California Housing Bubble a Worrisome Trend for First Time Loft Buyers

Don’t turn your back on the affordability gap between California and the rest of the U.S.

Housing Price Bubble? How big is it?

On a scale of 0 bubbles to 5 bubbles, five being the most severe danger of a burst bubble, one Southland writer sees this as a difficult time for the California housing market.  Adding all of the numbers, the current real estate bubble is at least a 3 out of 5. Inflation is the key ingredient mitigating this bubble.

Market watchers caution that the lack of affordability is worrisome for California’s housing market. The state is consistently 20% to 30% less affordable than elsewhere in the United States. Here in Los Angeles, the Loft Market is locked in a price and demand deadlock. As a result, sellers are reluctant to reduce prices while demand remains strong.

BISCUIT COMPANY LOFTS FOR SALE   |   FOR LEASE   |   UNLISTED   |   NEW

Yes, this past summer produced a slight narrowing of this California-vs.-U.S. homebuying affordability gap from earlier in the year. That’s when this spread was at its widest since the end of 2007 a decade ago. However, it sharply lowered the chance a typical Californian can become an owner even with historically cheap money. As a result, banks and Investors are cannibalizing the market buying up homes and, in turn, pushing up prices. 

… today’s overheated pricing is all about “simple supply and demand.” Well, demand means having buyers who can afford to buy.

This shrinking affordability is even more troubling when mortgage rates have nowhere to go but up. One big reason is that inflation — an essential factor in setting interest rates — is heating up.  The safer, newer, cleaner suburban single-family neighborhoods have shot up the most over the last 18 months. Much inner-city and urban real estate has held steady or dropped in price during the virus hysteria. Affordability is historically quite good in high-crime, high-homeless areas of inner cities, such as Little Tokyo Lofts in Downtown Los Angeles.

According to the Consumer Price Index since 2000, U.S. inflation has averaged 2.2%, while rates on 30-year mortgages averaged 5%, according to Freddie Mac. So historically speaking, loans are usually priced 2.8 percentage points above these cost-of-living increases. Yet this fall, inflation was around 6% while this benchmark for mortgage rates — kept artificially low with Federal Reserve help — averaged 3.1%. That’s 3.1 points BELOW the inflation rate.

Unfortunately, real inflation is higher than that. In fact, Thanksgiving dinner costs 14% more this year. Because the Federal Reserve and federal government have indicated that there’s no limit to radical monetary policy and government spending, and there’s no serious capitulation about inflation by the current administration, we can assume that inflation shall continue to grow. Real inflation with insufficient real growth, or stagflation, is likely to mitigate and obfuscate real estate bubbles for years. #realestate #bubble #marketupdate #entarispowerful

Fill out the online form for information on industrial warehouse lofts:

Industry cheerleaders will shout that today’s overheated pricing is all about “simple supply and demand.” Well, demand means having buyers who can actually afford to buy.

LOFT & CONDO LISTINGS DOWNTOWN LA [MAP]

  Lofts For Sale     Map Homes For Sale Los Angeles

SEARCH LOFTS FOR SALE Affordable | PopularLuxury
Browse by   Building   |   Neighborhood   |   Size   |   Bedrooms   |   Pets   |   Parking

Warehouse Style Lofts Are Great for both residential and Commercial Applications

Copyright © This free information provided courtesy L.A. Loft Blog with the information provided by Corey Chambers, Realty Source Inc, DRE 01889449; MPR Funding Inc NMLS 2000513. We are not associated with the seller, homeowner’s association, or developer. For more information, contact 213-880-9910 or visit LALoftBlog.com, Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties are subject to prior sale or rental. This is not a solicitation if the buyer or seller is already under contract with another broker.

Falling Little Tokyo Lofts Prices – What Creates Financial Winners and Losers

Little Tokyo Lofts condo building stagnates

Like many other loft condominium buildings that are today surrounded by homeless and violent mentally ill in Downtown Los Angeles, Little Tokyo Lofts for sale listings have been suffering a recent 91.66% failure rate. Only one out of twelve listings sold successfully.  This suggests a substantial risk that neighborhood prices may be lower next year.  A list of recent sale and lease listings are available here. | PDF

In early 2019, we reminded Downtown loft investors, in our blog post, to consider selling their unneeded loft condos, and using the proceeds to buy bitcoin.  Those who held on to their properties lost more than $40,000 of equity on average.  Those who sold and kept in cash lost 6% due to “transitory” inflation, which is really the beginning of stagflation — runaway inflation plus economic stagnation caused by virus hysteria, massive overreaction and socialist-style government interference.  Those who acted on our bold suggestion found that $300,000 in average equity jumped to $5 million since, more than a 1,600% gain.

Find out how much your home is worth. Get a free list of recently sold homes in downtown and the Greater Los Angeles Area. Fill out the online form:

Top floor unit 631 offers due October 15, 2021. To be removed from market.

Copyright © This free information provided courtesy L.A. Loft Blog with information provided by Corey Chambers, Realty Source Inc, DRE 01889449; MPR Funding Inc NMLS 2000513. We are not associated with the seller, homeowner’s association or developer. For more information, contact 213-880-9910 or visit LALoftBlog.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker. | PDF