Skip to content
Private Lending & Conventional Mortgage Advice
Account Closed
  • Homeowner
  • Signal Hill, CA
70
Votes |
521
Posts

2015-2020 Southern California Real Estate Predictions, anybody?

Account Closed
  • Homeowner
  • Signal Hill, CA
Posted Apr 27 2015, 13:33

http://www.latimes.com/business/realestate/la-fi-h...

LA area home prices continue to rise (heck, so does inflation!), and less people are buying them. 

The above article cites "inventory constraints, credit hurdles and reduced affordability". Sure, the articles a bit early for the season as now we're almost already in summer, but doubt it has picked up in sales, but just more somewhat overpriced inventory piling up as most residents - who rent - likely give up even bothering to try to save up a down payment or qualify for a mortgage.

People who are who are looking to uprade their housing situation after the proverbial spring cleaning and tax return season, are likely only moving into a either a more spacious or a more affordable rental in this economy and inflation, if they can find one with the rental market saturated and owners expective prices above comparable market values.

Definitely there's a new surge in foreclosures in the area thanks to the Homeowners Bill of Rights being passed last year which prolongs but doesnt relieve/stop the inevitable foreclosure process where a significant % of homeowners give up making ends meet and ultimately lose their home no matter how long it dragged on. 

Investors actually able to finance these foreclosures should feel like in the candy store with the resultant surge in (short sales and) foreclosures, given regular sales being so increasingly 'greedily' priced (or maybe its more the inflation of the US dollar). Likewise, landlords already wealthy and looking to add another multifamily gold mine to their portfolio, are more and more willing to pay a million bucks for a fixer in a transient neighborhood (ie, Compton, Bellflower, Long Beach) just cuz it has 3-4 units.

As for economic recovery, imo, that was so last year =( 

http://www.usnews.com/news/business/articles/2015/...

To what end? Any predictions as to what will happen in the next 5 years to the socal housing market?

I'm leaning towards most homeowners realizing the dollar is just practically worthless these days compared to even just 5 years back, so each year the price in lousy US dollars they would part with for their pride and joy and American dream is incrementally more, even if it means their houses and others' more and more pile up and sit on the market teasing agents who fail to bring an acceptable offer; and causing foreclosures, short sales, and distressed sales to sell at practically regular sale market value as compared to the overpriced inventory. 

User Stats

2,770
Posts
3,660
Votes
Aaron Mazzrillo
  • Investor
  • Riverside, CA
3,660
Votes |
2,770
Posts
Aaron Mazzrillo
  • Investor
  • Riverside, CA
Replied May 2 2015, 21:29
Originally posted by @Matt R.:

Hottest parts of LA don't seem to run on the cycles exactly like the rest. Some other areas are the last to go up and the first to go down (Big Bear). Other areas are first to go up and sort of flatline and never really go down much. ( Santa Monica). Then there is the historical 18 year cycle, 14 years up and 4 years down. Perhaps some of this is supply and demand unless there is a GFC. Even then the LA absolute hottest spots seem to have maintained their values during the GFC.

Is this possible @Aaron Mazzrillo?

 I don't know Matt. I don't buy/sell in L.A. At least I don't intentionally do so. Sometimes I get a lead on a property and wholesale it and even less often I'll rehab and flip it. Otherwise, I don't go to L.A. I won't even drive there. I hire a driver to get to/from the airport. I pretend the city doesn't exist. 

User Stats

3,975
Posts
2,727
Votes
Matt R.
  • Sherman Oaks, CA
2,727
Votes |
3,975
Posts
Matt R.
  • Sherman Oaks, CA
Replied May 2 2015, 22:37

@Aaron Mazzrillo That's funny.... I am a uber fan myself:)

Here is what I discovered for my SM cycle vs Cali cycle comparison.

2006 Santa Monica median 850k 

2011 SM median 825k 

2015 SM median 1.2 mil

During the worst real estate market in a five year history it lost approximately 2.5% or negative .5% annually. That kind of throws the whole RE crash part of these cycles out the window so far. I know none of this matters for your personal rei business but maybe some others might be interested.

BiggerPockets logo
Find, Vet and Invest in Syndications
|
BiggerPockets
PassivePockets will help you find sponsors, evaluate deals, and learn how to invest with confidence.

User Stats

129
Posts
102
Votes
Leonard L.
  • Investor
  • Newport Beach, CA
102
Votes |
129
Posts
Leonard L.
  • Investor
  • Newport Beach, CA
Replied May 3 2015, 22:05

@Matt R.

Your Santa Monica data point may prove something that was true in the past down cycle, i.e., that a grade A coastal market did not seem to react (crash) as expected.  But your youth may have you drawing incomplete conclusions from that data.

I bought in 1995 in Santa Monica, and two of the houses on the street that had each crashed from about $600k at the prior peak (1990) to $300k.  I bought one of them.  In 1998, a mere 3 years later, I sold that house for $500k.

So I agree that the core coastal markets did not react as expected in the last down cycle.  That was also true of other A markets, like Newport Beach.  But if you extrapolate from that data that coastal A markets have never crashed in down cycles, you would be mistaken.  Whether the next down cycle will be like the 2007 crash or the 1991 crash is, at best, uncertain. 

User Stats

3,975
Posts
2,727
Votes
Matt R.
  • Sherman Oaks, CA
2,727
Votes |
3,975
Posts
Matt R.
  • Sherman Oaks, CA
Replied May 4 2015, 06:48

Good point. The 90s local RE had a down time. I think there were other LA areas that weathered that storm better. The SM landscape has changed considerably since. To extrapolate expectatations of RE early 90s price behaviors to post GFC could be wishful thinking for some LA areas. If it did not crash GFC then I think it is tested waters overall more severe than the 90s generally. There are no guarantees of course and everything is always uncertain. How did Newport do in the 90s?

@Leonard L.

Account Closed
  • Investor
  • Bakersfield, CA
46
Votes |
161
Posts
Account Closed
  • Investor
  • Bakersfield, CA
Replied May 4 2015, 09:22
Originally posted by @Andrey Y.:

@Account Closed

 Do you suspect a similar crash in Hawaii as well, ie. end of this year or next? I would be very surprised if it happend that early.

@Andrey Y.: I'm not certain of the HI market, I don't have any experience over there.  My only guess is that since a lot of people's income is declining in value due to price inflation in daily life (utilities, food, energy), that they may travel less, and that could affect HI's economy.  Just my thoughts.

Account Closed
  • Investor
  • Bakersfield, CA
46
Votes |
161
Posts
Account Closed
  • Investor
  • Bakersfield, CA
Replied Jun 10 2015, 11:01

Does anyone have additional points of view on this topic?

User Stats

8
Posts
0
Votes
Maverick Wade
  • Dallas, TX
0
Votes |
8
Posts
Maverick Wade
  • Dallas, TX
Replied Oct 14 2015, 03:46

Yes, I agree with some friends who are posted here that real estate industry is growing. Real estate industry is not only growing in California but also all other states like Texas, Dallas etc. The real estate companies are able to deliver the perfect service in time are becoming more successful and those who are can't deliver good service in time becoming looser. As a buyer or seller we need  to catch a good real estate company. Recently one of my friend is sold his house in maximum price with hekp of a real estate company in Texas as "Whitestoneacquisitions"

User Stats

3,386
Posts
706
Votes
Jo-Ann Lapin
Pro Member
  • Loan Officer
  • Tustin, CA
706
Votes |
3,386
Posts
Jo-Ann Lapin
Pro Member
  • Loan Officer
  • Tustin, CA
Replied Oct 14 2015, 06:48

We are on the same page here. I published this article a couple of days ago:

All the buzz in California's real estate market

Oct 12, 2015

  • Let's explore todays real estate market place in California. As of July 1st 2008 California's population was at 36,756,666 according to the United Census Bureau. As of January 1st 2015 we are at 38,715,000 according to the California Department of Finance. With very little construction and low vacancies rates for residential and commercial. Where do we go? We currently have a surplus of investor capital and very little lendable inventory. Is this sustainable? Will we see the "shadow inventory"? What is ahead for 2016?