The Housing ATM is back – Cash-out share of all refis hits pre-crisis levels.

It was only a matter of time that people started using their homes as ATMs.  It is clear that the housing cheerleaders are drinking a mega dose of housing Kool-Aid and somehow think that people are immune from repeating past mistakes.  But here we are seeing cash-out refis hitting pre-crisis levels.  And this assumption is based on the underlying mentality that yes, a home is really worth that amount and now people are locking in these high price levels.  But guess what?  You have to pay that money back on your glorified crap shack.  This was one of the many reasons for the last housing bubble where people believed the hyped and went into deeper debt because of this notion that a home was an ATM with a roof on it.  The overall tone is incredibly housing positive even though there are major issues in the housing market.  For example, the homeownership rate is near generational lows and much of the household formation since the bubble burst has come in the form of rentals.  Now homes are being used as ATMs.  What can go wrong?

The housing ATM is back

People are once again using their homes like ATM machines.  And of course contrary to anecdotal evidence, we have actual data on this:

cash out refis

By doing cash-out refis you are essentially locking in the current valuation of a home and this gives you little buffer should there be a correction (of course this will never happen according to some).  Your debt load increases but this trend signifies something deeper.  The delusion is running deep.  You can look at crypto-currencies, startup companies, and even housing and we are in overvalued territory.

This idea that people are careful with their mortgages and their monthly payments is nonsense.  A majority of people max out their lifestyle and are living on the edge when it comes to servicing their payments.  They have mega mortgages, big car leases, kids in daycare, and their monthly bill is obscene.  All you need is a minor correction and the house of cards will collapse.  Tapping equity out of your house simply prolongs your obligations and assumes the good times will go on indefinitely.

This is largely symptomatic of a bigger issue here and that is people are still cash strapped.  Even in neighborhoods that I am familiar with you have people living in million dollar homes being incredibly frugal with groceries because they can’t afford to get out of line in their budgets.  These are typically your Taco Tuesday baby boomers.  A new house hits the market and you have a professional couple or investor buying the place up.  The older buyers are living modestly and are house rich, cash poor while their new neighbors are living a life of luxury supported by higher incomes.  In many cases, people try to chase their neighbors and since their incomes can’t keep up, they tap their home equity to keep pace with the Joneses.

The amount of debt circulating in the economy is relatively high:

household debt

Housing related debt is creeping back up but non-housing debt is in deep record territory:

non-housing debt

Many older boomers are now having to face the prospect of financing the college education of their offspring.  So either you go into deep student debt for school or you can help finance a college education by your current resources.  The housing ATM is an attractive choice.

What this shows is that people truly believe current valuations are solid and that prices will only go higher.  The same mentality hit in the last bubble when people were tapping equity out of their homes.  Of course this time it is more “sophisticated” and we won’t repeat the past.

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393 Responses to “The Housing ATM is back – Cash-out share of all refis hits pre-crisis levels.”

  • Well, the article says it all: buy now or be priced out forever

  • Hello Doc:
    I know many homeowners on the Westside (West of LaCienega) who bought in the 70’s, 80’s, 90’s and of course bought at low prices compared to today and their mortgages are low (and low taxes) but have run into a financial squeeze or retired or layed off and are therefore barely able to continue to afford where they are living but …guess what…
    They arent going to sell!
    they would rather scrape by on the Westside than live large in Funtucky!

    And in case AirBnB, VRBO and Craigslist werent enough to give homeowners some extra income by renting rooms, now the City of LA will pay a homeowner some money to place a tiny home in their backyard. More reason you won’t see Westside homeowners selling their homes.

    • It’s different this time. We are at 20 Trillion Dollars National Debt now and the next crash will not allow for any Fed or State funded Real Estate help to kick in to support homeowners. The fall back to earth shall be without a parachute this time. However, the low interest rate loans are low enough to have locked in the homeowners for the rest of their lives. Walking away will not be tolerated this time by the Feds and Banks. Bankruptcy will destroy the property owner and his Job prospects. Let’s hope the economy keeps pumping out new high paying Technology jobs to service that debt for at least another 25 years…//ironie off

      • excellent rant, A client in Texas in 500 million business said they are making plans for rate hikes and slowing economy, sales….

        A perfect storm is brewing, China, Trade, Treasuries, Rate Hikes, inflation, High Debt levels, More treasuries after CBO report….expect a lot of attention to keep bonds from causing crack in armor….thus market and then housing market will have to take a haircut to defend the treasury market…

        Most people are oblivious to the trillions of debt created around the world to ward off the greatest depression….no stick saves second time around….230 Trillion per latest report……

        good luck and good night

      • The new technology jobs will go to H1 visa holders willing to work for 100 hours a week for slave wages.

    • Barnie Panders

      Oh look: boomers passing regs to put themselves first, as always. Screw everyone else, gotta keep the boomer’s low property taxes and give them opportunities to make more $$$. Nothing to see here. Just business as usual.

      • Replace the word ‘boomer’ with word ‘republican’ and you’re onto something.

      • Replace the word ‘boomer’ with ‘loonie leftist communists’ and you’re onto something.

      • It’s not Republicans proposing this stupid idea.

      • Jeddie,

        What did St. Barrack do to make housing cheaper during his 8 year rein?

      • Jed,

        Americans can no longer afford to be this stupid. Liberals want to control every aspect of you life. What you drink and how large that is, how you carry your groceries, how you drive your car, which bathroom you can use, what you say, how you say it……AND IF YOU DON’T COMPLY they will call you racist and destroy your career. The list of those lives destroyed for just telling a joke is too endless to list.

        and you have the testicular fortitude to tell us it’s the Republicans fault.

      • Seen this all before, Bob

        St Barack was just as much a corporate capitalist as any good Republican with couple of exceptions.

        Why he was a corporate capitalist.

        1) He drove the stock market from 6000 in 2008 to 18000 in 2016. 300%! This was outrageously capitalist since no other President in history has ever seen this rise. This was Socialist since all of the major government pension funds needed to be saved. However, all of us Capitalists like Mr Landlord, saw our net worth triple. I am a nervous Capitalist and wanted to diversify. .01% Savings account rates, nope. Real Estate, 9%… Yep. Take your 500K winning from the stock market and invest in real estate at 9% yearly return. For now.

        Why he was a socialist?

        1) He implemented Dodd-Frank that should limit the abuses and tremendous transfer of wealth we saw in the last crash. Trump and the Republican Congress are working hard to revoke Dodd- Frank. This time it will be different.

        Since Dodd-Frank has not been repealed yet, I think we may have more run up in housing.

        Trump’s throwing gasoline on an inflated stock market with tax cuts and another 30% increase in the Dow just makes more people want to diversify to real estate. Though it is highly unlikely his voting base has majority share of the market. Left behind again.

        Trump’s recent trade war, deficits, and rising interest rates have put a damper on this.

        I have my popcorn, and a mattress stuffed with cash to see where this goes next.

    • alex in san jose AKA digital Detroit

      That’s because the “fun” in Funtucky is mostly opoids and cousin-f*ckin’

  • Seen it all before, Bob

    I have received at least 10 calls in the last month from mortgage companies asking if I would like to refi. When I say no and tell them my current rate, they immediately ask if I need extra cash.

    1) Since rates are still low but up from the bottom by over .5%, their focus seems to be primarily to get people to take more money out. When the entire industry is desperate, they are focusing the refi’s on what they can so I can see the percentage of people taking cash out now increasing.

    2) HELOCs are no longer tax deductible. I suspect many are switching to a cash-out refi as an alternative since interest is still tax deductible.

  • Not all cash out’s are equal. While the percentage of cash out refi’s is interesting it’s not useful data. What would be useful is how many people are actually doing a refi and how much cash are they taking out relative to the difference between their mortgage and the home ‘value’.

    I took cash out at refi time. I only did that because it was the cheapest/quickest way to do the refi. I took out about $6k in value, which is irrelevant given the mortgage balance and home ‘value’ at the time of the refi.

    I understand that story doesn’t fit as well with your blog title though.

    • I think it’s fine if you wouldn’t notice the difference either way. The more urgently you think you need it, the bigger the mistake to do it (i.e., paying off credit cards). But if it’s a lot – like a new backyard – I’d get the HELOC and eat the interest payments. They’re usually very low the first few years.

    • You have the most valid point on here and I was thinking the same thing. Of course anyone doing a refi right now is doing it to take cash out since rates are up quite a bit from their lows. People previously were doing a refi to get a lower payment but with rates up that will rarely be the case. I think the argument is somewhat disingenuous if you are just comparing the % of cash out refis. We need the actual numbers and dollar amounts to see if it is really anything like 2006.

  • Just wait until Treasuries finally become unsellable (again), except there won’t be QE 1-XX to save them!

    Pro Tip: People that actually own property after the black hole implodes with be in a position to survive, and those that don’t won’t.

    Of course thermal nuclear warfare would completely clear the board, and it’s anyone’s guess what the Brave New World would look like…


    • Maybe we should ask the warmonger McStain how the world will look like. Maybe he doesn’t want to die of brain cancer and he wants to take the whole world with him in the grave. People like him and Bolton should be hanged by a lamp post for high treason.

      These warmongers will decimate the RE with all their wars for the benefit of MIC.

  • The ATM cashout is just starting. This party has many years and legs up to go before prices even feel a hint of decline.

    SoCal Housing to Tank is wishful thinking. This market is NOT going to drop even if rates go to 6% and HELOC explode. There are NO downward drivers on the housing market in safe clean areas. I went to an open house in San Gabriel Valley this weekend. In 2013 it sold for $800K. With ZERO improvements, it now has 3 offers around $1.2-1.3M – likely all CASH deals.

    Before we start calling a panic, let’s see some ACTUAL evidence of defaults on HELOCs. Let’s see a foreclosure or two. Currently – everything is fine and it is more likely than not to continue to be fine for years to come.

    Buy what you can afford today and go enjoy your life. You may die waiting for the housing crash.

    • cynthia curran

      It depends upon the city. Most of the OC cities are not getting cash buyers anymore. You see little condos in Santa Ana and Anaheim under 300,000. People are leaving OC like flies the past 12 months.

      • Cynthia,

        WHy is that, I wonder?

      • Hope thats true, we have been wanting to move from the East Coast to OC for over a year, will only pay cash around 1.2m, I’d love to see a correction before we pull the trigger.

    • “…The ATM cashout is just starting. This party has many years and legs up to go before prices even feel a hint of decline….”

      In other words, housing is poised to produce limitless wealth?

      • No Limitless, but enough to keep the economy rolling. Banks can loan out 9X on 1 dollar, why can’t people borrow 1X the value of a home. Even if the home falls in value, we know the bank will just hold them and rent them out. They don’t need to mark them to market.

        No crash or even correction for many years to come. (10+ years)

      • Throbert Girth

        Sean – how many houses are you going to buy this year? You should get your realtor on the phone asap.

        P.S. Why are you on a housing bubble blog?

    • Good point Sean101,
      I do believe there will be a reset, timing and depth is the unknown. Allot of this speculation depends on if/when we enter a recession which most agree we are over due for,,this could trigger a harsh financial environment when a good deal of households are all ready stressed financially.

    • Housing has always followed the stock market. If there is any slowdown in the market for a significant length of time you will see a downturn. Not as bad as 2008, more like 2000.

  • I spent most of my life in Oakland, and ended up buying a house in Alameda 20 years ago. Seven years later, my house was up 2 1/2 times, so I sold it (it went from $285,000 to $$720,000). It dropped to below $500,000 in 2011/2012, but is now worth over a million. This is for a cookie-cutter 3/2 with 1525 square feet, a tiny yard, and pressboard siding that was failing all over the development. After the sale, my sweetie and I ended up renting for the next 10 years, but got kicked out of 2 places because the owners sold the rentals. We’re both engineers, but after we got kicked out of the second place, we couldn’t find anything within our price range that accepted pets that we weren’t competing with dozens of others for. Note that our FICOs are both over 800, and we have what I thought were great incomes (~$250K combined). Of course, I could have rented a 2 BR with 1000 SF across the street from my office on Grand Avenue in Oakland FOR $5300/MONTH (!!!), with an additional $150/month for one parking spot that you could only use overnight because they rented the spaces out during the day. So we said screw it, and moved up to Santa Rosa 3 years ago, where we have watched house prices get as crazy as Oakland and Alameda were when we left.

    But here’s the deal. Suddenly, rates are up. And not only that, your standard deduction and personal exemption have been merged into a $12,000 standard deduction, so if we buy a house together, neither one of us will have more than $12,000 to write off, meaning that we cannot get much of a tax benefit for the interest we pay on the mortgage (our Schedule A deductions would each have to be over $12K before we get a benefit). Worse, the write-offs for local taxes (state tax and property taxes included) are limited to $10,000 total. To get a decent-sized house up here (~$750,000), your qualifying income would have to be high enough that you’re paying around $10,000 in state taxes. Your property taxes on this typed of house would be close to $10,000 as well. So there’s another $10,000 or so that you now can’t write off. Which I think is a good thing. Why, you ask? I must be the only person in Sonoma County who is suddenly seeing house prices start to drop. The type of houses that were previously asking well over $750K are now coming in at under $700K. Realtors are telling me that they are seeing bidding frenzies, but when I check back on a house that had over a dozen offers, I see the sale coming in at maybe $10K over asking. And what happened at the last peak, in 2005? A huge debt overhand, just like this article is discussing. In 2005, I called the peak of the market in Alameda, CA as happening in April/May 2005, and I was dead on. I’m calling the peak in Sonoma County as right now, and the rest of the nation will follow. Let’s see if I’m right again.

    P.S. The Dataquick/Corelogic numbers for median home prices for February of this year came in a week or so ago, and show that Sonoma County is DOWN 13.1% year over year. This is not my imagination. Something’s going on, and no one’s talking about it.

    • Karin,

      I grew up in Alameda from 1992-2007. I moved to Sacramento in 2007 about 6 months after I graduated. Why you ask? Because I couldn’t imagine living with my parents for 20 years to save up to buy a home. Mind you I wanted to put a big down payment and not jump into a mortgage. My aunt sold her house by Franklin Park for 1.5 million. It’s just absolutely crazy. Over by the base they built condos that were being sold at 900k! Alameda was so beautiful but now it has been taken to the cleaners by developers. I am sad to see what is happening. Oh I have so many friends hat have left due to the increase of cost to live there.

    • Roger Rabbit(aka white rabbit)

      Karin, what is your call for the Burbank housing market?

      • RR~

        Sorry, I can’t call anything but the area I’m in, as I’m doing my own record of asking vs. selling prices in half a dozen towns in Sonoma County, along with visiting open houses and seeing for myself if there’s a buyer’s frenzy for individual listings. When I called Alameda’s peak, the adjacent cities of Oakland and San Francisco peaked at different times, but I wasn’t tracking them because I was only interested in Alameda (since that was where my house was). You really have to do individual legwork for your own area.


    • So you are seeing house prices starting to drop but houses are selling for $10K over asking?

      One of these two things can’t be true.

      • Mr. Landlord~

        I wrote:

        “Realtors are telling me that they are seeing bidding frenzies, but when I check back on a house that had over a dozen offers, I see the sale coming in at maybe $10K over asking.”

        That’s only for houses that are getting bidding frenzies. In the Oakland/Alameda area three years ago, the standard rule was for each additional bidder on a property, add $10-20K to the asking. In San Francisco, it’s much worse than that. I’ve heard of crap shacks going for a million over asking. Not that many houses up here are getting multiple offers.


      • Karin,

        You’re too focused on the weeds and missing the forest. You can’t claim housing prices are crashing while houses are still selling for above asking. Multiple bids doesn’t have to mean they are all above asking. Could be some are below asking, some are at asking and the one that wins is $10K above.

        Point is as long as there are still homes selling for above asking – as you admit they are – the notion that it’s a buyer’s market is ridiculous.

      • If asking prices are dropping, then yes sellers can be getting $10k over asking, AND there can be falling prices. Duh.

        I’m seeing the same thing in San Diego by the way. I’ve been watching prices of homes relative to what they sold for in 1995 to 2000, and prices are definitely coming down. Whereas the 2000 price was about 40% of asking today, it’s now around 50%. I think the bottom will be 1998-2000 level prices. At least here in San Diego.

      • Thanks not true. If a house sold for $1MM lats year and listed for $900k this year and closes at $910k, then prices have decreased. I am waiting for prices to drop. Same story as Karen, sold a place I paid $194k for in 1985 for $907k in 2004. Now worth $1.5MM to $1.6MM.

        So this is not at anyone in particular, but every over-leveraged speculator from 2006-1007 thinks he/she is a genius b/c the FED stepped in and saved them is well.. an asshat. People that were prudent and not heavily leveraged like myself could have easily have ridden it out. 30x GIM and 1.5% cap rate was enough to hit the sell button. Real estate prices were inflated to save the banks.

      • Sure- housing prices go down – they list it low to get a bidding war. Only now- the bidding war is only yielding a few percent over (lower) asking. Underpricing is great strategy. People see a deal and want it just like people make a run for tacos on tuesdays.

      • Landlord- the sellers price it low to inspire a bidding war. Only now, the bidding war isn’t bidding up very much. It’s a strategy. So yes prices can come down and homes can sell for over-asking.

    • Karin-Great analysis, I live in the bay area as well, specifically the peninsula 🙂 I appreciate your insight.

    • Karin-Great analysis, I live in the bay area as well, specifically the peninsula 🙂 I appreciate your insight.

    • Well, our adventure is eerily similar having been in SonomaCounty now 10 years. We lost our house with 5200 other households and I think that’s affecting what you’re seeing. Zillow has offered our home value at $620 last September, then $320 in November and $130 in January for what was a bare lot after October 9th.
      Values were inflated on the flip side of this drama because of the increased demand for the remaining housing stock. We thought of buying something acceptable, not fancy, as a place to live in until we’re rebuilt but even a crappy 3/2 was going for $550
      I wouldn’t trust any numbers for this area until it becomes rebuilt and stabilized.
      I think this is going to take 3 years.
      If you’re really seeing a dip, I would take advantage of it and pickup something you like. Long term I’m guessing values will climb. The job market is stable in a pretty area with insufficient housing stock. JMTCW

      • Fensterlips~

        I am so sorry for your loss. We almost bought a house in Berry Creek off of Redwood Highway a year before the fire, but the yard was too small. It burned to the ground in October. I also survived the Oakland Hills fire in 1991, which stopped 4 blocks from my house over Montclair Village. Back then, houses fell in value, but slowly, after the fire. They also fell slowly in Alameda after the peak in 2005. There was a brief frenzy of market activity a few months after the peak, that lasted maybe a week or two, and then it dropped over the next 7 years, bottoming in 2011/2012. So now is not the greatest time to buy. Values go up quickly, but decrease much more slowly, so it’s still a waiting game.


    • Those are interesting observations. We bought and sold during the bubble. But we’re still on the sidelines. Right now I feel like we’re at the tail end of the bubble. People are putting houses on the market for top dollar, despite interest rates going up. Some are selling, but many seem to be gradually dropping their prices. I remember how things were in 2007. Some people said we were in a bubble, but many “experts” said we were in a healthy economy. The stock market looked strong. Realtors were saying “buy now or be priced out forever.” Creative loans like this were propping up the market. I remember reading in the Modesto Bee (around 2006/2007) that some real estate agents were selling multiple Mexican families to one house. The housing market took a few years to peak. And I expected it would deflate at the same rate. In 2008, I was surprised see how sharply and quickly it could tank. BTW no one talks about the TED spread any more. But the TED spread looks the same way it did 2006 and 2007. And people are talking about how strong our economy is –just like they did back in 2006 and 2007.

      • Hi Karen~

        I am having deja vu as well. We just had a bust 6 years ago, but people have short memories. I am seeing the same situation today, with the added burden that the new tax codes are taking away massive write-offs from states with high income and property taxes, like California and New York. This is a bust just waiting to happen. I think the worst will hit by April of next year, when folks see how their deductions will be affected.


    • Didn’t Sonoma County just burn down a few months ago? Wouldn’t that possibly have had a negative effect on home prices?

      • Yes and no. A lot of people were under-insured and couldn’t rebuild, so they’re packing up and moving out of the area. Especially the older folks, who don’t want to spend many of their remaining few years working with contractors and permit departments. On the other hand, you have supply and demand. Before the fire, we had a housing shortage. Santa Rosa alone lost 6% of its housing stock in the fires, so the situation is much worse post-fire.

        At open houses, what I’m seeing is a lot of people coming up here from the Bay Area. Good luck to them if they expect to commute there from here. I spent over two years commuting to Oakland, where I left at 5:45 a.m. and didn’t get back home until 8:30 p.m. The commute generally took 4-6 hours a day, RT. Sleep? Maybe 5-6 hours. No life. The weekend was spent making up for lost sleep and running errands.

    • I’m just over the Napa foothills in Solano County, and our neighborhood is still bonkers. I truly thought we bought at the top in Dec of 2016, but needed a place to live and was not going to rent for my family of four at near parity. Granted we have an income producing inlaw unit on the property so a temporary decrease in housing prices wasn’t as big of a deal as it normally would be, but now smaller houses down the street are selling for $60,000 more than we paid just a year and 4 months ago. So I’d say we have to be nearing a top, but who the hell knows anymore. All I know is that I’m very happy with my purchase, even if it was done near the top.

    • Most people who buy homes on expensive side tend to be under AMT (alternative minimum tax)
      1) They get full mortgage deduction (since there is not standard deduction to compete with).
      2) Their state/property tax deduction were already excluded.
      So, for them -> tax laws are a moot point.
      In California, 250k combined income is very high probability of being under AMT. Plug in hypothetical mortgage into turbo tax and see your tax liability plummet by 35% of the hypothetical mortgage amount.

      If your combined income is 250k (and steady), 1mln dollar home should not be a problem.

      And Moral of this story: Do not chase the market. You sold a home at a peak (720), only not to buy at bottom and feeling like being priced out at next top(1mil now). You advertise your predictive skills, yet they led you to:
      1) Being far behind in equity than you could have been. Lets say you are right again in calling the peak, your former 1m home become $700k again (unlikely). You are back at square 1 at best.
      2) You moved to where you did not want to move.

      Let’s see if you calling the peak correctly, just not sure how is this going to help you

      • Surge~

        1) No one ever gets a full deduction for their mortgage. In 2017, single taxpayers got
        a standard deduction of $6350, and married got $12,700. They got that whether they have write-offs or not. The only advantage write-offs give you is if your Schedule A deductions exceed the standard, because you get the standard no matter what. So if a couple’s mortgage interest + state tax + other Sch. A deductions total $20,000, the only EXTRA write-off they got was the amount over $12,700 ($20,000 – 12,700 = $7,300). In California, your taxes at that level would be 9.3% at the low end, plus 25-28% for federal taxes. So you get a little over a third (~$2500) back of the $7300 over the standard deduction you get anyway, even though you have $20,000 in write-offs. Now, let’s look at the 2018 standard deduction, which is $12,000 for singles and $24,000 for marrieds. This same couple, with $20,000 in deductions, have less than the $24,000 standard, and therefore get NO benefit from their mortgage interest and other deductions. In other words, there is no benefit to your write-offs until you exceed $24,000 in Sch. A deductions under the new tax law.
        2) State taxes, and property taxes (for a primary home), were never excluded on the Federal returns before the 2018 tax laws went into effect. You could write it all off unless you got hit with the AMT. Now your total local taxes cannot exceed $10,000. Ouch!

        As for your last two comments, I was renting in the East Bay, and did not intend to buy there because I was planning to move out of the area when I retired, which I did less than half a year ago. I knew prices were going up, but did not want to buy a place elsewhere plus pay rent in the East Bay. And as for my house profits, I invested the money wisely two years after I sold the house, and doubled my money within 4 years, without all the hassle and expense of home ownership.

        You also state that I moved to where I did not want to move. Not true at all. Sonoma County is what I’d call God’s country, and if I never set foot in the East Bay again, there would only be about half a dozen places I’d miss (like Cat Town in Oakland). We both have relatives in the East Bay, and I have to be dragged down there kicking and screaming. I’ve been smiling like a Cheshire cat since I moved up here. I consider myself a refugee from the East Bay.

        Surge, let’s talk again after you do your taxes next year.


      • Maybe so on the demand side, but tax laws are going to impact existing owners of a certain vintage which is way more people than new era buyers of $1MM+

        No one knows for sure how that’s going to shake out, not even you.

      • Throbert Girth

        Dang Surge, have someone take you to the burn unit.

    • Lord Blankfein

      Karin, why did you sell your house in the first place? Were you trying to time the market? And if you weren’t, you made a huge profit from the sale and you have a 250K combined income. So what seems to be the issue, you should easily be able to afford a million dollar home…

      • Lord Blankfein~

        I previously wrote that I felt the market was topped out, and was now turning down. Why in heck would I buy a house now? It would be a very unsound investment. Do I just blow everything I made selling at the peak of the last bubble, by buying in again at the peak of the current bubble? I don’t understand your logic.


      • Karin, I read your post again. You did a great job timing the market back in 2005, but completely struck out by not buying again in 2010-2012. In hindsight, you likely should have kept your original house. Like you said, it would have been worth 1M and likely paid off and you wouldn’t had to deal with all the renting headaches and uncertainty of re-entering the market. You may be right, the market may have peaked or it may run another 20 to 30%. The fact is nobody knows. Your guess is as good as anybody’s.

        Trying to time any market (stocks, RE, etc) is a fool’s game. The only way to win is by letting time do its magic. Not rocket science here.

  • I guess I’m stuck in the distant past where a house was the roof-over-your-head (hopefully in a nice neighbourhood), and the only people who took out a home-equity loan were in financial trouble and wanting to do a roll-over debt consolidation. (It was considered shameful.)

    Now all you see in housing (and on other all front as well) are weird-ass financial games and foreign hot-money chasing up prices. It is not sustainable.

    But we all know that. It only remains to be seen how the bubble will burst. Will Tech go into the toilet again? Shades of the Japanese in the 80’s, will foreign money dry up? (Already happening.) In Southern California, will it be an earthquake that takes out the power, water and gasoline? (Easier than you think.) Will there be a sort of L.A. Riots writ very, very large as the dollar implodes and the various tribes (and have-nots) turn on each other and act out? (Chimp out?)

    You’re already seeing a reset on mortgage interest deductions on loans over a certain amount. Will new Government regulations – read market distortions – cause the implosion? Will the Socialist politics do it? (The productive classes are already voting with their feet, Tainter’s Collapse in action.)

    L.A. the next Detroit? Hey, it’s possible. (Bum Houses in the backyard? WTF?!)

    Look, I’m just free associating here. And thanks for letting me ramble. But when you have sidewalk tent cities and crazy-homeless people everywhere, and all more or less next to (nominally) multi-million dollar houses, you know that it can’t turn out well.

    Just a thought.


    • Stop whining and adapt to today’s world.
      And you still can have a home as roof over your head.
      Buy and hold for long time. Prop13 and no capital gain tax for up to 500k is there to help people who are not buying home as an “investment”.
      World always changes. Things will change. Longing for good old days will not make your life better

      • “The Good Old Days,” as you refer to them, were stable. (Or at least far more stable relative to the present national economy) The present situation is not. Indeed, that’s why you’re even visiting this blog.

        And if you or anybody else has to engage in weird ass financial games on a daily basis in order to keep a roof over your head, and if you think that sort of activity is *normal*, then you’re the one with the problem.

        If you swim in a cesspool long enough, you learn to think of the smell as normal. I invite you to think about that.

        Just a thought.


      • Surge, when it comes to buying RE in California nothing has really changed. Boom and bust cycles. Live frugal and save money. Buy low and you win the game. Get suckered in to buying high or even at the peak and you lose the game. Some Sore losers will hang out on housing bubble blogs telling people that rental parity is paying 200k down plus 1500 dollars more a month than a renter. Sounds familiar?

      • Surge is right, things change. Prop 13 has a shelf life and therefore cannot be counted on to be around for far longer.

      • I doubt it will be repealled, but regardless you should not buy based on this. Your purchase and finances are hopefully robust enough

  • Lord Blankfein

    May God bless these people who take out cash when refinancing. They are doing their part keeping the economy going and tax coffers full. When bad times come, they may even lose their home…which is great for people waiting for an opportunity to buy at a discount.

    • Nobody will lose anything. Both Dems and Reps will borrow another trillion or two and bail the deadbeats out. Plus there are thousands of SJW judges who will side with “poor Mr. and Mrs. Jones (or Garcia)” vs “EEEEEVIL BANK”. That’s why real estate is risk free these days. I know a family who had their house foreclosed on in 2010. They stayed in the house until 2013 when they finally went to court. There was some clerical error somewhere along the line. End result was the judge forced the lender to refinance the loan with a 40% haircut for the lender. All this after they lived 3 years mortgage/rent/property tax free in the home.

      That is the legacy of Obama’s America, the rule of law means jack.

  • I guess I’m stuck in the distant past where a house was the roof-over-your-head (hopefully in a nice neighbourhood), and the only people who took out a home-equity loan were in financial trouble and wanting to do a roll-over debt consolidation. (It was considered shameful.)

    Now all you see in housing (and on other all front as well) are weird-ass financial games and foreign hot-money chasing up prices. It is not sustainable.

    But we all know that. It only remains to be seen how the bubble will burst. Will Tech go into the toilet again? Shades of the Japanese in the 80’s, will foreign money dry up? (Already happening.) In Southern California, will it be an earthquake that takes out the power, water and gasoline? (Easier than you think.) Will there be a sort of L.A. Riots writ very, very large as the dollar implodes and the various tribes (and have-nots) turn on each other and act out? (Chimp out?)

    You’re already seeing a reset on mortgage interest deductions on loans over a certain amount. Will new Government regulations – read market distortions – cause the implosion? Will the Socialist politics do it? (The productive classes are already voting with their feet, Tainter’s Collapse in action.)

    L.A. the next Detroit? Hey, it’s possible. (Bum Houses in the backyard? WTF?!)

    Look, I’m just free associating here. And thanks for letting me ramble. But when you have sidewalk tent cities and crazy-homeless people everywhere, and all more or less next to (nominally) multi-million dollar houses, you know that it can’t turn out well.

    Just a thought.


    • I looked up estimates of 2018 homeless and California populations and found 134000 homeless in a state of 39 million. To 1 significant figure, that’s 0.3%. There are a lot more than 134000 people sharing apartments, or renting rooms in houses or living with Mom & Pop. I’ll bet there were more than that in California’s hobo jungles and migrant camps in the ’30s when California had 15% unemployment (half the national rate) and 6 million people. Homeless people here are like a big horsefly in an auditorium full of people trying to focus on a dull speech.

      • Oh wow stop the presses you looked up estimates on the homeless. Those numbers are probably less reliable than the polls of the 2016 presidential election. Anyone with their eyes open and a functional brain stem living in Los Angeles knows the homeless problem is out of control and getting worse. Downplaying the problem isn’t going to make it go away.

      • Happy Democrat

        The condition of people without permanent dwelling is a nothing burger. The inconvenience of having to notice these individuals can easily be avoided by living in a multi million dollar home, gated community and locked in prop13 property taxes. On my visits to clients I don’t have to drive by the dried out river beds that are populated by the these individuals. As long as MY taxes are not going up I see no reason to complain. We have ensured that the next generations will have to deal with tax bills and homelessness.
        Just do me a favor and keep interest rates low so that my stocks and house values will remain highly inflated. Thank you. Your happy democrat.

      • Happy Democrat,

        The interest was kept low by the FED not the republicans (the FED is in charge of that not a party). During Obama years, the interest was the lowest ever. As soon as Trump won, the interest was raised repeatedly and they will continue to do so till the economy crashes. Then, they will blame the republicans, Trump and conservatives for the mountain of trillions of dollars accumulated under Obama and the interest rate so high that it takes all the taxes just to pay the bankers from the FED.

        Yes, I agree that the low interest rate is the main cause for the vast income inequality, but you can not blame the conservatives for that. They were screaming for a decade about the manipulation in interest rate about QE and recently about the budget passed by RINOs and democrats (no difference between the two). True conservatives were against that.

        Homelessness is caused by many causes, and interest is just one of them but not the most important. I believe that personal responsibility and financial discipline are the most important to avoid homelessness. Education and being sober (no booze and drugs) would surely help.

  • Many of the comments on this board are shortsighted. Many think tax law changes mean the end of the real estate run … as if successful people are going to live with the less advantaged renters in those giant apartment complexes because of a tax law change. Fact is real estate is a global financial asset, and most blue chip cities in most countries are doing very well. US tax law changes has little to do with anything. As this article points out, real estate is the new gold worldwide.

    • Yep. People think tax laws (or even prop13/capital tax exclusion) will much change anything. They claim housing has turned into a speculative asset, yet they want to repeal those few things that actually protect those who buy home as a long term utility. Because they do not own RE, the think these protections act against them.

      • I have yet to hear someone who wants to get pre-approved for a home loan recoil or change their mind due to the tax law.

        I bet a small % of people may change their mind or at least scale back the amount of house they buy; but, the vast majority will not continue to rent just b/c of the tax change.

      • CallSignViper

        Its funny how people complain about the speculation in the market while engaging in the speculative market and driving it.

    • Say a couple earning $250K a year, is in the 24% tax bracket. And instead of deducting $25K in SALT like they used to, they can only deduct $10K with the new tax law. That means they will may an extra 24% tax on $15K which is an extra $3600 a year or $300 a month.

      Does anyone really think that couple will make a life altering decision to rent for the rest of their lives vs buy a home because of a $300 a month change in taxes? It’s beyond ludicrous.

      And what makes it even more ludicrous is that the 24% rate they’re in now used to be 28%. So whatever they may lose on the SALT deduction, will be more than made up for with the lower rates. Net effect is break even.

      Conclusion: Real estate won’t be affected by any of this.

      • No one is suggesting people are going to decide to become renters due to the tax law changes.

        What is more likely is that in high taxed and COL states like California it will move the needle for people to give consideration of moving to lower taxed and COL states. That will have an outsized effect on RE in both types of places.

        And that’s exactly what some of the changes were designed to do.

      • How so, if everyone is getting a tax break?
        Which needle?
        Very few move because of taxes

      • Throbert Girth

        It’s not about whether the increased taxes pencil out for buyers or not, it’s about momentum. Momentum has been up, up, up. Once that pendulum swings the other way, the momentum will be down, down, down. All you need is a catalyst, and the latest tax cuts could be it.

      • “And that’s exactly what some of the changes were designed to do.”

        So Republicans wrote a tax bill to force Democrat Californians to move out of CA and to red states, in order to vote out said Republicans.

        Sounds legit.

      • Surge suggests people don’t care about paying more taxes in the face of a better alternative but we all know money talks the loudest. Most successful wealthy people are very sensitive to taxes and are always stoked by a better deal. This tax plan upped the ante for finding better deals and California got ass rodded on this thing. Yes Sr Landlordt the Republicans passed a tax bill designed to help shift the economic balance of power in this country closer toward conservative states and that will push many more Californians over the edge to move out. Some libbers will be in that mix but I’d bet there’s a surprising amount of more conservative types leaving the state than you might believe.

    • Mr Landlord,

      It is likely the government would like to see less money flow into housing and more into the stock market. They would prefer that since money into the stock market finances expansion and jobs. So, they cut back tax incentives for real estate. That is a possible explanation. The counter to their line of thought is landlords still get all the tax incentives, so even if everyone starts renting, prices still hold because landlording will become even more popular. We will see what happens here …

  • son of a landlord

    That Palos Verdes Estates house from the last thread, listed for $1,550,000 and sold within 8 hours, closed for only $1,600,000:

    Someone got a good deal.

    And that 1979 Santa Monica townhouse with the 100% markup, listed at $2 million, has gone pending:

    • SOL, I recently drove by that PV home. Worth every penny and then some. The neighborhood is awesome and the home is very unique. That was a great buy, properties like that will ALWAYS be desirable.

      • Lord B., as conservative as I am with my money and as convinced as I am that we are in an everything bubble, on that particular property I am on the same page with you. It was worth every penny (I said so from the first time it was posted). I didn’t drive by but I know the area very well. The agreement is with a qualification – if someone buys it to live in it. For me, as an investor, the ROI was not there, but if I wouldn’t have a house and looking for one, that would meet the criteria (again for me personally not as an investment).

        When I look for me, I am looking for unique properties in unique locations, and that house met the criteria. The price was decent given these criteria.

    • Thats surprising. Nice place, nice area and I dont see the price as being a sign of a bubble. I see plenty of junk places on this and other blogs that go for 1M+ that are soulless dogmeat compared to this place which I do consider to be signs of a bubble. Good for the buyers, hope they can actually afford that nut!

    • Or maybe there’s something wrong with it that doesn’t appear in the ad. There aren’t any good deals.

  • son of a landlord

    Burned out house in Silicon Valley listed at $800,000:

    But it comes with a “generous” 5,850 sq ft lot.

    Realtor Holly Barr offers this sales pitch: “They did leave it standing so you can remodel it versus tearing it down so you save a lot of money when you can leave a wall up and do a remodel versus a complete tear-down.”

    • My great uncle was a real estate developer in San Francisco.

      For context, there are lots of rules that have to be followed when building a new house in San Francisco. The rules change over time. If you leave a wall up, it allows you to build off of the old rules instead of new which can save you a bunch of money. It’s a loophole that everyone accepts.

    • With regards to that last statement (I know this because my great uncle was a real estate developer in San Francisco):

      There are certain rules that have to be followed when constructing a new house in San Francisco. They are different than the rules for remodeling an old house. If you leave a wall up, legally, it counts as remodeling an old house. It’s a loophole that everyone accepts.

  • A clip from a real estate analyst in a research report:

    Home prices across the country are heating up faster than the temperature as the spring market gets underway. According to’s March 2018 monthly housing trend report, the U.S. median listing price for a home was $280,000 last month, already outpacing last year’s high of $275,000 — reached in July — and increasing 8 percent year-over-year.

    “Our latest inventory data tells us buyers are out in full force this spring,” said Javier Vivas, director of economic research for “Never in history have there been more eyes on fewer homes than today.”

    The housing market has seen a 7 percent decrease in days on the market from last year to 63 days, and total listings decreased 8 percent year-over-year to 1.29 million. Buyers will face competitive conditions this season due to continuing inventory depletion carrying over in March housing trends.

    While there has been a slow down at the rate that total listings are staying on the market, 36 of the largest 100 markets in the country are still seeing inventory move at least a week faster than this time last year, according to Vivas.

    “March housing trends show the inventory depletion we’ve seen over the last two buying seasons is carrying over to this year,” he said. “It’s going to be a languid search for buyers this season as they face the harshest, most competitive buying conditions yet.”

  • I took a cash out refi on my primary home to buy a rental property last year. Reason is my interest rate is a lot lower on my primary residential home than on an investment property. I refied into a 15 year fixed, and paid cash for the investment property. The interest rate would have run over 1.5% higher had I bought the house with a mortgage on it. And refi closing costs were a lot lower than on a purchase. Plus in at that price point, it was then (and still is now) a crazy seller market. 5 offers in the first day for houses priced right. As a cash buyer, my offer went to the top of the list, closed in 22 days vs the typical 45 days.

    So instead of my equity sitting there doing nothing, it’s now earning 9-10% annually and saved me thousands of dollars in upfront fees. I realize this isn’t typical, but it’s not that unusual either. Lots of people will take equity out of their home and use it for other investments and/or business opportunities. Primary residential mortgage money is the cheapest money available. Might as well take advantage of it.

    • I did the same thing many times with my investment properties. I always bought with cash for a better deal and I paid the loan on my house over time.

    • Cash out refinancing for the right purposes is a great thing. I know several people who have done cash out refis to come up with a rather large down payment for a move up property while renting out their old property. With rock bottom interest rates and sky rocketing rent prices, this was a genius move. And yet we still hear “how can anybody come up with a sizable downpayment in CA?”

      Don’t give all the secrets away Mr. Landlord. An unfair playing is a great playing field as long as you are on the correct side.

    • Seen this all before, Bob

      Mr Landlord,

      I agree with you 100%. Taking money out your house is THE cheapest option available.
      At a little over 4%, you can’t beat it.

      However in order of priority, take the money and

      1) Pay off student loan debt which is likely at 7%.
      2) Pay off any emergency medical or otherwise loans. Anywhere from 7% – 20%.
      3) Start a business. Risky, but a cheap alternative to other loans.
      4) Definitely pay off your 25% credit card debt and NEVER run it up again.
      5) Take it out to invest in real estate (9%) or the stock market (Trump’s 30%) but be aware that all good things come to an end. You don’t want to be left holding the bag while real estate/rents/stock market decline 70% while you are paying 4%. Risky today IMHO.

      • Bob,

        I have no debt other than mortgage, so that doesn’t apply to me, but good advice.

        And yeah the mentality here is so pathetic. Wahh wahh wahh nobody can get money for a downpayment, wahh wahh wahh. Well no, obviously some people can get money for a downpayment otherwise nobody would be buying houses.

        This is the defeatist/victim mentality Democrats and the MSM enforce all day every day. If you just vote for Bernie, he’ll buy you a house and all your problems will be solved!!! And it sounds a lot more appealing than forgoing up the iphoneX and $500 jeans in order to save for a downpayment on a home.

      • Seen this all before, Bob

        Mr Landlord,

        I used to wonder where people were coming up with the money to buy houses/crapshacks. Wages have not risen even close to the price of houses.

        However, non-wage income has been the key to wealth since 2002..

        1) If you bought a house in 2012 for $1M, it is likely worth $2M now. That is nearly $1M in equity that can be borrowed to buy another house.

        2) Better yet, if you had $1M and put it in a Dow Index fund in Jan 2009 when it was at 6600, The Dow is now at 24000, so you now have $3.6M. Plenty of money to buy a dream home (or several crapshacks).

        3) As I mentioned in previous posts, if you loved Apple and had prescience and put your spare million into Apple stock at $1.00 per share just after the tech bubble popped in 2002, you would now have $180M.

        So much money out there to buy with cash as long as you just haven’t been working for a living.

      • Seen this all before, Bob

        Mr Landlord,

        I used to wonder where people were coming up with the money to buy houses/crapshacks. Wages have not risen even close to the price of houses.

        However, non-wage income has been the key to wealth since 2002..

        1) If you bought a house in 2012 for $1M, it is likely worth $2M now. That is nearly $1M in equity that can be borrowed to buy another house.

        2) Better yet, if you had $1M and put it in a Dow Index fund in Jan 2009 when it was at 6600, The Dow is now at 24000, so you now have $3.6M. Plenty of money to buy a dream home (or several crapshacks).

        3) As I mentioned in previous posts, if you loved Apple and had prescience and put your spare million into Apple stock at $1.00 per share just after the tech bubble popped in 2002, you would now have $180M.

        So much money out there to buy with cash as long as you just haven’t been working for a living.

        It used to be in the US, if you worked hard, you could earn enough to afford a house, a car, and a few kids. You can’t do that today in many parts of the US. You had to be a part of the few who had a house when times were good. Or had the foresight and effort to invest in stocks before there was an E-Trade. The saying “Work hard and you will do well” no longer applies for many Americans. You can’t blame the Boomers since some did buy houses and invest in stocks. They are doing very well. Many Boomers rented and never invested in stocks. Most of them are in flyover country or rural central CA by now after being forced out of coastal CA by rising rents and low wages. These are the people both Bernie and Trump targeted. We’ll see how Trump does for these people. If he doesn’t deliver, Bernie and Bernie II will be the next FDR.

      • Bob,

        Damn these replies get all messed up with weird nesting. This is what I wanted to post regarding your views that Trump only won da poors. You’ve fallen into the same trap the MSM fell into, and never got out of. Your entire premise on who the Trump voter is….wrong. While the Hag won the PhD baristas making $11/hr and her BFF with a Masters in Art History making $30K working at the museum, Trump won the construction manager making $150K or the plumber who owns his own business making $250K a year. But in your twisted view, PhD = rich, plumber = living in a double wide. Plus Trump won a majority of white males WITH a college degree. If you want to believe that the only people who voted for Trump live in a double wide by the river… my guest. The data says otherwise.

        “To look at it another way, among white people without college degrees who voted for Trump, nearly 60 percent were in the top half of the income distribution. In fact, one in five white Trump voters without a college degree had a household income over $100,000.

        Observers have often used the education gap to conjure images of poor people flocking to Trump, but the truth is, many of the people without college degrees who voted for Trump were from middle- and high-income households. That’s the basic problem with using education to measure the working class.

        In short, the narrative that attributes Trump’s victory to a “coalition of mostly blue-collar white and working-class voters” just does”n’t square with the 2016 election data. According to the election study, white non-Hispanic voters without college degrees making below the median household income made up only 25 percent of Trump voters. That’s a far cry from the working-class-fueled victory many journalists have imagined.”

      • Seen it all before, Bob

        Mr Landlord,

        To clarify my point. Trump won the middle class working votes. These are the people making 50K-99K (Dual income) and make up 31% of the voters. Trump won these voters 50% to 46%. These are the voters who work hard at jobs and are doing OK but many can’t afford a house in most cities. As you pointed out, 50K is good in a Flyover city, but a 150K house is still on the crapshack side. This is a guess, but I doubt many of these have invested in the stock market or with 300% gain in the Obama stock market, they would be making 100K+

        I expected most of the poor to vote for Hillary since they always vote Democrat. If you work at WalMart full-time, even WalMart HR says you should apply for food stamps. Hillary and Bernie had given them the hope of higher wages.

        I expected most of the 100K+ earners to vote for businessman/pro-tax-cut Trump.

        The race was close, and the disgruntled working middle class swung the vote.
        Here is some data to back me up.

      • Bob,

        We’re saying the same thing, but drawing a different conclusion. Yes, The Hag won the poors, Trump won the middle and upper middle class. However, “middle class” ($50-99K) in flyover means a solid middle class life, including a nice home. “Middle class” in CA is border line poverty. A family earning $75K a year, can easily afford a $250K home. And $250K in most of flyover buys a very nice place. The American dream is alive and well in flyover. It’s in CA where you need $250K just to live in a non-ghetto ‘hood, where the American dream is DOA.

      • And also Bob, the people working at WM full time – most of them anyway – make under $50K a year. Which means that they did NOT vote for Trump. That’s the thing you’re missing. WM full timers voted for The Hag, your own data says so. Yet you insist on believing the opposite.

      • Seen it all before, Bob

        Mr Landlord,

        Both you and I agree the people working at WalMart mostly voted for Hillary. They are likely working full time and are still below the poverty level and qualify for food stamps. Trump has never claimed to support food stamps for the poor so he likely did not get their vote.

        The interesting thing is that the middle $50K – $100K voted for Trump. These are likely in the working middle class.

        Trump kind of screwed the bottom end of this income range if they have a family. With a family with 3 kids making 50K, , adding up the std deduction and personal exemptions, the total deductions in 2017 were 13K(std) + 20K (personal exemptions) = 33K. That pushed a family with 3 kids into the 10% bracket. In 2018, the personal exemptions are gone so this family will have 24K in deductions which will leave them paying 12% of 9K = $1.1K more in taxes.

        Trump just lost the median %50K income voters with families to Bernie next time.

        Please correct me if I am wrong.

      • Seen it All Before Bob you are completely incorrect. A family making 50k with 3 kids has a negative tax rate (they pay no federal income taxes and actually get a credit).
        50k-24k std deduction=26k. Of this 26k 19050 is taxable at 10%=1905. 6950 is then taxable at 12%=834. Their tax bill would then be 2739 however the child tax credit was moved from 1k to 2k so they get 6k (then entire amount) for their kids which means they pay nothing. Also 1400 of the child tax credit is refundable (I think per child.) even if you pay nothing (which they do). So they have a negative 3261 dollar tax bill and can get 2800 back.

  • You might as well take everything you can out of this eaten out husk of a state, California.

    What is left of California? The future of California belongs to hispanics and the tide of color. Have you been to Irvine? Try finding a white person there. The only white people in California are in tiny enclaves surrounded by cities full of foreigners. 1 in 4 school kids in California are white. The rest are hispanics and “new Americans”. 20 years from now California will be a collapsed banana republic actually make that a weed republic. There won’t be anything resembling America in California. Boomers will expire in a state that doesn’t resemble the one they were born in any way other than the weather.

    Jerry Brown and co play funny games with the state budget claiming California is in the black. Are you a public servant today expecting a nice pension when you retire? Yeah, good luck. Let’s see what the hispanic majority thinks of that in 20 years.

    It’s over for California. White Americans never came together and fought for their own interests and so they will be replaced. Demographics is destiny.

    • This is why you should do everything your power to make #CALEXIT a reality.

    • That is also the destiny in Western Europe. They have been subjected to the same thing in the last few decades. Good luck with those trying to collect a pension from a population addicted to socialism and welfare. What the people want is irrelevant in these countries where democracy means just selecting between puppet one or puppet two. In the end, they still end up with a puppet who is doing the masters bidding (by carrot or blackmail). Not much of a difference between US and EU these days.

    • That is also the destiny in Western Europe. They have been subjected to the same thing in the last few decades. Good luck with those trying to collect a pension from a population addicted to socialism and welfare. What the people want is irrelevant in these countries where democracy means just selecting between puppet one or puppet two. In the end, they still end up with a puppet who is doing the masters bidding (by carrot or blackmail). Not much of a difference between US and EU these days.

    • You can’t keep up with changes and resort to racially-charged whining.

      • There is nothing in that post that isn’t true. CA is now a 3rd world country for all intents and purposes. It’s basically Brazil. Good weather, a few ultra rich white people surrounded by dirt poor brown people. Maybe they’ll start a cool Carnivale in Santa Monica some day.

      • It’s no worse than not keeping up with the changes through apathetic acceptance of the unacceptable which is primarily to blame for the problems California faces.

    • son of a landlord

      Jonny OK: White Americans never came together and fought for their own interests …

      Hollywood, the news media, and academia convinced White Americans that it was racist to fight for your own interests (even though every other ethnic group does it)

      • Too much drugs/alcohol and estrogen = cultural suicide. Saw it 25 years ago while attending a UC as one of the few white guys studying stem. Most were poly-sci (sorry, nothing scientific about it) and other useless fields. Now the blue state is becoming a brown state – skin to match the s-t covering the streets and average IQs < 90. Very fitting.

        My old high school which was an open campus of mostly whites is now overwhelmingly third world filth and they've had to construct massive fencing and gates so it looks like a prison more than a school. Test scores went from top 20% in the state to the bottom.

        I hope they secede or get nuked. 1 of 8 places of similar climate? Who cares, its an overpriced, overcrowded dump. So what if youre not cold or sweating like a pig – they probably have climate control in prison or psyche wards too.

    • This is some of the most racist and xenophobic nonsense I’ve read in a long time. Wow.

      • If you’re so open-minded why don’t you go live in Mexico, China or Iran?

        I don’t want to live in any of those places but California is becoming a blended sh*thole of all of those places as the demographics have shifted from majority white to minority white.

        You don’t want to live in any of those non-white countries as a minority so why would you want them to come here to make you a minority in this country?

        That’s not racism. It’s common sense. I actually love all cultures and races. I just want to defend the Western (European) world.

        The multi-culturalism the left sells today is not multi-culturalism. It is cultural death. When you blend all the cultures together in one place those cultures are destroyed or the most dominant culture takes over. Take a look at Paris or London. They are no longer French or British. Look at California. It looks nothing like the California dream of yesteryear. It’s now a third world sh*thole.

        Why anyone would want to buy property in California I don’t know. I don’t even see how it appeals to these new immigrants. At least in their own nations they have their cultures and their people. They come to California to be subsumed into a overcrowded mass of strangers from all over the planet. It’s not a community. I see this every day here in California.

        The funniest thing I saw recently was a white female boomer school teacher saying “Happy Thanksgiving” to a muslim parent in a burka. The muslim didn’t even understand what the hell she was saying.

        The schools send out correspondence in English and mandarin now. This place is a joke.

        Real multi-culturalism is having homogenous nations where cultures can develop and be protected. This fake multi-culturalism is really globalism which leads to the loss of all cultures to be replaced by consumerism and atomization.

      • Johny OK, excellent explanation on the difference between multiculturalism and globalism (a collectivist ideology from the pit of hell to make everyone equal poor and no identity).

        Globalism destroy multiculturalism and is pushed by the larger corporations.

        Globalism is against free markets and thrives under fascism/communism (all the power in the hands of few hundred people). It is the use of military and politicians to get an advantage over those who want free markets. Globalism promotes TBTF (too big to fail). Globalism has more in common with fascism and communism and it is anti capitalists (capitalism implies free markets and we ceased to have free markets in 1913).

      • I agree. So whites are now a disadvantaged underclass, suffering because an insensitive minority-majority is doing what to them…??? What parallel universe is this group of whiteys from?

  • I’m so happy to say that we are now officially looking for a job somewhere far from California. We are sick and tired of it here. It’s a nice place (sometimes) but the cost of housing has pushed us out and we make 250k combined. There is something wrong when 250k isn’t enough to buy a home without making major sacrifices. Goodbye California! When we leave I can say for certain we will NEVER return.

    • You can make 250K work. According to Zillow, with 100K down, you can afford 1.05M. You can get into something decent for that. I just looked and I did not see much to pick from in the South Bay … This one is almost decent … it would be better if it was a little further west, but still not bad.

      Two or three years ago, for this money, you could have gotten into the Avenues of South Redondo Beach. Unfortunately, those have jumped about 400K since then, so west Torrance is the best spot for 1M.

      • He could do way better than just “decent” in other places. Ambitious people don’t stick around in order to settle for less.

    • Same here. We make 300k combined and have 300k for down pay. We want to live in a house in SGV that has at least 9000+ sqft land plus 2500+ sqft living space that the property is not distress nor still have 70’s decor or smells like an old hag. I guess we are still asking too much coz what I ask will be 1.5M at least in today’s market.

    • wise decision dont blame you at all you will find nice places to live for a third of cost

  • I’m so happy to say that we are now officially looking for a job somewhere far from California. We are sick and tired of it here. It’s a nice place (sometimes) but the cost of housing has pushed us out and we make 250k combined. There is something wrong when 250k isn’t enough to buy a home without making major sacrifices. Goodbye California! When we leave I can say for certain we will NEVER return.

    • Good Lord, Mark – $250k would buy you a hell of a spread in some VERY nice areas of CA. Assuming you could do the work remotely, that is.

    • Good luck, Mark! I can’t help but be a little envious. Unfortunately, I’m probably stuck here for the time being because of family connections. If it wasn’t for that, we would have already been gone. I am utterly sick of the rat race and expense of living here, though the amenities and climate can be very nice.

    • Thats a hyperbole. Steady 250k income will get something nice in a good area. Especially if you can work from home.

      • $250K will go further for him in many other places. Ambitious people like him don’t stay and settle for less.

      • Scroll down a little and see what he can get for $875K…a 2 bedroom home in an HOA that “barely has any” bars on the windows.

        Or he can move to 85% of the country and for $575K buy a great home in a great neighborhood, while paying 1/2 as much in taxes.

  • California has this desirable Mediterranean climate that only 8 places on the planet enjoy. Meanwhile our government is making it impossible to build new houses while importing millions of subsistence workers that don’t speak English.
    An earthquake would only make the prices and availablility far worse. Look what our big fires did to pricing. Here’s a clue from someone in the middle who lost their house. There’s almost nothing available and prices are up 30%
    We are competing with people from all manner of crazy places around the planet. With internet connectivity, someone making their fortune in, say, Malaysia, can take their bundle and move somewhere perhaps more stable with a nice climate. Why is the San Gabriel Valley suddenly all Chinese? What do you think happened? They moved from their sweaty hellhole to our not so sweaty hellhole bringing their millions. We are competing with them for houses, space on the freeways and everything else and they have no allegiance to us, our country or our mores. A Miidle Class isn’t normal. You need just right conditions for it to flourish and those conditions are evaporating quickly. We are becoming a 2 class state pretty quickly. A Tale of 2 Cities, or 2 states.

    • I tend to agree with what you say. I don’t know a whole lot about it but it seems that if foreign money is making it difficult to damn near impossible for locals to own, then shouldn’t there be some sort of law in place to prevent that? I read that Canada had a similar problem with foreign investors and started to put restrictions on foreign ownership into their real estate laws. Australia did that as well. The fact is, I can’t, as well as most of the people I know, compete with foreign cash (or any all cash buy for that matter) and it is absolutely wrecking the housing market here. California is seriously broken and seems to be only getting worse. Again, I am so happy to be leaving.

      • There was a law until Obama abandoned it….Foreign PE was not allowed to own multiple units but in haste he sold off America to his Manchurian overlords

      • “…shouldn’t there be some sort of law in place to prevent that?”

        Yes, but that would be “xenophobic” or “racist”. Boils my blood.

    • It is climate and political stability

  • You cannot compare cash out refi’s today to 2006. Back then you didn’t need INCOME VERIFICATION and could leverage up to 100% of the value of the property (and in some programs MORE than the value) and on “stated income”.

    Today here are the maximum loan to value programs for cash out:

    80% conventional
    85% FHA
    80-90% jumbo (with severe restrictions)
    100% with VA

    Unless you are VA you cannot really leverage the value of the collateral as many of you believe and also, remember, you must qualify from an income standpoint. Debt to income ratio is the magic qualifier.

    • Banks have just added a middle man between themselves and the poor lending standards. When you dig down through the layers, they are still doing the same lending. They’ve just changed the thin veneer of safety from AAA rated CDOs to loans to nonbank lenders. When those third party lenders collapse, the banks will still be on the hook for the subprime loans that fail.

    • I can concur. When I refied last year it wasn’t simple. Lots of docs were required, tax returns, bank statements, investment account statements, etc. And this was for someone like me with perfect credit and high income. And still they went over everything with a fine toothed comb.

  • Apparently, we learned nothing from the last financial crisis. Desperate for higher returns, investors are jumping back into bonds made up of sub prime debt.

    “…last weekend the Financial Times reported that in the first quarter of 2018 a total of $1.3 billion of bonds backed by sub-prime loans were purchased by investors.”

    This time the US Government is backing fully 70% of the total mortgage market through Fannie Mae and Freddie Mac. It might take a few years but when the housing bubble part deux pops – it just might take down the entire system.

    • “It might take a few years but when the housing bubble part deux pops – it just might take down the entire system.”

      The last bubble popped in 2 years. If I had to bet money on it, I’d guess that the next one will take longer (maybe much longer) due to owners being on more solid footing in general, but drop the same percentages. I don’t think the economy will collapse with it, though – at least not this time.

      • Laura Louzader

        That “solid footing” is likely eroding very rapidly as more owners take cash-out refis. You can bet that most of the people doing this are not using the money to make wise investments such as cash-flow rental properties.

        As it is, the people most likely to tap their equity are those who are most likely not on solid ground to begin with, being saddled with the highest CC debt on record, record student loan debt, and monster car loans for vehicles costing $35K-$50K. Add to this the epic corporate debt, and you have the ingredients for another Perfect Storm. Consumer, corporate, and government debt taken together total 250% of our GDP, while consumer and corporate debt alone total 161% of GDP. We passed the sustainable max of about 90% long ago.

    • Interesting article. Thanks for posting.

  • Lord Blankfein

    I hope Millie’s head doesn’t explode after reading the attached article from the OC Register regarding a ballot measure that will further strengthen Prop 13. There are some things in life not worth fighting…trying to overturn third rails is one of them.

    If approved, the Prop. 13 “portability” measure would allow homeowners who are 55 or older to take their low property tax base with them after selling their home and buying a new home anywhere in the state. There would be no limit on how many times they can use the provision and no limit on home prices (although buying a more expensive home would result in a slightly higher “blended” tax assessment).

    • Lord b,
      Hehe, you would dearly miss me, wouldn’t you?

      Regarding the article….come on now. Boomers looking for more handouts is not surprising is it? That’s what they’ve been doing all their life. Why do you think they have such a bad reputation. It’s a pathetic generation but the good news is they are getting older and older. Time is on our side.

    • Lame attempt at trying to get the retired boomers out of their houses.

    • Do you think it has a chance to pass? I don’t.

      CA is basically a 3rd world socialist country inhabited by brown peasant renters who rely on govt aid to survive. Not sure how you get those brown peasants to vote in a tax cut for old white home owners in Pasadena and Simi Valley. Plus 2018 will a Dem year, making it that much more unlikely.

      I predict this doesn’t get more than 45% of the vote.

      • son of a landlord

        Not sure how you get those brown peasants to vote in a tax cut for old white home owners in Pasadena and Simi Valley.

        Poor, young brown people don’t vote in large numbers. Older, richer, white folks do.

        Also, people are more motivated to vote for direct benefits than for indirect benefits.

        If teachers’ pay raises were on the ballot, teachers would vote in large numbers. Taxpayers would vote in smaller numbers, because their interest in defeating the measure is indirect.

        Likewise, homeowners are highly motivated to vote for a measure that directly benefits them. Whereas tenants and aspiring homeowners are less motivated to vote against the measure if it only indirectly benefits them.

      • Lord Blankfein

        I think there is a great chance of thing passing if it gets on the ballot. Despite LA and SF being renter majority cities, the majority of the state are still owners. And there are millions of illegals (likely all renters) who will not be voting. I don’t care if you are a peasant, middle class, or plantation owner…the majority will vote with their wallets. As much as I don’t like Prop 13, I will be voting for it.

      • The ballot measure will do two things:

        1) Further increase the prices, as the entitled class of 55+ will have a discount on taxes, they can and will offer more for houses, further pushing prices out of range of affordability for the rest of us without an entitlement discount.

        2) Churn more homes sales for realtors. Chaching! More listing and sales for higher values = more commissions.

        I will be voting NO.

        Lets just remove the 55+ stipulation. Does that seem fair now?

      • CA has automatic registration for anyone getting a license. CA also allows illegals to get licenses. Plenty of illegals will be voting. It’s not like anyone is there to check their legality at the voting booth.

      • Should have said automatic VOTER registration.

      • Libs are gonna hate it because they’re still angry about Trump. California has so many angry libs super motivated to vote especially dumb young ones. It’s not gonna be passed. When will the few remaining normal people in California get a clue?

    • Blankmind – that doesn’t strengthen it in any terms of how long it can be relied on to be around for any more than the gipper’s governorship strengthened California conservatism. The ultra lib courts will probably overturn it before too long if Sacramento doesn’t first figure out a more creative way to make it ineffective, so be prepared to fight for the leftover crumbs once its gone. Signatures and ballot initiatives are cute but in the end don’t amount to jack shit when the state becomes needy for cash.

    • This is very good thing.
      Also, I would increase amount of capital gain exclusion (from today’s 500k) but increase required holding period.
      This is more on federal level though.
      This would be good to protect those who buy homes as utility

  • Americans moving out of the cities. Non-Americans moving into the cities. What could go wrong?

    “A report released by the Census Bureau found that nearly 750,000 Americans moved out of cities and into over 440 retirement counties like Naples, Florida, Jackson, Wyoming, and Coeur d’Alene, Idaho, between 2016 and 2017

    In a similar trend, it seems millennials are also migrating to more affordable, suburban markets. Suburban areas on the outskirts of major metros saw populations increase by 1% in 2017. While many millennials still live and work in the city, the aging group is beginning to settle down, buy homes and have children in markets that offer better cost of living, the WSJ reports.”

    This millenial nonsense is one of the stupidest things to ever hit. The MSM acted as if millenials were this brand new species to have emerged or something. Ooooh look, 25 year olds want to live downtown. This has NEVER happened before. And I guess it also means that these 25 year olds will stay 25 forever!! Never mind that every 25 year old for the past 100 years has wanted to live downtown.

    What do you know, 10 years later, those 25 yos, turned into 35 yos and do what all 35 yos before them have done….get married, have kids and move to the ‘burbs. And yet it’s some sort of shock and surprise for the dullards in the MSM.

    But worry not downtowns, you will have a fresh crop of non-English speaking peasants to take their place. And I’m sure Jose and Maria will scarf down those $18 avocado sandwiches and $15 craft beers, just like Brtittney and Chad did, right? LOL!! Good luck with that!!

    “Even with large groups moving out of the urban core, metro areas still experienced an uptick in population growth by an average 0.7% last year, driven largely by new immigrants settling into cities upon arrival, according to the WSJ.”

    • Dude I know who would have thought that feeling safe where you live would make a comeback!!!! Crime has been moving up in cities like Los Angeles for a few years and then there’s the exploding homeless problem no reasonable people are going to want to slum it so they will move to cleaner safer and newer suburbs.

      • Let’s see….

        Option 1: Burbs. Safe neighborhood, with a yard, a garage and no homeless people at my front door. But ZERO Asian Fusion bistros within a 5 miles radius.

        Option 2: Downtown. A cramped apartment, no parking, bums crappigng outside my front door, no yard. But 72 Asian Fusion restaurants within a 1/2 mile radius.

        What to do, what to do……

        The plethora of bistros, craft breweries, etc has always been the selling point of millenial hip downtown. Which is all fine at 25 and singe. At 35, married with kids…..not so much. I don’t know too many parents who would give up the safety of their kids just so they can eat out a few more nights a week, locally.

    • Millenials = marketing construct. Marketing subgroup. In reality, just a specific subgroup of younger people. They do not want to live in suburbia, as they prefer social density and downtown living provides that. Once people have kids, they realize they want safety AND cannot utilize social scene.

      Millennial has been constructed by marketing as someone who is smart, hip, different and enjoys specific lifestyle (exactly the one that is being sold). Some people actually believe this by proudly attaching the title to themselves.

      There is nothing unusual or different here.

      • “Once people have kids, they realize they want safety AND cannot utilize social scene.”

        I’ll take that a step further and say they don’t want to be social except on a limited basis. Once every several weeks is plenty. Being a grownup is tiring, and you want quiet and stress reduction. The suburbs are perfect for that, and your friends are far enough away that just dropping in isn’t done. I’ve learned to appreciate them more that way.

      • Previous generations were buying into the lie “buy now or be priced out forever.” 7 mio lost their homes by not paying their mortgage anymore. Either they walked away be a use they figured out they screwed themselves by buying high or they simply could not make the payment anymore. Those were mainly your 30year conventional loans. The same generation want millennials to buy high now( stocks and overpriced houses). It’s no surprise that older people are upset that millennials don’t follow their lead. Millennials are being smart, live with their parents, travel, remain flexible and will buy once the market is priced correctly again (50-70% below today’s prices). We learned from your silly mistakes. Thank you!

      • “The same generation want millennials to buy high now( stocks and overpriced houses). It’s no surprise that older people are upset that millennials don’t follow their lead.”

        Older people don’t give a rat’s ass what you do, Millie. Get over yourself.

      • Looks like I hit the spot

  • If you are looking 2 buy a home on the Westside for under $1M forget it. If you can tolerate being close to the Westside and a safe neighborhood, here is a decent home. Although it is underpriced and will sell for probably about $875K or more.
    I have lived in this neighborhood for 6 years. Its in an HOA and so rules regarding upkeep of homes is strong. It is also the most well preserved mid century neighborhood in LA.
    15min to SM Beach, 15min to Beverly Hills, 15min to downtown LA (assuming no traffic of course).–2077202924

    nearly no bars on the windows of any homes in the entire HOA which is 440 homes.
    (HOA dues are $200 per year for strict rules on remodels, prohibition of Mcmansions, limited yardsales, no garages-turned-into-rentals, etc).

    • That certainly qualifies as overpriced crapshack!

    • LOL…$875K and one of the selling points is **NEARLY NO** bars on the windows in the HOA. Incredible.


      Seriously why in the hell does anyone put up with this insanity? $875K buys you a gorgeous home in a good safe ‘hood, in 85% of the country. Even in expensive blue states like CT, $875K gets you a nice place.

      Is 70 degrees in January really worth living like that?

      • The truth is that the weather isn’t perfectly 70 in January. In fact, it can get rather dreary and cool, especially closer to the beach which is why many people actually prefer to live further inland like Pasadena. For the days that it does touch the 70’s, that’s normally in a short time range of day when everyone is inside at work and by the time you get home after fighting traffic it’s dark and you’ve got the heat turned on.

        Just because the weather is less volatile or extreme than most other climates doesn’t mean it’s always good. Perfect weather is the lie that won’t die about living in SoCal.

      • True dat. I was in LA once for New Years and it was the most miserable weather imaginable….50s and rain for the entire week I was there. On the other hand I spent a winter month in San Diego and every day was just about perfect. But even if every day in January were 70 and sunny for 12 hours, I still wouldn’t pay $875K to live in that ghetto home.

    • baldwin hills… yuck! That house is so ugly too and has power lines all over the place neighbors have security doors with box seats above your yard popcorn ceilings probably bigly deferred maintenance and you’re looking at a million or so all in just to renovate this turd into something actually modern and nice. 15 minutes to the crowded beach in Santa Monica most locals hardly ever go to? 15 minutes to the flats of BH for the occasional trip to the dentist or a sprinkles cupcake? No traffic going to DTLA for work or occasional dinner after finding parking and stepping over bums? HAHAHAHAHAHAHA!!!!!! Maybe at 3am with all green lights and breaking the speed limit!!!!! My sides are hurting.
      Can’t. Stop. Laughing. $200 a year just to keep the ugly from getting too bad and NEARLY no bars on the windows!!!! Nearly no bars on the windows..that’s the standard

      • @ FAB. You sound angry about LA in general. If you are a commuter, I can understand why.

        Yesterday at 4:41 pm I left my home for Santa Monica (from Baldwin Vista) got on the LaCienega onramp to 10West and it took me 4 minutes. It then took me about 9 minutes to get to the Lincoln Blvd offramp. That is 13minutes. If I got off at the 4th street offramp (which leads to the beaches) it would have taken me another few minutes to get to the beach parking lot. I agree with the crowds at Santa Monica beach. That is why I go on Sat/Sun mornings to surf at 8am. I can assure you it takes no more than 15min to get to SM beach on a Sat/Sun morning from Baldwin Vista. Of course, I leave by 11am when the crowds start arriving AND I am home again in 15minutes.

        I myself never go to Beverly Hills but it too without traffic is 15minutes up LaCienega, with traffic a half hour. Downtown LA has some nice restaurants which I go to occasionally (Freehand, Baco Merkat, etc). But you are right, on a Saturday evening it is a 25min drive.

        In any case, my whole point about showing that listing (and that neighborhood in general) was that you will not find any nicer neighborhood for under $1M for a decent home in a decent neighborhood that is closer to the beaches of Venice and SM and Malibu.

        I lived in Santa Monica for 10 yrs and had 2 bicycles and a surf board stolen from my front porch. So far, in Baldwin Vista after 5 yrs, no stolen bikes or surfboards.

        If anyone can think of a nicer neighborhood where homes are under $1M AND closer to the Westside beaches, please post. As I would be impressed if anyone can find such an area on the Westside or Mid Cities (Koreatown does not count as it is quite a long drive to the beach. gotta go, surf’s up ! 🙂

        Perhaps there are some nice pockets of homes North of the 10Fwy between LaCienega and Fairfax for under $1M but not sure.

      • You prove my point that your earlier suggestion of 15 minutes as if that’s typical is bogus! Who cares if I’m angry or happy the place you showed is lame for aforementioned reasons. If I sound angry you must be the type that likes to make excuses for the inexcusable which is a common mindset in LA just ignore things make excuses and before you know it you’ve settled for less.

    • Dude the schools suck for that house.

      Try South OC.. you will get a great house and great schools for that price, 8-12 miles from the best beaches.

      • It’s really interesting that south OC in many ways is more affordable than north OC; and I think south county is wayyyyyy nicer.

        Bigger yards
        Newer homes
        Closer to beach

        For 800k-900k you can get a pretty nice place with a big yard in a good school district.

        One of my offices is in Garden Grove and this area is HOT right now. Older homes, average areas; but, selling sooooo fast. I would much rather live in Laguna vs Garden Grove. This part I just don’t get.

    • Are you referring to the Baldwin Hills Estates HOA? Isn’t it one of those typical toothless HOAs common to older SoCal nabes that homeowners voluntarily participate in?

      Here’s a gem from their recent meeting minutes:

      “Our ADT daytime officer, Carlos reported that there is a spike in the number of homeless people who are sleeping on the streets. He suggested that if this is happening in your area, you should wash down the street as a deterrent. Carlos explained that they increase their patrol “hot areas” as reported by our residents. One of our residents shared that instead of putting their alarms on silent, that they set them to alarm loudly. ADT can be reached at (310) 725-2572. You should identify yourself as a BHE resident and that will expedite the request.”

      Didn’t some guy write on here that the homeless problem was being exaggerated? Paying $875K for a fixer in a neighborhood where a spike in homeless people sleeping on the streets seems like a problem to me.

      • No, it is not the Baldwin Hills Estates HAO, it is the Baldwin Hills Village Gardens HOA. It is not toothless at all. I know I live in the HOA. It was established in 1946 and is the largest HOA in LA area.

      • Baldwin Hills Estates HOA vs Baldwin Hills Village Gardens HOA

        LOL….this could be an SNL skit about rival HOA gang members.

    • I tried to find the equivalent for the money in my neck of the woods, but didn’t have much luck. Had to drop the price a bit.

      Not the best school district in town, but not too bad either.

      • Inland Empire is a highly undesirable area for skilled people. There are no high paying jobs there. If you make good money you most likely have a long commute or you might get lucky and make over 100k and work from home. Most people in the IE earn way below avg salary. What you find there is what you would expect. Low income/low credit people. Good talent moves away. Nobody really complaines here about high house prices in the IE cause most people have already shown they research and know about cycles etc. those people have no desire to live in the IE.

      • You’re lumping Temecula in with the rest of the IE, which is a mistake. It’s the nicest city in the county. I’ve lived in a dozen different cities, including Carlsbad, Del Mar, Carmel Valley, and La Jolla, and Temecula is the first place that made me say “I could retire here.”

        “Low income/low credit people.”

        As of 2010, Temecula has a median household income of 78k, although all the fellow parents I’ve met have been well into 6 figures. Owner occupancy is 70%. Public schools are excellent, rivaling those on the coast. Virtually no homeless. Crime rate is among the lowest in the U.S. Friendliest people I’ve ever met, even the scary-looking ones. The city is well-managed and keeps a balanced budget. Murrieta (just to the north) is basically Temecula Junior, also a great place to live.

        My wife works locally, well-paid. I have a 50-minute commute (tech), but it’s worth it to me for the little slice of paradise I come home to every night and the early retirement the city will enable me to afford.

        You might want to check out the Demographics and Economics sections of the Wiki page before judging too harshly.

        I guess I could always rent in LA or SF or the OC, and step over piles of human feces and used syringes after my “short commute.”

  • $200 a year? You mean a month?

    • NO, it is $200 per YEAR for the HOA not per month. The $200 per year is for upkeep of some of the green areas along the HOA and enforcement of rules such as no McMansions, no perpetual garage sales, no inoperative vehicles parked on the streets, no RV’s, and prevention of pot shops and liquor stores from opening in the area. that type of stuff, not like condo HOA’s which are for roof replacements, etc.
      Anyone who has not driven through the neighborhood really has no concept of how nice it is. La Cienega to LaBrea, Jefferson to Kenneth Hahn Park. it is the neighborhood sitting between Blair Hill on the West and Baldwin Hills on the East. The homes are on 7,000 to 9,000 swft lots and most homes 1600 to 2200 sqft.

  • Laura Louzader

    That’s a perfect MCM home except for ONE conspicuous little detail. I hate to quibble, but the front door is so NOT MCM. A vaguely “traditional” dark wood entry door with a fan window does not belong on that house, and I’m surprised the strict HOA hasn’t made the owner change it.

    Other than that, it’s a great property. I like the climate-appropriate landscaping as well.

  • Why shouldn’t people put down a small down payment and ride the price up, taking out equity as they go? Do it on multiple houses, park the cash where it can’t be taken, and bail out when the market crashes. It’s the American way. There is no faster way to get rich.

    • Because you cannot. Today’s HELOC or home equity line of credit programs require a good amount of equity to qualify at least 10%, with many lenders requiring 15 to 20%.

  • Its probably nothing, maybe even fake news,,,weird site with ads on the borders..

    • I posted the below in response to another Carrington non-prime new program comment on a previous article.

      See below the restrictions of the program. Yes, there are programs out there that cater to borrowers that do not qualify for standard conventional or FHA financing; HOWEVER, there are severe restrictions/overlays put into place to mitigate losses. Reality is that the vast majority of these buyers never making it to the closing table as the lender wants the cream of the crop of the ugly borrower (if that makes sense). This is nowhere near what sub-prime was back in 2004-2007. Loan quality is high still and sub-prime is NOT back.

      If you want to argue foreign hot money cooling, or a deep recession or eveyone a 10.0 earthquake (as Millenial dreams about) being the catalyst for the housing bubble to pop; that is fine. But, the rise in rates and the “exotic lending” as another poster liked to put it is not going to bring down this market in my opinion.

      P.S. i write loans for a living

      Here are the Carrington program restrictions on that “sub-prime” program:

      25%-35% MINIMUM down payment required
      43% back debt to income ratio (including the new PITI and ALL other debts)
      *and remember this DTI is AFTER the large down payment quoted above
      Minimum of 3-6 months reserves
      Additional RESIDUAL income requirement: $1,500 plus an additional $150 per dependent is required
      Payment shock 150% max (I.E. current rent 2k/mo; new PITI cannot exceed 3k/mo.)
      There are additional credit restrictions, but, you get where I am going with this.

      • Hi Dan~

        Regarding the following:

        “Yes, there are programs out there that cater to borrowers that do not qualify for standard conventional or FHA financing; HOWEVER, there are severe restrictions/overlays put into place to mitigate losses. Reality is that the vast majority of these buyers never making it to the closing table as the lender wants the cream of the crop of the ugly borrower (if that makes sense).”

        I sold a house in Oakland not long ago that got 17 offers. The comps on the property were $400K, but it had a nice park-like back yard, so I asked $425K. Only one bid came in at the asking, and the rest were mostly in the $475-$535K range. And you are correct. My realtor and I ranked them according to price, then threw out all of the FHA loans (none of which were at the top anyway). He said it was too much of a hassle dealing with those loans, and if one matched a regular loan in price, we would take the regular one instead.

        Another comment is that I saw what it was like to be on the seller’s side during a buyer frenzy. Almost every offer took the house ‘as is’. I had an inspection done before it hit the MLS, but still, if I was a buyer, I’d want to go through the house with my own inspector to see what I was getting into. But you can’t do that if you want your bid accepted in a situation like this. No one had any contingencies, and all had fast closes (which I really didn’t want because it was my childhood home, that I’d inherited). They all took over the requirement to upgrade the sewer lateral, which the city started requiring just a few months before I put the house on the market. Etc., etc. We asked buyers #2, 3, & 4 if they wanted to be back-ups, and all said yes with enthusiasm. The day after the bids opened, the #1 position sent us an amendment wanting me to take the sewer lateral, fix everything called out on the inspection report, and give them a $10,000 credit at the close. With 16 competing offers, we thought they were nuts, so I had my agent give them a 24-hour notice to withdraw from the contract so that we could move on with the 2nd offer. #1 withdrew their amendment immediately, and closed shortly thereafter, with no more problems for me.

        My point here is that this really opened my eyes to what you’re up against as a buyer in a hot market. You have no rights if you want the house. If you want a fair deal with give and take on both sides, the seller will cut you loose and say ‘Next!’ (like I did). Understandably, they want the most money with the least hassle. Anyway, the end result for me now that I’m looking for a place in another city is that whenever I hear realtors pump up a house by saying there will be multiple bids (which usually is a lie, in my experience, as the house will more often than not then sit on the market for months after), I won’t even think about making an offer because I have flashbacks to my own experience with multiple offers. Not pretty for the buyer.


  • LOL…….I don’t know why some of you guys come here. Just to brag about how scary smart you all are? All I know is that for the vast majority, homes are completely out of reach, but have fun patting each other on the back.

    This site has become dominated by about 5 posters all congratulating each other on a job well done……..and you know who you are. One thing is for certain though, if I had half the wealth you guys claim to have the last thing I would be doing would be posting about it here.

    • This site reminds me of the callers that call financial shows on the radio. I happened to be listening to one such show and the typical caller is: “I make about $250K and I have $2.1 million in my retirement fund and I have $600K saved my my kids college education but i was just wondering if i’m on the right track”

      these people are not looking for advice they are bragging.

    • Interesting,

      You could approach this two ways

      1. Learn from those who have accomplished a lot and try to achieve the same type of success yourself

      2. Whine.

      Your choice bro…..

      • you sum up exactly what i’m talking about. Thank you for proving my point. here endith the whine.

    • Interesting, the success lies in humility and multitude of the counsels. Humility, so you can accept you don’t know everything and continue to learn. In the multitude of the counsels, because you can look at the same economy from different points of view. Something might escape you but not to someone else. Maybe those successful have both – humility and looking for many counsels.

      I agree, that many 75% of postings are useless. However, some posters really bring something to the table.

      • That’s all we need. To be counseled by a group of redneck xenophobes.

      • The problem with many posters here is they try to discuss non actionable things in self contradicting ways. How can one complain about prices being too high / speculative and at the same time reject buy and hold strategy (by complaining that houses do not really appreciate that much – which in itself a desire for rapid house appreciation)

        Real estate is so popular because it is probably largest transaction an average person will ever conduct, yet it is sooo easy

      • Notawhiner, it looks like you are the typical whiner who never learns anything and always blame others for your misfortunes. Also, rednecks do not have MBAs and don’t have experience in finance. Xenophob is someone without an open mind and you are the poster child for that. Sad.

        Surge, I know what you say, but I am sure you did not have me in mind. On a very long term basis I am the most bull on RE (more than anyone on this blog). I am a bull for 2 reasons: I made the most of my money in RE and even today, most of my income is from RE. On a short term basis I am a bear. I am not a bear in a sense of liquidating my assets, but not taking additional loans to buy more. What I sold was used to pay off all my debts because of the increased risk in the economy short term. With no debt I sleep well at night and feel free. For me, increasing my wealth comes in second after preserving my wealth. I would borrow again in a market correction, but for now I am good.

      • Flyover, your approach is sensible.
        My belief is that we RE, one should be prepared to hold on for a very long term.
        And I am firm believer that quality RE is a vehicle that provides a mix of wealth increase and preservation. Even if bought at peak, although clearly it is better to buy at the bottom.
        If one already has a RE portfolio, it makes much more sense to time the market.
        However, the need for timing the market can be reduced if one plan for a long term holding.
        I think the biggest mistake can do in RE is have a specific relatively short time horizon when they plan/have to sell…in other word PLAN for appreciation. This is a recipe for disaster. I believe in RE as a equity accumulation (either through personal ownership or rental).
        In other word, I do not believe much in selling real estate UNLESS there is a clear other need/opportunity for personal reasons (Just need cash) OR there is obvious super-bubble (which I doubt I have the ability to spot).

  • Laura Louzader

    We’re now officially off to the races. The Great Rampage 2.0 has truly begun:|facebook&par=sharebar

    I don’t think the peak is much further away. Expect a massive runup in prices from here, until 2021 or so. It might or might not take this overheated market any longer to unravel than it did 2007-2010.

    • Please Laura be serious! Dan et al are smarter and far more educated than the rest. If you don’t own land you never will and your voice, opinion or suggestions will never matter.

      All markets are cyclical except the ones Danny Boy happens to partake in-

      • Oh please, can we have a real discussion? You post an article that summarizes a supposedly subprime mortgage program touting credit scores down to 500, as the basis for your hypothesis that decades past Subprime programs are back which will now signal the top of the bubble.

        I refute this argument with specific examples of the restrictions of this program as someone who has closedloans with this particular lender and already spoken to a rep that went into details of this program. I laid out the guidelines which just scratch the surface of this program and let you and the rest of the posters decide if this mirrors previous decades subprime programs. Furthermore I do not argue that there potentially could be a pullback in prices in the near future I merely state that the loan quality is vastly superior to the Bone quality of the last decade when the initial bubble popped.

        Keep in mind I was in the industry back then as I am today and I’ve seen all types of loans.

        Ifo you want to argue a deep recession will cause a pull back and prices fine
        If you want to argue a crash in China that will lead to foreign money drying up causing a bubble to crash fine
        If you want to argue a 10.0 earthquake decimating California will lead to a bubble popping fine

        But as I have stated many times before subprime loans are not back in the way you think they are.

      • Hi, Dan,
        Many people see word Subprime and start to bark.
        They do not see difference between Fradulent Subprime (2006, stated income) vs properly risked subprime ( as you described).
        All their knowledge is from past headlines

      • Seen it all before, Bob

        Laura and Dan,

        Are we already in the danger zone with FHA loans?

        3.5% down with a credit score of 580? Sure you need up to 1% mortgage insurance

        If housing dips 10% now or 30%-50% like it did in 2009-2011, these loans will be underwater.

        What is stopping people from foreclosing? Having to pay that extra 1% PMI payment just makes the decision easier. Especially if rents also fall 10% and it is unlikely they have reached rental parity yet on their home loan.

        3.5% down with a 580 credit score seems risky to me.

    • Large down payments, appropriate income for the payment, etc. Very different from the nothing down, stated income loans of the last run-up.

      • Laura Louzader

        We’ve heard that line before, that only people with large down payments and appropriate incomes for the loan are being underwritten.

        But folks with credit scores in the 500-600 range are pretty unlikely to have down payments. And a loan that’s “appropriate” for the borrower’s financial situation is a matter of definition.

        The cycle always repeats. When times are good, or perceived as good, or there is some other overwhelming impetus such as a flood of cheap money courtesy the Fed, the “bezzle” of badly-underwritten credit expands. And when there is enough bad credit out there, the repayment obligations choke further growth, and the credit bubble collapses. When that happens, lenders once more become very conservative, and it becomes extremely difficult to borrow, so the bezzle shrinks until trust, and balance sheets, are restored. Then the cycle repeats.

      • “But folks with credit scores in the 500-600 range are pretty unlikely to have down payments.”

        Those people are unable to buy.

        “And a loan that’s “appropriate” for the borrower’s financial situation is a matter of definition.”

        It is defined. As in there is a specific back end ratio that must be adhered to. Lenders aren’t saying “let’s make the back end 90% so we can qualify that McDonalds worker for a McMansion.” That’s not happening.

        Of course this could change. But right now, the standards for qualifying are vastly different than they were during the run-up to the last bubble.

        I want there to be a crash. I’ll make a lot of money if it happens. But everything is pointing to the next correction only occurring in bubble areas, and not a very big correction at that. The rest of the country is barely above the long term trend.

        Unless we see a real reason for a crash (we haven’t), my guess is a 20-25% drop on the coasts, 30-35% so-cal inland empire (my ‘hood), and 10-15% in flyover country. That’s assuming there are no major policy changes and no stock market crash. If there are changes (like stated income loans, rapid interest rate increases, and rapidly expanding supply from the last bubble which are not happening now), they could trigger something worse. Either way, I’ll be shorting.

      • Laura,

        You are correct, they are “unlikely” which is why I said that 99% of these buyers will never make it to the closing table. That’s the design of this program, the lender/investor wants the BEST possible borrower with a low credit score. Essentially if you fit their very small little bucket and can get past all the landmines, you can get a loan, but, that is a very small percentage of these would be borrowers.

      • Bob,

        You are technically correct in that with FHA you need 3.5% down with minimum 580 credit score, HOWEVER, that does not automatically make you eligible nor an approve-able borrower. The entire profile: credit, income, assets, etc… are run through an automated underwriting program which renders a decision. If there is layered risk the findings may be a DECLINE even though you met the minimum criteria of down payment and fico score.

        It is a computer algorithm, therefore it’s impossible to know which profile will get approved.

        Example: 3.5% down 610 credit score – Declined
        Example: 3.5% down 585 credit score with 2-5 months reserves and no real derogatory other than a recent collection (which can crush your score) – Approved

        I really don’t know if there is a viable loan until this automated underwriter is run. For those actually interested in learning as opposed to spitting sub-prime talking points, it is called “Desktop Underwriter” and is the fundamental underwriting tool of all conventional, FHA and VA loans.

        Furthermore, as I have discussed in depth before, HUD tracks all loans from each lender and calculates “compare ratios” with each lender receiving a scorecard. Lenders with high early default rates are not practicing responsible lending (I.E. focussing on 3.5% down with 580 scores and no layered risk mitigation) and can be cut off by HUD.

        In any case; the purpose of my explanation is to paint the real picture of how underwriting is done which is vastly different from “sub-prime is back” talking points to further enhance ones hypothesis.

        Loan quality today is NOTHING like it was during the run up in the previous decade.

      • John D,


        Let me paint this picture for everyone, especially the “sub-prime is back” crowd who apparently know very little about mortgage lending and have very short memories.

        2003-2006 Sub-prime or AltA:
        80/20 (which means 0 down) to $1mil stated income with 620 credit score
        80/20 investment property
        80/20 no doc (no income, no assets, no employment)
        “Option arm” or “neg am” loans
        ARM’s aka adjustable rate mortgages

        Do you understand the above?

        0 down loans with no income verification. Often times no employment needed.
        A loan that had NEGATIVE amortization, meaning on a loan your payment would be LESS than the interest only payment and your loan balance would increase every month.
        An adjustable mortgage whose rate would adjust HIGHER after 12-36 months and payment would be double or sometimes triple where you started
        You could buy investment properties with 0 skin in the game and no income verification

        That above is a quick recap of some of the programs that were around during the last run up. Those were known as “sub-prime” or “altA”.

        Compare those programs to the DETAILS of the carrington program that I laid out STRAIGHT FROM THE PROGRAM GUIDELINES PROVIDED BY THE LENDER. Many here like to quote Carrington as evidence that sub-prime is back and a good indicator that the bubble has popped, however, the above should be a memory refresher from where we started in the early 2000’s to today’s programs.

        You be the judge if the 2 era’s of lending are the same.

      • Seen it all before, Bob

        Thank you dan and John D.

      • The craziest home loan I heard of from back then was a pay option ARM (negatively amortizing loan) up to 80% loan-to-value (LTV) and a HELOC behind it for the remaining 20% LTV with an adjustable rate and interest-only payments.

        If that isn’t a foreclosure waiting to happen, I don’t know what is.

      • @Joe,

        Yes, absolutely! That was basically a $2,000 payment on a $1mil house with zero down.

        Let’s let that sink in for people that believe today’s new subprime program which I have discussed in-depth compares to that aforementioned carrington program

    • Why would an excellent market need to even consider these types of loans regardless of similarity to former subprime? The fact that you miss Dan (seems you’ve missed x2) is that the ability to repay mortgage loans and debt in general is in a FAR worse state than before (08-09). Residential prop as a business hardly ever works out Dan.. read up on the pre depression years (US) and the Weimar Republic…greed and hubris from most (not all) of the RE people on here has ruined a need for survival, shelter..

      Thanks Danny Boy!!!

      • “…the ability to repay mortgage loans and debt in general is in a FAR worse state than before (08-09).”

        Reasoning? Unemployment was far higher in 08-09.

        “Residential prop as a business hardly ever works out…”

        I know a lot of wealthy people. Nearly all of them made most of their net worth via residential real estate. The good white collar careers helped them get started (engineers, medical, dental, cops, CPAs), but the early retirements came from RE.

      • Unemployment is always low when inflation is on the rise, read a book instead of google. I cited two examples of when housing has caused or has been negatively impacted by financial issues in a very big way (not to mention 08/09)

        Also try a dictionary for hubris and hardly…but don’t worry its EASY to be in RE, everybody does it right?

      • “I cited two examples of when housing has caused or has been negatively impacted by financial issues in a very big way”

        No one is saying that fundamentals don’t exist or that they don’t affect the housing market. If you’re going to claim that “the ability to repay mortgage loans and debt in general is in a FAR worse state than before (08-09)”, you’re going to have to be a lot less vague.

        You’re making arguments where there are none. Assuming we don’t believe in RE cycles, for example. Assuming that we don’t realize the economy could take a turn for the worse. It’s a waste of bandwidth.

        This bubble is different. So what? No one is saying that means it’s all roses and rainbows forever.

        “don’t worry its EASY to be in RE”

        Yes, it is. A single, full time $10/hour job will qualify you for a condo in many areas of the country.

      • “I know a lot of wealthy people. Nearly all of them made most of their net worth via residential real estate. The good white collar careers helped them get started (engineers, medical, dental, cops, CPAs), but the early retirements came from RE.”

        Absolutely. Residential r/e is the best way for middle to upper middle class people to make money. Not save $15K a year in a 401k money. That’s fine but it’s not real money. Real estate, both their primary homes and investment properties is how the middle class can become right.

  • Surge’s high level summary:

    For all those who complain about social make up of California -> please take a look at Falling down film (almost 30 years old). Awfully looks and sounds like a lot of people on this board. My take: This is all internal frustration and lack of power to do anything about it.

    Buy vs. Rent: Rent is always cheaper in a short term. Buying is always cheaper in a long term. In Rent there is a premium on flexibility, in buying there is a premium on ownership and equity. Rental parity calculations reflect that: short-termers will point out to better to rent, long-termers will point to long term better to own. Rental parity calculation will fit either belief as soon as you add a timeframe to the calculation.

    Timing the market: Good luck on that one. There is no doubt correction will occur at some point in the future, just not clear from which price point, when, by how much and what would the catalyst be. It is different each time in the root cause of the correction/crash. It is best to achieve your goals (whatever they might be) and bullet-proof them against other people’s foolishness.

    Take Care:

    • Timing the market is the only way to buy California RE. I’ve been involved in the market since 1991 having bought into the fake hype back then. In those 27 years, between two home purchases. One while married and one my X did while divorced the net result is about 6 years of NOT BEING upside down on the mortgage. the last purchases (in 2006) never got back to 100% of original purchase value and was sold in 2017 for $30K less.

      for the first purchase the drop was so massive (over 50%….I bought when it had dropped 15% and was told that, this was where prices would stabilize, renting is throwing your money away, they can’t build more land, interest rates will never be this low again ‘9%’, etc. etc. etc…..sound familiar) that it took over a decade to get back to zero BUT the neighborhood had deteriorated so much so that we couldn’t wait to GTFO.

      IMHO, the ONLY way to buy cali RE is to time the market….unless you really don’t care about the $$ you pay and plan on dying in the house….no matter what happens to the hood….. Then all bets are off.

      • See, here is the problem. If your home dropped 50% of value in last housing crisis, the location was sketchy to begin with(as confirmed by your statement about deteration)
        Good/decent areas did not drop more than 25%-30% in the worst housing crisis in Cali.
        My place lost 30% and condition of the neighborhood did not worsen.

      • I do not understand. You bought in 1991 and 2006 and you are barely upside up on mortgage? 1991 was almost 30 years ago, that home should be paid off by now.

      • Timing California real estate purchases is the only way to go. Over the long-term, there is actually very little appreciation in real estate. I have owned my primary residence for 28 years. Over that long period of time, it has appreciated at a 3 1/2% per year rate. On the other hand, since the 2011/12 bottom, my home has appreciated almost 50% and many homes in other areas have doubled in price.

        Be patient and wait for the next bottom is my advice. The current bubble prices cannot be maintained over the long term.

      • interesting~

        I agree with you about timing the market. Real estate is, if anything, cyclical. I just retired, and am old enough to have seen several booms and busts in the real estate market in the last decades. Right now, we are endlessly treated to stories of burned down shacks in places like Fremont that are asking over $800K, and getting multiple bids over asking. But that doesn’t go on forever, like all Ponzi schemes don’t. Sure, you can buy at the top while competing with a dozen other bidders, and tell yourself that even if your home goes down in price, real estate constantly goes up, and that in 20 years you’ll still be ahead. But you can also wait a few years for the market to cool down, and pay less over the life of the house for your mortgage and property taxes. When markets go bad, as they inevitably do, I’ve seen beautiful properties sit on the market for months because most people only feel safe going with the herd. And the herd right now says “Buy!” Sorry, but I’m not part of the herd.

        Having said that, rents are currently so crazy in our area of Northern California that it is making it harder every year to stand on the sidelines (I’m not renting right now, but staying in a home inherited by my significant other, thank god). In over 33 years of renting, my sweetie and I have been kicked out of 3 places during hot markets (both in terms of renting and housing prices) because the owners were selling the properties and needed to fix them up. It was not fun. The first time was in 1998, and led to my buying a house in order to keep my pets, and I had less than 60 days to find and close on a house AND make the move. I sold the house 7 years later for 2 1/2 times what I paid for it (see my comments at the beginning of the comment section) for two reasons. The first was because I knew that the market was peaking in the city I was in (Alameda), in April/May 2005. I had a post-it with 9 reasons on it that I hope to find again someday, but one of them was because people had too much of their equity solely in their primary residence. But moving along, it wasn’t just an investment decision. I worked for the State of California as a civil engineer while I owned that house (I just retired a few months ago), and I hadn’t had a COLA adjustment for over 8 years when I sold (plus, the State pays way below market value in wages, so I wasn’t making that much to begin with). Meantime, my property taxes, through endless school, hospital, transit, etc., parcel assessments and bond measures (which is how they get around Prop 13 in California) rose over 40% during the 7 years I owned that house, on top of the 2% annual tax adjustment. My HOA fees were also rising astronomically. On top of that, the house was only 10 years old, but had been poorly constructed by a developer with ties to a powerful Bay Area senator (initials D.P., for those from here), which had obviously only been given drive-by inspections during the building phase. The siding was pressboard, and had to be painted twice while we were there for it not to start rotting (I’m an expert painter now, btw). I spent all of my time – weekends, nights, vacations – working on that house. I had no money, and I had no free time. That house sucked everything out of me, like a black hole. THAT is the second reason I sold it when I did (this is to Lord Blankfein). Plus, it wasn’t even my house. I couldn’t replace a rusting outside light without permission from the HOA, and I lived across the street from the HOA president. I’ll never buy in an HOA again, for sure.

        Anyway, that is my wisdom and my tale of woe. Owning a house has its advantages, for sure, but there’s another side to it that should be looked at. Houses can suck the life out of you.


      • Who gives a shit about appreciation after 28years. You gain so much in terms of monthly cash flow – your monthly payment should be laughable now compared to rent.

      • Karen, “waiting for a correction” is a good strategy except you can never time the market properly. Prices can climb up much higher before rolling off. If you go back to this board 3,4,5 years ago people were saying “wait till prices drop”. What you are saying is true if you believe that prices have reached absolute the top, which by far i am not sure of.

      • Surge clearly has reading comprehension problems. The guy gives a shit about appreciation because he had to sell.

      • I call BS on only 3% appreciation over 28 years. So you’re saying a $1M home today cost $440K in 1990? That’s absurd. A $440K home bought in 1990 is easily $2M today.

        And even if that were true – which it isn’t but let’s pretend – you’d be only 2 years away from paying off a 30 year old mortgage, with a payment of about $2000/mo. Find me a $1M home today you can rent for $2K a month. And in 2 years you would have $1M home free and clear. Now compare that to someone who rented over this same 28 year span, with rents increasing yearly, and tell me who is better off. And don’t forget to add 28 years worth of property tax and mortgage interest deductions in you comparison. That alone is worth an extra couple of hundred thousand dollars.

      • LordB – I do not think the guy is looking to sell, he has not indicated that.
        Landlord – yes, you are correct. I think people here completely omit the notion of imputed rent. You always “owe” rent because you have to live somewhere. Now, paid off home effectively brings you positive cash flow every month (the rent that you would have to otherwise pay).
        Bought a home for 300k 30 years ago, today it is a mil.
        If you pay it off, you are saving roughly 3k a month (you still have to pay prop tax,etc…). 36k / year tax free of your original 300k investment.
        Of course they could argue that you could have bought stock, apple stock, crypto instead – but they did not

    • Surge’s high level view in simple English:

      Ignore the truth of L.A. being a shithole by pointing the finger at the people willing to speak up about it.

      • Shitness of LA has always been there, if anything things are improving in last years. I do not understand what does it have to do with real estate strategy. It is irrelevant what I think about how bad/good LA is, besides LA is too big to generalize. Are you personally impacted by how shitty LA is?

      • The general shittyness of a region and state by extension has everything to do with real estate stategy while my personal impact doesn’t have anything to do with it. Next question?

    • Surge, in our debt based system the cause is always the same – too much debt and serfs unable to service it (the borrower is the slave to the lender). Once the bubble gets inflated, what you use to deflate (the type of needle) it is irrelevant.

      • Yes.
        But you make it sound as all debt is bad debt.
        And also, why resignation that everyone who takes a debt is a serf? It is strictly a liability (which you have anyways in terms of rent owed).
        Goal is to minimize personal impact to world’s gyrations.

  • California rail getting audited by the feds. Expect many pols to end up in orange jump suits!

  • What do you think about cash out refi for building an addition on your home? Addition is like $300/SF and houses are like $500/SF. Seems like a no-brainer to increase the value of the property?

    • Depends on if/when you plan to sell. If the market tanks in a few years, you could lose even more than you already would.

      Regardless, I would personally only consider it if it’s properly permitted and really well done (i.e., looks like it’s part of the original floor plan). None of those crappy “patio turned into sunroom” eyesores.

    • Seen this all before, Bob

      Hi Mind1,

      I would take a cash out refi for an addition.

      If I had a 2 bd, 1 bath house, there would be a large ROI to make it a 3 Bd 2 bath house.

      Also, I believe that even if you add a smaller “ROI” addition like a Theater Room, if you stay long enough, you will get your ROI.

      I should have down that with my first house that was too small for our growing family rather than sell and buy a larger house.

      I should have added it to my list above.

    • Three things you have to keep in mind:
      1. Additions/remodels ALWAYS cost more than what you budget; there are always unexpected things and unusual demands from building inspectors.
      2. You ALWAYS want to have the least expensive house in the best neighborhood you can afford.
      3. The most expensive sq. ft. in the house are the wet areas (kitchen and baths). They are also fixed cost (all houses need them). Assuming they are new/remodeled, adding living space (non-wet areas) dilutes the cost per sq. ft.

      Having these 3 guidelines, ONLY you can answer the question.

      • Mr Flyover knows of what he speaks.

        It’s funny to see some homes in $350K neighborhoods asking $425K because they pimped the hell out of the house. That’s great, but nobody will ever pay $425K for a house surrounded by $350K houses, no matter how cool your theater room and imported Italian marble patio may be.

        The best ROI is renovating old kitchens/bathrooms. But again, you don’t want to nuts. You don’t want to go ultra cheap either, find that mid spot where it looks good, but doesn’t cost a fortune. And also key is keep it classic. I roll my eyes when I see some bathrooms and kitchens in either new or newly renovated homes. All this trendy stuff that will be out of date within 5 years. At one point in the 70s orange and avocado colors in the kitchen were the hot new thing. Always remember that. Stay away from trendy stuff, you will lose money on it in the long run.

        And pools usually have a negative ROI. Maybe in LA that’s a little different since you can use a pool longer than in most parts of the country. But still, pools cost a ton of money and not everyone likes or wants a pool. It can inversely affect the value of the home just because it excludes a lot of potential buyers who don’t want the hassles of it. And again, if nobody in your ‘hood has a pool, don’t build a pool, your home value won’t increase at all. If everyone in the ‘hood has a pool but you, then it may not be a bad idea, you’ll probably break even-ish.

    • It really depends. Some areas are $1000/sq ft, while other areas are only $250/sq ft.

    • As you go higher in total sqf, $$/sqf drops.

      Also, as you add sqf, you lose yard/land space, which is also valuable.

      So, it is not as linear so be careful

  • I just saw a really nice place last week in Windsor CA (Sonoma County) that my better half wanted to put a bid on. It looked like a bidding frenzy was developing. Full house, people from the East Bay pulling up in their BMW’s, etc. It’s a good neighborhood, near Windsor Town Green (a highly desirable attribute). I expected multiple offers on this one. The bids were submitted two days ago, so I asked my realtor how many came in. He said only one:

    I’m tellin’ ya. I don’t know about the rest of California, but things are slowing down up here in wine country.

    • I love the new definition of a housing crash….house sells in 2 days, but it only got 1 offer.

      Did you see where the house backs onto? Apartments that look to be 100% Section 8 with all sorts of garbage in the back. Look at the satellite image and you’ll see what I mean and then zoom into the front of the apartment complex. No wonder nobody bid on that. Plus it’s close enough to the freeway that you could hear traffic noise. I question your better half’s judgement if he wanted to live there. As always in real estate, LOCATION, LOCATION, LOCATION. It’s a cliche, but it’s as true today as ever. That same house a few blocks away probably gets 10 bids.

      And yet even so, it STILL sold in a matter of days.

      • It’s all relative, which is how you determine if the market is changing or not. The house I linked was actually on the market for two weeks, with two open houses. Another house nearby sold a month ago with 6 offers, after being on the MLS only a few days. The second house was similar to the one I linked here, except that it had a dated kitchen (tile, old electric stovetop), and the backyard was smaller and had been asphalted over. The asphalt was crumbing and old. In addition, the house was near a huge PG&E substation, and the neighborhood had towering cell phone towers running through it. But it got 6 offers immediately.

        The same thing happened when I sold my house in Alameda in 2005 (see previous posts). My particular plan sold for $740K twice at the beginning of 2005. I then saw multiple bids in my area dwindle, with houses staying on the market much longer. As I wrote earlier, I saw prices peaking in April/May, but didn’t get my house ready until September 2005. By then, things had cooled dramatically. Despite my house being voted ‘Best on Tour’ after the brokers open that week, it sat for 3 weeks before it got an offer (I sold it for $720K). The party was over (and btw, by 2009, the comps on my house dropped to below $500K). I’m seeing the same thing happening up here in Sonoma County, right now. A lot of asking prices are being dropped recently. Remember, the escalating home prices being reported on are houses that have closed at least a month ago (Dataquick/Corelogic are reporting on February closings). Additionally, the offers on these houses were generally made a month before the house changed hands. So the data is reflecting market activity that is at least two months old. I’m telling you, now is not the time to buy.

      • Karin,

        Sorry, for some reason I thought you said 2 days. OK 2 weeks. But for a house backing onto Section 8 garbage, selling for asking price within a matter of weeks is still impressive.
        I get what you’re saying that it’s relative and you’re seeing a change. But my view is we were going 200MPH and now we’ve slowed down to 75. Which is a far cry from going in reverse.

        At some point there will be a correction. There always is. I just don’t think we’re close to that point.

        And also didn’t the fires have something to do with this? I’m sure it scared a lot of people away from wanting to move and/or buy property in that area after the OH MY GOD WE’RE ALL GOING TO DIE!!!!! coverage in the MSM.

      • I like Karin’s insights but is she saying now is not the time to buy in her area or nationally? I have a feeling this time we’re not going to see a prolific national dip as before and we’re back to all real estate is local.

    • Winsor is near Santa Rosa where they had the big fires which destroyed so many homes. Many have been unable to rebuild due to the rising costs of land and material. Some have given up and moved else ware leaving the land bare. Housing bubbles suck when its time to completely rebuild you home as it is now un-affordable in this market.

      • Mr. Landlord~

        Thank you, by the way, for the tip about Google mapping. The first thing I saw on the photo of that house I linked was a security door, and when I visited the open house, I saw the high fencing around the apartments behind it, that you say are 100% Section 8. I must have had brain freeze, because I didn’t put 2 + 2 together and figure that maybe that’s why it only got one offer. Having said that, though, I am seeing both asking and closing prices all over the board up here. We were out with my sweetie’s cousin and husband two nights ago, and they said they’re seeing the same thing. Most houses hitting the market in the last two months are either over- or under-priced, generally by $100K either way. Having said that, an awful lot of properties over a $million are lowering their asking after sitting on the market for months. And I mean some very nice properties.

        As for the fires, within the first few days after 6% of Santa Rosa burned down, closings on houses for sale shot up in a strong spurt. Now I’m seeing a lot of fire victims that have decided not to re-build that are getting cashed out by their insurance companies, and buying houses with cash. The re-building costs, coupled with the insane California building regulations, are jacking up the price to rebuild to astronomical levels, particularly in the Fountaingrove area (almost all of which burned down). Fountaingrove is mostly a hillside community, where soil stabilization is expensive. Also, it’s a wealthy area with a high population of retired or about-to-retire people that don’t want to spend years of their last third of their life working with contractors and permit departments. So that is adding to the competition for houses. Still, I’m seeing price appreciation slow down considerably.


        I can only speak for my area. Having said that, here’s what is currently working against RE nationwide:

        1) Rising interest rates (the ‘s’ will hit the ‘f’ particularly hard next spring, when property owners in high state and property tax states like NY & California find out just how much they cannot write off any more;
        2) Tax laws punitive to residential real estate investments (excluding investment property, such as rentals). See my previous comments for specifics; &
        3) Too much of the nation’s equity is in real estate right now.


        What is really going to drive up costs is thousands of homeowners competing against each other for materials and labor. Especially labor, because there is no place to house the workmen because, well, so many houses and apartments burned down up here. Heck, I just retired, but maybe I’ll bring out my drill and tools and work for cash.

      • Karin,

        Oh yeah Google maps is a must. I’m always scoping out houses and that’s the first thing I do, even before looking at pics. It can be the greatest house ever, but it’s literally of no value to me if it backs onto a parking lot or an apartment complex or too close to a highway etc. And I can’t say for sure it’s Section 8, but judging by how it looks, I think it’s a high likelihood.

        My point about the fires was that, it was a pretty impactful event and it’s going to affect real estate there for some time. Whether it’s in a good way or a bad way, who knows. But it’s an effect. And I don’t think you can extrapolate what’s going on there with the rest of the country. Much like what happened in Houston after the flooding last year.

        My guess is 1/2 the people selling just want to get out, scared of the fires, so they are lowering by $100K. The others figure there is a shortage of homes right now, due to the fires, and are jacking up by $100K thinking they can capitalize on that shortage.

  • Mr. landlord, my home is located in South Orange Co., and it has only appreciated at a 3.56% annual rate over 28 years. I bought at the 1989-90 top and am now comparing its value in today’s 2017-18 top. It is worth about $800K today–fully priced. I BOUGHT IT FOR $300K in January 1990. There is currently great buyer resistance to homes priced over $800K in South Orange Co. By the way, my home has 2,100 sq. ft. and a panoramic view. I would have done much better by waiting 2-3 years or my buying a cheaper home since small, cheap homes always seem to appreciate faster than larger ones. At the 2011/2011 bottom, my home was worth about $550K at most. One house on my street sold for $470K in 2011–that is 21 years after 1990.

    • Mr. Landlord, there is great price compression going on now in South Orange Co. Homes below $700K are continuing to appreciate while homes over $800K going nowhere. One can basically buy a home 50% bigger for about $40/60K more. For example, the cheapest single family home in the city is listed at $610K (950 sq. ft., 2 bed, 1 bath) or buy a listed home in the same neighborhood for 650K (1450 sq. ft., 4 bed., 2 bath).

      • I forgot to mention one thing: If us bears are wrong and prices continue to rise for 2 more years, all the home in my South Orange Co. city will be selling for the same price. In other words, as the cheapest homes continue to rise and the larger homes continue to stagnate in price, all the homes in the city will be selling for the same price. The 1,000, 2,000 and 3,000 sq. ft. homes will all be selling for $800,000.

      • That’s what’s happening up in Sonoma County too. They’re selling crappy little townhouses with decks no bigger than a bathtub for $600,000, but you can get an acre with a gorgeous 2500+ SF house, an orchard, and even stables for under a million. It’s nuts.

    • Gary, if you say, so I believe it. I suppose you did buy right at the peak in 1990 so that will skew your gains.

      But even so, you got 3.5% appreciation while essentially doing nothing other than living. 30 years later you have a fully paid off $800K house. Had you rented for that entire stretch of time you’d have nothing. Plus you saved $100-200K in taxes over the years as well through the MID and property tax deduction.

      Even in you unique situation, buying at a peak, in the long run you still come out ahead. Take note Millie…..

      • Mr. Landlord, I bought 2 investment properties in 2004–one in Orange Co., CA and one in Portland, OR. Several years ago, I sold my Orange Co. investment property for a small profit but still hold my Portland home which has appreciated from 150K to 335K since I purchased it. I am probably going to sell it once the current lease ends in a month. The timing seems perfect. I will have to pay capital gains taxes but I’m happy that I have a big gain to be taxed. I really didn’t know what I was doing in terms of making investments in the winter of 1989/90 and in the spring of 2004. Yet, somehow I have become a multi-millionaire without knowing what I am doing.

      • He still had to maintain, insure, and pay taxes on it, no? Wouldn’t that reduce the 3.5% and make the effort more than doing nothing?

      • “Even in you unique situation, buying at a peak, in the long run you still come out ahead. Take note Millie…..”

        Go for it! More people buying at the peak is good for me. I won’t stop you.

      • not at these prices

        “But even so, you got 3.5% appreciation while essentially doing nothing other than living. 30 years later you have a fully paid off $800K house. Had you rented for that entire stretch of time you’d have nothing. Plus you saved $100-200K in taxes over the years as well through the MID and property tax deduction.

        Even in you unique situation, buying at a peak, in the long run you still come out ahead. Take note Millie…”

        It’s not quite that cut and dry.He wouldn’t have NOTHING unless he just let the down payment sit and do NOTHING.

        Assuming a 20% downpayment on 300K that would be 60K. If you had invested that there average total S&P500 return would be ~8X or ~16X if you re-invested dividends. That would be between $480,000 to $960,000. So his downpayment invested the whole time could possibly buy his house today in cash for doing nothing other than letting his money sit in a dividend reinvested index fund for 30 years. Now he got the benefit of living in that house for 30 years and that value is hard to quantify.

        You were likely spending more than renting for quite a long time as mortage rates were about 10% at that time. Hard to figure out how much he saved over the standard deduction tax wise. Plus maintenance costs, etc.

        I would guess it might be close to a wash at this point. But there are a lot of unknown variables. With any investment timing matters a lot.

      • “He still had to maintain, insure, and pay taxes on it, no? Wouldn’t that reduce the 3.5% and make the effort more than doing nothing?”

        He would have had to pay rent for 28 years. It’s amazing how you guys always forget that little piece of info. Track rent for a middle class in Orange Co for the past 28 years. Then get back to me about maintenance and insurance costs.

  • I’m getting a lot of I can’t believe we made so much already talk from homeowner folks, it’s just setting up perfect…..
    rates are pushing buyers out faster than heck now….wait until the 10 yr hits 3….pure pandemonium….u can see the everything bubble easily, if your not blinded by greed and vanity…….signed homeowner in san francisco

    • Most homeowners are up a lot so when the market eventually pulls back, they will still be up a lot, just not as much. That is life. It might pull back this year. Or it might not pull back for several years. Perhaps it will not pull back for 5 years. Eventually, it will pull back, but the timing of it is a guess. As far as climbing rates, they are climbing because people think inflation is on its way. If inflation actually appears, homeowners should see further gains.

      • JT, inflation is not a question mark. It is a FACT, and it is out of control for everything that maters to the average person. That publish CPI is bogus number to keep a cap on entitlements which get adjusted based on CPI. That is the reason for increase in rates. The FED is actually quite a bit behind the curve. They don’t know what to do – if they increase the rates they blow up the bond market (3x the stock market) and crash the whole financial system and if they don’t, the inflation will get out of control – doom on us either way. Imagine higher rates on over 21 trillion federal debt and even more in pension liabilities.

      • Flyover,

        I agree with you on most things but not this. Inflation is virtually non existent today. You have to remember to compare like for like. A $500 computer today would have cost $1000 2 years ago. A $30K car today has thousands of dollars of additional tech/safety features than a $30K car from even 3 years ago. I pay the same amount a month for my ISP service yet my speed has almost doubled from 2 years ago, which means my cost is effectively 50% lower. I travel for business quite a bit and what I pay for a typical hotel room today is more or less what it was 5 or even 10 years ago. Flights have definitely increased, but hotels – and rentals cars now that I think about – haven’t budged in a decade.

        SO yeah maybe milk has gone up in price, but there are thousands of items/services that have decreased in price as well.

      • Landlord, I agree that items related to technology stayed the same or decreased in price, because of fast advances in that field. For that reason I made the qualification – what the average person buy the most. Then I went on to enumerate: housing (to buy or to rent), food, construction materials, cost of technicians (plumbers, electricians, HVAC), education, electricity and gas bills, medical care, all the insurance (house and cars) because the insurance companies have to pay more for repairs. Did you try to call an electrician or a plumber lately? If they don’t make over $1,000 per day, they don’t even bother to answer the phone. IF and that is a big IF honor you to show up, you’ll be happy they came, forget about the cost. In a way, I don’t blame them. The cost of living went up constantly over the years and in WA state the minimum wage jobs went up every year, this year being $11.50/h. I don’t even live in an expensive/high cost city. Consequently, the skilled labor cost went through the roof and it is a massive shortage. I don’t even bother to go into the commodities because of the historical volatility; as an example, a sheet of plywood went up 300-400% up in price from few years ago. I know it is an outlier for various reasons but it gives an indication why builders are not rushing in with SFR construction. IF they do, they build high end because the rich people are less affected by these increases. For those not rich, they build multifamily residences.

        The airlines had longer terms fuel contracts. Once those expire, if the fuel prices stay high, expect higher airline tickets. The fuel expenses are a large % of the total cost of an airline.

        The items I mentioned take by far the largest % of an average person’s income after taxes. Technology items, as % of the monthly person’s income is insignificant.

      • Landlord, it is not just my personal experience with inflation in my neck of the woods. Here is an article talking about it on a nationwide basis:

      • Mr Landlord – housing, education, and healthcare.

    • cd,

      Don’t take offense to this question…but how old are you? I ask because you sound like one of these millenials who thinks history started the day Obama was elected. So you think a 4.5% 30 year fixed is the mostest highest craziest interest rate ever.

      You probably don’t know that in the 70s and 80s interest rates were in double digits. In In the 90s they were 6-8%. And even in the mid 2000s they were in the 5-6% range.

      So 4.5% is laughably low compared to the historical averages.

      And this is why so much of the analysis done here and other perma-bear places is wrong. You hear the 3X income rule spouted endlessly. Yeah that was applicable for a mortgage with 9% interest. Cut the interest in half, and that 3X rule goes out the window.

    • Seen it all Before, Bob

      What happened in the last 2 weeks in the market? Stocks went down due to tariffs and rising interest rates. Bond yields went up which drove bond prices down.

      In other words, that big pile of equity that someone could have used to buy an overpriced house is less now. The demand to buy a house if you don’t have one is still high but the pile of equity that could be used to buy it on a downward trajectory. That is bad news for people wanting to diversify into housing with their pile of stock and bond equity. The Dow went up 300% under Obama and is up 20% under the first year of Trump.

      That’s good for fixed income people retirees who own homes and conservative bonds. Finally, the bond yields are generating income above the inflation rate so they can eat again. They also have their Prop 13 protected home with a paid off mortgage.

      I studied controls engineering in college. There are a number of knobs and switches in the economy to make this a soft landing. Historically, the people at the switches have been too political or just plain asleep at the switch. Maybe this time it will be different. I doubt it though. A run up in the market of 300% in 8 years looks more political than scientific.

    • The 10yr is at 2.98 today.

    • The 10yr hit 3 today briefly and has closed at 2.9995.

  • This is an interesting article about the future of those cities JT praised so much:

    CH goes into a very balanced explanation about why something which can not go on forever, will not.

    • The government will fix everything with inflation. Then, those pensions will be worth nothing in tomorrow’s dollars/ Problem solved. You are seeing the inflation now.

      • That is true. The inflation will get out of control. What is that going to do to the interest rate and bond market? Way higher rates will crash both – the RE prices and bond market (a spectacular crash). What will happen to the stock market under a bond market crash?…What will happen to taxes to cover the interest on over 21 Trillion in debt. If they cut government expenditure in order to cover higher interest on national debt, what is that going to do to the economy on Main Street????….

    • I can only imagine what a police officer or our armed forces would feel like if they don’t get their pension? If counties/states say they we have to cut back on pensions I wonder if police/armed forces will just let crime reign?

  • Where are people taking the Uhaul trucks to? Just for fun I did a quick demand pricing exercise.

    For the biggest truck 26′ ranked in order of pricing premium with (percentage increase):

    LA -> Las Vegas: $964 (854%)
    Las Vegas -> LA: $101

    LA -> Seattle: $4160 (469%)
    Seattle -> LA: 731

    LA -> Austin: $3740 (310%)
    Austin -> LA: $912

    LA -> Houston: $3965 (310%)
    Houston -> LA: $967

    LA -> Reno: $1955 (300%)
    Reno -> LA: $488

    LA -> Denver: $3030 (196%)
    Denver -> LA: $1023

    LA -> SD: $245 (70%)
    SD -> LA: $144

    LA -> SF: $378
    SF -> LA: $493 (30%)

    SF -> Las Vegas: $2085 (1479%)
    Las Vegas – SF: $132

    SF -> Reno: $1128 (579%)
    Reno -> SF: $166

    SF -> Seattle: $3373 (411%)
    Seattle -> SF: $659

    SF -> Austin: $4380 (310%)
    Austin -> SF: $1068

    SF -> Houston: $4575 (310%)
    Houston -> SF: $1115

    SF -> Denver: $3515 (196%)
    Denver -> SF: $1187

    SF -> SD: $596 (127%)
    SD -> SF: $262

    SF -> LA: $493 (30%)
    LA -> SF: $378

    SD -> Las Vegas: $584 (478%)
    Las Vegas – SD: $101

    SD -> Seattle: $4403 (468%)
    Seattle -> SD: $774

    SD -> Austin: $3525 (310%)
    Austin – SD: $859

    SD -> Houston: $3820 (310%)
    Houston -> SD: $931

    SD -> Denver: $3130 (196%)
    Denver -> SD: $1057

    SD -> Reno: $1069 (108%)
    Reno -> SD: $513

    SD -> LA: $144
    LA -> SD: $245 (70%)

    SD -> SF: $262
    SF -> SD: $596 (127%)

    Supply and demand.

    If the former mayor of sidewalk poop and drug needles land, and soon to be next governor, Gavin Newsom can admit it, then so can the rest of us. “The middle class of the state is leaving in droves. This is a Code Red in California.”

    You’d better bet this guy has Prop 13 somewhere in his sights.

    • Seen it all Before, Bob

      Lordt B,

      This is good data but the real question, if this is a capitalist economy, why aren’t rents and housing prices plummeting if people are leaving in droves? Reality doesn’t support this data. At least, yet.

      • Seen it all Before, Bob

        Maybe the Millennials who had been living in their parent’s basement are finally moving out to cheaper pastures?

      • Supply is shrinking faster than demand.

      • Bob, rents are already dirt cheap compared to buying. Low rents that don’t increase are already a win for people like me waiting for the housing crash.

    • Gavin Newsome is a piece of dung scum from the hood up in Mafia controlled San Francisco, anyone from that govt. entity is bought. Plus the idiot did his best friend and campaign managers wife on the side while smiling at him…..

      Hack liberal scum like him need to move to Mexico

    • That’s a really interesting search I can dig that.

      My only point against that would be that most people with money and many middle class (however you define that) are hiring a moving company and paying a premium and not renting a U-Haul and moving an entire house themselves.

      • United Van Lines annual migration reports correlate with the Uhaul data. I use Uhaul data because quote data is easier to get immediately.

    • That Vegas premium for the Bay Area is fascinating as I personally know some tech workers who have done that in the past year. This gives me an idea for travel. Renting a small truck could be far cheaper than a one way car rental even considering the gas mileage. 💡 🤔

    • Of course. Lower income people are moving out, and they are the ones driving rental trucks out. Higher income people are moving in, and they don’t drive rental trucks in. Instead, the higher income people hire movers. That explains your data. Too many trucks are being driven out of LA because low income people are moving out. Wealthy people are not driving rental trucks into LA because they are too wealthy to drive a rental truck in. So, you have a rental truck shortage.

      • Lord Blankfein

        JT, couldn’t agree with you more. I don’t know anybody who would even consider packing up their lives and throwing it in the back of a U haul and driving a thousand miles to cheaper housing country. Things must be pretty bleak to even consider this.

      • Nope, you’re wrong. United Van Lines annual migration reports correlate with the Uhaul data. I use Uhaul data because quote data is easier to get immediately.

      • Lotdt B

        United Van Lines does not share this info. Plus there are hundreds of other moving companies. Also a lot of smart people who move to SF do not bring much (young and educated).

        It is not to prove that you are wrong, just to show that your evidence can be shredded to pieces without much effort.

    • But JT said SF is awesome cuz all the cool and smart people want to live there. How can this be?

      • LA/OC is awesome. SF is not. Not enough girls in SF.

      • I think the truth is that smart people (who move to SF) just hire moving trucks.
        Dumb ones who could not make it are getting u-hail and doing a move yourself (poor application of one’s time).

        The fact that you would ever consider moving yourself speaks for your ability to operate in a modern world (value of your time vs $$$)

        Little trolling in the morning is due for all prude folks

      • jt will lie and tell you that it’s only the dumb and uncool people moving out. He’s good at whistling past the graveyard.

      • of course you and JT don’t really know anything about San Francisco I see by your answers…

        JT-no ladies in San Francisco? are you kidding me. I grew up in Orange county and can tell you without a hesitation, there are more here and they can use their boots up here….The Pacific stock exchange, tech, law and marketing firms are full of ladies. If I wasn’t married this is where I would go, that is after living in most of the cities in the west.

        People are leaving the city because of high costs of services, housing and cashing out.
        San Francisco is like LA in the 70’s weather wise. Bigger sharks though. They are leaving also because of the insanity in the govt. This town is bought and paid for. A drain on residents with tons of taxes, surcharges, ticketing etc…..

        The peak is here, enjoy it rats…

      • Surge, when you mention the smart, beautiful liberal people of CA, the picture which comes to mind is Maxine Waters, what she represents and what she stands for. Sorry, I can’t erase her image from my mind after listening to her “intelligent” comments. I know you share her ideology. I guess the liberals have their own stereotypes of toothless redneck conservatives.

      • Did I call it or what? What these guys do is attempt to make the conversation about some potential attribute of the data (only dumb poors use Uhaul) so that you’ll lose focus on the very real possibility that the data correlates to something they don’t want to believe.

        Further down this Surge clown tries to make the conversation about me instead of sticking with disputing the argument.

        They’re so desperate and obviously worried it might be true!

      • Flyover – I never said smart beautiful liberal. I just said smart. So treat it as smart beautiful/ugly, liberal/conservatives. Just smart.

        LordtB – this was just a little bit of trolling (I even posted a disclaimer). Calm down. Perhaps Cali is losing some population. SF has crazy problem with equality. LA is up and coming but has problems as well.

      • You are right lord. These RE cheerleaders are worried. They know what’s coming. Half of these guys here are realtards or lenders. Historic low sales means they can hang out here all day long posting their propaganda of how this time is different in an attempt to sucker in the last buyer before it all goes crashing down again.

        Don’t be too harsh on the surge clown. He is one of the most entertaining guys here. We don’t want to lose him. “Rental parity is paying 200k down and 1500 more a month than a renter”, “your downpayment is making you 10%”, “paying principal is paying yourself” etc

    • People who move from low priced to higher priced areas tend not to use uhauls.
      They either young people with nothing much to move or they hire professional movers.
      When looking at uhauls only, you are excluding a very large segment of movers.
      Moving is such a pain in a butt, I would never consider using uhaul for that.
      I think people moving to cali either do not need uhaul or just pay someone else to do it.

      • United Van Lines annual migration reports correlate with the Uhaul data which disproves that theory. I use Uhaul data because quote data is easier to get immediately.

      • Also, past reports using Uhaul data show opposing results back when more people were domestically migrating to California.

        The problem here is that when the data was in California’s favor it would have been accepted as a legitimate metric by its promoters, but now that the tables have turned you have to stretch really far in an attempt to discredit it.

        The trick is to spread agitprop that only the lower strata of society is moving out of CA, all the while homeless encampments are piling up around LA, SF, and SD. As the situation on the ground worsens, fewer and fewer people are going to be fooled. But hey, Mexico City has its nice areas with wealthy people, too.

        Nice try, but what’s more likely is that there’s a widening mix of people migrating out of CA and in that mix are increasing amounts of productive tax payers. Best of luck to you if you think this is a positive short to mid-term quality of life indicator for all people living in California.

      • Surge,

        Call a moving company and ask to price a SF to Phoenix move and a Phoenix to SF move and see how prices compare.

        Hint: It’s much more expensive going west to east than vice versa.

      • Different regulation, taxes and insurance requirements originating from California as compare to other states. California, for instance, has double-driving time requirement (albeit it is for local moves only). It is not just demand driven.

        Prices of moves is circumstantial at best.

    • Nice job lord and great news too.
      Explains why my rent is not increasing.
      Hope the trends continues!

      • clap clap

      • Not sure how this is good news for you. It doesn’t necessarily mean that house prices are going to go down and indicates a negative outlook for the tax base. Sacramento and the local governments are going to double down on ways to make up for the loss at the expense of the remaining income earners and property owners. While it’s true that higher income earners and asset owners trend higher inbound to CA, it won’t be enough to make up for the difference of the increasing demand for government handouts. If you don’t believe me – just look at recent examples such as the gas tax increase, car tax increase, and increased local district levies.

        I think you posted before that the low inventory situation is a myth, but you’re wrong about that. Property owners in CA are increasingly HODLing, and will even more so as taxes and fees climb, so the supply dries up faster than demand thereby pushing prices up because the demand remains net positive. There are a lot of reasons for the HODLing such as why such as Prop 13 and the legacy effects of housing bubbles past, but it doesn’t really matter why because there are no indications of this untenable situation changing any time soon.

        Sorry to tell ya bub but your rejoicing at this data is the same side of the foolish coin that guys like jt are flipping. Stay in CA, continue to overpay.

      • Lord,

        First of all I love that you use the word hodling.
        Second, why is increased taxes a bad thing? Sure nobody wants to pay higher taxes but it hurts the middle class and makes California less attractive. I would vote for higher taxes anyway. Especially older people should pay higher taxes.
        Thirdly, what makes you think I am overpaying? I am getting a steal on my rent, have a 15 Minute commute to my tech company, make well above over 100k and live close to the beach. Hell, where else do I get that? Beautiful weather is just the icing on the cake.
        Sure if I would buy at the peak right now I would massively overpay and screw myself financially.
        And lastly, the statistics regarding the housing market are manipulated and bogus. Low inventory is totally a myth. The sheeple (hate that word) have been wrong before. Just a year ago we heard interest rates will never go up in our lifetime. Wait a year and that whole inventory is low myth is a thing from the past until it comes up again when re cheerleader need it.

      • “make well above over 100k”

        Sure you do, Millie.

        “Low inventory is totally a myth.”

        Not good enough, Millie. Bring data. Everyone else does.

        “Just a year ago we heard interest rates will never go up in our lifetime.”

        Who said that? No one, ever. Not the “realtards” you love to hate, not the people buying now, not the people on the fence, and not the people waiting for a crash. No one. You’re literally just making shit up.

      • I was going to respond to your individual points, but after reading that you’d vote for higher taxes, it’s clear you deserve to overpay (even if you wrongly think you don’t) for crap shacks, crowded dirty beaches, lies about the weather always being perfect, terrible traffic nearly 24/7/365, waiting in line for everything, nanny state government, declining infrastructure, and a nothing special in CA “well over” 100K salary.

      • John D, Millennial is right about the people saying rates would never go up in our lifetimes. At least on this blog there were quite a few a couple of years ago. Doc has it all available in the archives. I remember thinking back then how ridiculous those claims were.

      • Thanks Lordt b. Yeah I am sure many will remember and if one takes the time it can easily be proven by looking at these older comments. good ol’ Johnny knows it too but rather lies about it. Typical RE cheerleader.

      • “make well above over 100k”
        “Sure you do, Millie.”

        Sounds like Johnny boy doesn’t make that much at his job?

        “Low inventory is totally a myth.”
        “Not good enough, Millie. Bring data. Everyone else does.”

        I haven’t seen that much construction since years and I am being bombarded by my realtards with houses for sales on a daily basis. I can’t keep up.
        We have more than enough inventory. Sure, the realtard cone up with fake statistics to paint a different picture. We also have greedy sellers who think they can ask for 50% above value. That’s why we have historic low sales. If anyone on this blog is looking for a house in California and can’t find one that is for sale, send me your zip code. I am happy to forward you the open listings.

      • “ crap shacks, crowded dirty beaches, lies about the weather always being perfect, terrible traffic nearly 24/7/365, waiting in line for everything, nanny state government, declining infrastructure, and a nothing special in CA “well over” 100K salary.”

        I actually agree with what you say. sF and LA’s greater areas for instance are totally overrated.
        But again, the things you mention are goods things in my opinion because it excellerates people fleeing the state.

      • “Sounds like Johnny boy doesn’t make that much at his job?”

        I’m a software development project manager and technical writer with 25 years in the industry. You can look up my likely salary if you feel like it, or not, I don’t care. Why do I doubt your claim? Because you’re not smart enough, unless you work for the government, in which case your intelligence doesn’t matter. I work with a dozen talented developers, and you’re just not in the same league as they are – not in writing, not in logical thinking, not in maturity, not in anything. I wouldn’t hire you to flip burgers.

        Every so often your story gets more impressive. Numerous times you mentioned how a certain brand of crypto went up 5,000% in a year. Then you claimed you had made that 5,000%. Why would you not state that from the beginning? Because it never happened, that’s why.

        But tell us – what do you do exactly? It’s not like it would give away who you are. C#? Java? Scrum or Kanban? I think if you work in tech at all, you’re help desk or QA, you make less than 70k, you’re single with roommates (or still with the parents), and you log on to Steam every night of your life. Not that there’s anything wrong with any of that, but lying about it online is the equivalent of HELOCing your way into an Escalade.

        “I haven’t seen that much construction since years and I am being bombarded by my realtards with houses for sales on a daily basis. I can’t keep up.”

        “…the realtard cone up with fake statistics to paint a different picture.”

        The data is real and there for all to see. The problem is that you avoid it. And when you do accidentally catch a glimpse of it, you conveniently say it’s made up. Classic flat-earther logic.

      • Developer? Java? Wtf….since when do you have to be a developer to make over 100k at a tech company?? You have sales, finance, ops, accounting, marketing, licensing, R&D….at a certain level in each of these functions you can make over 100k without having 25 years of experience. If it took you that long to make that money….sry buddy.
        Makes me kinda happy you don’t believe me. Just one more thing you are wrong about.

        You are referring to litecoin. Yes, 5,000% was the return in 2017. There are ICO’s that made far more than that. That’s the world of crypto. I still think we will get to 1trillion market cap this year.

        Your insults don’t mean much to me. You only have that big mouth online, it would be different if I would stand in front of you. Plus I am used to that from old farts /RE cheerleaders. Especially when you nail it they respond with anger and name calling. Nothing new.

      • I was right about a few things – you aren’t smart enough to be a developer, and you lied about the crypto. No comment on Steam? I’m thinking I’m right about that, too.

        Don’t ever go anywhere – you’re the single easiest debate opponent I’ve ever had.

      • You thought the whole time working in tech means being a developer and the only job that pulls in over 100k?! Lol! And you call yourself smart?
        Don’t worry, I won’t go anywhere. Have been here for years and intend to stay. The RE cheerleader comments are highly entertaining. You being one of them. “Nobody ever said interest rates will never go up in our lifetimes”
        I am not sure what your confusion is about litecoin. Last year my litecoins made 5k percent alone. I started investing in litecoin before that. All together it made more than 5000 percent of course. Always happy to share about my crypto experience….I did sell about half of my ltc holdings during the run up towards the end of the year. Almost got the peak perfectly. Along with Ada and ripple.

        Wtf is steam? How does it help me?

  • Why People are Fleeing Los Angeles and California (Exodus from CA)

    “A baby means more space, a-house-hunting-we-a-go. A reasonable 3 or 4 bedroom house on the Westside will set you back 2 million. Buying near the beach in Santa Monica, prices grow ever steeper.

    Yes, these are desirable places to live with sunshine and comfortable temperatures year round, but let me put affordability into perspective. Even if you put a million dollars down (lucky you) you’re still going to be paying, on a 2 million dollar property, with current historically low interest rates, $45,000 a year in interest, $25,000 in property taxes, not to mention upkeep and insurance.

    Basically, you have to make $150,000 a year Just to keep your house.

    I have friends that as a couple make a combined $400,00 a year, and would love buy a place near the ocean, but will not pull the trigger. Why? They simply refuse to become slaves to the mortgage.

    It’s why I am actually going to be bold and call a top in LA real estate prices. If people like myself and my afore mentioned friends, who could potentially afford to, but refuse to buy in nice areas, choosing to move/rent, then there is little support for housing prices at these stratospheric levels.

    Also, I predict the driverless car will change the demand for real estate in major cities. Basically, supply will increase as parking lots disappear and roads narrow, and as the cost (time, gas, productivity) associated with commuting longer distances drops, people will be less likely to pay a premium to live in “the thick of it,” and opt instead for more space in more distant/rural areas.

    I believe spending 2 million for a 4 bedroom house on the Westside is a poor investment.”

    • Lord Blankfein

      The couple making 400K can EASILY afford a place near the ocean. It’s not even a question. They don’t need to pay 2M plus to live in Santa Monica, there are many cheaper alternatives. You will definitely pay a premium to live ocean close, in a safe neighborhood, good public schools, close to job centers and amenities. With their massive income, I’m sure the couple has a huge down payment saved not to mention they gross 33K per month. Paying a 6K monthly housing nut is a walk in the park…this should easily get them into a 1M plus house.

      • I’m gonna guess the 400K couple would rather lease a well equipped Camry then overpay for a Rolls Royce or worse yet settle for overpaying on a base model Lexus.

      • They gross 33K. 14K of that will go to taxes right off the bat. Down to 19K. Do they have student loans? Take another 1K off for those. Do they have kids in private school? Take another 3K off. Down to 15K. Do they each own a luxury car? Probably, it is LA after all. Take another $1.5K in car lease payments. Down to 13.5K. Do they contribute to a retirement account? Take another $3K. Down to 10.5K.

        Paying $6K a month out of $10.5K left over is doable. But also cutting it kinda close since you still have to eat, pay utilities, go on vacations, pay for the kids dance/art/ballet/gymnastics classes, hire a nanny (it’s LA after all), pay for gas, car insurance, clothes and on and on.

        And here’s the thing with $400K jobs (or 2 people each with $200K jobs). If you lose that job, it’s not that easy to find a replacement. Someone making $30K and getting laid off can find another $30K job tomorrow. Someone making $200, 300, 400K a year getting laid off could take a year to find a replacement, especially in a recession. Some never find that job again and have to settle for a lot less income.

      • Landlord, yes this is correct. Their incomes would be hard to replace if they were to lose a job. This is why 2mil home is too risky for them, even if affordable. 1-1.2mil is much more reasonable, because you can pull that one with 200k (hard but possible)

        But in general, why do people love to count other’s money?

      • Lord Blankfein

        Skimping on cars is one thing, which I totally agree on. Skimping on a place to live where fundamental issues arise such as your own safety and sending your kids to schools infested with gangsters and lowlifes simply won’t fly with people making 400K. We have people making MUCH less who will do anything to purchase in certain neighborhoods, and the prices reflect this. It’s brutal out there. This is LA afterall. The pretenders quickly get separated from the contenders.

      • Mr Landord – you just described nearly the exact scenario of a few people I know. All West LA folks and one of my next door neighbors!

      • Pretenders and contenders??????? ……only in lala land would some db come up with such a stupid and corny simplification…..Steven Seagal and Jean Claude Van Damme screenwriters want their line back!!!!!!

    • They are smart.
      $2million dollar home is more of a lifestyle statement than investment. It is an overkill in terms of location/size. Your friends can probably rent a very very nice luxury place w/o commitment. They also need to maintain extremely high income to pay for it.
      If you have to mortgage, I would not exceed 60% of your current income as max to maintain a lifestyle

      • They aren’t my friends, it’s a quote from the link. Quotes “ “ check ‘em out sometime.

    • Enough of BS. Nobody is “fleeing” LA. Fleeing is when an army moving in. People do move, for a number of reasons, sometimes outflow is more than inflow. You pick up on silly sources to support your irrelevant constructs to convince yourself one way or another.
      Yes, there will be a correction in RE prices at some point in the future, yes there will be depression at some point in the future. LA is growing because population is growing everywhere.

      • I shared an article and you’re blowing a gasket, get a grip! I never claimed any constructs. Sounds like you’re worried there’s some truth to the matter.

      • Surge, people ARE fleeing. I’m in Santa Rosa, and an awful lot of people are moving here from either the SF/Oakland area, or from L.A. I fled Oakland three years ago myself. Unfortunately, this area is becoming a lot more crowded because of this, and what I’m finding in the range of houses I’m looking at ($650-750K) is that many of the sellers are moving to states like Tennessee and Georgia. News reports from the peninsula below SF (the techie area) have older homeowners saying that their area has changed so much they no longer recognize it, and they’re selling and moving out of California altogether, to places with housing costs that are a fraction of what they are here. And definitely to places with less traffic.

      • Karin, what you are describing is simply migratory patterns.
        Yes, unfortunately, some seniors are being priced out, especially the ones who do not own a home. This is a problem for seniors/people living on fixed income AROUND the world. I am sure seniors in Tenessese/Georgia are feeling the same pinch…the ones from California might have advantage because they might have cash from California equity.
        Cost of living other than housing is not much different across states.

      • Karin,

        Regarding traffic…..traffic is bad EVERYWHERE! I always laugh at Californians who think that they’re a special flower when it comes to traffic. Try going from the eastern side of Atlanta to the western side between 3:30 and 6:30 on a weekday. The speedomoeter won’t break 15 MPH. Same with DC. Same with Las Vegas, Dallas, Houston, Boston, you name it. Every metro area in the country has bad traffic. It’s just nobody whines about it as incessantly as Californians.

      • Mr Landlord, the problem with your comparing Los Angeles traffic to Atlanta (or Las Vegas?!?! don’t make us laugh the traffic there is a comparative unequivocal breeze) is that other U.S. cities’ (NYC possible exception) traffic is more predictable. The example of Atlanta during rush hour proves my point. In Los Angeles there are several freeways that are always a horrible mess. For example the 405 from the south bay to the valley, the 10 from santa monica to the san g valley, the 101 from west valley to downtown, ALL days of the week with the only peace in the early A.M. hours, that’s it. I’ve even been stuck on the Sepulveda pass in bumper to bumper after Midnight more than once! Why? Because there’s always some dumb shit happening. Accidents, car fires, a couch in the roadway, someone’s gonna jump a bridge, standing water, mudslides, fires and smoke, presidential motorcades, car chases, mid-day road cleaning, you name it. The CHP are very fond of running road breaks and it seems to happen way more often than even the longest time resident normally expects.

        Even the freeways that aren’t as bad have enough unexpected things happen that your travel planning can be instantly made worthless. It’s maddening because you can’t set very reliable expectations.

        And that’s not even getting into some of the regular street routes like Lincoln from LAX to Santa Monica or the canyon roads going to the valley. Those other cities you mentioned do not have it anywhere close. The obscene L.A. traffic is something it can rightfully claim as a world class attribute. That’s why I give such a hard time to the pollyannas on here when it comes to some of their traffic claims because the problem is simply indisputable. It is probably the top hit to quality of life in this area for most people.

    • driverless cars are 20 years from mainstream utilization. I’m in the vertical and know enough people to guarantee this prediction. The issues are local, county, state and federal along with FIRE industry suppression….

  • I’ve been following this blog for many years now. It seems like saying is is a “housing bubble” blog isn’t quite accurate anymore. So is this a real estate or “state of California” blog now? I think that housing in CA may not be super expensive forever but will be for the next decade or so.

  • It cant be!!!

    Please help us understand these dynamics Dan an company..this time it IS different 🙂

    • Interesting article. Real estate has been going up all around Sacramento in the past couple years, and it seems like a spill over from what is happening in San Francisco.

  • California, America’s Poverty Capital

    “California — not Mississippi, New Mexico, or West Virginia — has the highest poverty rate in the United States.”

    Not to worry, the poors are all leaving on a midnight U-Haul to flyover.

    • CA is basically Brazil. A few ultra rich white people. A small, and shrinking upper middle class of mainly white people and a majority brown peasants. And like Brazil, it has good weather and nice beaches. Some areas of LA are indistinguishable from the favelas of Rio or Sao Paolo.

    • Doesn’t surprise me. However, in the end our entire economy is a form of PONZI scheme anyways. It’s all a big pyramid that will eventually collapse so I really don’t care what happens in the long run. All we can is is move to cheaper places, pay off debts or ride it out IMO.

  • The real estate is topping right now. Prices will likely go sideways for the rest of strong spring/summer selling season and then start to drop sharply in the fall. The last chance to sell–at a good price–will be early next year. After that prices will start dropping at about 1-2% per month.

    There is still time to sell but the window of selling at high prices ending. The first chance to buy will probably not arrive until 2021. I wish I were younger. We could all be billionaires if we lived over a 100 years. However, the cycles are so long that we can only take advantage of a few of them in our lifetimes.

    Invest as if you were going to live forever and you will become a multi-millionaire.

    • That sounds great! Buying opportunity in 2021? Basically around the corner!

    • I 100% agree with you. And 2021 is just around the corner, as it’s only 3 years away. I sold a place in 2005 for $720K; 5 years later the identical house plan was selling for less than $500K. How many people can save over $220K in 5 years? That’s a total savings. Remember, real estate markets are cyclical. Plus, next April 15th, homeowners that typically have Schedule A deductions are going to find out exactly how much they can no longer write off on their property taxes and on their mortgage interest. THAT’S when buyers want to start getting ready to get into the market.

  • New federal tax law limiting the deductibility of mortgage interest and state and local taxes appreciably reduces previously existing financial incentives of homeownership, and for many Bay Area residents will noticeably raise the cost of living, and specifically the cost of housing. Making the most expensive U.S. metro area to live in more expensive – and specifically, more expensive in comparison to other places – discourages immigration into the area and encourages resident and business relocation to more affordable metro areas. The negative effects of these tax law changes are specifically focused on expensive housing markets (which also tend to vote Democratic, which his another issue – a federal administration which clearly considers CA and the Bay Area to be a political enemy). Note: the CA legislature is looking for ways to blunt the effect of these federal income tax changes, however it is unknown to what degree it will succeed in light of the current balance of power prevailing in Washington D.C.

    The new tax law will reduce the financial incentive to make charitable donations for many residents, which may reduce social services to those in need.

    • Democrats Monday: We need higher taxes!!!

      Democrats Tuesday: How dare those evil Republicans increase our taxes?

      • +1. They ask for higher taxes till they have to pay them; then they don’t like it.

      • Kinda like a “landlord” that leverages a property for one price only to sell/rent to fellow Americans for a higher price…right??? Thats real value and ingenuity at work-

        hope you’re diversified cuz its gona be fun…

      • You mad JHK bro?

      • When I see this I see we are getting close to a top now. Just like the NINJA loan mania.

      • There is a HUGE difference in raising the top brackets a few percentage points… and making everyone including middle class pay federal rates of 22% on state tax income that wasn’t taxed at all in history before.

      • Not at all, most of this is tongue and cheek you know that. You’re successful at what you do, I believe that. what I don’t believe is that your success is due to knowledge, skills and abilities. Its luck and greed…you add absolutely NO value to the US economy. You over charge fellow Americans and humans for a basic necessity.

        You have to answer for that brother, not I..

  • greengroovymom

    Is there any thoughts on dried up SFR inventory? I notice how few RE agents have listings in my area of Santa Monica…how can these fools be making a living?

    • Dried up inventory,lol.
      It’s true that we have historic low sales. Main reason why realtors and lenders hang out on this blog complaining about millennials not buying overpriced crapshacks.
      Their advice is to skip the avocado toast and eat burgers instead and to not buy the newest iPhone. Supposedly, that’s how you get your 200k downpayment in no time!

  • I am currently renting in the Bay Area for a premium but all good things come to an end and we may have to move soon. We are approved for just $400k and are looking in the Central Valley because we cannot afford the immediate Bay Area right now.
    What I have been noticing is a month and a half ago there was not many houses available in our price range and we were getting a little worried. The last couple weeks I have been seeing multiple house in our range pop up now! One or two a day! What is going on? Fire sale at the peak before the crash?? Thats what im hoping. What do you think?

    • Part of what you’re seeing is simply seasonal. More people list their houses in spring (now) that in winter (a month and a half ago).


    “As waves of homeless descend onto trains, L.A. tries a new strategy: social workers on the subway.”

    Some commenters here will tell you it’s just a horsefly while another will quibble over the word “waves”. Good times.

    Stay in CA, expect to overpay.

    • LOL. The Golden state, where SF has poop maps and LA has social workers on the subway to deal with the homeless. All for the low low cost of $1M for a 50 year old 3 bedroom home with bars on the window.

  • Wellcome to the new brave world, same as the old one! I think I saw this movie before and I know the end.

    • Flyover,

      Fannie has had this exact same program for a couple of years. Freddie is just catching up. Nothing new at all with this.

    • Weird, our RE cheerleaders Johnny boy, tankinsight and Danny tell us weekly that this time is different? How can it be?

      • No cheerleading here, simply stating a fact of the lending world.

        Guess it’s useless to inject facts into a discussion with a fanatic. Your lines are tired.

      • Here we are.

        RE cheerleaders told us how this time is different over and over. We were also told that the upcoming pot boom will cause california’s Real estate market to skyrocket.
        They told us how we will never see increasing interest rates in our lifetimes and how trump will make the RE market great again because he is a real estate guy.
        We also heard many, many times how “tough” regulations prevent poor people from buying an overpriced house they can’t afford.

        Of course, the exact opposite is true.for instance, People who cannot afford a house are now being targeted because there is nobody left buying the overpriced homes. Loans with 3 percent down and no income restrictions are now offered once again. Those buyers are the ones buying at very high prices. When stating these facts, RE cheerleader have nothing more to stay than calling you a fanatic.

        And they also deny that they ever said we won’t see increasing interest rates in our lifetimes and it was never said that trump will make this market great again because he is a real estate guy. We are in the denial phase at the moment. Look at the stages of investor emotions. Google it. Right after the peak comes anxiety and denial.

      • If nothing else, zerohedge is entertaining. Sounds like they didn’t spend more than 30 seconds evaluating the qualifications of this loan program before publishing a sensational load of BS.

        The claim that you don’t need income to qualify for this program is a complete fabrication by zerohedge. They took the term “no income restrictions”, which in this case refers to income limits of the borrower (i.e., the most they can make and still qualify for the program) and changed it to mean “no income required”. The ACTUAL news is that this program now enables many people who previously made too much to qualify to get a low down payment mortgage.

        Try again. This time don’t fall for the fake news.

  • Dro510

    We bid on a duplex that was listed for 699. Within 24 hours, bids were over 9. The powers at be are toying with you. They price way low to create bidding wars.

    • Same thing here in flyover country. This week I bid on a rundown house (a bank loan was not possible on the house because of the condition – not livable). In 24 hours there were 6 offers, all cash – 3 below listed price and 3 above. Mine was above listed price, cash and zero contingency. Someone offered more than me and bought it. It’s OK. I buy ONLY if it is a deal. If not, I skip. What is the point in buying if there is no profit?!….I already have a house to live in. I’m always looking. If it is a deal, I’ll buy. It is not like I have millions sitting in the bank.

    • Unpossible!! Many posters here have assured me that the great housing crash of 2018 has begun and nobody is buying anymore.

    • “Toying with you” or a simple sales strategy? You decide.

      My realtor was all-in on doing that back in 2012, so that’s how we did it. I’m pretty sure that neither I nor my realtor make the list of “the powers that be”.

      • Not sure why a buyer would get into a bidding war? What’s the purpose to throw your money away like that? It’s not like houses are rare or won’t be build again. You can just buy the house next door during a crash for 50% off. Or you buy a nicer, brand new house for steal during the next recession.

        I could understand a bidding for Bigfoot. If they ever capture the massive man-ape a bidding war would make sense. A) you can’t easily reproduce Bigfoot (as you can with a house) and b) it’s the only one of its kind. (Very different from something like a house which you can always rebuild in masses.)

        Any other ideas in which scenario a bidding war makes sense?

  • It looks that quite a bit of illegal invasion is taking place on the southern border. What is that going to do to the RE prices in SoCal? My personal opinion is that it is going to be net negative.

    It looks like we can maintain military basis in 150 countries but we can not protect the southern border. Our politicians are sleeping in their job and the president is crying to the moon because all accuse him of being anti immigration. In the end no one is doing anything; at least Trump is verbally condemning it, but that is about the extent of his involvement in protecting the border. The Congress should be fired for being treasonous. Based on the Constitution they have only one duty – to protect the border. They get involved in anything where the Constitution specifically tells them not to, and in one duty assigned by the Constitution to them, they fail.

  • Exodus from blue states:

    Will we see any impact on RE prices? I know that the invasion from the southern border is replenishing the number of people leaving. Numerically the population stays the same. But what is the impact long term?

  • Since anecdotal evidence is so beloved here…I had 3 people coming back to Cali (from North Carolina). All 3 said they just wanted to come back to California. The other city just did not feel big enough.
    I love California. Even though it does have a number of problems, still one of the best places on earth to live.

    • You’ve been provided with hard data and facts beyond anecdotes, so not sure why you’re bitching. Oh wait, it’s because your eggs are in a battered basket. Those people you know probably couldn’t hack the real world outside of their fragile bubble. Tons of people in Mexico City or Moscow would also tell us it’s one of the best places on earth to live with all its problems.

      • I thought the sentiment here was that California is a harsh place and outside much nicer/easier?

  • I had an interesting discussion at an open house in Santa Rosa on Sunday. I’m a refugee from the East Bay, and at open houses I’ve been to in Oakland and Alameda, all I see representing the seller is an agent. In Sonoma County, in contrast, it’s very common to see a mortgage broker accompanying the agent. This Sunday, however, I found – instead of a mortgage broker – a mortgage BANKER. He said that his role was not only to make sure that the sale went through by qualifying the buyer, but most importantly, to make sure that the buyer could handle his/her finances AFTER they buy they house. He told me that it was after the purchase that his team shines. He told me that buyers with a 20% down, an 800+ FICO, and a steady income (which my sweetie and I are), are referred to as ‘unicorns’, due to their rarity. Couple that with a conversation I had with one of Pacific Union’s top agents in Santa Rosa last year, who told me that I would be surprised how many homeowners in Sonoma County were one month away from not being able to pay their mortgage due to no savings.

    Lord Blankfein and Mr. Landlord: do you have a comment about this?

    • They way it works is like this… when loan brokerage working on the loan, they have intent to resell it to an investment group, which in turn requires a loan to be of certain quality. Ability to pay the loan is also beefed up by available liquid and non liquid funds (401k balances for example are discounted 40% for taxes penalties). So, yes, unicorn loans are rare but they carry the lowest interest rate. So, it is all risk adjusted.

      Let me offer you another angle on this. Hypothetically, say if we cut the prices by 30% (all else being equal). The homeowners who are month away from default will be what, 1.33 months away from default? Also, if you put the same person as a renter -> he is also 1-2 months away from defaulting on rent.

      • Surge, this wasn’t a mortgage broker. This was a mortgage BANKER, who clearly stated that he was not there to get us a loan, but to help us afford the loan once we got into it. Apparently, many buyers are having trouble paying their note after they buy the property, because they’re too close to the edge financially.

      • What are you talking about? How can anyone help you afford the loan after it is originated? What, he is going to talk to your boss to give you raise or prevent your layoff?
        You misunderstood. It’s a gimmick, think about it.
        Underwriting makes sure you have enough liquid funds to carry you through in case you lose a job. This is part of loan quality.

  • Crypto is looking tasty. Big daddy is marching towards 10k.
    Where is wheelin dealin and tankinsight? They assured us btc will be zero soon. (We have heard that over 200 times now over the course of the last few years – by various main stream media sources)
    A formula that has worked like clockwork: If the haters cheer the loudest about btc going to zero, that’s when you want to start accumulating again. Blood on the street /the masses run for the hills means you re-enter on the cheap side. Who would have thought I get into ADA again below 20 cents!
    Almost forgot John d! “Buying the dip is the dumbest thing”.
    See a pattern here? You do the opposite of what these clowns say and you make a killing!

    • “Buying the dip is the dumbest thing”

      I never wrote any such thing, and you know it, but apparently putting words in my keyboard is the only way an idiot like you can “win”.

      Thinking you can “buy the dip” is foolish because you don’t know where the far side of the dip is unless you can see the future. I’m sure you think averaging down is a brilliant strategy, too.

  • Of course you wrote this and you are actually saying it again.
    “Idiot” oh, he’s pulling out the big guns now. Let’s see, I am making over 100k, over 800 credit score, no debt and sit on a large down payment waiting for a nice crash….but somehow that’s being an idiot? Why so hostile. Anecling and being quick to anger does not get you far (here and in real life).
    As far as dollar cost avg. I would not call it brilliant but it certainly made me a lot of money.

    • I didn’t say buying the dip is dumb. Buying the dip is ideal. I said instructing people to buy the dip is dumb, because it’s impossible to know where the dip is except in hindsight. Trying to guess the dip is dumb. If your attempt to buy the dip fails because you thought you were at the bottom when you weren’t, your next dumbass move is to average down, and doing that with something as speculative as crypto is not something that intelligent people do. So… carry on.

      I call you an idiot because you are an idiot, which you prove every single day here, and because stupidity is offensive. Combine that with extreme immaturity and an obnoxious refusal to use logic or look at data, and we’ve got a steady stream of retarded misinformation from one guy (you) that effectively brings the whole place down several notches.

      • I get it now. You can’t handle the fact that I made a killing with litecoin. You can’t name a single thing that I said that is idiotic. So instead of giving examples you call me names. If you are such a genius how come I made more money than you last year? Immaturity? Coming from the guy who shows emotions and anger outbursts. All I have to do is reference his funny comments. Reminds me a lot of our clown president. When he gets angry he starts a Twitter storm, name calling and calls that winning. I just hope you are not that childish in real life. I would feel very sorry for the family around you and your peers. Grow up buddy – you too can make money with crypto…it’s not too late. You might not make 5,000% with litecoin but you can pull in 3x-4x. Dollar cost avg and hodl.

      • LOL – you telling me to grow up.

        You forget that people remember what you’ve posted in the past. We know you’re lying about the litecoin. It’s painfully obvious.

      • Millie, I made a 200x profit this past weekend.
        As I was parking my car in a meter, I dropped a penny by accident. Eye-searched for it for 30sec, could not find it, but in this timeframe someone left another meter. There was $2 worth of time left and I parked there. Instance 200x profit on 1 penny. Made a killing on that one. Can you match it?

      • Johnny, See I was spot on. Big words and nothing behind it.
        Hey, if it makes you feel better than tell yourself whatever you need to.

        Surge, not sure what your point is. I think the majority of older dudes here just can’t keep up with opportunities like crypto so they tell themselves it’s a scam, will be worth zero tomorrow and those who claim they made a killing must be lying.
        It’s much easier to tell yourself these things than opening an account to trade crypto. My guess: it’s too complicated and confusing for some so they miss out on a once in a lifetime opportunity. For the longest time I told myself not to brag about crypto but it’s hard to hold back. I can’t wait until the next bull run….and the subsequent correction. During the bull run many crypto haters will be quiet. During the next correction they come out and tell you, see told ya so. Bitcoin will be zero soon. Same spiel over and over.

  • Noticed that he only one crying here are Republicans. But I thought they were wealthy?

    Don’t worry. Prices may be high now, but remember, the Economy always crashes under a Republican. Remember Bush? It took him 6 years to finally destroy / topple our economy. Everything crashed.

    I’m guessing it will only take Trump less than 3 years to accomplish the same.

    So, if you have $$$ saved up, get ready to buy. Because thousands of people are NOT prepared for the crash.

    And get ready to compete with the Chinese cash buyers. You know they have $$$ in hand.

    Don’t forget to dump all your stocks before it’s too late. Cash out now and profit.

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