Median California Home Price Breaks $500,000

[bemildred]

The nation's housing market heated up in April, with sales of existing homes hitting a record high as prices took their biggest leap in nearly 25 years, according to a real estate report today.

In California, the median sales price for existing homes broke through the $500,000 level for the first time, according to April housing figures released today.

The stronger than expected sales and price increases defied expectations of a slowdown and came amid growing signs and concerns of a speculative housing bubble emerging in many markets. Federal Reserve policymakers noted "signs of possible speculative excesses in some areas" in the minutes of their May 3 meeting that were released today.

Sales of existing homes in April rose 4.5% from the previous month to a seasonally adjusted annual rate of 6.28 million properties — a record high. The median sales price nationwide shot up 15.1% — the biggest annual gain since November 1980 — from the same month last year to $203,800.

LA Times

[phantom power]

1. is this one of those "bits of froth" Greenspan was blathering about?

[Xithras]

2. My house has appreciated $100,000 in one year

It's NUTS!

[bemildred]

3. Lessee. 15% of 500K is .... 75K per year.

You don't need to work anymore, just own a median home.

[slackmaster]

5. A house is a liability, not an asset

You have to live somewhere, and unless you own your house outright or live free off someone else you have to make payments.

My house has appreciated about $400K over 10 years. That's fine for creditworthiness, but the high price of housing has me pinned down in a sense - If I sell and buy something comparable I'll end up with about a $5K - $6K annual property tax bill in addition to payments on about a $120K mortgage. Unless I buy a much smaller, cheaper, less desirably located home I'd get screwed by moving. If not for Proposition 13 it would be a lot worse.

[bemildred]

6. Well, of course, you have to leave, go far away, to realize the "gain".

You have to arrange a "liquidity event" and then avoid the need
to roll the cash over.

Nevertheless, your "net worth" is increasing. That can be taken
as saying something about your financial status (which is how
most people think of it) or about the fictional nature of "net
worth" calculations.

[XemaSab]

7. Yeah, but you have a house

that you can sell....

I throw money into the garbage can every month by renting, and if I move, I consider myself lucky to get my deposit back.

Aside from taxes, all the money you put into a house payment you will get back and then some.

[slackmaster]

8. The only way I can see profit is to sell

To make a real gain in the transaction I'd have to either move to a less expensive area or accept a smaller house. As I mentioned in my other post, I'd get screwed on property tax.

I may eventually move to a smaller house when I'm much older.

[XemaSab]

9. It's the difference

between seeing a lot of your money back, and seeing none of your money back.

There's no gain whatsoever in renting, it's all loss.

[slackmaster]

10. Have you ever looked at the amortization table for a 30-year loan?

The earlier you are in the term of a loan, the more of your money goes to interest which, while tax deductible, is not recoverable. You have to make payments for several years before the principal balance of your loan starts to drop noticeably.

Roll your own at http://mortgage-x.com/calculators/amortization.htm

I paid $141,500 for my house 10 years ago. When I got divorced five years ago I took out $10,000 in a refinance to help pay my ex what I owed her. Since then I have refinanced once with no cash out, and taken out an equity line of credit to buy a vehicle. My principal balance is now about $120,000. I have just under 13 years remaining on a 15-year mortgage, and my payments ($1040 per month) are still going half to interest, half to principal.

I don't want to think about how much more I've paid in interest, but it's shitloads more than the principal balance reduction I've seen. The REAL winners in the home mortgage game are the lenders. They always win.

[Gormy Cuss]

11. Um, depends

If the cost of renting is considerably lower than the cost of acquiring a house AND appreciation rates locally are low, you may be better off financially as a renter. Your money in a well managed portfolio may yield greater gains than home ownership.
In nutty markets like urban California these days however it's hard to make the case for renting but one of the scary trends is that real estate purchase prices are out of whack with rental prices. Since the dot com bust rents in NorCal have been appreciating at a much slower rate (sometimes not at all). If the mythical bubble bursts, rather than slowly deflates, renters are insulated from loss.

[chicagiana]

4. A glimpse of the future ????

In the "ownership" society of the future, people's wages will be driven down too far to afford home purchases. They will be forced to pay outrageous rents just like in Pottersville.

The outrageous, uncontrolled illegal migrant situation doesn't help things. It just helps drive up housing costs.

I don't want to live in a "China-ized" society where people are up in your face every direction you turn.