Yes, that’s right folks, it’s the housing bubble déjà vu all over again – at least in the City of Angels. According to news stories published this week (Los Angeles Times and CBS), housing prices rose 28.3 percent since last June. Whoa Nelly! That’s a big jump and it seems eerily familiar to what happened in the mid-2000’s.

If my memory serves me right, this was a direct quote said to me (I’m a 1st hand witness!) from a mortgage broker at the time (circa 2005), “Prices won’t ever go down, so you better buy property soon!

Granted, this was when the average price of a very modest home in a so-so neighborhood was fetching $525,000 for a “roomy” 3 bedroom, 2 bath, 1,200 square foot house. No, I did not transpose those numbers – that’s One-Thousand-Two-Hundred square feet. I post about small and little houses all the time, but by no means do I want to pay half-a-mil for something that small.

I like small, but I associate “small” in size to “small-er” in price.

Now, let me get down off my soapbox and share an infographic that I have no way of proving if the data is accurate or fudged and what angle this company is coming from. However, this graphic was designed by a property management group, so my gut tells me they might say, “Yay! for renting!” I don’t necessarily agree – buying property has many more benefits than renting, but renting has it’s benefits too. Such as, you only have to pay a deposit less than 5-years of your salary. (Tongue and cheek there my friends!)

Without further adieu…

Infographic from Infographicsmania.com because we all heart infographics.
Infographic from Infographicsmania.com because we all heart infographics. (Click to see more on the larger version)

*Side note, though. Looking closely at this infographic, towards the bottom it states, “Renters seem to place the majority of their decision [not to buy] on their current lifestyles…” This sounds like some bad planning and I’m gonna lump myself into this as well. As someone who’d like to own property before I’m 80, it stings a bit to know I’ve probably been making some knuckle-head moves when it comes to the rent/buy dilemma.

What say you? “Crazy LA people”or “go team go?”

12 Comments

  1. krantcents Reply

    Prices are increasing now for economic reasons vs. the bad credit policy during the bubble. There is low inventory of homes and interest rates are artificially low. Normally, when interest rates go up , the demand goes down and so do prices. If there continues to be a low investory of homes, things may change.

    • @Krantcents – I keep waiting for more inventory to flood the market, but I’m not seeing it. Hopefully, banks will release some homes soon. This is just crazy!

      • Michael | The Student Loan Sherpa Reply

        I’ve heard there is a large quantity of homes out there just waiting to be foreclosed upon, but the banks are waiting, because they don’t want to flood the market. If that is the case, we are looking at a market where the prices are once again artificially high.

  2. Wow, that’s crazy. It’s such a fast turn around from last year. I thought the banks still have a lot of foreclosure inventory left. Or did they already wrote it all off?
    That’s good news though. Portland is usually a few years behind CA so maybe we’ll see a big 25% increase in 2014 or 15.

    • @Midlife Finance – I’m not sure what’s happened to all the foreclosures. There are plenty of vacant houses in the area, but they’re just sitting there…vacant. I can only assume that eventually the banks will release them onto the market and the market will adjust a bit.

  3. Greg @ Thriftgenuity.com Reply

    This just seems crazy to me. I always shake my head in regards to LA real estate. Not close enough to it to say whether I think it is sustainable.

    • @Greg – I don’t think it will sustain. I’m guessing things will cool off a bit over the next 6-months to a year. At least I hope so.

  4. SB @ One Cent at a Time Reply

    In south florida, where I live, real estate has gone up by as much as 30% in last 15 months

    • @SB – That’s crazy. But Florida was hit pretty hard and dropped significantly. Los Angeles also saw a dip, but it wasn’t anywhere near that of the hardest hit states. But that’s California for ya.

  5. Tushar @ Everything Finance Reply

    Wow. That is an astronomical amount. I didn’t think they even went down that much during the crash, compared to some parts of the country.

  6. Dividend investing Martin Reply

    That’s a good news. It’s time to check my property and see its valuation. At some point I was deep under water and now I might be back. I might be able to sell and buy something bigger.

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