What can you buy with $1 million in Southern California? Taking a look at Santa Monica, Arcadia, and San Marino. Some areas reach new peaks.

$1 million does not go very far in prime Southern California cities. While sales volume is still very low, home prices in some markets are making new peaks. Overall, the market has hit a lull in the summer and inventory is definitely returning. House lusting is still very much in vogue and sticker shock is only tempered by very low interest rates. Up in the Bay Area, we see people tapping out equity at a more common interval to upgrade their properties. Today we’ll take a look at three very prime cities in Southern California. Santa Monica, Arcadia, and San Marino are truly prime areas. With that said, your dollars will not go very far in these markets. In some cases, homes are making new peaks. For now, we continue seeing a shrinking middle class while these very selective markets continue to become even more selective. Let us go shopping in these prime areas.

A look at Santa Monica, Arcadia, and San Marino

The housing mania from 2013 is still going on in some niche markets. While the overall market certainly cools down, some areas are setting new records. Some cities are seeing wicked price jumps causing plain old vanilla homes to sell for $1 million dollars or more.

The first area we should examine is Arcadia. Arcadia has benefitted from heavy investor demand and continues to be a target for hot money.

arcadia

325 Laurel Ave, Arcadia, CA 91006

2 beds, 1.5 baths, 1,522 square feet

For Sale:               $960,000

For almost $1 million, you can actually buy this home with only 2 bedrooms. You don’t get two full bathrooms but hey, you’re living in Arcadia so stop mouthing off. This place was built in 1942 smack in the heat of World War II when we were full on battling the Axis Powers. Take on a piece of history for only $960,000.

Our next little trip takes us down to the People’s Republic of Santa Monica. What can we find for $1 million?

santa monica

2301 30th St, Santa Monica, CA 90405

2 beds, 1 bath, 963 square feet

For Sale:               $1,200,000

You don’t have many options at the million dollar range. At $1.2 million we get one bathroom and 963 square feet. I love this ad:

“First time on the market in over 40 years! Charming Spanish located in the highly sought after neighborhood of Sunset Park! Great opportunity to update, renovate and add on to the existing home or build new! 2 bedroom, 1 bath home with wood floors which needs some TLC.”

Some readers have commented on this trend where the ad is essentially telling you, “hey, you are spending $1.2 million so you better fork over another few hundred thousand dollars to renovate here.” $1.2 million at 963 square feet and still needs some TLC. No housing mania here folks!

Our final stop takes us to investor magnate San Marino.

san marino

1400 Winston Ave, San Marino, CA 91108

3 beds, 2 baths, 1,862 square feet

For Sale:                               $1,580,000

This is an interesting home here. The place last sold for $500,000 back in 2008. At some point in 2012, the place was listed as a rental for $4,000 per month. You can now have it for $1.58 million. Here is a headline grabber:

“Hard to find property in San Marino and Super Move-In Condition!”

This place better be move-in ready! You are dropping $1.58 million. Can you imagine a place at $1.2 million? They’d probably tell you to bring a mop and a bucket of soap to scrub the floors before moving in. Investor money keeps flooding in and some of these areas are seeing new peaks. Most working stiffs have no shots in these markets even with two professional stiffs. Your aspirational types are living at home trying to figure out how they can have mom and dad help out with the down payment. It is unlikely to make a dent in these areas.

For California readers, you might not be stunned but for other readers this gives you a taste of California real estate. Forget about craftsman like quality, good construction, or anything like that. You get your stucco box and a giant price tag. It is no surprise why the state is becoming heavier with the rental households. $1 million just doesn’t go that far in today’s juiced up housing market.

Did You Enjoy The Post? Subscribe to Dr. Housing Bubble’s Blog to get updated housing commentary, analysis, and information.





102 Responses to “What can you buy with $1 million in Southern California? Taking a look at Santa Monica, Arcadia, and San Marino. Some areas reach new peaks.”

  • blackswan's smarter brother

    Those are real life examples of the perversion of the law of supply and demand, and this has to be pushing folks to the brink of financial insanity. Eventually, someone has to look at these aging cracker boxes and say, “Hey, this ain’t a million dollar house”. So much for getting any kind of bang for your real estate buying buck.

    • There definitely is supply + demand at work here. There is a increasing supply of homes for sale and those sellers are demanding crazy prices that some people keep paying until there is no one left who will ante in to play the game.

    • The “law” was never a law, rather it is a theory and the theory has been debunked many years ago. We still seem to have a need to believe that transactions happen in a vacuum between “rational men” where money, banks and debt have no impact. Where is Minsky when you need him?

      • Most people believe the first “law” of economics is supply and demand. It’s not, it’s self-interest, and people will subvert supply and demand for their self-interest. This is why sellers, agents, banks and on and on and leverage informational asymmetries to keep housing prices high. Once people wake up and see we’re in a gigantic Everything bubble, this shit’ll keep happening.

      • Reminds me of the early 70′s when I had reason to drive onto the oil refinery down near the LA Harbor. At the guard gate the oil company had a poster that said “He who controls the supply controls the demand”. This was only a score or so months before the oil crises. And now here we are with crap shacks you could have bought in that day for low low five figures going for near or above a million. Go figure.

      • Tired of the BS

        “This was only a score or so months before the oil crises.”

        I bet most folks during the oil crisis didn’t consider that oil prices in USD would tank a few years after the crisis began and hover around there for over 15 years. Perhaps just a “leveling out” or a small decline. The cartels would #never let those prices drop. In real terms, WTI oil prices today are still lower than their highest point during the crisis.

    • stop your whining about the prices in the prime areas of SoCal. If you don’t like the prices, move to Dallas. Either accept the situation or do something about it, such as move to Governor Perry’s state. I know that California people are considered maniacs in paying the crazy prices, but that is just what keeps the movement going.

      • Tired of the BS

        “stop your whining about the prices in the prime areas of SoCal. If you don’t like the prices, move to Dallas. Either accept the situation or do something about it, such as move to Governor Perry’s state. I know that California people are considered maniacs in paying the crazy prices, but that is just what keeps the movement going.”

        Sure, when you stop your whining about other peoples’ whining.

        If you don’t like the whining, move to another blog.

        Either accept the situation or do something about it, such as start another blog about how great the housing situation is in Texas.

        See how that works both ways? You’re complaining about complaining and suggesting the solution of not facing the situation head-on. It’s a different stench of the same bullshit like comments from the folks who come on here trying to convince us that we’re all crazy for calling a spade a spade.

      • Texas seems to be drier and offers more corruption than CA.

        http://www.mensjournal.com/magazine/print-view/who-stole-the-water-20140623

      • yes,i wish you can wave your magic gun and have everyone who has moved here the last 30 years to pack up and move to texas.California is very crowded.

      • Texas would be great, if it weren’t for the weather, politics and people. YeeHaw Y’all!!

      • Jumpinandswim

        Kalifornia would be great, if it weren’t for the earthquakes, lack of water, radical far left Communist politics, millions of illegals, and crazy delusional people all on drugs. Hola!

    • where'd my username go?

      Off topic:

      http://seekingalpha.com/article/2293535-an-overview-of-the-single-family-rental-reit-sector

      “Launched after the collapse of the housing and mortgage markets, the business of single-family house rentals is now well off the ground and nearing cruising speed and altitude. By some estimates, the handful of new publicly-traded firms, offshoots of larger financial firms and institutional investors who participate in the industry have purchased nearly 400,000 homes over the past five years. The opportunity arose because banks and the housing market could not cope with the flood of foreclosures. Those investors who stepped up early were able to buy at bargain prices, making it profitable to rent out houses and perhaps sell at a profit later, after the rebound in house prices….”

    • where'd my username go?

      As far as oil prices falling after the OPEC crisis goes: The reason they fell was because Carter waged an effective war in the Middle East. No, not the ineffective, Bush/Cheney type of war, where we kill lots of people in order to privatize the Iraqi oil. What Carter did was raise efficiency standards on vehicles. It worked so well that if we had continued on that particular trajectory for one more year, we wouldn’t have even needed oil from the Persian Gulf. Then Reagan came in and started reversing policies which caused us to become re-addicted.

  • I find myself wondering, when I see these new sharp peaks, is it going to just settle down and flatten out? or is Jim Taylor right and we’ll see the market take a big header and correct? These thin and extreme spikes makes me think it won’t just flatten out.
    We joke about it but is there really enough of a cohort of big 6 figure families that can afford to step up to this stuff – and think it’s worth it?

    • There are a lot of 6 figure people in SoCal but a lot of them are scammers. My friend dated a female pastor of some strange Christian sect. The church was basically her cash cow. She had 100K car, mansion, etc. There are a ton of ponzi and pyramid schemers all over SoCal. I met a washed-up actress who was “the face” for a pyramid scheme and on and on. These people didn’t really work for the money, so the spend it without knowing it’s worth.

    • There can be no “flattening” as EVERYONE is using leverage. The entire economy is built on unsustainable LEVERAGE. If organic growth stops you can have a flattening of a market. If the growth is built entirely on credit expansion you have to have a correction either through flat prices in nominal dollars (cover up the mess with wage inflation) or outright deflation. We’ve been trying option one since Nixon killed the Gold Standard and deflation still hit us in the early 80′s, the mid 90′s and the 2008 crash. The exponential increase in the monetary supply are going to make these swings more frequent and volatile. This credit bubble is larger than the 2008 fiasco. Wages are stagnant despite the FED doing everything to inflate them.

      Math is undefeated in history… Hedge accordingly.

      • Wage growth, even with massive monetary expansion, is not enough to afford housing in most places. You have to strike it rich – movie star, tech billionaire, they found oil under your house – to be able to afford housing comfortably these days.

      • You know that math is now considered a four letter word! It is offensive to many modern day Merikins so be careful who is within earshot when you utter profanity like the “M” word…

  • New normal perhaps? Starting to lean that way, but not buying anytime soon so doesn’t really matter to me.

    To add some historical perspective to SoCal RE prices, a friend of mine recently took his grandma to her old home in Long Beach near Bennett and Broadway. His great grandfather had purchased the home in the 1930s for 7,000. The zillow current FMV…around 900k. On the face, a 6.2% CAGR doesn’t sound too bad except for the fact that there is generally a high carrying costs for a home (repair/maintenance, taxes, upkeep). In addition, it’s a crapshoot because you don’t know what the neighborhood will look like in 10, 20, or 80 years for that matter. While the price difference is shocking, the bigger question for me is, are homes really a worthwhile investment?

    • Homes are certainly a worthwhile investment if you can buy it at $500k, do nothing to it for 5 years and sell it for 3x’s as much to someone horribly bad at math and economics.

      • “math and economics” WTF is that? I recollects me great great grand pappy going on about the maths and the economics late at night after he thought all us chilince was a sleeping… I taint heard hide nor hair about no maths and no economics since…

      • That gives me a great idea! We should all go out and buy houses at whatever price they are offered. Then, we wait 5 years and sell them for triple the buying price!

    • “Haven’t half the articles posted on DHB been about the number of cash buyers? So if people are buying with cash, there is no mortgage and there is true price discovery.”

      There is so much wrong with this statement I have no idea where to begin. All sales are “all cash” sales unless the seller is financing. The question is, where did the financing of the cash occur, if it occurred. Mortgage is the case that you point out above but there is more than one way to skin a cat. As we have heard, only cash offers need apply in today’s market so it is prudent to get a loan prior to the purchase and not make the purchase contingent on financing. This appears as a cash sale in the statistics. Fund managers get financing (get loan from bank) to buy blocks of houses until they can “market” their fund. This appears as a cash sale in the statistics. Flipper has a relationship with bank and has short term loan to finance flip. This appears as a cash sale in the statistics.

      Price discovery is a quaint term which assumes that the “theory” of supply and demand determines price. I suggest you read blert’s friends book “Debunking Economics”.

      “FMV is what a willing and able buyer purchases property, in this case, for a home. So in bubble 1.0, FMV of “willing and able” was using money that essentially wasn’t theirs to start with. When they reneged on their contract, prices came down and more solvent/capable buyers came in with this new normal market.”

      In Ronald Regan’s famous words, “there you go again” assuming that there is no financing in the purchase. Remember mortgage is NOT the only way to finance a purchase.

      “And if their paying cash, you won’t see a dip unless greater economic factors push the market down (ie, significant 10+ percent rate hikes, derivatives bubble pop, deflationary spiral, asset price collapse, etc).”

      You really need to read Minsky because you are assuming that markets are stable by nature and that we find a “normal” and everything settles down. History has proven this misconception wrong over and over and over and over…

      “Class is out of session now What?”

      I am not clear that you have taught anything today professor CPA. I think I will drop this class as there are much more worthwhile courses available these days by informed instructors…

      • What? Seems to be typing feveriousily from his/her moms basement so completely understand the hostile tone. Unfortunately in the real world, FMV is occurring daily. If there is a real price dip and the market is a all a face, I will be happy to eat crow. Unfortunately for señor What? I’ll be bidding against him/her on the 50% price drop when and if it happens but probably it’s all based on theoretical lunacy.

      • Sorry Professor CPA, I dropped your class because there is no informative value. Good luck!

      • You give too much credit to What? He reads a lot but does not partake in anything economic except copy and paste…but he is good at that! Those who cannot do, teach…he is all theoretical without real world experience. He likes a good argument because he has some sort of oppositional defiance disorder that he likes to work out on this blog…blah, blah, blah…really another What? post, I can hardly wait! You know he has to comment on everything and get the last word. So predictable.

      • @Christie: If I recall, didn’t you make your money form flipping and rehabbing? Didn’t you mention before that thanks to flipping and real estate, you were able to raise your children all on your own because of the profits you made in California real estate? I’m curious, where did you invest and what kind of flips did you look for? I’m interested in the path you took because it does sound appealing to me. I’m sure other readers would like your guidance on this as well. Thank you.

      • Meg, I’m a day trader, yes if you know how to do it it is very profitable.

      • Meg, I don’t flip but I buy and hold and sell when timing is right. I bought California condos in Orange County 2012. That is when real estate was in an uptrend. I bought several 150,000-200,000 cash, rent them 1400-1800 I am keeping them for cash flow as of now. I am a day trader so that’s my main revenue source. The condos are just cash flow and diversification. Each condo has appreciated 20-40%.

      • Christie, you are sooooo funny…

  • Thanks DHB! Why would anyone want to pay that kind of money to live like that? I wonder when the insanity will stop?

  • I got excited when I read the title, I thought you found a home for 1MM in San Marino. Only to see you found one for over 1.5MM.

    This market is a complete train wreck. It defies logic and financial prudence. Just be sure to take out 100% loan so you can put it on the bank when the music stops.

    The question is not if the music will stop, but when. It may go on for years and the Asians buying in this market don’t have any plans of selling. Generations of families will live in these homes.

    I’m over the high prices. Waiting for the prices to drop has been a waste of 10 years. Nothing is going to tank until we have 15% interest rates and 20% unemployment. Until then if you feel the draw to be a homeowner you need a plan B.

    No one said life is fair.

    • http://time.com/2852740/china-millionaires/. This article explains where the supply of homebuyers with the means to buy these so-called overpriced homes will come from. Up 82% in the last year! Arcadia and San Marino are magnets for Chinese buyers, as is the West LA area. LA prices are still a bargain compared to NYC or SF. There’s still a lot of room for price growth as long as there’s a supply of buyers with the will/means to overpay, which is unfortunate for traditional buyers.

      Plus, most homeowners in overpriced desireable neighborhoods in LA aren’t moving, because most can’t afford to. I was driving through the Westwood/Rancho Park area yesterday, where the average home price is about $1.5M and noticed that a good majority of the homes are old, in seemingly poor shape, and most have inexpensive older cars parked in the driveways and on the street in front of them. These folks have probably been here for 10+ years, bought at bargain prices and refinanced recently. They are probably frugal, hence the lack of luxury vehicles and exterior home upgrades. They are probably middle-class families that can’t afford to upgrade to a better house/neighborhood, unless they move to another state. This area I mentioned also has a highly rated public school, so a lot of buyers are stretching themselves thin to get into the district. And a small subset of buyers are doing tear downs and putting up McMansions, which seem out of place in this area. As long as supply remains low and the foreign money supply remains high, don’t expect a price drop anytime soon.

      • Isn’t it rich? Are we a pair?
        Me here at last on the ground and you in mid-air
        Send in the Chinese

        Isn’t it bliss? Don’t you approve?
        One who keeps tearing around and one who can’t move
        But where are the Chinese? Send in the Chinese

      • I was talking to a friend of mine who lives in Shanghai. He was telling me about the attitude Chinese have toward investments in housing – the price you pay is the baseline for what it’s worth, period. This tells me that a lot of people there don’t really understand market dynamics and that just because you say the price is x doesn’t mean the price is actually x.

      • ernst blofeld

        People should understand that the hot money coming from China is coming to an end. Earlier this spring the Chinese government made anti-fraud crackdowns top priority. Anyone who thinks that hot money from China is safe from being clawed back needs to remember that with $1.3 trillion in U.S. debt China has quite a bit of leverage with the U.S. government.

        In the meantime, for anyone looking to buy in the San Gabriel Valley good luck…

      • Brain Of England

        That’s a poetic moment What? Yes, the Chinese and their money never runs out, apparently.

        Here’s a hilarious quote from an Estate Agent in London the other day: = “It is a reduction in the asking price, but not the underlying value.”

        To repeat: “IT IS A REDUCTION IN ASKING PRICE, BUT NOT THE UNDERLYING VALUE”.

        Sorry to shout, but just wanted to get it noticed. Hehe.

        http://www.dailymail.co.uk/news/article-2674977/Londons-cut-price-mansions-How-series-super-prime-houses-available-millions-original-asking-price.html

        Perhaps some indications of softening at the crazy insane joke trophy home end of the market.

        Also good response by TiredOfWaiting about ‘whining’.

      • I'm Not POTUS

        “the price you pay is the baseline for what it’s worth, period.”
        That should be the motto for all Central Bankers because that is all they are trying to accomplish. All fiat money everywhere in all denominations, all live by the sword and die by the sword together.
        Did anybody here notice that Subway has dropped the $5 foot long song. The new normal is $6 for the monthly special. Let’s start a pool on when $7 comes up.
        There is no going back with fiat. It is only straight ahead, full speed for the edge of the cliff. Just because you are a Lemming that can do math does not mean you can turn the herd.

    • “Nothing is going to tank until we have 15% interest rates and 20% unemployment.”

      You already have 20% unemployment if you count those with no job and unemployment benefits expired. It is even higher if you look at all part time jobs paying minimum wage.

      • I'm Not POTUS

        And under no circumstance should you look at the age distribution of labor. Where you realize that the only growth that has been sustained for the last few years is for the age group that is supposed to be retired, you will need Depends more than they do.

        What is the true rate when people who shouldn’t be working are and the ones that should aren’t?

    • where'd my username go?

      We’re not stopping until we reach Canadian levels. USA #1!!!

  • One of the partners at my wife’s new place of work said that if she bought a place in San Marino, she would provide free baby sitting for us. Yes, this 1.6MM house was the cheapest place we could find. No, we didn’t buy it. Find a much larger home for less in Sherman oaks.

  • So you’re basically buying the dirt and you have to pay to remove the debris sitting on it. But you know, they aren’t making any more of it.
    Buy now or be priced out forever.
    Real estate only goes up.
    The population is only increasing.
    “I made more just sitting in my house last month then I did at my job.”
    California – so many optimists. It must be the sunshine.

    • Welcome to the dark side! A tear comes to my eye every time I hear these words uttered…

    • You must be in Beverly Hills cose 9 million home owners are still under water since 08.
      as for “population increase” more people less wages earned = less demand for single family homes greater demand for multi family dwellings (condos ) .
      what exactly is happening in Commifornia.

    • Tired of the BS

      Don’t forget…

      Everyone wants to live here and this place is different.

  • Better buy that San Marino house NOW because in 5 years, that place will sell for $4.5mil!!! You know, because housing is going to keep going up up up like it has because of that special SoCal RE VooDoo.

    • No Voodoo needed! Read Marcia, Marcia, Marcia’s (Brady Bunch) comment above for the real “facts” why it will be worth $3,000,000,000,000.00 in the near future!!!

  • The problem, you can’t rationalize such prices for such homes. How could you reconcile that you bought a 2 bedroom 1 bath 1950′s home or pay 400k more to get a small additional bedroom and bath.

  • This is not unusual for a country that has no middle class. Many of the folks that buy in those areas have incomes that have been going up with inflation for decades. Unlike the middle class that used to exist here that once had incomes that would raise with inflation. Remember that? Wow. Also, the folks that our corporations and government sold out to, mainly manufacturing, are diversifying their investments.

  • Facts and Feelings

    I’m looking out my window on this sunny Southern California Sunday to see that no volcano has formed to spew lava that would ultimately form new land to build on. You are so right, Marcia! It is about the precious, limited coastal California dirt. Obsessive focus on “crap shack” homes made of chicken wire, termite-ravaged wood, and stucco mud detracts from the basic underlying problem of not enough coastal California dirt on which so many blog readers would like to live. We want less expensive homes? There’s a lot of cheap California desert dirt points east. And as Sean above correctly states, no one said life is fair.

    • Tired of the BS

      Hey Doc, looks like you can go ahead and stop posting, close the blog as we now have confirmation that this place is different and everyone really does want to live here.

    • You are correct! The empty land would cost more if no house would be on it. The cost to demolish decreased the value of the land.

      This is the reason it sounds so ridiculous to some to pay over a million for a crapshack. People mix the 2 together in their mind and then nothing makes sense.

      For example in Coeur D’Alene, ID I saw empty lots of only few thousand sq. ft selling for close to $300,000, with no view to the lake or mountains just for being in an area of high demand in downtown. Some “dog houses” on the same street sold for the same price. It was not the house but the land. If land in ID sold for that much, what about coastal land in CA?!!!….

    • OK, but there is a lot of coastal housing. All the way from Santa Barbara to San Diego, maybe not all of it right on the beach, but pretty close. They also have coasts in a lot of other countries too now. Regardless, does this explain why housing is so expensive in the Sacramento suburbs like CalGirl reports? Or why I read an article a week ago about house prices being out of reach in world-class area like Bend, OR or Oakdale, CA? Could it be a bubble or some other dynamic?

  • In the village of Bronxville New York a few miles from Midtown Manhattan, there are several co-op apartments in one particular complex called Stoneleigh plaza for sale. Each one could blow away any home that was profiled here & costs about the same ore less & you get more square footage four the money.

    One such unit is in the Eastborn building. This unit is on the market for $799,000 & is a 3/2 with 1875 sq ft. It’s a ground level unit, but you wouldn’t think so once you stepped inside. It was two ajacent apartments that were put together & as a result, there are some interesting querks such as the kitchen being almost ajacent to the master bedroom instead of the dining room wich is across the entire unit, but works if you want a midnight snack. LOLL One word that could describe the apartment – “breathtaking.”

    I should note this unit was on the market in April, but was removed soon after I went to an open house & it was relisted quite recently without any price action.

  • My goodness. If I had that kind of money to spend, I’d buy a fabulous house in Agoura and really enjoy it. I can’t imagine why anyone would want to waste all that money on these postage stamps.

  • Well well well, where I live in sunny and bubbly California the median sales price just dropped $105,500 what makes for a -12% drop y-o-y.
    Number of sales are down -59.9%! y-o-y!

    Now which one of you clowns where saying sales and prices are going up 30%?!

  • The fact that never gets reported is the sheer number of people with generational wealth. Crazy wealth. Drive down any city street. See all those buildings? Look on both sides of the street, nothing but buildings as far as the eye can see. Every city, every town. Big ones little ones. Guess what? Somebody owns that building. Somebody owns that land, and likely has for decades, making fortunes from rents year after year. If they have kids, they will help buy the home for the kids, as well as put them through college.

    In the 80′s I used to watch all the new cars driving on the freeways and I would ask myself ‘who has all this money to have all these new cars’? Same thing with the homes. I couldn’t understand it. Is everybody rich but me? And that was way back when.

    Now I realize that while there are a great many people who can’t afford homes at this time, there are just as many that can afford homes, and second and third homes, with great ease. More people than we realize. And that’s the disconnect here.

    • you are correct – and I am one of them as I just inherited almost $1M from my recently deceased mother. And I rent a lovely large old house in Sierra Madre and will continue to do so because my rent is so far below market rate it is laughable. My landlady (who lives in Berkeley) knows this but LOVES me because I take good care of the garden! Has never raised the rent in 6+ years. I’ve got golden handcuffs alright. Just want to move back to northern california anyway…

      • I'm Not POTUS

        I hope that lovely Landlady is in very good health. But, to play it safe, you should probably become bestties with the spoiled brat that will inherit your place.

    • Somebody please define median for our friend Marco…

      • that’s you problem What, you’re looking at the median income. The money that comes in to buy the homes does not come from that zip code or any zip code nearby. It’s surplus money from some rich, who lives out of the area.

      • Really?

        “Now I realize that while there are a great many people who can’t afford homes at this time, there are just as many that can afford homes…”

        You pretty much defined it with this statement. So what you are saying is that there are just as many rich as poor? That is what your statement says when you say “just as many”…

    • Yes Polo…everyday I drive by a restaurant that caters to so called middle class and soon out of business, then you drive by the high end places where steak is $50 and up plus sides, packed all the time never seen one yet fold the tent.

      A real estate agent just Sat told me she has a hard time getting financially comfortable people to tour under $1m dollar houses they say, waste of time they can’t be much good?

    • Tired of the BS

      You’re right, someone does own those Kmarts and Sears.

      • You’re right, someone does own those Kmarts and Sears.

        Oh, lets see… Simon, GGP, Macerich, Westfield, Kite Realty, Madison Markette amung others.

        Those in Southern California should recognise the names Westfield & Macerich as they are headquartered on the west side along with Caruso Afiliated of Americana @ Brand & The Grove @ Farmers Market fame. Although to be fare, Westfield’s world HQ is in Sydney & the US operations are in L. A.

        There’s a lot of money to be had in real estate, but you must be smart & not over extend yourself. That’s what happens to a lot of developers large & small. Names like GGP & Turnberry have gone bankrupt & needed to reorganize to survive. Home owners need to remember to stay focused & not let ownership get to them causing fullish decisions that will hert them down the road.

    • i got my piece of the pie … gotta make sure it doesn’t shrink … my way? no wife no kids … just enough to spoil my nephew

  • (A shrinking middle class + expanding population + supply + demand) == reality. I can`t think of any thing funny right now.

    • Financiers + Government Regulators + Politicians + shrinking pie = Zombie Host

      Zombie Host = the appearance of living long after the body has decomposed…

  • Use common sense. What do you think these houses are worth right now?

    My guess is a little over 1/4 what they are charging now.

    CASE CLOSED or go look elsewhere.

  • I think with every generation that have hung onto properties over the years certainly only makes property limited for the next generation. Since a property is a permanent shelter that could go on forever the only thing anyone can do is build elsewhere. Of course this all depends on our economy can maintain a living standard for the next generation. Regardless of what the economy does location will be the deciding factor that will dictate if people will part with their real estate or keep it going.

  • Just a million for a CA home? Grab me a few!

    • Tired of the BS

      “The estate tax has been historically part of our very fundamental belief that we should have a meritocracy,” – Hillary Clinton, December 2007

  • Its funny I keep hearing about people talking about housing in generational terms and population growth. Houses in California are made of wood and not made to last. Few homes built today will be occupied without total rebuilds 100 years from now. Most of these pieces of heaven will disappear over the years. Give your house to your kids or grand kids if you want to, but eventually they will move else-wear for jobs, ect. Many people in the future will not even have grand kids. Around 20% of women born in the US don’t even have kids. The more educated and wealthy your kids are the less likely you will have grand kids.

    LA like all places will continue to grow-up. As the core cities spread property prices rise. Eventually the land becomes more valuable than the house on it and the house will be bulldozed. I hear more and more about people doing tear downs. High rise apartments and other high density housing is the future. No need to create more land when you can create more units on it. Some people try to stop development, but it will keep soldiering on. Even in Santa Monica. I would not worry too much about not getting your piece of land. The job issue would be a better source of worry.

    DHB has picked some real gems. There are more affordable properties coming on line in many areas. This didn’t happen last year as much. Comps in many places will probably drop and lead to lower price estimates. I think we face some lower prices year over year. I hope it doesn’t spook the market like last time.

  • I see Panem may come to existence soon.

  • Just want to point out that this current echo bubble is not restricted to CA or “prime” locations. It is nationwide in metro areas. This discredits the foreign buyers, “we have something special here” arguments. Unless you think people are taking barrels over Niagara Falls to buy “prime” housing:
    http://blogs.marketwatch.com/capitolreport/2014/06/16/buffalos-housing-market-is-looking-a-lot-like-san-franciscos/#lf_comment=178257623

    • bler_not_blert

      Eh, that seems a bit of a stretch to me. I suspect Buffalo just wanted some free publicity in the press (“We’re hot too!”) The fundamentals for Buffalo aren’t great but aren’t particularly crazy either. I like the commentor who asks if he’s reading the Onion.

      Median home price to median family income is less than 4:1 (110k:31k – both very low by national metro standards), and compared to 2000, current median home prices have increased by only about 80% (4%/yr).

      Given that some of the rise can be explained by low interest rates, it’s a tad high, but not especially crazy. By comparison, Portland OR has seen increases of 110% over that span, and moreso the ratio of median price to family income is 6.2:1.

      And average list price in Portland is a whopping 9.4x median family incomes, though obviously the mean price is subject to skewing from 7 figure listings. Average list price:income for Buffalo? A shade under 5:1. And again, the base is so low that you only need to talk the seller $20k off asking price to drop right back down to 4:1 on the actual sale.

  • Change in ones life takes time, the housing market is one of those chances, that both buyer and sellers are reluctant and resisting each other, until both comes to terms that 2005-2006 selling price and 20008-2009 buying price are not returning,

    Buyers and sellers sit and wait for what I don’t know, the message is you have good credit, job, and down payment like any one should when buying, and the seller sell at fair market price, to get it done. Short sales and most bank owned are history, Underwater sellers are taking the hit and that is shrinking, sellers need to move on in life also, the big get of profit forget it folks, so there it is stop the 100 year war now and buy and sell to each other.

  • Sunset Park, bwahahaha! That’s the ghetto / “poor man’s” area of Santa Monica south of the 10 freeway, near the Santa Monica airport, Venice, and Mar Vista. “Only” $1.2 mil for that shitbox – and given the stupid funny money of Silicon Beach, it will more likely than not go for a LOT more than that!

    Oh and good luck remodeling, rebuilding, re-anything in the People’s Republic of Santa Monica – they pretty much make you take in a homeless crackhead or three in order to get your plans approved…

    • son of a landlord

      >> Oh and good luck remodeling, rebuilding, re-anything in the People’s Republic of Santa Monica – they pretty much make you take in a homeless crackhead or three in order to get your plans approved…<<

      Not true. I must pass a DOZEN or more construction sites North of Montana whenever I'm up there. Even today, at least a dozen. And it's not like I passed by every street.

      Lots of crapboxes being torn down North of Montana, with larger houses built to replace them. Not only in Santa Monica, but in the Brentwood portion as well.

      Money is no object to the people who live up there. Getting city permits is also no problem. If they have to pull strings to speed along the permit process, they can afford the attorneys to do it.

      • North of Montana is a completely different animal. As you state, they have PLENTY of money to bribe, errr I’m sorry “grease the wheels” to get what they want.

        Sunset Park and the other “poor” parts of SaMo though, not too sure. I know a few house poor SaMo residents who have shared the absolute hell they’ve gone through attempting remodels and expansions on their modest 20′s, 30′s, 40′s etc. tiny shitboxes and beach bunghole bungalows.

  • Oakland’s median sale price up 121% in the last five years

    We all know that Oakland’s market is soaring, but MLS data compiled by Red Oak Realty shows just what a difference five years can make. Between January and May 2010, the median sale price for single-family homes in the city was 203K. In the same time period in 2014, the median price was $449K—a 121% increase.

    http://blog.sfgate.com/ontheblock/2014/06/30/oaklands-median-sale-price-up-121-in-the-last-five-years/#24591101=0

  • DHB-

    The use of percentages rather than raw numbers can sometimes skew perceptions drastically. I bring up this point because I love looking at data in pocket markets. This is in stark contrast to what is shown on this blog. Here are some examples of a market I am consistently involved in.

    6/2013 median list 649k
    6/2014 median list 749k

    6/2013 median sold price 587K
    6/2014 median sold price 674k

    6/2013 # listings 132
    6/2014 # listings 161

    6/2013 days to sell median 27
    6/2014 days to sell median 36

    6/2013 number of sales 41
    6/2014 number of sales 37

    6/2013 median days to sell 27
    6/2014 median days to sell 36

    If one were to look at these numbers from a percentage standpoint of 2013 v. 2014 it would appear the sky is falling. However, based on a view of numbers instead of percentages, coupled with a “boots on the ground perspective”, the transactional differences appear far less drastic. I am curious to know everyone’s thoughts about this.

    • I am not sure what you are trying to present here but my take is that this does not contradict higher prices, higher inventory, less transactions and longer time on the market. Given that we do not know the history like how was this market in 2005 or 2000 or 1987 we have no context. We also have no idea of any other dynamics of the market. That all said, it appears to be in-line with what we have been reading from the good doctor. Not sure that you are making a point. This is how statistics look at a granular level. What is important/informative is how the holistic “market” is “performing”. The 29 more units on the market times a large number is what should concern folks. The 4 less sales times a large number is what should concern folks. Hell, if you break it down to a single block you would get even lower numbers but I am not convinced at how informative that would be…

  • I was raised in southern Cal. Moved to rural coastal Oregon in ’85 to look for work and start a family. Absolutely smartest move ever. And it’s still here. I’ve been a real estate broker for 26 years now living in Roseburg, Oregon. One of those best kept secret small towns. Great climate! Excellent wine growing area, (second only to Napa Valley as per recent Wine Spectator Magazine article), beautiful valleys, mountains, and the Umpqua River flows through town! Free quality concerts. No graffiti, clean parks, gorgeous air and water. Friendly people! 21,000 city pop, another 10,000 outside city limits. Google Roseburg. Google Douglas County waterfalls. Got $300,000? I showed an absolutely beautiful home on the Main Umpqua River. 3 acres. Super fish fishing hole. Check out this area and write me! hthomasmanning at msn. come!

    • i would love to leave shitty so cal for Oregon – but would also have to leave my USC professor husband…

    • You have got to be kidding me. Many of our closest friends are from OR. Roseburg is a notorious crime-ridden burg with more than it’s fair share of drugs and other unsavory activities perpetrated by many of the 80% of its residents who have no higher education. No quality employment, high unemployment, lack of quality education for kids. Not a good place to be.

  • Although the Calif Assoc Realtors is often accused of manipulating statistics, here is an interesting slide show “2014 Survey of California Home Buyers.”

    In another sign of recent market competitiveness, more than nine in 10 buyers (91 percent) made one or more other offer, with an average of 3.6 offers in 2014, up from three offers in 2013. Additionally, buyers viewed a median of 20 homes in 2014, up from 10 last year. Given the limited supply of homes available for sale, fewer buyers were satisfied with their home purchase than last year. Only about half of the buyers were satisfied with their purchase in 2014, down from two-thirds (66 percent) in 2013. Nearly half (46 percent) of buyers felt they “settled” on their home purchase in 2014, up from 34 percent.

    Buyers cited price decreases (54 percent), receiving a promotion or raise (34 percent), low interest rates (29 percent), and favorable prices/financing (17 percent) as the top reasons for purchasing a home.
    Echoing a recovering housing market over recent years, buyer optimism of home prices also continued to improve, with the vast majority of buyers (81 percent) believing that home prices will rise in five years and 60 percent believing that prices will rise in one year. This is an improvement since 2009, when only 35 percent of buyers believed that prices would rise in five years, and only 8 percent who believed prices would rise in one year.
    Higher down payments are still the norm in this market, with buyers putting an average of 28 percent down on their purchases.
    The average down payment has been higher than the traditional 20 percent since 2009. More than nine in 10 buyers (92 percent) obtained a fixed-rate loan, a 23 percent increase from 2009, when only 69 percent obtained a fixed-rate loan, reflecting low rates and the desire for certainty as the market gets back to basics.

    http://www.scribd.com/doc/227207434/2014-Understanding-Today-s-Home-Buyer-Webinar

    • I stopped reading after “Although the Calif Assoc Realtors is often accused of manipulating statistics, here is an interesting slide show”…

    • Tired of the BS

      This finely provided example demonstrates their adeptness at manipulating narratives.

      For example, the use of weasel wording…

      Recent market competitiveness really means desperation and buyer optimism is actually buyer capitulation.

      • Hello @tired of bs if home prices do not ‘crash’ in 2014 is it still ‘desperation’ or ‘capitulation’ ?
        With so many 20% or more down payment buyers this year it is hard see (per previous slide show I posted) where the sudden drop (that most on this blog are hoping for) will come from.

      • Tired of the BS

        What does one have to do with the other? People can make desperate plays and capitulate to manipulation for an unknown amount of time. I’ve no idea what the future holds and never claimed to. Can’t speak to what the “others” are claiming or “hoping” for.

  • Notice, with in the past 10 days many homes removed from market, seems like agents were getting the” why no lookers from their clients”, so they told them take it off to fall, I presumed.

  • Hey Doc:

    You are moving up in the world, David Stockman mentions your blog on his Contra Corner Blog.

    Link here:
    http://davidstockmanscontracorner.com/california-housing/

    • Brain Of England

      An interesting read. Thanks.

      …’they are just at the leading edge of the renewed speculative mania that has been touched off by the Fed’s latest and greatest monetary inflation.’

      Stimulus, money printing, rates floored, global intervention – and no price discovery… just prevent market participants in the real economy… younger people… from opportunity unless they sign up for jumbo debt. Too many VI’s only looking at what their homes should be worth.

  • The insanity will cool down when China puts a stop to it.

    If you check the tax records of all these homes that were recently sold, almost all are bought by overseas chinese.

    They hire an agent to rent it out and handle the maintenance.

Leave a Reply

Name (*)

E-mail (*)

URI

Message






© 2014 Dr. Housing Bubble