Around here, it's simply nearly impossible to go from "owning nothing" to "owning a middle class house in early 2025"... But a big portion of that is that housing prices have more than doubled in <10 years.
I just looked up the house I bought in 2010 and had to sell in 2016 when I got divorced. It was a typical middle class home here. 1450 sf, 3 bd 2.5 ba, single family home in a nice clean quiet neighborhood in south Orange County. If I look at the sale history:
- Feb 2002: $352K
- Dec 2010: $470K (note the value of the home massively exceeded 470K around the 2005-2007 time frame in the last bubble, would probably have been $700K or higher, then the housing market imploded)
- June 2016: $639K (closer to what I think the "true" value is after it recovered from the Great Recession)
- June 2024: $1.12M
I don't know how anyone could come from zero in the housing market to buy that middle class house today, which is what my ex and I did in 2010 which was basically exactly the market bottom after the Great Recession. What most people end up doing around here is getting on the real estate rollercoaster with something smaller (condo/etc) when younger and try to ride the equity wave up. But even so, $1.12M for that house is insanity pricing.
I personally think SoCal is in another bubble, because we have what is fundamentally an unsustainable affordability problem. But as has been hashed out quite a bit, right now the prices are partially sustained because nobody is willing to sell, especially if they have low mortgage interest rates, so the very few houses that ARE available are still commanding these high prices. So the prices are kept high because even though demand at these prices is pretty low, supply is even lower.
IMHO something has to give, and it's happened in SoCal many times over the years. There was a correction in the early 90s when the aerospace industry ran into problems. Then everything went bubble-tastic in the early-mid 2000s with the subprime bubble. IMHO I think the market has to correct, but I don't know what it's going to take to prick the bubble and let the air out...
Raging wildfires burning up some of the available property sure isn't going to help. Creating even further scarcity of supply, will be headed the wrong way, for the average folks.
It's similar here, though not to the same level as SoCal.
Our original house that my wife and I bought in 2001, we paid $120K for a 1400 sqft house in the "near suburbs" of Austin, which are now considered almost centrally located. When we moved out in 2012, I could have sold that house for about $400K, but we chose to keep it as a rental. Currently houses around it that are appropriate comps, are selling for $600K. At the peak a couple of years ago, comparable houses were selling for up to $750K. It would be extremely difficult for a young couple that was in our situation 24 years ago, to purchase that house today. So they either rent, or look further out.
Of course, that's exactly what WE did at the time, too. Moving further out is nothing new. We had to look further out to the "near suburbs" because I couldn't afford a house in the same neighborhood where my parents lived, or my wife's parents lived, both of which were much closer to the city center. My folks bought their house in 1969 for $30,000. My wife's parents bought their house in 1980 for $80,000. At the time we were buying, my parents' house would have cost over $300K and my wife's folks' house would have been $500K, and now both would sell for over a million.
So although this current wave might seem exaggerated, it's not a new thing.
