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Crewleader

(17,005 posts)
Tue Jun 10, 2014, 10:52 AM Jun 2014

Dr, Housing Bubble 06/09/14

The showdown in housing: Inventory increasing in California as sellers drink the Kool-Aid of housing mania 2.0. $769,000 and you get one bathroom. Low volume and cooler heads starting to rationalize the biggest purchase of their lives.

Welcome to the summer SoCal housing season! This is typically the house horniest time of the year and real estate agents are getting ready for all the open houses they will be hosting for future big eyed buyers. Last year, housing lust was reaching fever levels and people were diving into bidding wars just to get into a house. The biggest purchase of your life and people were making offers sight unseen. The grunt crowd seeing investors pony up big money simply tried to follow the larger players at the table. Those larger players are exiting stage left in 2014. This summer has a different tone from the summer of 2013. Inventory is higher and slowly, buyers are starting to question current prices. Sellers are drinking their own Kool-Aid and think that a home with a hardwood floor and granite countertop suddenly adds $100,000 to the value of a place. Like purchasing a new car, the novelty of owning real estate wears off after you go through a few years of mortgage payments, maintenance, and other costs of daily living. It is interesting to hear from a few condo owners or those with very closely built homes that bought and are unhappy with their neighbors. Some are unhappy that their new neighbor has a place with multiple generations living under one roof! You make the biggest buying decision of your life and don’t vet your neighbors? Hope you enjoy that place because when you buy, you lock in for a good amount of time. The honeymoon wears off quickly but there is still plenty of “buy now or be priced out forever” perfume stinking up the atmosphere. The showdown in housing is here and as we highlighted before, like a giant ship, housing markets turn at very slow speeds.

House hunting in Pasadena, Culver City, and Torrance

People seem to enjoy looking at real world examples. For those in SoCal, these prices are simply par for the course and don’t shock us beyond our already high tolerance state. However, for readers outside of California it gives you a taste of what it is to live in a boom and bust housing market.

Since real estate either in mortgage payments or rents consumes a high portion of your income, it is usually a very important sector of the economy to look at. It is so important that the very secretive Fed is actually buying up practically every mortgage-backed security in the market in the hope of keeping people in the game to buy (although what has happened is that big investors have used low rates on borrowing to leverage up in real assets).

Let us first take a look at a property in Pasadena:



787 N Wilson Ave, Pasadena, CA 91104

3 beds, 1 bath listed at 984 square feet

Built in 1905

The adjusted gross income for a household in the 91104 zip code is $58,610. Just keep that in mind when you realize that this tiny place is selling for $549,500. I love this line in the ad:

“The entire home is glowing with natural light”

http://www.doctorhousingbubble.com/showdown-socal-real-estate-socal-housing-inventory-grows-pasadena-culver-city-torrance/
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Dr, Housing Bubble 06/09/14 (Original Post) Crewleader Jun 2014 OP
Welcome back, Doc pscot Jun 2014 #1
A "Real Home of Genius", methinks? DinahMoeHum Jun 2014 #2
Well, this annoys me a bit Warpy Jun 2014 #3

Warpy

(110,900 posts)
3. Well, this annoys me a bit
Tue Jun 10, 2014, 03:28 PM
Jun 2014

" A 3 bed and 1 bath home is much too small for a couple planning on having a family unless you want everyone sharing the bathroom at the same time. "

Considering that the original house probably had a one-holer outhouse, that's actually a very big step up. Having everybody in a family sharing the only bathroom was sheer luxury after having to go to a foul smelling outhouse in wretched weather. It was either that or a chamber pot until the weather cleared up. One bathroom for everybody was how I grew up and one bathroom for 10-15 people is how I lived when I was first starting out. One SDS commune I knew had as many as 20 people sharing one bathroom and I never heard a single argument over it. I really think they could have run the country.

One bathroom is a test of character and a way to learn cooperation and accommodation.

What I'd worry about with this gem of an overpriced little house is knob and tube wiring, hidden behind walls and illegal connections to the Romex you see at the outlet boxes. If you've ever confronted wiring from the turn of the last century, you know that blowing on it will send the 100 year old, brittle insulation flying. It's horrible stuff.

"Glowing with natural light" might be a reference to its probability of catching fire from the obsolete wiring.

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