QUEER KIND OF BUBBLE, EH?:

Cost of Moving Up Keeps Many From Selling Homes: Owners balk at paying higher prices and taxes for a new house. Supply stays low as they sit tight. (Annette Haddad, June 13, 2005, LA Times)

Steve Friedman knew it was time to bring in an architect.

For two years, Friedman and his wife, Eden, had been looking for a bigger house in their area, knowing they could sell their residence in Rancho Palos Verdes for close to double what they paid five years ago.

Yet after they did the math, Friedman said, moving up didn't pencil out, even with the expected windfall. Any gain would be quickly absorbed by the purchase of a larger home, he realized. And their property tax bill would nearly triple, saddling them with a five-figure payment every year.

So the Friedmans decided to add on to their house instead.

"To spend roughly 50% of a mortgage payment on taxes is unfathomable to me," said Friedman, an executive at a website marketing agency. "So now our decision is how to best maximize the space we have."

Friedman is like many Southern Californians who could make a bundle by selling their homes. But rather than cash in, they are staying put.

These decisions not to sell are a key reason local housing prices continue to climb through the roof. While buyer demand continues unabated, the supply of homes for sale remains tight.

"There are a million bubble theorists, but the bottom line is: If no one is interested in selling, you're not going to have a market going down," said Michael Davin, executive vice president of South Bay-based real estate brokerage CataList Homes Inc.

The inventory of properties for sale in Southern California is near record lows.

And there are more Americans coming.

Posted by Orrin Judd at June 13, 2005 10:46 AM