Existing home prices in California surge 21.3 percent in June

Associated Press ^ | 7-25-02 | SIMON AVERY, AP Business Writer

[Oldeconomybuyer]

LOS ANGELES (AP) --

[SamAdams76]

With wages having been relatively stagnant over the past decade, how the hell can people afford these rapidly escalating housing prices? I bought my current home five years ago for $265,000 and thought that was an exorbitant price. If it went on the market today, it would list for $420,000 and I wouldn't be able to afford it. I am effectively priced out of my own house!

These prices are going to have to level off at some point. They just can't keep skyrocketing like this for much longer.

[SoDak]

I guess it's the dual income families buying these places. I will have built my first house soon, my budget is only 175k, and I had to save for the last 10 years for this. I'm amazed at the way prices are on real estate in populous areas.

[BornOnTheFourth]

No kidding. I'm glad I bought when I did--16 months ago. I couldn't afford to buy my house now and it's a 30-year old basic 3/2! My floor plan is selling for about $50K more than I paid. It's amazing.

[Willie Green]

With wages having been relatively stagnant over the past decade, how the hell can people afford these rapidly escalating housing prices?

And why would anybody pay that much for a home in a state that can't provide a reliable source of electricity?

[Argus]

Hey Willie, that's unfair. Don't you know Gray Davis will keep the lights on no matter what it costs?

:=)

[LibWhacker]

I am effectively priced out of my own house!

Nahhhh . . . You can leverage that $200,000 or so in equity you've got to buy a MUCH nicer house . . . A million dollar house, even, since you only need 20% down.

And just think where you'll be if housing goes up another 20% in the next year and you're sitting on a $1.2M home! Why, you'd be able to sell it and pay cash for your current digs. All in one crazy year from now. :-)

[calljack]

2 years ago the house next door sold for $199,950. It is now listed at 315,000 and across the street a little nicer one is listed for 420,000.I live in West Hills, 30 miles north of L.A. I bought mine in 1978 for 69,950. Hahahahahahahahahahahahahahahahahaha.

[Rockitz]

Next shoe to drop- real estate prices as seniors less retirement nest egg convert their only asset into cash via outright sales and reverse mortgages. Cash is king. If I had a house, I would sell into this rally and buy back in two to three years at prices which will probably be at least 30% lower. Look at the foreclosure rates and you will see that they are growing at an alarming rate.

[Southack]

"These prices are going to have to level off at some point. They just can't keep skyrocketing like this for much longer."

I don't know about that.

Consider that interest rates are at 31 year lows. Wages are near their all-time highs, and unemployment is historically low.

Then combine those facts with the scarcity of building permits. California only issues one building permit for every four homes needed due to their population increases.

Those building permits are probably what people are really paying for (the cost to construct a house hasn't gone up 21% in one month, that's for certain), and they might be a bit like a winning lottery ticket. The builder who has a permit knows that she'll have multiple people trying to purchase her house.

This cycle can go on until unemployment or interest rates move up. If they don't move up, however, it seems difficult to imagine that home prices will come down.

[Southack]

Actually, I'd expect someone in say, Vegas or Reno, to figure out a "retirement plan" that encourages seniors to cash out their high-priced California homes and live on Nevada golf courses (with a big fat nest egg left over from the housing price difference).

[Villiany_Inc]

Does anyone know of a good way to quickly compare prices such as they do in the above article, for say Indiana?
I would like to see if this is everywhere, or just in CA where things are crazy anyway. Plus, someone I know is looking at moving out of their rental house, to find a cheaper place to live. I wondered if I ought to suggest to them that whatever they do think about buying a home in 6-12 months.

[Rockitz]

I'll agree that flight from inflated regions to less inflated regions will be part of this process. If your at the top of the market, like in the Bay area and Southern Californian, look out below. With more professionals able to work from home, I'm guessing flight from the cities is a reasonable expectation as well.

[calljack]

Realtor.com has nationwide info.

[Myrddin]

I sold a house in Mira Mesa for $242K in Feb 2001. One of my colleagues who still lives in the area says that model is going for $320K. Apparently the houses are still going like hotcakes. About 3 days from list to a firm offer.

While its too bad that I missed another $80K in profit on the old CA house, I'll be free and clear on the new one in ID in the next week. The new one is 3 times the size and on a larger lot. The violent crime rate is 44% of the national average vs 144% of the national average at the old house in Mira Mesa. The cost of living is MUCH lower too. No anti-gun laws and "shall issue" CCW as well.

[Mr. Jeeves]

Because California is still the greatest place in the world to live, despite its inept government.

[Gritty]

HEADLINE: Existing home prices in California surge 21.3 percent in June

This article has one of the most misleading headlines I have ever seen. It says the surge was in June, not for the entire year!

[dighton]

Can you say 'real estate bubble'? Sure you can.

Yep. It looks suspiciously like money pouring out of the stock market into a "sure and safe thing."