Another Housing Crash

[Meandering]

It really is not that complicated. Supply and demand is what matters. All factors that impact prices will be reflected in supply and demand. You guys are screaming crash is coming with supply at the lowest level since financial crisis. smh

Actually no,

Pent-up demand, it's release and constraint, must be considered.

This is the reason we have mortgages and not relying upon only buyers who can buy with all cash.

You will note that Adam Smith addressed markets that were free of government influence, for good reason.

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[Randolph Kinney]

In a non-recession market, homeownership rates drop as interest rates move upward to cool the economy, as reflected in the rate of homeownership during the late 1950s through the early 1980s. Chart 1 displays the generally unacknowledged converse relationship between the average 30-year mortgage rate and the homeownership rate (and home price trends) from early 1980 until 2006, when the upward ride of the Millennium Boom began to reverse course.

Further, the Federal Reserve (the Fed) kept interest rates low the past several years to coax homebuyers out of the woodwork (since Congress has failed to do so) by continuing to supply money to mortgage lenders at literally zero interest. However, in late 2016 the 30-year mortgage rate began to rise, as it did in the ‘60s and ‘70s, and with that move, the homeownership rate will continue to lose strength before it fully stabilizes.

A long time remains before homeownership levels hit bottom in California, and homeownership will not begin any measureable resurgence from that bottom level until at least 2018. In this decade, rental property will become the new standard; the only alternative to traditional homeownership (with the rare exceptions of homelessness, motor homes, boats and cars).

http://journal.firsttuesday.us/rentals-the-future-of-real-estate-in-ca/4989/

Income growth has not kept pace with inflation nor price increases for rents nor home prices.

 

[George Hatch]

Not to mention the inflation rates for health care and energy. These "other" rising costs detract from the amount of money people can spend on their housing.

 

[Meandering]

Heck yeah,

Our gas went from $2.65 to $3.05 a gallon in a month.

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[Joe Flacco]

Everything is reflected in supply and demand. You guys point to a few things that may impact supply and demand think that it is all that matters.

 

[Joe Flacco]

Somebody that bought a house in five years ago is paying mortgage payment for price five years ago. Their housing expense is locked from five years ago prices and is not impacted by the higher today prices. Their income did not have to increase over the last five years to match the housing price today. The people that are buying today are buying because they can afford it.

 

[Joe Flacco]

Look at Randy, he sold his house in unaffordable CA and moved to North Carolina. Meanwhile North Carolina people are like man who is paying these high prices? And global buyers are like man I need to buy some CA real estate.

 

[Sid Holderly]

In this area, rural county next to Large City the highs have not yet been exceeded, in the city they are getting close.

 

[Randolph Kinney]

Look at Randy, he sold his house in unaffordable CA and moved to North Carolina. Meanwhile North Carolina people are like man who is paying these high prices? And global buyers are like man I need to buy some CA real estate.

Randy sold his house to a guy that was a renter. Entry level housing competes with rentals. It wasn't new homes that gave the additional supply. It was someone who moved, making new supply.

My buyer created a vacancy in the rental market when he moved into my home that he bought.

When new homes are built in California, they are not for the entry market. They are for the move up market. The median price for a California home is over $550,000.

 

[Randolph Kinney]

In fact, though, the San Diego price-to-rent ratio is high, meaning that renting could be a better deal than buying. Of course, your rent-or-buy decision will depend on your specific financial situation but conventional wisdom is that a price-to-rent ratio over 15 indicates a renter-friendly market. Take a look at the chart to see how San Diego’s price-to-rent ratio compares to other big American cities.

Housing is one of the major drivers of the cost of living in San Diego but it’s not the only factor to consider. According to numbeo.com a basic package of utilities for a 915-square foot apartment in San Diego costs an average of $117.04 per month. That includes electricity, water, heating and garbage. If you want to add internet (and we’re guessing you do) you can expect to pay a further $57.27 per month.

Once you have your housing and utilities taken care of you need to think about how you’ll get around. A monthly pass on San Diego’s public transit system costs $72. Let’s be honest, though. San Diego is a driving city. According to gasbuddy.com you can expect to pay $3.70 for a gallon of gas. That’s 4.5% above the California average of $3.54 and 40% above the national average of $2.64.

Let’s take a look at how food prices in San Diego stack up. A three-course meal for two in a mid-range restaurant will cost you $60, according to numbeo.com. The same source puts the cost of a meal in an inexpensive restaurant at $12. Prefer to save money by cooking at home? Numbeo’s recommended minimum amount of money for food for one person for a month in San Diego is $316.48.

California is known for its high taxes. In fact, it’s the highest-tax state in the nation. If you want to see what your tax burden will be like in California check out our free tax calculator. As far as San Diego-specific taxes go, the situation could be worse. The San Diego sales tax rate is 8%. The average effective property tax rate is $1.179%.

https://smartasset.com/mortgage/the-cost-of-living-in-san-diego

Cheaper to rent in San Diego than to buy. Need to make a lot of money to live there.