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This waiting game is getting old


By nw888   Follow   Tue, 21 Feb 2012, 4:48pm   15,195 views   115 comments
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We're looking for a $1.4-2.2M house in the Los Angeles area, and although the prices have come down a little, it's taking much longer than the rest of the housing market. I always see homes on the internet where the buyer purchased it at the height of the bubble, and is now trying to get out without incurring a loss, or better yet is trying to make a profit. I'm assuming the only thing to do is wait for these homes to go into foreclosure or sell as a short sale?

I was hoping to buy in 2012, but maybe 2014 will be better? I've been waiting for years for this whole mess to unfold, and it's infuriating that we can't speed up the inevitable.

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  1. bayarearenter


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    36   2:40pm Wed 22 Feb 2012   Share   Quote   Permalink   Like (1)   Dislike  

    The Japan comparison is informative, but only to a point, right? Japan has markedly different demographics, among other things obvious and not so obvious. I don't think we'll see a 20 year slide from here - if only bc the echo-boomers are going to need a place to live. Lots of them, especially in nicer areas, will have strong parental $backing$. I'd love to see continued price dropping, but I don't think the powers that be would allow such a slide...

  2. thomas.wong1986


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    37   2:40pm Wed 22 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    LAO says

    This potential buyer and anyone saying "time is on your side" should post their age... Then let average life span determine if that is really true :)

    Like everthing it does take time.. education, job, career, first home, etc etc. Patients and focus pays off.

  3. Mick Russom


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    38   2:42pm Wed 22 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    nw888 says

    Yeah, it's frankly ridiculous. I'm starting to feel the same way about moving somewhere nice that is a lot cheaper. My wife and I could live in a stellar home, work 2 days a week, and then spend

    I want this badly as well.

    Im tired. The rat race is an unwinnable game for those not in the 0.01% It time for me to get out of the Bay Area apocalypse.

  4. LAO


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    39   2:45pm Wed 22 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    Where are all these great deals on rental homes that everyone on this site lives in? I want a million dollar home that rents for $2500 too!

  5. Mick Russom


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    40   2:46pm Wed 22 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    Mikhail says

    The US could very well be heading into a multi-decade period of deflation similar to what Japan has seen.

    Unlikely. Gas, food and rent prices are increasing. Salaries are stagnant. Inflation is the only tool that the US government can use anymore - insolvent? Change the water level.

  6. dodgerfanjohn


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    41   2:53pm Wed 22 Feb 2012   Share   Quote   Permalink   Like   Dislike (1)  

    The responses in this thread are sorta off the wall. OP has a very specific situation most of us don't fall into, and the answer is relatively simple with one caveat:

    OP should buy only if he is ok taking a loss when he sells.

    Provided that caveat, the amount of money he is talking in San Marino and South Pas just doesn't go far. That leaves OP with three options IMO:

    1.) Buy a smallish house in S. Pas anyway.

    2.) Rent in S. Pas

    3.) Buy in great areas nearby where your money will go farther...Arcadia or La Canada. Tremendous schools, nice upscale areas.

  7. vbcoder


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    42   3:53pm Wed 22 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    First: It is very hard to catch the exact top or exact bottom of any market (stock or real estate). If you catch most of the swing you are doing well. If you wait too long you miss the entire market move. Most investors or traders who try and catch the exact bottom usually end up with nothing. I have never been able to catch an exact bottom, but I can get close.

    Second: It is hard to get a good price by watching just one property. You will get a good price by putting out many "ridiculous" offers until you flesh out the seller who is realistically in touch with this market.

    I decided last summer to buy a beach front condo in Ventura County as a second home. I made several unsuccessful offers over the summer and fall, and had some near deals. Finally, in the dead of winter I made an outstanding deal and closed a condo at a price lower than the seller paid 20 years ago.

    I have done this in many real estate market swings. I bought and sold a second home in Lake Arrowhead in the 2000 swing, and bought and still own my home in Westlake Village in the 1987 swing. I have bought and sold many commercial properties over three decades the same way.

    Each time I have to spend many months making offer after offer just to find a seller. You need an agent with a thick skin, or several of them you can wear out along the way. You also need to just be patient and wait.

    Each time I never knew if the market would ever recover, and each time it did. This time again, I do not know if this market will ever recover. Even if it does not, I really like the condo and will just keep it if this market is the "new normal."

  8. nw888


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    43   5:05pm Wed 22 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    Vbcoder-That's really good advice. Thank you.

  9. lunarpark


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    44   5:58pm Wed 22 Feb 2012   Share   Quote   Permalink   Like   Dislike (1)  

    Are you investing in a house or are you buying a home?

  10. JodyChunder


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    45   7:15pm Wed 22 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    edvard2 says

    a nice second tier city- like Austin TX

    Dallas is better. Money goes further and you get a lot better stock of houses. I have a rental in Fort Worth.

  11. JodyChunder


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    46   7:18pm Wed 22 Feb 2012   Share   Quote   Permalink   Like (1)   Dislike  

    nw888 says

    Typically, people in that situation have millions to spend because they worry MORE about bubbles, where there money is going, and how their assets are doing. Not worrying about things like this is one of the reasons most people never find themselves in that situation.

    Word.

    But the bubble is over dudes. There is calculating risk and there is analysis paralysis. The point is this jockeys already willing to sink 2 mill for a dwelling. That right there puts you in loco territory. It's like saying you are worried that paying forty dollars for a gallon of milk instead of 34 dollars for the same gallon when you know its insane either or. I don't want to overpay too much, but I am still willing to overpay by a lot.

  12. woppa


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    47   7:34pm Wed 22 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    So no residence is worth 2 millions dollars? It could be a mansion with every posh finish and upscale add on you could possibly think of, and 100 acres of land with a pool and pool house and guest house and theres no way that residence will be worth 2 million? Some people say some really dumb things on here.

    "Theres no way wood and brick can ever cost 2 million dollars!"

  13. David9


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    48   8:15pm Wed 22 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    thomas.wong1986 says

    LA and rest of SoCal have dropped nicely...

    True, and a few sales occur. However, I have two more properties that have magically appeared, disappeared, and reappeared on the MLS. The higher end one, I thought, yeah, someone bought that one. The cheap one, I thought, yeah, someone bought that one. But no, the magical mystery magician whoever he or she is has made them reappear on the market.

    http://www.redfin.com/CA/Encino/5301-Balboa-Blvd-91316/unit-K2/home/4777314

    http://www.redfin.com/CA/Tarzana/18530-Hatteras-St-91356/unit-302/home/4061045

  14. JodyChunder


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    49   9:14pm Wed 22 Feb 2012   Share   Quote   Permalink   Like (1)   Dislike  

    woppa says

    So no residence is worth 2 millions dollars?

    What makes something worth 2 million dollars? If I can get forty people to spend one hundred dollars on a kit kat bar, does that make kit kats worth 100 dollars? If I can sell someone the Brooklyn Bridge for 50K does that make it worth 50K?

    No one single residence is worth 2 million dollars unless it is sitting on oil rich land and you have mineral rights.. Or maybe if it comes with a fleet of robots that will massage you and blow you every morning.

  15. SubOink


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    50   10:28pm Wed 22 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    JodyChunder says

    If I can get forty people to spend one hundred dollars on a kit kat bar, does that make kit kats worth 100 dollars?

    Yes. It does :)

    And to further your example in the other direction, if you have a piece of Gold in your hand that you think is worth $1000.- but nobody wants to give you 1000 for it....then its not worth 1000.-

    Whatever it is...its worth what somebody is willing to pay for it. As simple as that.

    When you are stuck on the island and have no food that same exact kit kat bar could be worth 2000 dollars to somebody.

    :)

  16. Waitingtobuy


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    51   11:34pm Wed 22 Feb 2012   Share   Quote   Permalink   Like   Dislike (1)  
  17. JodyChunder


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    52   11:35pm Wed 22 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    SubOink says

    Yes. It does :)

    No, it doesn't. It means there is an extreme mania or exogenous factor distorting the relative equilibrium of the supply and demand curves. Historically, such extreme manias require facilitation by way of incentives or lax lending as in the case of our credit bubble from 1998-06 as desire to pay any price for something is not always enough to realize such gross distortions.

    The island analogy is a perfect example of an extreme scenario. :-D

  18. JodyChunder


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    53   11:43pm Wed 22 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    Waitingtobuy says

    Really? This is an issue?:

    I don't know about it being an issue, but those houses are Fugly, for one thing, and for another, they are smallish for the price and appear poorly built.

  19. toothfairy


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    54   12:57am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    2nd one is pending in 6 days. looks like all cash

  20. lexa


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    55   3:12am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    Hysteresis says

    housing market doesn't care that you're impatient. it'll correct when it corrects. it's an incredibly slow process.

    no, it'll really correct when politicians stop preventing the correction with all kinds of homeowners/banks bail outs.

    and we have some control over politicians, it is an election year after all.

  21. Waitingtobuy


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    56   7:36am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    JodyChunder says

    I don't know about it being an issue, but those houses are Fugly, for one thing, and for another, they are smallish for the price and appear poorly built.

    I just picked out 6 random houses from RB to Venice whether they were pending or not to illustrate the point. Obviously, there are hundreds, if not thousands, of houses in LA that will satisfy the OPs requirements. As for style, that is in the eye of the beholder. And qualitywise, hard to tell from the pics, but if you really want quality, you are looking in the wrong state. Very few stone or brick construction homes in California because of earthquake codes.

    I dont consider 3848 sq ft (Playa Vista) to be smallish. Maybe in Victorville, but not near the ocean.

  22. SubOink


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    57   8:00am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    JodyChunder says

    I don't know about it being an issue, but those houses are Fugly, for one thing, and for another, they are smallish for the price and appear poorly built.

    That's just silly! Those are amazing houses in an amazing location. Small? How big of a house do you need??

    Definitely beats the cookie cutter style homes in Victorville that go for $120k a pop.

    I only looked at the first 2...its not healthy to look at houses in that price range :)

  23. Philistine


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    58   8:04am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    Playa Vista, Venice, Redondo Beach??, Hermosa??, Manhattan Beach--all of these places you have listed are *not* LA. They are outlying areas that *might* appeal to some people, but Manhattan Beach and Redondo are like literally an hour to get most places actually in LA. The surface streets are dreadful during morning/evening rush hour.

    LA is Mid-City/Wilshire, Westwood, Hancock Park, Beverly Hills, Culver City, West Hollywood, Hollywood, and maybe a couple surrounding neighborhoods. Santa Monica probably. These areas are the heart of actual LA, where a majority of the jobs, culture, decent food, etc. are (just look at the 10 during morning commutes or weekend traffic and you will see both directions jammed between downtown and Santa Monica). You want to live in these neighborhoods? H'wood might get you under a mill if you love the crime and retardedness. Rest of these will be easily over a mill unless you are shopping for a 1000 sqft barfy '70s condo.

    Because I live and work in these neighborhoods, my "commute" is literally 12 minutes and the gas money saved not idling stupidly and time I save are extremely value-added to my quality of life.

  24. SubOink


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    59   8:30am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    Philistine says

    LA is Mid-City/Wilshire, Westwood, Hancock Park, Beverly Hills, Culver City, West Hollywood, Hollywood, and maybe a couple surrounding neighborhoods. Santa Monica probably. These areas are the heart of actual LA, where a majority of the jobs, culture, decent food, etc. are

    That's nonsense. Those areas you described are exactly where you do NOT want to live.

    Decent food? LOL. We have some of the best restaurants here in Calabasas, Agoura Hills, Westlake Village, Malibu. From Indian to Thai to BBQ. And no issues to park - room to breathe.

    Some people like to live in area's that are actually nice. Where you can hike out your backyard and live close to the ocean. To get to the ocean from any of the area's above its a haul, you end up never going. When is the last time you went for a walk?

    Well, I say that...because I am blessed and work from home so I don't have to live in car smog. I barely drive.

    Still, I know many people that commute right into Hollywood. And they all say that its worth driving home to a nice area.

    Just my 2 cents...

    PS: Hollywood?? Now, there is a $hithole...

  25. Philistine


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    60   8:38am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    Completely concur. Hollywood is a total POS. And it emblematizies exactly why LA sucks. I guess we just think places like Calabasas, etc. are bland, quasi-suburban, everyplaces.

    But there is always a Chili's/Target/Home Depot shopping plaza waiting for you around every corner. Always feels like home, no matter which one of those paint-by-number zipcodes you live in.

  26. nw888


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    61   9:19am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    The reason we really like the Pasadena area is that it has a good amount of architectural buildings, is more or less centrally located, nice tree lined streets, and has good schools.

    I love the idea of living out in the Malibu, which has a rural feel to it, but the commute would get old.

    Hancock Park is great too, but is still insanely overpriced.

    No matter the price or the area, the real point is that I refuse to pay the same or more than what the seller bought it for in 2006.

  27. Waitingtobuy


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    62   9:20am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    nw888 says

    We're looking for a $1.4-2.2M house in the Los Angeles area

    Philistine says

    Playa Vista, Venice, Redondo Beach??, Hermosa??, Manhattan Beach--all of these places you have listed are *not* LA. They are outlying areas that *might* appeal to some people, but Manhattan Beach and Redondo are like literally an hour to get most places actually in LA.

    The OP said LA area, not LA proper.

    Philistine says

    LA is Mid-City/Wilshire, Westwood, Hancock Park, Beverly Hills, Culver City, West Hollywood, Hollywood, and maybe a couple surrounding neighborhoods. Santa Monica probably.

    OK, how about this in Hancock Park?:
    http://www.redfin.com/CA/Los-Angeles/631-N-Mccadden-Pl-90004/home/7101139

    Philistine says

    These areas are the heart of actual LA, where a majority of the jobs, culture, decent food, etc. are

    You forgot to mention crappy schools, bad air, surface street congestion, high crime rates, and plastic people.

    Philistine says

    Because I live and work in these neighborhoods, my "commute" is literally 12 minutes and the gas money saved not idling stupidly and time I save are extremely value-added to my quality of life.

    My commute is 30 secs. I work from home. The OP never mentioned anything about his/her commute. Maybe they can clarify where they work, if they do.

  28. nw888


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    63   9:23am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    Waitingtobuy says

    My commute is 30 secs. I work from home. The OP never mentioned anything about his/her commute. Maybe they can clarify where they work, if they do.

    I work from home mostly, but sometimes have to commute to the movie studios, which are mainly in Burbank or Culver City. My wife can work anywhere there is a hospital. I'd like to stay close to studios, but it's not detrimental. And the only reason we don't leave Southern California is because we have a lot of family here, and that is very important to us.

  29. Waitingtobuy


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    64   9:36am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    I am in the Internet business, work from home, and also have to go to the studios. I arrange my client visits after 1030. Last week, it took me 30 mins from the South Bay to get to the Paramount lot. Burbank would take 45 mins-1 hr on a good day...but it depends what your definition of sometimes is..if once a month, doable. If once/week, not.

  30. Shawn


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    65   10:04am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    JodyChunder says

    nw888 says

    Typically, people in that situation have millions to spend because they worry MORE about bubbles, where there money is going, and how their assets are doing. Not worrying about things like this is one of the reasons most people never find themselves in that situation.

    Word.

    But the bubble is over dudes. There is calculating risk and there is analysis paralysis. The point is this jockeys already willing to sink 2 mill for a dwelling. That right there puts you in loco territory. It's like saying you are worried that paying forty dollars for a gallon of milk instead of 34 dollars for the same gallon when you know its insane either or. I don't want to overpay too much, but I am still willing to overpay by a lot.

    That's a very different statement from what you said before. Not worrying about a bubble because you have millions and not worrying about a bubble because it's over are very different standpoints. The first is ridiculous, and a sure fire way for someone with millions to soon become someone 'without' millions. The second is debatable. Is the hysteria that drove prices up rapidly over? Probably. Are some areas still overpriced and some sellers delusional? Also probably true. And if the hysteria is over than that's all the more reason to avoid buying in those areas.

  31. nw888


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    66   10:06am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    When I'm on a project with a studio I will then have to be there 5 days a week, so commute is important to me. More and more I want to just work from home and not deal with this rat race anymore.

    I just want a nice house, with a good size yard, a pool, a 15 minute commute, and under $400 a square foot. That price to me is still insane! I remember when the average price in Beverly Hills was $250 per square foot in 1999, and now it's something like $600+ still? South Pasadena with a good piece of land-1/4 to 1/2 acre is $6-800+ per square foot. It's out of control. I refuse to pay these inflated asking prices.

    Maybe I'm asking too much and being unrealistic. I wish interest rates would go up so prices would be forced to come down further, but that won't be happening until at LEAST 2014 according to the fed. Maybe a crisis will force the issue....

  32. LASVEGASWINNER


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    67   10:21am Thu 23 Feb 2012   Share   Quote   Permalink   Like (1)   Dislike  

    "Maybe I'm asking too much and being unrealistic. I wish interest rates would go up so prices would be forced to come down further"

    When interest start rising this time, you will be left at the gate looking for that "dream house" The market is in "recovery" per the time magazine report. Home Depot stock soaring, New Home Starts at a 2 year high, employment up, unemployment down, rents rising.
    The spring buying season around Mar 15 to May 30, will be the best in years, and your selection of houses in your price range will get smaller and smaller.

  33. nw888


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    68   10:30am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    Thank you for your reply. I 100% disagree with you.

  34. Waitingtobuy


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    69   10:35am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    nw888 says

    When I'm on a project with a studio I will then have to be there 5 days a week, so commute is important to me. More and more I want to just work from home and not deal with this rat race anymore.

    nw888 says

    I work from home mostly, but sometimes have to commute to the movie studios, which are mainly in Burbank or Culver City.

    nw888 says

    I just want a nice house, with a good size yard, a pool, a 15 minute commute, and under $400 a square foot.

    If you have to be in either Burbank or Culver City, where are you going to find a place in LA that is 15 mins from either Burbank or Culver City, unless you own a helicopter? Aren't you confined to a place like Hancock Park, and even then, on a good day, you are looking at 25-30 mins to either?

  35. APOCALYPSEFUCKisShostikovitch


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    70   10:37am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    It's June, 2005 all over again!

    You've only got a few weeks to stuff some cash into a Realtors® hands before the next implosion and he has to go back to cooking meth!

    Don't miss out.

    It's DIFFERENT this time.

    They got a brain-damaged reporter from a magazine to believe the NAR's stats!

    Hahahahahahahahahahahahahahaha!

  36. Waitingtobuy


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    71   10:38am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    Waitingtobuy says

    nw888 says

    When I'm on a project with a studio I will then have to be there 5 days a week, so commute is important to me. More and more I want to just work from home and not deal with this rat race anymore.

    nw888 says

    I work from home mostly, but sometimes have to commute to the movie studios, which are mainly in Burbank or Culver City.

    nw888 says

    I just want a nice house, with a good size yard, a pool, a 15 minute commute, and under $400 a square foot.

    If you have to be in either Burbank or Culver City, where are you going to find a place in LA that is 15 mins from either Burbank or Culver City, unless you own a helicopter? Aren't you confined to a place like Hancock Park, and even then, on a good day, you are looking at 25-30 mins to either?

  37. Waitingtobuy


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    72   10:41am Thu 23 Feb 2012   Share   Quote   Permalink   Like (1)   Dislike  

    nw888 says

    Maybe I'm asking too much and being unrealistic. I wish interest rates would go up so prices would be forced to come down further, but that won't be happening until at LEAST 2014 according to the fed. Maybe a crisis will force the issue....

    I used to think this way too. The thing is that the Fed will keep rates low until inflation picks up in order to stimulate economic growth. If inflation picks up, housing prices will go up with the price of everything else. There isn't necessarily an inverse correlation to all of this.

  38. nw888


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    73   10:42am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    Yes, the 15 minutes comment was just an ideal. I know that the reality is that it does take a long time to get anywhere in this city. I think I'm unrealistic about finding the "perfect" spot. Hancock park actually is pretty perfect though. Very pricey for what you get.

    Hmmm...maybe I can find a good price on a helicopter.... ;)

  39. Waitingtobuy


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    74   10:46am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    The issue for me with Hancock Park is schools. Elementary may be fine, but once the kids get to middle school, you may need private schooling. With two kids, that is grades 6-12 (7 years) * 2 kids * $18,000+/yr= an extra $250,000. In today's dollars.

    I would look at Culver City which has a good school system, and grit it out for your commute to Burbank.

  40. nw888


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    75   10:47am Thu 23 Feb 2012   Share   Quote   Permalink   Like   Dislike  

    Waitingtobuy says

    I used to think this way too. The thing is that the Fed will keep rates low until inflation picks up in order to stimulate economic growth. If inflation picks up, housing prices will go up with the price of everything else.

    What changed your view?

    My view is this:

    Historically housing does not go up with inflation. No one needs to purchase a home. They can rent instead. Real wages don't go up, therefore rents won't go up. Things people must have go up. Food and fuel.

    The only way to curb inflation is by raising interest rates. Raising interest rates makes mortgage payments higher. The only thing that can give will be house prices.

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