The California Housing Market
June * 03 * 2005 10:19 AM
This is a rare thing for me, to write something about housing markets or the like, but it is recently on my mind and I am out of a period right now of thinking philosophically about things, which I cycle through sometimes. I think i just need to get out more sometimes, its when I am around people or new things I get to thinking about the strangest things, which lead to more important ideas.
Anyway, yesterday Alan, our father, and I went up to see some model homes in Calabasas. The community is called the Oaks, and it is under ten minutes from where we are now but it feels like it is a world a way because the streets are wide, the homes are new, and it is placed with amazing views of the valley and hills all round. So there are 9 models open, and as well as selling the homes for future phases, they are in the process of selling the models, as is. That means all of the upgrades and decorating and furniture, hand painted wooden beams on the cieling, the pools, the fountains, fully integrated lighting controls and temperature, and home theaters in some cases. As well as all the appliances, such as the fridges, wine coolers, etc. As it goes allot of the homes were nice but there was one that was perfect, the layout, the size, not to big, but not small. It had a theatre and courtyard, the decorating was amazing and the furniture not cheap. Anyway, the price for this 4500 sq. ft. model as is, 2.7 Million.
Now to you IL readers this sounds like a fortune. Its time for a CA housing Market education. My parents were looking at houses in Burbank, the average home there is 1100 sq. ft. and was built in the 50's often with no updating or remodeling. Drum roll please......these 1100 sq. ft. homes sell for nearly $700,000. Now if you do the math between the two houses, the fully furnished, 4500 sq. ft., pool, low e glass, upgraded everything, floor, paint jobs, counter tops, verses the 1100 sq. ft. 50's house, with old windows(not good for energy costs), old pipes(health risk), old carpet, no furniture, no appliances, etc., you get a nasty picture. If you do the math, the Burbank house is actually a bit more expensive, you see, the burbank house is nearly 640$ per sq. foot, and the Oaks house is $600 approx., which is a better deal without any furniture, but it is fully furnished and decorated.
The fascinating moral is that it is actually more expensive to buy the Burbank house, it only costs more money to get the Oaks house. Its ironic to me that it is more "material", that is a bigger waste of resources to buy the cheaper house, and once you add up the cost differential when you have to fix the old house up, get it re-piped and change the windows, update the air conditioning to energy star standards, it will not even be close. The final killer is that the new one is the better investment, it will appreciate in value quicker. Suffice to say if we had the money/income to do it we would have bought the house yesterday. Maybe in two years I suppose, for now it does not look good. I wonder though, the house we are renting now is 1700 sq. ft. which is 1000 less than our house in IL, where are we going to fit everyone and thing in an 1100 sq. ft. house, welcome to Los Angeles.

p.s.-i hope that was at least a education about an area many of you may not be familiar with, housing in general or what the market for houses is like in other high profile areas of the country. i dont mean it to be a depressing tale either, although it slightly is, it is just reality here.