irvinehomeowner said:
I think you can connect them.
A renters wage isn't indicative of the true income of the owner of the home. That's why the numbers for Irvine household income are lower than what prices suggest. If you're looking at the price resiliency based on wages, you also have to look at the income of the owners of the rentals because it's their wages that drive the prices of the homes.
I think that's why Irvine is better off than Yorba Linda because of the mix, a US-based recession doesn't fully affect Irvine, as neither does a non-US based recession... like I stated before, it's just like a balanced stock portfolio.
I believe that Irvine would outperform cities like Yorba Linda in the event of a US recession. But in the event of a China melt down, Irvine would see more selling pressure than Yorba Linda would. Irvine is not immune to short term volatilities. Decades of stagnant wages affect both renters and homeowners. Homeowners are obviously less affected but are not immune to it.
It seems odd to me that you continue to misrepresent my point on home-ownership rate even after I posted the specifics of what I was talking about.
I will just lay out my entire view before it gets taken out of context again.
My view on the economy and housing are very linked. Our winners take all style of economy has created an increasingly small group of winners and an increasingly large group of losers. Therefore, I bring up issues like home-ownership rate, stock ownership %, household income, income inequality, and stagnant wage growth to point out that there are regular people living in Irvine who will become relative losers in this economy.
When bearish views get posted on TI, the top arguments against it usually center around Irvine is different, in a protective bubble, has large number of rich and wealthy families, and has history on its side. While those are true, the macro trend outside of Irvine is trending the opposite direction and I would argue that it is not possible for Irvine to be completely immune from macro changes.
Many posters on TI seems to be in good financial situations. Your polls indicated that most are in 1M + homes. Most probably grew up in a society that was affluent and believe that things would improve over time or at least stay the same. But things have been trending the opposite way for decades. 90% of people born in the 1950s ended up doing better financially than their parents. But those born in the 1980s, the Millennials, have less than 50% chance of doing better financially than their parents, despite being the best-educated generation in our history. When you add AI/Automation into the mix, the scale is about to be tip even more. This future path that we are on is going to be catastrophic for the have nots.
On housing, I am very against younger people stretching to their max DTI to buy homes. I know you have said several times that you did stretch to buy, and it worked out for you personally. But times have changed. This is a dangerous path to take for people who still have more tomorrows than yesterdays. Many posters on TI seems to have wealth built up and will likely be winners going forward judging by how popular the stock market thread is.
I work with a lot of young people, age 25-35, as I am part of the alumni mentorship program for my alma mater. Most of them want to buy homes not because they are well positioned financially. They want to do it because they are so brainwashed by this model of American dream that make home-ownership a must. Many of them have the insane view that housing is a good investment no matter what because prices can only go up. What?s worse is that many are stretching to buy, instead of investing in themselves like getting further education or additional certificates.
To me this is a big mistake considering the tidal waves of AI/Automation that will be upon us soon. No human can compete with AI/Automation when the name of the game is efficiency. It's only a matter of time.
This really hit home when a good friend of mine was laid off last September. His job was replaced by software. He was making about 85k-90k as a back-office manager for Insurance company. After months of searching, he eventually found another job in Portland for much less pay. He sold his Irvine home (bought 2016) at a loss. In addition to selling for a loss, the transaction cost (realtor commissions + closing cost +moving expense) was like another slap in the face for him. This is why I keep harping on the 6% real estate transaction cost. It hits you hard both financially and emotionally when you must sell for a loss.
