CA Housing Market?

BENCH

BENCH

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https://www.msn.com/en-us/money/realestate/median-riverside-county-home-price-tops-600k-jumping-more-than-86k-since-last-year/ar-AAV5YZd


Median Riverside County Home Price Tops $600K, Jumping More Than $86K Since Last Year


Statewide, the average median home price is up to $771,270, up from $765,610 in January, and $699,000 in January of 2021.

Don't get me wrong, I have a $H_t load of equity in my house but I look at my 3 children (oldest 13) and wonder how in the hell will they ever be able to afford a house of their own.  I know, I know.... move out of CA!  But honestly, the reason people are able to move out of CA and afford it is the equity they take with them from their CA home sale.  The FED is expected to raise interest rates tomorrow and continue on that trend the rest of the year to fight Bidenflation.  I guess we will just have to wait to see how that effects the current market.  What are your thoughts?

 
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Same way our parents did when they bought a house with interest rates: not buy Starbucks 5x/week, eat out every meal, fill your house with throwaway Chinese made chit, and any other frivolous crap that doesn’t really make your life better. 

Amusingly, the higher interest rates will probably make houses more affordable to those who can run a budget. 

 
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Slow and steady wins the race. Bought the biggest house in the nicest area I could be happy in, refinanced when I could get the lowest rate possible....now sit back make payments that I can afford working or not.

If housing costs suck in CA in 20 years when I'm dead, my kids can live here or sell the home and go live elsewhere, they will be fine.

The biggest mistake folks can make right now is using any of that equity...leave it alone.

 
Crusty said:
Slow and steady wins the race. Bought the biggest house in the nicest area I could be happy in, refinanced when I could get the lowest rate possible....now sit back make payments that I can afford working or not.

If housing costs suck in CA in 20 years when I'm dead, my kids can live here or sell the home and go live elsewhere, they will be fine.

The biggest mistake folks can make right now is using any of that equity...leave it alone.
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Exactly......

 
I'm in a much different place in life than you I'm sure.  I retired at 43 with only my house as my debt and even that was less than $1000/mo.  I did go back to work because I wanted more "stuff".  My kids are grown now, no real debt except for a house still.  I hope to pay my off my new house in a few years and retire again for good.

I had a GF that was in the mortgage industry and she was able to educate me and get my rates down while we dated.  It taught me a lot.  Since then, I watch the rates and look for opportunities to lower my rate.  When Summer of 2020 hit, I refi'ed down to 2.75% and then also bought a second home at the same rate.  I never thought I'd see it go down any further and in housing dollars, that's pretty much free money.  After several months, I decided I hated CA and owning 2 homes wasn't as fun as I thought.  I was never going to rent either home out and I found that once I had the other home, I never wanted to go back to CA, so I sold my CA house.  I "thought" I sold at the top of the market in Dec 2020.  I made a grip of cash off the place since I had been there 20 years.  Rates dropped again and I refi'ed my new house at 2.25% on a 30 year fixed.  We will never see that again in my lifetime.

My CA house is now $160K more than when I sold it!  No one could have ever predicted this market and we will never see these low of rates again.  My new house has almost doubled in just over a year and half.

Since the CA market is so hot, Californians are taking their cash and leaving.  That is driving up prices across the nation.  Sadly, the places people are moving to, it's destroying the economies by driving up housing, rent, which drives up labor cost, merchandise costs, etc...now, put our current inflation on top of that.  We are getting ready to collapse.  Our market collapse and what it will do to our nation and take to get out of it scares me.  Sounds douchey....but I'm glad I'm set, but I do worry about others.

 

 
Home ownership is nearly impossible in the Orange County area. The dream is crushed by investors buying for cash in 15-20 day escrows.  I have been trying for the last three years. I have seen the same homes sell for 750K 3 years ago, get fixed up, flipped for 890-920 less than a year later. Now same home is selling again for 1.2-1.3M.

Every home I got serious to buy with pre approval had 14+ full price cash offers with no inspections.  I gave up and now wished I wouldn't have. It would have consumed me no doubt and who knows if i ever would have had a real deal pan out. Hard to see these mid 1950's homes sell for that kind of money.

 
Rockwood said:
Same way our parents did when they bought a house with interest rates: not buy Starbucks 5x/week, eat out every meal, fill your house with throwaway Chinese made chit, and any other frivolous crap that doesn’t really make your life better. 

Amusingly, the higher interest rates will probably make houses more affordable to those who can run a budget. 
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Like 1200 on a phone every year....

 
The market will correct itself, but I do not think it will be to the levels like in 2008.   I saw a news story about housing prices.  In San Francisco something like 88% of the homes were a million or more.   In Anaheim more than half the homes are 1 million or more.  

https://www.bloomberg.com/news/articles/2022-03-09/which-u-s-cities-have-the-most-1-million-homes-san-francisco-anaheim-lead

People that want to stay in California and own a home will either have to make a chit ton of money or be willing to commute a long distance to their work.  

 
My parents said the same thing to me when I bought my first house, interest rates were 8%.  I lived below my means and saved for a 25% down payment.  This saved me PMI as well when we purchased a house.  Mind you my wife and I combined income was $60,000 and we bought a $300k home.  My son graduated college making $70k a year and is saving his way to purchase something in the next couple of years.  I tell him not to worry about interest rates (you get to write that off), worry about saving now for a nice down payment (which most new home buyers are not putting much down) and take your time.  Fact is most kids in the late 20's spend way too much money on starbucks, clothes, eating out, you must save.  Housing prices will stop rising, interest rates will rise, and everything will stabilize.

I am more worried about a generation that isn't saving towards retirement than them ever owning a home.  The world needs renters too....................

 
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Mortgage interest rates have risen dramatically already just on the Feds signal that they will raise the federal fund rate. With no action from the fed, rates on 30 year fixed mortgages are almost 2% over what they were last year. 2.7% to 4.6% (As of today). Tomorrow, the Fed is expected to announce rate increases though most financial types believe that raise is already priced in to mortgage rates. This interest rate raise on home mortgages will slow down home sales for the average home buyer but there are some other factors.

  There is a record low inventory of homes for sale till you get up well above median prices. This means that although there are fewer potential buyers, there are less homes available for those buyers so competition is still stiff. Most people who considered selling did so already, not wanting to miss out on the "top" of the market. I am one of those sellers. 

  Institutional home buyers (Blackrock, zillow, etc.) have billions in cash and don't need to worry about interest rates as they don't borrow. The percentage of institutional buyers has also risen dramatically. I've seen one article state that in the third quarter of 2021, 51% of homes sold in Ca. went to these buyers. 

  Basically, I don't believe anyone can call the market. If the numbers make sense, then buy. Otherwise, rent. I sold my house last June. My plan is to rent this shithole of an apartment close to work and continue with my schooling while I wait for home prices to drop.  I walked away with decent equity and hope to be able to buy either a bare acre of land to put a new manufactured home on or to buy a fixer upper already situated on land in the area I want (Still in Ca.). I estimated that once I sold the house, I would have to wait 4-5 years for prices to drop and it is still looking like that is a fair estimate. There is no knowing what the Gov. will do though. If raising interest rates throws us into a depression and rates are reversed back to record lows, then we may see home prices stay elevated. If we enter into a war, there is potential to lose my job and ability to qualify for a mortgage. If it keeps getting hotter and dryer, I may not want to continue living in Ca. though I love it here. 

 
Cookie said:
I am more worried about a generation that isn't saving towards retirement than them ever owning a home.  The world needs renters too....................
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^^^^THIS!!!

Having retired, I learned a lot.  You can listen to investors, read articles, plan...you really don't know what you need.  I would say "most" people save for retirement based on a number rather than a lifestyle.  A million dollars ain't gonna cut it.  People live longer, medical costs are going up, prices for everything is going up.  What about emergencies and unplanned expenses?  New AC unit, plumbing, car repairs, etc...  This doesn't even cover things like upkeep on a house like paint, windows, appliances...

I'm glad 23 year old me was smart enough to stick out a career I pretty much hated for the pay off to retire early and never worry again.  52 year old me would not be as smart if I had to make that decision today.

 
EmpirE231 said:
It's not that the housing market is going up.... the value of our dollars is just going down the drain.
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That combined with people not being able to travel, go out, spend money on entertainment, all the extra "stuff" during the pandemic.  People saved, paid off bills, found they had money and "hey...I can buy a house now!"  That drove up prices and then the panic hit of there being no inventory in the housing market.  Combine that with historically low interest rates.  Also, people cashed out of CA and other lockdown states to go find "freedom".  I know I did.  Even in the height of things in the Summer of 2020, no masks, no restrictions, everything open (bars, restaurants, etc...)

 
Supply and Demand - Econ 101

I predict in 2 or 3 years prices will drop to pre-covid levels...people are moving to CA because they want nice weather - more and more companies now allow you to work from home full time are all over the US, and globally really...all because of Covid, it at least jump started this.  A lot of the jobs that you can work from home are technical high paying...software engineers in example - so why not move to California if you can work from anywhere?   What these remote people need to also accept is that anyone, anywhere, can now do their job - meaning, someone in Ohio can do the job and get paid Ohio wages - or people in other countries even less money...companies will hire more talented people for less money if they can. In short, in 2 or 3 years the trend of moving to more favorable weather because you can now work from home will slow down...which will result in more supply and less demand.

I don't have kids, but if I did - I'd push them to want to succeed in sports and school (sports to teach them team work and hopefully the thrill of winning - which is important in the work world - and school to put them in a better position to make more money / have more options potentially).  The competition is now global for jobs, not just the people that live near you...Or start a construction business and be the best at the trade you choose...it's hard to find skilled labor.

 
Grease Monkey said:
Home ownership is nearly impossible in the Orange County area. The dream is crushed by investors buying for cash in 15-20 day escrows.  I have been trying for the last three years. I have seen the same homes sell for 750K 3 years ago, get fixed up, flipped for 890-920 less than a year later. Now same home is selling again for 1.2-1.3M.

Every home I got serious to buy with pre approval had 14+ full price cash offers with no inspections.  I gave up and now wished I wouldn't have. It would have consumed me no doubt and who knows if i ever would have had a real deal pan out. Hard to see these mid 1950's homes sell for that kind of money.
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^ ^ ^ yep.  multiple all cash offers. The 1100 sq foot home I grew up in that my mom sold for $675k in 2007 now goes for $1.2 million.  In Hawthorne . . .

 
Let's also keep in mind that median income from 2007 was only $50k and houses were peaking at $450k with higher interest rates. 

 
I don’t think house prices will come toppling down. There is no real supply and a lot of cash heavy people. It may flatten out. But competition will keep the bidding of houses up program steady. If you want your kids to own a home then start plotting it for them now. They will need some help for sure. 

 
Housing will take a dip eventually will they fall to 1/2 price I doubt it. But when they rise again they may go higher We sold out 1200 sf Fullerton home for 585k in April 2020. At the time no one knew what would happen lockdowns were in place etc.made 300k on it 

we bought our az home with a very large down so small 15 year loan with taxes and insurance it’s less than renting a single room. So far our old house has gone up about 100k and our az home about 170k so overall made right choice at the time. Honestly should have done better on the first house too but wife wanted to refi it a couple times while working part time or very little. Told her if we move she’s going full time and me part time.she got her bigger house I get more free time and can work when I choose. 
 

like mentioned younger kids or just some people complain about cost of home or rent etc. I love trolling them on social or news articles.we were in our 20s buying first house didn’t drive new trucks didn’t eat out every night or take  big vacations. Got into a house and worked up made cuts changed some things. 

 
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