All Forum Posts by: Account Closed

 Why is it that with every post I make, I find the same few crawl out of whatever cave theyve been in to spread hatred and bitterness? This is worse than stalking. Here is a suggestion. Get a life!

 Thats your view right? You are entitled to it... what I do know is that neither Ben Bernanke or a sea of economist af the Feds saw it in 2008.... they probably thought it was also another trough or peak in the cycle. For a bubble, you look for certain trends and patterns. The goal here isnt to discuss each element triggering a bubble per se. Price is growing at an unsustainable rate in LA compared to income level, that is the fact. It almost doesnt matter why (it does to solve problem) but what matters is in the absence of a reversal of the trend.. its going to pop. 

The difference with 2008 is that you had multiple asset bubbles amidst a wide scale economic downrurn affecting not just RE but the stock market globally. It doesnt mean bubbles often have to pop in tandem. Bubbles often form in different asset classes and independent of each other. Bubbles can also be market specific, regional or local. It doesnt alway occur in sync globally as it happened in 2008. Some people seem to be misled by looking for similar events, trends and patterns as in 2008. They'll miss it.

The neighborhood income data has been posted here quite a few times. You can compute what each neigborhood is able to afford from that list. Only about 23% can afford to buy at median prices.

 Last time I checked, there are more PhDs in economics at the Federal Reserve who's job it actually is to know these things but who apparently didnt see the crash, because usually, its seen after it happens.... last I checked, they said it was a surprise but I am sure they knew about it.

Think about it... if median wage is half what its supposed to be, we are already seeing DTI bumped to 50%, and prices in LA is growing still at a rate that further widens the unaffordability margin, how exactly will the properties be paid for? We are already at a stage where just about every LA investor is saying certain rules do not apply to LA. Properties suddenly werent meant to cash flow, 1% rule etc... these work well elsewhere but not in LA. When investor start concucting new ways to skirt around fundamental valuation techniques, making exceptions so the numbers can work, you know there is an issue with the price level.

Here you go...the problem you cant fix..... I get these sort all the time....

Median LA housing price = $685,000 (zillow avg. of median home value & median listing price)

Income required to qualify = $125,000 (0% down, 4.5% mortgage)

Income required to qualify = $118,000 (5% down, 4.5% mortgage)

Median LA household income = $54,000 (argue accuracy of data with census bureau)

How much home can a household buy with $54,000 = $260,000

Primary factor driving LA prices = Speculation (may also argue demand)

 and if you have a question about RE prices, shoot!

 I dont remember having a question about what drives RE prices.

Well, about supply in LA, it requires distinction. There is the supply of listings on the MLS for instance or FSBO where owners list to sell. There is also supply from the standpoint of availiable housing stock. My understanding is that new builds is strictly regulated if not prevented currently in LA. Both of these have an effect on what is LA's price on the supply side. But these arent the only issues driving price. There is speculative activity.