Housing Bubble Bursting?

[JSmith43]

I think, at least hope, the key is one's personal fiscal situation. I too know people who will spend 2,000 to save 500. Don't make sense to me but...

Similar to the situation of people contemplating a move which will lead to a 2-3 hour daily commute. Sure houses are cheaper, until you factor in your time, aggravation, fuel and automobile costs. But that's too much thinking for most people. Here's your sign.

You mean, it isn't a dollar for dollar market reaction?:laugh:

 

[Randolph Kinney]

I think, at least hope, the key is one's personal fiscal situation. I too know people who will spend 2,000 to save 500. Don't make sense to me but...

Similar to the situation of people contemplating a move which will lead to a 2-3 hour daily commute. Sure houses are cheaper, until you factor in your time, aggravation, fuel and automobile costs. But that's too much thinking for most people. Here's your sign.

You bring out a good point in California; they buy cheaper further out and commute 2-3 hours. That works when gas is cheap. It gets really expensive at $3.40 a gallon. Prices tend to correct more so on those cheap commuter properties.

However, if the price on cheap commuter properties falls low enough to compete with renting closer in, you will see some of those renters buying commuter homes.

Another anecdotal example. A friend was renting in Encinitas and commuting to San Diego. He bought a house near Fallbrook off I-15 and now commutes another 40 miles.

 

[DTB]

You bring out a good point in California; they buy cheaper further out and commute 2-3 hours. That works when gas is cheap. It gets really expensive at $3.40 a gallon. Prices tend to correct more so on those cheap commuter properties.

However, if the price on cheap commuter properties falls low enough to compete with renting closer in, you will see some of those renters buying commuter homes.

Another anecdotal example. A friend was renting in Encinitas and commuting to San Diego. He bought a house near Fallbrook off I-15 and now commutes another 40 miles.

From my view, the fuel costs are the least problematic of those types of situations. I think more of the stress and time away from my family.

 

[Riick]

Don't know the price point of your markets but a rental increase = or less than the TOTAL cost of the move is an automatic in my book.

By TOTAL cost to tenant I mean and explain to them their costs:

1. Physical moving costs even DIY costs $$
2. Change of utilities, mailing address change notices ...
3. Half a day @ DMV to pay for a drivers' license change
4. Moving every year sure doesn't help one's FICO score or future employment prospects.
5. Chasing your deposit from me and paying a new deposit down the street.

Usually they go along with the program. The family attorney let me witness an interaction with one of his tenants when I was about 12-13 years old. He explained this program to me with the kicker; if they are 30 years old and older they are YOURS.

With apartments, I always looked at it from point of view of keeping the place rented longest - at minimal cost to me.
Always keep my rents a little UNDER the market, and looked AAA tenants on a 2 year lease.
Low advertising expense, no annual repainting, minimize vacancy, minimize overall hassle.
Works for me.

 

[Randolph Kinney]

From my view, the fuel costs are the least problematic of those types of situations. I think more of the stress and time away from my family.

I agree with you but the California lifestyle does not. We have many commute towns / cities with no real employment other than retail. The only thing they have going for them is that because they are cheaper to buy a home, it serves as a common starting point for a mass traffic flow to the employment centers. I-15 and I-5 to San Diego is nothing but bumper to bumper traffic. It lightens up on the weekend: just another Pleasant Valley Sunday.

 

[DTB]

I agree with you but the California lifestyle does not. We have many commute towns / cities with no real employment other than retail. The only thing they have going for them is that because they are cheaper to buy a home, it serves as a common starting point for a mass traffic flow to the employment centers. I-15 and I-5 to San Diego is nothing but bumper to bumper traffic. It lightens up on the weekend: just another Pleasant Valley Sunday.

I also don't get why people move from employment centers?:Eyecrazy:

Can't afford to be close? How will moving farther help your earning potential? :Eyecrazy: 3 hour commute @ 20 per hour = 12K per year lost earning power + a $25,000 car every 4 years instead 6 or 7 = 2,400 or 120 hours of wages and the fuel = another 1,500 per year up in smoke

We want a bigger house with more land. With no time to enjoy it!:Eyecrazy:

800 man hours per year wasted due to extended commuting, gotta love it!

People do some strange things, a lot of the time.

 

[Terrel L. Shields]

really expensive at $3.40 a gallon

You can expect $5 on the coast soon...
I guess what is curious to me is what is the attraction to industry to move into such urban areas like San Diego. Surely they know it is hard to find help, the help they get has to be paid more because of living costs, and a traffic quagmire affects a whole lot of businesses. Why won't the businesses move to the smaller centers?
If Wal-Mart can be nurtured in a town that was less than 5,000 people stuck 200 miles from the nearest state capital or major town when it started, why are the tech companies married to California?

 

[Randolph Kinney]

The semiconductor companies have left San Diego county a decade ago. We have pharma research and biomedical research, all in San Diego. We have scattered medical equipment companies in the county but not too far from San Diego.

Buck Knife use be in San Diego just a few years ago but shut down operations and moved to Idaho where it was much cheaper to do business; workers comp and payroll taxes, wages, taxes (corporation, property, and personal), and regulation.

Other smaller companies have moved to Nevada for the same reason.

Our biggest industry now is the hospitality industry. This is not high paying jobs. Of course, we are a destination location for holiday and vacation travel. It is the reason Gateway computers moved operations from South Dakota to Poway; the owner liked to be here. However, it has been downhill ever since for the company.

We have a large population of rich people here because they like the climate. They need services.

There have been articles written on the future of San Diego becoming an area for the rich. It doesn't matter what the taxes are for the rich but it does matter for the worker class. It doesn't matter how high the home prices are for the rich but it does matter for the worker class.

 

[Cigar]

Terrel:

I've got a story for you since you live in Arkansas. In the early 70s I built an expensive home for a guy who owned a manufacturing company. He relocated his company to Arkansas because the labor was so much cheaper than here (this of course was before we had illegal labor), he bought a jet airplane and hired a pilot to fly him back and forth commuting a couple of times a week. He told me that he saved lots of money, so much that it not only paid all of his expenses but completely paid for the new house.

 

[Terrel L. Shields]

Happiness in Arkansas is a Californian heading west with a Mexican under each arm...:laugh:

I was in Vernal, UT a few years ago and mentioned to an old timer there that when I was working in Vernal in the 1970's there wasn't any new homes. Now there were a lot of large nice houses.

He claimed that a lot of them were air commuters who worked in CA or elsewhere and lived in Vernal most of the time. They might have an apartment in "the city". Seems Vernal had a large internet trunk line that gave high speed access to the coast and computer programmers, etc. were working at home and only traveling to the office when necessary.

An East Coast exec told me once that they liked manufacturing plants in the South because most of the people hired were mechanically minded. In Connetticut they had classes to teach folks the difference between kinds of wrenches, hammer basics (don't use a carpenter hammer to beat metal with) and channel locks, etc.