Something 'Crazy' Is Happening In The Southern California Housing Marke

[Scorpio]

Something 'Crazy' Is Happening In The Southern California Housing Marke

Joe Weisenthal | Apr. 8, 2012, 10:10 AM

Wikimedia Commons
In the areas around San Diego, the all-in cost of renting a house is more expensive than buying a house.

North County Times (via Calculated Risk):

Monthly payments on a house are now cheaper than monthly rents on a similar house in most of North San Diego and Southwest Riverside counties, according to an analysis of county-supplied and Realtor data by the North County Times.

...

"I don't think this has ever happened before," said G.U. Krueger, a principal economist for HousingEcon.com. "It's a function of the huge housing price collapse which has left a lot of people in the lurch."

Or, as Carlsbad real estate agent Tyson Lund put it: "This is crazy."

This inversion of the costs of renting and buying a house is something that's garnered a fair amount of buzz over the last several months.

Warren Buffett has called buying distressed properties, and renting them out his #1 business idea.

In a recent interview, Paul McCulley said he was intrigued by Southern California real estate, in part because it's so out of favor..

One think to think about, however, is that if a homebuyer assumes that the value of said home will continue to fall after purchase (a reasonable assumption, given that the direction of housing still appears to be going down) then it makes perfect sense that rent would be more expensive, since the homedweller is not risking a monthly loss of equity.

Meanwhile, other measures of housing affordability, such as the NAR's index that compares the price of a home to income is surging off the charts.



Of course, a major impediment to a housing rebound is credit and mortgage availability.

A lot of people who are renters can't make the jump to homeownership since they can't get a mortgage.

As this recent chart from Nomura showed, inability to get a mortgage is a growing reason why realtors are seeing deals fall through.



But as the jobs market starts to creep back -- something that is happening the fastest in these ex-bubble areas -- this impediment should begin to dissipate.

http://www.businessinsider.com/somet...202012-04-10#i

[mayhem]

Something 'Crazy' Is Happening In The Southern California Housing Marke


But as the jobs market starts to creep back --

What job market creeping back? Mixing facts with fiction. Can't and won't by a house on a 15 hour week job.

Only ones buying around here are cash buyers, as Fanny/Freddie are wholesaling them off below appraised value to them. Need a mortgage? Rott's a luck, there aren't any available. Very little new construction, all above 400k + glut of 125k homes.

Meanwhile Zillow keeps upping the value of my house. Currently about 50k over what it would appraise out at.

I'm stuck in a interest only (3.50%) note with lots of liquid assets. When the Bernak raises rates and the economy really tanks I'll just buy something for cash and walk away.

Easy as cake.

[Scorpio]

I find the second chart quite telling, not by what is said, what it doesn't say,

ie the vast majority of canceled contracts is due to 'other problems'

not mortgage and not appraisal,

so what does that mean?

S

[mayhem]

I find the second chart quite telling, not by what is said, what it doesn't say,

ie the vast majority of canceled contracts is due to 'other problems'

not mortgage and not appraisal,

so what does that mean?

S

First thing that comes to my mind is someone in the household got laid off, or hours cut and they decided to bail.
Second thing is a inspection report. These places have been empty so long. Full of insects and mold, etc..

[Joseph]

Monthly payments on a house are now cheaper than monthly rents on a similar house in most of North San Diego and Southwest Riverside counties, according to an analysis of county-supplied and Realtor data by the North County Times

??? when have mortgage payments ever been higher than rental payments anywhere in the US ?

[hoarder]

Warren Buffett has called buying distressed properties, and renting them out his #1 business idea.

LOL! I bet! Insider Buffet promotes stupid idea for others to get suckered into. This is just what the banking elite wants....buy their distressed properties they can't sell and pay them interest.

[budfox]

I'd never buy a house in Taxifornia

[wjv]

Same thing is happening here in SW Washington State.

People are renting homes for $1800/month, that would only cost $1300 to buy. Plus they would have a tax advantage.

Most of these people don't have the down payment, or a good enough job, or their credit was destroyed when they lost their last home. Hence they have to rent.

[GOLDZILLA]

Commiefornia is bizarromerica. In Bizarromerica logic is FUBARed. Thus crazy in normal America would mean the opposite in commiefornia.

[Gcubed]

Try to run a small business and stash some profits over there. You'll be "Californicated". JMHO.

[Hivemindgammahydra7]

Warren Buffet, the liar with the jackass grin. Hell is too good for him, but it will have to do.

[GoldMiner41]

Rich get richer and the poor get poorer. When you have a large chunk of cash, you can take advantage of opportunities. All the more reason to get in the habit of saving.