is anyone from southern california? Since southern cal / L.A. is such a crazy market compared to the rest of the country, what are your thoughts and opinions on real estate investing around here right now?
It depends on what sort of investing you want to get involved in. I recently did a study of price appreciation, price loss, and price stability in San Diego County. Of 95 Zip codes, 58 had lost some value (from less than 1% to over 30%), 25 had gained some value (from less than 1% to over 67%), and 12 had remained stable. If someone had bought property along the coast in 2006 and sold in 2007 they were almost guaranteed to make a gain.
What should be noted is that buying a condo in this market is not a good idea unless you just want a place to live - unless you buy a condo in the high end market along the coast.
A title rep told me in 2004 that large investors were buying land along I-8 east of San Diego as far as Arizona as they felt this area will be the next to be developed.
You can look at data on southern California from a company called DataQuick (www.dqnews.com).
real estate investing is very competitive in SoCal and there are plentry of very experienced operators with wads of cash. most of the action right now is in short sales and foreclosure.
The market down turn is and will be very uneven geographically in SoCal. This is already playing out in the Inland empire where thngs are dropping fast while the coastal area are doing better but still under a lot of pressure. Prices in those areas are flat (at best) with very, very long times on the market. There are plenty of stories of folks being $100k+ underwater and lots of stuff at the courthouse steps going back to the lenders (REO may start to get tasty as lender’s inventories climb, but this market has a ways to go).
I’ve been fishing in other waters for several years now (I mainly do buy-fix-up and hold rentals properties) and unloaded most of my SoCal holding in spring/summer '06 (keep a few of my very best properties). Maybe next summer I’ll get back in the SoCal REI market.
I moved out of the SoCal area to get started in the business, to the South. Not to say money can’t be made in CA, but right now I think it’s easier for a newer investor in GA.
We just sold our last SoCal property and I believe we caught the last train out of town. If you check the mortgage reset estimates, the “pig entering the python” starts in January, 08 and continues for 6 months. CA borrowers account for a huge percentage of this reset madness. It’s going to be much worse than anyone currently believes. The domino effect will hurt everyone including the high-end properties. The vulture investing time is coming but it’s not here yet.
OldGuy
I believe some of these banks will curtail this “pig entering the python” period by recasting the ARM loans to fixed rates. A client of mine received a call immediatly from the lender after I called for a short sale package. Long story short, they moved him from his ARM which reset to 10.25% (mortgage broker had a 4.5pt margin on the loan) into a 7% fixed 10yr interest only.
Smart move by the lender. Always cheaper to take less interest over no payment and an eventual foreclosure.
This will only slow the bleeding and help some folks. Others who lied their tailfeathers off to get a loan on a house that they could not afford and way over paided for…that’s a different matter and there plenty of wreckage in that department
So, how’s the weather in SoCal? I’d really love to live there based on what I have heard about the weather, etc. I’m sick of New England winters.
in the 10 years since I moved from the East Coast, I can’t count the number of times I’ve been driving home from LAX after coming back from the East (in the winter) and thought…this weather kicks butt. Of course, half the time I was stuck in traffic going 20 mph, but that’s a different story.
as a good friend of mine told me when I first moved here, SoCal is a great place to live if you live close to work and don’t have to get on the freeway to commute. This is soooooo true. :beer
I’m in SoCal too and where I am (L.A. at the beach) inventory is building and time on the market is a lot longer, but the prices are holding steady (flat) in the high end. A few miles inland, which had a huge run up in prices after the beach cities became completely unaffordable, there is starting to be some real pricing pressures and it just started to get going. These markets are going to suffer immensely. I have RE agents sending me deals that are at prices they haven’t seen in a few years and telling me the sellers are very motivated make a low ball offer, but this is just the very beginning. Definitely wait this out, there has been a lot of hype in the news etc., but reality on the street hasn’t gotten there yet. By the way, I grew up on the East Coast but there is nothing like the weather and quality of life out here (In the right spot!)
It’s been a year exactly since I moved from Cali…
Nothing beats the weather there but it’s a nice change to see the leaves change in the fall…
I’m in So Cali, Don’t listen to the News. If you listen carefully, most of the time they are speaking in general and nationwide. The more affluent areas of So cali are still going up slightly. The parts of So cali that are going down, you probably don’t want to live in anyway. I live in the Valley, which I have no idea why, cuz it’s cooler in LAS VEGAS!!! Prices here are coming down slightly. There are alot of factors that play into it, the more the property cost the more room it has to fall, also, market conditions vary from Area to Area, and So cali is diveded up into many, many, many areas. Don’t get me wrong, there is a rough road ahead even for So cali, but nothing like what they talk about on the news nationwide. Too many people want to live here.