Southern Cal housing bubble  

redmustang91 57M  
8723 posts
7/14/2005 9:03 am

Last Read:
3/5/2006 9:27 pm

Southern Cal housing bubble

The incredible price inflation in So. Cal and other places in the housing market is unreal. It is all fun while it lasts, but it cannot last indefinitly. Greenspan's phrase of "irrational exuberance" , referring to the internet and biotech speculative stock bubble, was uttered in 1996 and the crash began in March 2000! Housing cannot indefinitly outstrip increases in income and rents. There are tax breaks supporting home ownership and net in migation from China and underveloped countries where the elite is making a fortune helps bolster prices. And the extremely low interest rates support highly leverage strategies.

BUT there will be a correction someday. There are a few downsides to the flip and switch game many are playing. The newly acquired house is at current value for real property tax assessment and rates. These taxes can be very high on $1 Million plus properties. Insurance, closing costs and real estate commissions are much higher too. Moving often costs lots to buy new furniture and carpets, drapes, paint, etc. Remodeling is very expensive and disruptive. I look at all these costs and stay put.

The only ones who really profit are those who sell and move to the rural areas and buy a mansion for $200,000, pocketing the balance. But then they live in the sticks and miss out on the culture, restaurants, etc. When I get old enough I may do the same, but not now! I think it is still going higher!

redmustang91 57M  
8598 posts
7/15/2005 4:04 pm

My guess is the party will keep going another two to three years and then stop. By then everything will cost so much no one will buy except those who can sell!

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