Tuesday, May 24, 2005

CA Prices Soar, Sales Weaken

The CAR reports a new milestone in California. "The median price of a home in California topped a half-million dollars for the first time in April, reflecting the continuing demand for housing and the ongoing supply shortage."

About that supply issue. "An examination of 2003 data from the Census Bureau shows there are 43.8 million second homes in the United States, including 6.6 million vacation homes and 37.2 million investment units, compared with 72.1 million owner-occupied homes."

If you look at the reporting today, most stories lead off with some statistic like this, "Home Sales Up 4.5 Percent in April."

But where is this headline? "Statewide, the 10 cities and communities with the greatest median home price increases in April 2005 compared with the same period a year ago were: Reedley, 68.8 percent; Colton, 64.7 percent; Twentynine Palms, 63 percent; Atwater, 58.7 percent; Rohnert Park, 57.5 percent; Laguna Hills, 53.3 percent; Norco, 51.6 percent; La Canada-Flintridge, 50.9 percent; Adelanto, 49.1 percent; Victorville, 45.8 percent."

Don't miss the table at the bottom of the CAR site. Not one region showed a y.o.y. price decrease. But out of 20 regions, 13 had y.o.y. negative sales volume and 8 of those were double digit declines.

49 Comments:

At 1:04 PM, Blogger Sunny said...

Sales volume is way down in Florida coastal counties from my anecdotal research. Some neighborhoods only show 1 to 3 sales a quarter and they are, of course, the benchmark by which everyone brags at the bbq. Almost none of the benchmarks are from local buyers, but rather from out of state retirees and relocatees.

The very few commercial sales occurring are also almost exclusively from out of state buyers or extreme niche buyers. ("Honey, lets buy a business and retire in FL.")

 
At 1:22 PM, Blogger desi dude said...

just think,

if just buying a home if one can earn more than your salary, e.g. then why any one should work?

Cerritos $638,000.00 $540,000.00 18.1%
(100K)
Downey $507,000.00 $396,000.00 28.0%
(100K)
Pico Rivera $396,000.00 $300,000.00 32.0%
(any one want live in pico riviera???)
Norco $610,000.00 $402,500.00 51.6%
(Amazing! No one wanted to live in norco , Ithought, worst school dist)

note pricier areas have show a decline, or reaching the limits

Arcadia $589,000.00 $598,500.00 -1.6%
Agoura Hills $526,000.00 $599,000.00 -12.2%
Westlake Village $830,000.00 $863,500.00 -3.9%
Camarillo $570,000.00 $520,000.00 9.6%
Fillmore $460,000.00 $430,500.00 6.9%
Moorpark $536,250.00 $505,000.00 6.2%
Newbury Park $637,500.00 $632,500.00 0.8%

 
At 1:30 PM, Anonymous Anonymous said...

Any info on South West, FL? namely the Ft. Myers or Naples area?

 
At 1:34 PM, Anonymous Anonymous said...

For a long time I couldn't figure out how speculators could be a big factor in the bubble. After all, it's much harder for your average person to buy real estate than stocks. I think I have my answer now. I talked to a former engineer who became a mortgage broker in Silicon Valley after getting laid off in 2002. Homeowners who bought in the 1990's come to her initally to refinance and possibly get some cash out. She then "educates" them on how they can use the equity in their home to acquire additional investment properties. She is constantly researching new residential communities being built all across California so she has plenty of recommendations. You go to her for a refi, and you come away a property mogul. She has in effect become a financial advisor in addition to a mortgage broker, and owns 5 properties (mostly under construction) herself. By the way I was trying to recruit her for a $100K engineering job. She told me that she gets a check for $5,000 every time she closes a loan, and the salary I was offering was "no longer attractive" to her. Ouch. At least I have some good stock option and bonus gains from my job at a Nasdaq 100 company, or I would have been beside myself!

 
At 1:38 PM, Blogger goleta said...

Sta. Barbara S. Coast

$1,285,000, 12.2%, 30.5%, 2.6%, -28.4%

All numbers based on month to month changes.
Median price uped 12.2% from March 2005 and sales dropped 28.4% from April last year. People here still believe Santa Barbara is different from the rest of California and the rest of the country, They might be right, but the high price has already done some damage to the community. I'm afraid the party school reputation of UCSB will only be enforced with the domination of rich kids.



OTOH, total number of homes listed on foreclosure.com has jumped from 458 to 518 in a week. The same thing is happening all over California, which can't be a good sign for speculators.

 
At 1:46 PM, Anonymous Paul said...

Orange County,CA detached home appreciation is decelerating rapidly. Here are the Orange County ,CA detached home prices and year-over-year increase, which I extracted from the CAR data:

Jan-03 $440,890
Feb-03 $449,540
Mar-03 $449,100
Apr-03 $464,120
May-03 $470,690
Jun-03 $479,410
Jul-03 $496,370
Aug-03 $523,600
Sep-03 $515,110
Oct-03 $520,180
Nov-03 $526,270
Dec-03 $533,030
Jan-04 $523,380 18.7
Feb-04 $569,760 26.7
Mar-04 $605,560 34.8
Apr-04 $645,590 39.1
May-04 $662,290 40.7
Jun-04 $657,930 37.2
Jul-04 $648,590 30.7
Aug-04 $649,590 24.1
Sep-04 $633,340 23.0
Oct-04 $622,090 19.6
Nov-04 $633,340 20.3
Dec-04 $627,000 17.6
Jan-05 $634,280 21.2
Feb-05 $663,600 16.5
Mar-05 $667,200 10.2
Apr-05 $682,200 5.7

 
At 1:49 PM, Anonymous Paul said...

Just to be clear, that second column was all year-over-year percent increase.

 
At 1:50 PM, Blogger desi dude said...

some analysis of california numbers

more than 50%
Reedley $214,000.00 $126,750.00 68.80%
La Canada
Flintridge $1,290,000.00 $855,000.00 50.90%
Atwater $309,500.00 $195,000.00 58.70%
Laguna
Hills $575,000.00 $375,000.00 53.30%
Mira
Loma $495,500.00 $308,000.00 60.90%
Norco $610,000.00 $402,500.00 51.60%
Apple
Valley $253,000.00 $160,000.00
58.10%
Bloomington$310,000.00 $200,500.00 54.60%
Colton $275,000.00 $167,000.00 64.70%
Twentynine
Palms $110,000.00 $67,500.00 63.00%
Rohnert
Park $515,000.00 $327,000.00 57.50%

Negative/declines
Agoura
Hills $526,000.00 $599,000.00 -12.20%
Arcadia $589,000.00 $598,500.00 -1.60%
La
Verne $490,000.00 $495,000.00 -1.00%
Malibu $1,051,000.00 $1,547,500.00 -32.10%
Tarzana $490,000.00 $508,000.00 -3.50%
Sausalito $651,000.00 $810,000.00 -19.60%
Ladera
Ranch $579,500.00 $615,000.00 -5.80%
Lake
Forest $427,500.00 $432,500.00 -1.20%
Trabuco
Canyon $834,500.00 $840,000.00 -0.70%
Auburn $389,000.00 $425,000.00 -8.50%
Imperial Beach $390,000.00 $475,000.00 -17.90%
Poway $512,500.00 $620,000.00 -17.30%
Solana
Beach $762,500.00 $809,750.00 -5.80%
Westlake
Village $830,000.00 $863,500.00 -3.90%

 
At 1:53 PM, Anonymous Anonymous said...

It is much easier today to buy a home than stocks - You have to have cash to buy stocks. I know a person who has purchased 3 homes and a rental property in the last year. He is still sitting on them all - vacant (except for one he is living in) and the rental has a $800 negative cash flow. Oh and he has no job. His "job" is fixing up the properties for resale. He does a little work on one, gets an inflated appraisal, and pulls the money out to live on. The equity loans keep piling up and the payment gets bigger, but it doesnt seem to matter to him. He will just keep borrowing equity to live off. He is fixing one and when done, he will move into that one and fix up the next one. His strategy does not even include selling to extract equity. He seems to think the "equity" increases are free money.

 
At 1:55 PM, Anonymous Paul said...

First column of numbers is (again) Orange County,CA detached home year-over-year price increase. Second column of numbers is California detached home price increase. This is from that CAR data.

Jan-04 18.7% 20.5%
Feb-04 26.7% 20.4%
Mar-04 34.8% 21.4%
Apr-04 39.1% 24.6%
May-04 40.7% 26.0%
Jun-04 37.2% 24.7%
Jul-04 30.7% 20.9%
Aug-04 24.1% 17.2%
Sep-04 23.0% 22.5%
Oct-04 19.6% 20.8%
Nov-04 20.3% 22.4%
Dec-04 17.6% 17.3%
Jan-05 21.2% 19.7%
Feb-05 16.5% 19.6%
Mar-05 10.2% 15.7%
Apr-05 5.7% 12.3%

 
At 2:00 PM, Blogger goleta said...

"His strategy does not even include selling to extract equity. He seems to think the "equity" increases are free money.


interesting story. when will we see the lenders get burned? For people who have no jobs/saving, they have nothing to lose even if they go chapter 13. Life has never been so good with so much free money to spend.

 
At 2:01 PM, Anonymous Anonymous said...

I don't know about a lot of these areas, but I do know about Norco. That increase of 50%+ in Norco is very deceptive. The average price increas in Norco reflect the fact that a lot of new developments have come on line recently. these developments have engaged in a practice called "Eagle Nesting" where luxury homes are built on the choicest locations on hilltops in the community. There was an article about Norco in the LA Times maybe a year ago, talking about these developments. Rest assured that the white trash/illegal immigrants that work in the slaughterhouses in Norco still live in squalid homes that sell for nowhere near $600,000. Their homes just aren't moving, and so are ignored by the statistics.

 
At 2:09 PM, Anonymous Anonymous said...

2:00 pm These people have never heard of a deficiency judgement. They are going to find when the ponzi scheme ends that the bank is going to go after them for the difference between what they owe, and what the property brings at auction. On cash out refinances and non primary residences the bank can sue for the difference.

 
At 2:09 PM, Anonymous Paul said...

I just saw this article from a week ago. No wonder Orange County's housing appreciation is decelerating. Astonishing.

"In the past year, 77 percent of O.C. homes were bought with adjustable loans – the fastest pace in DataQuick's 18 years of tracking the market."

 
At 2:11 PM, Anonymous Anonymous said...

Not to mention that many people like this get "liars loans" or stated income loans and have lied on mortgage applications.

When the bank does forclose and there is an investigation, some of these people will have more than a judgement to worry about. Many will be worrying about the time they are going to be spending at "Camp Fed" for committing a felony.

 
At 2:28 PM, Anonymous bbh said...

The Median Price and Year-over-Year stats can be quite deceptive if not taken into perspective.

Median price only indicates the middle price of the house that has sold, so there are 2 factors that make it fairly unreliable: 1) If more expensive houses were sold in a particular month, that pulls up the median price, vice versa. More local the stat is based on, it actually becomes less accurate until it is so small that it focuses on subdivisions, and 2) the underlying attitude of the seller market will affect the average. In this market, seller will not sell for much less (if any less) than asking price, and is willing to sit until someone offers the right price. This is why we are seeing higher inventory and duration on the market. Buyers are less willing to buy, but sellers won’t budge yet.

Year-over-year is deceptive because the figures depend on how the market condition was 12-months ago, as well as 11- and 13-months ago. For example (only an example)

3/2004 $300,000
4/2004 $350,000
5/2004 $350,000
6/2004 $360,000
7/2004 $375,000
8/2004 $385,000
9/2004 $390,000
10/2004 $405,000
11/2004 $415,000
12/2004 $425,000
1/2005 $430,000
2/2005 $430,000
3/2005 $425,000
4/2005 $420,000
5/2005 $405,000

You can see that the Y/Y change in 3/2005 is 41.6%, 4/2005 is 20%, and 5/2005 is 15.7%. So these Y/Y’s still looks great, but the prices actually came down for the past 3 months. And that median price is subject to the scenarios above to boot.

There is a reason why NAR publishes these numbers today. Because for some time, the numbers will look great regardless of how the market has behaved in the past few months.

 
At 2:35 PM, Anonymous Anonymous said...

Before i wasn't (but i could) buying just because of making a point (crazy market) now i really can't so now i am a true bystander.

 
At 2:37 PM, Anonymous thelastwordonthesubject said...

(Not one region showed a y.o.y. price decrease. But out of 20 regions, 13 had y.o.y. negative sales volume and 8 of those were double digit declines.)

Buyers are chasing their own tails here. Most homeowners who have wanted to sell into this mania have likely already done so. The remaining owners are staying put because they dont/cant move out of state or out of their area to find cheaper housing.

If they sell, they will simply have to buy another home. And they can't afford them. Plus, because of Prop 13, they would face a tripling or quadrupling of prop taxes. Not to mention potential tax complications.

So the bubble in CA is limiting the supply by holding owners hostages in their homes. Buyers are fighting each other for the right to overpay for the few homes that become available. All the while rents are dropping and rental vacancy rates keep rising.

In short, there is no housing shortage in CA. Plenty of places to live. There is, instead, a shortage of homes available for purchase for the reasons stated above. And a unprecedented oversupply of buyers who have whipped themselves into a frenzy by thinking that either prices will run away from them or they are missing the gravy train.

What they don't understand is that prices are running away from them because they are chasing the prices higher.

 
At 2:38 PM, Anonymous Anonymous said...

BBH -- nice analysis. Thanks.

 
At 2:44 PM, Anonymous Anonymous said...

2:00 Goleta -- don't you think the financial institutions will do their part to ensure that the bubble does not pop before Oct. 15, when the new bankruptcy law goes into effect? It seems in Greenspan's interest to keep this thing going until he walks out the door December 31, but maybe he doesn't have the clout to make that happen if the financials get too nervous a bit earlier.
Chip

 
At 2:48 PM, Anonymous stock jock said...

(It is much easier today to buy a home than stocks - You have to have cash to buy stocks.)

Good point.

Imagine this scenario. You decide that stocks can't miss and you'd like to build a portfolio. But you have no money.

So you go to a bank and say, "I'd like to borrow $500K to buy some stocks. They may not go up in value right away. But they pay 2% dividends. So I'd like a zero-down, interest-only, 2% interest loan for the first five years that converts to market rates later. The stocks are sure to appreciate in five years. In the meantime, I can pay my loan back via the 2% dividends."

The banker would throw you out of his office. Why? Because stocks can go down, everyone knows that.

Now if you replace the world "real estate" for "stocks" in the above scenario, you'll be given the red carpet treatment.

But why? Over the past 100 years, stocks have done far better on avg than property in terms of appreciation. Yet RE is supposed to be risk-free and stocks are risky.

I don't suggest banks start offering stock mortgages, although I'm sure Wall Street would love it. But RE nationally, over the long haul, has badly underperformed the stock indexes. So why are finance companies today so willing to co-speculate on RE?

 
At 2:49 PM, Anonymous Anonymous said...

Moral Hazard is the name of the game.

 
At 2:50 PM, Anonymous Anonymous said...

"So why are finance companies today so willing to co-speculate on RE?"

They're not. They're selling the loan to someone else who *is* speculating on RE.

 
At 2:55 PM, Anonymous Anonymous said...

If it werent for the great depression, you would have probably been able to have "mortgages" to buy stocks during the .com boom. The margin rules put into place after the depression limited the amount of margin. -

Maybe we will see the same thing for real-estate soon. Nearly every speculative bubble in history (stocks, real estate, railroad stocks, tulips etc) were caused by new "creative" ways to finance (leverage) Without leverage these bubbles would not be able to form to anywhere near the level as without leverage.

 
At 3:00 PM, Blogger deb said...

The same manic psychology is at work on all the players in the game from the borrowers, to the lenders, to the buyers of MBS. It is an absolutely classic speculative mania. I feel like I am watching history unfold.

The psychology of all these players can and will change quickly, probably sometime soon.

 
At 3:24 PM, Anonymous Anonymous said...

One thing I find interesting is that median home price in Comption is $300k while in Malibu it is 1,051,000. The median in Malibu is only 3.3 times the median in Comption. I wonder how this compares to historical numbers.

Im not that familiar with Compton or Malibu, but it seems like it would be much more than 3.3 times more attractive to live in Malibu than Compton

 
At 3:25 PM, Anonymous Anonymous said...

At 1:22 PM, desi dude said...

"if just buying a home if one can earn more than your salary, e.g. then why any one should work?"

Ding ding ding.

Between this and the late 90s, we now have most of a generation indoctrinated to the idea that working and saving are for losers, and that "winners" can just take the no-brainer road to riches by speculating.

To see how this invariably ends, pick up any decent history book. Lots of exciting possibilities in there - revolution (France), tyranny (Germany), foreign conquest (Athens)...fun!

But, of course, "it can't happen here!" :)

 
At 3:45 PM, Anonymous boulderbo said...

So why are finance companies today so willing to co-speculate on RE?"

had an interesting meeting with an investor (loan buyer) in my office today. he rolled out all of his 100% ltv programs for investment property loans, stated income loans, marginal credit loans, etc. i asked him point blank how we can have 13,000 foreclosures here in denver and you can still offer these products. doesn't the repo department talk to the sales department? his response- are you kidding?, we don't even let the ink dry before we sell it to the street. if you follow the feeding chain on these loans, all roads lead to the gse's. downright scary.

 
At 3:49 PM, Anonymous Anonymous said...

" Lots of exciting possibilities in there - revolution (France), tyranny (Germany), foreign conquest (Athens)...fun!"

well, I'd say we're working on #2 and #3 right now. #2 is the new expanded Patriot Act, now before congress, and #3 is the Iraq War.

#1 could happen as a reaction to #2 and #3, once the bubble bursts...

 
At 4:03 PM, Anonymous Anonymous said...

'if you follow the feeding chain on these loans, all roads lead to the gse's. downright scary.'

Privatize the profits, socialize the losses. The perfect blend of capitalism and communism. If only Marx could see this.

 
At 4:04 PM, Anonymous Anonymous said...

"well, I'd say we're working on #2 and #3 right now. #2 is the new expanded Patriot Act, now before congress, and #3 is the Iraq War."

I'd say you should stick to thinking about housing bubbles.

 
At 4:04 PM, Anonymous Anonymous said...

"if you follow the feeding chain on these loans, all roads lead to the gse's. downright scary."

Well, lets take that one step further.

WHO is buying all these GSE packaged, mortgage backed loans? (there is currently over $3Trillion in GSE mortgage backed bonds!)

I read that banks, pension funds, and many other institutional type entities are huge holders of FNM issued bonds. Those bonds pay interest generated by mortgage payments.

So, if the bubble bursts, and a significant number of the underlying mortgages become insolvent, what happens?

I would think the bonds will drop precipitously in value, as the interest payments shrink.

That will make some banks insolvent and destroy the earnings of many others. Therefore the stock market will have a severe decline, since financial stocks are a huge part of the market's value these days.

Also, pension funds will be in trouble and unable to pay the promised benefits.

In other words, the destruction and hardship will be spread to every investor...not just home owners.

And, once this happens, how willing do you think the market will be to buy new issues of these bonds? There goes the 'easy credit' that is necessary to keep these prices up.

Greenspan, in my opinion, will eventually be widely reviled for fostering this bubble.

..DenverKen

 
At 4:08 PM, Blogger goleta said...

chip said. " don't you think the financial institutions will do their part to ensure that the bubble does not pop before Oct. 15, when the new bankruptcy law goes into effect?"



That's an interesting thought. Flippers should go BK now for the last chance to get chapter 7.

 
At 4:33 PM, Anonymous boulderbo said...

den ken,

you're right about who would get hurt. the problem that you have with the gse's is that they are selling the paper to institutional investors as grade a government product while the underlying paper is really dangerous. we had a discussion about a week ago about novastar and the implications of their paper. fannie is selling it as if it's treasuries, while undressed you wouldn't touch it with a ten foot pole. that, in a nut shell, is why alan is trying to bottle them up.

 
At 6:34 PM, Anonymous Anonymous said...

boulderbo -- great response, as in saying a lot in a few words. True, true, true.

 
At 6:47 PM, Anonymous Anonymous said...

Guys! I am no expert on bankruptcy law, but being in RE for awhile and having chance to deal with foreclosed properties and sometimes bankrupties filings, I dont see connection. I haven't met even one person who filed for BK being in foreclosure and get protected. Actually they get worse. Not paying mortgage in hope that BK save their house, eaten all equity they have.
My point is: new BK got nothing to do with the RE bubble, because existing BK law protect mortgaged houses very little. I am guessing it has something to do with credit cards and hospitals debts.
So, thinking that someone can have power over bubble market forces, is just hopefull.
YOU CANNOT PREDICT THE END OF THIS BUBBLE BASED ON SOME GOVERMENT CONNECTED DATE.
Actually is opposite. At this stage nobody will do anything to burst it, because later on can be blamed for it. The only thing they will do is Cover Their A$$e$.
MIke C., Chicago.

 
At 7:35 PM, Anonymous Anonymous said...

(Between this and the late 90s, we now have most of a generation indoctrinated to the idea that working and saving are for losers, and that "winners" can just take the no-brainer road to riches by speculating.)

Well said. I see it first hand in my classmates. And I can feel it seeping into my skull as well. At times it is a difficult message to reject: who amongst us does not secretly believe that he was meant to be a king, waited on hand and foot?

But I wax philosophic, and begin to bore...

Cheerio,
prat

 
At 8:57 PM, Blogger Ben Jones said...

Tuesday, May 24, 2005

Due to a hardware error, a percentage of Blog*Spot users will run into intermittent trouble when trying to access their blogs. We have people in the datacenter working on the problem and anticipate that this will be corrected during the next two hours.

Posted by Jason at 13:30

 
At 9:52 PM, Anonymous nostradamus said...

(Im not that familiar with Compton or Malibu, but it seems like it would be much more than 3.3 times more attractive to live in Malibu than Compton)

I'm seeing a slightly similar phenomenon where I live in Marin County, NorCal. Very affluent county. But the high-end homes ($2M and up) haven't appreciated much in the past five years. Yet the low-end ($450-500 in 2000-2001) are now priced at $750-$950K.

The low-end (under $1M) are really just gussied-up bungalows. But if you can afford $1.2-$1.5, you get a very nice view home with all the amenities. Seems like there is a compression in the market. If/when a downturn comes, I think the low-end gets hit harder because that's where the absurd appreciation has come. Most of the local homes under $1M will have trouble surmounting that level because buyers are stretching to get there and because the mortgage deduction is capped.

 
At 6:51 AM, Blogger ajh said...

I know this is a little off-topic, but reading the post from thelastwordonthesubject made me wonder what the property tax situation is in California if an owner demolishes an existing house and builds a new one on the same block of land. Does this trigger a tax reset the way a sale does?

 
At 9:29 AM, Anonymous Anonymous said...

I was looking around in CA. A year ago, the houses were at $600,000, today, it stands at $420,000. That is a significant difference. No one wants to buy these homes by the beach. I hope the bubble burst by the end of summer! You think?

 
At 10:48 AM, Anonymous Anonymous said...

Anon 2:34
You cannot compare Malibu to
Compton. That would be like comparing paradise to prison.
Compton is a "live at your own risk" place. There is no "desirable" ratio that applies between these two cities. Compton is NOT a desirable place to live.....unless you say "I desire to live in Compton, close to my job, so I have no choice because I cannot afford to live anywhere else"
The actual "sales price" figures don't mean ANYTHING other than people in ompton know about this real estate game too.

 
At 11:10 AM, Anonymous Anonymous said...

I think that when we look back at the stats, this month will mark the turn. Breaking the half million mark in CA. has got to be a wake up call for enough people to swing the tide.
Even the always optimistic CAR is expressing concern now.

All that said - my gut has not been on the mark about financial trends all that much recently.

 
At 6:46 PM, Anonymous Anonymous said...

10:48 - That is exactly my point. The median in Malibu should be much more than 3.3 times the median in Compton.

 
At 8:05 PM, Anonymous DD said...

Regarding AJH's question about property taxes in CA: When someone purchases a home here, a Base Year Value is established for the assessment of their property. If the purchase is an arms-length transaction (on the open market), the Base Year Assessed Value is usually the same as the purchase price. According to Prop 13, the AV can only be increased each year by the amount of increase in the California Consumer Price index or 2%, whichever is lower. However, if the property owner adds on or improves the home in some way, the assessor can increase the AV by the value of the improvements. Since a large percentage of the value of a CA home is in the land, even a tear-down/rebuild won't result in the same kind of increase in AV as it would if the owner sold his old home and bought a newly improved one on the same block.

The homes in my neighborhood are about 30 years old - ripe for remodeling. My neighbors bought their house about 4 years ago for $500K. They originally would have been paying about $6250/yr. (1.25% rate) in property taxes. If they had made no improvements to their house, they would be paying property taxes on an AV of about $540K - about $6750/yr. in prop taxes. Because they did some remodeling to the tune of about $150K, they are paying property taxes on an AV of about $690K - $8625/yr in prop taxes. They just sold their house for $1.1M. The new owners will have a Base Year A/V of $1.1M. Their property taxes will begin at $13,750/yr. You can see why the property taxes are such a big consideration when making the sell-move vs remodel decision in CA. Our home has a Base Year value of $267K. We don't ever plan to move, if we can help it.

 
At 7:35 AM, Anonymous Anonymous said...

I resent your comment about Compton. Compton isn't Malibu, but it isn't a bad place to live. The truth of the matter is every neiborhood has its problems and crime is in every state. For example, the city of Orange isn't all what it's cracked up to be. So why pass judgement, when you don't really know the truth.

 
At 10:25 AM, Anonymous Anonymous said...

Anon 7:35
I've lived in the South Bay all my life...and not once have I ever heard anyone say they wished to move to Compton. I don't believe this is going to happen in our life time. I'm not trying to get people to resent me...I am merely speaking a truth.....like it or not. If you already live in Compton.....out of not having an affordable alternative....of course it's natural to make the best of it. However....making the best of living there and saying it's "not a bad place to live" still does not make it a "desirable place."
Am I wrong?

 
At 11:55 AM, Blogger Ben Jones said...

Until this blogs problems are resolved, I will be blogging here:

http://thehousingbubble2.blogspot.com/

 
At 12:43 PM, Anonymous Anonymous said...

I've heard chicken little screaming, "the housing bubble is falling....." for about 4 years now. I'm glad I never listened. I purchased my fourth property in Simi Valley (SoCa) last year. I don't expect to see continued appreciation in the range of +15-20%/yr, but I do expect to see the market to continue an appreciation of 3-5% a year. Simi Valley has rated each year, on the FBI's top safest cities. The last of the new housing has opened for sale and is currently selling in the 850K-1.3 range. I'm sure glad I ignored chicken little. I bet this time next year (as was the case last year), I will find all of you still singing the bubble song.

 

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