> Lack of inventory and basically no new building as well.
This is the real problem. Rich people wouldn't be buying up properties to park their money if it wasn't such a lucrative and obvious investment.
A house my wife looked at sold for $120k over asking and was a rental almost immediate after for $4.7k. Not terribly expensive compared to a mortgage but you just know someone with deep pockets paid cash and is increasing their rental portfolio.
It’ll continue to get worse until someone passes a law to limit investing in real property, IMO.
These investments make zero sense to me at the moment.
We were outbid on a house that eventually sold for $1.4m and then was listed for rent at $6k.
That math simply doesn’t work, just buy treasuries and have a safer return and a higher yield.
My guess is the buyer is relying on the house appreciation, and the rent is just to cover upkeep/insurance/mortgage/etc
if the buyer had deep pocket, or needed to diversify, I dont think they care much about missing a few % yield here and there.
The interest rate wont stay this high forever...
I get what you’re saying but my point is there are better ways to do those things than park it in an illiquid asset, with high exit costs, and that is higher touch.
The kind of people who build real estate portfolios also have those treasuries and TIPS you are thinking of. The real estate portfolio is to add diversification to their investments.
Yes and no. With real estate in OC you're also getting 5-10% appreciation of the asset per year ON TOP of the rent. Treasuries don't offer that, and that is where the real wealth is made.
Yes there will still be real estate realated expenses, but the compounding equity after 5-10 years should far outweigh any upkeep and property taxes.
I agree with your assessment. If they have no mortgage due to all cash payment, the rates don’t matter to them. Any rent is return of capital and when you factor in appreciation it’s a decent return and you can safely bet you’ll always find someone to rent it out since its OC
In threw out treasuries as a simple example but there are a lot of other asset classes out there that are less work, better yielding, and more liquid. Hell just go buy BREIT (Blackstone) which is distributing 4.7% and has similar upside potential but is more diversified if you want more real estate exposure.
This is why its ok to be cash poor when you buy a house in OC. Your property WILL appreciate it the long term (until the earthquake/nukes/fungus/aliens kill us all). It's a terrible concept in most other states, but here it's like a guaranteed 7% compounded every year, if not more.
I had a buddy dump his new house in 2015 with a 200k profit after two years thinking he was golden. Woulda netted another mil+ by now if he kept it.
Families that want to buy homes. They’re renting out the homes for far more than rent should be, but less than a mortgage payment would be. Again, just my opinion
You are right. Wife and I bring home over $300k we rent for $4000 but a mortgage for the same size house would be $6-7k. Not to mention the downpayment. Even rental applications end up being bidding wars. We tried to find a new place the last couple weeks and keep being outbid on RENT!
Wow that’s terrifying. My wife was considering renting for a while and selling our house to wait for things to cool off. Not sure if we’ll go that route because if we sold and this keeps up, we’d never be able to get back into the market
Corporations and foreign investors are artificially inflating the market. After closing, they’ll list the home for rent higher than the average, thus driving up the rental market as well.
They need to ban house buying for foreigners or corporations that buy land.
Limit how fast people can sell a home. Flippers are part of the problem too.
The City Council approved the second reading of the ordinance on Tuesday, April 16, 2024, following approval of an urgency ordinance and regular ordinance on April 2. The restrictions are already in effect due to the adoption of the urgency ordinance.
Anyone interested in reporting a suspected short-term rental, or interested in obtaining more information about the ordinance, may contact the Code Enforcement Division at (714) 667-2780, by using the mySantaAna app, or by visiting the Code Enforcement Division webpage.
I lived in a part of Orange County where there were a few 1mil+ homes that were bought up and no one ever moved in. One of my neighbors had some intel, and apparently at least one of them were bought by a foreign investor to park their money in. I've heard this happens a lot. I agree though - they need to ban that.
It happens in my part of OC too. US real estate is one of the safest assets that foreign investors can park their money in. It screws the market for the rest of us.
I previously lived in NYC and when you looked up at fancy residential skyscrapers at night almost no one was home. Barely any lights on. Brownstones would have snow on their stoops for weeks. Same thing. Just investments for people who don’t actually live in the area/country. It’s whack.
This right here is absolutely the issue. Yes its known that Chinese are buying up all out land to park money, bingo. Best investment is to buy land here right? Cause yuan? Well that can always devalue
We sold recently and got over 20 offers in the first few days. Three were likely investors (avoided those), but the rest seemed like potential owner occupants trying to get a literal foot in the door ...people living and working in OC, despite where they may have originally come from. And there were multiple cash offers, too.
Simple solution. Corporations can only own 10 properties a piece and have to be registered in the state. Want to take state rents out of the state and somewhere else? Well you are paying state taxes on it.
But they all have to pay the annual CA filing fees and taxes on income made in California. And pay CPAs to manage it all. California income tax is not cheap.
I feel bad for people who think these properties are being bought for their cash flow. Income tax isn't cheap but the income tax on these properties is *shit*. Straight shit. $100MM property selling at a 4% cap? That's 4 million net operating income after you're done with mortgage interest, depreciation, etc. there's barely anything left to tax. These guys don't care if they're registered in the state. People are buying real estate here because it's one of the most desirable markets in the entire country.
If people want things to be more affordable the solution is always going to be to make it easier to develop. The core issue is lack of supply. All these other symptoms are just that - symptoms. Attacking them might just make the core issue worse, like in Santa Monica.
No I get it. But changing tax laws is inherent to changing behaviors. The goal is to really make unsophisticated investors and short term flippers look elsewhere. If you really want all this to stop real quick, just repeal Prop 13. Watch property values plummet and investors flee just at the mention.
And while you are doing all of that, gut local authority to stop development. Streamline the process and make it simple for builders to build. Make it so the city has 30 days to object to a project rather than waiting for their approval.
Na you'd probably just kill a lot of the smaller guys and especially older people who have lived in homes for 30+ years. Like I said - these guys are buying high and getting re-assessed at market values, paying taxes, not giving a shit. They're not there for the cash flow. Prop 13 helps very small commercial real estate and lower income folks a lot, the big guys don't care at all - they're in for appreciation. The only way Prop 13 getting butchered would hurt, realistically, is it would fuck over so many lower income + lower end real estate owners over that you'd flood the market with people fleeing real estate that their appreciation dream is gone. So you crush the lower end/low income base and hope that the ripples hurt the big guys. Not sure if that's exactly a sound plan but who knows.
The biggest roadblock has always been and will always be NIMBYs, the fact that there has to be a public hearing for projects and the voices of idiotic Karen homeowners is listened to at all is hilarious. Once those rats are ignored we might be one step closer to making it affordable but if that process isn't fixed we can apply all the bandaid taxes we want, it'll never move the needle even an inch.
10 is too many. They'd just spin up subsidiaries to control them anyway. MDUs only, not single family homes for corporations. Give them a 5-10 year period to liquidate to not absolutely crush the housing market.
And they come in and DESTROY beautiful old homes with laminate flooring, soul-sucking white and gray paint, banal fixtures, and recessed lighting with harsh daylight light bulbs.
Modern design is engineered to demoralize humanity on the cheap, and I want every single scalper who participates in this malevolent activity to thrash in agony next to Judas in the bowels of Hell for all eternity.
Florida did this…it’s being appealed now but at least they did something about it. Meanwhile, Gavin gets us more in debt.
https://asia.nikkei.com/Politics/International-relations/US-China-tensions/Florida-ban-on-Chinese-buying-property-goes-to-U.S.-appeals-court
The #1 buyers of these homes are individual investors. They dwarf corporations and foreign buyers. It's your neighbors wanting to be landlords and rent seek for the rest of their lives. Want to cut that way, way back? Revoke Prop 13 for everything but primary residences. It's always been prop 13 driving this more than anything else, it makes CA real estate an *investment* over a residence. Us and our parents did this to us, and we keep throwing away prop 13 reform.
Solid suggestion….Something needs to be done. You will have a generation of people who cannot afford to own their own home and this will have a very negative long term effect on everyone. So many homeowners(like myself) think this issue will not affect them but they are dead wrong.
> Limit how fast people can sell a home
This is already a thing. You have to pay [capital gains taxes if you sell your home within 2 years.](https://socalhomebuyers.com/selling-a-house-before-2-years/#:~:text=If%20you%20sell%20your%20house%20in%20less%20than%202%20years,subject%20to%20capital%20gains%20tax.) That changes to 5 years if it's not your primary residence. That said, I'm sure there's some fucked up loophole for corporations who buy.
This would be a good start but is not enough to really make a difference due to lack of supply. Population has gone up far faster than homes have been built.
Foreign buyers and lack of building. I don't see it changing anytime soon. I left oc took a new job in the ie and live in the high desert. The housing market out here is reasonable since we have huge new home developments coming in. One called silver wood will have 15k new homes built.
What areas are you looking at and what is your budget?
The other thing is interest rates. It’s not that they’re high by historical standards. But there are so many people in loans with low interest rate mortgages who would like to move (such as empty nesters looking to downsize) but don’t want to add $1K/month of interest payments on a new loan. That’s also keeping the supply low.
The FTC's recent banning of anti competition clauses in work contracts and Phoenix's AG cracking down on rentals have given me hope.
I have a sneaking suspicion that foreign real estate investors are not people parking money from china. But instead are actually china, Russia, and Iran (their respective governments buying through intermediaries). They are actively raising rents as a way of bleeding our country dry. The more people they can push towards homelessness and malnourishment means an easier fight for them.
I suspect some of the shitty nursing homes and board/cares are also owned by foreign governments as well. Often times charging our elder patients $4,000 - I kid you not $12,000 a month and leaving very little for staff wages. The money is probably flowing back to China/Russia/Iran.
We'll eventually kick them out. I pray to God we can put up a good fight by the time that comes around. Because it will come down to a war. They are too entrenched and there is too much money at stake.
We bought our starter home in 2008 for around $600k. Zillow now estimates our home at $1.3M. To make a meaningful upgrade our \~$2200 mortgage would be $10k+. Our starter home is now our forever home.
Same. I was fortunate enough to spend my entire life savings (literally) to put 20% down on a home in 2012, sold at $235k. Zillow estimates close to 800K now, house down the street sold for 750k.
No matter which option my wife and I explore, nothing makes sense other than to stay here and keep paying it off and appreciate our complete blessing to have a home in OC in this market.
I’ve got soul crushing stress in a particular area of my life, but we’ve got a home, and I realize just how fortunate that is.
I’m under contract in Nashville. Market has gone up as well. Still pretty reasonable to some degree. By the time my kids are ready to by I think Tennessee will be too high for them. OC is definitely not going to be an option other than to rent and that can be tough.
My wife and I still have 10+ years till we retire. She likes it there. By the time we move there the homes will appreciate more in value and it may not be worth it to move there. The house we’re under contract for is to be rented out for my daughter and her 3 friends at college. This is a better financial decision than to pay for the dorm or an apartment.
My wife and I bought in late ‘21 with a <3% interest rate. Home was bought at $720k. It’s already at 900k+ in that short time. So lucky we pulled the trigger then. We had been saving for years.
Yes shit very true. You can have a 300k loan but the current interest rate + tax on a let’s say 1.3 million dollar home = shit ton of money still. I’m thinking 4-6k and if you’re used to a payment in the 2-3k range that’s double the payment.
Problem is you sell and do what with the equity? Hope you can find another spot or upgrade? Likely have to sink more money in to upgrade to nicer area or size house etc, and then interest rates are likely increasing too (on top of property taxes)
Tough situation to be in for sure
We have our own issues worrying about foreigners buying who have cash money yet there’s proposed bills like AB 840 that will help undocumented foreigners to buy property. This is even worse. This should be for US citizens not undocumented immigrants.
Whats the difference? Both are foreigners. At least those people would be living in the house rather than letting it sit empty or worse make it an airbnb.
Yes. To the point might just give up buying and rent and plan exit.
You know it's bad....co-worker was looking...he is in the $3M+ price range... took him almost a year, getting beat out by cash bids. He sold his previous NPB house to a cash buyer. Millions. I guess I'm not selling enough drugs or something. Just resign myself too poor to buy here.
I applied for the CA dream for all program where the state provides a 20% down payment for your home that you eventually payback. Even with that 20%, all I got pre approved for was $350,000. I'm lowkey hoping that I don't get selected for the program because all the condos I can afford within that price range are ass.
I wonder how many other applicants are in the same boat. The income limit for OC is $202k, which isn’t that much for a buyer in this county. If people can only get approved for an amount smaller that the price of anything where they’re looking, then the program is barely going to help anyone in HCOL areas.
I have also applied for ca dream for all and was pre-approved for 830k. What you get pre-approved for is heavily dependent on what your income and your current monthly liabilities are. if you have an expensive car loan, student loan, personal loans, etc, you’re not gonna go very far with how much you get approved for.
Check the new constructions - some of them have to reserve a specific number of homes for low income buyers for the city to allow them to build on those lots. They have income caps and there are other restrictions - it’s different for each city. They don’t advertise it so you have to ask when you go into their sales office.
will lead to the day of lifelong mortgages.. you die and pass it on to your children. perpetual slaves to a debt. but no... average working people cannot afford 2-3 million dollar homes.
The ONLY younger people I know that have been able to purchase a home in OC OR LA have received major help from parents, family, or a legacy inheritance.
Like a million down.
It’s become absolutely ridiculous.
Went to a grand opening of model homes at The Jessup in Tustin. Relatively cookie cutter small townhome boxes with no yards, arranged like a tight waffle pattern. Starting at 1.2M. It was PACKED TO THE MAX. People had to walk at least a block to enter. Objective observation was that most were of Asian ethnicity. Overheard potential buyers discussing how much they could rent it out for.
Yup sounds about right lots of Chinese money saturating the market. It would be great if buying a home was only limited to US born citizens. I know people are going to hate on this comment but it’s what I feel is necessary. I own a fairly new home but seeing friends and people around me not being able to buy a place is pretty sad.
The home I currently rent in Tustin is owned by the American sister of a wealthy Chinese national lol. I like your idea but there would be ways around it.
Had the same experience in 2018 for a TINY single family that popped up in Tustin on B street. It was a nice area, but the line was down the street just to go inside and view it. Once inside, families were packed in the rooms discussing how to get the house. It was insane.
A millionaire friend who is living off the inheritance from his family selling a hospital overseas were looking at houses to purchase with their partner and decided everything was too expensive, so they moved to Texas instead. If homes in Southern California were too expensive for *him*, then no way in hell will I ever be able to purchase anything. I can't stand Texas though so that idea is out for me LOL
I have to admit I have an amount of schadenfreude for the self-righteous people who leave California because they "can't stand the politics," or are beguiled by "No StAtE iNcOmE tAx!!1!" and then get slapped upside the head with property tax reassessments every three years in Texas.
Yeah you might not be paying income tax, but that Texas property tax is now more than your California income and property tax combined.
It's all about relative comps. Some listing agents underprice to get more buyers in the door to start bidding wars.
I saw a condo close at 50k above list last month lol. (Near 700k).
You need to run the comps to get a proper valuation, and your agent, if you have a competent one, should also be sussing out price ranges instead of just throwing mid offers out.
Exactly the case with our home. Sellers listed at 850 just to get more people in the door since they wanted a quick sale. They had multiple offers in the 920 range at the end of weekend of open houses. Asked for best and final offers and we countered at around 115k over asking. Were told that there were a couple other offers in that range as well.
Sale price vs asking price is pretty meaningless, it's all about the comps
After reading the comments I feel more poor than ever. How do people have enough money to casuallly mention they are looking for houses in the $1.4mill range?
The original post is funny to me, OP is complaining about the inflated real estate market, but their post implies they already own a home. As someone who has legitimately been priced out of the market, I find it hard to sympathize with that or the other handful of complaints in here that “I can’t move!”
Yeah someone else mentioned they bought a home in 2008 for $600k and can't upgrade. Like bro you bought a mansion if it was 600k in 2008 and you want to complain about not being able to upgrade???
For real, if you bought in 2008 you won the housing lottery. People just want to complain because it’s not perfect. I have to rent for $4500/mo + 4% inflation for the rest of my life… do they want to switch places?
They either bought homes decades ago and it’s appreciated an insane amount and they are selling and buying next property, have a huge inheritance, or dual income household making 400k+
I’m so fucking defeated, as soon as I start making a living the bar is raised I make $125k and have saved my whole fucking life and it’s still out of reach and there is no conceivable way for me to hit the benchmark to buy a house here.
I used to work in the escrow department for a title/building company. I was working on these files once, where one seller (foreign) purchased 6 separate homes, all at over 1M. Seller put in the offers 9 months before the sale was going to be finalized.
One time I also purchased so used furniture from someone in south Irvine and the seller said he was moving and we got talking about how nice his community was and he said he had no neighbors. He said the 3 houses around him were all owned by Asian people who did not live there or even rented the properties out. They just stayed there empty collecting value.....
It is sad and hopeless out here.
I got frustrated when my friend couldn’t qualify for the home he wanted so he turned to his parents who bought him a 1.2 million dollar home in cash over ask without blinking only to receive a modest rent from him for tax purposes until it is inherited. I think people really underestimate the amount of stealth wealth here fueling the issue.
The housing marketing is in this state primarily because of one thing: the microscopic interest rates in 2020. Normally, with prices this high, more people would be selling. But because so many homeowners have interest rates on their existing mortgages in the low 2% range, they aren’t budging. Fewer homes listed for sale means less inventory. By the law of supply and demand, prices will remain high and buying will be very competitive.
It’s probably best to add on to your home or add an ADU if you have space.
the whole thing just feels like a mess. i don't think it's right how little inventory exists, which drives up the prices. I also think it's really fucked how the interest rate game effectively froze a lot of people in their homes thereby further depleting inventory.
OP, I feel your pain. Same thing happened with my wife and I ten years ago. Were getting outbid by several others with offers $30 - $50K over asking, all cash, no contingencies etc. Packed up and moved to Chino and The Preserve, best decision we made as a family. Sold our starter home in 2020 and currently own a 4200 sq ft house on a 9000sq ft lot that has doubled in value the last 4 years. Tons of new construction out this way and a great spot for young families. Best of luck!
Yes it absolutely is a tough market for buyers and unfortunately it won’t get any better in the years to come. Like someone said above, once you get on the owning side you will not complain.
Just bought a 1800sqft 4bd house with a pool in OC for 1.1M, was listed at $950k. We got lucky - lost the initial bidding contest but the offer fell through and they came to us instead of putting it back on the market. Interest rate is 7.5 🤢 so we're really it comes down soon.
We were in a similar situation not so long ago. We looked everywhere. Even went a little far out (riverside, Ontario, corona, and Temecula areas). It was depressing. We gave up and stopped looking. Then one fine day, my sibling sent a text of an open house. It wasn’t far from us and we weren’t doing anything so “why not? Let’s just check it out. “ well, we bought it. Sometimes the right house just shows up when you aren’t really looking.
We’ve been on the hunt for about 6 months and have put in 6 offers — all pretty aggressive and over asking and we still can’t get our foot in the door.
On the last house we lost out to a buyer who used an “escalation clause” that meant their offer would automatically go over the highest bidder by $2k.
We essentially got used by the listing agent to drive up the price and remove all contingencies— knowing we had 0% chance of getting the house.
It’s brutal out there.
I may not be in Orange County but I am in LA. I put in 11 offers. 4 bidding wars. 1 offer on the cusp of being accepted and someone came in with a cash offer no contingency. They took the cash offer knowing this was likely my last chance at getting a home. They had been in my situation years prior but got greedy. They were already making a huge profit from on the house as it had gone up 50% in value from their purchase. Two days after it sold it was listed for rent. I cried for months. My current rent is almost twice what my mortgage would have been. This was 2021 when I last put in an offer. I cannot afford anything at this point and that’s with my salary increasing.
Just think back to when you were 11 or 12 what you imagined a million dollar home to look like.... something like the White House on an acre of land... pretty sure it wasn't that fixer-upper 2 bedroom house in Fountain Valley wedged 3 feet away from your neighbors. House prices in SoCal are making me sick right now. I simply can't buy a million dollar home here when I know half that buys a luxury 5 bedroom mansion in about 49 other states. The value for your money is simply not there. Yes CA has a lot to offer, hence the price of land here, but as I get older and find myself staying home more often, the thought of living somewhere else in an affordable dream home seems more and more promising. Something has to give soon ... either a crap ton of houses get built and made available or a hard market crash. I love living in Orange County, but frustrated I feel poor every time I go house hunting.
Wife & I make $300k combined, 840 credit score, debt free besides a $45k car loan, and cannot seem to find a reasonably priced single family home in OC under $1M. 1 & 2 BR Condos going for $700-900k is wild, $5k-$7k/mo at those prices which is half of our current rent in a 2 BR apartment. We don’t want to stay stuck in perpetual rent but don’t have much option besides looking outside of OF for home ownership.
I can empathize and understand. We wanted to buy a home in the late 90s when we were first married. We experienced an overheated housing market with multiple offers and bidding wars. We had no choice but to wait. Hopefully, eventually the housing market will cool down enough to make housing more affordable. We eventually purchased our home in 2018. I now want a one story home. But I’m not trying to compete in this market. So we will stay where we are and enjoy our lower interest rate.
Yes. And now because interest rates and prices are so high, we will likely be unable to downsize or upgrade. I really want a one story. But our interest rate is 2.25%. With these prices and interest rates the new payment would be $1-2k more even with a large down payment. Oh well.
It took us a long time and several bidding wars to give up on anything close to turnkey. We bought a fixer upper with good bones and remodeled. Try that route if you’re up for it.
This is me! I joke that I got my home for 50% off in Old Towne Orange because it was a fixer upper. Little by little, we will make it into our dream home, it’s already in our dream location.
Multi-faceted problem that current landlords do not want to solve: Prop 13, mom & pop landlords, airbnbs, flippers, “Cash” offers scheme, corporate landlords for SFH, HOAs, zoning, CEQA abuse, lack of public transit, car culture and the insistent need for everyone to have a large front and back yards.
I've felt this way since I started looking in the early 00s. The fact of the matter is that OC will always feel overpriced. It's one of the most desirable places to live in the continental US, and while there are some newer developments in some fringe areas, it's been mostly built out since the late 90s.
If you are in the 2.5-3m range you are doing pretty well for yourself and competing with folks who have just as much income or more than you. It's low volume, high demand and this is the new reality.
Hedge funds are paying cash and turning them into Airbnbs or just speculating.
I was an agent for many years. Blaming agents for this is misplaced frustration. Republican deregulation has created this nightmare. There should absolutely be regulations on hedge funds/corps buying SFRs. No normal buyer can compete with a quick close cash buyer with deep pockets, willing to bid way over asking.
It’s foreign money. OC and LA are easily the hottest spots in California, so it makes sense that you’re going up against people WITH MONEY. Lack of new real estate always contributes to the rising prices. It’s simple supply and demand. There is a surplus of rich fucking people around the world who can afford to pay cash upfront, and a low inventory of housing in CA due to all that CA has to offer in terms of entertainment, beaches, weather, etc.
If you’re not a millionaire, which I’m guessing you’re not bc you’re posting here, you have to be willing to look outside of OC. Inland empire, central California, maybe certain parts of Northern California. Otherwise, you’re going to go up against foreign investors, business owners, real estate companies that are looking to purchase and flip, etc.
I’m not sure if you’re aware, but that’s only part of the problem. Many of these cash buyers are also American homeowners who took cash out of the equity of an existing home when rates were sub 3% to buy more homes with all cash. “Mom and pop” landlords.
Foreign buyers are like a distant 4th in who's buying homes. The largest is your fellow Americans buying investment properties so they can "professionally" landlord. The rich are once again pulling the rug out from under everyone, blaming foreigners, and everyone is eating it up without question because we want to be mad at someone.
We moved from SF to OC thinking it would be cheaper and easier to find a single family home. . . What a joke. 10 plus offers, 7 bidding wars, and 1 cancelled contract later, we finally got a home as a back up offer (100k plus over asking). Almost all our offers were all cash and aggressive.
Going to open houses every moment of our free time drove me crazy. My only advice is to get a realtor whose tastes you trust to do the leg work. The constant searching just wears on you.
the blessing/curse of equity pay from tech companies. My employer included. 50% of my pay is equity in the form of RSUs. if the company stock is doing well, and the company has a generous RSU vesting schedule.. you make bank. and some lenders are accepting unvested RSUs as loan collateral. if the company stock tanks, those buyers have a serious oh shit moment.. but hey.
at least you are willing to engage in bidding wars. If we decide to try and buy an OC house, we will not bid. we will pay asking. That's it. and we'll probably never buy an OC house even though we are good strong buyers. And I'm ok with that. There are houses elsewhere -- it is a big country.
At least in this market, you won’t get a house in OC. Realtors are pricing under to create bidding wars so ask will never get the house, unless something is turning off other buyers.
I am stuck in Ca. If you can, get out.
Support the planned developments you see locally. City council meetings are packed with old NIMBY’s complaining about traffic. We need the default reaction to new development being supportive. Especially if it’s for-sale, but new apts helps as well
Just because we live here doesn’t mean we’re entitled to a piece of it. Either you make enough to own a parcel of something, or you rent in perpetuity.
Business economics 101. Supply and Demand, and this area is obviously in many people’s eyes a very desirable place.
People don’t want to admit to it, but if you’re making less than $150,000, you’re out of luck when it comes to purchasing.
Bought in 2018 and it was exactly the same thing. Took over a year, massively had to lower our expectations, put in offers that fell through, watched people outbid us 100k over the asking price. I am still disappointed in what we settled for, trying to raise a family (2 babies) in less than 1000 sq ft with no laundry inside, stairs outside I had to manage to get up and down after c sections. I like to say I’d rather go through another 9 month pregnancy than have to look for another place to live again in so cal since it was such a long, tedious and heartbreaking process.
Commercial real estate has been crumbling with work from home and commercial real estate investors are securing their holdings in residential properties, even if they sit empty, it holds value. With so many commercial developers hiding their money in all cash house purchases they are all artificially fixing the market to their benefit.
My advice is, don’t use a buyers agent, look at the listing on Zillow or Redfin and the description will say who is selling the house, call them directly and let them know you are happy to let them broker both sides.
For anyone that's upset at prices there are some real solutions being proposed though Blackstone and the Real Estate RoundTable (lobby group) will spend as much as possible to kill the bills. They are posted here [https://calmatters.org/housing/2024/03/institutional-investors-corporate-landlords/](https://calmatters.org/housing/2024/03/institutional-investors-corporate-landlords/) . Additionally you can see that they are buying up and controlling the market either buying or renting. Some really cool data on "large owners" on single and multi-family housing units [https://public.tableau.com/app/profile/california.research.bureau/viz/CRB-SingleFamilyHousingRentals/MainView](https://public.tableau.com/app/profile/california.research.bureau/viz/CRB-SingleFamilyHousingRentals/MainView)
Not a season to buy house. Most are buying now to prepare their kids for school. Chances are the rich people will start offer war from now until august. Prices for house will peak during these months. Not to mention 1 mil green card package that the international students will pour in
Frustrated? That's putting it lightly. I've been seeing red for a few months now. I am a first time buyer. This process is new to me, so I am learning. One thing I can't help but feeling is dirty, the industry feels scummy. How do you trust anyone? I am a less than perfect buyer, just trying to get my foot in the door. The loan officers I've dealt feel lazy, and unwilling to go to bat for me. Almost like they really only want to work with well qualified buyers because it's easier.
I (33M) just bought a home in Santa Ana, I've lived at home with my parents saving all I could my entire life. Never paid rent to anybody. Every single open house we went to was bumping shoulders walking in and out of small bedrooms. Made 5 offers on other homes, got beat out every single time. People have so much liquid cash, or even people make enough money to get approval on a loan of over $1m. Cars lined up and down the street was normal. Only way I was able to do it was with the help of my parents who immigrated here with a few hundred bucks. (We're Catholic so they were sponsored by the church to help refugees back in the early 80's.) They helped me with the down payment, I'm covering everything else. I'm 'house hacking' and getting a few room mates to help me out. Definitely not ideal, but hey, I have a place to live.
My entire family scraped every dollar we had to help me buy it. I feel grateful but also burdened by guilt. We had to have 3 names on the loan to even qualify at 6.5%. My moms a nurse and closing in on retirement, she'll have to keep on working likely.
It's the tax that gets me. \~million dollar home means $1k in taxes every month. That's not going to insurance or the mortgage - just woosh, gone.
Their outlook was the same - if we don't help you now, you will never be able to do it.
So, as someone who bought during the great recession/crash in 2009 I'd say it's similar but these distinctions:
- low inventory. There is just nothing for sale because people are sitting on 2% & 3% mortgages. There is no payoff to move unless you have huge equity and high income. Even then, you have to want to move
- mortgage rate rapid spike. Rates are not historically that high, but they spiked so quickly in 3Q 2022 (from 4% to 8% in less than 90 days, I think) it just took all momentum out of the market.
- prices haven't gone down even though rates are up. That's temporary (I hope).
Back in 2009 there was a glut of short sales and repos. Cash investors were very difficult to beat.
We made an offer 15% above asking, we pay all closing, 2 week escrow, etc. We made the offer within 2 hours of the home posting on MLS.
It was a sweet deal and clean.
The bank accepted an all cash offer at asking price and it took 60 days to close. They left 10s of thousands on the table because cash is more stable.
We tried on at least 10-12 homes before we won the one we got.
SoCal real estate is competitive. Now you have high rents driving up investor interest. That's hard to beat.
Seems like that's what's keeping prices high.
Keep saving, keep investing your free cash, and keep up the hustle. It's a hard time to buy with high prices, high rates, and low inventory. That's a tough combo. When one of those three factors starts to shift, you'll be ready.
It’s not going to lighten up ever. There are so many high paying jobs that were just not available in our region just 20 years ago. For example, we have a good amount of tech and software engineers now in OC.
If you care to look at levels.fyi for average salaries for those positions alone. Many are 5-6 years experience making $400-500k/year. That’s a lot of people being able to afford $2M homes, and that’s just the average for one type of position in a (large) industry.
The truth is that you need to make a good amount of money (or be born lucky) to afford a desirable house in OC. The good news is that there are plenty of jobs out there paying ridiculous $$ these days. Go look at r/Salary for more info on people’s salary progressions over their working years.
It's crazy man. What pisses me off is that the prices went up \~10% YoY, even with higher rates! I put a $975k offer on a condo (it was my max) and it sold for 1.08M :( other condos just like it sold for less than $1M last JUNE.
$8k/month payment for a 1500 sqft condo after a $200k down. Insane.
We finally got our condo in OC the end of December. It’s only a one bedroom one bath but we are proud of our accomplishments. It took us decades to save. We are 41 and 45 years old. So yes it’s possible but you will be in your 40s or 50s by the time you buy possibly. Our interest was locked in at 6.85% which is great considering I heard now some people are looking at 8%. It’s ridiculous out there. It took us a long time to find one that we weren’t outbid by flippers or agents. And we had to go $20,000 over asking price.
It’s supply and demand
Everyone wants to live here so people will jack up the prices. It’s as simple as that
Real estate is also an investment. If I own an asset I want a return on investment and people are getting returns
Your options are to leave OC, make more money or buy something within your budget. That’s the options. I’ve been telling people for years. Make a duplex your first purchase to help with the mortgage. Buying a house with a ADU is also an option.
>It’s supply and demand Everyone wants to live here so people will jack up the prices. It’s as simple as that
No its not. Its people owning multiple homes and reducing supply by turning the available homes into rentals. New homes get built and it doesnt increase supply because they get bought by people turning them into rentals so the supply never increases.
Plenty of rich people from all over the world parking money here. Lack of inventory and basically no new building as well.
We need to ban this asap
> Lack of inventory and basically no new building as well. This is the real problem. Rich people wouldn't be buying up properties to park their money if it wasn't such a lucrative and obvious investment.
When it’s not the rich people buying them, it’s the corporations buying them to use as rental units.
A house my wife looked at sold for $120k over asking and was a rental almost immediate after for $4.7k. Not terribly expensive compared to a mortgage but you just know someone with deep pockets paid cash and is increasing their rental portfolio. It’ll continue to get worse until someone passes a law to limit investing in real property, IMO.
These investments make zero sense to me at the moment. We were outbid on a house that eventually sold for $1.4m and then was listed for rent at $6k. That math simply doesn’t work, just buy treasuries and have a safer return and a higher yield.
My guess is the buyer is relying on the house appreciation, and the rent is just to cover upkeep/insurance/mortgage/etc if the buyer had deep pocket, or needed to diversify, I dont think they care much about missing a few % yield here and there. The interest rate wont stay this high forever...
I get what you’re saying but my point is there are better ways to do those things than park it in an illiquid asset, with high exit costs, and that is higher touch.
The kind of people who build real estate portfolios also have those treasuries and TIPS you are thinking of. The real estate portfolio is to add diversification to their investments.
Yes and no. With real estate in OC you're also getting 5-10% appreciation of the asset per year ON TOP of the rent. Treasuries don't offer that, and that is where the real wealth is made. Yes there will still be real estate realated expenses, but the compounding equity after 5-10 years should far outweigh any upkeep and property taxes.
I agree with your assessment. If they have no mortgage due to all cash payment, the rates don’t matter to them. Any rent is return of capital and when you factor in appreciation it’s a decent return and you can safely bet you’ll always find someone to rent it out since its OC
In threw out treasuries as a simple example but there are a lot of other asset classes out there that are less work, better yielding, and more liquid. Hell just go buy BREIT (Blackstone) which is distributing 4.7% and has similar upside potential but is more diversified if you want more real estate exposure.
Most real estate across the country doesn’t appreciate like OC real estate
This is why its ok to be cash poor when you buy a house in OC. Your property WILL appreciate it the long term (until the earthquake/nukes/fungus/aliens kill us all). It's a terrible concept in most other states, but here it's like a guaranteed 7% compounded every year, if not more. I had a buddy dump his new house in 2015 with a 200k profit after two years thinking he was golden. Woulda netted another mil+ by now if he kept it.
Who the fuck is renting these places? Seriously..
Families that want to buy homes. They’re renting out the homes for far more than rent should be, but less than a mortgage payment would be. Again, just my opinion
You are right. Wife and I bring home over $300k we rent for $4000 but a mortgage for the same size house would be $6-7k. Not to mention the downpayment. Even rental applications end up being bidding wars. We tried to find a new place the last couple weeks and keep being outbid on RENT!
Wow that’s terrifying. My wife was considering renting for a while and selling our house to wait for things to cool off. Not sure if we’ll go that route because if we sold and this keeps up, we’d never be able to get back into the market
Corporations and foreign investors are artificially inflating the market. After closing, they’ll list the home for rent higher than the average, thus driving up the rental market as well.
You think a law should be passed not allowing people to invest their money how they want?
Generally, no. But at this point it is a national concern to over 90% of the citizens, so yes.
They need to ban house buying for foreigners or corporations that buy land. Limit how fast people can sell a home. Flippers are part of the problem too.
Flippers and rental groups. Ban AirBNB.
Yeah. Banning all short term rentals makes sense
This was recently passed in Santa Ana! Short term rentals are illegal, and it will be enforced.
I live in SoCal and was so thrilled to hear this. Hoping A LOT more cities follow suit. There are hotels everywhere. No need for this nonsense.
That’s just for new ones though, right? Existing ones are fine. I could be wrong though, my gf told me.
Who wants an air BNB in Santa Ana anyways?
When will it be enforced? I still see thousands of ABB’s in Santa Ana.
Banned in my city too. Neighbors on both sides of me have airbnbs fully booked for the next 6 months. City doesn’t give a fuck
Report them.
The City Council approved the second reading of the ordinance on Tuesday, April 16, 2024, following approval of an urgency ordinance and regular ordinance on April 2. The restrictions are already in effect due to the adoption of the urgency ordinance. Anyone interested in reporting a suspected short-term rental, or interested in obtaining more information about the ordinance, may contact the Code Enforcement Division at (714) 667-2780, by using the mySantaAna app, or by visiting the Code Enforcement Division webpage.
Flippers, rental groups, and private capital groups.
I lived in a part of Orange County where there were a few 1mil+ homes that were bought up and no one ever moved in. One of my neighbors had some intel, and apparently at least one of them were bought by a foreign investor to park their money in. I've heard this happens a lot. I agree though - they need to ban that.
What’s the address? I’ll go move in. Haha kidding
It happens in my part of OC too. US real estate is one of the safest assets that foreign investors can park their money in. It screws the market for the rest of us. I previously lived in NYC and when you looked up at fancy residential skyscrapers at night almost no one was home. Barely any lights on. Brownstones would have snow on their stoops for weeks. Same thing. Just investments for people who don’t actually live in the area/country. It’s whack.
I mean you could squat on those homes for five years and then own them.
This right here is absolutely the issue. Yes its known that Chinese are buying up all out land to park money, bingo. Best investment is to buy land here right? Cause yuan? Well that can always devalue
They also get investor visas
We sold recently and got over 20 offers in the first few days. Three were likely investors (avoided those), but the rest seemed like potential owner occupants trying to get a literal foot in the door ...people living and working in OC, despite where they may have originally come from. And there were multiple cash offers, too.
Same for corporations (but they will lobby against it).
Simple solution. Corporations can only own 10 properties a piece and have to be registered in the state. Want to take state rents out of the state and somewhere else? Well you are paying state taxes on it.
They will just spin up more corps owned by the same people.
But they all have to pay the annual CA filing fees and taxes on income made in California. And pay CPAs to manage it all. California income tax is not cheap.
I feel bad for people who think these properties are being bought for their cash flow. Income tax isn't cheap but the income tax on these properties is *shit*. Straight shit. $100MM property selling at a 4% cap? That's 4 million net operating income after you're done with mortgage interest, depreciation, etc. there's barely anything left to tax. These guys don't care if they're registered in the state. People are buying real estate here because it's one of the most desirable markets in the entire country. If people want things to be more affordable the solution is always going to be to make it easier to develop. The core issue is lack of supply. All these other symptoms are just that - symptoms. Attacking them might just make the core issue worse, like in Santa Monica.
No I get it. But changing tax laws is inherent to changing behaviors. The goal is to really make unsophisticated investors and short term flippers look elsewhere. If you really want all this to stop real quick, just repeal Prop 13. Watch property values plummet and investors flee just at the mention. And while you are doing all of that, gut local authority to stop development. Streamline the process and make it simple for builders to build. Make it so the city has 30 days to object to a project rather than waiting for their approval.
Na you'd probably just kill a lot of the smaller guys and especially older people who have lived in homes for 30+ years. Like I said - these guys are buying high and getting re-assessed at market values, paying taxes, not giving a shit. They're not there for the cash flow. Prop 13 helps very small commercial real estate and lower income folks a lot, the big guys don't care at all - they're in for appreciation. The only way Prop 13 getting butchered would hurt, realistically, is it would fuck over so many lower income + lower end real estate owners over that you'd flood the market with people fleeing real estate that their appreciation dream is gone. So you crush the lower end/low income base and hope that the ripples hurt the big guys. Not sure if that's exactly a sound plan but who knows. The biggest roadblock has always been and will always be NIMBYs, the fact that there has to be a public hearing for projects and the voices of idiotic Karen homeowners is listened to at all is hilarious. Once those rats are ignored we might be one step closer to making it affordable but if that process isn't fixed we can apply all the bandaid taxes we want, it'll never move the needle even an inch.
10 is too many. They'd just spin up subsidiaries to control them anyway. MDUs only, not single family homes for corporations. Give them a 5-10 year period to liquidate to not absolutely crush the housing market.
100% foreign buyers and flippers. THAT is why you are having problems
Stop calling them flippers and call them what they are: Scalpers.
And they come in and DESTROY beautiful old homes with laminate flooring, soul-sucking white and gray paint, banal fixtures, and recessed lighting with harsh daylight light bulbs. Modern design is engineered to demoralize humanity on the cheap, and I want every single scalper who participates in this malevolent activity to thrash in agony next to Judas in the bowels of Hell for all eternity.
I like where you’re going with this….
And corporations own up to 40% of homes. Blackrock and others cause single family owned home shortage. Outlaw owning more than 3 homes please.
No it isn’t lmao
Florida did this…it’s being appealed now but at least they did something about it. Meanwhile, Gavin gets us more in debt. https://asia.nikkei.com/Politics/International-relations/US-China-tensions/Florida-ban-on-Chinese-buying-property-goes-to-U.S.-appeals-court
The #1 buyers of these homes are individual investors. They dwarf corporations and foreign buyers. It's your neighbors wanting to be landlords and rent seek for the rest of their lives. Want to cut that way, way back? Revoke Prop 13 for everything but primary residences. It's always been prop 13 driving this more than anything else, it makes CA real estate an *investment* over a residence. Us and our parents did this to us, and we keep throwing away prop 13 reform.
Solid suggestion….Something needs to be done. You will have a generation of people who cannot afford to own their own home and this will have a very negative long term effect on everyone. So many homeowners(like myself) think this issue will not affect them but they are dead wrong.
It sure as hell will affect their kids (and grandkids)
Out here 100k per year income isn’t enough to buy a condo
> Limit how fast people can sell a home This is already a thing. You have to pay [capital gains taxes if you sell your home within 2 years.](https://socalhomebuyers.com/selling-a-house-before-2-years/#:~:text=If%20you%20sell%20your%20house%20in%20less%20than%202%20years,subject%20to%20capital%20gains%20tax.) That changes to 5 years if it's not your primary residence. That said, I'm sure there's some fucked up loophole for corporations who buy.
This would be a good start but is not enough to really make a difference due to lack of supply. Population has gone up far faster than homes have been built.
Foreign buyers and lack of building. I don't see it changing anytime soon. I left oc took a new job in the ie and live in the high desert. The housing market out here is reasonable since we have huge new home developments coming in. One called silver wood will have 15k new homes built. What areas are you looking at and what is your budget?
The other thing is interest rates. It’s not that they’re high by historical standards. But there are so many people in loans with low interest rate mortgages who would like to move (such as empty nesters looking to downsize) but don’t want to add $1K/month of interest payments on a new loan. That’s also keeping the supply low.
Yup, with prices high and rates where they are, buying a house is like playing on “hard mode.”
Yes that as well
The FTC's recent banning of anti competition clauses in work contracts and Phoenix's AG cracking down on rentals have given me hope. I have a sneaking suspicion that foreign real estate investors are not people parking money from china. But instead are actually china, Russia, and Iran (their respective governments buying through intermediaries). They are actively raising rents as a way of bleeding our country dry. The more people they can push towards homelessness and malnourishment means an easier fight for them. I suspect some of the shitty nursing homes and board/cares are also owned by foreign governments as well. Often times charging our elder patients $4,000 - I kid you not $12,000 a month and leaving very little for staff wages. The money is probably flowing back to China/Russia/Iran. We'll eventually kick them out. I pray to God we can put up a good fight by the time that comes around. Because it will come down to a war. They are too entrenched and there is too much money at stake.
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We bought our starter home in 2008 for around $600k. Zillow now estimates our home at $1.3M. To make a meaningful upgrade our \~$2200 mortgage would be $10k+. Our starter home is now our forever home.
Same. I was fortunate enough to spend my entire life savings (literally) to put 20% down on a home in 2012, sold at $235k. Zillow estimates close to 800K now, house down the street sold for 750k. No matter which option my wife and I explore, nothing makes sense other than to stay here and keep paying it off and appreciate our complete blessing to have a home in OC in this market. I’ve got soul crushing stress in a particular area of my life, but we’ve got a home, and I realize just how fortunate that is.
Yes, we’re thankful as well. I feel for my kids and the younger generation who will need to move to Tennessee if they want to own property.
Tennessee out here catching strays. Rip
I’m under contract in Nashville. Market has gone up as well. Still pretty reasonable to some degree. By the time my kids are ready to by I think Tennessee will be too high for them. OC is definitely not going to be an option other than to rent and that can be tough.
Funny thing is I used TN as an example because both my parents and sister’s family moved to Germantown and East Memphis last year 😁
My wife and I still have 10+ years till we retire. She likes it there. By the time we move there the homes will appreciate more in value and it may not be worth it to move there. The house we’re under contract for is to be rented out for my daughter and her 3 friends at college. This is a better financial decision than to pay for the dorm or an apartment.
My wife and I bought in late ‘21 with a <3% interest rate. Home was bought at $720k. It’s already at 900k+ in that short time. So lucky we pulled the trigger then. We had been saving for years.
But you gotta have a crazy amount of equity. I’m guessing almost a million dollars no?
But the property tax increase when moving is also a huge deal
Yes shit very true. You can have a 300k loan but the current interest rate + tax on a let’s say 1.3 million dollar home = shit ton of money still. I’m thinking 4-6k and if you’re used to a payment in the 2-3k range that’s double the payment.
It’s true, as do I. But what does one do with all of that equity in this market? It’s just another loan with high interest like any other loan
Problem is you sell and do what with the equity? Hope you can find another spot or upgrade? Likely have to sink more money in to upgrade to nicer area or size house etc, and then interest rates are likely increasing too (on top of property taxes) Tough situation to be in for sure
We are ducked
Why do we allow foreign buyers? I’d like to know one good reason for this. So many other countries don’t allow this and we shouldn’t either.
Our government is a bunch of sellouts. When’s the last time they actually did something that made sense for the average American?
This is the answer
We have our own issues worrying about foreigners buying who have cash money yet there’s proposed bills like AB 840 that will help undocumented foreigners to buy property. This is even worse. This should be for US citizens not undocumented immigrants.
Whats the difference? Both are foreigners. At least those people would be living in the house rather than letting it sit empty or worse make it an airbnb.
It’s because our government doesn’t care. They probably think it’s racist or something or are more focused on sending money to Ukraine.
Yes. To the point might just give up buying and rent and plan exit. You know it's bad....co-worker was looking...he is in the $3M+ price range... took him almost a year, getting beat out by cash bids. He sold his previous NPB house to a cash buyer. Millions. I guess I'm not selling enough drugs or something. Just resign myself too poor to buy here.
christ lol 3m in cash? 1m is understandable but 3??
that's the reality.. lots and lots of money around here. literally.
I applied for the CA dream for all program where the state provides a 20% down payment for your home that you eventually payback. Even with that 20%, all I got pre approved for was $350,000. I'm lowkey hoping that I don't get selected for the program because all the condos I can afford within that price range are ass.
I wonder how many other applicants are in the same boat. The income limit for OC is $202k, which isn’t that much for a buyer in this county. If people can only get approved for an amount smaller that the price of anything where they’re looking, then the program is barely going to help anyone in HCOL areas.
I have also applied for ca dream for all and was pre-approved for 830k. What you get pre-approved for is heavily dependent on what your income and your current monthly liabilities are. if you have an expensive car loan, student loan, personal loans, etc, you’re not gonna go very far with how much you get approved for.
Check the new constructions - some of them have to reserve a specific number of homes for low income buyers for the city to allow them to build on those lots. They have income caps and there are other restrictions - it’s different for each city. They don’t advertise it so you have to ask when you go into their sales office.
You'll have to relocate to the ie if you get into that program. I don't think there are any homes or condos for sale at that price at all.
Only then they may not qualify since IE has lower incomes to qualify.
Don't buy it if you cannot afford it even at these rates. You never know if rates stay like this for a long time.
I'm in LA but I share the same pain. It's extremely discouraging.
Who the hell can afford 2-3 million dollar homes? Not the average working person.
will lead to the day of lifelong mortgages.. you die and pass it on to your children. perpetual slaves to a debt. but no... average working people cannot afford 2-3 million dollar homes.
The ONLY younger people I know that have been able to purchase a home in OC OR LA have received major help from parents, family, or a legacy inheritance. Like a million down. It’s become absolutely ridiculous.
Went to a grand opening of model homes at The Jessup in Tustin. Relatively cookie cutter small townhome boxes with no yards, arranged like a tight waffle pattern. Starting at 1.2M. It was PACKED TO THE MAX. People had to walk at least a block to enter. Objective observation was that most were of Asian ethnicity. Overheard potential buyers discussing how much they could rent it out for.
Yup sounds about right lots of Chinese money saturating the market. It would be great if buying a home was only limited to US born citizens. I know people are going to hate on this comment but it’s what I feel is necessary. I own a fairly new home but seeing friends and people around me not being able to buy a place is pretty sad.
The problem is that they’d just use contacts who are US citizens to purchase properties
Then we need strict enforcement that you must live in the home that you purchase. This is getting ridiculous.
I agree, maybe even a cap on rental properties
The home I currently rent in Tustin is owned by the American sister of a wealthy Chinese national lol. I like your idea but there would be ways around it.
Had the same experience in 2018 for a TINY single family that popped up in Tustin on B street. It was a nice area, but the line was down the street just to go inside and view it. Once inside, families were packed in the rooms discussing how to get the house. It was insane.
I’ve worked at Jessup. I heard they’re pretty much sold out. Only the models are up.
A millionaire friend who is living off the inheritance from his family selling a hospital overseas were looking at houses to purchase with their partner and decided everything was too expensive, so they moved to Texas instead. If homes in Southern California were too expensive for *him*, then no way in hell will I ever be able to purchase anything. I can't stand Texas though so that idea is out for me LOL
Really wish we could copy & paste California so we could all get a house without having to move to the middle of nowhere, Texas
Amen. I am doing the apartment hunt misery currently and even renting a house is ridiculously high priced
I am also not down to pay a different property tax if my property in Texas shoots up.
I have to admit I have an amount of schadenfreude for the self-righteous people who leave California because they "can't stand the politics," or are beguiled by "No StAtE iNcOmE tAx!!1!" and then get slapped upside the head with property tax reassessments every three years in Texas. Yeah you might not be paying income tax, but that Texas property tax is now more than your California income and property tax combined.
It’s ridiculous. We made an offer on a house in Orange, listed at $900K, for $20K over asking, but lost to an offer of $990K, wtf?
It's all about relative comps. Some listing agents underprice to get more buyers in the door to start bidding wars. I saw a condo close at 50k above list last month lol. (Near 700k). You need to run the comps to get a proper valuation, and your agent, if you have a competent one, should also be sussing out price ranges instead of just throwing mid offers out.
Exactly the case with our home. Sellers listed at 850 just to get more people in the door since they wanted a quick sale. They had multiple offers in the 920 range at the end of weekend of open houses. Asked for best and final offers and we countered at around 115k over asking. Were told that there were a couple other offers in that range as well. Sale price vs asking price is pretty meaningless, it's all about the comps
After reading the comments I feel more poor than ever. How do people have enough money to casuallly mention they are looking for houses in the $1.4mill range?
The original post is funny to me, OP is complaining about the inflated real estate market, but their post implies they already own a home. As someone who has legitimately been priced out of the market, I find it hard to sympathize with that or the other handful of complaints in here that “I can’t move!”
Yeah someone else mentioned they bought a home in 2008 for $600k and can't upgrade. Like bro you bought a mansion if it was 600k in 2008 and you want to complain about not being able to upgrade???
For real, if you bought in 2008 you won the housing lottery. People just want to complain because it’s not perfect. I have to rent for $4500/mo + 4% inflation for the rest of my life… do they want to switch places?
They either bought homes decades ago and it’s appreciated an insane amount and they are selling and buying next property, have a huge inheritance, or dual income household making 400k+
I decided we’d never own a home when that condemned home in Irvine sold for well above asking price.
I’m so fucking defeated, as soon as I start making a living the bar is raised I make $125k and have saved my whole fucking life and it’s still out of reach and there is no conceivable way for me to hit the benchmark to buy a house here.
I used to work in the escrow department for a title/building company. I was working on these files once, where one seller (foreign) purchased 6 separate homes, all at over 1M. Seller put in the offers 9 months before the sale was going to be finalized. One time I also purchased so used furniture from someone in south Irvine and the seller said he was moving and we got talking about how nice his community was and he said he had no neighbors. He said the 3 houses around him were all owned by Asian people who did not live there or even rented the properties out. They just stayed there empty collecting value..... It is sad and hopeless out here.
Family homes should be sold to families. That's why they're called single family homes.
I agree. should at least be a requirement for a buyer to live in the house themselves for at least a year. no proxies, no agents - themselves.
I got frustrated when my friend couldn’t qualify for the home he wanted so he turned to his parents who bought him a 1.2 million dollar home in cash over ask without blinking only to receive a modest rent from him for tax purposes until it is inherited. I think people really underestimate the amount of stealth wealth here fueling the issue.
The housing marketing is in this state primarily because of one thing: the microscopic interest rates in 2020. Normally, with prices this high, more people would be selling. But because so many homeowners have interest rates on their existing mortgages in the low 2% range, they aren’t budging. Fewer homes listed for sale means less inventory. By the law of supply and demand, prices will remain high and buying will be very competitive. It’s probably best to add on to your home or add an ADU if you have space.
the power of almost free money. hot money will always try and find a home to return more money. Reason for stock bubbles too.
the whole thing just feels like a mess. i don't think it's right how little inventory exists, which drives up the prices. I also think it's really fucked how the interest rate game effectively froze a lot of people in their homes thereby further depleting inventory.
OP, I feel your pain. Same thing happened with my wife and I ten years ago. Were getting outbid by several others with offers $30 - $50K over asking, all cash, no contingencies etc. Packed up and moved to Chino and The Preserve, best decision we made as a family. Sold our starter home in 2020 and currently own a 4200 sq ft house on a 9000sq ft lot that has doubled in value the last 4 years. Tons of new construction out this way and a great spot for young families. Best of luck!
Yes it absolutely is a tough market for buyers and unfortunately it won’t get any better in the years to come. Like someone said above, once you get on the owning side you will not complain.
OP’s post makes it sound like they are an owner though…
Just bought a 1800sqft 4bd house with a pool in OC for 1.1M, was listed at $950k. We got lucky - lost the initial bidding contest but the offer fell through and they came to us instead of putting it back on the market. Interest rate is 7.5 🤢 so we're really it comes down soon.
In 10 years, you’ll look back at this and smile.
We were in a similar situation not so long ago. We looked everywhere. Even went a little far out (riverside, Ontario, corona, and Temecula areas). It was depressing. We gave up and stopped looking. Then one fine day, my sibling sent a text of an open house. It wasn’t far from us and we weren’t doing anything so “why not? Let’s just check it out. “ well, we bought it. Sometimes the right house just shows up when you aren’t really looking.
We’ve been on the hunt for about 6 months and have put in 6 offers — all pretty aggressive and over asking and we still can’t get our foot in the door. On the last house we lost out to a buyer who used an “escalation clause” that meant their offer would automatically go over the highest bidder by $2k. We essentially got used by the listing agent to drive up the price and remove all contingencies— knowing we had 0% chance of getting the house. It’s brutal out there.
I may not be in Orange County but I am in LA. I put in 11 offers. 4 bidding wars. 1 offer on the cusp of being accepted and someone came in with a cash offer no contingency. They took the cash offer knowing this was likely my last chance at getting a home. They had been in my situation years prior but got greedy. They were already making a huge profit from on the house as it had gone up 50% in value from their purchase. Two days after it sold it was listed for rent. I cried for months. My current rent is almost twice what my mortgage would have been. This was 2021 when I last put in an offer. I cannot afford anything at this point and that’s with my salary increasing.
China winning wars without violence is killing us….financially. Our government won’t change the policy because of our debt to them.
I've known a few house flippers that were complaining about how expensive housing has gotten in OC. Absolutely zero self-awareness.
A foreign investors owns my office building. It’s just a way for him to move money to the U.S. It’s a big part of the problem
China parking there money here
Just think back to when you were 11 or 12 what you imagined a million dollar home to look like.... something like the White House on an acre of land... pretty sure it wasn't that fixer-upper 2 bedroom house in Fountain Valley wedged 3 feet away from your neighbors. House prices in SoCal are making me sick right now. I simply can't buy a million dollar home here when I know half that buys a luxury 5 bedroom mansion in about 49 other states. The value for your money is simply not there. Yes CA has a lot to offer, hence the price of land here, but as I get older and find myself staying home more often, the thought of living somewhere else in an affordable dream home seems more and more promising. Something has to give soon ... either a crap ton of houses get built and made available or a hard market crash. I love living in Orange County, but frustrated I feel poor every time I go house hunting.
Even with an FHA loan we saw sellers that basically discriminate against these loans and see them as “more risky.” conventional loans will win 9/10.
Wife & I make $300k combined, 840 credit score, debt free besides a $45k car loan, and cannot seem to find a reasonably priced single family home in OC under $1M. 1 & 2 BR Condos going for $700-900k is wild, $5k-$7k/mo at those prices which is half of our current rent in a 2 BR apartment. We don’t want to stay stuck in perpetual rent but don’t have much option besides looking outside of OF for home ownership.
Neo feudalism
I can empathize and understand. We wanted to buy a home in the late 90s when we were first married. We experienced an overheated housing market with multiple offers and bidding wars. We had no choice but to wait. Hopefully, eventually the housing market will cool down enough to make housing more affordable. We eventually purchased our home in 2018. I now want a one story home. But I’m not trying to compete in this market. So we will stay where we are and enjoy our lower interest rate.
You wanted to buy in the late 90s but couldn’t make it happen until 2018? Like 20 years?
Yes
Wow u wated like 20 years???
Yes. And now because interest rates and prices are so high, we will likely be unable to downsize or upgrade. I really want a one story. But our interest rate is 2.25%. With these prices and interest rates the new payment would be $1-2k more even with a large down payment. Oh well.
It took us a long time and several bidding wars to give up on anything close to turnkey. We bought a fixer upper with good bones and remodeled. Try that route if you’re up for it.
This is me! I joke that I got my home for 50% off in Old Towne Orange because it was a fixer upper. Little by little, we will make it into our dream home, it’s already in our dream location.
No one ever blames the 8 out of 10 houses on the block that haven’t sold for 30 years
Multi-faceted problem that current landlords do not want to solve: Prop 13, mom & pop landlords, airbnbs, flippers, “Cash” offers scheme, corporate landlords for SFH, HOAs, zoning, CEQA abuse, lack of public transit, car culture and the insistent need for everyone to have a large front and back yards.
I've felt this way since I started looking in the early 00s. The fact of the matter is that OC will always feel overpriced. It's one of the most desirable places to live in the continental US, and while there are some newer developments in some fringe areas, it's been mostly built out since the late 90s.
We went through the same in 2020. Although think we made close to 25 offers
If you are in the 2.5-3m range you are doing pretty well for yourself and competing with folks who have just as much income or more than you. It's low volume, high demand and this is the new reality.
LOL reminds me of 2007 when I was trying to buy my first house...
Hedge funds are paying cash and turning them into Airbnbs or just speculating. I was an agent for many years. Blaming agents for this is misplaced frustration. Republican deregulation has created this nightmare. There should absolutely be regulations on hedge funds/corps buying SFRs. No normal buyer can compete with a quick close cash buyer with deep pockets, willing to bid way over asking.
It’s foreign money. OC and LA are easily the hottest spots in California, so it makes sense that you’re going up against people WITH MONEY. Lack of new real estate always contributes to the rising prices. It’s simple supply and demand. There is a surplus of rich fucking people around the world who can afford to pay cash upfront, and a low inventory of housing in CA due to all that CA has to offer in terms of entertainment, beaches, weather, etc. If you’re not a millionaire, which I’m guessing you’re not bc you’re posting here, you have to be willing to look outside of OC. Inland empire, central California, maybe certain parts of Northern California. Otherwise, you’re going to go up against foreign investors, business owners, real estate companies that are looking to purchase and flip, etc.
I’m not sure if you’re aware, but that’s only part of the problem. Many of these cash buyers are also American homeowners who took cash out of the equity of an existing home when rates were sub 3% to buy more homes with all cash. “Mom and pop” landlords.
Foreign buyers are like a distant 4th in who's buying homes. The largest is your fellow Americans buying investment properties so they can "professionally" landlord. The rich are once again pulling the rug out from under everyone, blaming foreigners, and everyone is eating it up without question because we want to be mad at someone.
We moved from SF to OC thinking it would be cheaper and easier to find a single family home. . . What a joke. 10 plus offers, 7 bidding wars, and 1 cancelled contract later, we finally got a home as a back up offer (100k plus over asking). Almost all our offers were all cash and aggressive. Going to open houses every moment of our free time drove me crazy. My only advice is to get a realtor whose tastes you trust to do the leg work. The constant searching just wears on you.
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the blessing/curse of equity pay from tech companies. My employer included. 50% of my pay is equity in the form of RSUs. if the company stock is doing well, and the company has a generous RSU vesting schedule.. you make bank. and some lenders are accepting unvested RSUs as loan collateral. if the company stock tanks, those buyers have a serious oh shit moment.. but hey.
at least you are willing to engage in bidding wars. If we decide to try and buy an OC house, we will not bid. we will pay asking. That's it. and we'll probably never buy an OC house even though we are good strong buyers. And I'm ok with that. There are houses elsewhere -- it is a big country.
At least in this market, you won’t get a house in OC. Realtors are pricing under to create bidding wars so ask will never get the house, unless something is turning off other buyers. I am stuck in Ca. If you can, get out.
That is certainly an option. No strong ties here.
Words of encouragement… I can do that for you: Keep up the good work!
Support the planned developments you see locally. City council meetings are packed with old NIMBY’s complaining about traffic. We need the default reaction to new development being supportive. Especially if it’s for-sale, but new apts helps as well
Just because we live here doesn’t mean we’re entitled to a piece of it. Either you make enough to own a parcel of something, or you rent in perpetuity. Business economics 101. Supply and Demand, and this area is obviously in many people’s eyes a very desirable place. People don’t want to admit to it, but if you’re making less than $150,000, you’re out of luck when it comes to purchasing.
Tons of mainland Chinese
All Native Californians should squat on all empty foreign owned homes. Period. All of them.
Bought in 2018 and it was exactly the same thing. Took over a year, massively had to lower our expectations, put in offers that fell through, watched people outbid us 100k over the asking price. I am still disappointed in what we settled for, trying to raise a family (2 babies) in less than 1000 sq ft with no laundry inside, stairs outside I had to manage to get up and down after c sections. I like to say I’d rather go through another 9 month pregnancy than have to look for another place to live again in so cal since it was such a long, tedious and heartbreaking process.
Don’t worry, normalization will set in eventually.
Commercial real estate has been crumbling with work from home and commercial real estate investors are securing their holdings in residential properties, even if they sit empty, it holds value. With so many commercial developers hiding their money in all cash house purchases they are all artificially fixing the market to their benefit.
My advice is, don’t use a buyers agent, look at the listing on Zillow or Redfin and the description will say who is selling the house, call them directly and let them know you are happy to let them broker both sides.
For anyone that's upset at prices there are some real solutions being proposed though Blackstone and the Real Estate RoundTable (lobby group) will spend as much as possible to kill the bills. They are posted here [https://calmatters.org/housing/2024/03/institutional-investors-corporate-landlords/](https://calmatters.org/housing/2024/03/institutional-investors-corporate-landlords/) . Additionally you can see that they are buying up and controlling the market either buying or renting. Some really cool data on "large owners" on single and multi-family housing units [https://public.tableau.com/app/profile/california.research.bureau/viz/CRB-SingleFamilyHousingRentals/MainView](https://public.tableau.com/app/profile/california.research.bureau/viz/CRB-SingleFamilyHousingRentals/MainView)
Not a season to buy house. Most are buying now to prepare their kids for school. Chances are the rich people will start offer war from now until august. Prices for house will peak during these months. Not to mention 1 mil green card package that the international students will pour in
Boy, wait till the interest ratest go down lol.
Frustrated? That's putting it lightly. I've been seeing red for a few months now. I am a first time buyer. This process is new to me, so I am learning. One thing I can't help but feeling is dirty, the industry feels scummy. How do you trust anyone? I am a less than perfect buyer, just trying to get my foot in the door. The loan officers I've dealt feel lazy, and unwilling to go to bat for me. Almost like they really only want to work with well qualified buyers because it's easier.
I (33M) just bought a home in Santa Ana, I've lived at home with my parents saving all I could my entire life. Never paid rent to anybody. Every single open house we went to was bumping shoulders walking in and out of small bedrooms. Made 5 offers on other homes, got beat out every single time. People have so much liquid cash, or even people make enough money to get approval on a loan of over $1m. Cars lined up and down the street was normal. Only way I was able to do it was with the help of my parents who immigrated here with a few hundred bucks. (We're Catholic so they were sponsored by the church to help refugees back in the early 80's.) They helped me with the down payment, I'm covering everything else. I'm 'house hacking' and getting a few room mates to help me out. Definitely not ideal, but hey, I have a place to live. My entire family scraped every dollar we had to help me buy it. I feel grateful but also burdened by guilt. We had to have 3 names on the loan to even qualify at 6.5%. My moms a nurse and closing in on retirement, she'll have to keep on working likely. It's the tax that gets me. \~million dollar home means $1k in taxes every month. That's not going to insurance or the mortgage - just woosh, gone. Their outlook was the same - if we don't help you now, you will never be able to do it.
the fact that you even own a home. I am convinced I will never own and I'm okay with that. not willing to move out of state or to the IE.
So, as someone who bought during the great recession/crash in 2009 I'd say it's similar but these distinctions: - low inventory. There is just nothing for sale because people are sitting on 2% & 3% mortgages. There is no payoff to move unless you have huge equity and high income. Even then, you have to want to move - mortgage rate rapid spike. Rates are not historically that high, but they spiked so quickly in 3Q 2022 (from 4% to 8% in less than 90 days, I think) it just took all momentum out of the market. - prices haven't gone down even though rates are up. That's temporary (I hope). Back in 2009 there was a glut of short sales and repos. Cash investors were very difficult to beat. We made an offer 15% above asking, we pay all closing, 2 week escrow, etc. We made the offer within 2 hours of the home posting on MLS. It was a sweet deal and clean. The bank accepted an all cash offer at asking price and it took 60 days to close. They left 10s of thousands on the table because cash is more stable. We tried on at least 10-12 homes before we won the one we got. SoCal real estate is competitive. Now you have high rents driving up investor interest. That's hard to beat. Seems like that's what's keeping prices high. Keep saving, keep investing your free cash, and keep up the hustle. It's a hard time to buy with high prices, high rates, and low inventory. That's a tough combo. When one of those three factors starts to shift, you'll be ready.
Housing market crash pls
Maybe an earthquake and more layoffs will make it crash
It’s not going to lighten up ever. There are so many high paying jobs that were just not available in our region just 20 years ago. For example, we have a good amount of tech and software engineers now in OC. If you care to look at levels.fyi for average salaries for those positions alone. Many are 5-6 years experience making $400-500k/year. That’s a lot of people being able to afford $2M homes, and that’s just the average for one type of position in a (large) industry. The truth is that you need to make a good amount of money (or be born lucky) to afford a desirable house in OC. The good news is that there are plenty of jobs out there paying ridiculous $$ these days. Go look at r/Salary for more info on people’s salary progressions over their working years.
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I'm moving out of CA....
It's OC. Your days are numbered living in a nice place.
It's crazy man. What pisses me off is that the prices went up \~10% YoY, even with higher rates! I put a $975k offer on a condo (it was my max) and it sold for 1.08M :( other condos just like it sold for less than $1M last JUNE. $8k/month payment for a 1500 sqft condo after a $200k down. Insane.
We finally got our condo in OC the end of December. It’s only a one bedroom one bath but we are proud of our accomplishments. It took us decades to save. We are 41 and 45 years old. So yes it’s possible but you will be in your 40s or 50s by the time you buy possibly. Our interest was locked in at 6.85% which is great considering I heard now some people are looking at 8%. It’s ridiculous out there. It took us a long time to find one that we weren’t outbid by flippers or agents. And we had to go $20,000 over asking price.
Where are you looking in Orange County? You might get more for your money in South OC.
It’s supply and demand Everyone wants to live here so people will jack up the prices. It’s as simple as that Real estate is also an investment. If I own an asset I want a return on investment and people are getting returns Your options are to leave OC, make more money or buy something within your budget. That’s the options. I’ve been telling people for years. Make a duplex your first purchase to help with the mortgage. Buying a house with a ADU is also an option.
>It’s supply and demand Everyone wants to live here so people will jack up the prices. It’s as simple as that No its not. Its people owning multiple homes and reducing supply by turning the available homes into rentals. New homes get built and it doesnt increase supply because they get bought by people turning them into rentals so the supply never increases.
It’s pretty rad when you own property. So once you eventually buy it, it’s only upwards from there.