new clothes, selfies, and always some OUTRAGE about some perceived unfairness/misfortune. For a society with access to so much, many people I encounter seem to be needy, angry, unhappy and/or unfulfilled much of the time. Even when they get what they want, it’s still not enough. Its becoming very noisy, really embarrassing and quite unbearable.

      • A society of special snowflakes. I just managed to miss the participation tropy age. If I wen out fishing and I didn’t catch fish, I went hungry. Ifmi missed the bus, I missed the bus, which by the way cost a dime. I call it the Starving Seventies, I learned to forage.

        Something changed mid 1980s. The hunger ended for most which is a good thing, but maybe patching your clothes yourself and mowing the lawn in front of the place you work with a push mower, which I had to learn to sharpen with a hand file, and re coloring my sneakers with Sanford’s markers teaches a certain Stoicism. Yes I’ve been given trophies and medals but I earned them.

      • The moral bankruptcy you described is what feeds every ‘asset’ bubble. It’s Marketing 101, a self- reinforcing con game that’s being exploited with the peeps more than willing to be the mark just as long as the game keeps on.

    • My parents were actually not very good with money, and I suspect the reason we could live in the archetypal suburban house in Costa Mesa on my father’s bank tellers salery involved some borrowing from his family.

      My parents just did frugal things because that was the way things were done. Tons of examples, like you always wrote letters, long distance phone calls were only for emergencies. There was one TV, and it was black and white.

  • Just want to say, “Thank you,” to all of you taking the time to comment on this fantastic blog. There is so little conversation today about important and interesting topics.

  • Nice to see a good article, I feel like this blog has lost some of its appeal because I see less and less discussion. Anyhow, my wife and I are still waiting for a small dip to buy. We finally moved from an expensive part of the SF Valley to a cheaper place so that we can save as much as possible. I will happily stay renting if things don’t change though, the market is just too expensive. I often think that I shouldn’t even bother looking for a home for at least 6 months since nothing has really changed so far.

  • Two things … existing home sales nationwide dropped by almost 5% last month, perhaps a clear sign that we’ve reached a peak at least in some areas. Second, again looking at household incomes, I found a chart showing that adjusted for inflation household incomes for all income groups has been stagnant since the late 90’s. Also, household incomes for the bottom 4 quintiles, a mean income of less than $88k, has been flat for much longer. To me that would clearly indicate that the rising rent problem isn’t sustainable.

    • Interestingly, I just did the math and it looks like I’ll make $13k this year as opposed to the $10k I did lastmyear. I’d better save that extra 3 grand since I’ll have to hand it to the IRS.

    • So then the real question is, how does all of this play out? What dominoes fall, and in what order?

      Do things just gradually decline from a peak? Do YOY prices and sales turn negative, people get nervous, and things start to accelerate? Those sound like best case scenarios.

      What if the economy turns sour though? If people start losing jobs, and can’t afford rents and mortgages…things are going to get ugly fast. The entire housing market feels like a family that has leveraged up to their eyeballs, and they’re one lost job away from having to dip into a savings that is entirely too small to sustain them.

      Historically speaking, we’re due for another recession:

      “Historical data show a recession in the U.S. on average every 6-7 years since 1947, and double-dips within eight years of big recessions like the Great Depression.”

      We’re 6 years out from the end of the last recession…and this recovery has been terrible.

      • I forget the authors name but he’s mentioned in The Archdruid’s Report or The Hipcrime Vocab or somewhere, but he sees most of us in favalas, south american type slums, and living on rice and beans. He even, helpfully, gives some recipes for preparing the beans.

        From what I observe, I think he is correct.

        Peak internet, for me, was in 2005. It’s followed a smooth bell curve, up, and then down, from before then and then after. The pipeline is squeezing shut and I apologize for the typos and miscorrects in my posts here, I can barely see what I am posting due to wonderful new technology.

        I am looking into more sustainable forms of communication like lithography or engraving, and its nice to see that the post office, sanctified in the Constitution, is doing better than ever because all this new crap depends on it. I honestly think this new stuff will ultimately ately turn out to be so expensive, due to the immense amount of embodied energy, that we will be back to printed paper in short order.

  • OMG. The housing market isn’t going to pop any time soon. This over priced property already has 9 offers….. A $600k, run downed and dated home in Anaheim.

    http://www.ziprealty.com/property/10874-GARZA-AVE-ANAHEIM-CA-92804/7502912/detail

    • Cool lot…horrific kitchen tile. Wow that is bad.

    • Not sure if you read the description closely, but it’s two houses on one lot. I agree, they’re crap boxes, but assuming they are in move-in condition (as claimed), that would be a pretty decent rental property.

      If you could purchase the property for $700k, that’s about $3,300/mo including taxes after 25% down (financing $525k). You could probably rent out the 4-bedroom house for $2,300 or more, and you could probably rent out the 2-bedroom house for $1,500 or more. After expenses, you would likely have a positive cash flow. As for whether or not it’s worth it, it probably varies from person to person. But I don’t think it’s a terrible investment as a rental property.

    • It’s a twofer, so there’s that.

    • WeDontMakeThoseDrinksNoMore

      I’ll guess this time next year this property will have 10-20 occupants, multiple cars in the driveway. For an owner occupant comfortable with this lifestyle, it could work. It might work for an investor too, but could be difficult keeping tabs on how many people actually occupy the property, dogs, liability, noise, wear and tear etc.

      Also if you Google the property there seems to be a facility across the street (Anaheim Independencia?) that has a banner up stating free lunches served here, a parking lot large play structure, so noise and traffic might be part of the package as well.

    • That could change overnight if Yellen were to announce a rate hike, but they’re stalling and producing excuses to avoid that (it’s China’s fault, yeah), only making the eventual crash all that more inevitably brutal when it commences. This ponzi economy is on borrowed time and money.

  • Alex in SJ and Maria.

    I love this conversation.

    I grew up in Santa Ana, near Bristol and Edinger in the 50 & 60’s and can relate Alex’s comments. We were frugal and poor, Mexicans and whites, and Blacks.

    By the way the Santa Ana house cost 11,000.00 in 1957. now zillows at 350 K

    Yo soy Guero, Gabacho, white honkie cracker, whatever.

    A Mexican is part Native Indian and European, (that’s you Maria, part gabacha!)
    But I love your comment, I married a Mexican, and I can relate.

    If you know your Cali history, Alta California, was Spanish from the 1600’s to the early 1800’s . That’s 200 years.

    Then Mexican for another 30 years. A little war with Mexico, and the southwest was “sold”.

    So you could say “ Esta Tierra era Mexico” (This land was Mexico)
    Most white Americans do not know that, or care.

    After the gold rush, it was bad times in California for the native Californio’s .

    Some were chased off their land. Spanish Rancho landholders like Antonio Berryessa, were murdered for their land holdings.

    Then came Joaquin Murrieta and Tiburcio Vasquez, the answer to the “gold rush white invasion”. Whites were killed too.

    Zoot suit riots in LA, La Raza in the 60’s and here we are

    Cali was Latino from the beginning.

    Con Un nopal in la frente.

    • son of a landlord

      No, Cali was not “Latino from the beginning.”

      Latino means derived from a Latin culture, such as Spain. But before Cali was Latino, it was Native American (i.e., Asian immigrants who came over the Bering Straights).

      • Son of a Landlord,
        You are correct, I say from the beginning, or the time of “Discovery”.
        ( A bad time for Native Americans)
        Native peoples from Asia,Walked across Alaska and then down to South America.
        Here in the bay it was the Ohlone, part of the Miwok nation.

        But from what I read and was told by old timers, the Californio’s prior to the gold rush were not Mexican as we know, but spoke spanish. they were a different breed, Californios perhaps with more native american ancestery. and did not relate to Mexico. That’s partly why they split during the Bear Flag revolution.
        The Spanish/Latino history is all around, going back several hundred years.
        I put this out there, to educate the Gringos. Como Yo.

      • Spanish conquerors in the Americas were Caucasian. Until the 1960’s, Los Angeles was overwhelmingly Caucasian. The LA Times has a map showing the percentage of Caucasians and where they live in LA:

        http://maps.latimes.com/neighborhoods/ethnicity/white/neighborhood/list/

        The terms Hispanic and Latino didn’t exist before the 1960’s. The term “Hispanic” was adopted by the United States government in the early 1970s during the administration of Richard Nixon after a census committee recommended that a universal term be adopted that encompassed all people from Mexico, Central and South America. The term Latino was officially adopted in 1997 by the United States Government which replaced the term Hispanic. Neither of the terms “Hispanic” and “Latino” refers to a race since a person of Latino/Hispanic ethnicity can be of any race.

    • Even I have heard of the name of some of this bandidos or freedom fighters.

      I knew a family in Santa Ana in a big old ranch house, immense beams holding the house up and super cheap mortgage.

      I didn’t know beryessa was murdered etc I’ll try to read up on this. I do know in the 1930s tons of Mexicans, by which here in el norte means anyone brown and spanish speaking, were deported, citizen or not.

      Since we are in Great Depression II, I fear this happenjng again. I was out in Arizona some years ago and they brought in something called Real ID. The result was that tons of Mexicans left and the economy got really bad. You see, Mexicans knew it was not worth it to work for less than $10 an hour, and if this is got bad they could always go back to the old country. Whites could not do that, and were desperate, and would work as cheap as $3 an hour. The Mexican restaurant me and my buddy went to was dying, and the McDonalds closed. Everybody, who was white anyway, was on food stamps, and some months I only made $5, all month. This was in 2007 and 2008.

      Screw red states just screw em!

  • Tell me about it. Unable to afford West of the 405 anymore. Have to look for something in Culver City, Hawthorn, Ladera Heights or Inglewood or maybe in the Palms area.The developers must either build up or move passing the 405 freeway and built in the hoods gated communities. We are being moved towards inland. I saw today, how Norwalk is offering Section 8 and how people camped out and waited long lines to get an application. I hope other more inland follow suit. Inglewood has nice homes waiting to be loved again. This communities near the beach areas have the bones for affordable big homes for the middle class. PS a lot of OC people moving to the coastal LA communities and downtown LA? A new trend?

  • I am of Indian heritage. I was born and raised in Chicago. I still live in Chicago. Maria and Alex In San Jose and others bring up the topic of different ethnic groups and housing/how they live. I am a first generation American and we live in certain ways that some third or fourth generation Americans find “perplexing” or “strange”. The Indian family unit is not nuclear but extended. That means aunts and uncles are just like your mom and dad and first cousins are just like your natural brother and sisters.

    There are many benefits of having an extended family unit. My kids are in good hands and we take care of each other. An aunt has medical problems and we all pitch in and love her even more. If her so called nuclear family had to bear the full responsibility of taking care of her then it would be personally, mentally and financially exhausting.

    Having an extended family also is beneficial if you own a business. The family is “minding the store” and not employees. No one will take care of your business like the owners will.

    Sadly though, as time goes by, more and more Indians adopt the American way of doing things. Which means more individualism and less family responsibility. Life is hard and life is very unpredictable and that is why I value and believe in the idea of having an extended family.

    • I can definitely see the value of the “extended family” as you put it. However, there are benefits and drawbacks to everything. The overall benefit of the “extended family” can probably be summed up as security of varying sorts. Although there is less security without an “extended family”, the relative freedom of living with my wife and child (and no one else) is invaluable. We do what we want when we want to do it. Not having to deal with parents or other family members on a daily basis is pretty nice, at least to me.

    • Hi Nimesh, I agree with you. There’s nothing wrong with extended families. It does seem to be frowned upon somewhat.

      Long ago, my wife and I were kicking around the idea of staying with my folks (Asian) for about 6mo to save for furniture and pay off the car. I had just got out of the service and started a new job. Her parents (White) were mortified! It was enough that it swayed my wife. So, we ended up living in a crappyer area till we could get right. Fast forward ~15 years and those same folks live with us! They lost big in the last bust, panicked, and blew it. The plus side, we get some money, built in day care, and they get cheap housing.

      Back to multi generational housing, it can have it’s uses with the right attitude.

    • Nimesh i wish I had the link but there’s an essay supposedly by an Indian guy about how he moved to the USA and left behind d family, friends, connections because he wanted to make it big, and in the end, he realized the only way he was doing better than his father was, he had a place to live with one more room. That was it, one more room. He’d given up family, friends etc., he was lonely as hell and all he had to show for decades of work was one more, empty, room.

    • Having family members share a house is different than what we see in LA where several unrelated families and unrelated persons share one dwelling. Often garages and outbuildings are converted illegally to house unrelated persons. LA has tried to address this issue several times but are usually stopped by lawyers from different advocacy groups:

      http://www.ladowntownnews.com/news/downtown-forces-fight-boarding-house-law/article_d4b686f2-5c42-11e2-84ed-0019bb2963f4.html

      http://clkrep.lacity.org/onlinedocs/2014/14-0118_rpt_plan_06-25-14.pdf

  • WeDontMakeThoseDrinksNoMore

    Thousands line up for the chance to apply for Section 8 housing in Norwalk

    http://losangeles.cbslocal.com/2015/09/21/thousands-line-up-for-section-8-housing-in-norwalk/

    • Where I am there are literally thousands of people sleeping on the street on any given night, I think the official figurenis 7500.

      I actually talk to homelessmpeople like they’re human beings. About 75% of them have hard tech backgrounds.

      I have a theory that for every obnoxious techbro created, about three people have to end up on the street.

      So thousands lining up to get under a roof does not surprise me in the least.

      • Are you willfully overlooking their drug addiction and/or mental illness? The vast majority of homeless people fall into one or both categories. The people who are homeless due to circumstance, and who are without drug addiction and/or mental illness, are probably few.

      • WeDontMakeThoseDrinksNoMore

        I talk to homeless too. Those with severe mental illness through no fault of their own, God Bless them. They should definitely be helped.

        The vast majority I encounter? Drug addicts, drunks, hustlers, grifters, thieves, people who can’t/won’t follow basic societal rules or laws and easily become angry if asked to do so. Cast out by family who can’t/won’t deal with their drama/problems anymore. Many love street life. Their numbers are growing at an alarming rate, especially in SoCal. Despite the belief that most just need a “hand up” to get off the streets and change their lives, seems to me the majority can’t/won’t hold a job, or maintain a residence if much personal responsibility is involved. They can be given all the tools they need, often within a short time their lives are back in disarray; usually “societies fault”, “police’s” fault, etc. Ask a homeless why they don’t go to a shelter, often they’ll say they don’t want to “follow the rules” shelters have. Sorry to sound heartless, that’s my experience and opinion. Disagree if you wish.

  • From CNBC investors are buying new homes to rent. ” In many of the nation’s actively selling, master-planned communities, which don’t build homes just for rent, there are a significant number of renters anyway.
    “Our research, which we confirmed with the CEOs of several of the institutional investors, shows that these renters live in detached homes primarily because that is the preferred lifestyle. Most of them did not even consider renting an apartment,” wrote John Burns of John Burns Real Estate Consulting in a recent report. “They prefer to live in a detached home and are renting either because of necessity, flexibility or choice.”
    In regards to the income to rent ratio, a lot of the income is not reported, that is how people survive. The region’s underground economy is now estimated at over $8.1 billion a year, siphoning off vast sums of money as workers and employers fail to make payments for Social Security, workers’ compensation, health insurance and other social safety-net programs, according to Daniel Flaming, one of the authors of the segment by the Economic Roundtable, a nonprofit, public-policy research organization in Los Angeles. Greece has the same problem. There are also room mates that share in the rent as well.

  • what if claudia and maria is the same guy? if so ……….

  • theres a lot of talk about mexicans here. i would just like to point out names of the biggest cities in california: los angeles, san francisco, san diego, san jose, santa ana. did you notice anything about them? like the fact that they are not in english?

    • apolitical scientist

      That’s the American Way: Commit whatever form of genocidal extermination is convenient to get the land, but then keep the old names to honor our multicultural sensitivity. Ever look at place names in the rest of the country? Tons of old Native American names – not too many Native Americans though. We’re very efficient when it comes to property confiscation and making the old owners disappear.

      • You clearly haven’t read much world history. All cultures have done this. More advanced ones wipe out the primitive ones. Just hope we don’t get visited by aliens or we’re toast.

    • All of those cities that you mentioned were named by Caucasians who came from Spain and who spoke Spanish.

  • “Typically in the rental market, landlords don’t want to see tenants spending more than 1/3 of their monthly income in rent. Staying at 33% or less of income towards housing is a typical recommendation for sound personal financial management, so in the landlords mind, they feel safe if tenants are under that mark. The tenants can pay rent, yet still have enough income left over to actually live their life and not be in a huge money crunch each month to pay the rent.” Section 8 housing states 30-40%.
    Obviously, the 50% figure does not include other income earners in the household that share in the rental and living costs. Landlords are very protective of their property.

  • Interesting comments to this article. The fact that L.A. has a majority of Hispanic and a growing Asian population has probably helped keep the housing cost rise alive so far! My take is that many Hispanics don’t make waves and don’t want people asking about their status. They are used to more difficult living conditions, resourceful, and will simply double up on the living arrangements. Asians have a history of multi-generational households and many have money. It is an ideal situation for nice zip codes with larger homes. One of the reason I sold the perfect So. Cal. home last year was L.A.’s seemingly unstoppable decline into a 3rd world city.

  • Hello Doc

    a related article from ZH on overall housing crisis and rentier crisis:

    http://www.zerohedge.com/news/2015-09-21/mystery-missing-inflation-solved-and-why-us-housing-crisis-about-get-much-worse

    excerpt: “…Which brings us to the latest, just released joint white paper by Harvard’s Center for Housing Studies in conjunction with the Enterprise Resource Center, in which we read that the US rental crisis is about to get far worse. In fact, in an optimistic scenario in which rental inflation rises by 3% annually (it is currently far higher at 3.6%), while annual income growth is rising at a speed 2.0% (it is currently far lower in real terms) the number of severely cost burdened households – those who spend over half of their income on rent – will rise by over 25% over the next decade, from 11.8 million to a record 14.8 million households!

    Which means that is using at least somewhat realistic assumptions, the real number of households who spend more than half of their income on rent will likely be in the upper teens if not 20s of millions by 2025….

  • If somebody bought a house in Irvine in 2008 at the bottom , should he holds the house or sells it given the current market situation? Any suggestion.
    Thanks

    • Sell. Sell and sit and save and wait.

    • If it is your primary residence do not sell. If a rental sell.

    • Sam, I’m somewhat in a similar situation in a neighboring city. It’s tempting at times to take the money and run. Personally, I’m happy where I am so I’m staying put.

      As the good doctor and folks on here have said, it’s boom or bust it seems. Part of me is tempted to sell during this boom and buy again on the next bust. Since I’m not one for gambling and hate moving, I’ll just count my lucky stars and stay put.

      I’m not qualified to say this but maybe you should keep your place and rent it if you buy another place on the next bust? If your current place was purchased cheap, it should flow cash no? I’d be interested to hear what the learned folks here have to say.

    • If you have been living in it I would sell cause you will get the tax benefit, not often uncle Sam will give you a tax break, last bu, this bubble , then just rent till the bubble pops and buy more homes , that’s if you are good and don’t touch that money

    • Sam,

      If you truly bought in Irvine in 2008, the following is likely true:

      1. If this is your primary residence. All your housing costs are likely below rental parity for a similar property. Those Irvine rents have gone up big time since 08 and you locked in the lowest rates ever and have Prop 13 protection.

      2. If this is an investment property, it is likely cash flow positive. Again, rents have skyrocketed and you locked in by low rates and Prop 13 protection.

      How much do you expect Irvine RE to go down? From the last downturn, it held up very well. Irvine is very desirable…especially to certain ethnic groups and they will pay the premium to own there. If you sell, do you plan on moving out of the area. If not, you likely need to rent. I’m sure you know the frustrations that come with that.

      Owning a house provides shelter and stability. You have a fixed cost and can stay in your place as long as pay the bills. Being a renter in socal can be an uneasy position. You need to weigh all the options, but trying to time the market is nearly impossible. Good luck.

    • I have the same dilemma – I bought low, and am considering selling (high). If it was just a commodity it would be a no-brainer, but it is my principle residence, and I am well below rental parity, so if I do sell and become a renter, my cost of living will jump by maybe 1k per month. That’s a huge thing to consider.

      Other considerations: maybe I can hopscotch my way up the quality of life index. If I sell and pocket well into 6 figures, maybe in a couple years I can put that down on a better place in a better neighborhood. No risk no reward?

      My personal consideration weigh into this – all those signs say “move” and deal with it. I have to keep reminding myself there are more important things than money. Because it’s true right???

    • Thanks for all the well-thought replies. I appreciated.
      Yes, this is my primary residence.
      If Irvine is considered to be less volatile due to the demand, then probably I should hold onto it.

  • I wonder what effect raising the minimum wage will have on LA as the “most unaffordable rental market”. People like to criticize fast food workers for wanting $15 an hour but if you were to look at the statistics you realize $15 is probably accurate for what minimum wage should be in LA. Example, adjusted for inflation, in todays dollars the federal minimum wage is 1968 would be $11.15 an hour. Today that wage is $7.25 an hour. When you know that you see that $15 an hour is pretty correct for LA/California. People also seem to also forget that as minimum wage goes up, every bodies wages will eventually go up over time also. This has to have some effect on making LA less unaffordable.

  • Just got back from my travels and I see the debate of Cal and ethnic groups. CA. about 40 million legal folks. The most diverse of any state and even many countries in terms of culture.

    Turn the block and you might find a complete different neighborhood of people and stores. Debating CA. and its wide range of lifestyles and income disparity, you can go on forever with that, the place will always be a society of have and have not’s, and ethnic network of complex social issues.

    Moving away to other states of smaller population and ethnic concerns could rid you of these concerns or could bring you a different type of prejudice, the fact you are from CA. can bring on such a reaction in the negative. You may be happy or sad you left, nothing is a given in this country, no matter where you move?

    • One can certainly be happy or sad nearly anywhere, and I think many of us can imagine many environments where we have the potential to be happy. The problem to me is that California is so much more expensive to live, compared to most parts of the country, that it pushes it over the edge. If everywhere in the country was the same price to live, I think we could all have personal debates on the lifestyle that we’re looking for, but, throw price into the equation, and you have to REALLY want to live in California to spend that kind of money.

      When I was a kid in the Midwest, my dad had the opportunity to move the whole family to Orange County, but, after considering it for quite a while, he turned it down, because the houses and cost of living were a bit more expensive. Now days, he wouldn’t have entertained it for even a second.

      • Thanks EZ…I know CA is a real place with all the problems, I want folks to know what they read about a better and more reasonable life can sometimes backfire.

        I love to make a example about Denver. Nothing cheap about living there, on the surface it may look good but very high home prices, property taxes, traffic, weather woes and certainly not CA. pay makes it a, “why did I leave CA for this?”

        Can you find a better life than CA. living answer is yes of course, but you must do massive research that entails more than a bigger house cheaper than you can get in CA. I have seen this play out many times with family and friends, several years later they regretted what they did but can’t turn back the clock and some are very happy with their decision, jus be careful on a life changing moves in ones life.

  • Somewhat off topic, but of interest to HBB readers:

    A new movie about banks, bad loans and the housing market circa 2008.

    “Big short”

    Trailer looks interesting:

    http://money.cnn.com/2015/09/22/media/big-short-movie-trailer/index.html?sr=fbmoney092215bigshort1100story

  • Wow. come on people. The U.S. has long ties to Mexico, especially in California and all South west… you CAN NOT erase that!!!!
    Name of cities like: Los Angeles, San Diego, San Francisco, San Jose, Santa Clarita…..

    Counties, Cities, Highways, Streets, Schools, HAVE Spanish names, and YOU all know why. You can not erase that history.

    U.S. and Mexico go hand and hand too much history period.

    What’s interersing is Asians hating on Mexicans… like they have any history over here to claim… you can’t walk from china to America… I don’t see any cities or streets here named chau kung lai mao…

    back to housing…Chinese are so crazy that they’re the ones buying 1M condos and townhomes in Sunnyvale and Mountain view… just like in HK they love to live on top of each other…

    • i have a problem with poor people of ANY color, IF they have kids when they can’t afford to raise them properly. when you educate a person you liberate him/her. i can’t stand poverty. it’s selfish on the parents part, and child abuse for the children

      unfortunately most peoples brains are between their legs

      this is an anonymous blog, don’t take anything personal

      i’m never married and no kids because i can’t afford a house in torrance and i can’t raise children properly on my limited income

      i am happily single btw. i dodged the bullet

      • ben:

        I agree entirely. Although we are not rich (I only consider people rich if they no longer have to work to sustain a nice lifestyle), my child has every need met and more, emotionally and materially.

        I am saddened on an almost daily basis by children of parents who are clearly not fit to be parents, and how unfair it is that my kid has a pretty nice life while other kids (through no fault of their own) are left to live a life filled with struggle of one sort or another. And the cycle will likely continue for these unfortunate people, as it probably has for generations.

        In many other countries, the disparities are clearly worse. Unfortunately, I have no answers for these issues, other than for impoverished people to cease to procreate. Unfortunately, they’re typically too unintelligent to do so.

        On the bright side (for me), I don’t have to compete with these people for housing. I can imagine that the housing issues in So Cal would be exponentially worse if there were no poor.

    • My associate Leland thinks that you disrespect our associates by your remark about them in The City. But then again, you probably hang out at Market and Castro streets, which is not our neighborhood. Southern California has no class for my associates, since southern California people are viewed as being like barbarians that honorable ancestors built a wall, in old country, to keep them out.

    • I think most understand that, but it doesn’t give carte blanche to avoid the rules of coming to this country, whether the person is from Mexico or Sweden.

      At least for me, it’s never been a racial thing. I lived part of my life in Venezuela, and I certainly have no problem with Latino culture, but certainly you must have an understanding as to why some would build up some resentment when millions of people come here illegally, and then use the power of their numbers to influence politics and policy. I’m a liberal, and I still struggle with it.

      • I feel the same way.

      • You can’t blame people for coming here… It’s survival mode man, people will cross that border if they can. Now, the U.S. is the most powerfull nation in the world and they could stop illegals from crossing here if they wanted to, keyword “want”. Resentment toward these people is ridiculous… it should be aim toward your congress.

        It’s like being resenful toward a football player who cheated and got away with it. Point the finger at the Referees for not calling the penalty!!! get it?

        The ruling people in the U.S. want the cheap labor and don’t give a $%# about the caos that comes with that.

        We you allow people to stay here, eventually they become part of the community and lifestyle and begin to have a voice…

      • What the US should have done back in the peso crisis in the mid 90s is lease a chunk of Mexico for the US to develop and Mexicans to work in, a low tax free enterprise zone. Lease lasts 100 years with possible renewal and the Mexicans would be limited to that zone, period. Every 10 years we reevaluate and perhaps seek to expand or contract based on business conditions. Eventually we grow this zone to get rid of the corrupt cartel controlled Mexico and basically establish Mexico as a territory where they get jobs and a lot less corruption, the US gets cheaper labor and more economic opportunities. Win-win. Maybe Trump can get something like this going if he can pry himself away from the flame wars on twitter long enough to win.

  • I was a teen in the early 80’s. I could afford college tuition, books, and a clunker car on a near minimum wage job and I saved for retirement. I could have afforded rent back then if I wasn’t living at home (or living in a coastal CA city) and saving while in college. Try to do that now. What does that say about wages?

  • The ranchero culture has much in common with us in Texas than the white liberal social culture of Oregon and Washington state. These people are good family people that share our social conservative Texas values that are being for the right to life, and against feminism(of course with that machismo culture) and gay rights. California will become more socially Catholic conservative when they get a path to citizenship and the right to vote. Remember, that former Jesuit Governor who invited them to Cali. And, as the good pope said, plenty of government services for the children and families . Yes, we are suspicious of the white Californians who seek refuge here . We need to vet them to make sure they do not have those social liberal values.

    • The best graffiti I ever saw in a toilet stall: ” here I sit cheeks a flexin’, about to have a baby Texan “. Jesus you all are a bunch of retards, if I were king I would give the land of Rick Perry back to Mexico.

    • son of a landlord

      Remember, that former Jesuit Governor who invited them to Cali.

      Mmmm, that’s pretty much what Maria said.

      You don’t suppose Big Tex IS Maria?

    • I may be fiscally conservative, but as a pro-gay rights, pro-choice, atheist, it sounds like I made the right decision to move from LA to Oregon. LOL

      • The libtard communists in the People’s Republic of Portland maybe pro-gay and pro-abortion, but they are not conservative fiscally! Portland has continual budget deficits. Portlandiers also hate Californians–especially refugees from SoCal. We couldn’t wait to move out of there.

      • Judging by your comment and attitude, my guess is that most people aren’t fans of you, whether they couch it in hating Californians or not. People have been very nice to us here.

      • p.s. Charlie Hale balanced the budget.

    • “Yes, we are suspicious of the white Californians who seek refuge here . We need to vet them to make sure they do not have those social liberal values.”

      You’re probably not aware of it, but you give Texas and Kinky Friedman a bad name.

  • http://www.hollywoodreporter.com/news/dockweiler-state-beach-closed-due-826938

    “Dockweiler State Beach, a popular surfing spot south of Venice, will remain closed Thursday due to medical debris — including hypodermic needles — found along the shoreline and rising bacteria levels, according to the Los Angeles County Public Health Department.

    Condoms and tampons have also washed ashore, KTLA reported.”

    Not surprising. The west side L.A. beaches are overcrowded dumps.

    The official claims it’s safe, yet the beach is closed? Wow where I can sign up to overpay for a Culver City adjacent crapshack within 15 minutes driving time from Dockweiler during the times of day when nobody goes there?

  • Robert, I am a little late to the game here, but I wanted to address your comment about Denver. What you say is 100% true. Denver, on the surface, may seem more affordable compared to other major metros (Denver is not a major metro, in my mind – just a really overpriced/overrated cow town that thinks it’s a big city…and I can say that, because I grew up here and have seen this city undergo massive change, and not for the better.) Denver’s taxes are going up, and you must consider the quality of both K-12 and higher ed here. Colorado is #49 when it comes to higher education funding and if you look at the quality of our public schools in relation to home costs, it’s pathetic.

    This is anecdotal at best, but I talk to a lot of people as part of my job and I work in central/south Denver. Many people I know – some of them have children – are choosing to move to Austin, St. Louis, and Boise because Denver and the entire front range has become pretty un-affordable when you crunch the median income to median house price numbers. And yes, in the winter months, the weather here is no cake walk.

    People should feel free to move anywhere that suits them; I am not trying to make the bitter nativist argument that many CO natives make. However, I would caution anyone wanting to move to Denver to be sure they’re comparing apples to apples based on where they’re moving from and what they’re used to.

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