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kuhla

Rent is too damn high.

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From the reddit thread: https://howmuch.net/articles/how-much-must-earn-to-buy-a-home-metro-area

Income you need to buy a median home price in the major metro areas:

 

The median sales price of existing single-family homes in the U.S. has increased steadily since 2013 ($197,400) and 2014 ($208,900). That equates to a 13% increase over two years! Below is a breakdown of the median home prices for 2015 across four U.S. geographical areas:

  • Northeast: $262,500

  • Midwest: $175,500

  • South: $196,400

  • West: $319,100

 

the-home-buying-map-final-image-5a65.png

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time to move to detroit hardcore.

 

but portland is kinda interesting for me. love the green forest hazy feel.

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source - http://www.ocregister.com/articles/percent-736817-sales-home.html

....

The median price of a newly built Orange County home – or the price at the midpoint of all sales – hit a record $934,250 in October, up 3.8 percent from the record set in October 2015.

New-home sales also were up, rising 59 percent to 384.

As a result, the median price for all homes sold last month – new and existing – hit $655,000, tying the all-time high reached in June. That’s up $54,000, or 9 percent, from October 2015.
....

 

 

A 9% increase in 8 months? Renting for life in OC? At this rate IT SURE LOOKS LIKE IT. Oh wait RENTS ARE GOING UP TOO. Housing in OC. So wonderful /s

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Hoping to get some quick opinions on this. I may make a decision quickly and would like to get as many perspectives as possible so I don't miss something while I am considering.

A unit opened up at the Brea Downtown lofts (funny side story about this) and I have a shot at it. It costs just about the same as I will be paying starting when I renew my lease where I am now so cost is not the issue.

WHAT I GAIN

  • Lots of guest parking in a well-light area. (BIG plus)
  • Easy walking to Ralphs grocery store (where I already shop) and a couple of restaurants (Blaze, Flame Broiler, etc.).
  • Much newer building. More modern lighting.

WHAT I LOSE

  • Noise. I absolutely expect more noise. Where I am now it is very quiet.
  • Assigned parking space is farther away. I already try to do everything in 1 trip but in the loft it would be definitely need to do everything in 1 trip.
  • Space. Current: 750 sqft. Loft: 650 sqft.

WHAT DOES NOT CHANGE

  • Monthly cost is very close to the same.
  • Still very local. Takes me <20 min on side streets to drive to my Mom's house with ok traffic.
  • Freeway access is pretty much the same (57 fwy close).

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Try it for a year and honestly I think if you don't mind the daily noise and some weekend festivities, I would absolutely do it. Parking is such a major plus, more walk to your unit maybe?

 

Also the fact the average noise is up you can be more loud in general lol.

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sv6yu.jpg

 

On a more serious note. I would expect this to add roughly 10-15 minutes to your daily commute. Just keep in mind that's another 30 minutes I would consider as "work" that you are not getting paid for. Also the 57 tends to shit itself right around Imperial Hwy so be aware that while you have close freeway access if you're looking to use the freeway between 7 and 9 it's going to be a parking lot unless you're going North.

 

It sounds like you get a slightly smaller but nicer apartment with better opportunity to have over guests. You will probably take a few weeks to adjust from living in a mausoleum to a downtown loft.

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I have arranged for a tour of the unit on Monday.

 

Need to verify the floorplan is not garbage.

 

Usable space vs unusable space.

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Took the tour today and I need to sleep on it.... this is not nearly as much of a clear upgrade as it seemed to be on paper... some notes from the tour I took today:

  1. No popcorn ceiling.
  2. Ceilings are tall.
  3. Elevator.
  4. Unit is on the 3rd floor.
  5. Windows/unit faces East across Brea blvd. That means morning sun.
  6. Parking is reserved but not assigned. Permit allows parking anywhere in the structure behind Edwards even if it is not a reserved spot.
  7. Modern lighting? No. Limited number of lighting fixtures and they look cheap and old much like what I have now.
  8. Modern cabinets? No. Actually I wonder if they hired the same guy to do the cabinets there that they had for my current apartment because none of the doors line up properly and look/feel like they have been painted over about 5 times too many with white paint and smeared wood glue.
  9. There was traffic outside and, with the windows closed, it was relatively quiet inside the unit. Windows are double-paned.
  10. Carpet everywhere except for kitchen and bathroom.
  11. Refrigerator is included (like it was for my current apartment).
  12. There is this structure in the middle of the room that is the closet and has some cabinets in it too but it's not free-standing. It's attached to an 2-3" elevated cement block. It's not attached to the ceiling or any walls and sits about 2" away from the nearest wall. It's not very well designed (Example: It has a space for a CRT TV).
  13. Layout is unlike what they have pictured on the site: http://www.breadowntown.com/wp-content/uploads/2015/07/brealofts.jpg
  14. There is only one possible layout I can imagine that would work with most of my current furniture and it would probably require me to downsize my current computer desk to fit something in that corner nook. There is some grey text in the image below.
  15. No bar-top or room for a table (combined with my furniture) so I guess.... I guess I would eat at my computer?
  16. The bathroom is much bigger than it needs to be and eats space. Also no separation between sink and toilet/shower like I have now.
  17. I forgot to ask about mail/packages situation but if a delivery person has access to the building, they can take the elevator.

The easy walk to local businesses and guest parking are still the main advantages to this move. I was unimpressed with the layout, cabinets, lighting (including that middle structure) and fixtures.

 

http://i.imgur.com/Uck2gxr.png

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It would really help if you had some units/size descriptions for the layout.

 

It's a loft so I would expect 10-12' ceilings minimum.

Third floor is good, elevator is nice.

Get some curtains/blinds? Does the unit come with window blinds?

I was afraid of the parking situation. That's a decent trek from the structure to your unit, the fact that it's unassigned is sort of crap, but considering I've rarely seen the entire structure full it's probably ok. The fact that you can park in the permitted spaces mean you should always be fine.

The nice thing about the loft is that you can probably afford to go with some tall floor lamps, or if you're feeling extra weird you can even mount some lighting on the walls themselves to save floor space. Depending on the height of that pillar you could even put a few lights on the top of it facing in either direction.

I feel like the best bet for eating would be to put a table near/under the wall where you have your tv. Might need to find a way to mount your tv to the wall?

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Get some curtains/blinds? Does the unit come with window blinds?

I use these and they work great. Its basically nighttime in my room at noon time.

 

http://www.ikea.com/us/en/catalog/products/40309139/

 

 

I feel like the best bet for eating would be to put a table near/under the wall where you have your tv. Might need to find a way to mount your tv to the wall?

You might even need TWO tv's based on your layout...

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Turned it down.

 

The location is pretty cool but the the layout is just too terrible and it's a deal breaker. I would have to get rid of multiple pieces of furniture not because it's not enough square footage but because there are so many corners; very inefficient plan. In many other ways it is a side-grade.

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source - http://www.sfgate.com/bayarea/article/California-s-birth-rate-hits-record-low-10807081.php

As California’s population grew to 39.4 million this year, its birth rate dipped to an all-time low amid the mounting challenges of raising a family, according to state data released Monday — a decline that some say threatens future economic growth and prosperity.
....

“It’s not like Millennials are all of a sudden different,” said Dowell Myers, a demographer at the University of Southern California’s School of Public Policy. “What’s different is they came of age at a really bad time. First, they lose their job opportunities. Second, they’ve been gridlocked by the shortage of housing.”

“It’s just been harder to get things in place before having kids,” Myers said.
....

Between July of 2015 and July of 2016, the state gained 188,000 people through migration from another country. But it lost 118,000 people due to migration between states. In all, 70,000 more people arrived than left.

Public policy experts say there could be significant costs if California’s growth rate falls further.

The population needs to at least sustain itself, and ideally to grow modestly, to fill the state’s jobs, support its economy and pay for the social benefits of retiring Baby Boomers.
....

Myers said California’s high cost of living is largely to blame for not attracting the young families that the state needs.

“While the job market is good,” he said, “the housing market stinks.”

 

 

Considering how many people I know have moved out of CA or considered moving out, I am not surprised.

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I'm just considering moving to Fontana, the rent/cost to own is so much lower there. Only double compared to the rest of the USA :D

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source - http://www.sfgate.com/bayarea/article/California-s-birth-rate-hits-record-low-10807081.php

 

As California’s population grew to 39.4 million this year, its birth rate dipped to an all-time low amid the mounting challenges of raising a family, according to state data released Monday — a decline that some say threatens future economic growth and prosperity.

....

 

“It’s not like Millennials are all of a sudden different,” said Dowell Myers, a demographer at the University of Southern California’s School of Public Policy. “What’s different is they came of age at a really bad time. First, they lose their job opportunities. Second, they’ve been gridlocked by the shortage of housing.”

 

“It’s just been harder to get things in place before having kids,” Myers said.

....

 

Between July of 2015 and July of 2016, the state gained 188,000 people through migration from another country. But it lost 118,000 people due to migration between states. In all, 70,000 more people arrived than left.

 

Public policy experts say there could be significant costs if California’s growth rate falls further.

 

The population needs to at least sustain itself, and ideally to grow modestly, to fill the state’s jobs, support its economy and pay for the social benefits of retiring Baby Boomers.

....

 

Myers said California’s high cost of living is largely to blame for not attracting the young families that the state needs.

 

“While the job market is good,” he said, “the housing market stinks.”

 

 

Considering how many people I know have moved out of CA or considered moving out, I am not surprised.

 

As I have a new coworker who recently moved in from Colorado due to a better job opportunities the topic of housing has come up recently. I think the article above is partly non-sense in terms of advocating growth from existing populations. If the existing population doesn't grow, whats the big deal? There will always be migration from adjacent states / countries as job prospects grow. I'm of course against illegal immigration but there is always a price where people will begin migrating into the state due to the high paying jobs. What hurts is to existing businesses who must pay these high wages to maintain competitive. This of course hurts economic growth.

 

The biggest issue is that too much of California's housing development is based around single family homes rather than multi-unit dwellings (MUDs). This causes both traffic issues (large commuting distances), and higher home prices due to fact that housing has to account for the significantly rising land value per unit. California needs significantly more high density, low and medium price housing units to maintain growth. This should be a policy decision both in the state, county and city level for developers to increase availability of such units near urban centers. While visiting the world (Philippines, Korea, other major cities) I saw a significant numbers of of apartment sky scrapers. California flat suburban sprawl is especially noticeable when flying into LAX as there are so few sky scrapers here. This partly could be due to earthquake fears but there are engineering workarounds for this, look at Tokyo. Irvine/Newport/Anaheim etc. all would be prime candidates for this type of construction. Additionally construction costs for MUDs aren't anymore than standard single family homes.

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What hurts is to existing businesses who must pay these high wages to maintain competitive. This of course hurts economic growth.

This is a false dichotomy. Wages are not created in a vacuum and while housing costs, or more broadly costs of living, affect wages they are not the crucial driver in wages. The crucial driver would be skill/experience, not housing costs. While there are certainly higher wages available in California, they would be substantially higher still if they were tied tightly to housing costs. Additionally, paying higher wages does not decrease economic growth, we'll see more of this in the near future with the phasing in of higher minimum wages, it also doesn't take into account the multiplicative effect of money and the increase supply very often outweighs the inflation generated.

 

Additionally construction costs for MUDs aren't anymore than standard single family homes.

I would need you to clarify what you mean by that, do you mean costs per unit? costs per sqft? Even if the costs/sqft were the same for multi-family structures and single family homes, it makes no sense to build dense housing without an already dense urban area. If they built 20 story building out in the middle of diamond bar they would need nearby industry and jobs to support those large structures, not to mention the physical infrastructure like roads, power, water, and parking.

 

The current lack of public transportation and sufficient infrastructure makes the idea of increasing density a much less effective method to control housing costs. I think a more obvious comparison would be to compare average lot sizes by decade. The trend towards building larger houses on smaller lots has increased over time and will most likely continue.

 

This article mentions that with the rise of NIMBYs and the current attitudes towards new housing developments have exacerbated the current housing crisis.

http://www.longbeachize.com/when-the-wealthy-and-privileged-hijacked-all-the-narratives

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http://www.latimes.com/business/realestate/hot-property/la-fi-hp-what-money-buys-20170701-story.html

I try not to be overly bearish when looking at markets, but it's very hard for me to take the southern california property market seriously.  Property values have increased 8.6% Y/Y (for reference I would generally put the long term property value increase around 3-3.5% yearly).  I'm not predicting some apocalyptic 2008 style crash, but I do feel like we will see a market correction eventually.  The fed seems set to raise rates at least 1 more time this year, and while unemployment is low - I have particular opinions of the BLS and those unemployment numbers - there seems to be little to no increase in real wages.  Property inventories are at historic lows, and new construction simply isn't keeping up.  I do wonder what will happen when older generations begin to run out of money and are forced to sell/downsize.  I'm also expecting the number of reverse mortgages to increase exponentially in the coming years, although I expect that will cause even more problems when inventories are predominantly bank owned. 

 

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....and you just know this will have some effect on rent prices. Even if there is an adjustment, current renters are not going to see their rent go down.

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"168 new condos coming to Dana Point"
article - http://www.ocregister.com/2017/11/28/168-new-condos-coming-to-dana-point/

Quote

 

...

South Cove will sell 17 of the smaller Trestles condos to lower-income buyers: one-bedroom, one-bath homes from 883 to 900 square feet. Successful applicants for the city-mandated sales will have no more than three residents and yearly income under $95,000 — depending on household size.

....

 

"Lower-income". Under $95,000. Well damn. As a member of the "lower-income" bracket let me tell you about the struggle.... (/s)

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$600k for beach front property is pretty darn cheap.....something like that would still run you close to 7 figures even in West LA.

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source - http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11958974
 

Quote

 

Legislation to ban foreigners from buying existing homes will be introduced tomorrow - although some non-residents and citizens will be allowed to buy property.

Housing Minister Phil Twyford and Land Information Minister Eugenie Sage announced the timetable today, saying the ban would be in effect early next year.

"Purchases of homes by offshore speculators push first home buyers and families out of the housing market," Twyford said.

The housing market was cooling, he said, but "when the cycle turns" the ban on foreigners buying homes would help address prices.

The legislation would allow a resident visa holder to buy residential land, under new Overseas Investment Act screening rules.

Resident visa types include skilled migrants, residence from work, investors, entrepreneurs, parent, refugee, dependent child and Pacific Access. People on temporary visas will not be able to buy residential land.

There will be two exemptions for resident visa holders. The first is for those that can demonstrate a purchase will increase housing supply.

The second is for those who can demonstrate they intend to live in New Zealand long-term. If people in that category subsequently left the country, they would need to sell the property.

Sage said there were 47,000 residency class visa holders in New Zealand last year, but there were no figures on how active those people were in the property market.

The OIO would assess the commitment of the person applying to reside in New Zealand long-term.

 

I have wondered before what would happen if legislation like that was done here.

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I'm not a fan of full on bans for foreign purchases because I consider that to be a bit heavy handed.  I would like to see additional taxes levied or residency requirements.  If they're planning on living in the residence that's fine, but purchase for rental properties with foreign all cash buyers are part of the reason why the markets here are so busted. 

I know I previously mentioned Toronto implemented a 15% tax, but I'd like to see it be even higher - something like 25-35% tax on foreign purchases.  I don't think it would entirely stop the foreign all cash buyers but the taxes collected could be put towards infrastructure and low income housing or something similar.

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