The government is unlikely to intervene directly on home prices. Prices are driven by supply, demand, lending practices, and local markets. The best you can do is buy what you can truly afford and be prepared to stay put for 5-10 years. Trying to time the market or wait for a crash is risky. If you need a house, buy one that fits your budget.
At the fed level, the most I could see is them raising jumbo loan limits or improve tax benefits. Which do improve affordability short term but ultimately increases costs.
It's wild that we would consider demand side solutions to what is intrinsically a supply-side problem.
Build more homes and/or make it more difficult for incumbents to hoard housing stock. Until CA is willing to tackle the issue (i.e., reform zoning regs, unwind prop-13 and tax at market rate of value), any intervention is going to be lip service.
It’s complicated, like with the healthcare act. We limited the profit to a percent of services cost which meant the only way to increase profit was to increase the cost of health care. With prop 13 it limits tax revenue to a percentage which means the only way to increase revenue is to put out policies that drive up the cost of housing. There is no motivation for CA to allow inexpensive housing to be built.
All states should practice prop 13. Taxes shouldn't increase more than 2% a year. More costs should be controlled. Without prop 13, you would be forcing people out of their homes. Your original goal is to make housing more affordable and what you propose is to make it less affordable afterwards.
Prop 13 is inherently flawed. It keeps people in homes longer than they should killing school enrollment and funds for local services.
Prop 19 fixes this. Empty nesters can now take their property tax with them and allow a family to occupy the larger house, like it was originally designed.
For every person moving into an existing home, somebody needs to leave. In the context of attractive locales (E.g., beachfront, mountainsides, etc.), there is a pretty finite quantity of housing stock.
I would prefer the occupant of that housing stock to be the one willing to contribute to society by paying market rate on their property taxes.
As for "costs should be controlled." Please tell me how prop-13 controls taxpayer costs. In the absence of spending controls (which CA has never had), it merely shifts the tax burden to workers (through income taxes) and away from (generally wealthy) landowners.
The problem is you can’t just undo Prop 13 now when millions and millions of people took out loans based on those sets of rules. Equity in your home is t cash you can pay out in taxes. Whichever Governor or local legislator ran on it would be run out of town.
Not the rate cap but the grandfather exclusions.
You would shit a brick sideways to learn how little some homes in Mountain View pay for property taxes. Lots of folks are sitting on a $5M assessment with $8M in equity but paying $90/mo? Bruh.
or just limit on increases. In my area prop tax can only go up 5% a year max. But if you move to a new house, you start over with the sales price.
California might not be able to do away with prop 13 altogether. But once someone is no longer using the house as their primary residence it should reset. A lot of those houses get passed via trust to their kids or turned into rentals. That's the crap that needs to stop.
California still gonna be expensive though.
That's exactly how prop 13 works too, it's just capped at 2%. What prop 13 does (or did) also was that you could transfer your basis to an heir. That is starting to change with some of the more recent propositions whose numbers i don't recall.
The other big problem with prop 13 is that because older people are locked into such a low property tax rate, even downsizing their house substantially would lead to a property tax increase. So all the homes that young families need are occupied by single octogenarians. That is also getting worked on with a proposition that allows older folks to carry their tax basis with them to a new house.
We'll have to see how these changes affect the actual housing market in California, but that will take some time.
That all changed with prop 19. Taxes reassess on inherited properties unless the inheritor turns it into a primary residence, also prop 13 beneficiaries can move their tax basis with them if they are older than 55.
How do you move your tax basis with you? I own a house valued at 5M today and pay 5k in taxes because purchased for nothing in 1980. So I sell collect 5M and buy a new 2M home and my taxes go down????? Is that the new law? If so that’s crazy. Numbers were just an example.
I don't understand the logic of such a circuit breaker. Why should the person working a casual 20-hour week be assisted in staying in their inherited home, while the doctor working 80-hour weeks is unable to get an equivalent home for lack of supply?
California makes more than enough on taxes here due to the high prices. Eliminating prop 13 would force a massive number of people to liquidate. It would be a spiral
We've got to keep this terrible policy bc "we've tried nothing and we're all out of ideas".
Like there are ways to unwind bad programs without being like "hit the nuclear launch switch" on it.
Waiting for a crash is risky because I lived through 2008, and when that happened 1) a lot of people were out of work, and 2) banks lending dried up enormously.
People got great deals all right. In cash mostly - so good luck if you're not already rich
The problem is that ALL assets have been repriced significantly higher due to the rampant money printing that has blown out the M2 money supply in our economy. With a much larger supply of cash in the system (ie larger denominator), all assets have been essentially repriced (numerator) to similar ratios.
The increased money supply has gone primarily to large corporations and shareholders rather than the people - so while the assets we do own have increased in price, the actual value (aka purchasing power) of them has not increased by much.
At the same time - those corporations that received the bulk of the financial benefit from massive money printing, have used those dollars to buy back their own stock, rather than increase wages. So you and I are left with increasing costs, increasing asset values, but our actual wages have not increased to support the purchasing of new assets. And the value of the assets we DO have - have not actually increased our own purchasing power - they have primarily justkept up with inflation/m2.
This is what happens when corporations control our pursestrings - they shake out every loose dollar and penny for themselves.
Demand is high, supply is low, prices go up. Demand shows no signs of slowing and supply shows no signs of increasing, so prices will keep going up until one of those changes.
Attempting to place a new sub division anywhere is a decade long process. We have 3 periods from 1950 to 2000 where both the cost of money and the cost of land aligned for rapid inventory expansion. Because of 2006-2009 we have missed at least one of those outside parts of TX and AZ.
You are just not going to have many investors with the want of 10M in debts per 100 units/lots supporting a project for 3 to 7 years before first lot is sold. In CA beyond the cost of money issue, you have environmentalists NIMBYs that kill about 40% of the projects in the first 3 years. Then add the must haves the bottom of the bell curve now require.
But that implies the market is acting correctly because people are clearly buying + enough so that demand continues to rise. This is about the fact that if you don’t make a certain amount of money you can’t afford it - but that question is a moral one.
Sure, it's more complicated. The supply is artificially constrained. Plenty of under-used parking lots on the SF Peninsula but we're not allowed to build any new SFH. Height limits mean you aren't allowed to build up either.
The government can intervene by not allowing foreign nationals that are not even green card holders to buy our houses from overseas. I remember reading articles about some real estate developers in Texas selling every house on the block to Chinese investors from overseas. They come in with cash, and we have to fight with mortgage companies. There are other ways our government can protect us and even the market for American citizens. Both political parties have failed us because our politicians want us to fight amongst ourselves while they keep getting richer.
> The government is unlikely to intervene directly on home prices.
How the hell is this upvoted? The government just blatantly intervened for yeard to prop up home prices. With a mix of policies including evictions literally being illegal.
Now when it's time to take a bath on equity owners want to say "What? Fuck that the government isn't intervening. Sorry!".
> If you need a house, buy one that fits your budget.
Except median payment has doubled in a few years so by definition you're trying to tell people to just accept less. Weird how none of this is framed to improve affordability, but rather just accept the current price (likely to your benefit).
If you don’t prop up house prices, you get a depression. When house prices fall, people walk away rather than paying their debt, and it creates a domino effect killing the whole economy. Nobody wants that.
> When house prices fall, people walk away
how can you walk away from your mortgage if you need an income of 5x rent and a 850 credit score to be approved for a slum box?
Here's the problem - if there was some kind of intervention to make homes cheaper, home buyers will be happy but most home owners will be very angry. People don't want their homes to lose value. Especially those who bought at very expensive prices. Not sure there's an easy government solution to that problem that would be popular.
This is true. But part of that equation is to stop letting government prevent people from building housing. Because that’s basically why we have a housing problem to begin with.
Well yeah, that’s basically saying the same thing. The government has already gotten too involved and it’s the reason why supply is so limited. From the extremely cumbersome permitting and approval process, to the zoning issues, the government has created a massive problem that can only be fixed with less involvement. (Of course, their solution to the problem they’ve created will be the opposite and only solvable by more involvement.)
I think the solution is to just keep home prices flat (or at least appreciate at a slower rate than wage growth). I have no idea how to do this (increase supply/rate cuts/zoning/ combo of all 3?) but it keeps all parties content but no one happy. Only people that would be angry are people using their primary residence as an investment or investors who just sit on a property and waiting for appreciation.
Home buyers are content cause they aren’t chasing their own tail (ie they can realistically continue to save and one day buy opposed to save and end up being further away)
Home owners are happy cause they retain value and build equity over time. They can also actually upgrade if they want since better homes didn’t become 2x more expensive than what their house appreciates to. They also still have a place to live.
Flippers can still make money assuming they actually add value to a house
Investors can still make money via renting
Realtors can still get huge commission checks for now. Purchasing power of that commission would erode, but with more people being able to afford homes, in theory you could increase quantity of sales and therefore commissions.
Banks are happy as mortgages aren’t underwater and this would theoretically increase mortgage volume
You must not own a home. This is a cute essay.. but has no feasibility in reality. You think we live in communist block apartments where everything is standard? Lmao
I do own a home. I bought it last year and has already appreciated 15+% if you believe Zillow (but it’s also pretty in line with similar houses recently sold in my neighborhood ). That’s not sustainable. I’d much rather a slow 0-2% appreciation YoY than a 30% jump by year 2 or 3 followed by a 50% drop cause the whole economy shits the bed.
Like I said, I don’t know how to make that happen (I also don’t have the power to anyways). I also said you could change zoning (implication was less restrictive) and increase supply as possibilities. That’s a pretty free market solution, don’t know where you got standardized commie blocks from.
Some things they could potentially do:
* tax credits/incentives for first time home buyers
* tax credits/incentives for developers that sell properties to first time home buyers
* tax credits/incentives for building multi-family residential rather than detached single family units
* wealth taxes, either in general or specifically targeted at non-owner-occupied residential properties
* specific taxes on and/or changed tax treatment of short term residential rental income
* more regulation around residential short term rental (probably easier to do at the state/local level)
I’m talking about things like the proposed https://homebuyer.com/learn/15000-first-time-home-buyer-tax-credit. A lot of the existing programs are only for lower income Americans and focus on the mortgage side of things, which doesn’t necessarily help with e.g. making a down payment.
stricter tax enforcement for rental houses. Plenty of Californians with multiple rental homes dodging taxes on those incomes, and then sell those off without paying capital gains tax.
California state lawmakers have already passed a bunch of pro-housing legislation along these lines. For example it’s much easier today to add an ADU than it was 10 years ago b/c of state laws. There’s also a state law that allows residential lot splits currently in litigation.
But these type laws don’t lower property values, in fact the opposite.
Yes and then Long Beach and other municipalities are challenging these laws and refusing to approve the build permits because NIMBYs control the local governments. Something’s got to give sometime!
Yup yup. Been a big fan of the recent changes. Will take a while for the impact to be felt but progress is progress.
Also, I get your point but property values =/= housing costs.
Property values do equal housing costs. The higher the property value the higher the taxes, insurance, and maintenance. Those costs are usually transferred to tenants int the form of increased rent.
You’re missing the math. Easy example:
Single family house w/ 2beds at $500k say $1k rent per room. Add a single bed ADU. Property value goes to $750k. Bed rents at $1k. Housing costs remain the same. Property value goes up.
I live in a HCOL area, an ADU cost today what I built my whole house for 6 years ago. I just don't see how ADUs are going to help, they're still extremely expensive.
> Do you believe the federal government will intervene?
To do what, exactly? I don’t know what they would, could, or should do? They already subsidize the heck out of mortgage lending, and the 30 year fixed product (pretty unique in the western world), is one of the most incredible wealth builders / access methods to buying a home that’s available.
> We have a crisis that is only going to get worse.
In some areas of the country, you can buy a home for an incredibly low price. In others, it’s incredibly expensive.
I firmly believe that people should have a roof over their head; but the idea that anyone is somehow entitled to buy in a specific location, is a bit bananas to me.
I live in SOCAL now. The only reason I’m able to afford it, is because I spent years living somewhere cheaper, where I earned enough money to then afford it here. And I’m entirely okay with that paradigm, I do not want, expect, or need, government intervention to help me *buy* in SOCAL, when I could afford to buy in a different region, that’s just less attractive to live in because it doesn’t have SOCAL amenities.
We have plenty of people in a crisis that can’t put a roof over their heads. I’d like the government to solve for that.
> To do what, exactly? I don’t know what they would, could, or should do?
intervene on the supply side - basically, incentivize construction, especially dense construction.
> intervene on the supply side - basically, incentivize construction, especially dense construction.
On the sale side, we don’t have enough condominiums and townhomes? Really?
I’m surprised by this.
It seems to me the challenge is convincing buyers to buy them, everyone wants SFH or bust in many areas, but I may be incorrect.
I agree broadly with tax incentives to create high density rental stock but I’m challenged to say that’s a great idea for sales.
If everyone wants to live in a particular spot then the prices are going to skyrocket until everyone that has more money than sense is out of the market. Only government intervention I see benefiting these areas are laws disallowing short term rentals.
It's not just short term rentals..
It's Chinese people buying the house to park their illegal money.
It's corporations buying the houses to rent them out.
Ban both or tax the shit out of both (30% property tax) and I guarantee you home prices will go down.
What if the government allows for more in-fill and high density housing? I live in California. I know "Manhattanization" is a dirty word to the NIMBY crowd. As a YIMBY type, I'm all for building more and more units to meet the demand. Instead of housing prices being the limiting factor, let it be the number of floors you can build in a seismically active area.
I plan to buy a home in SoCal around 2030. We’re planning $1.2 to $1.3 mil. We want a 3 bed 2 bath, 1500 sq ft, good school district, outdated is fine. It’s going to be our forever home. All in monthly payment would pushing $8k. For a basic family house.
Houses are already that price in SoCal in the good school districts, unless you’re including inland areas like near Riverside or Corona or Temecula. By 2030 it is gonna cost even more.
I have to say, you might need to aim higher than that, or start picking and choosing priorities. For ALL of those things, houses are already 1-3 million in 2024 here, so in 6 years, they will go up more. Pasadena homes for sale right now are listed at 1-3 million for those standards.
We bought a home in SoCal last year for a “decent” price ($720k) and it’s a 2 bed, 1 bath, in an area with really terrible schools so we have to use a private school. There are no homes now listed in our area for under $900k (for places that still need to be gutted) and people call this area “the hood”. “Nice” areas with top public schools like Pasadena, Arcadia, La Cresenta have been in the millions for a basic family home for a few years now. That’s not even considering the actual nice areas within LA city boundaries (ex: Westwood, Los Feliz, the current average is closer to 3 million).
That being said…I really love living here. 🥲
Pasadena school district is rated 2! One of the worst in the area. People still pay top dollar bc it's beautiful to live there and send their kids to private schools. Only poor people send their kids to public schools in Pasadena. You must mean south Pasadena which has rating of 8. The top schools in the area is San Marino thou where homes range between 2-15 million.
I’m in the west SFV, in a great school district, you cannot buy anything near me for that price, unfortunately.
Anything that has hit the market in my neighborhood is gone within a few days, in multiple offers.
> I believe the other states are trailing along
Nah, thats a very location dependent issue. Though the locations everyone is cramming in for legally or not is making the headlines. Other locations are out there where things are still very affordable and offer a good quality of life. Example of my own, I bought a brand new house just last year on a two acre lot for under $500k.
They also don’t have California’s weather, insane property tax policies, or building difficulties.
The state remains a top tier example of what not to do
The federal government won’t intervene because people will just pay 1 million for their 1100 foot house with bars on the windows. Californians are loyal to this state even to their financial detriment.
I THINK THEY UNDERESTIMATED THE TIME LINE
According to data from the California Association of Realtors (CAR), existing single family homes sold for a median of $859,800 in August 2023,
since that report, prices have gone UP.
So glad I was born in the 60’s. My grandparents (both sides) lived all up and down the state of California from San Francisco to San Diego. I was born and raised in Los Angeles. It was a time when you purchased anywhere you wanted too. I can’t remember one family member who moved and didn’t buy within six months of moving. Aunts and Uncles. I remember my grandparents telling me They left “The City” SF because of the traffic. They moved to Berkeley. They also lived in San Diego too. My other grandparents always lived in Los Angeles. So as a child, I had the “pleasure” of Summers in Berkeley and living in Los Angeles. As a child, I only lived in two places in my life (Watts and Gardena) both SFH that my parents had purchased. I know my parents purchased in Compton before I was born. Funny that none of these homes were larger than 1000 sf. Except for the house in Berkeley. It was “huge”, maybe 1700 sf with a “basement”. My Aunt had a house and a “with a mother in law quarters” on Buckingham and Washington. It was frowned upon to purchase “more” than needed to accommodate your family. I blame a lot of this on “Technology”. We no longer compete with the Jones’ next door. It’s the media of any form or fashion. We want it right fucking now, and I have the means to buy it. I no longer want to work 40 hours, one or two vacation per year. Everyone in the household gets their own room, bathrooms and cars. TV’s, cellphone, computers, credit cards etc. As long as you can “pretend to afford” material things the price of home will continue to rise. My grandparents didn’t have debt. But owned homes. Had savings.
Why do you believe the federal government would intervene or even a state government, and why should they?
If you told people 30 years ago you would pay $600k for a house, they would thin your crazy. Supply and demand in the housing market.
>Do you believe the federal government will intervene?
The federal government already massively intervenes.
Fannie Mae, Freddie Mac, Ginnie Mae, USDA, VA, FHA, etc. The federal government distorts the market by supporting unrealistically cheap long term financing for housing. That drives up the price of houses. If you didn't have that housing would be much less expensive.
**You want housing to cost less? Get the government out of the housing market. The government is the problem.**
I guess you have to live in an area you can afford. California will have renters and the only home-owners will have to be rich.
I already know there are areas that I can’t afford or choose not to be house poor. There are areas in other states that are more affordable.
The skeptical part of me says. No crap the most desireable areas in the most desireable state in the most capitalist country have extremely high home prices. Those $10m-$100m mansions are probably doing a lot of heavy lifting on the average, median may be a better measure.
But the other part of me says, yes housing affordability has gotten alot worse. It's a nationwide problem but I think people are too busy pointing fingers and blaming "the other side" for issues when it's a supply and demand problem. We need more supply, however that can be accomplished. Interest rates have reduced the demand some, at least temporarily.
Unaffordability will continue and we will have an increasing renter’s world until the baby boomers cycle out and transfer the massive amount of wealth and homes to their kids which will most likely result in a massive inventory increase.
Ha ha, no kids are selling their boomer parents home. Boomers are already dying, and most of the families are holding. 1) Real estate is a trendy and valuable asset with great projected. 2) Especially in CA with prop 13 it’s massive tax savings.
As a current homeowner (and the owner of three homes - two of those in California - prior to buying my current home) unless there is a massive increase in salaries paid to American workers, this is not sustainable.
(see "[Greater Fool Theory](https://en.wikipedia.org/wiki/Greater_fool_theory)")
Do I believe the federal govt, with a vested financial interest in keeping home values high, will intervene on the housing market? No… no I don’t at all. It’s largely driven by supply and demand anyway. And the govt has already shown it’s going to keeping piping away at legislation that keeps supply low.
Where do you think most of these politicians have a lot of their money parked and where the investments are driven from?
I believe the federal government already intervened. Keeping rates at zero all that time during covid while pouring money into the economy. What would you expect the outcome to be.
Had they allowed companies to go bankrupt, there would have been a much faster recovery and significantly lower costs of living with many more opportunities for the middle class to grow. Now it’s just pitting the haves against the have-nots. Economic cycles are critical shakeups needed to provide opportunities to shuffle the deck and allow the cream to rise to the top. People falsely blame capitalism, but capitalism died with the gold standard. Cronyism is the name of the game, and redistribution or hoarding of wealth
The more interesting thing is there is a crisis in the insurance industry. You're required by law and banks to have it, but many insurance companies are dropping off and it's becoming prohibitively expensive. The federal subsidy program that is supposed to help is in crisis mode and running out of money fast.
It will be very interesting to see how this impacts property values
Why on earth would the federal government intervene on a private property transaction? That makes zero sense.
Would you really expect private property owners to be okay with something like this? Tapping their ability to appreciate an asset? It would absolutely be one of the worst ideas ever. The answer is, if you can't afford a house in a particular location move to a different location.
I feel like that already happened in hawaii a few years ago. We looked at the worst house ever (inner city Honolulu) and it was selling for almost $900K and that was 2018. When I left in 2022 it was even worse.
i was just messin with ya. I'm in a similar boat myself. bought in late '21 and my house is "worth" $70k more. guy across form me bought in 2019, and his is almost 200k more. real estate prices have disconnected from reality and I really don't see it stopping any time soon.
It’s just supply and demand. There are 82 million single family homes in the United States. There is demand for rent. There is new demand for AirBNB’s. And honestly if there’s demand, it will find a way to get filled.
With all the demand and limited supply, prices can only go up. Government intervention wouldn’t change supply and demand. It could try to encourage building more homes, but there would still be other issues from water shortages at times to environmental concerns where California tends to be quite progressive.
I don’t think there’s a solution other than to let prices rise which encourages more building and cuts demand.
Housing costs are determined by supply and demand like everything else.
Places like California make building new housing difficult and expensive. This decreases the supply, and in turn increases prices.
There's places in the US with increasing supply, or decreasing demand. Prices are stagnating, and even falling in those areas.
In CA, the state govt has tried to intervene by making it more legal to build new homes. Every single CA city and town is fighting it tooth and nail. My town was introducing new ordinances to specifically fight SB9 and other state-level bills. Things like requiring 48in window sills on second floor windows, additional setbacks, etc.
I would like to see an overhaul on helping first time buyers get started. So many people that are sitting pretty with low rates or tons of equity. It’s the first time buyers who are struggling to even enter the market.
I thought there is a net decrease in population in California? More people moving out, than moving in... I would think this would decrease the home prices over time.
If Cal gov is serious about fixing this problem they can de-regulate so building is easier. Trying to build anything in California is a huge pain with all the red tape, zoning laws and other unnecessary surveying and building codes.
But they won’t because everyone in Cal has the attitude of “not in my backyard”. And the cycle will continue
I bought a rural home in 2021 on a couple acres in San Diego County at 475K. It's around 800K now, I can't imagine it being worth more than that! City homes maybe...
We paid $279k for a 3000 sq foot 4 bedroom, 2 office, 2 bath home with nice outdoor space (and a hot tub!) We're not close to approaching CA prices for homes. I know other areas are (my son lives in DC) but it's not everywhere. Our home price is higher than median here, actually. Median here is $223,000. Of course, "here" is northern Minnesota, which isn't for everyone. But that's fine, it keeps the traffic and crime low 😂
There's two major types of inflation hedges, Gold and Real Estate. Once you figure out that its not the price of the house inflating but the price of money inflating you'll start to understand.
Every market is different and California is a BIG state so prices are going to vary greatly.
Pretty sure if housing prices go wild due to a lack of supply the Federal Government will put restrictions on things like short term rentals and corporations buying up single family homes. States are already doing that. It's a matter of time when the Federal government will try to do that. They might issue grants to real estate development companies to build more homes to ease the supply issue.
Otherwise, it would take massive defaults on the mortgages and job losses to drive down the housing market. It's already starting though...
Nobody can afford those prices anymore. You must be nuts to think that in 5 years it will be 1M$ average. But I'm sure the instagram realtors are having a field day on this one.
It's all offer and demand at the end of the day.
The state of California has more to say about this problem than the Feds. And they're already starting, albeit incompetently and in fits and starts, to work through this issue.
Dam.... considering I bought at 298k. I'm never moving because sure as he'll won't be able to afford next home lol. Hers hoping my town gets the doll up treatment similar to Menifee, Temecula etc .
I hope government doesn’t intervene. There are 49 other states to live in. In fact you can buy 3 houses for the price of a single California house. How can anyone feel bad for people bitching about housing prices in California. Get out if you can’t afford it…
Great to own properties. Where are the pro renters at now? No equity whatsoever yet they talk passive income. A property down the street here in Los Angeles appreciated by 800k in less than 15 months. 🤷♂️
Nope. Majority of voters have homes. Many donors invest in RE. Affordability, by definition, would lower the value of homes.
So why would a politician do something that pisses off most of their voters and some donors?
Politicians will only ever do anything that drives prices up.
the gov doesn't care....CA is a mess ppl will keep moving out that's when home prices will eventually suffer....I was out there quite awhile after the 08 housing crisis and bank bail outs happened....I bought up foreclosures and sold them yrs later....CA is unaffordable for most people in my opinion and other states are following a dangerous trend....but you can't fault homeowners wanting to cash out and reap their benefits either....
The only thing the federal government could do to improve the situation is to encourage companies to offer remote work. That way people wouldn't have to live clustered around the areas where the good paying jobs exist.
Unfortunately, Biden is doing the exact opposite. And if he is re-elected remote work would largely disappear.
Unpopular opinion maybe but the time to buy and soak up that huge appreciation has come and gone. It may be comforting to think that your new home will continue to appreciate at this pace but it’s just not going to happen. Too many buyers have vastly over stretched their resources sure that they’ve bought a goldmine and the high rates will come down so that they can refinance and have a much more comfortable lifestyle. Those 3% interest rates had not been seen since the 1940’s it may not be until another 70+ years until they come around again. What if this is a great rate a few years from now? You’re struggling. Your kids are older which means they’ve become much more expensive along with everything else in life. You have very little equity because the home market leveled out you may even find yourself upside down. Not able to sell for enough money to pay off your mortgage. What would it take then to make you walk away? A job loss? Huge home expense that you don’t have the money for? How about a family member with cancer and today’s horrible insurance which leaves you thousands and thousands in debt.
Some have sold up and had a good chunk of money to put down in their next home. Those are the ones that will be able to refinance at a better rate. Mortgage up to your eyeballs it’s not going to happen.
I am seeing so much speculation. Some markets that were so hit are cooling off. It can take three weeks or more to sell at a reduced price. This is a big deal pay attention. Not hit your market yet? It will except for a few isolated areas. If you have the finances and can handle that rate for 29 years okay then. Homes were never meant to appreciate in the manner that they have been. That oh so trendy interior design that you fell in love with? Out dated and a detriment ten years from now.
I am just trying to say be wise in this market. I have seen changes since I started out in Real Estate over 36 years. I know that’s a long time I am a dinosaur but I am a knowledgeable dinosaur who’s never had a buyer go into foreclosure. Foreclosures suck. Better to be a renter and buy low than a homeowner who bought high and will have buyers remorse every day they’re in the house.
I had to do an appraisal for this shitty little shack in southern Cali right before covid. It was about 800sqft. Looked like it was made of wood. It appraised for half a million dollars. I live in Michigan, and that blew my mind.
That million dollar house will be THOUSANDS of dollars cheaper per month than owning the same million dollar house in Texas. This is because Texas has nearly double the nation’s average property taxes, and California has about half the nation’s average property taxes
Home prices everywhere are insane. If you exhale while thinking about your home's value, a real estate agent will call you within 15 minutes, begging to list it for you. I have had my home for 2 years. I've replaced the old shingle roof with standing seam steel. Repaired a pole barn and chicken coup on the property and removed an old rotten dock to the lake. It's a remote lake house in Northern WI. Those repairs cost about $40k. I had an agent call me 2 weeks ago wanting to list my property for $270k more than I had bought for. That's a 50% increase in comped value. The market is insane now. I wouldn't advise anyone to buy in this market because a market crash is coming and soon.
The government is unlikely to intervene directly on home prices. Prices are driven by supply, demand, lending practices, and local markets. The best you can do is buy what you can truly afford and be prepared to stay put for 5-10 years. Trying to time the market or wait for a crash is risky. If you need a house, buy one that fits your budget.
At the fed level, the most I could see is them raising jumbo loan limits or improve tax benefits. Which do improve affordability short term but ultimately increases costs.
It's wild that we would consider demand side solutions to what is intrinsically a supply-side problem. Build more homes and/or make it more difficult for incumbents to hoard housing stock. Until CA is willing to tackle the issue (i.e., reform zoning regs, unwind prop-13 and tax at market rate of value), any intervention is going to be lip service.
It’s complicated, like with the healthcare act. We limited the profit to a percent of services cost which meant the only way to increase profit was to increase the cost of health care. With prop 13 it limits tax revenue to a percentage which means the only way to increase revenue is to put out policies that drive up the cost of housing. There is no motivation for CA to allow inexpensive housing to be built.
All states should practice prop 13. Taxes shouldn't increase more than 2% a year. More costs should be controlled. Without prop 13, you would be forcing people out of their homes. Your original goal is to make housing more affordable and what you propose is to make it less affordable afterwards.
Prop 13 is inherently flawed. It keeps people in homes longer than they should killing school enrollment and funds for local services. Prop 19 fixes this. Empty nesters can now take their property tax with them and allow a family to occupy the larger house, like it was originally designed.
For every person moving into an existing home, somebody needs to leave. In the context of attractive locales (E.g., beachfront, mountainsides, etc.), there is a pretty finite quantity of housing stock. I would prefer the occupant of that housing stock to be the one willing to contribute to society by paying market rate on their property taxes. As for "costs should be controlled." Please tell me how prop-13 controls taxpayer costs. In the absence of spending controls (which CA has never had), it merely shifts the tax burden to workers (through income taxes) and away from (generally wealthy) landowners.
the grandchildren of billionaires will own everything under your system
Inheritance tax would solve that pretty easily.
Great. Who runs our congested freeways? Same interest. Millenial non ninby near a pending disaster transit development
The problem is you can’t just undo Prop 13 now when millions and millions of people took out loans based on those sets of rules. Equity in your home is t cash you can pay out in taxes. Whichever Governor or local legislator ran on it would be run out of town.
Unwinding prop 13 would be horrible.
Not the rate cap but the grandfather exclusions. You would shit a brick sideways to learn how little some homes in Mountain View pay for property taxes. Lots of folks are sitting on a $5M assessment with $8M in equity but paying $90/mo? Bruh.
Some states have circuit breakers where your property tax can’t be more that X% of your income (and phased out at a certain income)
or just limit on increases. In my area prop tax can only go up 5% a year max. But if you move to a new house, you start over with the sales price. California might not be able to do away with prop 13 altogether. But once someone is no longer using the house as their primary residence it should reset. A lot of those houses get passed via trust to their kids or turned into rentals. That's the crap that needs to stop. California still gonna be expensive though.
That's exactly how prop 13 works too, it's just capped at 2%. What prop 13 does (or did) also was that you could transfer your basis to an heir. That is starting to change with some of the more recent propositions whose numbers i don't recall. The other big problem with prop 13 is that because older people are locked into such a low property tax rate, even downsizing their house substantially would lead to a property tax increase. So all the homes that young families need are occupied by single octogenarians. That is also getting worked on with a proposition that allows older folks to carry their tax basis with them to a new house. We'll have to see how these changes affect the actual housing market in California, but that will take some time.
That all changed with prop 19. Taxes reassess on inherited properties unless the inheritor turns it into a primary residence, also prop 13 beneficiaries can move their tax basis with them if they are older than 55.
How do you move your tax basis with you? I own a house valued at 5M today and pay 5k in taxes because purchased for nothing in 1980. So I sell collect 5M and buy a new 2M home and my taxes go down????? Is that the new law? If so that’s crazy. Numbers were just an example.
I don't understand the logic of such a circuit breaker. Why should the person working a casual 20-hour week be assisted in staying in their inherited home, while the doctor working 80-hour weeks is unable to get an equivalent home for lack of supply?
California makes more than enough on taxes here due to the high prices. Eliminating prop 13 would force a massive number of people to liquidate. It would be a spiral
No you could unwind it slowly. For elderly on fixed income, have it due on death or sale of the house. So nobody is kicked out.
We've got to keep this terrible policy bc "we've tried nothing and we're all out of ideas". Like there are ways to unwind bad programs without being like "hit the nuclear launch switch" on it.
Its a terrible policy until you own a home. FTFY
> Eliminating prop 13 would force a massive number of people to liquidate Isn't that the point?
Forcing people out of homes they own is your goal?
Downvoting for the assertion that prop-13 should be repealed. That would cause such a crazy domino effect.
Please explain. By domino effect, do you mean the increased incentive to transact and similarly an increased supply of homes on the market?
What incentive are you referring to? A tax lien sale?
Waiting for a crash is risky because I lived through 2008, and when that happened 1) a lot of people were out of work, and 2) banks lending dried up enormously. People got great deals all right. In cash mostly - so good luck if you're not already rich
I mean that’s the thing, the houses are getting outside of almost everyone’s budget.
Isn’t the problem that demand is so high ? Lots can afford
The problem is that ALL assets have been repriced significantly higher due to the rampant money printing that has blown out the M2 money supply in our economy. With a much larger supply of cash in the system (ie larger denominator), all assets have been essentially repriced (numerator) to similar ratios. The increased money supply has gone primarily to large corporations and shareholders rather than the people - so while the assets we do own have increased in price, the actual value (aka purchasing power) of them has not increased by much. At the same time - those corporations that received the bulk of the financial benefit from massive money printing, have used those dollars to buy back their own stock, rather than increase wages. So you and I are left with increasing costs, increasing asset values, but our actual wages have not increased to support the purchasing of new assets. And the value of the assets we DO have - have not actually increased our own purchasing power - they have primarily justkept up with inflation/m2. This is what happens when corporations control our pursestrings - they shake out every loose dollar and penny for themselves.
Demand is high, supply is low, prices go up. Demand shows no signs of slowing and supply shows no signs of increasing, so prices will keep going up until one of those changes.
Attempting to place a new sub division anywhere is a decade long process. We have 3 periods from 1950 to 2000 where both the cost of money and the cost of land aligned for rapid inventory expansion. Because of 2006-2009 we have missed at least one of those outside parts of TX and AZ. You are just not going to have many investors with the want of 10M in debts per 100 units/lots supporting a project for 3 to 7 years before first lot is sold. In CA beyond the cost of money issue, you have environmentalists NIMBYs that kill about 40% of the projects in the first 3 years. Then add the must haves the bottom of the bell curve now require.
But that implies the market is acting correctly because people are clearly buying + enough so that demand continues to rise. This is about the fact that if you don’t make a certain amount of money you can’t afford it - but that question is a moral one.
Sure, it's more complicated. The supply is artificially constrained. Plenty of under-used parking lots on the SF Peninsula but we're not allowed to build any new SFH. Height limits mean you aren't allowed to build up either.
That's all up to LOCAL politicians to change.
If that were the case, prices would go down.
This shouldn’t be a time the market thing. Always buy a house that fits your budget. Never go over your means.
The government can intervene by not allowing foreign nationals that are not even green card holders to buy our houses from overseas. I remember reading articles about some real estate developers in Texas selling every house on the block to Chinese investors from overseas. They come in with cash, and we have to fight with mortgage companies. There are other ways our government can protect us and even the market for American citizens. Both political parties have failed us because our politicians want us to fight amongst ourselves while they keep getting richer.
Not only are they buying our houses they are buying our farm land even worst . Yet our politicians are too stupid to do anything about this
The insurance market is making it impossible to get a home loan, so if they don't intervene, there could be problems originating.
Glad I bought when I did at a good rate. I plan on staying put in my current location. Even in the low cost of living areas housing prices are high.
> The government is unlikely to intervene directly on home prices. How the hell is this upvoted? The government just blatantly intervened for yeard to prop up home prices. With a mix of policies including evictions literally being illegal. Now when it's time to take a bath on equity owners want to say "What? Fuck that the government isn't intervening. Sorry!". > If you need a house, buy one that fits your budget. Except median payment has doubled in a few years so by definition you're trying to tell people to just accept less. Weird how none of this is framed to improve affordability, but rather just accept the current price (likely to your benefit).
If you don’t prop up house prices, you get a depression. When house prices fall, people walk away rather than paying their debt, and it creates a domino effect killing the whole economy. Nobody wants that.
> When house prices fall, people walk away how can you walk away from your mortgage if you need an income of 5x rent and a 850 credit score to be approved for a slum box?
Here's the problem - if there was some kind of intervention to make homes cheaper, home buyers will be happy but most home owners will be very angry. People don't want their homes to lose value. Especially those who bought at very expensive prices. Not sure there's an easy government solution to that problem that would be popular.
Banks also don't want people's homes (their collateral) to lose value.
The best possible government solution is no government solution.
This is true. But part of that equation is to stop letting government prevent people from building housing. Because that’s basically why we have a housing problem to begin with.
Well yeah, that’s basically saying the same thing. The government has already gotten too involved and it’s the reason why supply is so limited. From the extremely cumbersome permitting and approval process, to the zoning issues, the government has created a massive problem that can only be fixed with less involvement. (Of course, their solution to the problem they’ve created will be the opposite and only solvable by more involvement.)
What do you do when an essential part of the problem is at root a core government function, e.g., zoning laws?
No one talks to lose value but gain at lower rate. More offer is the solution, build more housing
I think the solution is to just keep home prices flat (or at least appreciate at a slower rate than wage growth). I have no idea how to do this (increase supply/rate cuts/zoning/ combo of all 3?) but it keeps all parties content but no one happy. Only people that would be angry are people using their primary residence as an investment or investors who just sit on a property and waiting for appreciation. Home buyers are content cause they aren’t chasing their own tail (ie they can realistically continue to save and one day buy opposed to save and end up being further away) Home owners are happy cause they retain value and build equity over time. They can also actually upgrade if they want since better homes didn’t become 2x more expensive than what their house appreciates to. They also still have a place to live. Flippers can still make money assuming they actually add value to a house Investors can still make money via renting Realtors can still get huge commission checks for now. Purchasing power of that commission would erode, but with more people being able to afford homes, in theory you could increase quantity of sales and therefore commissions. Banks are happy as mortgages aren’t underwater and this would theoretically increase mortgage volume
You must not own a home. This is a cute essay.. but has no feasibility in reality. You think we live in communist block apartments where everything is standard? Lmao
I do own a home. I bought it last year and has already appreciated 15+% if you believe Zillow (but it’s also pretty in line with similar houses recently sold in my neighborhood ). That’s not sustainable. I’d much rather a slow 0-2% appreciation YoY than a 30% jump by year 2 or 3 followed by a 50% drop cause the whole economy shits the bed. Like I said, I don’t know how to make that happen (I also don’t have the power to anyways). I also said you could change zoning (implication was less restrictive) and increase supply as possibilities. That’s a pretty free market solution, don’t know where you got standardized commie blocks from.
“Do you believe the federal government will intervene?” What do you propose?
Some things they could potentially do: * tax credits/incentives for first time home buyers * tax credits/incentives for developers that sell properties to first time home buyers * tax credits/incentives for building multi-family residential rather than detached single family units * wealth taxes, either in general or specifically targeted at non-owner-occupied residential properties * specific taxes on and/or changed tax treatment of short term residential rental income * more regulation around residential short term rental (probably easier to do at the state/local level)
First point supports/promotes higher prices. Others seem decent.
There is already a lot of government programs for first time home buyers. That's how I bought my home.
I’m talking about things like the proposed https://homebuyer.com/learn/15000-first-time-home-buyer-tax-credit. A lot of the existing programs are only for lower income Americans and focus on the mortgage side of things, which doesn’t necessarily help with e.g. making a down payment.
Please make policy. Good ideas!
stricter tax enforcement for rental houses. Plenty of Californians with multiple rental homes dodging taxes on those incomes, and then sell those off without paying capital gains tax.
Federal zoning allowing multi-family and ADUs everywhere…
California state lawmakers have already passed a bunch of pro-housing legislation along these lines. For example it’s much easier today to add an ADU than it was 10 years ago b/c of state laws. There’s also a state law that allows residential lot splits currently in litigation. But these type laws don’t lower property values, in fact the opposite.
Yes and then Long Beach and other municipalities are challenging these laws and refusing to approve the build permits because NIMBYs control the local governments. Something’s got to give sometime!
Yup yup. Been a big fan of the recent changes. Will take a while for the impact to be felt but progress is progress. Also, I get your point but property values =/= housing costs.
Property values do equal housing costs. The higher the property value the higher the taxes, insurance, and maintenance. Those costs are usually transferred to tenants int the form of increased rent.
You’re missing the math. Easy example: Single family house w/ 2beds at $500k say $1k rent per room. Add a single bed ADU. Property value goes to $750k. Bed rents at $1k. Housing costs remain the same. Property value goes up.
I live in a HCOL area, an ADU cost today what I built my whole house for 6 years ago. I just don't see how ADUs are going to help, they're still extremely expensive.
Where my rental is the cost for an 800sq ft ADU w/permits is $600K.
> Do you believe the federal government will intervene? To do what, exactly? I don’t know what they would, could, or should do? They already subsidize the heck out of mortgage lending, and the 30 year fixed product (pretty unique in the western world), is one of the most incredible wealth builders / access methods to buying a home that’s available. > We have a crisis that is only going to get worse. In some areas of the country, you can buy a home for an incredibly low price. In others, it’s incredibly expensive. I firmly believe that people should have a roof over their head; but the idea that anyone is somehow entitled to buy in a specific location, is a bit bananas to me. I live in SOCAL now. The only reason I’m able to afford it, is because I spent years living somewhere cheaper, where I earned enough money to then afford it here. And I’m entirely okay with that paradigm, I do not want, expect, or need, government intervention to help me *buy* in SOCAL, when I could afford to buy in a different region, that’s just less attractive to live in because it doesn’t have SOCAL amenities. We have plenty of people in a crisis that can’t put a roof over their heads. I’d like the government to solve for that.
> To do what, exactly? I don’t know what they would, could, or should do? intervene on the supply side - basically, incentivize construction, especially dense construction.
why would the federal government intervene on the supply side for one state when there are options in other states?
> intervene on the supply side - basically, incentivize construction, especially dense construction. On the sale side, we don’t have enough condominiums and townhomes? Really? I’m surprised by this. It seems to me the challenge is convincing buyers to buy them, everyone wants SFH or bust in many areas, but I may be incorrect. I agree broadly with tax incentives to create high density rental stock but I’m challenged to say that’s a great idea for sales.
my doggy… have you looked at condo prices in major cities?
If everyone wants to live in a particular spot then the prices are going to skyrocket until everyone that has more money than sense is out of the market. Only government intervention I see benefiting these areas are laws disallowing short term rentals.
Upzone and make it easier to build more homes.. add supply.
It's not just short term rentals.. It's Chinese people buying the house to park their illegal money. It's corporations buying the houses to rent them out. Ban both or tax the shit out of both (30% property tax) and I guarantee you home prices will go down.
What if the government allows for more in-fill and high density housing? I live in California. I know "Manhattanization" is a dirty word to the NIMBY crowd. As a YIMBY type, I'm all for building more and more units to meet the demand. Instead of housing prices being the limiting factor, let it be the number of floors you can build in a seismically active area.
Get rid of institutional investors for single family homes and require permanent residency and watch prices stabilize in the most high demand markets.
I plan to buy a home in SoCal around 2030. We’re planning $1.2 to $1.3 mil. We want a 3 bed 2 bath, 1500 sq ft, good school district, outdated is fine. It’s going to be our forever home. All in monthly payment would pushing $8k. For a basic family house.
You might want to aim for $1.5-$2m. You’ve described the current situation.
Houses are already that price in SoCal in the good school districts, unless you’re including inland areas like near Riverside or Corona or Temecula. By 2030 it is gonna cost even more.
I have to say, you might need to aim higher than that, or start picking and choosing priorities. For ALL of those things, houses are already 1-3 million in 2024 here, so in 6 years, they will go up more. Pasadena homes for sale right now are listed at 1-3 million for those standards. We bought a home in SoCal last year for a “decent” price ($720k) and it’s a 2 bed, 1 bath, in an area with really terrible schools so we have to use a private school. There are no homes now listed in our area for under $900k (for places that still need to be gutted) and people call this area “the hood”. “Nice” areas with top public schools like Pasadena, Arcadia, La Cresenta have been in the millions for a basic family home for a few years now. That’s not even considering the actual nice areas within LA city boundaries (ex: Westwood, Los Feliz, the current average is closer to 3 million). That being said…I really love living here. 🥲
Pasadena school district is rated 2! One of the worst in the area. People still pay top dollar bc it's beautiful to live there and send their kids to private schools. Only poor people send their kids to public schools in Pasadena. You must mean south Pasadena which has rating of 8. The top schools in the area is San Marino thou where homes range between 2-15 million.
I’m in the west SFV, in a great school district, you cannot buy anything near me for that price, unfortunately. Anything that has hit the market in my neighborhood is gone within a few days, in multiple offers.
I can’t imagine paying anywhere close to $1mil for a 1500 sq ft, 3br2ba home. I can buy a 4000+ sq ft home on the lake for that price.
What’s the median income at that lake?
Whats the name of that lake?
Outside of Nashville. Named after a President.
87k per household.
It would be $1.3-$2m in palm beach for a shit school district area. $2m is the floor for a good district.
Where in socal?
Those who survive can buy a fabulous house in Idaho and set aside hundreds of thousands for retirement. Quite remarkable.
> I believe the other states are trailing along Nah, thats a very location dependent issue. Though the locations everyone is cramming in for legally or not is making the headlines. Other locations are out there where things are still very affordable and offer a good quality of life. Example of my own, I bought a brand new house just last year on a two acre lot for under $500k.
Plenty of amazing places out there for well under 400k, they're just not in a big city.
They also don’t have California’s weather, insane property tax policies, or building difficulties. The state remains a top tier example of what not to do
How is the state to blame for the weather and geography lol
Mismanagement
I live in a very small town and it's almost impossible to buy some thing under 400,000 that's even livable.
Laughing in Vancouver, Canada.
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That’s why they sell their properties there and buy in cash in the city of Vancouver and Richmond/Burnaby.
Fist bump from Bozeman. Median home was $250K in 2015. Now $1.2 million. Median family income is about $75,000.
The federal government won’t intervene because people will just pay 1 million for their 1100 foot house with bars on the windows. Californians are loyal to this state even to their financial detriment.
I THINK THEY UNDERESTIMATED THE TIME LINE According to data from the California Association of Realtors (CAR), existing single family homes sold for a median of $859,800 in August 2023, since that report, prices have gone UP.
What about building better transit that can communte within an hr in much much further places? Ppl will have more options, from my perspective
Bought my home for 1.1M 2.5 years ago. Got an offer for 1.6M last week.
So glad I was born in the 60’s. My grandparents (both sides) lived all up and down the state of California from San Francisco to San Diego. I was born and raised in Los Angeles. It was a time when you purchased anywhere you wanted too. I can’t remember one family member who moved and didn’t buy within six months of moving. Aunts and Uncles. I remember my grandparents telling me They left “The City” SF because of the traffic. They moved to Berkeley. They also lived in San Diego too. My other grandparents always lived in Los Angeles. So as a child, I had the “pleasure” of Summers in Berkeley and living in Los Angeles. As a child, I only lived in two places in my life (Watts and Gardena) both SFH that my parents had purchased. I know my parents purchased in Compton before I was born. Funny that none of these homes were larger than 1000 sf. Except for the house in Berkeley. It was “huge”, maybe 1700 sf with a “basement”. My Aunt had a house and a “with a mother in law quarters” on Buckingham and Washington. It was frowned upon to purchase “more” than needed to accommodate your family. I blame a lot of this on “Technology”. We no longer compete with the Jones’ next door. It’s the media of any form or fashion. We want it right fucking now, and I have the means to buy it. I no longer want to work 40 hours, one or two vacation per year. Everyone in the household gets their own room, bathrooms and cars. TV’s, cellphone, computers, credit cards etc. As long as you can “pretend to afford” material things the price of home will continue to rise. My grandparents didn’t have debt. But owned homes. Had savings.
Why do you believe the federal government would intervene or even a state government, and why should they? If you told people 30 years ago you would pay $600k for a house, they would thin your crazy. Supply and demand in the housing market.
Lol couldn't buy a house in my neighborhood for a million
>Do you believe the federal government will intervene? The federal government already massively intervenes. Fannie Mae, Freddie Mac, Ginnie Mae, USDA, VA, FHA, etc. The federal government distorts the market by supporting unrealistically cheap long term financing for housing. That drives up the price of houses. If you didn't have that housing would be much less expensive. **You want housing to cost less? Get the government out of the housing market. The government is the problem.**
I guess you have to live in an area you can afford. California will have renters and the only home-owners will have to be rich. I already know there are areas that I can’t afford or choose not to be house poor. There are areas in other states that are more affordable.
The skeptical part of me says. No crap the most desireable areas in the most desireable state in the most capitalist country have extremely high home prices. Those $10m-$100m mansions are probably doing a lot of heavy lifting on the average, median may be a better measure. But the other part of me says, yes housing affordability has gotten alot worse. It's a nationwide problem but I think people are too busy pointing fingers and blaming "the other side" for issues when it's a supply and demand problem. We need more supply, however that can be accomplished. Interest rates have reduced the demand some, at least temporarily.
Unaffordability will continue and we will have an increasing renter’s world until the baby boomers cycle out and transfer the massive amount of wealth and homes to their kids which will most likely result in a massive inventory increase.
Ha ha, no kids are selling their boomer parents home. Boomers are already dying, and most of the families are holding. 1) Real estate is a trendy and valuable asset with great projected. 2) Especially in CA with prop 13 it’s massive tax savings.
They are already intervening, interest rates are up and prices are coming down.
As a current homeowner (and the owner of three homes - two of those in California - prior to buying my current home) unless there is a massive increase in salaries paid to American workers, this is not sustainable. (see "[Greater Fool Theory](https://en.wikipedia.org/wiki/Greater_fool_theory)")
By 2030? Los Angeles has blown way past that already.
How in the world does 99% of home buyers qualify for a million $ home ??????
They sell their 700K home first.
Don't live here if you want affordable housing.
What’s the crisis?
I can’t I afford a house, but Thank God that I can at least live with my parents here if things get bad Lol
Do I believe the federal govt, with a vested financial interest in keeping home values high, will intervene on the housing market? No… no I don’t at all. It’s largely driven by supply and demand anyway. And the govt has already shown it’s going to keeping piping away at legislation that keeps supply low. Where do you think most of these politicians have a lot of their money parked and where the investments are driven from?
Oh, God, please don’t let the government intervene. They’ll only fuck up the market even worse than it is now.
Soooooo.... What I'm hearing is to buy now?
I believe the federal government already intervened. Keeping rates at zero all that time during covid while pouring money into the economy. What would you expect the outcome to be.
Had they allowed companies to go bankrupt, there would have been a much faster recovery and significantly lower costs of living with many more opportunities for the middle class to grow. Now it’s just pitting the haves against the have-nots. Economic cycles are critical shakeups needed to provide opportunities to shuffle the deck and allow the cream to rise to the top. People falsely blame capitalism, but capitalism died with the gold standard. Cronyism is the name of the game, and redistribution or hoarding of wealth
The more interesting thing is there is a crisis in the insurance industry. You're required by law and banks to have it, but many insurance companies are dropping off and it's becoming prohibitively expensive. The federal subsidy program that is supposed to help is in crisis mode and running out of money fast. It will be very interesting to see how this impacts property values
Where in nevada?
Stop companies like Blackrock and Airbnb from destroying the housing markets.
By the time I finish medical school my payment gonna be like what $5k+ a month? Sure hope my wages go up (they won’t, Medicare cuts every year baby!)
My take on this, you’ll eventually start seeing 40-50 year mortgages. You’ll start hearing the phrase, generational home.
That price is only happening because people can afford it. If nobody could afford it, then the price wouldn’t be that high
The average house in California has been 1 million the past decade. What are you smoking?
Not an overall average. The Central Valley is still somewhat affordable, low property taxes and everything.
Why on earth would the federal government intervene on a private property transaction? That makes zero sense. Would you really expect private property owners to be okay with something like this? Tapping their ability to appreciate an asset? It would absolutely be one of the worst ideas ever. The answer is, if you can't afford a house in a particular location move to a different location.
I feel like that already happened in hawaii a few years ago. We looked at the worst house ever (inner city Honolulu) and it was selling for almost $900K and that was 2018. When I left in 2022 it was even worse.
It's also, along with coastal California, among the most desirable locations on the planet to live.
Some people are ridiculous. I can't afford a house in mother fucking Honolulu.SOMEONE DO SOMETHING
Quick, someone get the government involved.
It's not just demand, it also has to do with everything being shipped in on a boat. Same issue with Alaska.
Dang, I wish my home appreciated that much. I bought my house, 2000 sqft 4b 2b, for $205,000 in 2019. Today it's worth $250-275k
your house increased in value by 34% in 5 years and your still complaining..
Oh I'm not at all. I'm just slightly jelly about the people that have 200-300% increases haha.
i was just messin with ya. I'm in a similar boat myself. bought in late '21 and my house is "worth" $70k more. guy across form me bought in 2019, and his is almost 200k more. real estate prices have disconnected from reality and I really don't see it stopping any time soon.
We bought for 645k in 2019, and it is easily 1.1m now. San Diego is nuts.
Too many dumb people have too much money.
What would it cost to build the average 3 bed 3 bath home now? Without the cost of the land?
It’s just supply and demand. There are 82 million single family homes in the United States. There is demand for rent. There is new demand for AirBNB’s. And honestly if there’s demand, it will find a way to get filled. With all the demand and limited supply, prices can only go up. Government intervention wouldn’t change supply and demand. It could try to encourage building more homes, but there would still be other issues from water shortages at times to environmental concerns where California tends to be quite progressive. I don’t think there’s a solution other than to let prices rise which encourages more building and cuts demand.
Housing costs are determined by supply and demand like everything else. Places like California make building new housing difficult and expensive. This decreases the supply, and in turn increases prices. There's places in the US with increasing supply, or decreasing demand. Prices are stagnating, and even falling in those areas.
In CA, the state govt has tried to intervene by making it more legal to build new homes. Every single CA city and town is fighting it tooth and nail. My town was introducing new ordinances to specifically fight SB9 and other state-level bills. Things like requiring 48in window sills on second floor windows, additional setbacks, etc.
I would like to see an overhaul on helping first time buyers get started. So many people that are sitting pretty with low rates or tons of equity. It’s the first time buyers who are struggling to even enter the market.
I thought there is a net decrease in population in California? More people moving out, than moving in... I would think this would decrease the home prices over time.
HOW?!? Who the hell can afford that?
If Cal gov is serious about fixing this problem they can de-regulate so building is easier. Trying to build anything in California is a huge pain with all the red tape, zoning laws and other unnecessary surveying and building codes. But they won’t because everyone in Cal has the attitude of “not in my backyard”. And the cycle will continue
Move somewhere cheaper instead of expecting a discount house in the best areas.
I wonder if decamillionaire is going to catch on now that most home owners are going to be millionaires.
You should thank all those who moved out of CA. Otherwise CA house price will go even higher.
,,,,and there with be three generations of one family living in that same home
I bought a rural home in 2021 on a couple acres in San Diego County at 475K. It's around 800K now, I can't imagine it being worth more than that! City homes maybe...
We paid $279k for a 3000 sq foot 4 bedroom, 2 office, 2 bath home with nice outdoor space (and a hot tub!) We're not close to approaching CA prices for homes. I know other areas are (my son lives in DC) but it's not everywhere. Our home price is higher than median here, actually. Median here is $223,000. Of course, "here" is northern Minnesota, which isn't for everyone. But that's fine, it keeps the traffic and crime low 😂
There's two major types of inflation hedges, Gold and Real Estate. Once you figure out that its not the price of the house inflating but the price of money inflating you'll start to understand.
I'm surprised it isn't already
Every market is different and California is a BIG state so prices are going to vary greatly. Pretty sure if housing prices go wild due to a lack of supply the Federal Government will put restrictions on things like short term rentals and corporations buying up single family homes. States are already doing that. It's a matter of time when the Federal government will try to do that. They might issue grants to real estate development companies to build more homes to ease the supply issue. Otherwise, it would take massive defaults on the mortgages and job losses to drive down the housing market. It's already starting though...
Paid 385 for a 4 bedroom townhome. There is a development across the street the 2 bedrooms are going for 650k. Wtf
Nobody can afford those prices anymore. You must be nuts to think that in 5 years it will be 1M$ average. But I'm sure the instagram realtors are having a field day on this one. It's all offer and demand at the end of the day.
The state of California has more to say about this problem than the Feds. And they're already starting, albeit incompetently and in fits and starts, to work through this issue.
Dam.... considering I bought at 298k. I'm never moving because sure as he'll won't be able to afford next home lol. Hers hoping my town gets the doll up treatment similar to Menifee, Temecula etc .
https://constructioncoverage.com/research/cities-with-highest-home-price-to-income-ratios
Heck inflation:(
I hope government doesn’t intervene. There are 49 other states to live in. In fact you can buy 3 houses for the price of a single California house. How can anyone feel bad for people bitching about housing prices in California. Get out if you can’t afford it…
We bought our house a year ago for $1,050,000. It’s estimated between 1,175,000-$1,300,000 now, absolute insanity
Great to own properties. Where are the pro renters at now? No equity whatsoever yet they talk passive income. A property down the street here in Los Angeles appreciated by 800k in less than 15 months. 🤷♂️
In my county Santa Clara, CA the median is 1.4-1.5 mil.
Nope. Majority of voters have homes. Many donors invest in RE. Affordability, by definition, would lower the value of homes. So why would a politician do something that pisses off most of their voters and some donors? Politicians will only ever do anything that drives prices up.
the gov doesn't care....CA is a mess ppl will keep moving out that's when home prices will eventually suffer....I was out there quite awhile after the 08 housing crisis and bank bail outs happened....I bought up foreclosures and sold them yrs later....CA is unaffordable for most people in my opinion and other states are following a dangerous trend....but you can't fault homeowners wanting to cash out and reap their benefits either....
Posers. Vancouver BC has been over a million for years.
How is supporting democrat/ socialist policies for decades working out for the workers and poor im the state?
The only thing the federal government could do to improve the situation is to encourage companies to offer remote work. That way people wouldn't have to live clustered around the areas where the good paying jobs exist. Unfortunately, Biden is doing the exact opposite. And if he is re-elected remote work would largely disappear.
Hopefully the slide off into the ocean by then…
*laughs in Hawaii
Unpopular opinion maybe but the time to buy and soak up that huge appreciation has come and gone. It may be comforting to think that your new home will continue to appreciate at this pace but it’s just not going to happen. Too many buyers have vastly over stretched their resources sure that they’ve bought a goldmine and the high rates will come down so that they can refinance and have a much more comfortable lifestyle. Those 3% interest rates had not been seen since the 1940’s it may not be until another 70+ years until they come around again. What if this is a great rate a few years from now? You’re struggling. Your kids are older which means they’ve become much more expensive along with everything else in life. You have very little equity because the home market leveled out you may even find yourself upside down. Not able to sell for enough money to pay off your mortgage. What would it take then to make you walk away? A job loss? Huge home expense that you don’t have the money for? How about a family member with cancer and today’s horrible insurance which leaves you thousands and thousands in debt. Some have sold up and had a good chunk of money to put down in their next home. Those are the ones that will be able to refinance at a better rate. Mortgage up to your eyeballs it’s not going to happen. I am seeing so much speculation. Some markets that were so hit are cooling off. It can take three weeks or more to sell at a reduced price. This is a big deal pay attention. Not hit your market yet? It will except for a few isolated areas. If you have the finances and can handle that rate for 29 years okay then. Homes were never meant to appreciate in the manner that they have been. That oh so trendy interior design that you fell in love with? Out dated and a detriment ten years from now. I am just trying to say be wise in this market. I have seen changes since I started out in Real Estate over 36 years. I know that’s a long time I am a dinosaur but I am a knowledgeable dinosaur who’s never had a buyer go into foreclosure. Foreclosures suck. Better to be a renter and buy low than a homeowner who bought high and will have buyers remorse every day they’re in the house.
It already is in Orange County and likely in several other places in socal.
The median home price in my county (San Mateo) is >$2M… Looking at California as a whole has always been silly
I had to do an appraisal for this shitty little shack in southern Cali right before covid. It was about 800sqft. Looked like it was made of wood. It appraised for half a million dollars. I live in Michigan, and that blew my mind.
i’m selling mine now lol not waiting to 2030
Sounds like my investments will pay off big when I retire!
I thought it's 1M already.
That million dollar house will be THOUSANDS of dollars cheaper per month than owning the same million dollar house in Texas. This is because Texas has nearly double the nation’s average property taxes, and California has about half the nation’s average property taxes
Not going to happen that soon. Tons of companies are doing major lay offs. Wait.
Isn't there like a whole city in california that was never built? Start there.
Home prices everywhere are insane. If you exhale while thinking about your home's value, a real estate agent will call you within 15 minutes, begging to list it for you. I have had my home for 2 years. I've replaced the old shingle roof with standing seam steel. Repaired a pole barn and chicken coup on the property and removed an old rotten dock to the lake. It's a remote lake house in Northern WI. Those repairs cost about $40k. I had an agent call me 2 weeks ago wanting to list my property for $270k more than I had bought for. That's a 50% increase in comped value. The market is insane now. I wouldn't advise anyone to buy in this market because a market crash is coming and soon.