Is it me or are real estate prices going wacko again

[K1052]

I wouldn't pay big money to live in a fly-over state, because land is cheap, there is room to build, and there are few inherent incentives to the area. But in a metro area like Silicon Valley, consider the situation:

- There's no more land.
- The population is continuing to rise.
- The job market continues to increase.
- There are insufficient candidates for high-paid jobs.
- As traffic gets worse, long commutes to rural areas are less attractive.
- It's still very hard to get home financing compared to the bubble.
- Most homes are being purchased with cash. Rates are irrelevant.
- There are arts, culture, scenery, and good weather. It's a nice place to live.

So please explain to me how this is a bubble. What would make it pop? Interest rates rise? No one is buying with financing, so it doesn't matter. Job market goes down? No real change in employment percentages because there aren't enough candidates anyway. Opportunity to telecommute? Go ahead, raise your brown-skinned kid in South Dakota and see how that goes.

No, this isn't a bubble. This is socio-economic stratification and you're either on the bus or off it, but it doesn't have any reason to slow down.

Sure, there are pockets of bubbling. San Francisco as a city is inflated and when the techno-weenies get tired of the urine smell, they will leave it back to the arts and finance people. But they're just going to move back down to Mountain View, not out of the area entirely.

Housing production is also extremely slow in the SF and the peninsula due to politics. This has to be the hardest place to get something built that I've ever seen. The money burning, flesh rending, sanity taxing gauntlet that they call the entitlement process is absurd. Only the deepest of deep pocketed patient developers and REITs can even make a go of it anymore.

I see horrifically underused land basically everywhere in the metro. Yea, technically the area is constrained but that vacant K mart or dilapidated strip mall could be put to higher and better uses. They need to start whacking a bunch more stuff with the upzoning stick particularly areas right next to transit.

 

[Mai72]

Why do people pay these prices anyways, do they think they can build equity and double up when they sell? I know in Canada the bubble will burst and loads of people in the big cities will end up owing half again what the house is worth on their mortgages.

And this may be the small town guy in me talking, but would someone want a million dollar home in a place like Toronto or Vancouver that's a 100 year old 900 square foot dump when you have places out East like Moncton or Charlottetown where you can get a new 1200 square foot bungalow for 200k. Hell, around here 5 year old houses with a finished basement can take 2 months to sell at 200-210k.

Interesting site for Canada : http://www.crea.ca/content/national-average-price-map

I don't get it either. People are paying $800k plus to buy a home that they are only going to live in a fraction of their lives. It's only a house. Seriously, what do most people do in their homes besides sleep, shit, eat, shower and have sex. To afford such a home most people are going to be putting in a lot of hours for the next 30 years. Is it worth it?

Why not buy a house for $250k and setup other investments? IMO, putting it all in one basket is a bit risky, no? What if you lose your job? What happens if we hit another major recession? So many people get caught up trying to outdo each other. In return they end up tying themselves to a house for the next 30 years. It's only a home!

 

[MrSquished]

I don't get it either. People are paying $800k plus to buy a home that they are only going to live in a fraction of their lives. It's only a house. Seriously, what do most people do in their homes besides sleep, shit, shower and have sex. To avoid such a home most people are going to be putting in a lot of hours for the next 30 years. Is it worth it?

Why not buy a house for $250k and setup other investments? IMO, putting it all in one basket is a bit risky, no? What if you lose your job? What happens if we hit another major recession? So many people get caught up trying to outdo each other. In return they end up tying themselves to a house for the next 30 years. It's only a home!

It's only a home, why not just pitch a tent?

 

[Mai72]

It's only a home, why not just pitch a tent?

I know a guy with $500k in the bank and lives in an $80k trailer.

 

[K1052]

I don't get it either. People are paying $800k plus to buy a home that they are only going to live in a fraction of their lives. It's only a house. Seriously, what do most people do in their homes besides sleep, shit, eat, shower and have sex. To afford such a home most people are going to be putting in a lot of hours for the next 30 years. Is it worth it?

Why not buy a house for $250k and setup other investments? IMO, putting it all in one basket is a bit risky, no? What if you lose your job? What happens if we hit another major recession? So many people get caught up trying to outdo each other. In return they end up tying themselves to a house for the next 30 years. It's only a home!

$250K buys you a piss soaked refrigerator box (with a complementary decorative chandelier made of used hypodermic needles) on a sidewalk in the Tenderloin here. If you go out in to the veeeery distant suburban fringe and buy something totally in the ghetto maybe...

 

[Nograts]

5,000 square foot home a few cities over from where I grew up: $550k

Randomly searched apartment in San Francisco, 680 square feet: $580k

No fuckin way. I mean, I'm sure that wages are proportionate to some degree, but why would you hole yourself in like that? Do you have any idea how much you could get in a medium-sized city, or even a large city that isn't constrained by space? The choice I would think is obvious but there are some factors at play that I am completely unaware of.

My first apartment was an 800 square foot 1-bedroom. And it was SMALL. Really small. It cost me 400$ a month. For 200 LESS square feet you'd pay over HALF A MILLION DOLLARS. Holy fucking christ. This makes me so confused why people would choose it over more rural living.

What's the attraction to these big ass cities? I should also state that I like space and land, I don't want to walk out in my front yard and immediately see my neighbors, all 800 of them.

 

[brianmanahan]

What's the attraction to these big a** cities? I should also state that I like space and land, I don't want to walk out in my front yard and immediately see my neighbors, all 800 of them.

i never understood it either, cities are crowded and have increased crime and in many places are dirty

not to mention the hobos

working there i can do, but living there? no way.

 

[Leyawiin]

Even inland cities in California seem overpriced compared to the rest of the country. I live in the Sacramento Valley a little over an hour north of Sacramento. Hot as hell in the summer and nowhere near the ocean (about a three to four hour drive). The run of the mill small subdivision home of about 1400 square feet on a 4500 sq ft lot is $250,000. In Oklahoma or Texas for that price you get a much larger home on a much larger lot. What's frustrating is the wages in this part of the state are no higher than the Midwest to compensate for it.

This:

http://www.realtor.com/realestateandhomes-detail/74-Lacewing-Ct_Chico_CA_95973_M16986-49973?row=104

vs. this:

http://www.realtor.com/realestatean...dmond_OK_73012_M88551-04462?row=16&source=web

 

[MrSquished]

half the places with these cheap home prices are in east bumblefuck. no culture. you have to drive everywhere to do anything. just a bunch of chain stores and strip malls. hey if that's your thing go for it.

some people enjoy being able to walk to most things and the culture that bigger cities bring. so you gotta pay to play. me personally? can't do the suburban culture-less strip mall laden lifestyle. if you can, god bless. that's why we have both options.

 

[JSt0rm]

You have to make sacrifices to live in any big city. Hopefully you enjoy the rewards of good city living.

 

[brianmanahan]

half the places with these cheap home prices are in east bumblef**k. no culture.

city culture is overrated

suburban is also meh

living in the country is where it's at

 

[WhoBeDaPlaya]

I hope Austin stays semi-sane for the next ~3 years, because I'll likely be settling down then

 

[MrSquished]

city culture is overrated

suburban is also meh

living in the country is where it's at

that's another option. again me? well i went backpacking last weekend. i enjoy nature. just can't live out in the country either. but i can respect those who enjoy it. options. nice.

 

[rednas]

So glad that I left the SF bay area for Texas.

 

[rednas]

I hope Austin stays semi-sane for the next ~3 years, because I'll likely be settling down then

I think that Austin is overpriced for what it offers. I initially was gonna settle down there since that is what everyone from California is doing but now that I am in Houston I am glad that I ended up here instead.

 

[jpiniero]

- Most homes are being purchased with cash. Rates are irrelevant.

My understanding is that it's about 25% in SV: and most of those are investors, including Chinese nationals. The people who actually buy to live there have a mortgage, and are doing so at well over the 30% take home that is considered the recommended percentage.

 

[rednas]

i never understood it either, cities are crowded and have increased crime and in many places are dirty

not to mention the hobos

working there i can do, but living there? no way.

work is the reason why big cities are so expensive. There are TONS of different job opportunities that generally pay higher salaries in a small area. Living rurally is cool but the problem is that if you lose your job getting a replacement job is MUCH harder than when you live in a city and are many different job opportunities close to each other.

 

[brianmanahan]

work is the reason why big cities are so expensive. There are TONS of different job opportunities that generally pay higher salaries in a small area. Living rurally is cool but the problem is that if you lose your job getting a replacement job is MUCH harder than when you live in a city and are many different job opportunities close to each other.

true but you can always drive into a city

i drive like 40 miles 1 way to my job

 

[rednas]

true but you can always drive into a city

i drive like 40 miles 1 way to my job

I have done that and now I live in a city and commute to the burbs. My quality of life has increased drastically since I no longer have to drive 2+ hours every workday. Nothing sucks more than having a 12 hour shift knowing that you still have over an hour to make it home.

 

[pcgeek11]

I paid 75K for my 1700 Sg.Ft. 3 BR 2 Bath Ranch.

 

[Ns1]

half the places with these cheap home prices are in east bumblefuck. no culture. you have to drive everywhere to do anything. just a bunch of chain stores and strip malls. hey if that's your thing go for it.

some people enjoy being able to walk to most things and the culture that bigger cities bring. so you gotta pay to play. me personally? can't do the suburban culture-less strip mall laden lifestyle. if you can, god bless. that's why we have both options.

this.

 

[Nograts]

this.

I agree with brian that city culture is stupid and overrated. If you live in sicily or paris or something maybe, but pretty much anywhere in America can go suck it.

 

[rednas]

I paid 75K for my 1700 Sg.Ft. 3 BR 2 Bath Ranch.

what part of Detroit are you living in?

 

[brianmanahan]

I agree with brian that city culture is stupid and overrated. If you live in sicily or paris or something maybe, but pretty much anywhere in America can go suck it.

but it does work out well that people like living in cities, since millions can flock there instead of buying lots in rural areas

 

[Phokus]

I got my own house, but if i ever wanted to move back to Boston, i'd probably just build an addition to my parent's home. Real estate is batshit crazy there.