i have been saying this for years. These valuations were never in line with the actual value of homes in CA. Not only that, the valuations have outpaced incomes. That is a recipe for great failure. I live in a neighborhood where houses sold for $6-$700k five'ish years ago. a home just sold near me for $1.8m... something is seriously wrong and we will eventually find out.
I mean I'd pay the buy side $5000 if they can get my price under asking. But 3% only made sense when houses were $300k. Just because the Fed and PBOC and every other major central bank is trying to print their ways out of global debt, doesn't mean the same job realtors were doing 10 years ago is somehow 2x or 3x more valuable.
They are. News is all over YT about it being reported as fraud. They are talking about class action suits in different states all over the country. Real Estate Mindset is talking about it.
Prop 13 and associated propositions keep your property taxes low. You can transfer your old low property tax base if you meet certain criteria. Also, they cap the increase in property tax bill to 2%/year regardless of the increase of market value, so you don't get forced to sell due to rising property taxes.
Lower percentile homes going aways means: they are selling faster and at higher price than asking: My neighbor was selling a condo: Asking price: 698k Buyer offer: 720k Sold for 720k
Home values in Southern California will remain elevated unless people move away, have more supply comes onto the market to meet the demand in which only newer expensive homes are being built, unless you want to move 2 hours away to like Perris or Winchester etc. New construction builds costs a lot because of all the fees, labor and price to acquire the land. If we can get 20 million people to move out of so cal then homes will be affordable. Right now you have 10 people living in a single family home being rented for $3900. Building more ADUs and multiple units come at a cost to the city with the city needing more public services. A lot of people don’t understand this. You double or triple housing in every city you have to double or triple all the services as well. If so cal is too expensive to live in, then move away or figure out how to level up to stay here. No one owes anyone anything. Yes it sucks that everything costs a lot more now, but if I couldn’t afford to live where I’m at then I am moving to somewhere where I can afford it. Luckily I can afford to live here. I wish everyone the best .
People don't *have to* live in Cali. Average single-family homes will set one back $200-250K in much of the Dakotas and Nebraska. Life's a little slower paced, though.
@@chetpomeroy1399 opportunites to earn bigger money are also fewer, and then there is weather and other factors. There are many other factors for reason the Dakotas and Nebraska have low population densities.
@@JBoy340a The rat race isn't for everybody. It's much easier and more cost-effective to set up a profitable business in the Dakotas and Nebraska. There's less red tape and operating costs are substantially lower. There's also *plenty* of work for blue-collar workers, who can actually buy 3-bedroom homes for a lot less.
CA local government policies, especially multi-family bans (single family zoning) and driving mandates keep pulling the bottom rung of housing out of reach of more people. The good news is, you can start moving in the other direction with the stroke of a pen. I think momentum is finally going in that direction.
The historically lowest priced single-family homes in Ventura are on the west end. They are smaller, older homes on relatively bigger lots. With the state deregulating local zoning laws so that multi-unit homes can be built on these lots, sellers have been able to sell these homes at much higher prices to developers. So yes, many of these homes are literally disappearing, with most of the others getting priced out of their former price bracket because of their newfound potential for development.
Great point! We’re seeing that in LA, too. Older homes in less desirable neighborhoods being bought up by developers and turned into 4-unit properties.
@thejonschwartz And given Newsom is a real estate investor himself, it's hard to not be suspicious of him. What better way to inflate rents and real estate assets than by raising wages and deregulating zoning laws? BTW - great video.
@@thejonschwartzThe correlation between raising wages and inflating housing prices has been long proven, and doesn't constitute my being conspiratorial. Ditto the fact that this instance of deregulating zoning laws has inflated housing prices. So either Newsom is naive and didn't understand what the inflationary impacts of his actions would be, or he did know. Given his $12 million in real estate holdings, his donor base, and the fact that many of our politicians hold their own interests above their constituent's interests, my posing the possibility that Newsom is operating from his own self-interests is more of a healthy skepticism than conspiratorial. More importantly, his actions are the same old symptom-treating strategies that don't address the roots of the problem, but instead make things worse. Holding employers, who are actually being productive and making positive contributions to society, responsible for funding the greed of the non-productive real estate investors serves not only to further inflate housing costs, but to make it even tougher on small businesses to survive, and further erodes our country’s exporters' ability to compete on the global market. And as we're seeing in Ventura, increasing density in older neighborhoods with very small streets and in which congestion is already a problem is bad policy. We need to start addressing the real roots of the problem.
Actually, creating more housing is addressing the root problem: not enough housing units for California’s population. And increasing the minimum wage is a form of wealth redistribution, and if you haven’t noticed, wealth disparity is a root cause of disfunction in our society. So Newson’s just going after root causes.
Everyone including this realtor says the sky will fall soon in the real estate market, but where in the heck is all of this inventory going to miraculously come from? Building anything in California where people actually want to live is very expensive and sometimes damn near impossible. So many owners have low rates they're not going to want to get out of. Working with building & planning in most desirable cities is like pulling teeth and neighbors fight any new developments that pop up. All of this is expensive folks... Again... Where is all this magical inventory going to come from?
Thanks for providing this information, you’re not wrong just a little early. Big Short took 3 years to actually hit even though the warning signs were already there. Longer it takes the worse it will get
I don’t understand. I says a crash bro is anybody perpetually talking about the upcoming crash - and not in terms of “if” or “to what degree,” but “when” and “how much worse than 2008.”
Very well said: The California housing sector is characterized by its inherent volatility; it’s not unlike Bitcoin in that sense-capable of surging to dizzying heights but equally prone to devastating crashes. Contrary to popular belief, the 2008 crisis was far from an isolated event. California’s real estate market has seen multiple significant corrections, driven not merely by cyclical trends but by deep structural factors. Bull runs in real estate are deceptive, often sustained far longer than anticipated, leading many to the erroneous conclusion that prices will always rise. Yet markets are inherently cyclical, oscillating between bull and bear phases. The present conditions suggest we are transitioning into a bearish period. The fallacy lies in assuming that lower interest rates will resuscitate the market. What is often overlooked is why rates would drop in the first place-inevitably due to an impending recession. In such times, liquidity tightens, lending criteria become more stringent, and access to capital dries up. Thus, while rates might ease, only the most creditworthy will secure financing. This phenomenon was starkly evident from 2008 to 2011, when prices in regions like Irvine collapsed by 40-50%. Here’s a revealing historical parallel: The 2008 crash initially ignited in Florida, where oversupply and speculation spiraled out of control. Interestingly, Florida is once again experiencing sharp declines in real estate prices, foreshadowing what may occur on a national scale. Those expecting a rebound driven by rate cuts may find themselves caught in a bear trap, misjudging the deeper structural shifts at play
The difference between 2008 and 2024 is the supply of good homes in desirable areas. Homes in Irvine and other SoCal coastal cities and neighborhoods will not see 40-50% price drops because of the lack of inventory.
299k price range is mobile home, 600k to 1000k Apartment condo home, 800k to 1.2 M town house, 1.2M to 2M single family home,more people are looking for single family to buy.
What do you mean by "lower priced homes are just going away"? Are they being teared down and rebuilt into more expensive homes? Are we building more ADUs that push up the home values? Are they just getting more expensive due to appreciation? If they are just appreciating such that the < 500k homes are now worth >500k then wouldn't that just suggest there is growth in home value? Which is contrary to your point that there is some sort of stagnation or crash.
Great point. I mean, it is price appreciation ultimately that constantly pulls up the lowest rung of home values, but with homes trading hands every ten years on average, that upward movement of the "cheapest house" is usually a lot slower than it's been since the pandemic.
In my valley neighborhood, I've noticed that just about every older single family that has gone up for sale has been bought by a developer that has replaced it with 2 duplexes on the same lot. It appears they are driving up the market for these home, since they can pay a lot more than an owner/occupy is willing to pay because the amount of profit involved.
This is just factually untrue. I've closed three homes in the last month that all needed insurance as a lender requirement and got insurance. What's true is that several of the biggest insurers aren't offering policies in CA right now. If you are a CA buyer looking for insurance, I highly recommend Homesite (go.homesite.com/). The process is easy and the pricing is totally sane. I insured my home with Homesite about a year ago without any issues. (I don't have a relationship with Homesite - just trying to spread good info!)
@@thejonschwartz Two people I know who have lived in CA for decades suddenly found out that their home insurer is no longer covering their house, each of them in prominent, long time suburban areas in desirable neighborhoods. It was not for lack of payment either as neither ever had a lapse in coverage. Their homes were well maintained and in pristine condition. If you'd like to share which insurance companies you worked with that are still insuring residential homes in CA, please let me know.
@@TheMrsMenes What your describing isn't unique. I've lived in California for just over two decades, and I've owned homes here for 15 years. I've always had my homes and cars insured by USAA. Last year, I sold a house, bought a new one, called USAA to get homeowners insurance, and was informed they wouldn't write me a policy. And please read my previous comment again; I already recommended an easy-to-use insurer still insuring homes in California, Homesite. And lemme see... A recent client asked me to review the three quotes he got for homeowners insurance on a triplex: Homesite, Aegis, and California Fair Plan.
Of course California housing is going to crash, it always has… It’s always been a very cyclical market. Just look at the history. It has just become completely outrageously expensive, and the market needs movement not stagnancy, I just feel for all the people that bought thinking oh yes, it’s gonna keep going up😂
That's a great point. Ultimately, the lowest end of the spectrum is going away because of price appreciation, but I think it's quite notable since the pandemic. We expect the cheapest house in any area to become 5% or 6% more expensive every year. But with the huge run-up in prices post-pandemic, the lowest end of the CA market jumped up 50% or 60% in the same timespan. It's a dramatic flourish to say entry-level homes have "vanished." I just wrote the above paragraph and then looked at your user name. Bro... this video was definitely a dive into crash-bro dumpster-diving, and I already regret it a bit. The non-salacious point is: CA is becoming an increasingly expensive market. The low end is shrinking so quickly. Anyway, I'm going back to "give it to 'em straight" with next month's CA update.
I think this is what is happening all over the country. 1. Sellers have not been selling because of interest rates have been to high to move 2. Some buyers just have to buy for what ever reason pushing up the prices of the limited amount of houses for sale, in turn pushing up comps 3. People have known for the last 6 months the Fed has to cut interest rates prices are getting out of control 4. Now the opposite is happening in line 1 BUYERS are now waiting for the interest rates to drop to buy therefore more houses sit on the market In short over the next 2 years SOME houses in SOME areas will drop in price but if you are waiting for a crash like in 2008 its not coming, This is a supply and demand thing
If unemployment continues to rise and the people who bought in the past few years at inflated prices can’t make their payments I can see it being comparable…I would argue that while it may not be exactly like 2008, I think the debt levels are making it just as risky. It’s not just real estate, people are drowning in debt.
I don’t quite get this analysis. The value of a good is a result of what someone is willing to pay for it. The reason there are so few homes sold below $500k is because people value them higher than that and are willing to pay more. If you price your home at $1m but no one buys it then the value is less than $1m. You can say that these valuations are too high but if people will pay then you are wrong. If home sales dry up then you can say that current valuations are too high but right now they are slowing but still moving.
@@thejonschwartz Funny. But yes, I do know my place. I'm in a place where nobody around me who owns these homes and bought 10 or more years ago could even come close to affording them if they had to do it again. That's why my wife and I are leaving California next year.
they make you sign a buyers agreement now before you can see a house, just make sure you dont sign that exclusivity for 3 months meaning you can only use that realtor for 3 months to buy that house. agents are pulling that crap i noticed.
@@thejonschwartz ok. Thanks for that. I don’t disagree but I don’t think the ‘imminent crash’ narrative is supported by that. If you do, please connect the dots for us
Explaining the "mix-shift" phenomenon that is distorting the Median Sales Price (and has in the past) is a tough thing to do because it can't be rolled up into a nice and simple phrase. You have to dive into the statistics to wrap your head around what's going on. He always does a great job explaining it though. Hopefully more people start to "get it".
@eile4219 Gotcha. So for the purposes of analyzing housing data - which is what we professional and amateur housing analysts like to do - should we look at the median of final sell prices for the geography and timeframe we’re discuss?
Homes in my neighborhood are sitting at homes are 2 to 3 million dollars. Yeah you have a be a hell of a window licker to pay $50,000 a year in property taxes. How long will that last 😂 just to the math on staying in a property like that for 7 years. The homes are not even worth the price and people buying are hoping to flip the houses for more 3 months later. 😂 horrible time to buy a house.
Stupidity in California. Inventory going up because the 1960's shacks they are selling for $1 million + is where the problem lies. Some idiots buy no matter what. Massive job losses is going to slow demand naturally. But some people aren't buying because the prices are absurd. Inventory is up because people are trying to sell at all time high and cash out on top. Problem is people are getting smart and refusing to pay these ignorant prices for a shack. And most don't qualify. You have to put down 70k at a minimum at 6%...no thanks. Let it crash back to reality.
It’s a pretty common misconception that’s we’re out here spending millions on shacks. In reality, we’re spending millions are incredibly desirable pieces of land. For example, last year I bought a half-acre hilltop property in the Monterey Hills, just east of LA, with views that stretch 20 miles to the ocean. It cost $1.65M and is worth every penny. And I got a free shack with the land, too!
@@thejonschwartz Yep it's the land, more than the structure on the land. Building new is so expensive that people are buying old homes, shacks really, "remodeling" by leaving one small wall section and adding more bedrooms, huge kitchen, etc. and making $1M profit when they sell.
I don’t believe this real estate agent knows what he is talking about. He should go back to school. Homes near me in Los Angeles county selling in 2 days and with multiple offers, my next door neighbor just sold his home for 1.8 million, he bought this house in 2013 for $ 580,000 There is a thousand of buyers waiting for real-estate to crash by listing to guys like him. No one is willing to sell. With 3% interest rate people living comfortable and not planning to sell their home in near future
I’m in LA, too, and you’re right! What you’re saying doesn’t conflict with my video at all. Did you even watch the video, or are you just responding to the thumbnail?
I don't think you know what you're talking about. LA is a bubble full of wealthy people. If you were to remove them the remaining 95-90% cannot afford to buy. You're also not taking into consideration all the people that may live on fix income that are/will becoming priced out due to increasing costs of living. Sure if they sell there's enough ppl that can jump on it but that's not a rreality in all of california.
All real estate is local. So national or statewide may differ from hyper local trends. I wouldn’t be buying any house for $1.8m rn with liquidity issues at banks piling up and the Fed not lowering rates yet. Fed is pinned in their strategy and it’s going to get ugly when they finally pull the rug.
The issue with the chart is that of course lower end homes are going away. You wouldn't put a segment for homes $0-50k because of course $50k houses don't exist. Case Shiller tracks the effective equivalent of same store sales and therefore isn't skewed by the mix of home sales. The data lags a bit but the June index for LA is up YoY. Meaning when you look at the sale of the same house, the value went up. You were right against the crash bros but now you are starting to pander like them.
I track many Southern California towns and I haven't seen price appreciation in many months. Very slow price declines in most places. Minimal declines, but clearly in decline. I feel confident in saying that a normal home in Long Beach or Carson could absolutely not fetch its 2022 peak price today. Probably not much below peak, but definitely below by my eye. Case Schiller seems completely absurd and worthless to me at this point, especially if we're talking about "actionable" data.
Average people need a real estate agent don’t believe the hype you will make a costly mistake not get the proper disclosures and inspections etc you will be happy to have an agent !
Stop fear mongering. The faster recovery in building over buying in your chart is not a glut, it is due to smart anticipation of interest rate decreases. Builders are reading the tea leaves better than you. And, wouldn't you know it, just last week the Fed announced plans to start lowering interest rates. With every 0.25% drop, the sales rate will go up that much quicker, eventually outpacing building.
These numbers are for existing home sales. No new construction in these numbers at all. These aren't new homes being built; these are sellers trying to unload their homes.
lol yes crash in some places like 2009. What happen the most desirable and yes expensive areas drop 4 -6 percent and within a year up by 16 percent.Now eastern/vallley /Riverside Califronia 40-50 percent drop. This time around there will be a drop but even with the drop it still will be still too expensic v Yes Stockton will dropped and even after the drop it stil will be barely affordable for the working class.San Francisco will drop and years later bounce up and even with a drop still unaffordable. Lol You can not listen to these youtubers. The developers and politicians bend over for thier donors so they dont lose in the long run. Lies, damn lies and statistics lol
![ร้อยพ่อพันแม่ - WanMai [Official MV]](http://i.ytimg.com/vi/XY2pNYASEbg/mqdefault.jpg)
Buying a home in California? Buy for less. Buy with Blueprint. 👉👉👉 buywithblueprint.com/
i have been saying this for years. These valuations were never in line with the actual value of homes in CA. Not only that, the valuations have outpaced incomes. That is a recipe for great failure. I live in a neighborhood where houses sold for $6-$700k five'ish years ago. a home just sold near me for $1.8m... something is seriously wrong and we will eventually find out.
you gonna find out that you won't afford it later either lol
Are you in SF Bay Area or Silicon Valley?
If someone was willing to buy it then the demand is there
I mean I'd pay the buy side $5000 if they can get my price under asking. But 3% only made sense when houses were $300k. Just because the Fed and PBOC and every other major central bank is trying to print their ways out of global debt, doesn't mean the same job realtors were doing 10 years ago is somehow 2x or 3x more valuable.
Agree!
And nobody talks about the Property Tax and Home owners insurance. 🤣
Sure we do! The property tax situation in CA is a godsend. Google “Prop 13” to learn more.
just say you are broke bro
They are. News is all over YT about it being reported as fraud. They are talking about class action suits in different states all over the country. Real Estate Mindset is talking about it.
@@mtbeast8977 Broke because I'm a homeowner? Bro, google "net worth homeowners vs renters." Enjoy!
Prop 13 and associated propositions keep your property taxes low. You can transfer your old low property tax base if you meet certain criteria. Also, they cap the increase in property tax bill to 2%/year regardless of the increase of market value, so you don't get forced to sell due to rising property taxes.
Waiting for a 15-20% correction from the peak.
Lower percentile homes going aways means: they are selling faster and at higher price than asking:
My neighbor was selling a condo:
Asking price: 698k
Buyer offer: 720k
Sold for 720k
Home values in Southern California will remain elevated unless people move away, have more supply comes onto the market to meet the demand in which only newer expensive homes are being built, unless you want to move 2 hours away to like Perris or Winchester etc.
New construction builds costs a lot because of all the fees, labor and price to acquire the land.
If we can get 20 million people to move out of so cal then homes will be affordable. Right now you have 10 people living in a single family home being rented for $3900.
Building more ADUs and multiple units come at a cost to the city with the city needing more public services.
A lot of people don’t understand this. You double or triple housing in every city you have to double or triple all the services as well.
If so cal is too expensive to live in, then move away or figure out how to level up to stay here. No one owes anyone anything. Yes it sucks that everything costs a lot more now, but if I couldn’t afford to live where I’m at then I am moving to somewhere where I can afford it.
Luckily I can afford to live here. I wish everyone the best .
I agree with you - except for the NIMBYism with regard to ADUs and density.
People don't *have to* live in Cali. Average single-family homes will set one back $200-250K in much of the Dakotas and Nebraska. Life's a little slower paced, though.
@@chetpomeroy1399 opportunites to earn bigger money are also fewer, and then there is weather and other factors. There are many other factors for reason the Dakotas and Nebraska have low population densities.
@@JBoy340a The rat race isn't for everybody. It's much easier and more cost-effective to set up a profitable business in the Dakotas and Nebraska. There's less red tape and operating costs are substantially lower. There's also *plenty* of work for blue-collar workers, who can actually buy 3-bedroom homes for a lot less.
CA local government policies, especially multi-family bans (single family zoning) and driving mandates keep pulling the bottom rung of housing out of reach of more people. The good news is, you can start moving in the other direction with the stroke of a pen. I think momentum is finally going in that direction.
Amen!
$600000 still so expensive
The historically lowest priced single-family homes in Ventura are on the west end. They are smaller, older homes on relatively bigger lots. With the state deregulating local zoning laws so that multi-unit homes can be built on these lots, sellers have been able to sell these homes at much higher prices to developers. So yes, many of these homes are literally disappearing, with most of the others getting priced out of their former price bracket because of their newfound potential for development.
Great point! We’re seeing that in LA, too. Older homes in less desirable neighborhoods being bought up by developers and turned into 4-unit properties.
@thejonschwartz And given Newsom is a real estate investor himself, it's hard to not be suspicious of him. What better way to inflate rents and real estate assets than by raising wages and deregulating zoning laws?
BTW - great video.
@dumbanddrumber92 Now you’re being conspiratorial. Raising wages and deregulating zoning are both just good policy for Californians.
@@thejonschwartzThe correlation between raising wages and inflating housing prices has been long proven, and doesn't constitute my being conspiratorial. Ditto the fact that this instance of deregulating zoning laws has inflated housing prices. So either Newsom is naive and didn't understand what the inflationary impacts of his actions would be, or he did know. Given his $12 million in real estate holdings, his donor base, and the fact that many of our politicians hold their own interests above their constituent's interests, my posing the possibility that Newsom is operating from his own self-interests is more of a healthy skepticism than conspiratorial.
More importantly, his actions are the same old symptom-treating strategies that don't address the roots of the problem, but instead make things worse. Holding employers, who are actually being productive and making positive contributions to society, responsible for funding the greed of the non-productive real estate investors serves not only to further inflate housing costs, but to make it even tougher on small businesses to survive, and further erodes our country’s exporters' ability to compete on the global market. And as we're seeing in Ventura, increasing density in older neighborhoods with very small streets and in which congestion is already a problem is bad policy.
We need to start addressing the real roots of the problem.
Actually, creating more housing is addressing the root problem: not enough housing units for California’s population.
And increasing the minimum wage is a form of wealth redistribution, and if you haven’t noticed, wealth disparity is a root cause of disfunction in our society.
So Newson’s just going after root causes.
Everyone including this realtor says the sky will fall soon in the real estate market, but where in the heck is all of this inventory going to miraculously come from? Building anything in California where people actually want to live is very expensive and sometimes damn near impossible. So many owners have low rates they're not going to want to get out of. Working with building & planning in most desirable cities is like pulling teeth and neighbors fight any new developments that pop up. All of this is expensive folks... Again... Where is all this magical inventory going to come from?
the decline of 500k is that there's none lmao
Thanks for providing this information, you’re not wrong just a little early. Big Short took 3 years to actually hit even though the warning signs were already there. Longer it takes the worse it will get
Finely a realtor who is telling the truth... we're headed for a major fall in home prices. No FMO...Good job sir just keep telling the truth.
Being unwilling to overpay for overpriced homes makes you a crash bro in Realtor speak 😊
I don’t understand. I says a crash bro is anybody perpetually talking about the upcoming crash - and not in terms of “if” or “to what degree,” but “when” and “how much worse than 2008.”
Las Vegas here i GO!
Very well said:
The California housing sector is characterized by its inherent volatility; it’s not unlike Bitcoin in that sense-capable of surging to dizzying heights but equally prone to devastating crashes. Contrary to popular belief, the 2008 crisis was far from an isolated event. California’s real estate market has seen multiple significant corrections, driven not merely by cyclical trends but by deep structural factors.
Bull runs in real estate are deceptive, often sustained far longer than anticipated, leading many to the erroneous conclusion that prices will always rise. Yet markets are inherently cyclical, oscillating between bull and bear phases. The present conditions suggest we are transitioning into a bearish period. The fallacy lies in assuming that lower interest rates will resuscitate the market. What is often overlooked is why rates would drop in the first place-inevitably due to an impending recession. In such times, liquidity tightens, lending criteria become more stringent, and access to capital dries up. Thus, while rates might ease, only the most creditworthy will secure financing. This phenomenon was starkly evident from 2008 to 2011, when prices in regions like Irvine collapsed by 40-50%.
Here’s a revealing historical parallel: The 2008 crash initially ignited in Florida, where oversupply and speculation spiraled out of control. Interestingly, Florida is once again experiencing sharp declines in real estate prices, foreshadowing what may occur on a national scale. Those expecting a rebound driven by rate cuts may find themselves caught in a bear trap, misjudging the deeper structural shifts at play
Thank you for sharing your experience/ knowledge ! Based on what you know when home prices in Ca will change so will be affordable? Thank you ☺️
The difference between 2008 and 2024 is the supply of good homes in desirable areas. Homes in Irvine and other SoCal coastal cities and neighborhoods will not see 40-50% price drops because of the lack of inventory.
@@JCizzleSoCal That's a bad argument. Housing will drop depending on how severe and long the recession is.
299k price range is mobile home, 600k to 1000k Apartment condo home, 800k to 1.2 M town house, 1.2M to 2M single family home,more people are looking for single family to buy.
Statewide, there are plenty of single-family homes in the $800K-$1.2M range.
Interesting insights John, I wonder if this is a trend in other markets too. Could be a good buying opportunity in the future if the prices do crash
So I got our home in 2022 November homes had came down 50k, home right now is worth 540k and we bought for 462k
Congrats!
What do you mean by "lower priced homes are just going away"? Are they being teared down and rebuilt into more expensive homes? Are we building more ADUs that push up the home values? Are they just getting more expensive due to appreciation? If they are just appreciating such that the < 500k homes are now worth >500k then wouldn't that just suggest there is growth in home value? Which is contrary to your point that there is some sort of stagnation or crash.
Great point. I mean, it is price appreciation ultimately that constantly pulls up the lowest rung of home values, but with homes trading hands every ten years on average, that upward movement of the "cheapest house" is usually a lot slower than it's been since the pandemic.
In my valley neighborhood, I've noticed that just about every older single family that has gone up for sale has been bought by a developer that has replaced it with 2 duplexes on the same lot. It appears they are driving up the market for these home, since they can pay a lot more than an owner/occupy is willing to pay because the amount of profit involved.
The CA real estate market will crash when the tech workers are replaced with AI, and they're unable to keep their house.
So, you're thinking 2025 or 2026? 😋
@@thejonschwartzI'm not going to say what time exactly, but that's the current path that is going to happen.
Or the AI bubble bursts
Maybe. But I have been hearing about the tech industry going bust since I started in it 40+ years ago.
Insurance won't insure homes in CA. For the first time, CA home owners cannot sell their homes. No one will insure the house.
This is just factually untrue. I've closed three homes in the last month that all needed insurance as a lender requirement and got insurance.
What's true is that several of the biggest insurers aren't offering policies in CA right now.
If you are a CA buyer looking for insurance, I highly recommend Homesite (go.homesite.com/). The process is easy and the pricing is totally sane. I insured my home with Homesite about a year ago without any issues. (I don't have a relationship with Homesite - just trying to spread good info!)
@@thejonschwartz Two people I know who have lived in CA for decades suddenly found out that their home insurer is no longer covering their house, each of them in prominent, long time suburban areas in desirable neighborhoods. It was not for lack of payment either as neither ever had a lapse in coverage. Their homes were well maintained and in pristine condition. If you'd like to share which insurance companies you worked with that are still insuring residential homes in CA, please let me know.
@@TheMrsMenes What your describing isn't unique. I've lived in California for just over two decades, and I've owned homes here for 15 years. I've always had my homes and cars insured by USAA. Last year, I sold a house, bought a new one, called USAA to get homeowners insurance, and was informed they wouldn't write me a policy. And please read my previous comment again; I already recommended an easy-to-use insurer still insuring homes in California, Homesite. And lemme see... A recent client asked me to review the three quotes he got for homeowners insurance on a triplex: Homesite, Aegis, and California Fair Plan.
Everyone has been predicting a crash for the last 8 years. Eventually someone's broken clock will get it right.
then they will claim they were right when it drops 10% yet it has gone up 45% lol
Yup! There are still cash buyers paying 2 million in cash for a CA home. Paying for the weather? 😳
And the scenery!
It’s kind of dry and hot with little vegetation. 😂
@@dianne2446 Really depends where you are. CA's a huge piece of dirt.
Of course California housing is going to crash, it always has… It’s always been a very cyclical market. Just look at the history. It has just become completely outrageously expensive, and the market needs movement not stagnancy, I just feel for all the people that bought thinking oh yes, it’s gonna keep going up😂
You never lose if you don't sell. Even when it goes down it eventually goes back up
Crash Bros are right unfortunately.
Thanks.
Good summary.
Are the sub $500k home really "vanishing"? Or are they just appreciating out of the
That's a great point. Ultimately, the lowest end of the spectrum is going away because of price appreciation, but I think it's quite notable since the pandemic. We expect the cheapest house in any area to become 5% or 6% more expensive every year. But with the huge run-up in prices post-pandemic, the lowest end of the CA market jumped up 50% or 60% in the same timespan. It's a dramatic flourish to say entry-level homes have "vanished."
I just wrote the above paragraph and then looked at your user name. Bro... this video was definitely a dive into crash-bro dumpster-diving, and I already regret it a bit. The non-salacious point is: CA is becoming an increasingly expensive market. The low end is shrinking so quickly. Anyway, I'm going back to "give it to 'em straight" with next month's CA update.
Not true. San Diego house price is stable and continue to increase.
I think this is what is happening all over the country.
1. Sellers have not been selling because of interest rates have been to high to move
2. Some buyers just have to buy for what ever reason pushing up the prices of the limited amount of houses for sale, in turn pushing up comps
3. People have known for the last 6 months the Fed has to cut interest rates prices are getting out of control
4. Now the opposite is happening in line 1 BUYERS are now waiting for the interest rates to drop to buy therefore more houses sit on the market
In short over the next 2 years SOME houses in SOME areas will drop in price but if you are waiting for a crash like in 2008 its not coming, This is a supply and demand thing
Totally agree. Definitely not 2008 all over again!
If unemployment continues to rise and the people who bought in the past few years at inflated prices can’t make their payments I can see it being comparable…I would argue that while it may not be exactly like 2008, I think the debt levels are making it just as risky. It’s not just real estate, people are drowning in debt.
I don’t quite get this analysis. The value of a good is a result of what someone is willing to pay for it. The reason there are so few homes sold below $500k is because people value them higher than that and are willing to pay more. If you price your home at $1m but no one buys it then the value is less than $1m. You can say that these valuations are too high but if people will pay then you are wrong. If home sales dry up then you can say that current valuations are too high but right now they are slowing but still moving.
I’m saying that the overall median price is being distorted by the high end of the market, which is disproportionately growing in size and value.
Great content
Thanks so much!
Houses near me in Burbank keep selling for above asking. I'm a lowly renter watching it all.
I'm glad you understand your place in this ecosystem... KIDDING, I'M KIDDING!
@@thejonschwartz Funny. But yes, I do know my place. I'm in a place where nobody around me who owns these homes and bought 10 or more years ago could even come close to affording them if they had to do it again. That's why my wife and I are leaving California next year.
@markl1473 Good luck, sincerely!
Oh no! Jons sick and tired of having 5K subscribers guys... he's ready to go insta-grab 100K+ subscribers!!!
100K subs, here I come!
@@thejonschwartz if you cant beatem, joinem
So how do buyers go see the property?
Open houses.
they make you sign a buyers agreement now before you can see a house, just make sure you dont sign that exclusivity for 3 months meaning you can only use that realtor for 3 months to buy that house. agents are pulling that crap i noticed.
I was waiting for a grand reveal toward the end but I don’t think there was one. What concise summary is being drawn here?
Concise summary: growing prices and marketshare at the upper end of the CA housing market is masking price stagnation at the lower end.
@@thejonschwartz ok. Thanks for that. I don’t disagree but I don’t think the ‘imminent crash’ narrative is supported by that. If you do, please connect the dots for us
Explaining the "mix-shift" phenomenon that is distorting the Median Sales Price (and has in the past) is a tough thing to do because it can't be rolled up into a nice and simple phrase. You have to dive into the statistics to wrap your head around what's going on. He always does a great job explaining it though. Hopefully more people start to "get it".
you had me till you blatantly lied about representation changes so you can pitch your own product
What’s my blatant lie?
inflation at its finest
Only data that matters is the sales price
How do you mean?
@@thejonschwartz i mean the final sell price. Other data doesn't do average people any good If they still can't afford to buy a house in CA.
@eile4219 Gotcha. So for the purposes of analyzing housing data - which is what we professional and amateur housing analysts like to do - should we look at the median of final sell prices for the geography and timeframe we’re discuss?
Homes in my neighborhood are sitting at homes are 2 to 3 million dollars. Yeah you have a be a hell of a window licker to pay $50,000 a year in property taxes. How long will that last 😂 just to the math on staying in a property like that for 7 years. The homes are not even worth the price and people buying are hoping to flip the houses for more 3 months later. 😂 horrible time to buy a house.
I don't know anybody who's buying now and looking to flip in 3 months. You must be stuck in 2005!
Stupidity in California. Inventory going up because the 1960's shacks they are selling for $1 million + is where the problem lies. Some idiots buy no matter what. Massive job losses is going to slow demand naturally. But some people aren't buying because the prices are absurd. Inventory is up because people are trying to sell at all time high and cash out on top. Problem is people are getting smart and refusing to pay these ignorant prices for a shack. And most don't qualify. You have to put down 70k at a minimum at 6%...no thanks. Let it crash back to reality.
It’s a pretty common misconception that’s we’re out here spending millions on shacks. In reality, we’re spending millions are incredibly desirable pieces of land. For example, last year I bought a half-acre hilltop property in the Monterey Hills, just east of LA, with views that stretch 20 miles to the ocean. It cost $1.65M and is worth every penny. And I got a free shack with the land, too!
@@thejonschwartz Yep it's the land, more than the structure on the land. Building new is so expensive that people are buying old homes, shacks really, "remodeling" by leaving one small wall section and adding more bedrooms, huge kitchen, etc. and making $1M profit when they sell.
I don’t believe this real estate agent knows what he is talking about. He should go back to school. Homes near me in Los Angeles county selling in 2 days and with multiple offers, my next door neighbor just sold his home for 1.8 million, he bought this house in 2013 for $ 580,000 There is a thousand of buyers waiting for real-estate to crash by listing to guys like him. No one is willing to sell. With 3% interest rate people living comfortable and not planning to sell their home in near future
I’m in LA, too, and you’re right! What you’re saying doesn’t conflict with my video at all. Did you even watch the video, or are you just responding to the thumbnail?
I don't think you know what you're talking about. LA is a bubble full of wealthy people. If you were to remove them the remaining 95-90% cannot afford to buy. You're also not taking into consideration all the people that may live on fix income that are/will becoming priced out due to increasing costs of living. Sure if they sell there's enough ppl that can jump on it but that's not a rreality in all of california.
All real estate is local. So national or statewide may differ from hyper local trends. I wouldn’t be buying any house for $1.8m rn with liquidity issues at banks piling up and the Fed not lowering rates yet. Fed is pinned in their strategy and it’s going to get ugly when they finally pull the rug.
The issue with the chart is that of course lower end homes are going away. You wouldn't put a segment for homes $0-50k because of course $50k houses don't exist.
Case Shiller tracks the effective equivalent of same store sales and therefore isn't skewed by the mix of home sales. The data lags a bit but the June index for LA is up YoY. Meaning when you look at the sale of the same house, the value went up.
You were right against the crash bros but now you are starting to pander like them.
I track many Southern California towns and I haven't seen price appreciation in many months. Very slow price declines in most places. Minimal declines, but clearly in decline. I feel confident in saying that a normal home in Long Beach or Carson could absolutely not fetch its 2022 peak price today. Probably not much below peak, but definitely below by my eye. Case Schiller seems completely absurd and worthless to me at this point, especially if we're talking about "actionable" data.
Average people need a real estate agent don’t believe the hype you will make a costly mistake not get the proper disclosures and inspections etc you will be happy to have an agent !
Why does everyone make this stupid face for their thumbnail
Because it elicits curiosity and clicks.
Stop fear mongering. The faster recovery in building over buying in your chart is not a glut, it is due to smart anticipation of interest rate decreases. Builders are reading the tea leaves better than you. And, wouldn't you know it, just last week the Fed announced plans to start lowering interest rates. With every 0.25% drop, the sales rate will go up that much quicker, eventually outpacing building.
These numbers are for existing home sales. No new construction in these numbers at all. These aren't new homes being built; these are sellers trying to unload their homes.
lol yes crash in some places like 2009. What happen the most desirable and yes expensive areas drop 4 -6 percent and within a year up by 16 percent.Now eastern/vallley /Riverside Califronia 40-50 percent drop. This time around there will be a drop but even with the drop it still will be still too expensic v Yes Stockton will dropped and even after the drop it stil will be barely affordable for the working class.San Francisco will drop and years later bounce up and even with a drop still unaffordable. Lol You can not listen to these youtubers. The developers and politicians bend over for thier donors so they dont lose in the long run. Lies, damn lies and statistics lol
This guy should do comedy 😅
Thank you!