Static...Or Not?

[No_Such_Reality_IHB]

<p><em>If the need to accomodate first time homebuyers is paramount, then real estate wealth will have an artificial ceiling.</em> </p>

<p>Yes and no. Select places will have their ceiling set by wealth accumulation. The Hamptons, beach front Malibu, etc. The majority of places provide a commodity, a place to reside, subject to imperfect substitution, cross elasticity of demand and a wide variety of opportunity costs. That majority is subject to predominantly to the entry buyer and move-ups. Some will be able to imput wealth accumlation from outside into the housing. </p>

 

[IrvineRenter_IHB]

<em>"Select places will have their ceiling set by wealth accumulation. "</em>





I upset someone yesterday on the main blog making this same point. There are some towns like Santa Barbara, Carmel, Beverly Hills, Corona Del Mar, and others where there is no entry level housing. In areas of old money, prices can remain inflated relative to incomes because people are not paying for houses out of income, they are buying out of wealth.





Irvine is not one of these towns.

 

[bishie_IHB]

Okay just to give an example from the very high end of the market:





Seller: Mark Levin


Buyer: Nicholas Cage





Purchase Date: 2000


Purchase Price: $10.85M





Sale Price: $15.7M





Address: 75 Gray Craig Road in Middletown, R.I


YoC: 1924


SF: 24,664





Sale Date: 7/31/07





Last I checked that is only 57% return from 2000 to 2007 so far less than pretty much anything you could have bought in Irvine during that time period.