I lived in So Cal for a long time before moving back to TX. I hadn't intended to move to CA but I fell inot it backasswards. Had a helluva time.

Anyway, some markets in CA are bonkers, SF/Oakland, LA, OC, SD. Other areas are dirt poor.

In the 70's they asset Prop 13 which capped property tax in a move to prevent those on fixed incomes from bring priced out of their homes. It's tied to the urchase price and homes are not reassessed UNLESS the property sells at which point the market rate is the next fixed point and usually the market price is fixed at the purchase price. If you do major renovations and expansion of the Sq footage then the home can be reassessed. Which is why you'll be driving through older neighborhoods with huge houses and then see some rinky dink house from the 60's. A small increase of taxes can happen but it's tied to the CPI. so for 40 ish years as the property tax base has changed ged they've increased the state income tax but the big area is the corporate tax. Which then really ties the states future to the boom and bust of the economy.

As for how people buy, some make a lot most dont. The most that don't pay a fortune in rent. It is very very common to see people paying 50-55% of their net for housing. For loans you're looking at 2 income house hods stI'll paying way over 30% and the average person that can buy is looking at an FHA 3% loan. 3% down on a $350k house is what will push up the housing portion of the budget. And people do it because it's whats normal. And a lot of people live in condos, the kicker is a lot of condos are older buildings that under went apartmentcondo conversion . But the HOA are broke and the building is older so on top of all that other nonsenze, HOA fees can be really high.

Most average people in this loop won't be retiring in their 60's. Or they live further out and have really bad commutes. Zero savings, high debt...everything you're told not to do.

With the property tax structure the way it is in Cali, I bet there are some really wealthy landlords. Or can they reassess rentals more often? If not, guys are paying taxes on a 100k house from 1970 when its rental value is based off 1.2 mil today.

Thanks for getting this back on track. Yes that is mostly correct.

But people NOW that are buying houses have a lot of money. Just remember that in 2008 houses were 1/2 of what they were now. I think people just rent until another market crash and then buy and then stay there forever.

My 80 year old neighbor bought his house in 1965 for $35000. Now it is worth $1,200,000. But it is a total tear down. The lot is worth that b\c the lot next to him just sold for that.

But a lot of cities in LA county have restrictions on building new property single family homes. For example here in Sherman Oaks, your house cannot be larger than 45% of your lot size (lot was 11000 sq foot so house cannot be larger than 4950 sq foot, if your attic is taller than 7' then it counts as square footage etc on and on.


This image is very normal around here now:
http://la.curbed.com/2014/11/5/10026800/14-la-hoods-getting-special-antimansionbuilding-rules

But this is all cyclical. With density controls in place, richer people moving here displacing poorer ones the demand for rent will continue to skyrocket.

But it isn't all like that. there are some very poor areas a lot of area further from the water and mountains are more affordable (but that means if you work downtown or something it is going to be a long commute).

Obviously CA is another world in terms of home prices. But I happened to see the first 5 minutes of the episode that the OP is referring to and that first craftsman bungalow with all the original detail MIGHT go for 450k plus in the right neighborhood in Austin and 350k plus in Dallas/Houston. Lot values are at least that much in desirable in town areas even in Texas.

Matsui said:

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Thanks for getting this back on track. Yes that is mostly correct.

But people NOW that are buying houses have a lot of money. Just remember that in 2008 houses were 1/2 of what they were now. I think people just rent until another market crash and then buy and then stay there forever.

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A lot of people are priced out and will remain so for a long time. I was only able to buy in '11 at the very bottom of the market and it wasn't in a bad neighborhood, but I didn't have kids so school districts weren't a factor. Also because i had no hope of being able to afford in those areas. And it was built in '47, 3bdr, 2 ba. Made a mint when I sold.

I also had roommates. Easy way to pay the bills and a lot of people rent rooms. But it was not my ideal and I knew the situation wouldn't last.

Some people I know have zero desire to buy because they know it can't happen and it's a price they're willing to pay just to live in coastal CA.

Median Priced home in San Diego $495k
Los Angeles $597K
San Francisco $1,116K
Houston $315,000

Average income San Diego $63,400
Los Angeles $55,909
San Francisco $84,160
Houston $61,465

Those are some screwy numbers and if you're living in an area below the median, it's the hood in CA. I threw Houston in for reference.

Spot on. Owning a home isn't big on the priority here I am finding out. Owning a condo/apartment/townhouse in the actual LA metro area is a more realistic goal for people.

People making $55k a year have no hope to own a single family home in the LA area, but they are okay paying $2000-2500 a month in rent.

tamutaylor12 said:

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With the property tax structure the way it is in Cali, I bet there are some really wealthy landlords. Or can they reassess rentals more often? If not, guys are paying taxes on a 100k house from 1970 when its rental value is based off 1.2 mil today.

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You nailed it on the head.

My bro's house in Danville, just across the street is a little culdesac with a few townhomes.. the old lady has owned them since the 60s. Her prop tax on all units is based on maybe $100k, yet she's sitting on a few million in real estate and bringing in $10s of thousands a month in rent.

AlaskanAg99 said:

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Median Priced home in San Diego $495k
Los Angeles $597K
San Francisco $1,116K
Houston $315,000

Average income San Diego $63,400
Los Angeles $55,909
San Francisco $84,160
Houston $61,465

Those are some screwy numbers and if you're living in an area below the median, it's the hood in CA. I threw Houston in for reference.

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this is amazing. 300k in houston can get you into a really good school district and a nice house. Hell, 400k can get you into the "ghetto" part of West U. Assume a 500k place in San Diego is an old bungalow in a ratty neighborhood.

Have any info on how this breaks down per square foot?

In Charleston...
- I didn't bother to check on any of the beach towns ($$$$$$$$$$)
- Old and historic (1600s-mid-1800s) will run you $500/sq ft and up. I found $750/sq ft on the battery without trying hard.
- Up the peninsula a bit, for housing stock built around 1910 up to 1940, $300s/sq ft. Like a 1920 bungalow at about 900 sq ft (2/1) that would sell for a bit over $300K without being over-renovated.
- Our neighborhood adjacent to downtown (Houston ITL equivalent? 1940s-1960s), they sell for $200s/sq ft unless there's something really wrong with it. Condition, size, ... matters because it varies widely around here.
- Soulless suburbia (2000-2010) it's all over the $100s/sq ft map
- Outer suburbia / traffic hell, I found low $100s for new construction

blindey said:

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AlaskanAg99 said:

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Median Priced home in San Diego $495k
Los Angeles $597K
San Francisco $1,116K
Houston $315,000

Average income San Diego $63,400
Los Angeles $55,909
San Francisco $84,160
Houston $61,465

Those are some screwy numbers and if you're living in an area below the median, it's the hood in CA. I threw Houston in for reference.

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this is amazing. 300k in houston can get you into a really good school district and a nice house. Hell, 400k can get you into the "ghetto" part of West U. Assume a 500k place in San Diego is an old bungalow in a ratty neighborhood.

Have any info on how this breaks down per square foot?

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The median price above was for San Diego County, which includes 18 incorporated cities.

For City of San Diego Zillow has the median at $547k, or $406 Sq ft. Median rent is $2,350.

And yes, if you are at median or below you are in a less desirable section of the city.

AlaskanAg99 said:

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blindey said:

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AlaskanAg99 said:

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Median Priced home in San Diego $495k
Los Angeles $597K
San Francisco $1,116K
Houston $315,000

Average income San Diego $63,400
Los Angeles $55,909
San Francisco $84,160
Houston $61,465

Those are some screwy numbers and if you're living in an area below the median, it's the hood in CA. I threw Houston in for reference.

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this is amazing. 300k in houston can get you into a really good school district and a nice house. Hell, 400k can get you into the "ghetto" part of West U. Assume a 500k place in San Diego is an old bungalow in a ratty neighborhood.

Have any info on how this breaks down per square foot?

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The median price above was for San Diego County, which includes 18 incorporated cities.

For City of San Diego Zillow has the median at $547k, or $406 Sq ft. Median rent is $2,350.

And yes, if you are at median or below you are in a less desirable section of the city.

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I didn't know zillow had stats like this.. pretty cool.

When I purchased my home in fall 2012, it says my town's median was $302k. Now it's $432k!

When I put in Houston, it says no data??

And yet prices are still skyrocketing. When I bought the bank was willing to loan me 1.7x what I wanted. I had no clue how they cane to that figure as if I maxed out I would have next to nothing to live off of. Even in 2011 it was bizzare.

It can vary widely based on updates and finishes.

In an "average" house ($700k) that will be around $500 per foot. But the LA area can vastly change on the price per foot from city to city. Heck, even street to street.

In very nice houses ($3-10 million) you can get $2000 a foot

http://www.zillow.com/homes/for_sale/Los-Angeles-CA/house,condo,apartment_duplex,mobile,townhouse_type/12447_rid/500000-600000_price/1902-2282_mp/globalrelevanceex_sort/34.400677,-117.820817,33.640347,-119.001847_rect/9_zm/

THat is a quick estimate of what you get for the median house in LA area ($500k-600k)

Wow. That is incredible. Thanks for the link. Looks like a decent place can be had but commutes would be nuts.

The Fife said:

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Probably because in Texas real estate transaction prices are not public.

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It has data for dallas. Didn't check any others.

Is it crazy that those seem dirt cheap and look like bargains...? Stupid Bay Area...

I did lending out there and in new england for years. People live and work to pay the mortgage/rent. They have a completely different outlook on debt and everything else......

Deats99 said:

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I did lending out there and in new england for years. People live and work to pay the mortgage/rent. They have a completely different outlook on debt and everything else......

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There isn't anything inherently wrong with that. It turns their house into an investment. Instead of saving 15% of their money towards retirement they deposit it into an appreciating asset. The dangerous part of that is when someone loses their job and the market puts them upside down. It also puts too many eggs in one basket and isn't the wisest strategy in my opinion.

I think you made your own point as to what is wrong with it, especially when are all your investment eggs are in one asset class.

Premium said:

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Deats99 said:

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I did lending out there and in new england for years. People live and work to pay the mortgage/rent. They have a completely different outlook on debt and everything else......

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There isn't anything inherently wrong with that. It turns their house into an investment. Instead of saving 15% of their money towards retirement they deposit it into an appreciating asset. The dangerous part of that is when someone loses their job and the market puts them upside down. It also puts too many eggs in one basket and isn't the wisest strategy in my opinion.

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When I lived in Fla I always wondered how the yankee hordes, mostly blue collar union types, afforded the pretty nice homes they bought. Seems like they would sell the family home in some hellhole like Flint that they paid $25,000 for in 1962 and used the money for their $350,000 Fla home.

tamutaylor12 said:

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With the property tax structure the way it is in Cali, I bet there are some really wealthy landlords. Or can they reassess rentals more often? If not, guys are paying taxes on a 100k house from 1970 when its rental value is based off 1.2 mil today.

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The cap on prop taxes is for homesteads only. If you own more than one house or owned by a business then you are assessed at todays value

The Original AG 76 said:

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Premium said:

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Deats99 said:

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I did lending out there and in new england for years. People live and work to pay the mortgage/rent. They have a completely different outlook on debt and everything else......

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There isn't anything inherently wrong with that. It turns their house into an investment. Instead of saving 15% of their money towards retirement they deposit it into an appreciating asset. The dangerous part of that is when someone loses their job and the market puts them upside down. It also puts too many eggs in one basket and isn't the wisest strategy in my opinion.

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When I lived in Fla I always wondered how the yankee hordes, mostly blue collar union types, afforded the pretty nice homes they bought. Seems like they would sell the family home in some hellhole like Flint that they paid $25,000 for in 1962 and used the money for their $350,000 Fla home.

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It's the same thing here. Ohio and parts of the northeast are moving here and jobs on average don't pay terribly well, so this is what you get.

knoxtom said:

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tamutaylor12 said:

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With the property tax structure the way it is in Cali, I bet there are some really wealthy landlords. Or can they reassess rentals more often? If not, guys are paying taxes on a 100k house from 1970 when its rental value is based off 1.2 mil today.

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The cap on prop taxes is for homesteads only. If you own more than one house or owned by a business then you are assessed at todays value

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My llc owns CRE, and it is capped. All property taxes go up based on small increases from local elections, and a percentage point or two each year across the board for some reason or another (not entirely sure why).

Geez, $2-4/SF? That's what prime commercial is leasing for in BCS.