All Forum Posts by: Account Closed

If that is a bubble, look at China. The median income is around $10000 per year in shanghai, housing price is around half million to 1 million US dollars for a small apartment.

That is a real bubble!

It is a catalyst that can along with other factors (which all seem to be present), escalate the formation or its pop.

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Originally posted by @Matt K.:

Originally posted by @Account Closed:

Originally posted by @Matt K.:

Originally posted by @Account Closed:

Originally posted by @Matt K.:

@Account Closed imagine that:

So you are clear on the fact that median LA household wages is in the $50,000 range correct? Trying to focus on whats going on in Dallas for instance, doesn't exactly help whats going on in LA. They aren't just miles apart, prices are quite different.

So little digging, this doesn't seem realistic to me.... we shouldn't use 4 year data to compare it against 2 year old data.

While affordability is making small but apparently encouraging gains, the figures themselves are still a little daunting. The median house in LA County was nearly $482,000 in the last quarter of 2015. The monthly payments would run about $2,410, and the minimum income required to qualify to buy the house is $96,420, CAR figures. If that doesn't sound so bad, consider that the median income in LA County is $55,909, according to US Census figures from 2009 through 2013.

https://la.curbed.com/2016/2/16/11028498/los-angel...

I wish I could sugar coat this and say its all good for LA. That just isnt the fact. As of 2015, family income in LA is $54,000 and in most families there is often multiple earners. If income grew at 3% inflation, its about $57,288. That number already accounts for what is going on in tech. What you can afford is in the $200's. The median home value in LA (city), is $685-$700K. Required income would be in the $120's range (based on what you put down). As an investor, when there is such a disconnect between housing prices and wage levels, it is an issue of serious concern.

Source for the low income number? Because this is 2011 numbers here...

https://www.bizjournals.com/losangeles/interactive...

For the record, I'm not saying you're wrong about the bubble, not saying you are wrong about the disconnect. I am saying you're wrong about the median income being so low and it's impact on the median housing price.

Well, the data is right here: https://factfinder.census.gov/faces/tableservices/...

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Originally posted by @Matt K.:

Originally posted by @Account Closed:

Originally posted by @Matt K.:

@Account Closed imagine that:

So little digging, this doesn't seem realistic to me.... we shouldn't use 4 year data to compare it against 2 year old data.

https://la.curbed.com/2016/2/16/11028498/los-angel...

I wish I could sugar coat this and say its all good for LA. That just isnt the fact. As of 2015, family income in LA is $54,000 and in most families there is often multiple earners (per capita income in LA is almost half that). It is not unusual for people to be out of touch with the facts. I think in some ways the sheer shock of the reality fuels the resistance.

If income grew at 3% inflation, its about $57,288 currently. That number already accounts for what is going on in tech. What you can afford is in the $200's. The median home value in LA (city), is $685-$700K. Required income would be in the $120's range (based on what you put down).

As an investor, when there is such a disconnect between housing prices and wage levels, it is an issue of serious concern.

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Originally posted by @Jay Hinrichs:

Not everyone gets to own a home.. so the median rents.. those that rise above the median buy homes. and a lot of folks are in the move up mode.. LOTS of cash to put down driving down the need for massive incomes.

I know when I look at my sales of new construction here on the west coast last 5 years and its a small sampling I think we have built and sold about 100 homes.. I would say 10 to 15% were sold for cash.. Oh and price ranges 300 to a million is were we deal.. and I will lump Charleston SC in there since we have been quite active and that is a expensive market relative to local median income.. Any way back to sales data... gone is the day were Everyone put nothing to minimum down.. So don't see the median income affecting the new home prices as much as one might think..

If I think back to my pre 08 days were we were flipping 75 plus homes a year as a retail flipper.. 97% sold for minimum down and I can't really recall a cash sale I am sure we had one but it would be an outlier.. But now its totally flip flopped at least from my little slice of the world. Lots of cash sales.. MOST sales are 10 to 30% down and small sampling is FHA or VA.

WE will bend over backwards for VA ( lot of folks won't deal with it because of time lines and such but we feel its our duty to help our Vets get into our homes)..

Good info... but there is a reason why economist look at aggregate data when planning. Sometimes you have to look at things at a per capita level also. New construction by the way is one of many economic indicators that can hint were things are heading.

5 months of CONSECUTIVE pending sales decline in California sure is a sign of a cooling of some sort... right when it nears the 08 pop level is enough to spook the alert.

Regarding down payments, I think the government put in place the 3.5% FHA down payment because there was/is a general trend of buyers not having sufficient down. Dont forget this is all tracked data... for instance at anytime what the savings rate is, is known and what the average american has in the bank account, say in CA for instance, would be absolutely insuffient to meet a 3.5% down payment, less 30% on a $700,000 property in LA.

If almost 70% of transactions is financed, and financing relies on a qualifying income, which is currently half below where it should be (what is required), the question is not if there will be a problem.

There isn't an issue with seeing things differently... someone always is a victim of a pop.

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Originally posted by @Matt K.:

@Account Closed imagine that:

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Originally posted by @Matt K.:

@Account Closed imagine that:

CHART 1: Highest salary premiums for tech workers among largest U.S. tech hubs:

1. Seattle, $108,350, or 78% higher than all Seattle workers

2. Dallas-Fort Worth, $86,810, +77%

3. Houston, $90,390, +74%

4. Austin, $84,660, +71%

5. Oakland, $105,160, +70%

6. Los Angeles-Orange County, $91,150, +69%

7. Philadelphia, $86,620, +65%

8. San Jose, $128,850, +64%

9. San Francisco, $108,960, +63%

10. Boston, $97,480 +58%

CHART 2: U.S. MSAs with the most workers in computing and math occupations (May 2015):

1. 280,900 New York-Jersey City-Newark

2. 251,000 Silicon Valley (San Francisco-San Jose-Oakland)

3. 185,200 Washington, D.C.

4. 147,400 Los Angeles-Orange County (Anaheim-Irvine)

5. 141,700 Chicago

6. 140,100 Dallas-Fort Worth

7. 126,600 Boston (including Nashua, N.H.)

8. 117,000 Seattle

9. 91,200 Philadelphia

10. 84,000 Houston

NOTE: BLS figures are by occupation, not industry, and include those who work for both tech and non-tech companies. Figures do not represent mean salaries in the tech industry, which also employs thousands of lower-paid, non-tech service workers.

https://www.usatoday.com/story/tech/columnist/shin...

This is actually an improvement... :-) a Californian (or CA resident) with something that remotely looks like a fact :-)

But tell me this... what is the size (number) of LA's labor force? And what percentage of that labor force represents tech?

That may help shed some light on the fact that that sector doesnt reflect exactly what is happening economy wide.

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Originally posted by @Christopher Phillips:

@Account Closed

Speculation means a lot of building to meet the pentup demand, that would be brand new affordable housing.

No, it's not a myth based on the data you cited. Median income is way off of what's required to own a home.

lol...I already know this, but as you can see here, there is someone who already feels the census bureau is wrong. I deal with countless such arguments. Its usually just emotional or defensive. Regarding speculation, not sure it requires further simplification... part of what is happening in LA is driven by speculative investor activity, just as its demand and inventory shortage issues.

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Originally posted by @Matt K.:

Originally posted by @Account Closed:

You are aware that a company does reflect entire region's economy correct?

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

You are aware I said tech boom, not a google boom right? Go look at SF, median household income is like 77k and the median home list price is almost 1.2 MIL. This is because of all the tech money floating around, not everyone want to live in the burbs and will go into the city.

You gotta realize too at this point a lot of people in these companies aren't new to the game and aren't interns anymore... Check out the pay here and this is an old article. Nearly every single one of those jobs median mid career income meets your the numbers you posted for LA... tech is moving to LA, they're expanding outside the bay area. You can see this in plenty of other states as well...

http://www.huffingtonpost.com/entry/silicon-valley-salaries_us_56d61ee6e4b0bf0dab33ce96

As an investor, it would be great if everyone in LA made at least $100,000 but that just isnt the case. That is why there is the affordability crises. What you are trying to talk about here is already accounted for in the employment numbers for the region. Neither Google or Facebook was born last night.

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You are aware that a company does reflect entire region's economy correct?

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

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Originally posted by @Matt K.:

But back to my point....

This is just one company of many... and they just so happened to make a big push of setting up shop in LA

https://www.glassdoor.com/Salary/Google-Los-Angele... that salary looks like it'd lend itself well your numbers of what kind of salary someone would need in LA... https://la.curbed.com/2016/6/6/11872300/playa-vist...

You're seeing the impact of this https://techcrunch.com/2014/10/08/theres-something-going-on-in-l-a/ and everyone thinking it's a repeat of silcon valley...

I would rather this discussion stay on target.... so what you just posted here is proof of?

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All Forum Posts by: Account Closed

Account Closed has started 11 posts and replied 613 times.

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