It just isn’t logical.
If I suggested someone rent this 1200 square foot one bedroom house for for $4000 people would think I was crazy. Yet someone was willing to drop $200,000, take out an $800K loan and pay about $4800/month for the privilege of “ownership”.
You are stupid!
Here’s another ugly lesson in economics: at these levels you start running out of suckers. Let’s say you get another 10% increase in value this year, how many people are out there at $1.1 looking to buy an old small house with one bathroom? $1.2 mil the next year? As we will see in a month even a 1% change in interest rates takes a huge toll on the house of cards holding up the real estate market.
Maybe I’m wrong. Maybe I should move to Arizona or Oregon. Maybe it’s totally logical to risk that amount of money and spend that monthly amount to “own” in El Segundo.