What is going on w SoCal RE?

In Real Estate its always "area, area, and location".

During the 2009 "crash" my home stayed at the same price for 2 years. Then, went back up faster than before. Some areas will always be in demand.

People are trading out homes in LA. They are either upscaling or downscaling. Low interest rates are part of what is driving it. Some are using the equity in their homes to get cash out (IMO, this is rather dangerous long term).

If you look at the trends of who is leaving CA, its actually more the rural areas in the Eastern part of the state.

CA has one of the highest taxes and the highest cost of RE. But it also has the highest salaries which tends to mitigate it.

 

I can only make sense of it out with my example and a few friends. Last year before election I decided to take some money out of the market (unknown election, unknown capital gains tax, unknown employment outlook) and buy a place out in Palm Springs. Lived there at one time, think about retiring there someday and just moving money from one investment to another. This was last September and the market was hot back then, had to do an all cash offer to even be considered and it's gotten worse, better for sellers, since that time. Many stories of my neighbors out there doing a similar thing, or the ability to work remotely made them get another place. I agree with you that it will pop at some point and hopefully I got in early enough or I'm one of those suckers you mentioned

 

All I can say is never count California out. People just want to live here if they can make a living. The state also is quite diverse in its economy, which helps smooth things out in rough times.

CA is a major agricultural state, an entertainment producer, a high tech producer, has some of the largest banks, is a capital of the media, has manufacturing, has military and Naval bases, has shipyards, is big in commercial aviation, the leader in big tech and software, is one of the top tourist destinations, has the biggest commercial ties to Asia, and has some of the largest deposits in the world for rare earth minerals for batteries.

CA ain't goin' anywhere.

 

It's not just there, for some reason it's everywhere. It's borderline inexplicable. Spoke to a Real Estate agent near Baton Rouge, LA. The same thing that's happening with real estate back home in Austin is happening here. I don't get it. How are people going crazy over real estate in every single market?

 

Its the excess in the money supply (Thanks to Fed pumping and gov handouts) has to go somewhere. Explains the stock market and RE prices.

It will all go boom soon enough. The "greaterr fool theory" only works for so long. That is the idea that there is a greater fool than yourself who will buy over what you bought for.

 

Austin is pretty easy to explain. There is huge growth in high paying jobs. Also there are a lot of limitations on just throwing up new houses in the form of the water company refusing to allow hook ups so it is driving demand on existing housing. 10 years ago this place didn't have a very reliable water supply and there do not seem to be any plans to change that. .I can see a situation like there was in Lake Tahoe happening in Austin. Low priced structures are bought for the water hook ups and leveled. East Austin may be headed for some serious urban renewal.

My next door neighbor just moved. He was one of the assistant coaches at UT. Told me in the 5 years he was there he nearly doubled his money on the house.


My sister is a RE agent in the East Bay of the SF Bay Area. She said it is a land rush. Mostly people wanting to bail from San Francisco with all its issues but also a lot of foreign buyers too.

 

Inflation is the answer.....If you own something tangible(real-estate and precious metals)....it will always be worth something.....If you are holding fiat currency, it will decrease in value. The banking system is in for a big change. Inflation is heading toward double digits by end of year.

 

I know 3 people that have moved to LA for every 1 person I know thats left within the past year alone (pandemic be damned). Something to keep in mind is that the pay is much much better out here for the same work. Both at my main job and with my side business I can guarantee I would be making at least 50% less out of state (well outside of major metro areas taht are also expensive anyways), so until I can have passive income I stead of active leaving the state just flat out doesn't behoove me even if I didn't like it here (I love it here btw, no way I'm leaving other than maybe moving to the bay area).

As for housing prices, I personaly can't afford yet (I'm fairly young and just don't have the down-payment needed since even with stellar credit and dumb low interest everyone wants 25%+ down), but there honestly are lots that can. Somethint else to keep in mind is that is fairly rare for people out here to own 1 home if you aren't in the IE. You kinda either have multiple properties or none, so that takes up a massive portion of the housing market and keeps prices high as there are always buyers even if it will be condo #35 and not #1

 

Eh, while thats true for places like Dallas that are basicaly 40,000 sq mi of suburb you also have places like Austin that while they do sprawl the popular places are all dense and urban not suburban. Honestly, California has a crazy amount of space too. Bakersfield is cheaper than east TN and Redlands is the same cost as outside Phoenix or flagstaff. Its just that people don't want to live in those places (and the work doesn't make as much quite often which is what keeps pricing low)

 

A few things to keep in mind. 27% of people living in CA are foreign born (11,000,000) so that creates an inflated demand. Also the US is adding, thru both legal and illegal immigration 4,000,000 per year. This creates a huge demand for everything. I find it somewhat of an overwhelming concept that we are adding five times the entire population of where I live every year.

 

it’s musical chairs. Everyone racing to get into RE before the music stops. Like stock market bulls get fat and pigs get slaughtered.

 

and there is lots of land in Cali but only limited land by the beach.

 

I live in Bel Air and so I closely follow the higher-end real estate markets in LA. It appears to me that the $4-10M segment of the market is very active and prices have ticked up over the last year, perhaps as much as 10%; the $10-20M segment of the market is flat and relatively slow; and the $20M+ segment of the market is definitely down and those homes are languishing on the market, some of them for years now. It's a great time to be a buyer of a $20M+ home in the hills.

The issue is there are no foreign buyers due to Rona and the foreign buyers are a the driver of the $10M+ markets. Perhaps when Rona is definitively over the foreign buyers (and to a lesser extent, tech entrepreneurs who want to come down from Silicon Valley and play Joe Hollywood with their new found riches) will return. We shall see. It might take some years.

LA real estate has had its ups and downs, but over a period of 10 years or more you're always going to win. Hard to imagine that changing no matter how much the liberals in Sacramento and City Hall screw things up.

 

Unfortunately I'm not sure what a dds is, but at least in engineering and law (the fields where most of my friends group work, just so you know my bias) there is basicaly nowhere that pays as well for engineering under executive level and only a few sparse cities that are better places to practice law. I saw a 50% jump in starting pay offers when I moved to cali after college and have scalled far past that disparity now. I'm sure it is field dependant, but thats something you need to keep in mind as well. Your field may not pay enough to cover the increased cost of living but yhere are plenty that do. Plus, tbh, I like the amenities of California ¯\_(ツ)_/¯

 

I'm an MD and groups that reached out to me for positions and friends that do work there get paid very low compared to rest of the country. It was comical.

 

Tyvm for the info

 

sounds like you are taking hmo and bad paying ppo? Don't play their game thinking you need them. You don't. Let work 100% profit is better than no time for lunch giving insurance cos a discount.