Median home price in San Francisco hits $1.42 million:  A standard condo in San Francisco is now selling for $1.15 million.

San Francisco housing has entered into a new reality.  Tech money and foreign cash continues to flood the market and pushing prices to astronomical levels.  The typical San Francisco crap shack now will cost you $1.42 million, a new record high with condos going for $1.15 million.  The city is entering into escape velocity of gentrification.  You have older Taco Tuesday baby boomers with rudimentary tech knowledge that bought decades ago living next to a new generation of wealth and tech savvy professionals.  You see this as well in Los Angeles.  Some real estate “experts” barely have a working understanding of tech but definitely know how to navigate to Zillow to view their inflated prices. San Francisco is such an odd case study.  A city that outwardly states it supports the poor but when you look at prices even making $100,000 a year makes you part of a new high income poor – at that income level a sizable amount of your net income is going to go to simply paying for housing unless you want to be part of the mega commuting culture that is now emerging in California.  What is going on in San Francisco?

The new ultra rich in San Francisco

It is hard for people to wrap their minds around the cost of housing in a place like California.  Not so much that it is expensive, but once you look at the property and price you realize people are paying high prices for crap shacks.

Take a look at prices in San Francisco:

1968-2010_US-CA-SF_Median_Price

And people are still active and buying.  You’ll notice that prices for the U.S. and California overall are merely back to their previous peak price points.  Adjusting for inflation, things are moving along more carefully.  In San Francisco, we are in a different dimension.

You have foreign money flooding the market and you also have dual income high tech households trying to buy up what little inventory exists.  This new class of wealth would rather live in a million dollar dump than spend horrendous hours in a commute.  The new sign of status is living near your work, not a McMansion out in the middle of nowhere.

And properties are moving along nicely in San Francisco even at a median price of $1.42 million:

property sold

What is telling is that the media is now in unison championing why real estate is a great buy, even at these prices.  Forget about the multitude of factors that now face our economy including jobs that don’t last for a lifetime or the necessity for mobility with the new workforce.  You have the Taco Tuesday baby boomer mentality where people want to stay put forever and assume everyone is going to follow in their same footsteps.  Apple wasn’t built following the old.  Facebook wasn’t built by following the old.  Tesla wasn’t built by following the old.  This generation is different and their need in housing are reflecting a changing tone.

Beyond the obvious, even at $1.42 million most are not going to have the money to buy these properties.  So what does this do to the current market? What does it do to neighborhoods?  Or how about the local school systems?

I think people just assume that high prices are always going to be part of the equation in California.  But recent history shows that we go in booms and busts.  For those that seem to think the market can only go up they should be out in the market buying real estate.  That is their position.  For those renting, you are already taking a position.  And many parts of the state are becoming renting majority counties.

San Francisco real estate continues to go up.  Who is buying right now?  Funny how those buying real estate at these levels don’t see it as speculation but think stocks or crypto are “crazy” – everyone picks their “investment” product and the market seems frothy across all areas.

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456 Responses to “Median home price in San Francisco hits $1.42 million:  A standard condo in San Francisco is now selling for $1.15 million.”

  • NoTankinSight

    Given LA and SF are 60-70% rental markets..

    The vast majority of people in both locations have no choice but to rent

    Home ownership rate is in the 30-40% and has been for a long time

    • Renting is def a smart way of saving money. Less liabilities, don’t have to put 200k down and you are saving monthly. If you are really smart you live with your parents until 40 or so and invest in crypto. You might pull in a 10x and be a millionaire. Someone who bought an overpriced crapshack and tied up all his money cannot profit from crypto gains and will never catch up with the renter. Unless he somehow finds drug money in the parking lot.

      • If you are really wanting to do better financially, leave California. My husband makes less than half what he made in LA and now we are in a beautiful huge house, paid cash, in a very nice area. In LA we rented. Living in CA is for lifestyle, not to save money.

      • Spoken like a true Millennial! You must be popular with the ladies.

      • Kolob,
        I am doing great financially. Why should I leave? All I need to do is wait for a nice recession and housing crash.

      • Dean, yea I
        I Am married. We have lots of cash and no debt. We have no financial stress, can travel anytime we want etc. So I guess you are right I must be popular and have been successful with my strategy so far.

      • Living with your parents until you’re 40 is ludicrous. I hope you’re trying to be funny to make a point. Otherwise it would be like saying, “Sure the guy got put in prison for thirty years for something he didn’t due, but now he’s out and they gave him 10 million dollars compo. Well no amount of money makes up for that time lost and no amount of money, even a billion dollars would make up for what you missed by living with your parents, instead of experiencing life.

        After all if I were to tell you you had 24 hours left to live, you wouldn’t say “Gee if only saved more money,” no you’d cry over things you missed out on and now will never do.

      • AntiCoyte,

        Trying to follow…..what has experiencing life to do with living with your parents? Think about it, if you buy an overpriced crapshack and are deep in debt you have financial stress and might lose that house during the next recession (7 mio lost their house during the last bubble). If you live with your parents you are probably debt free and can actually do stuff in your life (travel, nice cars, vacation, go out, invest in crypto and stocks). You are also flexible and if the RE market crashes by 55-75% you can buy a normal priced house. If you already bought high you are out of options.
        Maybe we have a diff. Definition of experiencing life. Being a debt slave is not experiencing life. I feel very sorry for you. Somehow you had really bad mentors in life and haven’t gotten a chance tonexperience living a debt free life? Maybe it’s just normal for you to always be in lots of debt?

      • Millennial is doing great financially but is desperate to “own” a house. That’s why he should leave. There is no guarantee prices will drop as low as he expects.

      • Leave?? Where should I leave to? I like California. There are beautiful parts in this state. LA and the Bay Area are arm pits but there are other nicer areas that are less crowded.
        Desperate to own? Not at all. I would buy if it crashes but if not, renting is much cheaper. I am on this blog because I want to continue to learn about the market, manipulations and scams. The entertainment is the icing on the cake.

      • Of course you’re desperate to own and the excuse that you’re here for the entertainment is the big lie told by both those desperate to own and those desperately hoping CA housing prices stay inflated.

      • Okay. Quick story. In 2014 I almost bought. The realtard (supposed to be a family friend) was the biggest liar under the sun. The lender he suggested was no different. We ended up not buying and I started researching online. I also tried other realtards. The point of the story. It opened my eyes. If buying made any sense or would benefit me, how come everyone had to lie in order to get you to sign? I found this blog and other websites, read books, blogs etc. I am forever grateful I did not buy and found this website. Yes, my goal is to buy, but not until the market crashes. Call it desperate or whatever you want. It doesn’t matter I am Not buying until we see a severe crash. Rest assure I will share it the minute I sign that deal.

      • Millie, so what is the story?

        You only said you did not buy and everyone was a liar.
        Did not say the reason you did not buy or what was the lie told to you
        Often times when you have to make a stressful decision you fell like everyone is lying/witholding info from you – while in reality you are just crumbling under the weight of the decision. Same thing if something goes wrong with credit score,final payment, etc…calling everyone around a liar is typically a flag about your own approach to life

        Agents and loan officers are there to get things done. They should not advise you about directions of the prices, etc…

      • I am glad you ask. Put yourself in my shoes for a moment: I was just a few years into my career, good job, good money, a promotion later, wife has a decent job, had money saved for a down payment, 800+ credit score. We thought, okay let’s buy a house. Back than I was not thinking about rental parity, prop13, etc. I was very much pro buying. My parents bought early in their marriage and have several rental properties.
        the realtard, supposed to be a long time friend of my family, figured out quickly that I ask questions and do my homework. That’s just how I function. Anyways, I guess everything took too long for him. In my mind, if you make the biggest purchase in your life so far you want to learn and compare as much as you can. I am happy to elaborate on his lies if you want. But the point of the story is, it opened my eyes. If realtards, especially if they are friends of your family have to make up so much shit and lie in your face multiple times than you ask yourself why? The answer is simple. Buying makes zero financial sense. If it would make sense, why lie? To get thinks done you say? Nothing got done in the end, and them making up these lies resulted in me getting suspicious about everything they said. Thank goodness this happened. If I would have bought, I would have had to pay 700 dollars more a month than what I pay now as a renter for basically the same place. Plus a significant down payment. Without this guy and his lender I would have never researched so much online. I found blogs like this and websites explaining how renting makes way more sense because during s bubble you have no rental parity. You yourself proved it as well. (Pay 200k down plus 1500 more a month than a renter).
        Than I thought, well, I will still keep looking, tried different realtards and they were all similar. The only real estate agent I found that seemed good was a young kid. She said because the buying experience was so horrible she decided she can do a better job than that so she became an agent. Unfortunately, she gave up
        Two years later. I guess in this market you can only be an agent if you lie like there is no tomorrow and hope to find a stupid buyer that does not do basic research. The funny thing is, if the guy would not have lied that much I would have probably bought (I could have afforded it). So I am forever grateful, that it went down that road. Now I understand the game. You only buy during a recession when prices are down 55%-75%. Until then renting is a smokin deal.

      • “…when prices are down 55%-75%”

        LOL

      • I’d suggest you buy when everyone is not buying, you sell when everyone is not selling. Ignore whoever you think they are lying to you. Do your research and think about your affordability. There is no time that is not a good time to buy. It depends on your purpose of owning a property. Like us, we have big dogs so there is no option that we can sell at high price, move to a rental, and wait for next crash.

      • 123,
        Dude…
        “ There is no time that is not a good time to buy.”

        I could not disagree more, it’s all about timing. Right now is the worst time in history to buy a home. It’s massively overpriced. Wait for the next recession and buy half off. Buy now and you will never recover from this mistake.

        Also, it’s not about affordability. I can afford to buy now. It’s about patience, buying opportunity and opportunity costs.
        I like that you have dogs. Take em for a walk and post less financial advice-maybe?

  • Not a great idea to build real estate over a big earthquake fault. Doubly not a good idea to make that real estate the most expensive in the country. I wonder how many people have insurance? Even the shitty government earthquake authority insurance?

    • It’d be so sweet if we get a severe earthquake. That would help to correct the market. But we might not need it. A recession will come soon, interest rates are going up and millennials are not buying. All signs point to crash.

      • Greengroovymom

        Millie, wait til the wife gets pregnant. That renting shit gets old real fast when you have kids. Most crave a big yard, neighborhood play dates and sidewalks to learn to ride bikes. The wife will want to decorate and well ya know…nest! Others on this blog will agree.

      • Grandma,
        Why would a renter have no access to playgrounds, parks or a backyard? You can have all of this for less money. Renting from s private landlord is much cheaper than renting from the bank. I don’t expect you to follow this, crunch the numbers or have any clue of what opportunity costs mean. You are spoiled since when you bought it was dirt cheap Compared to now plus you don’t pay your fair share when it comes to property taxes. You are a beneficiary of the housing bubble and think you are entitled to participate in this discussion. Wait until we raise your property taxes to what millennials have to pay then you have room to talk.

    • No matter where you build there is the risk of a natural disaster. Tornadoes in Oklahoma, Hurricanes in Florida. Earthquakes in CA. Tsuunamis in Oregon. And on and on.

      • Yes, we are also due for a huge asteroid strike, not a good idea to build anywhere right now

      • @surge

        Asteriod strike! Hahahahaha, sorry but that was hilarious. Needed a good laugh this morning. Thx

      • You laugh but I grew up in a small town in south suburban Chicago, Park Forest and a meteor actually crashed through the house not far from where I grew up and injured the occupants.

      • Not really. Some areas are more or less prone to natural disasters than others. A quick search on google will reveal there is a lot of analysis showing CA and LA to be more prone than some other parts of the country and world.

  • What goes up will go down and the other way around. Always did, always will. Nothing new under the sun. Everyone knows that. The only debate is on the timing and amplitude. Both of these depend on so many variables that not even the people from the FED can predict. I don’t know that either.

    I’m just saving steadily and I’m patient like always. I can afford to do this because I have a house I like and live in it. All I’m looking for are investments with good ROI.

  • How come cities run exclusively by socialist Democrats – who claim to be for the little guy – are always the worst places for “the little guy”?

    Things that make you go…Hmmmmmmm……

    Just keep voting Democrat y’all and everything will be just fine. I hear Cuckerberg has a super cool idea of Universal Basic Income for everyone in California. You get $1K and you get $1K and you get $1K. What could go wrong?

    • Seen this all before, Bob

      Yes, How come cities run exclusively by socialist Democrats are so desirable and have so many jobs that so many people want to move there and pay any price to live there?

      • Do go on….. LOL

        “In fact, in some parts of the Bay Area — including Santa Clara, San Mateo and Marin counties — already more people are leaving than arriving, according to the estimates released Thursday, which cover the period from July 1, 2015, to June 30, 2016. The same would be true in San Francisco if it weren’t for the high number moving in from abroad. ”

        Illegals are moving in, American middle class is moving out.

        3rd World Status: confirmed.

      • After the lecture I gave you on the previous thread you still did not get it. The word is not “desirable”, it is “demand”. Something can have demand without being desirable and something can be desirable without much demand or with a lot of demand. Calcutta in India and Mexico City, both have lots of demand and are far cry from being desirable.

      • Like Chicago? Detroit? Baltimore?

        I read that there’s a shit map of for San Francisco showing people where not to go cause the homeless are shitting on the side walk…..did a google search….here’s “A” link, it’s just the first one so don’t go off about the link….

        http://dailycaller.com/2018/01/15/san-francisco-defecation-map/

        What a lovely place to spend $1,400,000 to live …….for ~$6K a month you too can live in a toilet.

      • San Fransicko is not desirable, unless you enjoy stepping on human feces and seeing them defecate and spraying you.

      • Seen this all before, Bob

        I should have said:

        Yes, How come cities run exclusively by socialist Democrats are in such demand that so many people want to move there and pay any price to live there?

        Demand: willingness and ability to purchase a commodity or service

        San Francisco is not a prison. All of those people could move to the conservative bastion of Kansas but conservatives don’t create that kind demand for their cities.

        Why?

        I asked an engineer awhile back why he stays in the Bay Area.

        1) Family – He grew up there.
        2) Jobs. Conservative cities just can’t seem to offer the variety of jobs and high wages that the Bay Area or LA offer. Socialist Democrats seem to do a better job at this. His point was that if he makes 200K per year, 5K, per month in rent or mortgage (30%) is affordable.
        3) Weather. Many people living in CA hate snow. Even though many drive up I80 to Tahoe to ski and pay thousands to rent there.
        4) Activities, arts, theater, sports, clubs, are all available in the city

        Many are commuting an hour to their high paying jobs, and some have the willingness and desire to pay 2M to move closer and walk to work.

      • Toilets are also desirable.

      • Guys, you can discuss it all day long about whether SF is desirable or not…reality is: money and statistics speak and they say that people are willing to pay the current rent prices. If you think it is undesirable, it is undesirable to YOU and obviously desirable enough to others. Your only power is to judge what others consider desirable (they do not give a shit what you think).

      • Yeah there are no good paying jobs in Dallas Atlanta. All those Fortune 500 companies based in Texas and Georgia and N. Carolina pay like $10.50/hr.

        You people live in a separate world, both figuratively and literally.

      • Spending $5k a month on housing on $200,000 salary is only affordable if you don’t care to do anything else or save money. That’s roughly half your take home pay and the money you have left over will be used to buy things that have an increased cost because you are living in such an expensive area.

        My girlfriend and I make over $200,000. If we had to pay $5,000 a month just for housing it would seriously cut into our ability to save, travel, and do the other things we enjoy. Could we do it? Yes. Do we want to do it? No. We actually want to retire some day.

        After taxes, $200,000 only nets you roughly $127,000. Is it doable to pay $5,000 a month? Sure. Is it financially healthy? Probably not.

      • Surge is right in the way a child’s brain works. There are a lot of people in India and China and a lot of dumb money changes hands over there so always demand = desire.

    • Yup, give everyone $1k and rents go up $1k across the board. That’s how severely constrained housing markets work. Renters have little bargaining power.

      The James Henry Law: In certain kinds of constrained real estate markets, most new wealth creation goes to landlords.

      • It does not work like this. $1k is one time deal, rent hike would be for every month. That $1 will be blown on short term consumption and that’s it. Redistribution within system. No change.
        Now, if hypothetically taxes are lower, then rents/stuff will increase in prices (because this is sustained extra cash on hands)

      • NoTankinSight

        Sean’s point is accurate though.

        If you give renters disposable income it goes directly into landlords pockets with rent increases.

        With the Trump tax plan I expect rent YOY increases in SoCal to be Yuge in 2018.

      • That made me laugh out loud. Don’t you wish notankinsight, weird that that hasn’t happened for me at all. Since I started my career I had massive salary increases. Received several promotions but my rent has not increased a penny. Well, i certainly don’t show how much money I have. I drive an older Honda and whenever I get a chance to speak to my old landlord lady I tell her how hard life is and how I can get barely by, lol. I rent in an area where many struggle financially. If you live below your means for a decade or so you can buy a house in all cash during the next crash. That’s what I am doing and I don’t charge you for giving out my secrets. Over the years I learned just how dumb people really are. They spend less research on buying a house than on researching their next vacation. They believe anything their realtard tells them, buy with 3% down, switch employers almost annually and will be the first once to get laid off during the next crash. it ends with foreclosure or short sale. That’s when I come in and swoop it up for 55% below today’s “price”.

    • The funny thing is the city that went bankrupt, Stockton, is the first one to roll this out. I say lock up the supervisors and mayor.. If you have to file for bankruptcy you clearly don’t know how to manage the finances of the city.

      https://www.npr.org/2018/01/29/581674763/in-california-stockton-experiments-with-guaranteed-basic-income

    • I don’t see many Democrats moving to republican areas, but I do see alot of Texas plates in Ca. Funny thing about hypocrites is that they always make a judgement. Why not stay in the place they made crappy? How is that Texas and Oklahoma fraqqing going? Why not put up a house on top of that natural disaster? Also when a republican house goes down don’t think they are not near the front of the Fema line. They will take aid, but not offer it. Garbage.

  • This is a direct result of Fed funny money and artificially low interest rates. The inflation happened, in asset prices. As bad as it is, it’s still better than inflation in consumer prices.

    This real estate is also being paid for by people working in highly overvalued companies, due to the same funny money phenomenon. So if you’re a Tesla engineer, you’re getting a paycheck from a company worth more than GM, but will never make a dime, and spending it on a condo in SF. It’s not real money anyway, you may as well blow it on a crap shack with a toilet wedged in what used to be a broom closet in 1940.

    Such is the perverted environment that the central bankers have created.

    • +1
      Excellent explanation!

    • This line is pretty funny-

      “It’s not real money anyway, you may as well blow it on a crap shack with a toilet wedged in what used to be a broom closet in 1940.”

      I think it’s more than just “cheap and easy credit” as POH likes to describe. The credit may be cheap but it’s certainly not easy. Everything is income based underwriting and POH’s “exotic products” line is way over hyped.

      Definitely a combination of many circumstances:

      Low rates
      Foreign money looking to escape the east and SF seems to be a straight shot with climate that is preferrable
      Major tech money
      Building restrictions strangulating inventory
      Prop 13 keeping properties within the family for generations
      Boomers not retiring and leaving in mass

      So, it’s not just 1 major event; it’s a combination of different components which all lead to insanely high prices. Not really sure what can change it at this point.

    • Fair Economist

      Fed mortgage rate support is everywhere. The insane prices are only in a few, albeit large and important, metropolitan areas – something like SD, LA, SF, Portland, Seattle, Houston, Austin, Miami, Orlando, DC, NYC, and Boston. In most of the country rents and prices are well-aligned, indicating the current Fed activities are pretty spot-on for them.

      What we are seeing is a huge gap between a number of booming metropolitan areas and the majority of the country, which is still experiencing a weak recovery 10 years out from the crash. Fed policy can’t accommodate both and they are choosing to tune policy for the majority of the country and allow booms in the big, well-educated metropolitan areas. They can only have one policy so somebody is going to see a mismatch. Even if in the long term a more restrictive policy would be better (and that’s not clear) this is a democracy and you can’t tell the 200 million not in the boom areas they have to be unemployed to keep house prices down for the 100 million in the boom areas.

      • Thank you!
        A rare good post with an interesting idea.
        I wonder why lenders would not be able to do what FED can’t…adjust actual mortgage rates based on location (risk). This would be an interesting idea.

      • “Fed policy can’t accommodate both and they are choosing to tune policy for the majority of the country and allow booms in the big, well-educated metropolitan areas. ”

        Nice idea but I’ve much more cynical view to anything FED does: It exists solely to make owning banks (and other ‘too big to fail’ -banks as a side effect) even richer they already are.

        Nothing else matters.

        To that policy 1,6M average mortgage fits like a glove: It makes lenders filthy rich.

        So far I haven’t seen FED doing anything which would cause loss of profits to banks. Loss of property of people? A lot, they don’t care an iota of that.

      • ‘Fed policy can’t accommodate both and they are choosing to tune policy for the majority of the country and allow booms in the big, well-educated metropolitan areas. ‘

        Nice idea but I’ve much more cynical view to anything FED does: It exists solely to make owning banks (and other ‘too big to fail’ -banks as a side effect) even richer they already are.

        Nothing else matters.

        To that policy 1,6M average mortgage fits like a glove: It makes lenders filthy rich.

        So far I haven’t seen FED doing anything which would cause loss of profits to banks. Loss of property of people? A lot, they don’t care an iota of that.

      • >Fed policy can’t accommodate both and they are choosing to tune policy for the majority of the country and allow booms in the big, well-educated metropolitan areas.

        Nice idea but I’ve much more cynical view to anything FED does: It exists solely to make owning banks (and other ‘too big to fail’ -banks as a side effect) even richer they already are.

        Nothing else matters.

        To that policy 1,6M average mortgage fits like a glove: It makes lenders filthy rich.

        So far I haven’t seen FED doing anything which would cause loss of profits to banks. Loss of property of people? A lot, they don’t care an iota of that.

      • @surge

        That’s illegal. It’s called redlining

  • Almost two years ago, a relative was a renter who had a saved a decent amount of money. He told me prices were too high and he was going to wait for them to come down. I changed his mind and he bought a very nice little cottage with a backyard in Dana Point in the low 600s. Now, that same cottage is in the mid 800s. Now, he tells me he is glad he bought because even if prices fall he has a 250K equity cushion. That equity cushion continues to increase each day. I was able to save one lost sole. He now gets it. It is all about inflation. The FED does its best to make sure there is a small inflation. So, why not just buy then sit back and enjoy the ride. Even if you screw up and buy the top, after a few years, the FED will fix it for you.

    • how much can he rent out that dana point bunghole for? Will the rent cover his mortgage? If so, he’s sitting OK…if not, that equity bubble means nothing unless he sells now.

      • Actually, if he rented it out, the rent would not be enough to pay for the mortgage and taxes. It will be some time before the rent covers the payment.

    • Lol JT, another fake story

    • well I for one am glad you’re basically admitting that what we have isn’t capitalism. BUT there’s a bust coming, just like last time and the time before that. Is his $250K cushion enough? I don’t know…….If the economy was allowed to function he could be upside down for a decade or more……like I was in the 1990’s.

      • You never know when you are at the top until after it has passed. When you buy, with some luck, after a few years you may have enough equity to survive a downturn. It is risky. You could get unlucky and be down hundreds of thousands several years later. But, the odds are in your favor since the government and private debt levels are so high that the entire system would collapse if deflation takes hold. So, the Fed desperately engineers inflation and that is how the system works.

      • Throbert Girth

        @JT The QE unwind is well under way and the Fed will continue to raise the FFR, so what is that going to do to your hypothesis that debt levels are just going to keep going up?

  • Sunnyvale 850sqft home listed at $1.45M recently sold for $2M in 2 days, broke record for price/sqft (thats over $2K per sqft).

    https://sf.curbed.com/2018/3/2/17073100/silicon-valley-house-home-sunnyvale-record-price-crisis

    • LOL, thats insane! I bought a bigger, nicer house ~20 years ago with ocean view down in San Diego for less than 180K! Lots of funny money chasing stupid nowadays. No doubt lots of broken families and broken bank accounts in the future.

    • Laura Louzader

      That Sunnyvale house gives me a headache- $2M for everything I ever wanted to escape from, which is life in a fugly little 50s-stye subdivision house that reeks of cheapness.

      • NoTankinSight

        Laura, agree… the crazy thing is that it doesn’t even look like a nice tear down.

        I would expect you buy that place for the lot and spend a million dollars cash building your dream home.

        … but the lot does not feel like a $2M-$3M home

        I sold my home in the Bay Area recently to cash out from that madness.

      • Laura Louzader

        You’d have to build a house that cost $2M to justify the price of that “tear down”.. meaning you’d have to spend $4M at least.

        But I’ll bet that most of the people looking to buy this thing can’t afford to tear down and replace. $2M is a LOT of money, even for most well-paid techies in Sunnyvale. Figuring on a 20% down payment, you’re financing $1.6M, which means you have to make about $400K a year to afford this distinctly lower-middle-class house. And you’d still be just a little stretched, because you also have house taxes and cars to run.. and you’d like to enjoy a few of the luxuries that you work so hard to have. What sucks the most, though, is that, as a techie, you know that you have only so many prime earning years before you become “legacy” IT, and you can no longer command anything like the kind of money you could a decade earlier, but you haven’t saved much because basic, half-decent working-class housing is so expensive that you tear through your paycheck just paying for a substandard little house that many blue-collar types out in Flyover Country would sniff at. Hopefully, you have gobs of stock options and the start up you work for is successful, but that doesn’t always happen. It has to occur to some of these people that they could live 3X as well on a quarter the paycheck somewhere else-and still have money left over to put towards savings.

      • NoTankinSight

        Laura, it sounds crazy but many of these Silicon Valley purchases end up as tear downs

        I would expect the lot to be nicer than this one though, but you would be amazed at the cash floating around in the Bay Area both from Tech and from Asia.

      • +1
        Laura, lots of common sense in your post, which is not so common these days. Lots of lemmings in the SF area these days!… They have knowledge but they lack wisdom.

      • So according to the stories this house was bought by a young, single techie for all cash. Looks like he only has to pay taxes.

        If you have that much cash money, why are you buying this crap. He has enough brains to earn and save, but bought crap.

        Kaboom. My mind is blown

  • If bums urinating on you and $3500 1 bedroom studios isn’t enough reason to live in San Fran, how about this….

    SAN FRANCISCO (KPIX) — Car break-ins are on the rise across the Bay Area. In fact, 2017 was a record-breaking year for our three largest cities.San Francisco leads the pack with 31,120 break-ins last year. In the same period, San Jose reported 6,476 car burglaries. That number is the highest the city has ever seen and a 17 percent increase compared to 2016. It was also a record year in Oakland with 10,007 reported cases in 2017, up 32% compared to the previous year.”

    CA’s slide to 3rd World status continues unabated.

    • That is what liberals call “desirable” – a poop city with burglaries everywhere; sanctuary city on top of that. Statistics and maps speak for themselves. No further comment needed.

      • Even with so many problems, people still want/need to live in SF. This means there is something more to life than number of break-ins. If someone is fed up, they move. Yes, SF city proper is not very family oriented, but it is what it is

      • Seen it all before Bob

        Nobody can argue that the demand to live in the Bay Area is going up. Prices prove it.

        The poop web page has a disclaimer that it is not run by the government or verified. Yet conservatives like Rush Limbaugh spread it as the truth. That just annoys me. Making stuff up to prove a point. There is a sucker born every minute who will take it as the truth.

        I probably couldn’t tell the difference between a rude dog owners who don’t clean up their dog poop and human poop. That has given me an idea to post a site for our conservative neighborhood showing a neighborhood map of where the dog poop is piling up.

        Also if conservatives show tens of thousands of people fleeing the Bay Area, they must be getting replaced by even wealthier successful people to keep the house prices rising.
        If so many people are leaving, why hasn’t supply increased? Either rent or home prices or both would fall if you would believe the conservative biased media. That is Capitalism 101.

        Again, the home prices in the Bay Area keep going up. That means the demand keeps going up. More wealthier people are moving in than moving out so supply remains low.

      • “Seen it all before Bob” says: Nobody can argue that the demand to live in the Bay Area is going up. Prices prove it.

        That is complete bull. Fact is prices are moving up nearly everywhere in the country because of inflation. Prices are moving up strongly in Detroit. That does not mean demand to live in Detroit is going up. When prices are going up everywhere, that just means there is inflation.

        Fact is males who like women hate the bay area because the bay area does not have enough quality women. I would never live there. What straight male would??

    • http://www.areavibes.com/spokane-wa/crime/

      Yeah, and Spokane is the Garden of Eden.

      • I am hours away from Spokane. I don’t live there, although Spokane is a livable affordable city with some nice neighborhoods, especially the South Hill and Liberty Lake area. I wouldn’t mind living there, but I live in a nice place and I can not live everywhere at the same time.

        I would move to Spokane anytime before I would consider SF. SF has exactly zero attraction to me. I wouldn’t move there not even if I would be a billionaire.

      • Flyover, SF has no attraction to you? This is fine. What are your argument? That SF is going down because people are leaving? Or because you do not like it. What is your point? If it is overpriced, but you don’t like it/have to live in here – what is this to you?

      • I live in California but would never ever want to live in San francisco or close to it. Way to crowded and way to overpriced. I don’t know much about Spokane other than mr landlord lives there and that you have rental parity there. I would buy there.

      • Flyover,

        My comment was directed towards Landlord who slams CA but lives in crime ridden Spokane. Statistically (specifically property crimes which he quotes) are higher per capita in Spokane than SF. Double for the state of WA. It’s amazing given the lack of liberal democrats and “bad hombres” (and no Somali restaurants). Must be the meth or oxy.

      • Surge,

        Why so triggered Bro?…The whole purpose of this blog is for people to express opinions. Isn’t that obvious?!
        I post my opinions the same way you post yours. Some learn from my posts and I learn from others.

        What? Do you want to be the only one posting? Or you would accept just JT to give one each other high five?!!!….From my point of view, there is nothing wrong to be challenged in the way you think; that is how you develop a greater perspective.

        Yes, my opinion is mine. You can accept it or reject it. You don’t have to become triggered. In the eighties there were lots of rich Japanese paying exorbitant amounts for RE in USA. That doesn’t mean that they were wise, most lots all their money. Heard mentality just leads you to the shearers.

      • Flyover, dude, yes I am triggered so what (Triggering is a cheap psychology 101 trick anyways). Opinion is dirt chip, yes you are entitled to it but who cares unless it brings value to the table. Talking about very very high level social issues on RE blogs is useless – in the end, the discussion will end up in the realm of “who really owns this land” – and then everyone will get triggered. Stating the obvious (that SF has a lot of specific problems) is also useless.

      • Surge, if my comments/opinions are useless why do you read them?

        Are you on this blog the purveyor of what is useful and what is not?

        Are your comments/opinions useful? If yes, why?

        If I posted anything political it was ONLY in connection with RE which is influenced by politics as much as by the FED. I did not mentioned any other social issues which are not related to RE. While the main focus is on SoCal RE, even the Doc is talking about other areas like SF. As far as I know, all blogs are for posting comments/opinions – for some people they are useful and they learn from them, and for some without critical thinking you can hit them with a brick and they still don’t get them. Also, for me, your comments are just waste of virtual space. However, I recognize your right to post and freedom of speech. I don’t know what is the matter with these liberals who get triggered all the time and all the time are ready to take the freedom of speech from others. Those liberals from SF who control Twitter, YouTube, Facebook and Google practice censorship all the time for any conservative view and then they say “don’t be evil”. Hypocrites!…

        Censorship of speech is un-american and against 1A. But the liberals have no respect for the law of the land – the Constitution. They change it as it is convenient to them at the moment.

      • Flyover, once you start throwing words like “liberals”, “freedom of speech”, etc.. – discussion spirals into pointless drivel, and then you are 1-2 sentences away from calling someone a Hitler. I do not want this on this blog, I want to see numbers/specific ideas, and I do not really care for the freshman-level non-actionable discussions. If you want political change, this is not the forum.

      • Surge, I’m sorry for you! I know that truth hurts, and liberal’s heads explode when they hear it. And they explodes especially when they hear about “freedom of speech” – their communist/collectivist minds can not stand it. “Freshman-level non-actionable discussions” is all I hear from you and MSM. Also, where are the numbers in your posts???!!!!….

        Solutions, ideas? Vote out all democrats/socialists/collectivists for a start. If you can’t vote them out, move out.

        “If you want political change, this is not the forum.” Ha!!!…this is all you hear at liberal universities. They don’t want to hear any view opposite of theirs. They like to live in their own bubble – “safe space”.

        Guess what?!…I’m going to stay here and post everything I like if you like it or not. If you don’t like my posts, just skip my posts and move on! You don’t have any monopoly and wisdom and you are not going to take it with you in the grave.

      • Flyover, to add more fairness to my post:
        <<<once you start throwing words like “liberals”, “freedom of speech”, "republicans", "conservatives", "avocado toast", "realtard"… then discussion is going down the drain towards mindless drivel. Somehow you assumed that I am liberal.

        I prefer when democrats changed by republicans and then democrats every 6-10years. This is the healthiest modulation. You seem to like just single party.

        I provided plenty of numbers, but useless politically-charged drivel like yours seems to draw more responses. Fine.

        Of course you can post here whatever you like, but then expect occasional feather-ruffing thrashing from me if you post political drivel.

  • Bbbbut the weather!! And the culture!! And the Chinese food!!! And the progressiveness!!! And those oh so awesome high tech paying jobs that don’t exist anywhere else in the world!!!

    LOL

    “San Francisco lost more residents than any other city in the US in the last quarter of 2017, according to data from real-estate site Redfin, which sampled a million users. The data factored in the number of residents that cities gained, meaning San Francisco lost a net 15,489 residents; about 24% more than the next-highest loser on the list, New York City. This is expected to continue into 2018, considering that, as of February, 49% of Bay Area residents were looking to move out of San Francisco, according to a survey by public-relations firm Edelman.”

    • maybe SF lost some residents, but they just went across the bay to live in Oakland/East Bay.
      Bay area is growing.

      • You are wrong.

        “SAN FRANCISCO (KRON) — The San Francisco Bay Area is losing more residents than any other United States metro area, according to real-estate site Redfin. In 2017, 19.4 percent of Bay Area residents were searching for housing elsewhere, the report said.

        Of the 15,489 people who moved out of the area, most of them settled in the Sacramento area in-state, Redfin said. The top out-of-state destination for former Bay Area residents was the Seattle area.”

        http://kron4.com/2018/03/07/study-san-francisco-bay-area-losing-more-residents-than-any-other-us-metro-area/

      • So, so, so wrong!!

        “OAKLAND, Calif. (KTVU) – In the last year, California grew by .85 percent, bringing the total of people living in the Golden State to 39.5 million, according to the Department of Finance. But also in 2016, 30,000 people fled cities such as San Francisco, San Jose and Oakland to other parts of the country, according to an analysis by Jed Kolko, chief economist of Indeed.com of net domestic migration gleaned from the census. “

  • Timing is everything. I got it right in 2012 and bought at s low. Now I am waiting for the crash so I can sell on the way down and buy again at the low.

    Plus buying at the low locks in a better tax rate.

    Patiently waiting….,

  • Fundamental Question:

    Why are tech companies so tethered to San Francisco?

    One reason is historical accident. (Sun Micro, Stanford spinoffs, Cisco, Google, Apple, Intel, and hundreds of smaller enterprises).

    But is there some gravity force from a black hole forcing these companies to stay put?

    Suppose someone starts XYZ Crypto company and decides that Arizona is the place to be and will pay $150K entry level salaries?

    Then what San Francisco?

    What is also truly ironic is that all this technology is suppose to bring mobility along with it.

    The reality is that (at least in my high tech company) that tech isn’t being used.

    Why? Tradition (we have always done it this way), power, control, all of hot women in the front lobby, etc.

    Of course none of this makes any logical sense, but neither does absurdly insane SF real estate prices either.

    • Fair Economist

      Yeah, the companies stay because that’s where the talent and support industries are, and the talent and support industries stay because that’s where the companies are. It’s an old phenomenon but it’s especially acute in the tech field because so often the #1 company gets almost everything and everybody else just gets crumbs. Tech companies have tried to move out of the Bay Area for decades and for the most part they fail.

    • Silicon Valley was farmland up until the late 50s. Shockley started it all in 1957, then that begat Fairchild, which begat Intel. All that happened in about a 10 year span. And from the late 60s, Silicon Valley as we know it took off. Add in Stanford to that mix and you have a self fulfilling circle.

      What a lot of people don’t get is that the tech industry isn’t so much about tech, but also about money and connections. All the tech money is in SV. If you want to start a new company, you need money. And to get money, you need to be in SV to access it.

      Now of course there is investor money outside of SV and plenty of start ups exist outside of SV. There’s Austin and NYC and RTC in North Carolina. But generally speaking those are more exceptions to the rule. And those companies are often 2nd or 3rd gen companies, ie the founders of those companies move there after running companies in SV.

      It’s like movies in LA or finance in NYC. A movie can be made anywhere, and stocks can be traded anywhere, with cheaper rents and lower taxes, etc. But still, NYC and LA are the epicenters of those industries.

    • There’s something about Californians that makes them stay. I know plenty of people who live in the BA who hate everything about the area…the cost of living, the taxes, the progressive politics, the traffic, all of it. But still they won’t move. They have this mentality that somehow they’ll miss out on something if they go to Phoenix or Boise or Denver. It’s weird talking to them since on paper they know their lives would be so much better somewhere else, but still they don’t leave. It’s bizarre, in a way, but I also understand it. There is something unique about living in N. California, especially if your life revolves around the tech industry.

      • surprise, but life is not all about optimizing ones finances or real estate.

      • Seen it all before Bob

        Mr Landlord.

        I agree with this.

        Other than family reasons, the engineers I work with like the peace of mind of earning an extremely large salary for a variety of jobs. If they grow tired of a job, there is an even better paying job across the street. That is security.

        Also, as you have mentioned before, the thought of becoming a billionaire with an exciting new startup that is funded by Bay Area VCs is extremely exciting and attractive.
        It’s like buying a lottery ticket in Flyover Country but having a much better chance of winning.

      • Fair Economist

        If you are in the tech industry, the Bay Area really is unique. But the other thing that stands out about the Bay Area is that it is one of, if not the, best-educated major metropolitan area. Only Boston is comparable. Any other place with a similar percentage of doctorate holders is a college town. If you like smart, well-educated people as friends and co-workers, the Bay Area is really hard to beat.

    • In order to start your crypto company and be able to pay $150k salaries -> you need to be able to raise good capital. Need to be close to VCs. Need to attract top talent. And top talent typically does not want to live in Arizona (sorry, this is just a reality, good or bad).
      Its like having a mall -> more shops clustered together better for everyone involved.
      Silicon Valley is organic conglomeration of the large industry.
      Like it or not, it is just more vibrant and dynamic there in that regard

    • Stanford, UC Berkeley and cooler weather (compared to inland or socal) – cuz nerds hate to sweat. They couldnt roll in the country (Whats that smell? neeeerrrrddsss!) or the desert and no way they make it on the beaches so they needed a place where the weather was good but not so good that you’d be expected to have an “outdoor bod”. Thats why it took so long for tech to make it down to socal in a big way – its like theyre allergic to anything slightly jock-ish

      Plus more than a few are probably

  • I bought my home for 162k in 1998 and its’ never been below that. In 2009 it still hovered at the 400k mark. Now it’s over700k. We are adding an ADU that will raise the valve at least 200k. When I retire in 7to 9 years we will rent it all out if the market is down, or sell it if the market is high. I do wish they would slowly correct the prop. 13 inequity that makes the millennials suffer a higher tax due to the climbing market.

    • Let’s say prices drop 30% on the coast in 2019, and hit bottom in early 2020. That sort of drop will happen whether or not prop 13 is repealed.

      So the smart millennial then buys a $500k property, at a typical 1.1% rate.

      That year he’ll pay $5,500 in taxes, with or without prop 13.

      If prop 13 is then repealed, it would have virtually no effect on housing prices. Housing prices are primarily affected by location (demand), the economy, and speculation, not taxes.

      In 2030, let’s say the house is now worth $700k.

      With prop 13, he’ll pay somewhere around $6,700 for that year.

      Without prop 13, he would pay closer to $7,700.

      But wait – I thought prop 13 was unfair to millennials??

      There are unfair aspects to prop 13 (commercial property and inheritances), but the way millennials are treated is not one of them. They benefit from it, period. Once they actually own and can see past the next Xbox game release, they’ll realize that.

      • NoTankinSight

        What millenial misses since he never owned a home here or anywhere else… is that without Prop 13 there is no limit to what your taxes could be. I have owned homes in areas like this, you really don’t want this trust me.

      • John, thanks for providing the example of how much millennials have to pay in property taxes.
        That’s exactly why it’s a scam to screw young buyers by transferring the tax burden to them.
        The boomer next door has the same house, receives the same services but pays a fraction of what the millennial has to pay. Why? Simply because the old fart is greedy and does not want to pay his fair share. The boomer did not have to pay ten times his annual household incomes for the house he bought. Back than houses were dirt cheap compared to now. Yet, he brags how good the housing bubble treated him and he is totally fine with new buyers paying way above value plus paying 1.1% of that overpriced house in property taxes. I don’t care if the inflated property taxes are locked in or not. They are too high to begin with and a scam because boomers get a pass. That’s why renters and millennials will vote against prop13. You need to lower taxes for new buyers and increase drastically for people who owned for a while. And don’t give me the pathetic poor grandma BS.

      • “That year he’ll pay $5,500 in taxes, with or without prop 13.”

        Yes, but the people who own it now, pay $550 because of Prop. 13.

        That’s the difference.

        Claiming that $5k per year in taxes doesn’t affect selling/buying is just laughable, basically it’s a blocker for selling to anyone who can count and it’s not absolutely necessary to sell.

      • So No Taking In Sight you would also approve of rent control, which is what Prop 13 is for homeowners.

      • “Claiming that $5k per year in taxes doesn’t affect selling/buying is just laughable, basically it’s a blocker for selling to anyone who can count and it’s not absolutely necessary to sell.”

        Point to the post where I said prop 13 beneficiaries don’t hold on to their homes because of the low taxes. Good luck with that.

        If it was repealed overnight (which won’t happen), you would get a temporary surge in inventory, as happens every summer anyway. The affect on prices would be insignificant compared to other fundamentals.

    • John D failed to mention the resultant higher taxes and fees levied for everything else by the state in order to pay for subsidizing earlier property owners. Apparently he thinks Sacramento pays for government handouts with dollars grown on money farms in the Central Valley.

      • “John D failed to mention the resultant higher taxes and fees levied for everything else by the state in order to pay for subsidizing earlier property owners. Apparently he thinks Sacramento pays for government handouts with dollars grown on money farms in the Central Valley.”

        The damage from prop 13 is already done. If they repeal it, do you honestly think county taxes and fees would go DOWN?

      • Before prop 13, property taxes set by counties were 2 to 3 percent of assessed value. Translation – first time buyers suffered right along with grandma.

        Now the burden is slightly shifted to everyone – first time buyers, long term owners, and renters. Some owners benefit more than others, obviously, and renters get the shaft.

        Prop 13 is bad. It’s also good. Definitely gives an incentive to own, unless you’re Millie.

        “Fixing” it is not as simple as repealing it.

      • Throbert Girth

        Prop13 is a bastardized way of trying to “solve” value-based assessment of property taxes. It’s like Affirmative Action…giving to one race at the expense of another. The real solution is to make property taxes assessed as a fee based on the size and type of the parcel of land, NOT THE VALUE. If the government wishes to increase that fee, the public has to vote on it. Period.

      • Thro,

        I agree. Prop 13 is just helping the already bad property taxes. They shouldn’t even exist….we should be able to own a house without paying rent, prop taxes, to the government.

        As a millennial, it really hurt to pay property taxes….about $4800 a year…a little less than take-home pay for a whole month!

        The way I see it: 5 years of property taxes here is equal to a down payment on a rental house in another state!

  • $1+million? There are ranches here in lovely Roseburg OR for less than that. And they are little larger than a condo, say 500+ acres. Of course you wouldn’t have the struggle to commute every morning, getting out of town wouldn’t be filled with existential dread, and you wouldn’t be surrounded by sociopaths. I moved here from Portland. I hated it at first but was just in Portland last week for a night. COULDN’T WAIT TO GET OUT OF TOWN. Living in a small city/town has made me a friendlier person. It really truly improved the quality of life. The culture here is a little rednecky, so just wear some Carharts and you blend right in. Plus, anymore the flow of information is swift so wherever you are, the conversations aren’t all that different. Okay, so the restaurants are pitiful… but you can get any ingredient you want locally… and then order some super slick culinary items off Amazon and you are slicing/dicing/preparing some tasty dishes the next day! Less time on the road and less ENERGY wasted being ANGRY at the other drivers EQUALS more time for hobbies like golf-meditation-painting-skiing-hiking-etc.

    An anecdote… I met up with a friend a couple years back and she said that so-and-so was coming into town from SF to spend the night. My eyes perked up because so-and-so is a HOTTIE. I couldn’t wait to see her again. She was more of an acquaintance to me in earlier times but she didn’t go unnoticed. WOW… she looked TIRED and not at all like the bright eyed 20yo I met 9 years earlier. She had been mugged and experienced many unpleasant situations in SF. I am pretty sure/perceived something even more sinister had happened to her but she decided to “keep it off the books”. It had definitely taken it’s toll on her looks. Yet she had the idea that she needed to ride it out as if that made her a champion of sorts in someone’s eyes. Her eye’s got wide when we talked about Portland and how cool the place was getting at the time (2010) plus the complete lack of crime that was Portland at the time.

    Something else: you don’t need to move to fly-over land to find a good deal. Oregon has plenty of spots to live in that are relatively cheap. I lived in fly-over IOWA for 22 years. There is NOTHING appealing about those places in a natural sense. Sure, the people are fine but the visual/climatic/cultural aspects of fly-over land are what makes it only worth flying over unless it is that or PRISON assuming you can afford to stay somewhere on the west coast. The winters and summers in most fly-over areas are awful whether it is snow or super hot/humid. What natural splendors did I miss the 22 years I spent in FO land? Not to mention crime is being exported from Omaha, St. Louis, Kansas City, Chicago, Milwaukie and Minneapolis into smaller towns in that region. The PAC NW isn’t going to get much migration from many violent cities as they further implode under their current stresses. Portland and Seattle have GOOD problems. Midwest cities… NOT SO MUCH.

    • How you will sustain yourself on a ranch home in Roseburg, OR if there are no decent jobs around?

    • “plus the complete lack of crime that was Portland at the time.”

      Complete lack of crime is a bit much, but yeah 10 years ago Portland was relatively safe. Not anymore. Thanks for sanctuary city policies and a lax policy on drugs, Portland of 2018 is a worlds apart compared to 2010. And thanks to the BLM, nobody in their right mind wants to be a cop anymore, especially in a progressive city like Portland. The end result, a shortage of cops and a green light for criminals to do as they wish. But at least you have like 1738 craft beers to choose from before getting assaulted or raped by a Mexican gang banger. So it’s all good.

      “PORTLAND, Ore. (KOIN) – Someone who is assaulted in Portland only has a 3.5% chance of an investigation, according to a letter from the president of the Portland Police Association. Officer Daryl Turner wrote that detectives and investigators are “continuously crippled by catastrophic staffing shortages.

      In Portland last year, the number of reported person and property crimes increased 7%, reported assault offenses went from 7,525 in 2016 to 8,042 in 2017 and 282 assaults were assigned to the 5 detectives in the Portland Police Bureau’s Assault Detail for investigation and follow up.”

      • Apparently you have a higher chance of getting raped or robbed in your lovely hometown of Spokane. Of course Portland has a larger population so there are more overall incidents however… per capita your town is akin to Detroit.

        No BLM, no Mexican gang members, no sanctuary policies, just 85% conservative white people. The stats don’t support your bigoted comments.

        http://www.areavibes.com/portland-or/crime/

        http://www.areavibes.com/spokane-wa/crime/

      • SoCalGuy, CA policies of encouraging illegals and frustrating the federal LEO to enforce the laws of the land allowed many of the mexican gangs to go all the way to Canada. I would be curious if all the incidents would be stats based on ethnicity. I wouldn’t be surprised if the majority of culprits in Spokane would be the same like in CA.

        The metro area of Spokane with all neighboring cities is close to a million. Lots of the liberals moved from CA and Seattle like locusts destroying everything in sight. There are not the conservative families increasing those % of burglaries but the same “nice” people moving from large liberal cities into conservative cities.

        That is one reason I like small conservative towns and I am not going to say where I live (too nice to be spoiled by liberals). The conservative families are nice family oriented and civilized. Yes, few in town are mexicans, but conservative ones, hard working and disciplined. In the last 13 years since I moved here, I know all my neighbors and I never locked the doors on the house or cars. I leave even the key in the cars. Nothing ever went missing. Try that where you live before blaming the conservatives.
        One time I was with family in Hawaii and the neighbors called me that someone they don’t know entered into my garage. It was my brother in law because I sent him there to take something. That is what I call a true neighborhood – better than any security camera.

        That is not bigotry – those are facts. You don’t believe me? Go to East LA and let me know – is it bigotry or what I am saying is the truth? Liberals live in a parallel universe!

      • Flyover,

        http://www.waspc.org/assets/CJIS/2016%20crime%20in%20washington.small.pdf

        Uniform crime report for Washington. It’s from 2016 but they make one every year. Breaks down every stat you could imagine.

        The majority of crimes are committed by good old white folk in your state. Unless you are trying to convince me that white people have joined MS-13.

        I’m glad you have found a nice community. But this right wing bigotry from you and especially Landlord is annoying. I don’t live in East L.A. But since it’s majority Hispanic, I’d expect a lot of them to be involved in crimes simply because they are the majority demographic.

        Now when crimes occur in WA, well it must be those Mexican/Canadian MS-13 gang members again. Give me a break.

        I live in a nice OC beach community. Our demographics are similar to Spokane (80% +\- white) but a third of the crime rate of Spokane. You can even look at Santa Ana, which is probably the MS-13 HQ and it looks safer than Spokane.

      • SoCalGuy,

        First, you gave the stats for WA state as a whole. WA state is a liberal democrat state so I’m not surprised to see the same results like in any other liberal democrat state. The whole political class is made up by liberals like you. Eastern WA has many enclaves of conservatives.
        Second, it looks like you agree with me – you prefer to live in areas which are not “enriched” like in East LA (80% white). You could have bought in East LA if you really believe in that “enrichment and multiculturalism”. Based on your actions you are more racist and bigot than those you accuse them of, and hypocrite on top of that, same like all the liberal democrats.
        Third, the line I always hear from liberals that this nation was formed by immigrants does not hold any water – 100 years ago there was no welfare, free medical, free housing and free food. Socialism with open borders does not work; the middle class will break under the taxes to support it while facing a race to the bottom to enrich the 0.0001% globalists.

        Please revise your arguments because there are full of holes. I can point out more of them in your post, but I will stop here.

      • Flyover,

        It’s amusing you think I’m some kind of die-hard liberal because I can assure you I’m not. Trust me, I’m married to a millennial bleeding heart #metoo liberal. She considers me a moderate. Honestly, I’m not much for titles. I believe what I believe. Fiscally, I’m conservative. But socially, I’m admittingly liberal. I believe in the 2nd amendment and never once preached open borders. I’m not for full blown socialism but I believe in basic rights. If you contribute to society, work a full time honest job you should be able to provide for your family including a roof over their head and basic health care. Kids should have access to higher education despite their economic background without graduating with soul-crushing debt.

        My parents were Eastern European immigrants as well. I am a dual citizen myself. I understand their struggles. My father came over on a boat. He had to have a sponsor (my uncle) and had to sign paperwork that he’d receive zero public assistance for years. And this wasn’t 100 years ago, it was 1956. He was also bitter like you (and I understand why) but the veiled racism you spew is blatant. You seem too intelligent to not know better.

        I grew up in Long Beach and my parents decided to move to OC when I was 12. I live where I live because it’s home. If East LA had the most consistent surf on the west coast maybe I’d live there.

        I stand corrected my town is now 76% white. It was a seedy town when I grew up (mainly white gangs/Neo nazi skinheads). It’s become more diverse and crime has gone down. Does diversity make society better? If introduced too quickly then of course not. It weakens society especially if the immigrants come from drastically different social, religious and moral backgrounds. This is what is going on in Europe right now.

        So just to clarify the “culprits” causing all the crime in WA are dirty CA liberals and not MS-13 members. Fair enough. It’s interesting- my wife hails from Kentucky (the educated part) but the state is primarily full of right wing, god-fearing, gun-toting, conservatives. Eastern KY, along with VA and most of Appalachia is the same. The whole area is referred to as the “white ghetto” (see when you put things in quotes it’s not racist). Drugs/crime is rampant. There is poverty everywhere and welfare fraud. There is no shortage of methadone clinics. There are also no Mexicans abusing the system. Just good ‘ole ‘merican conservatives with their pickups and guns (oh and Oxy pills).

        These globalist you speak of are all on the same team. Liberal, democrat, Republican, it doesn’t matter. It just further divides people and distracts them from the truth. Some nutjob shoots up a school and now we need to ban guns. More people are dying each year from opioid overdoses than the height of the AIDS epidemic (in WA it’s meth but the heroin is coming). We blame the Mexican drug cartels and now Donny wants the death penalty for drug dealers. Why don’t we start with the CEO of Purdue Pharma and the Sackler family. Look them up.

        If you want to blame someone then look at your peers. Your generation caused this mess. You guys were at the helm. When I flip through C-Span, I see a bunch of crusty old white guys. Something is seriously wrong with this country and you can’t blame today’s generation or recent immigrants on issues that started long ago.

        Build a wall, moat, whatever you want around your conservative enclave. The reality is you have far more years behind you than lie ahead. Fuck the future generations, seems to me your generation’s mantra. Times are changing whether you like it or not.

        We must, indeed, all hang together or, most assuredly, we shall all hang separately.

        -Benjamin Franklin (the original globalist)

      • SoCal Guy, I am familiar with what happens in Kentucky and Appalachia in general. It is all the result of globalism and raising a generation with no hope. The causes are far more deep and divers for a post here and I can write a book to cover all bases – they all go directly or indirectly to liberal democrats and their agenda. Yes, there are republicans, too – RINOs, which are just democrats with and R after their name – McCain is a prime example.

        I am not a racist and bigot. Those are words used by liberals to close a conversation with no logic. I have plenty of friends blacks and hispanics. Their skin color does not bother me a bit. I always look at the character. I would have preferred Ben Carson as a president instead of Trump. Does it mean I am racists??!!!….Now, I learn to live with Trump. Some of the things he is saying and doing are very dump (he is shooting himself in the foot) and some a very good. I know there are plenty of whites mentally gone. But like you said, bringing too many, too fast from a foreign culture is not good.

  • LastGaspOfTheBoomer

    This is all the result of the spoiled boomer generation putting all importance on their personal economic prosperity ahead of anything else. This is the rootless entitled boomer cosmopolitan. Whose ego is defined by his stock portfolio and the value of his home. Nothing else matters. His nation is being invaded with mass immigration. Foreigners buy up all the property and price out the youth of his own nation. He relies on cheap labor to do his gardening, cleaning and the work for his landscaping or contracting business.

    Now look at California. A wonderland built by white Americans that was handed to boomers on a silver platter. What have they done with their endowment? They’ve given it away to foreign hordes. Now only a quarter of California school kids are white. Whites are already a minority and will be a tiny minority in a few decades. There is very little of anything American remaining in California.

    But who cares? The property values are up and the sun is shining. The boomers will go to their grave not caring one bit that they surrendered the West and allowed whites to become minorities in their own nations.

    • Last gasp, I think you use a too wide of a brush in painting the boomers. Some boomers are liberal/progressives and some are conservatives (some just RINOs). I don’t think the conservatives encouraged the immigration. The liberals and the progressives came up with sanctuary cities and “undocumented workers” instead of using the term “aliens” or “illegals” to avoid the correct conversation.

      The globalists represented by democrats and some RINOs are the ones encouraging the mass immigration not the conservatives. I am a boomer and I said it for years on this blog that the massive illegal immigration is part of the feudal mindset of the liberal democrats in Sacramento to encourage a race to the bottom in wages and the massive inequality you see in the liberal sanctuary cities.

      Therefore, be careful in putting all the boomers in the same basket. I could argue that there are more young millennials (not all but higher percentage than boomers) who vote for liberal democrats who are responsible of what you accuse the boomers. All the indoctrination they suffered in the public indoctrination centers takes a toll.

      • LastGaspOfTheBoomer

        That’s true. I don’t even blame boomers so much. They are just products of the culture they live in. A culture that is largely directed by a certain tribe that dominates media, entertainment, politics, finance and academia. This is the reason so many Westerners are completely rootless and are not up in arms over the invasion of foreign hordes into their lands. There are a few that speak out but they are suppressed by the peer pressure of the conditioned masses.

      • Here we go with the tribe. Are you bringing that anti semitic nonsense spewed about over on ZH. That used to be a pretty good financial analysis news site yet all the commentary these days is about the tribe and Jews and anti-semitism.

    • +1
      Excellent. You nailed it.

    • The U.S.government allowed massive illegal immigration to occur. Both Republican and Democratic politicians supported an open border with Mexico through their actions. It was a national decision–not one made by the white baby boomers living in California. Now the political power of those illegals has grown so that California and many other parts of the country are turning into sanctuary areas. Any whites who objects are called a racists even as they become a smaller and smaller portion of the population.

      The same thing is happening to Europe and Australia–those areas are just decade or two behind California.

      • Ok. Next

      • Democrats want millions of votes. Republicans want millions of near slave employees. Illegal immigration is the one area where we have bipartisanship.

        CA is for all intents and purposes a 3rd World nation now. It’s basically Brazil, where you have a small white aristocracy, Hollywood moguls and Silicon Valley titans. Then there is a small upper middle class, comprised of white people who work in tech and provide services for tech, like lawyers, investment advisors, etc. And the rest is a non-white serf population living in abject poverty.

      • Ok, what does it have to do with RE blog? You just want to discuss stuff you have zero control over?

      • son of a landlord

        Mr. Landlord: Then there is a small upper middle class, comprised of white people who work in tech and provide services for tech, like lawyers, investment advisors, etc.

        You forgot the upper middle class composed of government employees — police, fire, teachers, DWP, UC professors, etc.

        As in any Third World nation, government employees do very nicely. Secure jobs, good salaries, great benefits, and bribes on the side.

      • “Ok, what does it have to do with RE blog? You just want to discuss stuff you have zero control over?”
        Surge, like I said before, it has EVERYTHING to do with RE. Too bad you can not connect the dots on such black and white picture. Not enforcing the laws on immigration resulted in crowded cities with high rents and high RE prices. If rents are higher, based on ROI, the RE prices will be higher. The quality of life of the existing residents is affected in a negative way in every aspect – traffic bumper to bumper, bad air pollution, homelessness, overcrowded hospitals supported by taxpayers’ money, budget deficits to pay for a myriad liberal programs, higher taxes, all to enrich even more the 0.0001% (globalists) who are the ONLY beneficiaries. Massive immigration, legal and illegal decimates the middle class in a race to the bottom in wages for unskilled and high tech workers. That is the reason for massive income inequality and the reason for CA looking more and more like a third world country – the aristocracy and the 99% dirt poor. Maybe few more years and this picture will become more vivid to you.

        Yes, you can help change that. If all voters will cry in a bipartisanship way to their elected officials (letters, emails and phone calls), they will get the point if they want to get re-elected. Right now, only the conservatives voice their opinions against it, while the liberals cheer and support the Soros and MSM led groups for more immigration.

        When Trump opened the public discourse on this issue, he was attacked merciless by the liberal MSM (the voice of globalists) and his RINOs. He may be a goof ball on other issues, but on that one he was straight on target. If he is a true populist or not, remain to be seen. However, on that issue he is a populist, at least in voicing the concern of the many.

      • Flyover – I understand Cali (and the US in general) inequality is growing. But this is RE blog. Yes, inequality impacts RE significantly. But this is RE blog – RE discussion under PRESENT conditions. If you want to discuss how to change conditions, you can contribute in political/social blogs. From your comments, I do not understand your opinion about which way will Cali RE move and your vision to how approach investment (in current climate).

      • “….a national decision–not one made by the white baby boomers ”

        I hope you realize Congress and Senate consists of white baby boomers?
        Most of who are millionaires too.

        “National” has nothing to do with that, The People wasn’t asked at any point.

    • Seen this all before, Bob

      Actually in most of the West, America was built by immigrants from Mexico who arrived in Santa Barbara CA, Sante Fe NM, Pueblo CO and built businesses in the 1600’s. My family arrived poor and desperate from Sweden and Russia in the late 1800’s and were called “Dirty Russians” by the locals like you. The local business owners at the time gave them jobs and a chance.

      The West was mostly built by Mexican immigrants since 1600.

      It wasn’t until the late 1800’s when white immigrants moved in.

      • son of a landlord

        seen this all before, Bob: in most of the West, America was built by immigrants from Mexico who arrived in Santa Barbara CA, Sante Fe NM, Pueblo CO and built businesses in the 1600’s. … It wasn’t until the late 1800’s when white immigrants moved in.

        Uh, those immigrants from Mexico in the 1600s, they were white. They were Spaniards. They were as white as your ancestors.

        Yes, the white Spaniards built up both Mexico and the American southwest. And much of Latin America. But their ancestors are not the ones illegally immigrating into the U.S., so why drag them into the picture?

      • The line I always hear from liberals that this nation was formed by immigrants does not hold any water – 100 years ago there was no welfare, free medical, free college education while the local students pay astronomical fees to make up for losses, free housing and free food. Back then, there was no IRS, no FED and no income taxes. You worked hard or you die. Socialism with open borders does not work; the middle class will break under the taxes to support it while facing a race to the bottom to enrich the 0.0001% globalists.

      • Seen it all before, Bob

        Come on, Son of a Landlord.

        1) Mexico declared Independence in 1810. They were Mexicans 50 years before the whiteys moved West.
        2) Spaniards mostly assimilated and inter-married (or killed off) with the Natives of Mexico. Unlike the US which forced them into reservations and killed them off.
        3) After 1700 it would be hard to find a pure whitey Spaniard in Mexico.

        The US West settled by Mexicans who were Mexican for over 50 years before a Whitey showed up.

        The US Whiteys showed up after 1860 looking for gold.

        There, that is my racist rant to answer your racist rant.

        It is true, there wasn’t Welfare back then but my Whitey brother tried to get Welfare a few years ago and was denied. All of the Mexican immigrants were working hard in the vineyards picking grapes to make a living and the welfare person told my able-bodied brother he would have to do the same. I think the sanctuary states are protecting their cheap workers and not giving away anything for free.

      • son of a landlord

        Seen This All Before, Bob: Mexico declared Independence in 1810. … The US West settled by Mexicans who were Mexican for over 50 years before a Whitey showed up.

        Over 50 years?

        The Mexican War ended in 1848, followed by the U.S. annexation of the American southwest. If Mexico became independent in 1810, that’s 38 years of Mexican sovereignty of the American southwest, not “over 50 years.”

        The US Whiteys showed up after 1860 looking for gold.

        After 1860? Yet according to Wikipedia: “The California Gold Rush (1848–1855) began on January 24, 1848, when gold was found by James W. Marshall at Sutter’s Mill in Coloma, California.”

        That’s 1848. Not “after 1860.”

        that is my racist rant to answer your racist rant.

        Racist rant?

        The only racism in this conversation is your use of the word “Whitey.”

        I didn’t use the N-word or the S-word, so why must you stoop so low as to use hateful words?

      • Seen it all before, Bob

        OK, maybe I was a little harsh.

        However, I guarantee you there were no white Spaniards settling the US West. They were all integrated Mexicans for over 100 years. They declared independence from Spain in 1810 only 34 years after the US declared independence.

        White Spaniards. Ha!

      • SOL, “racist” is a word used extensively by liberal democrats to stop a conversation they can not win by logic or critical thinking. It is used a lot these days because they lost the narrative. They use it even if it does not have anything to do with racism.

      • LastGaspOfTheBoomer

        So if the Mexican people are so great why isn’t Mexico so great? Isn’t it interesting how California turns to sh*t as the demographics shift to being less white?

        What made California great was the European people that populated it. Now it’s a total sh*t show where Europeans are the minority. The same thing is happening to Europe itself. Europe won’t even be worth visiting in 20 years. London is a white minority city and it sucks.

        There are very few places left for white people to run and it has everything to do with real estate.

  • son of a landlord

    Inventory just got tighter in Santa Monica. A 6 unit condo burned down in Santa Monica: http://smdp.com/residents-lose-homes-after-second-fire-at-condominium-complex/164761

    The article’s writer actually checked Redfin and said that units in the building were valued at $1.3 million. However, I checked Redfin and found that units in the building actually sold for close to $1.5 million in 2016. Might have been valued at close to $2 million by now. (Redfin seems to undervalue; Zillow overvalue.)

    Article also implies the building had 5 units, but my research indicates 6.

    This was the building’s second fire in three months. The first was last December, during a “remodel.” A prospective flip?

    Fire investigators are investigating whether the two fires are related.

    The condo was built in 1975. It looked pretty crappy on the outside. I’m wondering if these were cheaply constructed rentals that were later converted to condos.

    People paying insane amounts to buy crappy, 40-year-old, rentals-turned-condos.

  • Barnie Panders

    I can’t wait for the big one to hit. (Soon, please!)

  • Laura Louzader

    Just read your linked article- the woman who was trapped and rescued in a nick of time is going to suffer from serious PTSD for a long time. The only thing as scary is having a gun stock stuck to your temple and hearing the trigger click. My condolences to her, and to everyone who ever was killed, injured, or barely made it out of a raging fire.

    I can’t help but notice that the worst apartment building fires, the ones that jump firewalls and involve the whole structure, are in buildings built AFTER WW2, especially buildings built in the 60s and 70s. 90% of what was built in the Post WW2 era is absolute garbage. I have, by choice, lived only in buildings built between 1920 and 1935, as they are the most beautiful and livable buildings ever built, designed by classically trained architects with a keen sense of beauty and style. My places have been in two cities, Chicago & St. Louis, and were either high rises, or courtyard buildings (I have a courtyard condo now in Chicago). Almost every single building I’ve lived in had a fire sometime in its life, but every fire stayed contained in the unit in which it started (usually caused by a cigarette or bad gas line), and none ever breached the fire wall between units. But two fires in luxury high rises here in Chicago, built in 1960 and 1968 respectively, jumped firewalls and ceilings, and involved several units. One tore through an entire upper floor and killed 2 people, while the other jumped to the unit above and killed 1. And you may notice also that stuff built in the post-war era deteriorated much more quickly than the fine homes and buildings of the 20s.

    Seems to me that building practices deteriorated steeply between 1930 and 1960, which is especially sad because we really do know more about building and have the ability to construct much better, stronger, more durable buildings. But we choose not to, which tells you a lot about how much real “progress” our culture has made in the past 9 decades.

  • Other factors to consider would be the US government backing the majority of the loans through Fannie Mae and Freddie Mac as well as California’s Proposition 13 artificially holding down property taxes.
    In the next financial crisis the US taxpayer could easily be on the hook for trillions of dollars of mortgages.
    We apparently learned nothing from the last financial crisis and the next one will be much worse.

  • son of a landlord

    This is odd: https://www.redfin.com/CA/Santa-Monica/2011-Idaho-Ave-90403/unit-6/home/22691452

    A Santa Monica condo, sold last December for $2,215,000.

    For sale again, 3 months later, for $2,335,000.

    No remodel. Just a resale for $120,000 over what was paid 3 months ago.

    I’m guessing this is not a flip. I don’t see how the seller can profit after the transactional costs. Perhaps buyer’s remorse?

    I visited the Open House last year. The unit is on the second floor. There’s another unit beneath it. So no shared walls, but a shared floor/ceiling.

    There are 6 units in the complex.

    • Looking Forward

      Dude. Make your peace with living in your condo and be done with it. You already live where you want to be. Improve your current place and be happy.

  • I can’t keep up. My realtors I am in touch with are bombarding me with houses for sale on a daily basis. Not that I am interested at buying at levels that are 55% over value but I like to look at what’s for sale and I get a kick out of these unrealistic, greedy prices. If you think inventory is low in California I will send you the open listings for your zip code. Inventory is low is the biggest lie and probably the last attempt to sucker in the last buyer before the ship goes down.

    • why are you in touch with multiple realtor(s) if you are not in the market to buy. Are you nuts?

      • Surge, that made me laugh. I am sure I am a little nuts! Life is more fun that way 😉
        Why am I in touch with multiple realtors? You can easily see that….I like to discuss the RE market (and not buy or even look at open houses). I am fascinated by the amount of BS realtors and RE cheerleaders tell you in order to sucker you in. There are realtors that have been emailing with me back and forth for YEARS!!! This one guy probably still thinks I will eventually buy through him. I love it and picked up good responses over the year. You can tell how they all read from the same script and try to play in your emotions/fears. Doesn’t work on me. What’s also fascinating is how the conversations change alongside the RE cycle. Right after Trump won the presidency there was this euphoria of how America will be great again and how the RE market will take off. Now we are discussing how big the drop will be during the next recession.

      • Yeah, it is nuts to lead someone (sales person) for no reason for years.

      • No reason?? Nothing could be further from the truth!
        One reason is that I like to hear their sales pitches and it seems like they are all reading from the same script. Another reason is that they sometimes approach me with a “great deal” they found for me. It feels good to reject them and have them still come back again and again. Shows me how desperate they are. Another reason is that it’s interesting to me how discussions change. Now we are discussion how big the drop will be. It seems like some realtards are capitulating.

      • Millie,
        Perhaps realtors give stupid pitches that you so enjoy, but think about this…
        They make 100 pitches and maybe 1-2 will work with somebody and they will make money in the end.
        You, my friend, will always get big fat 0 dollars from listening to their pitches.

        While you might feel smarter than them, you are just a statistical number in their work.

        What a grand waste of time.

      • I don’t think it’s a waste of time at all. Emailing with realtards and writing/reading this blog Keeps me in training. When I first got in contact w a realtard he overwhelmed us with his sales pitches. Back than i did not have fast and good responses. Now I do! I can easily dismantle his BS. I also lost all respect for them. When the market crashes and I have to get into business with them I am well prepared on how to communicate with them. No margin for errors, no lies….as soon as he messes up once he will be fired and u go the next house or realtard. But you can prevent them by openly telling them how bad past experiences were and that you already know their cheap sales pitches. You will save time that way. So, in a sense it’s an investment by having these simulated discussions now.

    • https://fred.stlouisfed.org/series/MSACSR

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

      • Great post! Thanks woody! I am glad there are still people that get it on this blog

    • They are not desperate. They are salesmen. This is how sales work. It is all about making you feel like you are being smart and superior to them. They have 100s of you and it is probably semi-automated e-mails you are dealing with. Why not just go look at open houses without reason (at least getting some fresh air).

      • Of course I visit open houses once in a while. I like to walk thru the house, eat a cookie and chat with the realtard. I tell him I buy when the house is 55% below today’s price, take another cookie and go back on my bike.

  • Sometimes I ask myself if there is another reality/universe out there that exists alongside ours. Since I haven’t found proof of that I come to the conclusion that when people say inventory is long they actually mean that quality homes for sales at a reasonable price are almost non-existent. By that measurement I totally agree. Inventory for correctly priced houses is low. Very, very low.

    • This is because you are a couch real estate warrior.

      price is a function of what market is willing to pay in any given point, not some imaginary number. This is why people incorrectly use term “overpriced”.
      If you do not believe me, please go ahead and actually try to buy a home in a good area. Low inventory means you will be competing against multiple bidders.

      All other ideas about whether homes are priced reasonable are irrelevant and non-actionable. These are the prices today for whatever reasons. They might change in the future, but today in multi-offer environment prices are nudging up because of competition. If you think this will reverse drastically, then yes it will pay to wait.

      • Prices are nudging up because of the mispricing of risk (interest rate) in our increasingly financial economy. The federal reserve has artificially lowered interest rates and the government is guaranteeing horrible and risky mortgages for the banking industry. As long as pricing continues to increase is covers the mispricing of risk (banks can recover capital). Once the increase turns into a decrease the losses will be massive. The government is insuring loans that will go belly up if prices do not continually increase.

      • Surge, your mistake is that you think This RE insanity is a normal functioning market. Nothing could be further from the truth. This is a highly manipulated market and these insane price levels are disconnected from reality and fundamentals. Give you an example. In theory, interest rates are reflecting risk. If I give you money I evaluate the risk of you not paying me back. That risk is quantified and the end result is that I want more money back on a regular basis than what I loaned you. That’s called interest rates. Now, in today’s RE market, the lender does not keep the risk on his books. He sells it to Fannie and Freddie. He gets a fee by selling it and has barely any risk in case the loan defaults. Behind Fannie and fedddie is the tax payer. That’s why you can run this scam of artificially low interest rates that don’t reflect the risk. If the market crashes its the tax payer again who has to pay for it.
        Appraisals, property taxes (prop13 scam), interest rates….all manipulated to screw the buyer and artificially push house prices higher. Wages have barely kept up with low inflation but house prices go up higher. That’s why these house prices are not real and can crash hard. There is no fundamental support. Nobody in their right mind is buying overpriced crapshacks at the moment.

      • Yes, that is one reasonable explanation. But it’s not just that. With such low interest rates, there are not many avenues for good returns. This is why money is pouring into RE, stocks, startups. Everyone is chasing a profit. Money sitting in the bank is negative real return now. IF liquidity crisis hits, of course it will be different.

        This is a beauty (and danger) of fiat currency. Fiat currency has full potential for optimal money control (via interest rates) and optimal control of economy. It is still new and we do not know how to control it the best (Plus there is human factor).

        Of course you can blame bankers, government, etc… but in general it is amazing how well the system works.

      • Surge, “chasing profits” I might have shared this before, my litecoins made 5,000% last year.

      • This is great. I hope you bought a lot, not 1k or so.
        You could also get 50x from well executed option trades
        It is all about risk.
        Whats your point?

      • Millie, even if lender selling the loan, the guy next still rates the quality of the loan and risk/pricing is done accordingly. Loan is a loan.
        You are telling us 2006 story(with morgtage ratings fraud) and pretend to be smart and knowledgeable (just because you feel compeled to educate everyone with well known melodrama facts).

      • It is much much much less riskier to put money in RE than in crypto
        By money I mean significant amount of personal wealth.

      • Lenders don’t want the risk on their books so they sell it to Fannie and Freddie. Because it’s bad risk. Behind fannie and Freddie is the tax payer. That needs to stop. If lenders would actually hold the risk they would not give out loans with 3% down to everybody. People are highly over leveraged. Those people spend most of their income on mortgages. Saving rates in the US are horrible. Most people can’t come up with 1000 bucks in savings. As soon as people start losing their jobs you will see a housing crash never seen before.

      • Fannie and May are not the only one buying these loans.
        My jumbo loan was sold to AIG…they specialize in high quality jumbo loans.

        You keep telling us a story from 2006-2008 time frame.

        Next housing downturn will be caused by something that probably not anyone on this board is aware of.

    • NoTankinSight

      Millennial,

      It’s even simpler than that… here we go…. try to stay with us:

      There are less homes for sale than there were 5 years ago and much less than the historic norm. Doctor Housing bubble has expounded on this with the data, why ignore it?

      You are the one who lives in the fantasy world. It’s hard to understand why you ignore all rational data and thought that goes against your rhetoric.

      You can still have the belief that there is a crash coming this year of 55% and cryptos are going to the moon…. but living in the fantasy world where inventory is high and rents haven’t increased dramatically since 2012 is ignoring all rational thought.

      • We have enough inventory.
        https://fred.stlouisfed.org/series/MSACSR

        If we get a nice economic collapse we will see even higher inventory. Low inventory is the biggest BS.

        Also, my rent hasn’t increased at all. You can still rent rooms for the same cost as in 2009 in certain areas. You must be a realtor trying hard to get a sale and a sucker to buy an overpriced crapshack? Or you are just pushing an agenda here. Or, you need to take your pills again.

      • Millennial is the new Jim Taylor who was the new Alex in San Jose. I’ve watched them cpome and go.

      • SoCal Engineer

        As Woody posted earlier, looks like the supply is more than March 2013.

        https://fred.stlouisfed.org/series/MSACSR

      • Hopefully Millie already took profits on crypto. That ship has already sailed because BTC ETH and all the alts appear to be on a slow downward correction for a long while.

      • Lord Blankfein

        @NoTankinSight,

        There are may factors that have DRASTICALLY lowered inventory relative to historic norms. Maybe it’s super low rates, investors coming out in droves, increasing population, building not keeping up with increasing population, Prop 13, no more move up buyers, etc, etc, etc. Whatever it is, there is no denying the fact the inventory is tight. And there is no denying the fact that rents have went up BIG TIME in the past few years. Millie lives in a world of denial if he does not accept these facts. Just like Millie, I hope we have a 50% plus crash. If so, I will likely buy several places with my warchest that is overflowing!

      • Millston,
        Great name by the way.
        Yea I usually take profits when a coin is up 3-4x. I lost out on some gains but lucky on other ones. I agree, crypto is way down at the moment. Nice opportunity to dollar cost avg and accumulate. I still think we will see a trillion dollar market cap on crypto and new ATHs this years.

      • There you go! Have the cash ready and buy when it crashes! Can’t get much easier! All you need is patience!

      • “Watch them come and go”
        It will be a looooong time before I decide to go 😉

      • NoTankinSight

        1. Are we talking Months Supply or Inventory here?

        2. Are we talking national or CA here?

        Nationally months supply has been relatively flat because both Inventory and Sales are way down. I don’t want to assume you know how to calculate months supply but if you spend some time here you can see the facts:

        https://www.redfin.com/blog/data-center

        In Los Angeles inventory from 2010-2012 averaged 28,000 homes for sale

        Current inventory in Los Angeles is 12,000 homes for sale

        Months supply in Los Angeles is under 3 months

        From 2010-2012 months supply was about 5 months

      • NoTankinSight if the number of houses went up to 28000 there would be no buyers for those houses and the months of supply would go up almost 150%. It would indicate a recession and cause prices to absolutely collapse. Right now the number of houses available for sale is in the normal range to meet the demand from buyers.

        There is no low inventory when inventory matches demand.

    • “Sometimes I ask myself if there is another reality/universe out there that exists alongside ours.”

      You mean the alternate reality where people look at actual data before drawing conclusions? I live there.

      Inventory is not high. The number of listings has just started climbing out of a seasonal low, and will peak in mid-summer. But since you choose to remain willfully ignorant, you will never escape your “reality”.

      • Yep, that’s exactly the reality I was talking about. Check out the post from woody:
        “https://fred.stlouisfed.org/series/MSACSR

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

        Or just keep repeating the inventory is low myth.

      • We’ve been talking about CA, specifically LA, when discussing inventory. So we’re apparently no longer talking about the west coast? So let me make sure I have this right – use data that seems to fit your narrative, even though it doesn’t, hoping that your readers won’t notice. Good plan.

        See NoTankinSight’s post for RELEVANT data.

      • LA?? LA is the arm pit. Even The inland empire would be better than living in LA.

      • Millenial, you don’t want to live in LA? Well at least you do recognize the inventory facts there. So you don’t want to live there…

        How about Orange County?

        Inventory averaged 12,000 homes for sale in the OC from 2010-2012.

        Inventory is 5000 homes for sale in OC currently.

      • See the posts further down. This guy is never going to give specifics about where he would buy. Clearly he just wants to troll the same lines and not have any discussion beyond it. People are asking where and he ducks the question.

      • “you don’t want to live in LA? Well at least you do recognize the inventory facts there”
        What has me not liking LA to do with inventory? It’s a crappy city, dirty, too much traffic, no charm. The allure stems back from the 40’s. Old movies show it. Today’s LA is more like a dump. I am not attracted to LA at all. There is a reason why LA is everyone’s favorite whipping boy and it has nothing to do with inventory.

      • You have not been to LA

      • I have been many times. Maybe you love LA for whatever reason. Tell me some places you want me to see/re-visit and I might change my mind?

  • I just read somewhere that SF is sinking while sea level is rising.

    • Yes, but it is actually other way around. Sea level is sinking, but SF is rising. But yes, same idea

    • I spoke to a California sea level expert a few weeks ago. I think he said that sea level had risen about 1 foot (since 1900) in some places of California, I think it was SoCal, but in NorCal the Pacific Plate is rising, hence, sea level appears lower but by NorCal he may have meant Humbolt area.

      • Barnie Panders

        “California sea level expert” aka someone with the crippling and debilitating mental illness known as liberalism

      • Seen it all before, Bob

        I believe in geological time frames, the Pacific plate under San Francisco is rising.
        The plate under Flyover Country is falling under the Pacific Plate.

        San Francisco will soon be on top of Flyover Country. Soon, with respect to geological time.

      • So millennial can buy around the year 2100. No problem

      • I used to deliver newspapers when I was a wee little lad, around 9 and 10 years old. This was back in the olden days of the 1980s when kids actually did more than play video games all day. But I digress…

        On Sundays the paper came in 3 sections and before delivering them, I had to put all 3 sections together. And I’d read some of the stories while doing that. And I remember vividly one Sunday there was a big bold front page headline about Global Warming and how within 20 years Florida would be under water. At the time, my grandparents lived in FL and reading that scared the hell out of me, and I started thinking of my grandparents drowning because of this global warming stuff. My parents had to calm me down and assure me that grandma and grandpa would be just fine.

        And here we are 30+ years later, Florida is just fine, yet the same scare tactics are still used by leftists, with the same lies about an impending doom caused by globBULL warming. The more things change the more they stay the same.

  • Reality Bites

    Just think about all the outside amenities that you get with a $1.1M+ condo in a sanctuary city like San Fransicko? Streets filled with homeless and their sh*t, violent illegal alien gangs, drug addicts, Antifa thugs, and loony leftists.

    • I am sure people who are buying these condos are well aware of these issues.
      You dont have to buy

    • Remember, diversity is our strength. Those MS-13 gang bangers hanging out on the corner in front of your condo are strengthening us.

      • Perhaps, but you don’t have to worry, since you are not going to live there

      • Mr. Landlord,

        Why do you troll this website with your political rhetoric. This is not the forum. Certainly, there are political issues that greatly impact RE and investing in a myriad of ways… but your slant is biased, laden with generalizations, and hyperbolic and low information and your vailed racism is beyond moronic. Are you a Russian troll bot? Sad fat virgin in your apartment eating pizza and masterbating and reading breitbart? Keep it your experiences and perspective as a landlord and save the political stuff for the fox news comments section please.

      • According to SoCalGuy, it does strengthen us. If you don’t agree with a proud liberal democrat, you are just a deplorable bigot and a racyii…ist. That is supposed to close any argument, or so the liberals think!…..

      • Crime is overrated. Crime in the neighborhood puts pressure on house prices. Anything that puts pressure on prices is great news. THAts totally worth a few robberies

      • Mr. Democrat,

        Why do you troll this website with your loony leftist political rhetoric? This is not the forum. You inane postings add nothing. Are you just another worthless DemocRAT troll bot? Maybe you are a fat soy boy living with your mommy who fondles his manboobs while watching the LGBTQRS clowns on CNN and MSNBC spew fake news? Keep your inane postings to yourself and save the political stuff for the HuffPoo fake news comments section.

      • Democrat snowflakes sure are easy to trigger eh MR L? Remember everyone is racist the snowflake battle cry!

    • Sure, but there are so many shitholes out there and so little of you.

  • son of a landlord

    This Palos Verdes Estates house went Pending after being online for only 8 hours: https://www.redfin.com/CA/Palos-Verdes-Estates/701-Via-Somonte-90274/home/7723981

    I saw it online this morning. An Open House was scheduled for this Saturday. Yet it’s already snapped up by this afternoon. I’m guessing they buyer made a very strong offer, sight unseen (aside from the MLS photos).

    • Laura Louzader

      I’ll just BET that house went quickly. The list price is really pretty low for such an attractive, large house on a view lot overlooking the ocean. I’m sure it will close pretty far over the ask price, too, because that is a real house, with great architecture and real charm as well as a lot of space, a scenic location in a prime area, and a spectacular view. There were probably many offers well over $2M. I see houses out there with much less going for them, in so-so areas nowhere near the ocean, sell handily for not much less.

      • Yeah, thats a beautiful house in a great location. I would guess it was underpriced and I have no problem with it selling closer to 2M. Its those POS in the ghetto where theyre asking 500K or the nothing 60s ranch home in San Jose selling for 1-2M that irritate me.

    • NoTankinSight

      SOL,
      That one may actually be a good purchase, I am surprised it’s that low in price. Maybe the offers are well above asking.

    • Palos Verdes is nice and clean. It is one of the enclaves, same like La Jolla in North SD. By comparison with other places it is worth the price (most value is in the land, but the house, although old, it has character). I am saying this based on the current interest rate; that can change in the future. The house was priced right based on current interest rate and location.

    • Is that suppose to be proof we are not in a real estate bubble or we are?

      • Woody, if you were here for a long time, you would know that I believe that everything is a bubble – RE, stocks, bonds and cryptos. The whole risk is assessed based on T-bill the most sovereign of all debt. Due to the artificially low interest for almost a decade, risk is very misplaced. As interest continues to increase, it will blow up the bond market (3x the size of the stock market); that in turn will blow up the stock market and that in turn will blow the RE market. When I say “market” I hope you understand that I don’t mean a free market. Everything is centrally controlled like in a communist central committee – the FED.

        The inflation is already way higher than the bogus number published to cap the increase in entitlements. Adjusted based on that true number, the GDP was negative for many years. That is what the middle class experienced – continued economic contraction (Depression). The FED knows this very well and they know they are behind the curve. However, they feel that what they experimented in the last decade led to “check mate” – doom on us and them if they raise the rates or if they don’t. If they raise them, they know that they start the chain effect by blowing the bond market. If they don’t, they lose control on inflation and they might not be able to bottle up the inflation genie. Well, they can, but can they do what Volker did decades ago and raise the interest to 18-20%?!!!????….Do they have the guts?!!!????…..OK, if that happens, what will be the effect?

        It is not only the employment increasing; inflation is increasing along with it. You see, there are no good outcomes, regardless of what course of action the FED takes – I mean for the average guy; the ones at the top will continue stealing in trillions one way or another.

        Now I am just patiently waiting to see what moves they take – continue QT and rate increase, or stop and let inflation go really high. The outcome will be the same. However the path can be smooth down or violently crash.

        I am not a doom and gloom, I am a realist. There is no bad news or good news, just news. It is always good for some and bad for others. It is always good for those who prepare.

    • But there’s plenty of inventory…..

    • You can be there neighbor for a rental of 4500 a month or 54k a year at 789 Via Somonte,Palos Verdes Peninsula, CA 90274.

      https://www.zillow.com/homes/for_sale/Palos-Verdes-Estates-CA/21340434_zpid/33311_rid/33.806422,-118.381923,33.789143,-118.40499_rect/15_zm/0_mmm/1_fr/

      You can then place your 1.5 million into Vanguard real estate index ETF VNQ and collect 4.67% or 70k a year.

    • Lord Blankfein

      That property was a great buy if it sold for anywhere close to the asking price. Super prime PV location, forever ocean views, historic home with tons of character, large lot with lots of unique features. Unlike much of PV, you can be in Redondo Beach in less than 10 minutes. What a great property, hats off to a lucky buyer. Could you imagine having coffee every morning on your patio enjoying the views or catching those sunsets every night. Incredible!

      • That house is a total albatross at asking prices

        1.5mil asking minus 20% down is 1.2mil mortgage

        1.2 mil mortgage at 4.6% interest rate = payment of $6080 vs $4500 rent.

        then add another $18750 for property takes, $15000 for maintenance, and $1500 for insurance. Total cost of ownership per year $9017 vs $4500 rent WTF. Opportunity cost of not having your 300k in a stock market index fund 21k per year.

      • That home is rising in value 11K per month. You are way ahead by buying it. Do the math.

      • Woody,

        The higher you go in the RE food chain, the less rental parity there will be. Needless to say, owning this property with 20% down won’t be anywhere close to rental parity. That is little concern to potential buyers since they will likely be paying cash or putting a significant portion down (50% plus). What makes this property unique is exactly why it went pending in 8 hours. This is not a run of the mill 60s/70s tract home that looks exactly like every third house on the street. I keep tabs on PV properties and this one definitely hit all the marks, there are’t too many like it (supply and demand). Just like like people are willing to pay big money for all original classic cars that are rare, same holds true for housing. This home likely sold for over asking, we will soon know how much over asking. If given the opportunity, I would have bought this property. It takes luck, timing and having the inside track (realtor who has connections).

        No thanks on the VNQ ETF. The 4.8% yield is nice, I looked at the chart and it has lost 23% of its value in the past two years. Not a good investment!

      • Woody is on the right track. There’s probably some catch like the property needs serious repairs or whatever. Great location but as usual Lord B trolls the flip side of Millennial’s same coin.

      • JT why would it logically increase in value outside of a mania when it’s already over priced by 100%?

      • Woody, great post.
        I showed a few rent vs buy examples in the past. The responses you receive from RE cheerleaders are hilarious. No comedy on TV can make you laugh that hard. This one guy said, “price does not matter and your down payment makes you 10% each year. “ other comments were:”exclude principal payment because principal is paying yourself”, “therefore, paying 200k down AND still paying 1,5k more a month than a renter is RENTALPARITY”. And just look at the joker above who makes the statement that your overpriced house is making you 11k each month!! Bawahaaahaha

        Hey JT, so the 11k monthly, I don’t see it my bank account yet. What number do I call? I bought three month ago and someone owes me 33k. But it still has not shown up!!!??

      • Dude, I’m not trolling anything here. I’m just stating that this house was a good buy. Clearly somebody else agreed with me and snatched it up a few hours after it hit the market.

      • “There’s a sucker born every minute”

      • Lord blankfein,
        “A good buy”???
        You are kidding. This was a fantastic buy. A no brainer. A steal. It was an investment! Probably one of the best investments out there. As we learned it’s increasing in value 11k….not per year. Per month!! Why would you still go up in the morning and go to work? Your house is making you 11k just by sitting there. You can’t call this a good buy….this house is a cash cow! How can the seller let this go for less than 10 million?

      • Yes, currently housing prices are rising around 8.5% per year, so that comes in to just a little less than 11K per month.

        Over 20 years, you will not see 11K per month average. Over 20 years, you should see on average 4K to 5K per month appreciation. Of course, you will have months where you make much more than that, like now, and you will have months you lose money because your home depreciates. If you average all of that out, 4K to 5K per month over 20 years should be about right.

        I bought a number of beach fixers in the early 90s … right after I graduated from college. It was easy with the next to nothing down mortgages. On my best one, which is in Corona Del Mar south of PCH, I am up on average 8500 per month. And, on my worst, which is on the redondo/torrance border, I am up 2800 per month … these numbers are over 20 years. So, I would expect 4K to 5K per month on that PV property.

        What is wrong with your logic:

        1) You are ignoring appreciation which is leveraged 5x to 10x on your initial investment
        2) You are ignoring tax breaks … 2/3rds of the property tax and interest can be written off
        3) You are ignoring a portion of that payment flows into equity and the amount into equity becomes large as time goes by
        4) You are ignoring the 500K tax free gain on your primary residence

        You factor all of that in, and buying is a no brainer.

        I retired more than 1 year ago, and I am in my later 40s. That happened because I shoved every available penny into my homes for 20 years. I still drive old cars, have little furniture, and watch my spending. I spend most of my days repairing rental properties. But, I am retired and happy.

        At this point in life, I suppose I could run out and buy a brand new BMW … but that is not going to happen. Actually, my 7 year old Toyota Camry and 8 year old Honda Pilot suit me just fine. I do have my eye on a brand new bike so I can ride up and down the strand. That will happen.

        I watch my 40 something friends who bought all the cool stuff over the years. Now, they are all struggling with their finances.

      • There are two types of people who would buy this house:

        1) Speculating that it’s going to keep climbing.

        2) Loves it and makes more than enough to afford it. It’s about the home, not the money. Plans to be there for 20 years.

        I don’t see a problem with #2, in any market.

      • John D,

        You have a good point there. The people most likely to buy this home can easily afford it and will enjoy living there for a long time (and mostly likely own other properties). And maybe even pass it on to their heirs. Unlike dirty, disgusting San Francisco…guaranteed there will never be bums, syringes, human excrement in this pristine PV neighborhood. Millie may get his wish with a 50 to 70% decline in the IE, never going to happen in this neighborhood!

      • John, you forgot the most common on:
        3) can’t afford it,is up to his ears in debt and when he stops making payments he gets to live there for free a couple of months until the sheriff knocks on the door to evict.
        4) the guy who thinks that purchase makes financial sense. Yes, these people exist. Principal is paying yourself (per Surge) and the house makes you 11k a month (per JT)..

      • “3) can’t afford it,is up to his ears in debt and when he stops making payments he gets to live there for free a couple of months until the sheriff knocks on the door to evict.”

        Wrong. You need to qualify to buy a property, which means your debt is evaluated as part of the process.

        “4) the guy who thinks that purchase makes financial sense. Yes, these people exist. Principal is paying yourself (per Surge) and the house makes you 11k a month (per JT)..”

        It does make financial sense to someone who thinks the home is more important than money. It’s #1 who is taking a huge risk.

      • Seen it all before, Bob

        I agree 100% with The Lord and John D. Housing should be a long term investment and should be held to balance rental parity (at least 10 years).

      • “Wrong. You need to qualify to buy a property, which means your debt is evaluated as part of the process.”

        Oh please. What a BS. People are in way to much debt and over leveraged. On a daily bases People buy houses they can’t afford. These qualifications are a joke. The avg joe is just one recession away from foreclosing. During the last crash we had 7 mio foreclosure. The next crash will easily top that. The avg joe has trouble coming up with 1k in savings and you are telling us people who buy at these insane price levels can afford it? Don’t kid yourself.

    • Everything is based on assumptions. Garbage in, garbage out. They can not predict the weather correctly for a week. One meteorologist said that 2 weeks into the future it is already pure guessing. But they can predict what will happen a century from now!!!…if you believe that, I have a bridge to sell you….

    • “And when that is factored into sea-level rise models, the area around the bay in jeopardy of being underwater by 2100 ”

      I call BS on rising sea level as we’ve precise measurements on that since 1950s and no significant change, within centimeters.

      “Rise models” forecasted about 2 centimeters per year by 2010. We can already say that that didn’t happen, so the models are and were wrong. OF course no correction is done, only the end is pushed to 2100 as no-one of the forecasters is alive there to explain the non-results.

      I can believe that a landfill sinks, it’s basically a pile of dirt on top of other dirt and piles in water tend to spread. But totally different thing.

  • This is what MAGA looks like….the economy is on fire. Amazing what happens when we get a pro-American, pro-Business president. And yet imbeciles like Nancy Pelosi is still talking about the tax cut only benefiting evil rich people, LOL.

    “Inside the glittering nonfarm payrolls report the Bureau of Labor Statistics released Friday were some even more inspiring numbers. Skilled labor positions surged with big increases in construction and manufacturing, which has seen its best three-month period since 1984.

    The labor force surged by 806,000, the biggest move since September 2003, and now sits just below 162 million. That’s due to 653,000 people no longer counted as being out of the labor force and a growth of 785,000 folks reporting to be at work, according to the government’s household survey. The labor force participation rate rose to 63 percent while the employment-to-population ratio rose to 60.4 percent, both the highest since September.”

    • Wow…Trump taking credit for this economy would be like inheriting a couple million dollars in cash or RE and claiming to be a self made financial genius. Of course there is no denying that trickle down economics doesn’t work and every Republican administration in the last half century as exited office with a recession of varying sizes and time lengths. Like I said before, save your lectures on the gilded wisdom’s of maganomics for the infowars comment section please.

      • Mr. Democrat,

        Why do you troll this website with your loony leftist political rhetoric? This is not the forum. Quit regurgitating the fake news you heard that was spewed by the loony leftist LGBTQRS clowns on Democrat propaganda outlets like CNN. NBC and MSNBC. Keep your inane postings for the HuffPoo fake news comments section.

  • Say Millennial is right and inventory is not low or let’s say inventory is really high.

    What difference does it make?

    Prices are still high either way. He’s not saying that’s also a myth is he or is that his next tactic?

    Like what is the point of even arguing it? Just because this guy dithers about with an untruth is not enough to change the market.

    He also denies his obvious desperation to own. He can move which is what adaptable determined people do to attain the goal but he continues to choose to be stuck in a place where he can’t get what he wants within his criteria.

    He talks about ((potentially)) saving money all the while undeniably continuing to lose the finite resource of time. He’ll stubbornly spin all this by saying desperately waiting is time well spent. He’ll then spin that by saying he’s not desperate and that this is just entertainment as if the rest of us were all born yesterday.

    Tick tock.

    • Huh?! Everything alright? I can dumb it down for you….save money in good times and buy assets during bad times. Crash=opportunity.

  • Millennial how about you put your cards on the table.

    Which areas would you buy in if your criteria was met?

    As in the actual cities and neighborhoods.

    • Cards on the table? Why would the are I want to buy matter?

      • Area

      • He doesn’t want to have an actual discussion but would rather repeat trolling lines over and over. Best thing anyone can do is to no longer respond to him and the troll will eventually give up.

      • “In Internet slang, a troll (/troʊl, trɒl/) is a person who sows discord on the Internet by starting quarrels or upsetting people, by posting inflammatory, extraneous, or off-topic messages in an online community (such as a newsgroup, forum, chat room, or blog) with the intent of provoking readers into an emotional …“

        I don’t do any of these things. I express my opinion and call things like the prop13 scam out. Just because I point to facts and the truth does not make me a troll. I am happy to have an actual discussion. What do you want to discuss?

      • The question was asked yet you continue to evade answering it. Name specific locations.

    • Millston, strangely, the best place to buy during a crash would be the least desirable areas like East LA, Lancaster or Hesperia. They would drop the most percentage wise (60% or more) and therefore appreciate the most during a recovery. The worst area to buy would be a beach town like Costa Mesa where prices would drop very little (25% or less).

      • Lancaster….the only time you visit Lancaster is if your daughter’s softball team plays in the state tournament. Beautiful Lancaster ain’t so beautiful. They have space and nice fields and many hotels. That’s all. Summers can get brutally hot there. The city itself is a dump. Ugly, dirty, no attractions, no high paying jobs. No money in the world would get me to re-locate to Lancaster. Don’t care if you can buy a mansion for 100k or not during the next crash.

  • @Millennial

    > If you are really smart you live with your parents until 40

    When does your life start?

    I have to ask, do you feel embarrassed bringing women home to your parents house?
    I am much much older than you at the age of 36 and I would be happy to discuss my successes in cryptocurrency, earning a PhD in CS, realizing a startup, and and buying some CA homes in my 20’s and 30’s.

    • Tell me more that sounds interesting! What’s the project about? Website?
      I don’t actually live at home. I wish I would but my commute to my tech job would be close to 45 min each way! My wife and I rent, save money, invest in crypto and stocks and wait for the big RE crash. Let me know if I can help with anything else! I envy anybody who is over 30 or 40 and can still live at home. Smart way to save money during the RE bubble.

      • Seen this all before, Bob

        Thank goodness for the Boomers who had the foresight to buy a home during the local peaks of the 80’s and 90’s. The Boomers made a wise decision to buy in their 20’s and 30’s. The Millennial children who live at home and other Millennial friends who seem to live there also on the futon are thanking the Boomers for their wise decision to buy and for a place to live (and for the free beer even though it is Dad’s beer).

      • Well, yea. Why wouldn’t they have bought when they were in their 20’s and 30’s. Back than a house did not cost ten times the annual household income. Buying back than made sense. Now that we are light years away from rental parity, buying makes no sense. It’s much cheaper to rent and buy when the market crashes.

      • Do your folks have prop 13? Do you wish for them to lose it? I’m sure you’ll have some wise-ass response.

      • Jed, just because relatives, friends or family profit from the prop13 scam doesn’t change the fact that it’s a scam. You have older people in a paid off house paying a fraction of the millennial next door for property taxes. That millennial has to overpay massively for the house itself and on top of that has to carry the property tax burden. A scam is a scam regardless of who you kbowbetc.

      • Whoa!!! Millie is married? LOL.

      • This is for Democrat who thinks MS13 is just a figment of Fox News’ imagination. Washington Post, that well knows pro-Trump newspaper has a length write up on the gang, that has grown exponentially since Obama allowed “minors” from Central America to walk into the US. They sound like pleasant fellows, eh? Coming to a high school near you…..

        “From New York to Virginia to Texas, schools in areas racked by MS-13 violence are now struggling with a sobering question. What to do when the gang isn’t just in your community, but in your classrooms? Nowhere has this effort been more intense than in Suffolk County, where police say the gang has committed 27 murders since a surge of unaccompanied minors began arriving in 2013.

        Starting in 2013, thousands of unaccompanied minors — most from Central America — began entering the United States illegally from Mexico each month, many turning themselves in to authorities. More than 200,000 have been detained, screened and then placed with relatives by the Office of Refugee Resettlement. Nearly 5,000 have been sent to Suffolk County.”

        https://www.washingtonpost.com/local/ms-13-is-taking-over-the-school-one-teen-warned-before-she-was-killed/2018/03/09/93ed7c9c-2083-11e8-86f6-54bfff693d2b_story.html?utm_term=.8364ae57032c

      • For all the doomers and gloomers here, you keep forgetting a key element. Obumbler is no longer the prezzie. We have a pro-American, pro-Business president now. In other words prosperity is here once again.

        You all bought into the liberal media nonsense about the new reality of anemic growth, high unemployment (remember FUNemployment??!!) and 35 year olds living home with mom and dad. That wasn’t a new reality. It was the sad reality of Hussein’s 8 year rein of terror. No more. We have years ahead of us of unbridled prosperity. So you have 2 options: continue living in the past, like a pauper in Obama’s America, or embrace MAGA and prosper.

        Your choice.

        PS: 35 year olds living in mom’s basement was NEVER cool not even during the depths of Obnama’s depression.

      • Seen this all before, Bob

        Millennial has said that he is married and has kids multiple times. I’m not sure if Mr Landlord is married or has been divorced multiple times with no wife who would ever want to bear his children. 🙂

        Back to real estate. Millennial wants to buy low and leave his children a large estate with no estate or Real Estate taxes. Mr Landlord should agree with this. It is a sound investment strategy

  • Let’s be clear, millennial is a troll. Let’s ask him a question with an easy to find answer.
    .
    .
    .
    .
    What’s the months of inventory in San Diego and the actual inventory numbers compared all the way back to 2012? I won’t link to another blog, but it’s very easy to find and makes millennial look like the joke he is. I’d like to be a fly in millennial’s brain as he performs the mental gymnastics to juke every fact and statistic that goes against his preconceived notions.

    • What is going on lately. I have been on this blog for years but lately newbies call me a troll. One guy even said I am in my mid fifties. No idea how this is supposed to accomplish anything or maybe it’s supposed to be insulting. Who knows. Also, whenever you see political posts on here someone throws in the troll accusation. Even if I think that’s true, why respond to it saying he or she is a troll. Just ignore that political stuff. Same with me, if you think I am a fifty year old troll just ignore me.

    • Throbert Girth

      I don’t think Millennial is a troll at all. This is a housing bubble blog and he makes a lot of good arguments that support its purpose. Why are all you house-humpers on this blog anyway?

    • Seen it all before, Bob

      Millennial isn’t a troll. He is just trolling us slightly to make us think.

      The general recommendation for any investment is to buy low and sell high.

      Millennial is simply saying that he doesn’t want to buy high.

      That is sound advice for any investment.

      My point and Surge’s point has been that if you buy high, and if you hold on long enough, eventually the next high in the future will be higher than the current price.
      Rental parity will also lean heavily toward owning a house vs renting the longer you hold onto the house.

      The only thing certain in life is death and taxes. This is only true if you own a house. If you rent, the saying should be: The only thing certain in life is death, taxes and increased rent.

      • obviously, it is better to buy low than high.

        That said, RE has uniqueness in that leveraged RE is structured so that impact of price swings is significantly reduced for long term owners.

        Yes, you can time prices, but timing horizon is so long it might start to interfere with other life goals. Personal RE is a mix of investment and lifestyle.

        1) Impact of price swings on the RE is reduced through leverage and inflation hedge. This is why price does not matter as much as say in buying a regular stock (which brings no utility in itself)
        2) Rental parity is impossible in the beginning. Rental parity is achieved in few years through inflation. As any investment (especially with utility component), you cannot expect break even at day1.

        Above 2 statements are reasonable in my mind and could be debatable. The typical Millie answer is 1) I am RE Cheerleader/agent and want to convince him to buy 2) It is a parody on rental parity.

      • A troll is a troll there is no such thing as slightly troll.

  • https://www.zerohedge.com/news/2018-03-11/california-high-speed-rail-budgetary-trainwreck-cost-soars-20-77-billion

    It’s time to repeal prop13. Much needed tax revenue will prepare California to be a world class state with a world class public transportation system!

    • Why is CA so obsessed with 19th century transportation? Oh right. It’s cuz all the cool European countries have it.

      • Partly – get the poors to use public transpo while the richies have the exclusivity to drive. I heard on a leftist public radio in my area last week the host and several callers wanting to limit driving cars to those who make more than 65K a year, no joke!

        But the bigger, more near term need is to get lots of cash (and some jobs) to bribe unions and others. Its why you see trains going from nowhere to nowhere in development in CA, IL and even HI(!) that are massively over budget and riddled with corruption. Wealthy builders gets these clowns elected and in turn make out like bandits feeding at the govt trough. Once you realize these types of public works projects are a scam from the get go, everything makes sense. I’ve read article after article where people debate each other at agonizing lengths about why the design didnt include some technology or connect points of actual interest. They dont get it – they were NEVER designed to be successful, ever! Evil genius is behind this, and the fact that they get the blue state suckers to buy in time and time again is amazing and a testament to the stupidity of their residents.

  • The ONLY way of making money or getting ahead of a renter in California is if you buy at a perfect time and sell high.

    “https://www.usatoday.com/story/money/columnist/2018/02/18/why-your-home-lousy-investment-when-you-think-its-great/340516002/

    On Jan. 1, 1995, San Mateo’s median home price was $305,083. Suppose you bought and put 20% down plus 1% closing costs. With 1995, 30-year fixed-rate mortgages going for 7.5%, your monthly payments were about $1,700.

    Jump to 2005, when you sold for $763,100 (2005’s median price), a perfectly timed deal months before home prices peaked. After amortization payments, your remaining mortgage balance was $211, 837. After paying that off, you had a gain of $551,263. Then, subtracting your down payment, you had a whopping 803% return, or 23.4% annualized. Problem is you forgot a mega boatload of expenses, all of which must be subtracted.

    Over those 10 years, you paid more than $32,000 in principal and more than $172,000 in interest. Subtract them, and your return falls to 468%, or 16.7% annualized. San Mateo’s annual home upkeep averaged $1,820 (general maintenance, HOA fees, yard care, etc.). Don’t forget your 1995 closing costs and 2005 real estate agent’s commission (about 5%). And property tax! In San Mateo, you paid 1.125% of your purchase price, increasing 2% every year. Over 10 years, that’s more than $37,000. Maybe you remodeled for $40,000 and added a patio for $15,000. Median homes grew 500 square feet between 1995 and 2015. To generate average prices, you must maintain average size.

    After all this, your amazingly lucky timing in one of America’s then hottest markets rendered a 177% cumulative return, or 10.8% annualized, pre-tax. That’s comparable to stock or bond returns over the same period in a tax-deferred 401(k). Most American regions did far worse. The one important difference since then? Uncle Sam foots less of your bill since Congress capped property tax and mortgage interest deductibility.

    No matter how wonderful your home is, it’s a worse investment than virtually everyone thinks.”

    • Mille, that is a lame article and you know it too They conveniently forgot to mention that your house is also shelter. Unless you like living in a van, you need to pay to live somewhere. How many tens or hundreds of thousands did the comparable renter waste in this 10 year span? Why was there no mention of refinancing? Rates in 2005 were MUCH lower than 7.5%. There was mention of MID for the 172K paid in mortgage interest? Why not? And no mention of 250K single 500K married tax free profit from selling a house. Were the hypothetical investment returns tax free also?

      And just imagine if they never sold that San Mateo house. What would it be worth today? If it weren’t paid off, it would be so far under rental parity it would make Jim Taylor’s head explode. These people made a fantastic buy in 1995. Between buying low, refinancing to the lowest rates in history…they likely had a windfall to invest in other things all while enjoying a primary residence. The author of this article clearly left out many important things.

    • Seen this all before, Bob

      “On Jan. 1, 1995, San Mateo’s median home price was $305,083. Suppose you bought and put 20% down plus 1% closing costs. With 1995, 30-year fixed-rate mortgages going for 7.5%, your monthly payments were about $1,700. ”

      The true penalty of renting vs owning over time wasn’t mentioned in this article.

      In 1995, two brothers lived in San Mateo. One purchased a house with a mortgage payment of 1700 above during a local bubble. The other brother called his brother a fool while renting the same size house next door for 1000 per month.

      Fast forward 23 years to 2018. The homeowner is now paying 1000 per month with refinancing at 3% interest on a 15 year loan after 10 years of paying down principal.
      San Mateo rental rates average 5K per month for a 3 bedroom house. The poor brother who rented is now struggling to make ends meet because his salary didn’t go up 5X during that time and he wasn’t as lucky as some with his bitcoin investment.

      Fast forward another 10 years and the homeowner has now paid off the house so he has 0 monthly payment for PI and is paying 1/3 the taxes as his other neighbor who bought recently thanks to Prop 13. The poor other brother who would like to retire but the San Mateo rental market is now 10K per month for the same house.
      He certainly doesn’t make 10X what he made in 1995.

      Homeowner brother has now retired and is living comfortably on Social Security with no monthly housing payments and extremely low taxes. He lives another 50 years paying no rent or house payment.

      Poor rental brother had to move to Baker and lives in an un-air-conditioned trailer for 1000 per month rent. He’s worried the rent will double next year.

      I don’t know how to quantify the long term rental parity advantage of owning a house.

      • Seen this all before, Bob

        I forgot to add that when homeowner brother sadly passes away, he leaves his kids either a rental property renting for some enormous amount at an extremely low property tax rate or a tax-free windfall on the house due to the odd stepped-up basis law and Trump’s revocation of Estate Taxes.

        The poor kids of rental brother get nothing except for the 25 cats that the brother had in his trailer.

      • Nobody said anything about renting forever. There are two points here:
        1)You only truly make money with RE if you buy low and sell high-it’s common sense in my mind but there are people who tell you it’s always a good time to buy a home.
        2)during a severe housing bubble it’s much cheaper to rent. Once prices collapse by say 55-75% I would agree that buying is probably a good idea. At least if you intent to stay at that house for say ten years. If not you have the option to rent it out and cover your expenses. That only works if you buy very low.

        The point of the story is that some RE cheerleaders don’t understand all the additional costs, taxes and expenses. That’s why RE crashes are good for almost everybody. If you buy low it’s almost impossible to screw it up. Waiting, saving and patience is key!

      • Lord Blankfein

        In hindsight, buying a home in a nice Bay area city back in the mid 90s was equivalent to winning the CA state lottery. How this is viewed as a so-so investment baffles me!

      • Well for starters the down payment would generate over 500k (9.8% non inflation adjusted index equity market returns) in capital gains after 23 years. If he added the 700 dollars in savings from not owning he would have over 1.1 million.

      • You also forgot to mention the two main drivers for the RE in the last 30 years:

        1. Women entering the work force like never before – 2 income household instead of one income household. That doubled the purchasing power per household. Are the households of the future going to have 2 moms and 2 dads to double again the purchasing power????!!!!…. Or is it going to be mainly (like 2/3) one income households?

        2. The mortgage interest rate came down from about 18% to 4%. While the interest could go negative (NIRP), will it go to (minus) -14%? Who knows, in our bizarro world anything seems possible in order to double again the purchasing power.

        Also, will the incomes keep up with inflation in a globalized economy???!!!!….If not, how will the doubling of debt be serviced???!!!…

        Unless you replicate the 2 main drivers in the next 30 years, I doubt you can replicate the results – past performance is no guaranty of future performance.

      • Seen it all before, Bob

        I see your point, Millennial. Buy low and hold.

        However, when I bought in 1997, it was a local high. Rental parity was out of whack for 5 years following and people said I was nuts. Prices didn’t crash until 4 years later in 2001. And it was a minor crash compared to 2008.

        Long term, it worked out OK 20 years later, rental parity is a joke. I pay 1200 per month and my neighbor with half the house I have pays 3000 per month. I am coasting to retirement with a paid off house in 6 years.

        Buying low is a good goal, but also calculate when you want to retire and buy with a loan that will fit that window. Paying 3K per month on SS will never work.

        Trump is boosting the economy and giving more people more money to spend so my prediction of a Yuge crash in the housing market is extended out a couple of years

        I mostly pulled out of the stock market in late 2016 and missed the 30% Trump gain.
        I still don’t know why stocks went from overvalued to extremely overvalued.

      • “I mostly pulled out of the stock market in late 2016 and missed the 30% Trump gain.”

        You and me both, Bob. Well, except for my 401k. That I always let ride, recession or not.

    • how much would this person spend in rent for the same house during that time if they DIDNT buy? how many times would they pay for moving? what if they stayed in that place until now, whats the value today? millions?

      • Yeah, imputed rent is conveniently omitted, as if house was simply a stock and did not provide any utility over the 20 years.

        But yeah, it is a tiny detail 🙂

    • You forgot to add 600k worth of rent (20 years, 2.5k/month on average, just a rough number). Imputed rent that you would have paid regardless. So, ~600k needs to be added to the bottom line profit.

    • Millennial, I finally agree with you about something. Even in the long-term, timing of your home purchase makes great deal of difference in your future return. If someone in California had purchased a home in 2006, for example, they are now just be braking even–after 12 years. Renters would have come out way ahead if they had waited to purchase sometime from 2009 to 2015.

      12 YEARS IS A LONG TIME TO BREAK EVEN

      • True, if you bought at the peak it will take longer to break even.
        However, you still need to count accumulated equity and imputed rent.
        My feeling that if someone who bought in 2006 and holding on beyond 2018 will still do better than someone who has not acted at all.

      • Seen it all before, Bob

        I agree with Surge. (and Gary)

        Buying and holding a house for 10+ years is required for ROI will selling the house and for reaching rental parity. Don’t buy unless the house will meet your desires for at lest 10 years. No matter what the price.

        Buying low is a sound investment strategy. When will the low happen? It happened 8 years ago in 2010 after rising for nearly 30 years.

        Who knows if it will take 30 years to plummet again? Trump continues to throw gasoline on the asset fire. When will the gas run out? Likely in 2020 if he is thrown out of office but who knows?

        My opinion is that if I was looking for a personal house now and:

        1) I could keep the payments below 30% of my income.
        2) The house will fit my requirements for at least 10 years to come out ahead on rental parity

        I would buy now.

        I don’t know if housing prices will plummet this year, next year, or in 30 years.

        If it is 20 years, I could have the house paid for and living for free with low prop 13 taxes for the rest of my life. Hopefully 50 more years of living free of rent and low taxes.

        As they say, 50 years rent free is priceless.

  • son of a landlord

    I was researching agents, and found this agent’s Instagram page: https://www.instagram.com/p/BfwdQWcHHmn/?taken-by=corinetherealtor

    This is not a joke. She actually wrote this, and intends it as serious advice:

    Blustery day in Los Feliz. Clouds are coming in and interest rates are rising up! Now is the time to buy or sell before it’s too late. Contact me for more info..Don’t miss the boat!!

    • It makes sense from a realtards perspective. She makes more commission by selling a highly overpriced crapshack now compared to selling it once the impact of rising interest rates causes home prices to fall. Realtards have only one goal: to inject fear into the buyer in order to sell the house at the highest possible price. By lying to their buyers they earn more money. Realtards are the cancer of the RE market.

    • LOL. Awesome.

  • Major economist says home prices should remain strong for 4 to 5 more years partly because millennials are entering their home buying years …

    https://www.cnbc.com/2018/03/13/economist-home-prices-are-increasing-twice-as-fast-as-income-growth.html

    • Baaawahahahaa
      The “this is the year when millennials go out and buy in droves” is back.
      Yep, since MAGA is here America is great again and millennials have no more student debt, decided that starting a family and buying an overpriced crapshack is suddenly a good idea. Plus they are no longer eating avocado toast and boom the down payment showed up in their savings account! Also all millennials got a pay increase of 200% this year. Buying a million dollar crab box is no longer an issue. Housing will explode in 2018!

    • Comparing average income to median rent? Lol. Way to skew the message. What about home prices.

      But yes, some places have housing cost burden compared to others. So Cali is impacted by general desirability(weather, etc…) and more foreign investment. This is why prices are higher in So Cali.

    • Oklahoma City is not on the top of the list of places that I want to live. I drove through there last year, nothing wrong with it, it has all of the services that you would find in any large city, it’s just in the middle of nowhere.
      Geo-Arbitrage….I have been thinking about this lately. It’s easier to take your California pension and sell your California home and move to flyover country, than go the other way. Once you move away from California, you can’t change your mind and afford to come back.

    • Some of these cities are OK but others are laughable. Bakersfield?? I work with a guy from there. He has two small kids with breathing issues because of that place. The entire San Joaquin valley is terrible not to mention it’s hot as eff in the summer.

  • Millennial, you are totally misunderstanding Prop 13. It benefits everyone: Long term buyers, recent buyers and future buyers! Here is just one example:

    If a home now selling for $600K drops to $400k in a few years. That new buyer will pay $4K per year in real estate taxes. Now if that home appreciates to $600K a few years later, that new buyer will still pay $4 in taxes. Using your logic, that recent buyer as well as all older buyers would pay $6K in taxes. Essentially, the local government would be getting a windfall in tax revenue just because of government/Fed caused bubble mania.

    Also, without Prop 13, there would be nothing to stop the local government from raising the tax rate to 2% or higher. You would have no protection from runaway government spending and might end up paying property taxes of $12K on the home you just purchased at $400k a few years earlier.

    Do you naively believe that any local government would drop its tax rate (below 1%) on all homes just because it would be receiving more revenue from former Prop 13 beneficiaries?

    • Gary, you are not quiet correct. If home price drops significantly, yes prop tax will drop. However, if it will appreciate back to 600k, they will access it back to 600k. In housing downturn, they keep track of what would tax be and will re-access to that value eventually. So no, you do not get to keep accessed value of 400k (in your example) forever, eventually it will restore to normal prop13 cap…but you get few years of discount

    • You’re not getting the point. The problem with Prop 13 is the existence of a static cap. The rate is something else entirely. The cap is market distorting. That’s what government subsidies do. They create behaviors in the marketplace that wouldn’t otherwise exist and before long the price no longer reflects true discovery. If we had higher property taxes, the property prices would adjust lower to compensate for the difference.

      The government is going to tax as much as they can get away with regardless of Prop 13. The proof of this is the high rise in taxes on everything else in California since 1978. All Prop 13 has accomplished is in an outsized shifting of the tax burden from longer term owners to shorter term owners and non-owner residents — that is all. It has fixed absolutely nothing in Sacramento and thereby contributes to making this state even more out of whack for middle class income earners.

      Go ahead and keep up the insanity while the state continues to lose a highly productive middle class. And keep the faith that this will have no ill consequences in the long run.

      • Only people who want to repeal Prop 13 are socialists. But since CA is more than 50% socialist, it will happen sooner than later.

      • In essence, it protects long term owners (personal residence and investors).
        It “rewards” not selling. In other words, those people who own real estate mostly for its utility (shelter).
        Homes will appreciate with or without prop13 (look at other states, un-capped taxes do not do much to halt the prices).

        As I see it, prop13 is a wonderful things as it is doing a right thing – insulates a true long term homeowner from insanity of speculative market

      • “If we had higher property taxes, the property prices would adjust lower to compensate for the difference.”

        Millions of people on the east coast would beg to differ with you.

        Prop 13 does need to be amended/replaced. But you know that the Taxifornia legislature would take 50% from us if they could, so there does need to be a cap in place – and not just on property tax. No more sneaking in taxes by calling them “fees”.

      • Point. you are missing the point. Under Prop 13, real estate taxes can still rise 2% per year which is equal to the average worker pay increase over the last 20 years. The government should not be increasing spending/taxes faster than the average worker wage growth.

        Like I said to Millennial, it is naive to think that other California taxes would decrease if property taxes were allowed to increase rapidly. Has any state government ever dropped tax rates accept for the very rich? State governments can think of ways to spend money that we could have never dream of.

      • Point in on point.

        Prop 13 has distorted the market. I don’t think an outright repeal would ever pass.

        The best ideas would be to set a cap annual tax bill, like $4K per year.

        Over time the property would continue to slowly turn over and most would cap. This would be eventually level the playing field without disrupting the market. Those over the cap would get a tax break. There is a 6.1 billion budget surplus in CA. I think the tax payers need a break.

      • “If we had higher property taxes, the property prices would adjust lower to compensate for the difference.”

        ___

        Just like New Jersey and Connecticut where a crappy $500K house carries a $20K tax bill. Right?

      • JD, in Switzerland they capped it at $1,500/yr and their schools, roads and fire stations did not suffer in a any shape or form. I would argue that they are in better shape than in CA. $4,000 cap would be plenty.

    • Benefits recent buyers how? I can imagine a real estate agent telling a first time buyer how paying 5x in taxes over the neighbors BENEFITS them in the now. Big tax bennies bro! Thanks for laugh!!!!!!

    • Oh wait I get it. Recent means 10 years ago.

    • You are trying to avoid the real issue with prop13. Probably because you are one of the beneficiaries.

      Prop13 is extremely bad for new buyers/younger generations. Since you are not the sharpest tool in the shed I will explain with two simple examples based on true stories:

      Ex1: joe realtard and Millie live next to each other in condos. Mr realtard bought 25 years ago and his condo is paid off. His property taxes are 1500 dollars annually.
      Millie stopped eating avocado toasts and was therefore able to save for the down payment. He bought the condo for 400k and his property taxes are over 4K annually.
      Millie is screwed because the condo is way overpriced and double screwed because the property taxes are based on the inflated condo price. Realtard next door receives the same services, same size condo and has it paid off, could easily afford higher property taxes but laughs at Millie for being double screwed. Milie suggests to repeal prop13 and realtard screams “poor grandma!!! Poor grandma”.

      Ex2: the couple oldfart inherited a multimillion dollar home a long time ago along with prop13 property taxes. Both had good careers and are living the life. Millie can’t buy next door and buys the 400k condo. While the oldfarts pay only 2500 dollars in property taxes for a multimillion dollar house, Millie has to pay over 4K in property taxes for a small overpriced condo. The oldfarts could easily afford 10k or more in property taxes but like that the tax burden is on younger buyers. They both scream as loud as they can “poor, poor grandma” when Millie is visiting and suggesting to repeal prop13.

      It’s obvious that prop13 needs to be repealed. I don’t care if property taxes will go higher and higher. As long as oldfarts and realtard their fair share. That includes poor old grandma as well. If she can’t afford it have her downsize or move her to Spokane.

      • Since we’re giving examples, how about this:

        In two years, prices fall 30% on the coast. You buy a nice place for $500k.

        A) Prop 13 stays in effect. You’re paying $458/month, while the old man next door is paying $90. In 10 years, you’re paying $548/month.

        B) Prop 13 is repealed with no replacement. Taxes shoot to 3%. You’re paying $1,250/month, but so is the old man next door. In 10 years, you’re both paying $2,000/month. Vengeance is mine!

        We know you’d pick B. And that means you shouldn’t be in charge of your own finances, let alone a family’s.

      • 30%? In Millie’s fantastical world, 30% if but a mere flesh wound. Prices will fall 70%. And when that happens taxes will be like $14/year I think.

      • I have to agree with John D. Millennial would rather pay sky high property taxes than see anyone else pay even one cent less than he does. He is pursuing jealously to an extreme. This logic is expressed in the saying: “Cutting off the nose to spite the face.” It describes a needlessly self-destructive over-reaction to a problem: “Don’t cut off your nose to spite your face” is a warning against acting out of pique, or against pursuing revenge in a way that would damage oneself more than the object of one’s anger.

      • John D.
        Both examples are no good.

        That’s why it’s c) millennials should pay 90 dollars a month and boomers who can afford it should pay 548dollars a month property taxes.
        Boomers have already a paid off house and profited from the housing bubble on the expense of millennials. All you have to do is transfer the tax burden from young to old.

      • Millie, a person who is benefiting from prop13 actually has NOT profited from housing bubble. Why? Because they have NOT sold. It is all paper profits. They have a house and if they sell, they will get enough money to buy only another house.

        Prop13 actually protects (mostly) seniors from madness of the bubble. It also protects those who took a risk and bought in 2010 for instance.

  • https://www.zerohedge.com/news/2018-03-14/generational-disaster-debt-laden-millennials-set-back-140000-vs-their-parents

    THIS is the year when millennials go out and buy in droves! Oh wait. It’s not this year….
    “Until then, young Americans are drowning in debt, unable to improve their standard of living, and are significantly worse off than their parents generation.”

    That’s why it’s a great idea to have the entire property tax burden on millennials. They have to pay 1.1% of the inflate house price while boomers pay next to nothing. Makes sense, millennials deserve it…they are the ones that all studied social justice and blow all their money in avocado toasts and Starbucks. If they would have studied business instead, ate more burgers and bought a keurig coffee maker they would be debt free and owned million dollar homes easily. At least we have MAGA now! We don’t need these loser millennials!

    • Dude, focus your mind on you earning your money and getting what you want under current conditions. Let others be. You got youth and energy, it is despicable that you blame so much of the problem on older generation.

      • Triggered. I know the truth hurts but that’s life. I do agree I have lots of energy and I will continue to call out that prop13 scam that screws young buyers and benefits old farts that sit on million dollar homes but refuse to pay their fair share. Prop13 needs to go.

      • Yes triggered, so what. Everyone supposed to stay calm here? If you want change for prop13, you need to write to your representatives. Nobody on this board has any power.

      • “…that prop13 scam that screws young buyers…”

        Your fantasy of boomers paying ten times the taxes of millennials will never happen, because most retired people don’t have the kind of equity or income that you imagine they do. I would tell you to look it up, but we both know how that would turn out.

        As a young buyer, prop 13 could easily save you upwards of a half miliion dollars over your lifetime. If that’s getting screwed, bring it on.

      • “As a young buyer, prop 13 could easily save you upwards of a half miliion dollars over your lifetime. If that’s getting screwed, bring it on.”

        The tax burden is soley on new buyers. Older owners pay nothing in comparison. That needs to change. We need to lower taxes for millennials and raise them for the ones that tell us daily in this blog how they are millionaires due to the housing bubble. Meeting in the middle is the right approach. Boomers are just incredible greedy and On the expense of younger generations.

  • With all due respect regarding Prop 13, how about keeping it for those who already own their home. But for new buyers, how about 0.50% Tax Rate instead of 1.00%? it cuts their effective tax rate in half, and is closer to what older owners are paying for their property tax.
    Something along those lines.

    I don’t think it’s fair for one house hold to pay 4x, 5x, 6x, 7x, more than the owner next door. But I don’t think it’s fair also for us to tell someone that they now their property taxes are exponentially higher. I’m just looking to meet somewhere in the middle.

    How can you ask someone who’s been paying their homes for years, paying the property taxes, then all of a sudden tell them that their property tax is now 5x, 6x, 7x or more?

    If we repeal Prop 13, the renters would be screwed as well. Imagine if your landlord bought the house you are renting for $100,000 in the 80’s He is paying $1000 a year. Now the house is $800,000, so $8000 a year. Guess who’s going to pay that extra cost?
    Are you willing to pay an extra $7000/year or $583/month in rent? Is that fair?

    Those people who say that the owners who bought many years ago aren’t fair have been paying for years for the communities, the roads, parks, the police, firefighters and public transportation that we utilize for free everyday. We don’t hear them complain why people who do not pay property tax get these benefits. They don’t complain why the police officers protect those who do not pay property tax. They don’t complain why we use the roads they’ve paid for, for over 30 years. They don’t complain why the renters who do not pay property tax are using the local park they’ve been paying for for years.

    Sorry I don’t mean to offend anyone. I’m just looking see what might be a good solution while looking at both sides of the argument.

    • CB,
      Is this fair:
      1) That my neighbor next door is paying 3% interest, while I am paying 4% (and future owners will pay 5%,6%,7%).
      2) Is this fair that house next door was bought for 700k while mine for 1mln.

      It is all about time-frame. Yes, prop13 is a tax-initiative so natural thinking that is should be level set. However, my strong belief it is needed to protect those who buy home as utility (as opposed to investment) to insulate them from market madness due to speculation activities.

      • Surge, what has any of your examples to do with property taxes? It’s not like millennials have a choice. If you buy a house now you pay for an highly inflated price plus high property taxes on top of it.
        Just think for a minute if it were the other way around. If property taxes would be sky high for boomers and super low for young buyers. Young buyers would still be screwed because of highly inflated house prices. However, the tax burden would not be solely on them. Instead it would be on boomers who can easily afford higher taxes.
        The result would be riots. boomers would dust of their weapons and put streets on fire. wheelchair or not they would all be outside starting trying to start a war if they would have to pay what millennials have to pay currently.
        There is no other way. we need to raise property taxes drastically for older people and lower it for millennials.

      • Lord Blankfein

        Agree 100%. You can kick and scream all you want about Prop 13. It may get revised in the future, but Prop 13 protection for primary residences is here for good.

        If you can’t beat them, join them!!!

      • Millie, no matter how you spin it (low taxes for new buyers, high taxes for boomers), if you think about it, the prices will not move much. Prop taxes do not impact prices significantly. It is all hypothetical thing in your head.

      • Surge,

        “, no matter how you spin it (low taxes for new buyers, high taxes for boomers), if you think about it, the prices will not move much. Prop taxes do not impact prices significantly. It is all hypothetical thing in your head.”

        So you do agree with me that older owners can pay their fair share and the hiding behind the poor grandma arguments is pathetic? If increased property taxes does not make a difference why are there so many here that don’t like the thought of paying their fair share?

      • 1) Repealing prop13 will not help with lowering prices enough to make homes more affordable to younger gen. Prices will not come down much.
        2) Repealing prop13 will punish older folk who did NOT contribute to massive housing price increases due to bubbles, etc… It insulates them from asset inflation madness.
        3) Repealing prop13 will not increase tax revenue significantly. Statistically, there enough of higher priced homes to drive extra tax revenue.

        So let’s recast. Repealing prop13:
        1) Does not lower prices much.
        2) Punishes those who did NOT contribute to massive price increases.
        3) No significant tax increase.

        Nobody wins here.

    • And the statewide average is 1.25% with some areas with mello roos pumping up to the 1.5%-1.75% range.

      • Millenial,

        Why is it that your pushing for established homeowners to raise their taxes. Why not propose to lower property taxes for people who buy now? Is it because the result you really want are foreclosures for these people? So that you can then finally get your 70% drop in price?

        Also, what do you think of what I previously said:

        “If we repeal Prop 13, the renters would be screwed as well. Imagine if your landlord bought the house you are renting for $100,000 in the 80’s He is paying $1000 a year. Now the house is $800,000, so $8000 a year. Guess who’s going to pay that extra cost?
        Are you willing to pay an extra $7000/year or $583/month in rent? Is that fair?
        Those people who say that the owners who bought many years ago aren’t fair have been paying for years for the communities, the roads, parks, the police, firefighters and public transportation that we utilize for free everyday. We don’t hear them complain why people who do not pay property tax get these benefits. They don’t complain why the police officers protect those who do not pay property tax. They don’t complain why we use the roads they’ve paid for, for over 30 years. They don’t complain why the renters who do not pay property tax are using the local park they’ve been paying for for years.”???

      • Hi CB,
        “Why is it that your pushing for established homeowners to raise their taxes.”
        Because the tax burden is solely on new buyers. Older people pay next to nothing and receive the same services but they can afford to pay more. They already have paid off houses and like to brag how good the housing bubble was for them.

        “Why not propose to lower property taxes for people who buy now?”
        First it needs to hurt everybody. Only if there is enough pain things will change to a more balanced prop tax law.

        “Is it because the result you really want are foreclosures for these people?”
        Sure that works. Or they could just downsize. You don’t need grandma in a five bedroom 2million dollar home. She can live in a condo or sell and move to Idaho.

        “So that you can then finally get your 70% drop in price?”
        A RE crash will happen anyways. I only buy if the market is down 55-75%.
        Repealing prop13 will excelerate it. So yes.

        Regarding your example. Yes, property taxes needs to be raised heavily for older people. They own the houses and profited from the housing bubble. It’s time for them to pay their fair share. Deferring liabilities and the tax burden to younger generations is not going to fly anymore. Running up the debt burden is what boomers did all their life. If you start showing on social media how little the avg boomer pays in property taxes in comparison to what a millennial pays you have your outrage. That’s what we need.

      • son of a landlord

        Millennial: First it needs to hurt everybody. Only if there is enough pain things will change to a more balanced prop tax law.

        You’re describing a Catch 22. You need everyone hurt before you can change Prop 13. But until you change Prop 13, older owners won’t hurt.

        Right now, older owners feel fine. So, how are you going to change Prop 13 to hurt everyone? Older people vote in far larger numbers than do millis.

      • “…. Or they could just downsize. You don’t need grandma in a five bedroom 2million dollar home. She can live in a condo or sell and move to Idaho.”

        For some weird reason you’re picturing all senior citizens living in mansions on the coast, when those kids of houses were few and far between when they bought in the 50’s and 60’s. The vast majority of seniors are not in that situation. The lucky ones own a small (<1,500sf) old house in a beach community and managed to not only stay in it without using it to run up debt, or help their Gen X kids, or get their husband through a debilitating illness, but paid it off. They don't necessarily have pensions or much savings, just social security (that's about $1,300/month, which I'm sure you're blissfully unaware of). The not-so-lucky ones are living inland. There are far more of those. They've got a few hundred thousand in equity, little savings, only social security. The rest are not lucky enough to own anything at all, and live with their kids. You imagine that every retired person in California didn't spend their working days paying taxes, when in fact incomes were much lower and property taxes and interest rates were much higher then. They're holding on to those homes because they know they cannot afford any alternative at all (not an apartment, not a house in Idaho) during the interim between retirement and the need for assisted living (65-85), and because they'll need that equity once they can no longer care for themselves. And even that, for those inland dwellers, won't be enough. I'll say it again in a different way, because you're so goddamned thick-skulled – YOU have a higher net worth than most of them, and that's coming from someone who believes you're greatly exaggerating your financial status.

        You also seem to be completely clueless when it comes to inflation. They had it easier, but it wasn't THAT much easier. My parents both worked (dad a union general contractor, mom owned a clothing store), but the 80's were still a major struggle for them. In hindsight, yes our house was very cheap compared to today but the income was lower to match. I also did the math on my old digs in my 20's, and discovered that it's more affordable to live their now than it was in the 90's. You're not the only generation to have it rough.

        If you're going to be jealous and angry about someone, make it government workers/contractors. You want to talk about unfair? Ask the secretaries at the DWP how much they're making (hint – it's 6 figures). Then ask an LA cop or firefighter about his/her pension (another hint – their pension will end up paying more than their salary did during their working years – well into the millions. That's millions with an S).

      • “Older people vote in far larger numbers than do millis.”
        Sure, but time is on our side. While boomers get older and older and die, millennials will catch up, inherit and vote against the prop13 scam in the future.

  • This blog has become so annoying. It is constant real estate and wealth building advice from someone (Millennial) who has never even owned real estate. It is a farce wrapped in a riddle. Millennial, congrats, you are super annoying.

    • This is a housing bubble blog. Millennial’s advice supports the site’s whole premise. If you don’t like it, why are you even here?

      • Incorrect the doctor has already capitulated and admitted that housing prices for the foreseeable future are here to stay

  • More wealth building and real estate advice from a guy who has never owned real estate before. Enter Millennial. The most annoying peddler of ‘wisdom’ ever.

    • How could millennials own real estate? That would mean they had to buy during the worst housing bubble in history. It’s a good thing millennials generally don’t own. You want to buy low not sky high. Plus we need to repeal the prop13 scam first. I will buy as soon as we see a correction (55%below today’s prices). I could buy now but why waste your money?

  • It is amazing how many people nave seven figure wealth in their 40s. You see then all over the beach cities of Southern California, and all over Silicon Valley. With so much wealth circulating around, the 2M dollar price tags on starter homes makes sense. The trick is to figure out what area the wealthy people will start buying in and get there first. Since the number of wealthy people continues to grow, they will need more zip codes to call home, and the smart money figures out which zip code the wealthy will move to.

    • It is fairly simple to get a seven figure net worth by the time you are 40 if you have a job in the top quintile. They are also not exclusively in the beach cities of Southern California.

    • 7 figures in their 40’s……I call bs. How would you even know? The reality is that most Americans can’t come up with 1k in savings. It’s usually the opposite of what JT portrays.
      The Majority is barely getting by. Save your money and wait for a nice recession is key.

      • Graduate at the age of 22 (with hopefully no debt) and max out your 401k and IRA. When you put 2k a month into your retirement account and getting a long term gain of 8% in equities you will have one million dollars at 42. It’s pretty damn easy.

      • Senor Millie,

        You are confusing “most” with “some”. You are right most Americans are imbeciles who don’t save anything. Buying $1000 iphone is more important than a 401k or IRA. But just because the majority is populated with imbeciles doen’t mean there aren’t many smart people in the minority.

        7 figures in the 40s isn’t that hard to achieve. Someone saving $1K a month starting at 25 years old with an 8% yearly return would have $1M before turning 50. And anyone who is in their 40s today and bought a house in their 20s has several $100ks in equity as well.

        It’s not that hard. Just takes a little discipline, ie don’t buy the $1000 iphone, but that $1K in a retirement plan. Don’t throw $3K down the toilet in rent, pay $3K towards mortgage. Virtually anyone can do it.

      • Lord Blankfein

        Couldn’t agree more with Mr. Landlord. The VAST majority of the population couldn’t save a dime even if their lives depended on it. Rest assured, non of these jokers will EVER be buying RE in desirable areas. I actually like these people, keep spending and keep the economy going and keep those rent checks coming in.

        Millie, keep doing what you are preaching. Save, invest and buy when the opportunity presents itself. No reason to be angry at those before you. You even said, you were close to buying in 2014. Had you bought, your house would have appreciated by at least 30% and heaven forbid you would be benefiting from Prop 13. Save, sacrifice and make good life decisions and you will be rewarded.

      • I actually agree with both of you that if you are disciplined and live frugal for a number of years you can save a ton of money. when JT “sees” these 40 year olds all over the beach cuties that look like millionaires that doesn’t mean they truly are. It’s “amazing how many there are”. How can you tell? Well, just because you drive a fancy car and go to the mall every weekend doesn’t mean you are a millionaire. Most people like to pretend they are. In reality they are spenders and not safers. But who cares anyways. Live frugal, stash away and Wait for the buying opportunity – that is my strategy.

    • Getting to a million US Dollars in savings at age 45 maybe doable if you are lucky determined and frugal. However, due to the current policies and indebtness of the state, we are looking at a major reset in the form of a currency devaluation, recession and asset price deflation all at the same time. Unfortunately, if you keep your money in US real estate or US Dollars and work in the United States you will get clobbered. Keep your million diversified across the globe, currencies and asset classes. Good luck to y’all!

      • Sammy, how can you have currency devaluation and asset price deflation at the same time?

      • This is a global bubble. Putting your money in foreign currencies is not a safe bet!
        I am for diversifying but I think sitting on USD and waiting for the asset deflation is still your best strategy. Once the stock market and RE market crashes I will go in hard.
        The last few years spending was in trend and people love to pretend they are millionaires. There will be time in the near future when cash is king again. Live frugal, save money in good times and buy assets in bad times. No chance there will be major inflation, no matter how badly some debt loaded boomers want it. Ask most people around you how their annual performance and salary talk went. My bet is nothing has changed since the last few years….great performers get more and the majority will get their 1.5-2% increase and continue to struggle financially. The MAGA dreams continues to be a dream.

      • Millie, can you clarify… is this Crypto or USD as the best strategy?

  • There is hope for Millennial and other first time buyers. The real estate market appears to be nearing its peak? There are definite signs pointing to top by this summer:

    1. The “Housing Index” of stocks is down about 12% from it Jan. high and appears too weak to make a new high. Stocks tend to lead fundamentals by about 6 months which suggests that home prices will begin to decline sometime this summer.

    2. Investors/flippers will likely run for the exit at the first sign of a declining real estate market.

    3. Interest rates for home loans are rising fast and should be 5 1/2% or higher by early next year.

    4. Sellers are becoming very greedy and are now asking ridiculous prices which they have no chance of getting.

  • Someone mentioned a $6B surplus in CA. That’s an illusion surplus due to a few billionaire tax payers. As soon as the tech bubble bursts that surplus will evaporate faster than Hillary Clinton’s presidential dreams on election night. 1% of CA tax payers, pays 50% of all CA taxes. And the majority of the income earned by that 1% is investment income.

    Good luck when the stock market bubble bursts. Or it doesn’t even have to burst it just has to stay flat and all that capital gains tax falls to $0. The year that happens CA’s back in the hole to the tune of billions.

  • Very good post by Throbert:

    “Prop13 is a bastardized way of trying to “solve” value-based assessment of property taxes. It’s like Affirmative Action…giving to one race at the expense of another. The real solution is to make property taxes assessed as a fee based on the size and type of the parcel of land, NOT THE VALUE. If the government wishes to increase that fee, the public has to vote on it. Period.”

    • Property tax assessment based on size and type of parcel can’t differentiate between neighborhoods and location. It also disregards the improvements, quality, and size of structures built on the parcel/lot. You will have an even more people crying “unfair.” Try again.

      • Throbert Girth

        Ah, another Prop13-house-humper with a “can’t do” response. Let me guess…you’d like things to stay as they are?

      • Agree. This would put disproportionate burden on rural areas of California and relief those greedy seniors (per Millie’s def) living on the coast (smaller lots)

    • son of a landlord

      Replacing the current property tax with a parcel tax would be GREAT for me. I live in a high rise condo with nearly 100 units. The condo building would be assessed ONE parcel tax, which would be split among all the owners. Thus, I need only pay a small fraction of that one parcel tax.

      Whereas someone with a single house on a parcel would have to pay the entire tax for the whole parcel.

      I’m not sure how FAIR this would be. Nearly 100 condo owners, all using city services, yet paying only ONE parcel tax among ourselves.

      But thanks, Milli. Lots of retired Boomers in my building. They send you their love.

  • Let’s be honest, millennial is a troll, no doubt about it. I’d be surprised if he even knows what an amortization table is or how to calculate a property’s present tax based on a purchase price from 20 years ago.

    The fact that he thinks property taxes are the reason people can’t buy is because he’s poor and he is in fact the millennial that can’t buy. It’s sour grapes to the extreme.

    On a $500,000 purchase price today that amounts to about $6,000 in property taxes per year, or $500/month, pretax benefit adjusted. Assuming that house cost $135k 20 years ago, that older property owner would currently be paying $2,407 in property taxes for a difference of about $3,600 or $299 per month pretax benefit. Who the hell cant afford $300 more per month in their young age when income is dynamic and people can work longer and smarter to accumulate more wealth rather than being on fixed government benefits. Secondly, the earning power of people today is significantly higher than in the past, so the only people “losing” from this relationship is the state not being able to tax people to death. Proposition 13 is the greatest thing ever created for residential homeowners.

    Conclusion? Millennial is a troll, is poor, and would rather have no one enjoy protection from an over taxing government simply because he’s poor and jealous that others are accumulating wealth and he’s on the sidelines. It’s actually quite pitiful to watch. SAD!

    • Don’t forget tying granny to the railroad tracks so he can grab off her home, aka ‘repeal prop 13’.

    • Thanks for numerical example Erick. I tried to give those myself, but a lot of people on this board do not respond to the numbers.
      300$/month is nothing and is actually equivalent to about 60k of extra morgtage
      And yes if 300$/month warrants such a dislike towards someone who is getting that break – one should not be in the business of buying a home, but rather improving their own finances

    • Sadly I don’t think he is a troll. It’s the millenial mindset; it’s sooooooo unfair that some people have more than me. If only Bernie were president, he’d give me a free house and everything would be well.

      • I think you’re right. It’s the millenial entitlement mindset. You can actually see it from his posts. He feels entitled to someone else’s home. He’s entitled to a 70% drop in price so he can have what he’s entitled to.

      • “Millennial” (and all other gens) is a marketing construct.

        Young post-college youth is smart (but not smarter or dumber than previous gen during their time). They have their own not so unique challenges, but global environment is definitely different. As far as RE, I think younger generation is facing situation that is more and more looking life something in Europe – RE price to income ratio is increasing and renting is more prevalent. This is because America and California are changing. Population is growing, world competition is increasing while California (prime) remains a both an excellent place for career growth AND foreign capital investment.

        As always, times are challenging and exciting. Younger generation will do just fine, just because they have too and they are too big too fail.

        World is not just about Real Estate.

        I am 38, btw.

      • BS. When I graduated college in the way back olden days of the 1990s, I didn’t expect anyone to buy me a house or pay for my college loans or anything else. And neither did any of my friends. It was expected that graduating college was just a first step and it would take years of hard work to “make it”.

        Compare that to today’s 22 year old who thinks he’s entitled to a free house, free health insurance, free college, oh and has some sort of constitutional right to a $100K starting salary. And if it doesn’t happen, they sulk while eating a $17 Avocado sandwich and complaining about how unfaaaaaaiiiiiirrrrrrr life is.

        And the notion of living with mom and dad post graduation was unheard of. It was the absolute worst case scenario, a last resort. People would rather live in a shithole basement apartment, than move back in with mom and dad. Not today. Now it’s some kind of badge of honor to celebrate turning 30 in mom’s basement

      • Still talking about construct. The millenials you are referring too are a very narrow segment of population who is both well educated in the right skills AND popularized by the popular culture. If you take entire generation there is a very wide spectrum of people, and 95% of them do not eat avocado toast. There millennial plumbers, taxi drivers, store clerks. The ones that project entitlement are the ones that popularized by media, etc… THis is why it is a construct. Just like Baby Boomer is a construct

      • CB,
        “I think you’re right. It’s the millenial entitlement mindset. You can actually see it from his posts. He feels entitled to someone else’s home. He’s entitled to a 70% drop in price so he can have what he’s entitled to.”

        Of course I am entitled to pay 55-75% less than current prices. It’s my money, I am entitled to pay only as much as I want to pay. In regards to “someone else’s home”: if people bought lately, they massively overpaid for a home. BTW, it’s not their home. The bank ownes it until it’s fully paid off. Most people are just one recession away from having to move out because they lose their jobs. Basically, they paid very expensive rent to the bank and realtards. That’s why you wait, save and buy when foreclosures are up to get the house at a more realistic price (about 55% less than today’s asking price). There is something wrong with boomers entitlements to lower prop taxes and entitlements to asking prices way above from what they should be.

    • Life isn’t fair. I am not a Democrat (and no socialist at all). But, I wouldn’t call myself a republican either. There is middle ground, no? Not everyone has to be in the in one of the two camps.
      Anyways, when people think that I am poor that is a compliment to me. I try so hard to portray that picture. I rent a very cheap apartment from a private landlord. She hasn’t raised my rent. She lives almost next door. If I would drive fancy cars, tell her about the promotions I had at work or tell her where I really went for the last two weeks she would think I am doing really well. Why would I want to do that? She might think it would be time to increase my rent. Isn’t it smarter to pretend in general you are poor and get a pass? That also applies to family and friends. Especially family.

      That’s why the prop13 thing bugs me so much. It’s smart to hide behind the poor grandma argument. People are tying hard to get away with this: older people living in multimillion dollar homes and pay less property taxes than a millennial who buys an overpriced, small condo. The tax burden is solely on new buyers in an extrem way. Of course this must change. I don’t use the word fair/unfair in this context. It’s rather an obvious scam. But, no matter what happens I keep renting a cheap apartment and wait for a nice recession. If you buy low your property taxes will be lower for the rest of your life compared to someone who bought high.

      By the way…it’s much better/easier to have these prop13 discussions online. Yeah, you are being called Sad, poor, mid-fifties and a troll however there is a big benefit in these online discussion. I remember a discussion about prop13 during a family gathering. This one uncle (pretty rich guy-multi million dollar home with ocean view) almost could not say how low his property taxes are. He feels guilty about it-of course! Now, do I say what I think in that discussion? Hell no! I much better off being best friends with him. When it comes to any of these gatherings I stay out of discussions that involve money or political stuff. That’s what this blog is for!

      • Millie, this is first smart thing I heard from you…to use the blog to fight over RE issues vs fighting them in real life in people who matter.

        And talking about RE, prices, taxes over family gathering is so boring.

      • “If you buy low your property taxes will be lower for the rest of your life compared to someone who bought high.”

        Okay, now I know you’re not paying attention. You just described prop 13.

        A system based on current assessed value (as I had assumed you wanted – after all, it’s the system that would give grandma the boot) would mean your tax is the same as everyone else’s in your neighborhood, no matter when they bought.

        Or maybe prop 13 should only stay in effect for millennials, and all the existing beneficiaries would start paying assessed value? Would that make you all giddy?

      • Lord Blankfein

        “If you buy low your property taxes will be lower for the rest of your life compared to someone who bought high.”

        Millie you just called yourself out. As was just mentioned, you just described Prop 13. Certain things in life may not be fair, take advantage of these things and profit from them!

      • These “Poor Grandmas” who bought those houses for less than $100k in the 70’s most likely had a house hold income of less than $40k – $50k a year. They treated their houses as their home. They never treated is an investment. These were the generations that stayed in their homes once they bought. Houses back then did not appreciate as quick as today so flipping was out of the question. They paid between 8-18% interest rate for their mortgages. Their SS is probably less than $2k a month. Barely enough considering medical expenses. How would they be able to pay $700 per month in taxes?

        Also, it’s not only the Millenials that are paying for property taxes based on value. There’s people well into their 40’s, 50’s, 60’s, that are buying houses everyday who don’t complain about prop 13.

      • CB,
        “These “Poor Grandmas” who bought those houses for less than $100k in the 70’s most likely had a house hold income of less than $40k – $50k a year. They treated their houses as their home.”

        You are just proving my point. Houses were dirt cheap back than. About twice the annual household income! A no brainer. Basically free compared to now. Now, People have to pay 6-10 times the annual household income to purchase a home. Boomers who got houses basically for free can easily afford higher taxes. It’s the millennials who deserve a hefty tax break. We are facing house prices 55% over value and have to pay 1.1% (and sometimes more) of that inflated price in taxes to keep the lights on here. That’s the reason why older people don’t downsize. To repeal prop13 and massively increase the tax bill for older people is long overdue.

        John/lord,
        I don’t get your confusion. It’s always better to pay less for a house. (Wait for a nice recession). Your tax bill will be lower as well based on the current law.

        That does not mean I like prop13. Sure, I am fine if my taxes don’t increase. But they are too high to beginn with because boomers don’t pay their fair share and are subsidized by the government and millennials. On the other hand boomers scream poor grandma and bad illegals and bad government. They love subsidies as long as it only benefits them. Not to mention the debt burden they created and won’t pay back. That scam needs to be repealed yesterday.

      • Your advice is only valid for well capitalized buyers or with incomes completely impervious to recession. Majority of people will never be in that position. Even if you live well well below your means and save a lot, if you lose a job (in recession when prices are cheap), you will still not buy a home. Unless you are as described above.

        I had a very good job in 2009, but no capital (all Stock options under strike price) and no confidence/vision. Looking back, I was probably one of the most qualified buyers out there, but again I did not even think I could/want to buy (perma-bear).
        Even if I had cash for cash-only purchase, the view on RE was so negative, it would be unlikely that I would have bought.
        This is what happens in recessions and why prices drop.

      • “Millie, this is first smart thing I heard from you”
        I love your comments Surge and I am truly happy you found this blog.

        “Price doesn’t matter”, “we have rental parity in California!”, “just pay 200k down and 1500 more a month than a renter!”,”your downpayment is making you 10% each year”.

        Your comments were priceless and worth mentioning again and again! You even topped my favorite ones:”this is the year when millennials go out and buy in droves”, “buy now or be priced out forever”,”if millennials stop eating 14 dollar avocado toast they could easily afford a 200k downpayment”!

  • One picture is worth a thousand words. Take a look at the Housing Index:

    https://www.barchart.com/stocks/quotes/$HGX/technical-chart

    • Up 50% since Donald J. Trump was sworn in.
      Thank you, sir.

    • Mr. Landlord, I am not using the Housing Index to show stock market performance. I am using it as a timing tool to show boom and bust cycles in real estate. Look at the 20-year chart option:

      https://www.barchart.com/stocks/quotes/$HGX/technical-chart?plot=BAR&volume=0&data=MO&density=X&pricesOn=1&asPctChange=0&logscale=0&sym=$HGX&grid=1&height=500&studyheight=100

      In the last cycle, the index had its first major break in spring 2006 which was when home prices first started to drop. Since this cycle’s break started in winter 2018, home prices are just starting to drop right now. The drop hasn’t shown up in statistics yet because they tend to lag behind reality by many, many months. There was a lag of about a year in California statistics last time before the reality of dropping prices finally showed up.

      It seems impossible to believe right now, but home prices will probably drop sharply for the next 30 months and then drift lower for another 3 years after that.

      • Gary,

        If you’re convinced of that, you will be a very rich amigo in the next 3 years. I’m assuming you’ve begun shorting the hell out of home builders, mortgage lenders and REITs, right?

        This is the funny part about the perma bears. They are always convinced the next crash is on the horizon but weirdly enough, they never take advantage of their prognosticating ability. And many like Millie, still live at home with mom and dad.

        Weird, huh?

      • Landlord, I would love I stil live at home. I would save even more money than I do already. I think it’s very smart to live at one and wait out the housing bubble until house prices are realistic again (55-75% below today’s prices). Why waste your money now by buying overpriced crapshacks? You can simply wait until a nice crash and buy half off!

  • One development that really worries me is the mid term election cycle in November. If the Democrats get the house, they will impeach Trump, even though he has done nothing wrong. This will undermine the country, and all markets will fall, because going forward, every president will get impeached for no reason. Trump and the congress need to take a look at the impeachment laws.

    • Seen this all before, Bob

      Do you mean impeach for having an affair like they did for Clinton? If this is the case, Trump will be impeached multiple times.

      Back to real estate. If Trump s impeached, then real estate and equities will return to a rational value.

      • Rational value on a leveraged investment is very difficult to define

      • son of a landlord

        Do you mean impeach for having an affair like they did for Clinton?

        Clinton was impeached for lying to Congress about the affair. Not for the affair itself.

      • Seen this all before, Bob

        Do you mean that during this Russia investigation if they find Trump has been lying about having multiple affairs that he should be impeached also? The Whitewater investigation was a witch hunt and all they could find was Clinton had an affair. He never even slept with that woman, it was a bit more lurid. They impeached him for lying about almost having an affair.

      • cynthia curran

        Really was real estate cheap under Obama in California no. Most of the price increase happen under his presidency because he kept interest rares low. As for flyover country, Minnesota now has higher median income than California and a much lower poverty rate. There are lots of stereotypes of the Midwest, both Trump and the Democrats painted it as a industrial wasteland not true.

    • Remember, Clinton was impeached as well and it didn’t mean anything. Impeachment is the equivalent of an arrest. Still innocent until proven guilty. Then the trial is in the Senate. And it takes 67 votes to convict (vs a simple majority in the House to impeach). And there is literally a 0% chance 67 senators will vote to convict Trump. You’d need all Democrats and 18 Republicans. It’s not happening.

      I don’t think they’ll even impeach. After the Lamb win in PA, Dems know the only way they win is by moving the center. You’ll have imbeciles like Maxine Waters screaming impeachment, but Dems are smart enough to know radicals like her are best ignored.

      • Seriously Mr. Sh$tlord, we come here for a lively debate on RE investing…your still going after black politicians. Let me guess, she is probably a muslim and she wasn’t born here as well right?

      • I don’t know what religion Maxine is. I have no idea where she was born. I do know she is an imbecile. This is the moron who thought 170M job would be lost due to sequestration. Only problem is there are only 130M total full time jobs in the US. That’s Maxine Math for you!! Maxine also said she was outraged that Putin marching into Korea. Only problem is Putin was in Ukraine at the time. Korea, Ukraine…they both have the letter k in the name, so close enough for Maxine the Dullard.

        You’re the one who sees her race bro, I see her imbecility.

      • Seen it all Before, Bob

        The Republican idiots impeached Clinton for something totally unrelated to what they were investigating. The Republicans were investigating the Clintons for years on Whitewater and all they could prove was Bill had an affair with an intern. Does this sound similar to the Russian investigation of Trump? It should. Clinton lied about having one affair which wasn’t really an affair. More like a lurid fling.

        If the Democrats gain control of Congress, is there not a precedent now to impeach a President for having an affair? How about Trump’s multiple affairs? And how he is lying to Congress by denying them? Can they impeach Trump multiple times for each of his affairs that he is denying like they did for Clinton?

        An impeachment isn’t even an arrest. It a trial that is based on a charge.

        Clinton was rightly dragged through the mud during his impeachment trial. He didn’t do anything criminal so he was not removed from being the President. I predict they will drag Trump through the mud for the same reasons as Clinton. And Trump won’t care.

    • It will be nearly impossible for the dems to impeach him. If they can find a good candidate they might be able to beat him in 2020 though. *IF*

  • Prop 13 is socialism. It’s a subsidized handout the government forces non-owners and later owners to give to early owners.

    The only people who argue against this are those who get the handout. They put up smoke and mirrors such as grandmas and rental rates to try to conceal the truth of the matter.

    • Seen it all Before, Bob

      Prop 13 was written by one of the original Tea Party members. Howard Jarvis and Paul Gann. Both hardcore anti-tax Republicans.

      They slashed CA property taxes from 3% to 1% with Prop 13 and limited the tax growth on properties to 2% per year.

      You are correct. It devastated the CA schools.

      Democrats would love to see it revoked.

    • Seen it all Before, Bob

      People don’t have to buy a $1M house in CA which would have a 1% tax rate. 10K per year.

      They could move to TX and buy the same house for 500K where the tax rate is 4%. They would pay 20K in taxes.

      Prop 13 is a Tea Party dream. It is not a social program.

    • Seen it all Before, Bob

      I think the Colorado TABOR (Taxpayer Bill of Rights) is more fair. It was written in the early 90’s by an Orange County transplant to CO who is also a rabid Tea Party member. Doug Bruce.

      It limits the entire state yearly revenue to the inflation rate plus the population growth.
      Property taxes are limited by this state revenue cap but distributed based on assessed values.

      If inflation grows 1% and the population stays the same, Colorado can only collect a 1% increase in revenue distributed across all properties. If all properties are assessed up at the same %, then the cap on property tax increases is 1% per year.

      That is why Colorado property taxes are about 0.5% of assessed value.

      There isn’t the same disparity between older and newer homeowners but the tax rates are kept low with this state revenue cap.

  • Surge: “Next housing downturn will be caused by something that probably not anyone on this board is aware of.”

    If you look back, all downturns are caused by the same thing – people taking too much debt and unable to service it. The FED raising the rates is just the last straw on the back of the camel. Wherever the bubble was more pronounced, that is where it breaks first.

    • Agree. It is all about liquidity crunch. This is why your posts about politics and how shitty cali is are useless – the crisis will hit everywhere the same. People are equally greedy in Cali and in flyover.
      This is why I personally think all political and social justice posts are sooo useless.
      This should be the place where ideas about next crunch be shared and how to fortify your finances against it (fortifying could also means selling home). Calling people “liberal” ,’ conservative” is such a waste of time.

      • Yep, predictable and boring.

      • Surge, just to understand me better – I lived for decades under communists/socialists/collectivists which is hell on earth. That is the epitome of Totalitarianism. Visit N. Korea to get a glimpse of what I am talking about.

        When I see them too close to me, I get a very strong aversion towards them. Not only them, but also against those who support them (for money or being useful idiots). Now you can understand why I get triggered by communist/socialist/collectivist propaganda spewed out by liberals in universities and MSM or even here on this blog. It is an ideology from the pit of hell. I don’t trust politicians who want to grab more and more power in the hands of few people. I am marked for life against those people/politicians. I came to US for the freedoms conferred by the constitution. When I see politicians and judges and MSM trampling on the Bill of Rights and Constitutions you bet I will be triggered. I did not come to US to live under a new gulag.

      • That’s not true. There are varying levels. People in many inland parts of the country such as the Midwest tend to be more risk adverse. They’re better able to keep greed in check. Of course there are always exceptions but that’s not the point. That’s why in the run-up to 2008 some areas just didn’t rise that much nor fall that much afterwards. You don’t have any better of a crystal ball than anyone else to know what’s going to happen.

  • Not satisfied with destroying their home state, Californians and now going across state lines and slowly destroying their new areas as well.

    They are locusts, going from place to place and leaving nothing but misery behind.

    https://www.nytimes.com/2018/03/20/business/economy/reno-growth.html?mtrref=www.google.com&gwh=6C0A2463A17853A71EA71E5BA0F897F3&gwt=pay

    • Seen this all before, Bob

      It is all of those businesses that are starting and booming in those liberal CA cities and moving to where it is cheaper to run a business. Little do they know as the article states, conservative cities don’t have the government in place to manage growth. They don’t plan anything so the congestion problems appear very early and then they become a disaster as they try to fix problems after everything is built.

      • Yeah only liberal cities like SF and LA know how to manage growth. There’s like virtually no traffic in those cities, right?

    • How true that is! Locusts!…That is the reason I will not say where I live. All my life they followed me with their liberal ideology – marxist/communist Bernie Sanders’s style. Finally, I am in a conservative areas (barely) and I hope it stays that way or I have to move again.

    • Unfortunately, very true. People take their politics with them when they leave California and end up voting in the same type of people that made their previous home expensive and unlivable. It’s sad, but there’s a lot of economic illiteracy out there.

      • The liberals never make the connection between cause and effect. It never occurs to them that they are the cause (for electing those liberals in power in the first place). As a result, they vote the same type of politicians in the new places they move to, and the cycle is repeated.

      • they cant take their politics with them. Because people who are priced out do not have politics to begin with. Just yapping

      • Flyover, and conservatives are 100% rational in the selection.
        Next.

  • Seen it all before, Bob

    This is amusing.

    Millennial is saying housing prices are too high so he won’t buy.

    Everyone is ganging up on Millennial for not buying now.

    I thought this was a Housing “Bubble” blog? And not a “REA”/”Trump is great” blog?

    Millennial, I think everyone would agree with you if you dropped the Prop 13 discussion. That is sacred for homeowners and politicians and should be sacred for millennials who want to be homeowners and not wiped out in 20 years when the speculation on homes in their neighborhood bumps the prices to 50 million and they have to come up with 50K per year for property taxes.

    • “Everyone is ganging up on Millennial for not buying now.”

      It’s not that we’re ganging up on him for not buying (I wouldn’t buy now either if I were him), it’s that everything is about money in his mind, and only the current value of it. He’s a petty, jealous, immature, short-sighted, greedy narcissist. Because he can’t see past all these negative traits, he thinks that there is no possible good reason for buying now, and if you do so, you’re an idiot. It’s insulting, especially coming from someone who has no understanding of the effect of time on currency, and how drastically a financial picture will change with time. He’s willfully ignorant – refusing to look at data or do any sort of math that would enable him to make projections into the future, because the end result might contradict his fantasy world.

      It’s like debating the existence of clouds with someone who refuses to look up, and having them call you a fool for believing in clouds.

      • John I could not agree more. “ he thinks that there is no possible good reason for buying now”. I have yet to see one reason why buying during this bubble makes any sense or has any benefit. That’s the reason why we have historic low sales. Once the last sucker bought high, the bubble will pop.

    • Well Trump **IS** great. But that’s beside the point.

      Millie is living in a fantasy world where house prices will magically fall 70%. But hey, having fantasies is cool I guess, everyone needs a hobby.

      Nobody here is saying prices will go up forever and we will never have another housing correction. Or at least nobody sane is saying that. But there’s a bigly yuugely big difference between saying “at some point house prices will correct again” and “I guarantee we will see a 70% correction next year”.

      • During the next crash house prices will easily fall 55-75% in California. You don’t believe me? Go out and buy……or save money, watch and see. It will be beautiful! Has nothing to do with fantasies. Bubble always pop. Prices are artificially pushed higher by the prop13 Scam and artificial low interest rates. Also, realtards come out with fake stories and the inventory is low myth. It will all change and reality will hit some people – hard!

    • Nah prop 13 blows big time. School districts chronically underfunded due to it. Who cares about education and our children? As Long as I got my $500/year cheapo property tax that’s all I care about!

      • Not quite. School Funding comes from both long term owners (lower taxes) and new owners (much higher taxes due to much higher prices). Try again on this one.

        But in general, yes, it is a problem that school funding comes from localized tax pool.

      • I think Prop 13 has been a disaster for those not receiving the handouts such as non-owners and later owners….but the schools would still be “underfunded” without it because higher taxes pull down on property prices (* see footnote below) and thereby offset any gains you think there would be without a statutory cap.

        * (Some guy said high east coast prices disproves this but that’s bullshit because prices there are already informed by higher DEMAND and as such would be even HIGHER if the taxes were lower)

    • RE cheerleader ganging up? What else is new and how is this not a big toothless tiger? Entertaining for sure. One of the reasons why I am here. RE cheerleaders are just getting more and more nervous. Soon the free lunch (prop13 scam that benefits only older generations on the expense of younger ones) will be over. The fact that “poor, poor grandma” can live in a multimillion dollar home and pay next to nothing in property taxes is a scam. She lives next door to a millennial who just bought a small overpriced condo and pays ten times more than “poor, poor grandma“ in property taxes! Why should I stop calling this out? On top of that “poor grandma” tells everyone how good the housing bubble has been to her and her advice to younger generations is buy,buy,buy to keep the bubble going! And we are supposed to not repeal prop13 because grandma is somehow “poor” and that’s supposed to make us feel bad? She did not have to pay outrages tution and back when she bought house prices were not ten times more than the annual household income. RE cheerleaders can whine all they want, they know what’s coming.

      • I’ll keep it short so you can finish reading before the urge to play Xbox overwhelms you.

        Median monthly cost of assisted living: $3,500

        Median net worth of someone in their 80’s: $271,000

        Since you’re not familiar with math, I’ll do it for you – that median 80-something person will last 6.4 years until they’re flat broke, and that’s not counting additional expenses, so call it 5 or 6. But by all means, make them spend that equity on a house in Idaho instead, and maybe flip them off as they get on the bus, if it makes you feel good.

        I can’t wait until you’re 80 looking back at present-day you, and besides calling your younger self an idiot, you’ll realize just how good you had it – prop 13, inflated housing prices, and all.

      • People sure do get upset when their handouts are threatened! No different than ghetto queens getting ghetto over their free shit. Notice how the best they can do is to try to guilt you into conceding because maybe you’ll get the chance join their party years from now. Classic.

        Telling you man, sticking around California at your level of disadvantage while waiting for this shit to get better on NET (a significant fall in CA property prices won’t happen in a vacuum free of other consequences) is dumb money.

      • There’s also the option of a “poverty exemption” for prop 13. That is, for low-income people prop 13 could stay in effect until they die.

        But of course the prop 13 cheerleaders will oppose even this LOL.

      • John D,
        The property tax law in California is a scam. Property taxes for millennials are way to high. The taxes should not be assessed on price. A millennial
        Who bought a 400k overpriced, small condo pays over 4K in property taxes annually while a boomer next door in his mansion pays next to nothing. None of your sob stories can talk this scam away. Every other boomer on this blog tells you how they are millionaires due to the housing bubble yet they can’t afford to pay their fair share and can’t even match what millennials have to pay? Give me a f. Break with your bs. Prop13 has to go and prop taxes for older people has to be increased massively.

      • The fact that you people still think I’m a prop 13 cheerleader shows how little you pay attention. I’ve repeatedly stated that prop 13 is unfair. I also think it’s unfair to suddenly repeal it without a replacement. It is one of the few tax protections Californians have, against a government who is itching to take everything from you. The CA legislature is made up of utter lunatics.

        “The property tax law in California is a scam”

        Voted for by people who recognized that limiting property taxes in a blindingly blue state is absolutely necessary. They didn’t get it right, but it’s better than the alternative.

        Luckily the “scam” will continue until it is modified or replaced.

      • “Property taxes for millennials are way to high.”

        If prop 13 were repealed without a replacement, housing prices would not be noticeably affected – but PROPERTY TAXES FOR MILLENNIALS WOULD TRIPLE.

      • John, you still don’t have it right. Of course prop13 needs to go. Taxes for older homeowners need to be raised dramatically so they pay at least as much as millennials pay. The time for free lunches for boomers are over. Since millennials already pay an incredible amount for property taxes you just need to raise it for all other generations as well. House prices will collapse over night. Old farts will finally downsize. There is only one solution to the housing crisis in California. Repeal prop13.

  • Beautiful! Rates keep finally rising to an impactful level. I hope they will reach 6,7,8 % for a 30year conventional mortgage loan within the next couple years. Down we go with the artificially inflated house prices.

    http://www.bbc.com/news/business-43489661

  • I just happened to come across an article about the rise of distressed properties in, I think, Orange County. Just a year ago, I check my area, Sacramento, and there were so few distressed properties. But after seeing this article, I checked again, and sure enough, distressed properties are popping up all around the area. And most seem to be very recent. Seems most of them defaulted at the beginning of the year. Sacramento has 671 homes that have been served a notice of default. The economy is supposed to be really strong now. Does anyone know what is driving these defaults?

    • Q: “Does anyone know what is driving these defaults?”
      A: Inability to service too much debt, for too long, like always.

    • HELOCs from late 2007?

    • What’s driving the defaults?

      Maybe it’s buyers who bought at the top of the market in 2007/08 who stretched to get into their homes using creative financing and adjustable rate mortgages who are seeing their monthly payments increasing beyond what they can afford as the Fed continues to raise interest rates?

      “Foreclosures will be a factor impacting home values in the next several years. In Sacramento 1.1 homes are foreclosed (per 10,000). This is greater than the Sacramento Metro value of 0.9 and also lower than the national value of 1.6. Mortgage delinquency is the first step in the foreclosure process. This is when a homeowner fails to make a mortgage payment. The percent of delinquent mortgages in Sacramento is 1.1%, which is lower than the national value of 1.6%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Sacramento homeowners underwater on their mortgage is 9.2%, which is higher than Sacramento Metro at 7.1%.”

      https://www.zillow.com/sacramento-ca/home-values/

    • Seen it all Before, Bob

      I noticed this in Santa Barbara also for about 30 properties. Some seem to have been purchased or refinanced at the peak or the last bubble so the outstanding mortgage is still more than the price they could get by selling today.

      Some also seem to be older homes that possibly the owner died with no heirs. I don’t know what happens when the homeowner dies and just stops paying the mortgage and taxes. I suspect the bank forecloses and gets their money. With no heirs, who gets the rest?

      Some are likely people with large debt (ie medical) and a lost job so they can’t pay the mortgage on a house that is under water due to equity loans or refinancing. So they walk away and the bank forecloses.

      • It is mathematically impossible. Prices are roughly back to peak levels (in absolute terms).
        If you bought at peak with 0%, you went underwater in 2009. Refinance is impossible.
        Holding interest only for so long also does not seem plausible (they usually need to refi I think).
        Taking out equity – not possible
        This is only possible if you purchase at 0% down and interest only forever.

    • Is 671 a lot? In a city the size of Sacramento, which is 2M for the metro area, it doesn’t sound like it. What’s the historical number in say 2005, 2010 and 2015?

  • Mr. Landlord, what I do with my personal finances is irrelevant. Real estate prices will fall for many years, and there is nothing we can do to stop the decline. The crash in the Housing index show that the real estate bubble has popped. It is not an opinion; it is a fact.

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