OT: California Dreamin': Density is the Future.

[mhespenheide]

Originally Posted by jimcav

...if we sell, we won't be able to buy anywhere near our current neighborhood. I really have no idea how current families are moving in--I assume they have huge down payment help.

We're looking at moving to Sonoma County, CA. The only way that is at all feasible is that the house we bought 10 years ago outside of Seattle has appreciated so much in value we now have a bunch of capital available if it sells. So new "current families" may be moving in from another area of expensive houses.

[pdonk]

Originally Posted by mhespenheide

We're looking at moving to Sonoma County, CA. The only way that is at all feasible is that the house we bought 10 years ago outside of Seattle has appreciated so much in value we now have a bunch of capital available if it sells. So new "current families" may be moving in from another area of expensive houses.

And then when people move from expensive areas to less expensive areas, the less expensive areas face pricing pressures as people are used to high prices and see value on lands/properties that historically have had little. Anecdotally this has happened in the maritime region in Canada and more concrete examples are outside of the historic commutershed of the GTA during COVID.

[.RJ]

Originally Posted by Alistair

5% of a really big number is usually still a big number. I'm assuming 5% of the housing market is more than enough to make a dent in pricing (one way or the other).

It is, and it does, and I think its more a symptom of constrained supply and cheap money than a cause (on the whole).

[Alistair]

Originally Posted by .RJ

It is, and it does, and I think its more a symptom of constrained supply and cheap money than a cause (on the whole).

Yep, probably true. PE money is only getting into RE because RE can be considered an investment. It really shouldn't be.

[Alistair]

Originally Posted by jimcav

there are no longer any homes in a 10-mile radius near me anywhere near that, except a few mobile home communities, but then you don't really own the address. When the boys are both out of college, if we sell, we won't be able to buy anywhere near our current neighborhood. I really have no idea how current families are moving in--I assume they have huge down payment help.

Not much different here. The numbers are a bit smaller, but the appreciation is similar.

Average new SFH is over $1million now. Resale SFH is something like $800k.

That $600k home is what I own - mid-70s, 3 bed, 1500sqft TH with no garage, and on the edge of some less desirable neighborhoods (where you'll still spend $400k on a 2-bed condo). But, we back a golf course, can walk to lakes, shopping, work, and schools.

I feel like I really found a gem here. I don't know why more people don't find that appealing. Oh well, I'll take my "tiny" under-valued home, pay it off early, and retire young(ish).

[AngryScientist]

Originally Posted by jimcav

When the boys are both out of college, if we sell, we won't be able to buy anywhere near our current neighborhood. .

?

What am I missing? Presuming you would be selling to downsize because the kids are gone, you sell your big home for $$$$ and buy a smaller house in the same neighborhood for $$$, right?

[Alistair]

Originally Posted by AngryScientist

?

What am I missing? Presuming you would be selling to downsize because the kids are gone, you sell your big home for $$$$ and buy a smaller house in the same neighborhood for $$$, right?

I think he's saying local home prices have grown faster than local incomes.

A home that as once 3x average local income is now 5x average local income. Assuming he's earning an average income, he can no longer buy his own home (not that he would ever do that in real life).

Yes, buy while young in a major metro, sit on the house for 25 years (or ride the wave to bigger/better houses in same area), then cash out and move to {insert rural place} is a viable retirement plan for those who can afford that major metro early in their careers.

[jimcav]

Originally Posted by pdonk

And then when people move from expensive areas to less expensive areas, the less expensive areas face pricing pressures as people are used to high prices and see value on lands/properties that historically have had little. Anecdotally this has happened in the maritime region in Canada and more concrete examples are outside of the historic commutershed of the GTA during COVID.

the one exception to the new families in my neighborhood is a neat couple in their mid (him) to late (her) 60's who moved from the Bay area--they were able to buy a smaller house (say 1300 sq ft) for about a million--which seems insane, but it wasn't from where they were coming from and for being near kids/en-route grandkids.

[deluz]

https://nypost.com/2024/02/28/busine...ate-in-hawaii/

[pdonk]

Originally Posted by AngryScientist

?

What am I missing? Presuming you would be selling to downsize because the kids are gone, you sell your big home for $$$$ and buy a smaller house in the same neighborhood for $$$, right?

While demographers and planners have expected and predicted this lifecycle for nearly 20 years (see David Foot's Boom, Bust, Echo) it has not played out this way in the majority of markets, older people are not downsizing at the expected rates. People's fitness and health are much better so people keep their houses, people also see no need to move if their house is paid off and appreciating faster than inflation, and they don't need the money.

Finally, it may be difficult to buy a smaller unit in the area, especially if you live in an area dominated by large houses.

[pdonk]

Originally Posted by jimcav

the one exception to the new families in my neighborhood is a neat couple in their mid (him) to late (her) 60's who moved from the Bay area--they were able to buy a smaller house (say 1300 sq ft) for about a million--which seems insane, but it wasn't from where they were coming from and for being near kids/en-route grandkids.

Depending on your local market, they likely crowded out a person who would otherwise buy that unit as they "cashed out" and used remaining money for other things.

[donevwil]

Originally Posted by AngryScientist

?

What am I missing? Presuming you would be selling to downsize because the kids are gone, you sell your big home for $$$$ and buy a smaller house in the same neighborhood for $$$, right?

Same thing here in Sonoma County, smaller houses are HOT and sell fast, while larger ones less so and take time to sell. My wife and I want to downsize, but it's ultimately a lateral move financially after all the expenses. A nice 1200-1300sf house in a similar neighborhood is only marginally less expensive than our 2300sf house.

[prototoast]

Originally Posted by AngryScientist

?

What am I missing? Presuming you would be selling to downsize because the kids are gone, you sell your big home for $$$$ and buy a smaller house in the same neighborhood for $$$, right?

I can't speak to the details of his situation, but if I were to sell my house and buy a house valued at the exact same amount, my property taxes would increase by 60%, and my mortgage payment would increase by 75%. My situation is quite common in California where property taxes can't keep up with home price increases, and so many people locked in low rates in 2021. It's very inefficient for the housing market, but not hard to understand.

[jimcav]

Originally Posted by AngryScientist

?

What am I missing? Presuming you would be selling to downsize because the kids are gone, you sell your big home for $$$$ and buy a smaller house in the same neighborhood for $$$, right?

When I fully retire, there are very, very few homes smaller than ours. Right now, the premium paid is more the location than the actual sq ft. My house is now worth nearly 2.5 of our orig. purchase price, and even with higher mortgage rates, it isn't dropping--it continues to rise as the real estate flyers show on recent sales.

As my joints age and ache, I'd love to get a 1-story 2-bdrm (like we rented before deciding to buy). I got our larger 2300 sq ft 3-bdrm plus den 2-story b/c there were no single story for sale at the time.

Now, in 5 years if I sell, there is no chance the 1-stories here will be much less then 2.5 - 3x our current house purchase price. Yes, I can put all the equity into the 1-story (our current house won't be paid off), but I'd still have some mortgage plus the new purchase price would 2.5-3x the current house, and thus the real estate tax will be much higher than our current.

I think there might be a pending law about trying to not have seller's who want to downsize not take that tax hit, but I'm not up to speed on the progress of that.

IF we go elsewhere, I would likely be driving the problem where ever we go--Prescott, Bentonville, St George are all very attractive to me b/c I see it from the cost of houses here in America's Finest City. However, I fear driving to MTB is my future b/c my wife has many friends and hobbies here etc.--the only way she will want to move is if our boys move away and start having their own kids.

[deluz]

Originally Posted by prototoast

I can't speak to the details of his situation, but if I were to sell my house and buy a house valued at the exact same amount, my property taxes would increase by 60%, and my mortgage payment would increase by 75%. My situation is quite common in California where property taxes can't keep up with home price increases, and so many people locked in low rates in 2021. It's very inefficient for the housing market, but not hard to understand.

I agree with this. Property taxes go way up and there are a lot of fees associated with selling and buying a home. We live in a modest 3 bedroom 1800 sq ft home so we plan to stay put.
I would like to buy a second home on the central coast and spend half time there but that is not doable with our income.