Housing costs reaching crisis levels in California

[Judi Lynn]

Article Published: Wednesday, December 08, 2004 - 2:25:25 PM PST


Housing costs reaching crisis levels in California

By Scripps-McClatchy Western Service, Sacramento Bee

Gov. Arnold Schwarzenegger speaks passionately about California companies fleeing for greener pastures. But we have yet to hear him speak in the same fashion about another exodus Californians who can't afford a roof over their heads.
In a recent poll of state residents, nearly one-fourth of those surveyed said they were considering moving elsewhere because of high rents and dim prospects of finding an affordable home.

Three-fourths said they were worried that their children and grandchildren will never be able to buy a house, according to the survey by the Public Policy Institute of California.

The Golden State has never been an Eden of inexpensive living. As Woody Guthrie once put it, "Believe it or not, you won't find it so hot if you don't have the dough-re-mi.'

Woody probably never imagined that a median-priced home in California would one day cost $465,000, as it does now, according to the California Association of Realtors. The minimum annual income needed to buy that home is $107,880. Four out of five households don't have that kind of dough.
(snip/...)

http://www.whittierdailynews.com/Stories/0,1413,207~12044~2584782,00.html

[The Zanti Regent]

1. Can you say HOUSING BUBBLE folks?

I'm still lucky enough to make $55,000 and my Significant Other makes more than I do. She's a cost accountant at Paramount and she makes $80,000. Add our salaries together and we don't come close enough to buy a house. I'm 48 and she's 28, neither one of us want to be locked into a 30 year contract that will be guaranteed to screw us when the bubble bursts.

The main pain in trying to buy a house in California is Proposition 13. 13 protects those who owned property before 1978. Prop 13 does NOT protect those who buy after it was passed, so you have widely different asessments for similiar property.

Where we live in Los Angeles, we've seen a single family house jump from 250,000 to over 1 million. We came to the decision that if we matched six lotto numbers, then we'd look...

On top of that is the various fees they tack on for garbage, utilities, and property taxes. It's a pain...

[elsiesummers]

2. The idea of buying a 465Khouse on 108K income is nuts!

Anyone who does this is begging for trouble. This is crazy. I mean - if that person chose not to drive a car and insure it, not to eat food, not to have phone, internet access or cable, then sure that home price might be fine.

The idea of purchasing a 465K home on 107/8K income is crazy - unless with 20% down - and then - damned, damned, expensive.

[Princess Turandot]

4. For a $465,000 house..

assuming that the bank required a 20% equity payment, which would be
$93,000, you would pay approximately $27,000 a year in mortgage payments, at a 6% fixed rate for 30 years.(That would exclude property taxes, and whatever else comes along with a house since it's just a straight mortgage calculation.)

I don't know what the effective tax rate is of someone making $106,000 in California.

[Eurobabe]

3. we can also thank the greedy real estate industry

for tacking on 6% to almost every sale when average American moves every 3-5 yrs. People have to recoup this when they sell, so the price just keeps climbing.

I say the 6% model should DIE.

[bendeminga]

6. Wow--way to piss off 1 million+ people!

I will be the first to admit that there are many that don't work hard for their 6%.
But take into account, they spend a TON of money and a huge amount of time researching, preparing and marketing your house for sale. All this and your house may not even sell because of the 2 pit bulls that live next door or because you didn't want to fix your roof. Then the real estate agent is out that money they invested in selling your home.
These people work hard and get little recognition and when the day is done very few live in the lap of luxury.

[Chef]

9. Agents

You are correct that very few of make a lot of money and the reason is that very few of them work at it as much as the description you have given. It is a tough business and a good agent deserves what they get. Unfortunately, the 80% or 90% who are able to make a good living in the sellers market these last few years will be weeded out when the market softens. In our area, there has been a trend of lower or negotiated commissions in recent years just as there is talk of going to 35 and 40 year mortgages. Overall though, I wouldn't say the commissions have been a major contributing factor to prices escalating 25% a year. Land, materials, fees and low interest rates have helped. But, beyond those there will get to be a time when there is no pressure from entry-level buyers if they can't afford to get into the average entry-level house as rate increase. Then, with no buyers at that level, the market softens. It becomes a question of what other economic factors are in play that will determine if it will be a softening or a crash.

[loathesomeshrub]

10. Just a minute. Most realtors make half that, its got to be split between

2 agents and their companies. Out of that they have to split it with their company, and that could be 60/40. Then they have to pay around $65-$100 for errors and ommissions insurance thanks to the sue happy idiots out there. For buyers agents, add gas for running people around in their cars all day, (who sometimes decide to walk into an open house and buy from someone else after all that, and not even what they said they wanted!)Then the listing agent in most markets has to advertise, make flyers etc.
Do you know how much an average agent who sells a million makes a year? $18000. An not every agent sells a million a year. And that's before all their office costs, licensing, education amd other costs are deducted.
Don't talk to me about how overpaid agents are. You are wrong.
Yes, in markets like California and Hawaii, where everything is $450000 and up, and you put a sign up and you have 3 people outbidding each other forit, they probably make way more than someone like me does. FYI 90% of the money in sales is made by 10% of the people. So don't give your business to the people who drive the Lexuses, and wear the jewelry. You'll probably get better service from the other kind anyway! They have more time for you.

[AlCzervik]

11. I work my ass off to sell a clients house and i don't get 6%

it isn't free to market a house. advertising costs alone are plenty nevermind all the other things that go along with it. My E & O insurance is almost $3K a year that i pay out of pocket along with many other expenses.

[RadicalMom]

5. The median home price in Santa Barbara is $1 million...

and not much of a house at that. If you didn't buy six years ago, you're sunk. Now they are having trouble finding people who can work in that city and live anywhere near it. They are commuting very long distances to those $500,000 homes noone can afford, not to mention the gas. I live in Ventura county, half way between LA and SB.

[MrUnderhill]

7. ReachING?

As in "only just now getting to the point"?

They've been at the crisis level for some time now.

[Ripley]

8. My sister lives in CA and is in deep denial.

She laughs when I mention "housing bubble" she said they've been saying that for years. People keep coming up with the money!

Funny, she doesn't seem to put the puzzle pieces together. After about 15 years of renting office space for her business, she's now moving her business into her home this month.

Voted Smirk last time, can't pin her down this time. She's all about the taxes thingy. :eyes:

[PartyPooper]

12. I own a house in California with my partner.

We've been together for the past 31 years...in the same house for the past 11 years. Before that we owned another house for 16 years.

Ugh! We don't even get state or federal recognition for our relationship as domestic partners. :wtf:

To do it all over again...we'd both move to a foreign country in a hearbeat! At least, I would!

;-)

[mojavekid]

13. We sold our home in Venice, Ca.

in Aug. from 1997 to 2004 it had appreciated close to 200% and we sold because we wanted a yard for our son. So we are renting - (the rents had been dropping in our area, because???) and waiting to see what happens. Perhaps we won't stay in So. Cal. It is crowded and expensive and much of the old Venice has cashed out and moved on, as well as been torn down. Hard to leave though as my family has been here for over 100 years...No. Cal. beckons...!

[Ernesto]

14. Cheer up kid

The 1st step is recognizing the challenge. I think you've got that covered. Now it's time for you to attack the problem.
& BTW, welcome to DU! PS-There's plenty of room left up here in Nor Ca.