@STARCHY: how long do you keep paying rent while you wait
for prices to drop?
Probably 2 years. I thought it would be longer, but prices are in absolute free fall. I have to admit I never thought things would collapse so quickly.
at what point have the prices dropped enough so that you WILL buy?
how long are you willing to wait? a few "more years"?
I have waited maybe a year, depending on how you define it. I was planning to purchase when I was in certain shape financially, which I’ve now reached, so I was passively looking for a little longer.
"just look around and know it’s not today." and I am sure that one day you will "just know!" the time IS right to buy correct?
I’m looking in Sherman Oaks for about 250-280sqft, which was about ‘01/02 prices. We’re approaching that point fast, so fast it actually makes me kind of uncomfortable.
Yes, it is. You like to deride market timers, but spotting the biggest housing bubble in American history, as opposed to the normal ups and downs of the housing market wasn’t that hard. I looked at what someone with pretty good income and savings could buy without levering up like crazy and then what I could rent, and realized it didn’t make sense. I also thought things would get bad economically, but the collapse has been worse than I anticipated.
the main idea behind buying a house is not to "buy low sell high", but I can certainly understand why someone would not want to buy a house in todays market, regardless of price. scary out there
I also thought I’d buy into stocks when the S&P traded in the 600s (and that sounded a lot like "never" when thinking about it a year ago), but I never thought we’d get here so quickly with the bulk of the recession still ahead of us. So yeah, there I’m too scared to get off the sidelines, even though I planned on it. Same thing could happen with housing to a certain degree as the economy worsens dramatically and any kind of substantial, long term financial commitment just becomes frightening.
now please explain your "how’s not market timing the stock market working out for you? " comment. that would be great thanks.
You said you bought blue chips at depressed prices and invested for the long term, not market timing. I’m sure you’ll deny this, like you deny many other things you’ve said here. Big whoop. We both know you said it, and that buy and hold for the long term (i.e., you) is taking a major bath. 1996—2009 is long term, and t bills and cds have absolutely crushed equities over that time frame.
And it’s more than just that, this deflationary environment has removed a lot of previously eligble buyers. As you say, people renting and investing in the stock market have lost their shirts. And I feel bad for them. Of course, so have middle aged home owners, who invested the most and now have little to nothing to retire on. These people are desperate to unload, and would like current buyers to help them sail off into the sunset. Nothing against them, but I’d rather not pointlessly fund their retirement, when a year or two of waiting is going to bring a 100k or more off the purchase price. I could "afford" to pay more, but I could also afford to take that money and throw into a furnace.
So inventory is up, sales are down, prices are falling rapidly, credit is drying up (for the high end at least), and the national and particularly local economies are collapsing. So why buy now? What points to the dramatic decline in housing prices suddenly stopping? If it continues, buying today instead of renting (which is getting cheaper as well) makes no sense. It’s really that simple.
I wouldn’t hold my breath for prices to "come to you". We seem to all be talking somewhat desirable areas and while prices have deflated in the Inland Empire and some pockets of Los Angeles, most of these areas like Eagle Rock, and yes Sherman Oaks and Studio City, haven’t exactly crashed.
My wife and I have been looking and it seems as though the houses you’re going to find deals on are a few short sales or if someone recently passed away (trust or probate) and the property hasn’t been updated since the 70’s.
Other than that, the homeowners who aren’t in trouble or who don’t have to sell aren’t selling their homes. And now the ones in trouble have more options than ever to be able to hold onto their home.
You never know what the market will do, but if you can stay in a home for the next 5-10 years then we figure its a good time to look.
"You’re not just competing with other middle-class shoppers; you’re competing with wealthy homeowners looking for a flipper, foreign investors looking to snatch something up while the getting is good, and about a zillion other demographics."
I think things have changed a little bit over the past 6 months-1 year. Haven’t you noticed what’s going on with the economy? Even the wealthy have had a huge chunk of their net worth wiped out. These are the same wealthy that were buying real estate at inflated prices and are already too long / overlevered on real estate. On average, the financial capacity / liquidity of these people has been severely reduced and they are in no condition to go on a buying spree. Further, a lot of them are smart to realize that real estate is not a great investment right now at current prices. Cash and cash flow is king and there is a lot less of it going around. Given there is also a lot less debt available, you can figure out the impact on future home / condo sales.
Unrelated, Lincoln Park, Echo Park, and (even) Silver Lake are transitional areas where you are not only dealing with gang violence but you are also far from core areas of LA like the west-side, beach, West Hollywood that make Los Angeles what it is.
I think we often make the mistake to think of LA as a bubble when it should be faily compared to other cities. If you live in Santa Monica, Beverly Hills, Century City, West Hollywood, some parts of the South Bay then you are reaping the benefits of living in Los Angeles. Of course, this is true for some other areas (e.g. Sherman Oaks, Culver City, etc.) but to a lesser extent. If you’re living in the ghetto in a shit box then what is great about living in LA compared to other cities, especially given the traffic.
And if you’re an overseas investor then you can alternatively choose investing in San Francisco and New York, which have far superior mass transit systems.
Prices will re-adjust in the long term where they make sense compared to local incomes and the quality of life you get in return. So expect another 20% drop at least.
And prices were reasonable in LA in 1998-1999 compared to incomes. They will get there again.
The world is going straight to hell in a handbasket when a Houston 2/1 in the the River Oaks Barrio ( kind of like the slums of Beverly Hills) rents for the same price.
Point System: Parking Requirements Bill Introduced
I strongly suggest scrapping the idea for parking maxima, though. A parking maximum that’s appropriate for a pre-WWII area is thoroughly inappropriate for, say, Thousand Oaks.
SignGate: Eastern Columbia Fears the Ugliness Beneath
More problems between the city and billboard companies:
L.A. officials miffed at mysterious trimming of trees near billboards
One of the 15 trees that got a major whacking is next to the 405 Freeway near the Sherman Oaks Galleria. A row of 15-foot trees were cut down to 3 or 4 feet.
Removal of the landscaping improved the visibility of enormous ads placed by outdoor advertising firm World Wide Rush. Company officials deny involvement in the vandalism.
Light Rail to the Ocean: Even the Sea Gulls Are Happy
@guest (#4): you obviously haven’t experienced california blvd. in pasadena during the afternoon rush hour. the trains will often add an extra 2-4 light cycles to get from fair oaks to arroyo pkwy. it’s worse when trains approach from both directions about a minute apart – i’ve timed the gates down for over 3 minutes several times.
@guest (#13): With that statement I wholeheartedly agree. My guess is a SFH buyer locked out of Brentwood goes to Sherman Oaks but he doesn’t go condo and say Brentwood or Bust. The demographic of 3000 square foot condo buyers-other than miniature Candy Spelling’s- is beyond my ability to reason.
Yeah, I always enter from the Beverly side and rarely have to deal with much traffic. It seems that Fairfax is much worse. But, traffic is lousy around the Beverly Center or the Sherman Oaks Fashion Square as well (and that is right next to a freeway.) People need to realize that malls generate traffic. It sucks, but what can you do? I am sure that the Grove has brought in lots of tax dollars to the city that we need, especially in times like these when Sacramento won’t give counties/cities the money we need for infrastructure improvements.