Quote:
Originally Posted by Crawford
Because high housing prices are good for most people. Most people are homeowners, so obviously they benefit.
I've never heard any CA homeowner complain about high housing prices, ever. My aunt is thrilled, and has set up her grandchildren in enviable situations, entirely due to her (absurd) housing value. Why would someone complain about millions in added wealth?
But her grandchildren aren't being raised in CA, they're being raised in Oregon and Montana, and coastal CA's high housing prices may be a factor. The younger folks are negatively affected, in theory, but they vote less, some leave, and those that stay eventually get the wealth transferred to them.
Southern OC is full of youngish teachers, nurses, contractors and cops living in homes valued over $1 million (sometimes way over $1 million). It feels like a West Coast version of the South Shore of LI. I don't think they bought these homes absent intergenerational wealth transfers.
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I outlined why it's not necessarily a good thing for homeowners. Many homes have artificially high prices - meaning, the price of the house is not due to the actual house but the neighborhood and how high prices are overall. The house shown in this thread is a great example of this: that house's quality isn't making it worth nearly $1 million.
That likely will mean the homeowner of that house is not going to be able to sell it for that much. Which isn't necessarily a bad thing, unless they aren't able to afford a new home because ... prices are ridiculous.
They probably also have a manageable mortgage payment because they certainly bought that house when housing prices were not nearly as high. Because of that, if they wanted to sell and move, their next option would likely need to have a payment similar to what they were paying, especially since they look fairly working/middle class based on the state of the house + the car in the driveway (yeah, assumptions on my end lmao). Certainly, if they can get what that the estimate is, they could probably put enough of a down payment down for it. But if that house comes in lower than the estimate? And most houses in the area, even metro or county or beyond, are going for that much, they may not be able to get enough of a down payment to make their mortgage payments work for them.
If I still owe $400,000 on my mortgage and I put my house on the market, knowing it needs maybe a new roof, new pipes and some electrical work, while the entire living area hasn't been renovated since 1984, I might only get $650,000 instead of $900,000.
So, that leaves $250,000 for a down payment after your mortgage is paid off.
Are you likely to find a home where that down payment brings your mortgage payment more in line with what you were paying at your old house? Knowing housing prices, especially in that region? Probably not. Maybe in some areas of the country - but not there.
Then you have to ask yourself if moving into a home that's basically the same as your current home is actually worth it? Most people move because they are relocating for work or want a bigger/newer/nicer home or need to downsize (maybe for money reasons).
And that's why people aren't selling. So, you've got a lot of buyers and not a lot of sellers and it's creating this bubble that is not sustainable.
What good is sitting on all that value if you're unable to cash in on it?
And that doesn't even get into first-time home buyers. They're basically screwed because even small starter homes are going for ridiculous amounts now.
The only people who are buying those homes are likely flippers. They'll do a quick sale on a property for far less than the estimate, renovate the fuck out of that house so it can at least come close to equaling the outrageous price, and then sell it for a hefty profit.