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kuhla

Rent is too damn high.

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Keep in mind two things, that article I posted is using average rents (for the state) and they're also assuming that only 30% of income is being used for housing costs.

$55,432 *(.3)/12 = $1385.60 per month in rent.

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Keep in mind two things, that article I posted is using average rents (for the state) and they're also assuming that only 30% of income is being used for housing costs.

$55,432 *(.3)/12 = $1385.60 per month in rent.

 

I probably should have calculated that too. Looking at that number, that seems a bit high for a 2 bedroom if 2 people are splitting it in our area of OC. You can certainly find some north a bit of $2k but there are plenty that are just under $2k too and put each persons contribution close to $1k.

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Unfortunately I believe they aren't taking splitting into account. They're using average rent prices for 2 bedroom (no idea how many bath) apartments. I would imagine this gets really ugly if you start trying to take an average of LA/OC and SF and put it together with riverside or some rural areas. I personally think they're calculations are very low, but I would need to see what data they're using for average rents.

Actually their data is here starting on page 31 (WARNING pdf): http://nlihc.org/sites/default/files/oor/OOR_2015_FULL.pdf

 

Their data seems low. They're suggesting that 2 bedroom (i'm going to assume 1 bath) apartments are $1,608 in Orange County and $1,424 in LA. These numbers are supposedly from HUD's Metro Fair Market Rents. I'm also only seeing prices of $2,000 in Marin and SF which once again I think is low.

 

If you take the OC numbers they're using you'd get this:

$1608*12/.3= $64,320 For reference this is 340% of the minimum wage of OC.

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Unfortunately I believe they aren't taking splitting into account.

 

That's a really big detail. I think most people would expect 2 people in a 2 bedroom, even if it's parents with kids or just friends, to be splitting the rent. Not that this justifies any of the obscene prices but it seems an important consideration.

 

Their data seems low. They're suggesting that 2 bedroom (i'm going to assume 1 bath) apartments are $1,608 in Orange County.....

 

If you adjust the padmapper link I posted earlier, there are results around that price in our area for a 2bd/1bt but it's probably not fair to call them the "average" price: http://www.padmapper.com/?lat=33.88093555619926&lng=-117.90355682373001&minRent=1350&maxRent=1700&searchTerms=Words+Required+In+Listing&maxPricePerBedroom=6000&minBR=2&maxBR=2&minBA=1&maxAge=7&imagesOnly=true&phoneReq=false&cats=false&dogs=false&noFee=false&showSubs=true&showNonSubs=true&showRooms=false&showVac=false&userId=-1&cl=true&pl=true&aptsrch=true&rnt=true&airbnb=true&ood=true&rltr=true&zoom=13&favsOnly=false&onlyHQ=true&showHidden=false&am=false&workplaceLat=0&workplaceLong=0&maxTime=0

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“Rents are insanely unaffordable on a historical basis in the United States right now,” Zillow Chief Economist Stan Humphries told the AP.

 

The Wall Street Journal reported the share of renters considered to be cost-burdened in the 25- to 34-year-old age bracket rose to 46 percent in 2013, up from 40 percent 10 years earlier.

http://www.ocregister.com/lansner/percent-675330-rents-rent.html

 

I wonder how long it will take until rents become such an issue that we see another huge increase in subprime lending. My bet is that subprime loans will increase heavily over this year and next, to try and push burdened renters into the equally overprice real estate market.

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I wonder how long it will take until rents become such an issue that we see another huge increase in subprime lending. My bet is that subprime loans will increase heavily over this year and next, to try and push burdened renters into the equally overprice real estate market.

 

Wouldn't that solve zero problems and just make more? Isn't real estate inventory also really low driving up prices on that too? It just seems like housing of any kind, rent, own, house, apartment is becoming more expensive across the board.

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San Fransisco 1 Bedroom Appartment Median Asking Rent At ~$3,800 Per Month - highest In Nation - https://www.reddit.com/r/news/comments/3hlzks/san_fransisco_1_bedroom_appartment_median_asking/

 

Reading comments and stuff like this....

 

 

[–]elokr 2 points

15 hours ago

My house is NC is $369/mo - mortgage, not rent

  • 3 story
  • 4 bedroom
  • 3 bath
  • full basement
  • 3800 sq/ft
  • 2 acre yard

[–]DebitsOnTheLeft 17 points

15 hours ago

It doesn't count when you put 95% down.

[–]elokr 2 points

14 hours ago

I put nothing down

 

.....is damn depressing....

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http://www.bloomberg.com/news/articles/2015-08-20/best-u-s-home-sales-since-2007-shows-momentum-in-housing-market

The number of previously owned homes on the market fell 0.4 percent to 2.24 million, matching the fewest for that month since 2002. At the current sales pace, it would take 4.8 months to sell those houses compared with 4.9 months at the end of June. Less than a five months’ supply is considered a tight market, the Realtors group has said.

“We have this broad-based housing shortage,” Yun said at a news conference as the figures were released. “Rents are rising fast, home prices are rising fast. This is a result of under-production.”

A pickup in the number of available properties, particularly entry-level homes, would provide an added boost to the housing market by luring more young adults who have been largely absent from the market.

fredgraph%20%2810%29.jpg

http://www.businessinsider.com/david-rosenberg-on-the-us-housing-market-2015-8

 

This is the part where it gets interesting and conflicting:

Permits decreased to a 1.12 million annualized rate. The 16.3 percent drop was the biggest since July 2008. They were projected to decrease to a 1.23 million rate after 1.34 million the prior month, according to the survey median.

Authorizations have been see-sawing because of changes in legislation in the Northeast, where permits plunged by 60 percent last month. Still all four regions of the country saw declines in July.

http://www.bloomberg.com/news/articles/2015-08-18/housing-starts-in-u-s-climbed-in-july-to-almost-eight-year-high

 

The best I can do for an explanation is this. Order of Operations: Permits - Starts - Sales. Housing permits is a leading indicator of the housing sector and and the financial investment that is being channeled into the housing sector. Housing starts are the actual construction of homes and also acts as a leading indicator for the strength of new construction. Housing sales are a current indicator (although some measures lag by 2-3 months like the Case-Shiller Index), and describe the current state of the real estate market.

Currently the real estate market looks pretty grim for new home-buyers/renters because there's no inventory and credit is still tight. Additionally we're seeing dramatic increases in rents because of larger demand in rental properties (higher numbers of people who cannot afford to buy). To make matters worse we're seeing really shitty behavior from several owners of rental properties. Here is an article talking about some of the nasty practices in LA/venice of landlords evicting tenants and turning their entire property into AirBnB rentals (basically hotel conversions). I won't speak on the legality of that but it's certainly not helping the rental markets. Additionally multifamily homes (apartments/condos) haven't seen the same increase in housing starts, which is again pressuring rental prices.

 

In response to Kuhla's post:

Honestly while I can certainly sympathize with the fact that seeing California's cost of living is 4-10 times higher than other states, I try not to look at other areas, because I just don't have good frame of reference for them.

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Randomly came up on conversation with someone else at the wedding on saturday, he was shopping apartments and had actually looked at the same complex where I am now. He threw out some numbers and I double checked them. Since I moved in just 3 months ago it looks like prices have already gone up about $200/month.

 

Got a notice yesterday "you lease is coming to it's end in 3 months here are our new rates if you want to sign another 12 month lease before February" and the number increased by exactly $100/month. Not surprised. A little less of an increase than I expected. I will adjust my budget but it is likely that I will sign for another term.

 

What I don't understand is there are 3 options: 12 month lease, 11 month lease, month-to-month. I cannot for the life of me understand the 11-month lease. I re-read it a few times to make sure I did not miss anything. It's like $40/month more than the 12-month lease.

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time to buy a house @ san bernadino LOL

 

You joke but there are plenty of people who do even if they work around here.

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time to buy a house @ san bernadino LOL

 

You joke but there are plenty of people who do even if they work around here.

 

i wonder how the traffics are at least to the northern OC.

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Traffic would still be horrible.

 

It's very difficult to buy a house in LA/OC. OC is worse because the median values are higher than LA. For all the low interest rates it's still very tough for first time home buyers. It's no wonder we're seeing some of the same stuff as pre-2008 with people putting less than 5% down on a house, there's no other way to do it. I honestly have no clue how someone with student loans or a car payment would be able to afford something even remotely close to the median home value.

 

Are there cheaper homes in OC, well yes of course, but even then the lower end is $350,000-400,000. Just some silly numbers I pulled:

House: $400,000

Down payment $20,000 (5%)

Mortgage (not including fees) $380,000 at 4% interest

Monthly Payment (not including fees/insurance): $1,814

 

Then you take into account how much your mortgage should be of your gross income (28% says this website)

You're looking at (1814/.28)*12 = $77,742 gross income just to afford a $400,000 house. And that doesn't include: insurance, taxes, maintenance, mortgage insurance etc.

If you bump that up to let's say 35% of your gross pay you could get away with $62,194 gross income. But again this doesn't include other expenses.

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If a home is under $400k in the OC, its most likely under 1000 square feet or a real poor quality home.

 

When I was home shopping in the lowest of times, everything in the 300-400k range was a fixer upper or not in a good area. That was end of 2012. Now even the 500-600k homes are fixer-uppers in the Diamond Bar region.

 

@Tino: My buddy bought a brand new construction home in Fontana and traffic takes about 1-2 hours to reach the 57. Tons of people are moving there and traffic on the 10/60/210 is all bad in the morning because of it.

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well just another hour than my ussual commute aint no thang.

took me 1-1 a half hours to get to work at times.

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In late March 2011, as the housing market was trying to revive after the Great Recession’s pounding, there were 5,809 existing homes priced under $500,000 listed for sale in Orange County broker networks. That was 54 percent of what was being sold in the county.

Last Thursday, there were only 1,224 homes listed for sale in that same price range – a eye-popping 79 percent drop in five years. Even with overall homes-for-sale inventory cut in half in five years, homes under half a million now comprise just 22 percent of the market.

http://www.ocregister.com/articles/county-710618-homes-orange.html

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http://www.pewsocialtrends.org/2016/05/24/for-first-time-in-modern-era-living-with-parents-edges-out-other-living-arrangements-for-18-to-34-year-olds/

 

It's interesting to see that there's a rather large gender disparity of 18-34 year old's living with their parents. I wonder if this is partially to do with the larger percentage of female college graduates, or if it's easier for women to find living arrangements.

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My main theory is that women are more accepting of cohabitation then men are. Notice how they tend to go in groups to the rest room or other cliquey things.

Alternately, older single daughters have more trouble with adult authority than single men. Thus they are more driven to find an alternate living scenario whether that is with friends or partners.

 

Notice the total percentage of men and women living alone are similar

 

Living Single % = 100% - Cohabitation - Parents

Men: 37% = 100% - 28% - 35%

Women: 36% = 100% - 35% - 29%

 

Not a large difference between men and women in single living arrangements.

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Here's an article that focuses predominantly on rent vs buy parity in Irvine. There is a pdf at the end containing all the other cities in OC.

The author points out that because Irivine has had steady development their rent prices per property have no increased as much as the rest of OC, but because of the new properties being created and rented the median has increased (new properties are often more expensive and higher rent, skewing the median upwards).

Take some of this with a grain of salt, this particular author covers Irvine extensively so he may be tooting his own horn a bit, but I do think he's not entirely off the mark about development acting as a way to slow rent increases.

 

http://ochousingnews.com/blog/irvine-rent-growth-slower-than-rest-of-orange-county/

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source - http://www.latimes.com/business/la-fi-llc-money-laundering-20160727-snap-story.html

 

Los Angeles has long attracted wealthy individuals willing to spend millions of dollars for a sprawling estate in the chaparral hills above the city or along its fabled coast.

But in addition to movie stars, financial executives and foreign billionaires, Los Angeles real estate has also attracted criminals seeking to launder ill-gotten gains by purchasing its tony mega-mansions.

Amid heightened concern that such individuals are using shell companies to hide stolen funds, the federal government is cracking down.

On Wednesday, the U.S. Treasury Department announced it will require buyers of luxury homes in Los Angeles and other California counties with pricey real estate to reveal their identities when laying out cash to purchase homes through secretive shell companies.
....

 

 

Curious to see if this will make any kind of visible difference at all.

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I sincerely doubt it will make a difference at any level beyond the ultra-luxury level ($5M+). I know New York is moving ahead with similar regulations in an attempt to stop similar issues. The problem is that even if we take out all the stolen/illegal funds you still have very wealthy individuals from other countries that are willing to pay top dollar for high end real estate.

This is an old news article but it does illustrate the point of many wealthy foreign buyers inflating the high end market: http://www.cnbc.com/2015/06/22/wealthy-foreigners-bought-100-billion-in-us-real-estate.html

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