As everyone, I think, knows, buying a house in SoCal (or anywhere in Cal, for that matter) is a very expensive idea. It’s so expensive that, frankly, anyone who buys a house out here ought to be forced into massive therapy and medical examinations prior to the closing to confirm that the purchase is being made by someone who still has at least half a brain and that the half-brain is functioning.
Here are some examples, taken from realtor.com, craigslist.org, and/or the Sunday Union Tribune…
Charming 2BR with garage. $450-475K.
This “charming�? two bedroom has one bath and is a whopping 768 square feet of house. Its whole lot is 2561 square feet. (according to Zillow.com) It’s located in North Park, which, while a great area in many ways (it’s where we used to live), also has more than its share of drugs, whores, tranny-prostitutes, loud cars, and garbage.
Our next fine home is located in our current neighborhood, Clairemont. In fact, it’s just a couple of blocks from our (rental) house. Offered at $625K it is bigger–a 4 bedroom, 2 bath home. On Zillow, we learn that this house is actually one of the larger ones in this neighborhood at 1734 square feet, but still, that makes for over $360 per square foot of house! And, if you look at the pics. it’s not a very pretty house (though it does have a big yard for the area).
So, for just under half a million dollars you can get a tiny house in a “transitional�? area and for a bit over that half a million, you can get an ugly, plain, blah house in a neighborhood that offers, well, not much at all.
Let’s see what $625K can buy you in Columbus, OH. Well, for a little less you can get a 4 bedroom 3.5 bath house on a half-acre lot in Upper Arlington (and look at how many square feet!) or a 4000+ square foot estate on over 2.4 acres near Gahanna.
In Atlanta you could get a gem in Virginia Highlands which is a great neighborhood (just ask my brother–he has lived there for years) and still have enough left over to buy a new car.
It just makes me sick. Even if we had the money, we simply couldn’t buy a house out here. It makes no sense to pay the prices they are asking. And those prices don’t even include the property taxes (based on the selling price, btw, so they are HUGE too) and the extra cost to get earthquake insurance (doesn’t come with the incredibly expensive regular home-owner’s policy–and it ain’t cheap itself).
Luckily, for those of us who haven’t bought, it looks like the bubble is about to burst. I follow several housing blogs, and they all seem to be showing the same thing for SoCal–a drive to massively lower prices, increased foreclosures, and generally good things for future buyers.
Take this post, for example:
which quotes a story on how a 77-year old bank now holds all, yes all, of its mortgages as option ARMs. And, 80% of those loans were made with low or no documentation. Now how screwed up is that? Of course, that is the only way anyone (almost) can buy a house out here, but that doesn’t make it a good thing. In fact, this sort of insane banking should lead California right into its own gutter before too long.
Or this one, from a guy who I think must be the last honest realtor in the county: http://www.bubbleinfo.com/journal/2006/4/2/first-quarter.html
which shows how house deals just aren’t closing anymore.
Of course, it is sad to think about people losing their homes. But at the same time, if you are going to take out a loan for around a half-million dollars, wouldn’t you take the time to make sure you understood the way the loan worked?
Which leads me to my last link. This is a letter to a real estate advice columnist. The letter was in the Union Tribune today:
Quote: About a year ago, we bought our home with the help of an adjustable rate mortgage (ARM) at 1.95 percent interest. We knew it would adjust after six months to 4.95 percent interest. That was quite a jump in our monthly payment, but we handled it.
However, when we received the lender’s Internal Revenue Service 1098 year-end report, we learned our mortgage balance has grown by about $7,800. When I called the lender, I was told the increase was “unpaid interest.�? What’s that?
That, my friend, is the sound of you losing your shirt.