patrick.net

KILLERJANE says

My point is if you are going to invest 500,000, then why not do it where it can create income and use that income to rent where the cost of buying is insane overpriced? Your investment will pay your rent rather than it coming out of pocket from a job.

Just keep your blinders on! Common sense is a myth.

And my point is that if you have to pay $2500 to rent a house that you can buy for $1800 a month, then that property doesn't strike me as being insanely overpriced.

Reader says

Lose the word PEAKS. Peaks of what? The peak or rise was not real, there was in the clearest sense no peak it was all a con a bullshite game. Do you get that point? The prices of even 2000 were way too high, the rest up through '07 was just sheer brainwashed lunacy.

So? If you look at any charts for housing, then prices are pretty much back to historical norms for the US as a whole - hence my point about prices being MUCH lower than the peaks in most areas. That might not be the case in the BA and certain other areas, but hey, not everybody lives there.

So you pay 1800 a month when you could be getting 6000 rents minus 1800 netting you 4200 before other expenses. I see the the math works better in rents on my scenario than yours.

Reader says

I may be wrong but I feel a few things need to be asked since this is irrelevant to you. Do 1. You have a mortgage? 2. If so is it is well over 250K? 3. And do you have an auto loan or loans?

1. Yes
2. No
3. No

500,000 home in LA 1800 mortgage plus 6500 a year in taxes plus plus plus old ugly fixer costs.= not worth it, debt slavery.

KILLERJANE says

So you pay 1800 a month when you could be getting 6000 rents minus 1800 netting you 4200 before other expenses. I see the the math works better in rents on my scenario than yours.

Just keep your blinders on! Common sense is a myth.

That's if you want to become a landlord and presumably of properties a long way away from where you live. Quite clearly, most people don't want to follow that path, so your point is rather moot when it comes to assessing how overpriced a house is that rents for $2500 but costs $500k to buy.

KILLERJANE says

500,000 home in LA 1800 mortgage plus 6500 a year in taxes plus plus plus old ugly fixer costs.

Just keep your blinders on! Common sense is a myth.

Tax break, potential equity... Why is that so much worse for someone who just wants their own home than paying $2500?

Well a property is actually only worth what you can rent it for, that is the point.

KILLERJANE says

Well a property is actually only worth what you can rent it for, that is the point.

Just keep your blinders on! Common sense is a myth.

You still aren't directly addressing my point. Why do you consider a house that costs $500k but rents for $2500 to be massively overpriced?

Perspective 1, use your money to chase the mortgage payment.
Perspective 2, use your money to create more money.

KILLERJANE says

Perspective 1, use your money to chase the mortgage payment.

Perspective 2, use your money to create more money.

Just keep your blinders on! Common sense is a myth.

As I said, that's fine if you want to be a landlord. If you don't, your point is irrelevant. Either way, you still haven't answered my question.

Because a smart move is one that allows an investment to pay for itself and then some extra for the effort. 500,000 house for not even 1% return is sad.
Bigsby says

KILLERJANE says

Well a property is actually only worth what you can rent it for, that is the point.

Just keep your blinders on! Common sense is a myth.

You still aren't directly addressing my point. Why do you consider a house that costs $500k but rents for $2500 to be massively overpriced?

Darrell In Phoenix says

Bigsby says

House prices in most areas of the US are around their historical adjusted averages,

Post up a link please or shall I save you the bother?

KILLERJANE says

Because a smart move is one that allows an investment to pay for itself and then some extra for the effort. 500,000 house for not even 1% return is sad.

That's not addressing my point. Most people don't want to borrow 500k to set themselves up as an out of state landlord, so that isn't an issue. The question is if you want to buy a house to live in, then why is a 500k house that would cost you $2500 to rent such a bad purchase?

Chart is not accurate for Major CA RE hotspots. Houses could be bought for 200,000 in LA in 2000 and still can be sold for close to 3x that today.

KILLERJANE says

Chart is not accurate for Major CA RE hotspots. Houses could be bought for 200,000 in LA in 2000 and still can be sold for close to 3x that today.

Just keep your blinders on! Common sense is a myth.

And where exactly did I say it was? Everything I said was for the US as a whole. And that is a chart for the US as a whole. Do you suddenly want to change the goalposts? And anyway, it more than relates to Darrell's imaginary place of residence for starters.

Common sense is a myth. I find this out every time I read the blog.

KILLERJANE says

Chart is not accurate for Major CA RE hotspots. Houses could be bought for 200,000 in LA in 2000 and still can be sold for close to 3x that today.

Just keep your blinders on! Common sense is a myth.

And I don't know how accurate that comment is, but this chart certainly doesn't seem to match your assertion:

That is not accurate, IMO. I have seen it firsthand, on the ground in LA. If you bought in 2000, you tripled your "value" by 2005-6, sometimes more. And now now you could sell or a bit less but not much. I know, I did it. Did you? Are you there?

Not interested in a fight, just have learned that there are different ways to do things. And those charts are macro, not local.

KILLERJANE says

That is not accurate, IMO. I have seen it firsthand, on the ground in LA. If you bought in 2000, you tripled your "value" by 2005-6, sometimes more. And now now you could sell or a bit less but not much. I know, I did it. Did you? Are you there?

Not interested in a fight, just have learned that there are different ways to do things. And those charts are macro, not local.

Just keep your blinders on! Common sense is a myth.

If you say so. Presumably they collected the available data, whereas you... And yes, if you want to take it down to very specific pockets of LA, then I'm sure you can find what you want, but that is hardly painting an accurate picture of the area as a whole.
And I'm not looking for a fight, but I think talking from the perspective of an investor is not particularly relevant or constructive for those people who are simply looking to buy a home.

Check out Redfin. 90041

Find history of 2000-2001 sales and then find otu what the same sold for this year. Best to you, gotta do some work now.

KILLERJANE says

Check out Redfin. 90041

Find history of 2000-2001 sales and then find otu what the same sold for this year. Best to you, gotta do some work now.

Just keep your blinders on! Common sense is a myth.

Like I said, I'm quite sure you can find what you want if you select individual zip codes, but that quite clearly isn't the experience for LA as a whole though, and surely that is the much more relevant point for most people.

Darrell In Phoenix says

Housing prices are still at the grossly inflated levels of 2004..... and falling

Ho, ho, ho. Even using a chart showing NOMINAL house prices, it indicates prices back to those of 2003. Last time I checked 2003 was not 2004.

Darrell In Phoenix says

run Bibsy run!!!! lmao

Now, now Darrell, we all know facts aren't your strong point. You can't even get your place of residence right. And remind me again how many vacant homes there are (in your imagination).

I don't see Bigsby's argument. The bubble was inflating pretty good by 2001, so 2003 or 2004 prices aren't anything to be excited about.

Goran_K says

I don't see Bigsby's argument. The bubble was inflating pretty good by 2001, so 2003 or 2004 prices aren't anything to be excited about.

Er, why don't you look at the real house price chart rather than Darrell's nominal one? Real house prices look like they are basically back to their norms and given the record low interest rates, then presumably affordability must be pretty damn good for most people (read most people, not necessarily those living in the BA etc.). Do you see my point now?

Darrell In Phoenix says

Goran_K says

I don't see Bigsby's argument. The bubble was inflating pretty good by 2001, so 2003 or 2004 prices aren't anything to be excited about.

He got caught lying once again.

Darrell, Darrell, every time your knuckles scrape across your keyboard you get caught lying.

You already posted that Darrell. Is your memory really that bad?

Darrell In Phoenix says

You're lying to the public about housing.

Why are you lying Bibsy?

Here we go again. Go on then 'Darrell the troll', what am I lying about?

Darrell In Phoenix says

Why are you playing stupid about your lies Bibsy?

Troll lol lol lol....

you cant afford a house on $10/hr either place.

Darrell In Phoenix says

jan says

you cant afford a house on $10/hr either place.

This truth goes to show you how grossly inflated housing prices are, even though prices are falling.

Now.... Do you believe that wages will triple to meet inflated housing prices or do you believe housing prices will continue to fall to meet wages......

You know the answer.

NAILED IT. That is precisely what most cannot see or answer, this is exactly the problem, and the basis for why this mess is such a MESS. I guess people don't remember pre-1975 when small houses in nice clean neighborhoods were 35K no more than 50K each.

As for LA those houses built on the Westside in 1960s ? They were 25K a pop 50K bought you a house in a very good area. 150K bought a stunning property in a high end neighborhood. So no one is going to tell me that a small shack in the same neighbourhoods today warrant 750K NO WAY NO HOW.

Does RE pricing today match wages? NO IT DOES NOT because it isn't in line with the dollar, and hasn't been in a very long time.

Also to top it off, in West LA prior to the early 80s no only did one lived well at reasonable prices in Santa Monica, Culver City or Beverly Hills (which were known for their tri-schools.) You would live there with your family primarily for their public schools as they were as good as private, tuition free with actual student residents from those given areas, NOT Inglewood and downtown LA students bused in on vouchers as they are now.

So recap this with my prevous comment above this one, and think about today ...it is NOT a pretty picture of neighbourhood bliss by my standards.

Reader says

So no one is going to tell me that a small shack in the same neighbourhoods today warrant 750K NO WAY NO HOW.

Of course.. LA in the 60s is exactly the same as they are now, and housing prices should be the same + inflation.

Oh wait, maybe there is one small difference

SFV 1963

SFV 2011

Maybe a better comparison might be tract housing prices in 1960s LA vs tract housing prices in 2012 Vegas.

Bigsby says

Er, why don't you look at the real house price chart rather than Darrell's nominal one? Real house prices look like they are basically back to their norms and given the record low interest rates, then presumably affordability must be pretty damn good for most people

How are wages different? What about employment numbers? If less people are working, and wages are stagnant while other things have gotten more expensive (gas for instance), then "affordability" may even be worse.

Your point, and your explanation don't necessarily paint a conclusively picture.

Reader says

actual student residents from those given areas, NOT Inglewood and downtown LA students bused in on vouchers as they are now.

Reader

What do you mean "bused in"?

Michinaga says

summers aren't nearly as hellishly hot.

New York summers not HOT?!? Have you EVER been to NYC in the summertime? It's disgustingly humid and feels far hotter than even Las Vegas in the summer.

I prefer dry heat that is 10-20 degrees hotter than a lower temperature where you step out side and are soaked in sweat from the humidity.

Reader says

As for LA those houses built on the Westside in 1960s ? They were 25K a pop 50K bought you a house in a very good area. 150K bought a stunning property in a high end neighborhood. So no one is going to tell me that a small shack in the same neighbourhoods today warrant 750K NO WAY NO HOW.

And gas was 31 cents a gallon then. I guess no one's going to be able to tell you that it's $4.xx now?

Goran_K says

How are wages different? What about employment numbers? If less people are working, and wages are stagnant while other things have gotten more expensive (gas for instance), then "affordability" may even be worse.

Your point, and your explanation don't necessarily paint a conclusively picture.

I imagine wages have been pretty stagnant in real terms at least for those outside the 1%, who apparently should be taxed less according to certain characters on here. And of course unemployment is a major problem (though presumably we are looking to what will happen in coming years and the optimist in me imagines that things will improve even if only gradually). And sure prices are up, though I'm not sure how big a deal changes in gas prices have been given improvements in mileage and the fact that the increase (on average) isn't as large as some people seem to imagine. Someone will have to show me the effect of that. Anyway, what do you expect nominal house prices to have done since 2003? We presumably aren't talking about people already holding mortgages here, rather people looking to buy, so real house prices are rather important, wouldn't you say?

Darrell In Phoenix says

Gas was 1.75/gal just 3 years ago.

Well?

It was $4 at one point towards the end of Bush's term. The average adjusted for inflation during Bush's second term was $2.98. For Obama, the figure is $3.04. Paint me stunned that oil prices dropped rapidly over a short period at the height of the world recession.