The Current Price of Real Estate

July 28, 2006 No Comments »

So as an Account Executive, I see a lot of loans. All I see are loans. Day in and day out, though luckily only five out of the seven days in a given week. =)

I see all types of different properties, ranging from small condo conversions to multi-million dollar mansions. What amazes me though is how my mindset has been altered from working in the mortgage industry for so long. And more so because I’ve been working for a jumbo wholesale mortgage lender. Or maybe it’s a combination of that and living in Los Angeles, one of the most expensive cities in the world.

Now when I see a loan around $400,000 I think what a tiny loan. I think small property. I think small commission. But the other day I began looking at real estate to buy for myself, and it occurred to me that prices for real estate in California, namely Los Angeles County, are sky high. All of a sudden those $400,000 loans didn’t seem so small anymore. I guess what I’m getting at is recognizing the insane state this industry is in. Loan amounts keep inching higher and higher, and no one stops to think about what they’re getting for half a million dollars.

By the way, the properties I was looking at were around $300,000-$600,000, and all the search engine came up with were condo conversions. That is, old apartments that are now condos. Do I really want to pay $400,000 to live in a shoebox with a shared laundromat downstairs and the same dingy surroundings I enjoyed in college??? No way. That’s why I think the cost of real estate right now is just too high. It can’t be the right time to buy. It just can’t. And the real value is in single-family residences, not condos. At least not former apartments with zero charm and zero space. Oh and my favorites were the 0 bedroom, 1 bath studios that are now on sale as well. Zero bedrooms!

That said, there are areas in the United States where real estate stills comes cheap. At least relatively…

Recently a few friends and former co-workers moved to Texas and were able to buy large single-family homes for $300,000. While the price makes me want to pack up and leave, I just can’t imagine myself living in Texas. Maybe it’s because I was born in Los Angeles and am quite used to the busy pace. The friends I know that moved there were from Illinois and North Carolina, so that could make it an easier transition. Who knows. But investors seem to be buying up space there as well, so it’s something I’ll definitely look into when I get a chance. I should have some home value by city data up shortly. This is a very new blog, so it’s a big work in progress.

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