Will the price of housing ever give... a bit?

[ShokWaveRider]

We sold our copiously inflated home in SoCAL last August. I look back now and the same place is selling for $120k more than when I sold it. Other than this fact P!@&#s me off, it presents a problem. For the next couple of years we are travelling (we really were not comfortable doing this with a big asset in SoCAL) and renting, but sooner or later we will more than likely settle down and buy (or rent?)

By the time we want to buy, will house prices stabilize and get more affordable? We will not buy such an expensive home next time, but the old one did gain 100% in 11 years (most in the last 3 years) and was a major contributor to our ER.

We are no longer in SoCAL and intend on settling down someplace in Western Canada. But prices there are almost as high there in proportion.

Perhaps there are some folks out there with Real Estate experience that can shed some light.

Background:

We purchased our place in SoCAL in 1991. It promptly went down 15% in 2 years and hovered there for 5 -7 years then slowly inched up and skyrocketed in the last 3.

Is this problem affecting anyone else?

SWR

If you mean the problem of buying things and having their prices fluctuate - Yes, it affects everyone.

If you choose to live in an area that is popular then you are going to pay the big Bucks. If however you choose to live in an area that is not as popular, like where Bob Smith is moving to. He can get the lovely house that he posted pictures of for a shade over 100K.

I don't think the prices of houses will ever 'give' unless we hit another great depression. And then it will be 'careful what you wish for'.

I think the cheapest thing that you can do, is decide on a location that makes you happy and buy something there that you can happily live in for a long time.

If you start concentrating on the financial aspects of where you live and what you buy, I think you'll set yourself up for misery.

Buying and selling real estate for a profit is called a Job. And that is 4 letter word as far as I'm concerned.

[wabmester]

One of three things will happen in SoCal:

1) Salaries will skyrocket to catch up to the cost of housing

2) Rents will skyrocket to rationalize housing prices

3) Housing prices will drop

Prices in the area are the least affordable they've been since 1989. And as you know, starting in 1990, prices fell or were flat for about the following 6 years. I expect the same thing to happen again (and again).

[Whakamole]

I wouldn't be too worried. There are plenty of inexpensive places to live - mainly because of a lack of jobs. I know one person who has rented a nice house on a river in Oregon for less than what I am paying rent for a 1BR in Seattle. Good fly fishing river, too.

If I was ER, I'd move there in a heartbeat.

[Jarhead*]

Shockwaverider:

Sounds like you did fine. Got out of So. Calif. Also got out at near the probable top.
You mentioned that you could have gotten an extra pop if you'd stayed one more year.
Remember the old stock-broker, "You can be a bear or a bull, but don't be a pig".
So. Calif. and especially coastal Calif.,have been bid up to unrealistic values. (Not at all representative of the bulk of the country).
As Cutthroat mentioned, and I hope you will follow his advice, buy or rent in an area that will be suitable for you for years to come, because if you do that, the price, up or down, really won't make a difference.
There are plenty of areas in the country that will feel like 1975 prices to you, after leaving So. Calif.
Good luck

[bruce1]

Hello
If you were thinking BC because of the weather or other reasons then you are probably stuck with the high prices. However if you don,t mind the cold and have found high prices in Alberta (Due to OIL and many jobs) then you may want ot look a little further east to Manitoba where prices are depressed. Alternately you may wnat to look to Norther Ontario. Elliott LAke and Kirkland Lake are both very depressed as the mines that supported the towns are now closed. These places are not much colder than Alberta and by reputation a bit warmer than Winnepeg in Manitoba. I priced a house or two slightly north of North Bay and could buy a low maintenace home for $85,000 to 125,000 Canadian. I am in Southern Ontario and prices are high and going higher. I am hoping to sever some lots off in a year or two and sell them down the road.


Bruce

[ShokWaveRider]

Currently I am with rellies in South Western Ontario about 40 miles West from Toronto. Prices are high but not too bad. I like St Catherines and Niagara on the lake. Port Colborne is also quite pleasant. Weather patterns are better there because of the wine growing micro climate induces by the Niagara Escarpment. We do not like the cold though.

SWR

Hi SWR. Are you anywhere near Preston? My
favorite restaurant in the world used to be nearby.
Forget the name but they had a bar called
"The French Cowboy" I think. Long time ago now.

John Galt

[Beachbumz]

If misery loves company...I sold half my oceanfront duplex in NC last May for $525K (over appraised value), thought I hit a homerun. I just turned down $715K for the other side. How high will it go?

[charlie]

It is really hard for me to relate to you guys talking about such expensive housing. My daughter just bought a 1800 sq ft, 3BR, 2 bath new brick home with really nice features for $137k in north central Texas.

Cheers,

Charlie

Hello Charlie. North Central Texas has got to be
one of the cheaper (and expanding) housing markets anywhere. I kind of sensed this when I lived there full time, and like you had my feelings confirmed by some
of the amazing housing related posts on this site. I am not really sure why this is. Lots of land?

John Galt

Bought my house on Cape Cod for $250K in 1990 (asking $275K). Value went down to around $205 during the next three or four years. Bought the lot next to mine (for privacy) for $55K in 1992 (same price the person had bought it for in 1985). Identical lot, on the other side of my home, went for $245K last year and is on the market for $350K now. My house is worth not a dime less than $550 at the moment. Do I think the prices will drop again? Yup. Will they rise again? Yup. If ya got the time, and aren't forced to sell, than you can comfortably ride the rollercoaster of housing costs. Otherwise....

[charlie]

Hi John. Yes, cheap land explains part of it and cheap
labor explains part. Also no income tax and low property
taxes help.

For example, we had a bad hail storm about a year ago that ruined most of the roofs in my neighborhood. It took about 1 day to replace a roof using a 15-20 man crew of Mexicans, many illegal workers I suspect. Hardest working crews I ever saw.

Cheers,

Charlie

[Roger_R]

The housing prices you folks talk about are almost beyond my comprehension. How can first time buyers to the area afford to buy a home? The differential of wages must have a little to do with things, but I can't imagine them being so different area to area.

I live in the Denver area. Nice place for a city with plenty of recreation and other amenities. Median house prices are in the $250,000 area and my home is much less $ and very comfortable. Home prices were going up ten or fifteen percent a year but have stalled out for about the last three years and are pretty stagnate or even dropping some. I guess I won't be moving to S Cal anytime in this lifetime.

I posted about the large house which sold here for
25K. A fixer-upper to be sure.
However, here is what they got. About 2500 feet of living space abd they could move right in. Large lot
(no garage), backing up mostly to a big state park
(woods, no roads or tourists). A nine iron shot from
a nice boat landing and great fishing. Wonderful
scenery. Good schools, friendly neighbors, low crime.
Drawbacks, not much. It is close to the highway
and needed a lot of work (mostly cosmetic). If I was
handy and 10 years younger it would have been a no-brainer. I still have plenty of ideas but a avoid
work at all costs. I post this just to show some of you
in high cost areas what can be done out here in the
boondocks. About 2 years ago I watched a similar
deal unfold right across the road from us
and they even have a water view. Think about it.
25K for 2500 SF. That's $10 a SF wothout the land.
Amazing!

John Galt

[Jarhead*]

I posted about the large house which sold here for
25K. *A fixer-upper to be sure.
However, here is what they got. *About 2500 feet of living space abd they could move right in. *Large lot
(no garage), backing up mostly to a big state park
(woods, no roads or tourists). *A nine iron shot from
a nice boat landing and great fishing. *Wonderful
scenery. *Good schools, friendly neighbors, low crime.
Drawbacks, not much. *It is close to the highway
and needed a lot of work (mostly cosmetic). *If I was
handy and 10 years younger it would have been a no-brainer. *I still have plenty of ideas but a avoid
work at all costs. *I post this just to show some of you
in high cost areas what can be done out here in the
boondocks. *About 2 years ago I watched a similar
deal unfold right across the road from us
and they even have a water view. *Think about it.
25K for 2500 SF. *That's $10 a SF wothout the land.
Amazing!

John Galt

Location, Location, Location. (Supply and demand).
Except for the utilitarian use for a proprety, it is not worth anything without a demand for it.

[KB]

Ex-Jarhead... Where are you located? And is that 25k a normal price or was this an occasional great deal ?

I assume the question is directed at me and not ex-Jarhead.

The $25,000 house is an anomaly. It used to be a tavern. Tenants lived there for a long time and then left
it very run down. I assume the owner was a "don't wanter" big time. Anyway, it was way out of the ordinary. More typical was a waterfront cottage
(small - no garage) which sold this summer for $55,000.
It was in good shape, for the most part. My wife wanted me to buy it. Once again, 10 years too late.
We are located in northern Illinois on the Rock River
(south of Rockford)
with the Chicago suburbs edging closer each day.

John Galt

[KB]

Yes John, that question was directed to you. I just wasn't alert enough to figure it out this morning.

[cute fuzzy bunny]

Well see, thats where subjectivity gets ya.

I live in Yuba City. Like it just fine.

In fact, theres a lot of more expensive new home construction going on, real estate prices have doubled and tripled vs 5-6 years ago (which will eventually bring about better heeled owners), and a lot of shopping and restaurant construction is going on.

Its also very inexpensive to live here compared to surrounding areas, probably because we're one of the welfare capitals of the world.

On the downside, there are crime reports here and there...but no worse and perhaps better than when I lived in such bastions of disaster as Berkeley and San Jose. You do get to see some really, really interesting looking scumbags walking the main roads from time to time. So far none of them has jumped at the car and latched on with suction cups. $50 a plate restaurants are hard to come by.

We also have to suffer with some of the best hunting and fishing around, lots of large open space parks, very little traffic, and cheap produce from dozens of local farm stands.

So I guess it really depends on what floats your boat.