House value is up $190,000.00 in less than 6 months!

[MadPeriot]

Originally posted by: Kalbi

Originally posted by: MadPeriot
I just bought a condo in So.Cal. Few friends are telling me its a mistake and its a bad time to buy because the "bubble is going to burst." Then I ask them "then you tell me when is a good time to buy?" And of course they can't answer that. Then I tell them if you don't know when is a good time to buy, how would you know if its a bad time to buy. Moral of the story is no one can predict the market.

people last year said to wait for prices to stablelize....1 year later it's up...so they say wait until a pullback....then in 3 years market drops let's say 10%...by the time they buy it's 50% higher than if they had bought 5 years before even after the 10% drop.

e.g. price is $500k, it's "too high," later it's 800k, then the bubble pops and it drops to 700k...the price is still 200k above. ppl are dumb. Real estate is not like stocks. Stocks were pieces of paper...real estate is REAL...people need to live somewhere, home prices are not dropping anytime soon.

Exactly what happened to many people around me, either can't afford to purchase or getting rapped by rent. Unless your still living at home with your parents then thats a different story.

 

[Vic]

Originally posted by: Kalbi
You are simply wrong. You don't see 3 carat diamond prices coming down do you? The supply of land is FIXED, and as incomes rising, unemployement falling, population growing, the price of homes will always inevitably increase. When you buy a "house" the portion of the price that is rising is the land part, not the house part.

When people can't afford to buy a house, they will rent, or move further away from the city. There will always be people able to afford $700K houses in for example Socal, because it's full of entrepreurs, doctors, lawyers, rich ass mofos. And if a married couple buys that's income X 2.

Diamonds do not compare to this argument in any way. Their prices are intentionally fixed by an international monopoly. Houses OTOH are almost unique in that they are (more or less) sold completely on an individual basis.

I'm a mortgage broker with 11 years experience. Your argument is not accurate. Fannie Mae (and other instituational lenders) does not lend on land. They lend on residential improvements, i.e. houses. The "house part" does rise in value, as the cost of construction goes up, and (with pre-existing houses) the value of the completed structure as whole goes up. The supply of houses is not fixed, it is constantly increasing.

Jeez... I like how you say that people are buying land and then contradict yourself by saying that they will move farther away from the city. There is a ton of land out there. The US is mostly empty space, and in some areas out in the plains states right now they are literally giving away land (so long as the buyer promises to build on it and live there).

People are buying houses and location. As they always are and always have been. For average middle-classes homebuyers, who far and away make up the majority of the market, their ability to buy a home is constricted by their ability to qualify for financing. End of story.

 

[Kalbi]

Originally posted by: Vic

Originally posted by: Kalbi
You are simply wrong. You don't see 3 carat diamond prices coming down do you? The supply of land is FIXED, and as incomes rising, unemployement falling, population growing, the price of homes will always inevitably increase. When you buy a "house" the portion of the price that is rising is the land part, not the house part.

When people can't afford to buy a house, they will rent, or move further away from the city. There will always be people able to afford $700K houses in for example Socal, because it's full of entrepreurs, doctors, lawyers, rich ass mofos. And if a married couple buys that's income X 2.

Diamonds do not compare to this argument in any way. Their prices are intentionally fixed by an international monopoly. Houses OTOH are almost unique in that they are (more or less) sold completely on an individual basis.

I'm a mortgage broker with 11 years experience. Your argument is not accurate. Fannie Mae (and other instituational lenders) does not lend on land. They lend on residential improvements, i.e. houses. The "house part" does rise in value, as the cost of construction goes up, and (with pre-existing houses) the value of the completed structure as whole goes up. The supply of houses is not fixed, it is constantly increasing.

Jeez... I like how you say that people are buying land and then contradict yourself by saying that they will move farther away from the city. There is a ton of land out there. The US is mostly empty space, and in some areas out in the plains states right now they are literally giving away land (so long as the buyer promises to build on it and live there).

People are buying houses and location. As they always are and always have been. For average middle-classes homebuyers, who far and away make up the majority of the market, their ability to buy a home is constricted by their ability to qualify for financing. End of story.

I said supply of land is fixed, not houses. Nevertheless, in some parts of the country, such as desirables as West Los Angeles, supply of homes are fixed. Try finding an empty lot in this area - you can't. That's why 2 bed 1500 sq ft houses are $800K - $1 million. All the rich lawyers and doctors want to live there.

 

[dafatha00]

Originally posted by: Kalbi

Originally posted by: Vic

Originally posted by: Kalbi
You are simply wrong. You don't see 3 carat diamond prices coming down do you? The supply of land is FIXED, and as incomes rising, unemployement falling, population growing, the price of homes will always inevitably increase. When you buy a "house" the portion of the price that is rising is the land part, not the house part.

When people can't afford to buy a house, they will rent, or move further away from the city. There will always be people able to afford $700K houses in for example Socal, because it's full of entrepreurs, doctors, lawyers, rich ass mofos. And if a married couple buys that's income X 2.

Diamonds do not compare to this argument in any way. Their prices are intentionally fixed by an international monopoly. Houses OTOH are almost unique in that they are (more or less) sold completely on an individual basis.

I'm a mortgage broker with 11 years experience. Your argument is not accurate. Fannie Mae (and other instituational lenders) does not lend on land. They lend on residential improvements, i.e. houses. The "house part" does rise in value, as the cost of construction goes up, and (with pre-existing houses) the value of the completed structure as whole goes up. The supply of houses is not fixed, it is constantly increasing.

Jeez... I like how you say that people are buying land and then contradict yourself by saying that they will move farther away from the city. There is a ton of land out there. The US is mostly empty space, and in some areas out in the plains states right now they are literally giving away land (so long as the buyer promises to build on it and live there).

People are buying houses and location. As they always are and always have been. For average middle-classes homebuyers, who far and away make up the majority of the market, their ability to buy a home is constricted by their ability to qualify for financing. End of story.

I said supply of land is fixed, not houses. Nevertheless, in some parts of the country, such as desirables as West Los Angeles, supply of homes are fixed. Try finding an empty lot in this area - you can't. That's why 2 bed 1500 sq ft houses are $800K - $1 million. All the rich lawyers and doctors want to live there.

But the overwhelming majority of people in Socal aren't lawyers and doctors. Remember, we're talking about Southern California as a whole, and not just West LA. The average income of a household is still only $60K. Taking into account the standard average of 3-5% raises, most people will still not be able to purchase homes if the increasing trend of home prices continues. Rather, the demand will decrease since people simply will not be able to purchases homes as the prices are too high.

Again like I said before, an increasing number of people will start moving into apartments as more and more people can't afford to purchase homes. This negates your contention that the supply of land being fixed will always cause home prices to increase since people don't necessarily have to live in a house.

In any case, even if a bubble doesn't exist in Socal, it is a certainty that the percentage increase in home values cannot be sustained at the constant rate that many people have been enjoying for the past several years.