Topic: Housing has truly gone insane

[Jack Morris]

http://news.yahoo.com/s/ap/20050606/ap_on_bi_ge/risky_mortgages

Lenders too. All this speculation is just about as crazy as the .com craze. It may SOUND like a good deal, but as Money magazine pointed out, your house or condo may be worth such and such on PAPER, but to reap the benefits you FIRST MUST HAVE A BUYER, something people in California (especially San Diego) are quickly finding out.

Give me at least 30% down on a traditional 30 year note any day of the week, or in my brother's who works in construction case, all cash... Wish I had his money. 

[Dracho]

I avoid those "hot markets" like a case of the clap. 

ALL of my properties are less than $150,000 and most sell for less than $125,000.  That segment of the market moves quickly, and if I can't get in low enough to offer a good deal to the next buyer, I move on to the next one.

[Jack Morris]

I hear ya Dracho, I'm NOT PAYING more than 300k for a house, PERIOD, and it best have a lot of acreage for a greenhouse, pool, rose garden, etc...

Case in point, 24 y.o. Kelly Pearson bought a ranch style house for 580k in San Diego last August. 1450 sq. ft. and wait, look out! a 737 descends with what seems like feet to spare above her roof! Her house is 1,000 yards from the single runway (San Diego needs to GROW UP airportwise) She took out a mortgage and paid 10k down that was first earmarked for her wedding). A smaller house across the street just sold for 740k! So she figures that she is already 200k above what she paid.

Now for her bufu, 60 days average to sell in February, up from 39 days in 2004 of same month. 40% of the 18k net new jobs are in construction and real estate, a downturn in housing boom could cascade through the economy. Housing prices leaped by 24% while incomes just rose 1%! To me anyways, that is a perfect recipe for getting your arse in a VERY BIG SLING!

Just like the stock market, the housing market will correct, and when it does, a lot of buyers will feel their arsehole burn like never before, to the tunes of thousands and thousands of dollars down the drain.

[Sirgod]

How's the Housing prices down there in Chiua... cheu... Dogtown , Jack? Just curious If it would make for a Vacation home or something like that.

Stephen

[Jack Morris]

30k or more for a small lot in U.S. style streets and sidewalks and park area developments. 1500 for permission to build, and house must be built within 6 months, or you pay the city AGAIN. Average housing costs for a modern 2 story ceramic tiled, brick, cement and adobe house? If you do it yourself through contractors, 150k. Buying off the market? 200-400k!

It's the same everywhere, the get rich scheme of real estate, never mind that your land is on rocks from the mountains and there is not enough WATER. 

If they would only build a huge desalinization plant on either side of the northern Mexican states and let it pour, a LOT of people would move there and other places and the economy would skyrocket due to new jobs and Americans buying vacation homes. Hey, it's just like Cali, sunny and no humidity, perfect for growing palms, tomatoes, roses, and POT! 

Oooops, they do that anyways, and ship it to the U.S., hehehehehehe...

Now the Opium growing really scares me, as I have no respect or tolerance for that crap besides in medicines that are opiates for controlling pain. Mexico does not use it for medicines, it is for brown tar heroin production.

[Dracho]

The average salary in California is about $65,000, so this example could vary slightly.  

Your friend makes roughly $5416 gross per month.  Her house payment, without insurance & PMI, minus a $10,000 down payment would be, oh lets say $570,000 at 6% for 30 years.

That's $ 3,417.44 a month, plus probably $1000 per month in Taxes, Insurance, and PMI.

Now, when we convert $5416 gross to net, we have about $4300 per month we can actually spend.  

She's already $117 per month in the hole, before cars, clothes, health insurance, or food comes into the picture.  

Anytime a real estate market takes the median price of a home more than 2.5x the median annual income, it will not be able to sustain itself indefinitely and the price will have to adjust.  When the prices fall into the crapper, that's the time to swoop in and buy.  Some of these investors are going to be left holding the bag, but unless there is a major recession or depression, real estate works on a regional basis, so LA or Phoenix going to hell in a hand basket won't affect me much out here in the Midwest.

[Sirgod]

Thanks for the Info Buddy. Yeah It might not be a good place for a summer/vacation place. I was just thinking about building somewhere exotic, and then Renting it out to friends and Family.

Stephen

[E_Look]

You stinkin' guys have me in tears: according to paper, I'm a rich guy, when I'm just scraping by- I live right around NYC, and the housing prices  here isn't insane, it's retarded.