I am watching this townhouse I am watching this townhouse and like it a lot. It is closed to my friends and family, near Little Saigon, and has good schools. Currently it is priced at $494k. I can afford it, as my income allows me to borrow up to $450k but I will only borrow around $350k. Currently I am planning to buy near the end of 2016. My hope is that price for this townhouse would drop to around $450k, it would be much more affordable for me. What is your prediction? Many thanks,
jimmyle wrote:I am watching [quote=jimmyle]I am watching this townhouse and like it a lot. It is closed to my friends and family, near Little Saigon, and has good schools. Currently it is priced at $494k. I can afford it, as my income allows me to borrow up to $450k but I will only borrow around $350k. Currently I am planning to buy near the end of 2016. My hope is that price for this townhouse would drop to around $450k, it would be much more affordable for me. What is your prediction? Many thanks,
That’s a really cute townhouse. Why not make an offer of $475K or so to see if they’ll bite? You’ve got nothing to lose if they don’t accept it. If you wait a year, you have to consider the rent that you’ll be paying between now and then, too. Will the drop be enough to offset that rent expense?
While I really like the look of the townhouse — nice end unit with more light and one fewer neighbor, some patio space, looks fairly well-maintained, more distance between buildings than newer units, more vegetation, two story instead of tri-level, etc. — just think about the detached garage a bit as carrying groceries and other stuff between the garage and house might get to be a pain, especially on rainy days. The bedrooms are a bit on the small side, too.
Other than that, it looks very desirable…AND it’s close to good schools and your family and friends! You might not get something like that next year. Make an offer! π
teaboy
February 24, 2015 @
6:12 AM
Also, I have it on very good Also, I have it on very good authority (a realtor) that now is a great time to buy.
tb
FlyerInHi
February 24, 2015 @
11:42 AM
I believe that as long as I believe that as long as interest rates stay low and GDP grows, housing will continue to grow at about 3% or more, especially in the coastal metro areas.
The large metros are contributing larger share of GDP and attracting new residents, even as the Internet allows improved telecommuting. So I see bifurcation between the desirable areas, such as San Diego and Orange County, and other lesser areas.
I would guess housing appreciation will be more than the rate of GDP growth in the desirable metros.
Now, if you believe that the Fed is manipulating and running out of tools, that rates will shoot up and the economy will crash…. then house prices will drop.
Act accordingly.
spdrun
February 24, 2015 @
12:30 PM
Looks like even low rates and Looks like even low rates and loser-loans are losing their effect on housing… (and GOOD!!!!!!!!)
Home sales (and inventory) are about steady from last year despite lower rates and Mel the Skell’s 3% down program. Prices are still going up, but for how long if demand isn’t rising?
As far as the economy, it won’t be what’s expected that will lead to a recession (aka buying opportunity). It will be something unexpected by 99% of the sheep.
FlyerInHi
February 24, 2015 @
1:18 PM
spd, I would grant you that spd, I would grant you that lower rates did all they could for an extraordinary recovery from the trough.
Housing now depends on economic growth. And housing growing at the rate of GDP is not out of line, especially in the desirable metros.
On a local level, Fountain Valley is very desirable. One of my friends was bitching that the Koreans and Vietnamese are taking over. I tell him to be happy to watch property values rise.
There are larger houses and large lots in Fountain Valley without HOA (better than surrounding areas). The ppsf may be higher than Irvine (have not confirmed lately) because it’s further north so it’s better for business people who want to closer to North OC and LA. There are lots of Asian small business owners who need a place to call home.
spdrun
February 24, 2015 @
1:55 PM
Well, good thing is that when Well, good thing is that when (not if) the next recession comes, the Fed won’t be able to lower rates much further … buying opportunity, baby!
BTW – why was the recovery a good thing? If anything, it bailed out Gen-X’ers and Boomers who took on stupid amounts of debt at the expense of affordability for more deserving younger people. Basically, unless you have medical issues, a loss of job, or a death in the family, if you took on a loan without engaging your brain, you didn’t deserve a bailout.
FlyerInHi
February 24, 2015 @
2:25 PM
spd, going forward, I feel spd, going forward, I feel positive about America. We have energy, flexible labor markets and immigration.
We will see economies crash in Europe and China before here.
The recovery is a good thing because it’s good for the country. It’s not about punishing people who made bad choices. It’s about the country becoming better off.
Do you want unhealthy people to become healthy for the benefit of us all? Or do you want to punish people who made unhealthy choices, to our overall economic detriment?
On a personal level, you act to your benefit. But on a policy level, we want our leaders to act to our aggregate benefit.
spdrun
February 24, 2015 @
2:47 PM
Why do YOU want to punish/tax Why do YOU want to punish/tax younger people who made responsible choices (via higher property prices) in order to bail out olds who made irresponsible choices and likely will do so again given the opportunity? Who says that the country will be better off if the olds get to keep their houses versus if young people (and immigrants) are able to buy at more reasonable prices? Cuts both ways.
Speaking only to San Diego, if anything, lower prices would be economically beneficial, even if some olds who bought at over-inflated prices in the mid-2000s get pushed out to Florida or Arizona or (Allah forbid!) have to rent.
Lastly, about the sick people, if they got sick through their own bad choices, it’s their problem.
FlyerInHi
February 24, 2015 @
2:47 PM
Spd, if you don’t believe Spd, if you don’t believe preserving and growing GDP is a worthy policy goal, then you clearly fall outside the mainstream.
Btw, the young lose their jobs sooner than the olds because they olds have “experience” and hold the levers of the establishment.
Also the young bitch a lot but they don’t vote so they don’t have much less say over policy.
spdrun
February 24, 2015 @
2:57 PM
All the more reason why the All the more reason why the young should be given a leg up over the codgers rather than bailing out codgers who should have known better and still fucked up bigtime π
And no, increased GDP isn’t always a worthy goal. It’s only a good goal inasmuch as it increases standard of living. Expensive housing actually increases expenses without necessarily increasing productivity much and tends to benefit established people vs relative newcomers. Immigrants and newcomers tend to be driving forces in an economy. Especially an economy as based on knowledge and technology as San Diego’s.
FlyerInHi
February 24, 2015 @
3:08 PM
The Fed does not care about The Fed does not care about prices. They care about new construction.
Unfortunately, in many markets there is no profit in construction unless there are higher prices.
spdrun
February 24, 2015 @
4:45 PM
And I disagree with And I disagree with construction as a welfare program for extreme southerners and high-school dropouts. Construction should occur where it makes sense. Demand will raise prices to where it does in places where it makes sense. If you have construction for the sake of construction, you end up with sprawled shitholes like the outer burbs of Phoenix and Vegas.
FlyerInHi
February 24, 2015 @
5:15 PM
Not my cup of tea, but the Not my cup of tea, but the outer suburbs of Vegas are better than the close-in burbs. Look up summelin and herderson anthem. High end 4000sf houses abound. Vegas had a phenomenal crash but also an awesome recovery which still hasn’t made everyone whole on a nominal basis.
I hate McMansions but they do provide jobs and lots them.
spdrun
February 24, 2015 @
5:26 PM
Places like Summerlin are the Places like Summerlin are the exception. So you support over-building where there’s not much demand in order to provide jobs? That’s not terribly productive nor good for the environment.
Last I checked, people in a given industry (construction workers, auto workers, etc) aren’t entitled to jobs just because they’ve always worked in it.
FlyerInHi
February 24, 2015 @
5:43 PM
Not over building. There’s Not over building. There’s plenty of demand otherwise the houses would sit unsold.
Btw Howard Hughes got the land for almost nothing. One of the best land deals in history.
spdrun
February 24, 2015 @
5:48 PM
Vegas and Phoenix areas have Vegas and Phoenix areas have no shortage of vacant buildings in areas that were overbuilt.
Irrelevant. The new ones are Irrelevant. The new ones are selling.
When it comes to houses, builders buld only when there’s a buyer.
spdrun
February 24, 2015 @
6:15 PM
Maybe the new ones are Maybe the new ones are selling now. Presumably, they took a crowbar to the yarbles in 2009 and are being a lot more careful about where, when, and how to build. But your quip about building only when there’s a buyer is factually incorrect. There have been many buildings and developments that have ended up unsold. Builders build when buyers are forecast, generally not after they’ve all paid.
A return to the conditions of 2005-2007 (which is some idiots’ idea of a “full recovery”) would be idiotic.
FlyerInHi
February 24, 2015 @
6:23 PM
Bulilders no longer mass Bulilders no longer mass build on spec. Inventory is low. And building is not robust like in haydays.
also sometimes developers got projects for pennies so they can afford to be patient. look up the gramercy complex in Vegas.
spdrun
February 24, 2015 @
6:29 PM
Exactly — they’ve gotten a Exactly — they’ve gotten a lot smarter. For now.
The-Shoveler
February 24, 2015 @
5:09 PM
AS long as there is not a AS long as there is not a severe recession, I don’t see a housing crash, and I don’t see a severe recession coming without severe stupidity on the part of the fed (not likely IMO) or war (which is unfortunately somewhat possible IMO).
In absents of those two I think there will be demand until 2020 just based on demographics.
Anyway IMO.
svelte
February 24, 2015 @
9:36 PM
Get a room, you two! Get a room, you two!
Jazzman
February 26, 2015 @
10:29 PM
You can’t predict how severe You can’t predict how severe a recession will be but one is due. You also can’t predict how much of an effect it will have on housing, but recessions impact prices negatively. As worrying are levels of debt globally, and the effects of QE on asset values. Although Greenspan has lost credibility, he recently said he believes there is no exit from QE without severe consequences. Prices increased very rapidly in 2013/14 and that seems to have been driven by low interest rates, low inventory, and high investor activity. None of that seems ‘normal’ to me so I’d argue it is unsustainable. We’ve seen a slow down in prices more recently, and I don’t think it would take a lot to turn the tide. If affordability measures still indicate values are on the high side, its seem reasonable to assume some kind of reversion to the mean is written into the script. So late 2016 gives plenty of time to see how all these elements play out. I’d keep a close eye on sales, inventory, prices, price reductions, days on market, list to sales ratios for any other signs of an end to the sellers’ market.
FlyerInHi
February 27, 2015 @
12:14 AM
QE lowers rates for sure. QE lowers rates for sure.
But don’t higher levels of debts equate to higher levels of savings? Debt to one party is savings to another. That could just be indicative of a larger global economy.
CA renter
February 27, 2015 @
3:33 AM
FlyerInHi wrote:QE lowers [quote=FlyerInHi]QE lowers rates for sure.
But don’t higher levels of debts equate to higher levels of savings? Debt to one party is savings to another. That could just be indicative of a larger global economy.[/quote]
No, because of fractional reserve banking. There is always more debt in the system than real money (however one might want to define that). When debt levels and debt ratios are high, problems usually follow.
Jazzman
February 27, 2015 @
10:59 AM
CA renter wrote:FlyerInHi [quote=CA renter][quote=FlyerInHi]QE lowers rates for sure.
But don’t higher levels of debts equate to higher levels of savings? Debt to one party is savings to another. That could just be indicative of a larger global economy.[/quote]
No, because of fractional reserve banking. There is always more debt in the system than real money (however one might want to define that). When debt levels and debt ratios are high, problems usually follow.[/quote]
That is my interpretation as well. Debt and savings sit on different sides of a balance sheet so are opposites. Higher levels of debt equate to higher levels of consumption, spending, and investment, which is not quite the same as ‘cash’ savings. If you borrow to buy a used car, that money goes into the seller’s pocket, which he may save, spend or pay off a loan. You could argue either way it goes back into the economy, and that even ‘cash’ savings are circulating. The distinction has become somewhat blurred I suppose, but I see savings as fenced off in terms of proprietorship. It represents the most fundamental individual right to value (‘backed by the full faith etc…’).
Levels of personal debt to income expanded during the debt crisis, and although de-leveraging has been impressive, it is still high and needs to be viewed in the context of the cost of borrowing, which as we know is very low. Levels of debt to income and GDP vary globally and some countries seem to court disaster. If central banks worry about one thing, it’s probably not so much asset bubbles, but levels of debt.
I don’t know how interconnected the world is in terms of personal debt, but we’ve already seen the results of exported collateralized risk around the world.
Perhaps it’s old fashioned to want to go back to the days when people saved, banks lent based on savings, and productivity grew the economy. If the last couple of decades is the new normal, we still haven’t got to grips with it …IMHO. Any that to me represents volatility.
CA renter
February 27, 2015 @
8:20 PM
Agreed, Jazzman. Agreed, Jazzman.
FlyerInHi
February 28, 2015 @
12:12 PM
Someone owns the debt that Someone owns the debt that someone else incurs.
Remember your college accounting class?
The problem is when value of the collateral drops and debts aren’t repaid which lowers the value of the debt (savings for whoever owns the debt).
It doesn’t matter if the money was created through fractional reserve banking.
Plus higher levels of consumption, spending and investment are good to improve our standards of living.
Cash savings as a store of wealth sucks as it should be. You should rightly be required to do some work and purchase assets that do store value.
Economics is an evolving field of study. And I believe that economists understand a lot more today that then did a few decades back.
Back a few decades ago, only the “first world” practiced good economics. The “second/communist world” was managed through crazy 5-year plans. And the “third world” was dictatorships by uneducated strongmen/revolutionaries who had just come out of jungle.
Now, the whole world is becoming integrated in a worldwide economy.
spdrun
February 28, 2015 @
3:30 PM
And that’s where we disagree. And that’s where we disagree. Humans shouldn’t be required to work for work’s sake. A truly evolved economy would follow Keynes’ prediction of a 15 hour work week.
FlyerInHi
February 28, 2015 @
6:19 PM
I don’t think we disagree on I don’t think we disagree on economics. Maybe we disagree on happiness. I just assume that more economic goods and services such as massages and vacations equal more aggregate happiness.
Free stuff such as walking around don’t count because that what unemployed people do which don’t contribute to the economy. Unemployed Italians walk around Rome practicing thievery. But a paid trip to Rome is great for the world economy.
There is more money now and more savings/debt sloshing around the world. A lot of wealth was created when the Second and Third worlds joined the global economy, esentilaly since the 1990s. With lots of savings around low rates are the new normal.
Want to earn more on your savings? Don’t hold cash. Do something with it. I think economists would agree that’s the way it should be.
spdrun
February 28, 2015 @
7:05 PM
Nothing wrong with just Nothing wrong with just walking around — it’s healthy. I try to walk at least 6 miles a day. Personally, I think that a lot of the US’s woes would be solved if people took the time to walk one or two hours out of the day.
Not every activity that promotes human happiness and health needs to involve the exchange of money.
It might even render a few doctors, personal trainers, and liposuction specialists unemployed, but if so, good riddance. On the other hand, sales of comfy walking shoes should go through the roof!
scaredyclassic
February 28, 2015 @
7:40 PM
All of man’s unhappiness All of man’s unhappiness stems from his inability to sit quietly alone in a room.
Or go for a simple walk.
NotCranky
February 28, 2015 @
8:17 PM
I walked 9 miles yesterday I walked 9 miles yesterday and didn’t steal anything. Of course , I wasn’t in Rome.
I like your lifestyle attitudes SPDRUN, a lot of really important things wouldn’t get done if everybody lived by them though. It truly takes all kinds. A lot of the economy is driven by war machines , toxic shit, and conning the “consumer”, bullying the little guy, and more, more, more, types like, Brian. it’s good that some people refuse to get real into those things. We need honest people who sometimes refuse to play. They , we , are an important part of nature’s checks and balances.
spdrun
February 28, 2015 @
8:24 PM
I’m going to jump to Brian’s I’m going to jump to Brian’s defense here and say that while cynical, I don’t think he’s a bad type.
Maybe he was thinking of the Romani (not so much from Rome), which have a reputation for certain activities?
FlyerInHi
February 28, 2015 @
9:11 PM
spdrun wrote:
Maybe he was [quote=spdrun]
Maybe he was thinking of the Romani (not so much from Rome), which have a reputation for certain activities?[/quote]
Italy has always been known for pickpockets.
Maybe it’s worse now with freedom of movement in Europe so the Romani have come to various capitals. I don’t blame them because they don’t have economic opportunities (read money). Too much idle time combined with desires for consumer goods is a really bad situation.
CA renter
March 4, 2015 @
12:12 AM
scaredyclassic wrote:All of [quote=scaredyclassic]All of man’s unhappiness stems from his inability to sit quietly alone in a room.
Or go for a simple walk.[/quote]
And be content with what he already has.
The #1 way to guarantee unhappiness is to always wish for more than what you already have. There is a lot to be said for low expectations and simple desires.
(I know you already know this, scaredy; just chiming in to back it up!)
FlyerInHi
February 28, 2015 @
9:12 PM
People say they want the People say they want the simple pleasures of life. But when money/goods are in short supply, all hell breaks loose.
Walking is not at odds with good economics and capitalism: New York and London.
But another example: Hong Kong. People over there walk miles and miles everyday, but they are busy and have places to go. When I last visited, I did not see any free public or private bench for resting (except at the park). There are acres of malls and shops to through. But want to rest? You gotta pay! (American malls have benches everywhere).
40 years ago, HK was a Third World place producing cheap toys. Now, one of the wealthiest on earth, on par with NYC, and always ranked near the top on OECD reports. And frequently declared by Cato as a example of good economics, with the highest degree of economic freedom. http://en.wikipedia.org/wiki/Economy_of_Hong_Kong
CA renter
March 4, 2015 @
12:17 AM
FlyerInHi wrote:People say [quote=FlyerInHi]People say they want the simple pleasures of life. But when money/goods are in short supply, all hell breaks loose.
Walking is not at odds with good economics and capitalism: New York and London.
But another example: Hong Kong. People over there walk miles and miles everyday, but they are busy and have places to go. When I last visited, I did not see any free public or private bench for resting (except at the park). There are acres of malls and shops to through. But want to rest? You gotta pay! (American malls have benches everywhere).
40 years ago, HK was a Third World place producing cheap toys. Now, one of the wealthiest on earth, on par with NYC, and always ranked near the top on OECD reports. And frequently declared by Cato as a example of good economics, with the highest degree of economic freedom. http://en.wikipedia.org/wiki/Economy_of_Hong_Kong%5B/quote%5D
If people feel safe and secure, you’d be surprised how content they can be with relatively little. I think the tendency to hoard, including the impulse to constantly shop for new things, is due to a feeling of vulnerability.
It’s true that we need those ADHD, Type A folks to really grow the economy, but one can also grow the economy to the point of extinction if we use up resources in an unsustainable manner, or if we create such inequality/oppression that non-stop wars become inevitable.
We need to find a sustainable middle ground, IMHO.
Jazzman
March 4, 2015 @
11:30 PM
FlyerInHi wrote:
Want to earn [quote=FlyerInHi]
Want to earn more on your savings? Don’t hold cash. Do something with it. I think economists would agree that’s the way it should be.[/quote]
That is central bank speak for invest is risky assets as a rising equity market is good for the economy β¦or so Ayn Rand disciples thought. What it means is the economy is in dire straits and is the equivalent of a financial ‘draft’. A monetary Vietnam if you will.
Jazzman
March 4, 2015 @
11:47 PM
FlyerInHi wrote:Someone owns [quote=FlyerInHi]Someone owns the debt that someone else incurs.
Remember your college accounting class?
Plus higher levels of consumption, spending and investment are good to improve our standards of living.
Cash savings as a store of wealth sucks as it should be. You should rightly be required to do some work and purchase assets that do store value.
[/quote]
Consumption is not what used to drive economies. A trade surplus was the goal. Think where it ends with finite resources. If Chinese consumers have what US consumers have, we would very quickly run out of natural resources. Make no mistake, they want it. Now add in India.
Cash savings were always put to use. It was how banks lent money and enabled home ownership. A debt dependent system is a zero sum game. Ownership is substituted for debt enslavement. It drives up the real cost of living. Look at house prices and education.
FlyerInHi
March 5, 2015 @
1:04 PM
Absolutely, everyone in China Absolutely, everyone in China and India can enjoy a high standard of living. The future won’t be what we have now…. lifestyles evolve.
debt is savings. you cannot prove otherwise. the only problem is that during recessions, debts go unpaid, so savings lose value, thereby resulting in a contraction in spending.
Also, some accounting standards are unhelpful, requiring markdown of debt assets, even though default has not yet occurred.
Jazzman
March 6, 2015 @
10:02 PM
Ultimately, it will depend on Ultimately, it will depend on your definition of ‘savings’. Borrowed money is purchasing power, but that is where the similarity ends. Doing the same thing doesn’t mean they are same the thing. Savings guarantee certain rights. Debt reverses those rights.
FlyerInHi
March 8, 2015 @
3:27 PM
Jazzman wrote:Ultimately, it [quote=Jazzman]Ultimately, it will depend on your definition of ‘savings’. Borrowed money is purchasing power, but that is where the similarity ends. Doing the same thing doesn’t mean they are same the thing. Savings guarantee certain rights. Debt reverses those rights.[/quote]
Yes for your own personal well being….
But in the economy, your savings are lent out to other people. They borrow because their have economic uses. Good.
If they default, the value of your savings go down. That might cause you psychological pain thus prompting you to cut back on your own spending. Bad.
So debts are savings. The more of both, the greater the size of the economy.
spdrun
March 8, 2015 @
3:34 PM
I’m not convinced that an I’m not convinced that an infinitely high level of spending on Far East made crap that people don’t really need is good for anyone.
FlyerInHi
March 8, 2015 @
4:19 PM
Incorporate the Far East into Incorporate the Far East into the interlinked world economy and all is good.
More debts, more savings, larger economy, more prosperity in the aggregate. I would argue more aggregate happiness also.
svelte
March 6, 2015 @
11:23 PM
I’ve got realtor friends in I’ve got realtor friends in San Diego and they say the traffic through model homes and tour requests through other homes is off the hook right now.
Multiple offers on every offer they write.
That can’t help do anything but raise prices.
Can’t speak for OC, but I doubt it’s much different.
spdrun
March 6, 2015 @
11:33 PM
What kind of homes are they What kind of homes are they selling. This doesn’t appear true for the market as a whole…
Check back on what is written two months from now…
spdrun
March 7, 2015 @
12:16 AM
It’s also spring, we’ll It’s also spring, we’ll see.
Indicators (and markets) have been all over the map since October 2014.
fun4vnay2
March 7, 2015 @
7:30 AM
If properties have multiple If properties have multiple offers, it reminds me of the days of 2004/2005, at the top of the bubble.
Are we back to bubble territory ? The wages have not grown for sure..
svelte
March 7, 2015 @
7:43 AM
Rising prices are also being Rising prices are also being confirmed by Jim the Realtor:
I remember a realtor I remember a realtor predicting a 21% increase for SD for 2014 in a news article.
The prices may be going up. Personally, I think the SD home prices are over the roof for working families. The wages have not grown fast enough.
My gut feeling is: a correction is coming. No one knows when.
People may argue with “this time is different”. I was told similar story in 2006 when I was looking for a house. Everyone told me that unless you buy now, you’d be priced out for ever.
They had facts in their side about SD home prices never going down: awesome weather, zoning restriction, good job market blah blah blah..
But in 2007/7 looking at the state of the housing market, I decided to wait for the madness to cool down and finally bought in 2011.
Let’s see. Uncertainty is another name for fun
svelte
March 7, 2015 @
8:12 AM
Absolutely prices will go up Absolutely prices will go up and down.
I don’t think anyone on here thinks otherwise.
Right now, I do believe they are going up. I think that’ll be the case through 2015 since the job market is improving.
There will be another downturn for sure, but I doubt that’ll happen for another year or two. I’m certainly not gonna go “all in” on that prediction, but that’s what my gut tells me.
I am predicting home price increases in San Diego on the order of 5% for 2015…maybe a little lower but I think a little higher is more likely than lower. I doubt they’ll top 10% though.
spdrun
March 7, 2015 @
8:17 AM
#1: Is the job market #1: Is the job market improving? Feb jobs report was a blowout, but unemployment claims have started holding above 300k/wk again.
#2: Look at the North County report that you posted. DOM is up to 68 so far this quarter, which doesn’t indicate such a frenetic sales pace. Could the rise in the median be reflective of the market being distorted in favor of higher-end homes. Either owners of more ordinary homes aren’t selling them, or buyers aren’t biting at them.
svelte
March 7, 2015 @
8:43 AM
Listen, buddy, you appear to Listen, buddy, you appear to want to sit there and take pot-shots at everything I say.
I’ve made my prediction, but reading back through this thread I notice you have said nary a word as to what yours is.
So it’s time to put up or shut up: what is your prediction for OC? What is your prediction for SD?
At the end of 2015, will those markets be:
– down 10%
– down 5%
– even
– up 5%
– up 10%
Time to pay the piper, dude.
We can compare who is closer to right come Jan 2016.
[quote=spdrun]#1: Is the job market improving? Feb jobs report was a blowout, but unemployment claims have started holding above 300k/wk again.
#2: Look at the North County report that you posted. DOM is up to 68 so far this quarter, which doesn’t indicate such a frenetic sales pace. Could the rise in the median be reflective of the market being distorted in favor of higher-end homes. Either owners of more ordinary homes aren’t selling them, or buyers aren’t biting at them.[/quote]
spdrun
March 7, 2015 @
8:53 AM
Even — +- 3% for both. This Even — +- 3% for both. This doesn’t mean the mix of sales can’t change, but I’m betting that the value of given homes won’t change that much from Q4 2014 to Q4 2015.
Not giving you a hard time, but I did find the rise in DOM to be interesting.
Cheers – may the best win! π Cheers – may the best win! π
scaredyclassic
March 7, 2015 @
10:24 AM
Doesn’t it seem as if things Doesn’t it seem as if things would be clearer in the future with more time passed more informatuin?
If anything things become increasingly less clear.
Could be macular degeneration
FlyerInHi
March 7, 2015 @
6:45 PM
spdrun wrote:Cheers – may the [quote=spdrun]Cheers – may the best win! :)[/quote]
I’m with svelte. The market is getting sizzling hot because of lack of inventory.
The Homepath email updates I get show increase in prices.
spdrun
March 7, 2015 @
7:28 PM
Less inventory, but Less inventory, but properties sitting for longer, at least per the stats posted for San Diego. And on Friday, 30-year rates shot up to summer 2014’s levels (~4 to 4.1% depending on source), in time for spring.
Question remains whether it will spur more people to buy before rates rise further, or cause people to sit and wait. The rise in 2013 had the latter effect.
What areas are you getting Homepath updates for? San Diego or Vegas?
There’s really nothing on Homepath in CA that would interest me. More locally to me, I can see that NJ has 3x the amount of properties below $150k as this time last year. Delaware County, PA (near Philly) is about steady. Not selling really quickly either. The rise in foreclosures locally, both at the sheriff auction end and the REO end in the last year has been pretty shocking.
The only inventory reductions I’m seeing are within NYC itself, but nowhere as dramatic as San Diego from 2012 till today.
zk
March 8, 2015 @
8:12 AM
I’m looking on Redfin, I’m looking on Redfin, Zillow, and a couple other similar sites, and I don’t see a single house for sale in zip 92121 (Sorrento Valley). Not one single-family home on the market in that zip code. There aren’t tons of homes there to start with, but there are usually a number on the market. The last couple months it’s dwindled down to zero.
FlyerInHi
March 8, 2015 @
5:29 PM
spdrun wrote:
What areas are [quote=spdrun]
What areas are you getting Homepath updates for? San Diego or Vegas?
[/quote]
Vegas is one example. Nothing under $100k. There used to be a lot.
I don’t see price drops unless interest rates go up.
spdrun
March 8, 2015 @
5:34 PM
I’m seeing some listings I’m seeing some listings coming on line in Vegas under $100k on the site itself. What ZIP codes are good or bad in your book?
Rates essentially hit last summer’s levels this part Friday. Bond rout.
svelte
January 18, 2016 @
9:57 PM
svelte wrote:
I am predicting [quote=svelte]
I am predicting home price increases in San Diego on the order of 5% for 2015…maybe a little lower but I think a little higher is more likely than lower. I doubt they’ll top 10% though.[/quote]
It’s December 2016 now? Who It’s December 2016 now? Who knew — must have slept 11 months.
Also, the data are for SD not Orange County.
svelte
January 19, 2016 @
7:25 AM
spdrun wrote:It’s December [quote=spdrun]It’s December 2016 now? Who knew — must have slept 11 months.
Also, the data are for SD not Orange County.[/quote]
I guess you don’t remember the conversation. I’ll refresh your memory:
[quote=svelte]Listen, buddy, you appear to want to sit there and take pot-shots at everything I say.
I’ve made my prediction, but reading back through this thread I notice you have said nary a word as to what yours is.
So it’s time to put up or shut up: what is your prediction for OC? What is your prediction for SD?
At the end of 2015, will those markets be:
– down 10%
– down 5%
– even
– up 5%
– up 10%
Time to pay the piper, dude.
We can compare who is closer to right come Jan 2016.
[/quote]
[quote=spdrun]Even — +- 3% for both. This doesn’t mean the mix of sales can’t change, but I’m betting that the value of given homes won’t change that much from Q4 2014 to Q4 2015.
Not giving you a hard time, but I did find the rise in DOM to be interesting.[/quote]
svelte
March 9, 2015 @
6:50 AM
spdrun wrote:
#2: Look at the [quote=spdrun]
#2: Look at the North County report that you posted. DOM is up to 68 so far this quarter, which doesn’t indicate such a frenetic sales pace. [/quote]
From the area in North County that I’ve been watching, I would believe DOM is rising.
Here’s why. Not a lot has been coming on the market, but the homes that do come on with a reasonable price sell relatively quickly – 1 to 2 weeks.
But there are quite a few overpriced or completely rundown homes that have been listed for a looong time. They aren’t selling now and likely won’t be selling due to unrealistic pricing.
That’s probably throwing the DOM stat to the high side. And why trying to figure out the market simply by watching stats is full of peril. Need to do deep dives into individual listings to see what is really happening.
spdrun
March 9, 2015 @
7:45 AM
I think Jim’s stats are for I think Jim’s stats are for sold properties, not properties that are unsold or are pulled from market.
FlyerInHi
March 9, 2015 @
2:25 PM
Not different this time. But Not different this time. But we have low rates which make mortgages cheaper to carry. And maybe 15 to 20 years to get back to overall peak nominal prices sounds about right to me.
spdrun
March 9, 2015 @
8:04 PM
No reason why the “getting No reason why the “getting back” has to be in a straight line.
FlyerInHi
March 9, 2015 @
10:31 PM
It’s not in a straight line. It’s not in a straight line. The Fed really helped it along. Different regions went at different rates. And different neighborhoods moved differently.
But we will get back to former nominal peak. Over about a couple decades, with inflation… Not too bad. Talking very generally about national housing maket here.
spdrun
March 9, 2015 @
10:47 PM
It will likely have ups and It will likely have ups and downs over the next 10-20 years. Unless it’s “different this time.” *snarf*
CA renter
March 9, 2015 @
11:19 PM
FlyerInHi wrote:It’s not in a [quote=FlyerInHi]It’s not in a straight line. The Fed really helped it along. Different regions went at different rates. And different neighborhoods moved differently.
But we will get back to former nominal peak. Over about a couple decades, with inflation… Not too bad. Talking very generally about national housing maket here.[/quote]
Prices are above nominal peak prices in our neighborhood. π
We know a couple of people who’ve sold in the last few months. The market is sizzling hot — multiple offers, with many cash offers. These are probably upper-middle/lower-upper tier homes.
FlyerInHi
March 10, 2015 @
1:07 PM
CAr, do you still believe in CAr, do you still believe in deflation?
CA renter
March 10, 2015 @
4:32 PM
FlyerInHi wrote:CAr, do you [quote=FlyerInHi]CAr, do you still believe in deflation?[/quote]
Absolutely. Deflation is, and has been, the major undercurrent since ~2007 (some, including myself, would argue that it goes back quite a bit further than that). All of the central bank/govt manipulation that’s been going on around the world since then has been used specifically to fight deflation. And the fact that it’s 100% manipulated is why we’re getting all of the asset bubbles; it’s the gross misallocation of resources. It’s why the top 1% have gotten ~95% of the benefit of this growth. It’s why capital expenditures are down vs. speculative bets. It’s why companies are borrowing money to buy back shares instead of spending money on growing/investing in their companies.
svelte
March 8, 2015 @
9:51 AM
Inventory does seem light.
A Inventory does seem light.
A realtor told me a client wanted to tour 12 homes this weekend. Within 24 hours of him receiving the list from the client 4 of the 12 went pending. 33%.
Not saying this pace will go on all year…but it might!
spdrun
March 8, 2015 @
10:15 AM
Market could also be Market could also be splitting, with high-end homes selling quickly, and low-end homes selling at average to slightly slower pace.
That actually happened in NYC. For all the talk about expensive condos being sold to Russians with f-u money, the price of the average studio or 1-bedroom below a million in a good area hasn’t changed dramatically.
Some areas gentrified in the past few years. But take Fort Greene, a “nice” area of Brooklyn that’s hasn’t changed much over 10 years. You always had a handful of 1/2 bedroom apartments (some had an alcove converted to a second bedroom) selling in the high $300k range. There are still a handful for sale at this price range if 5-10% more expensive than before.
Jazzman
March 8, 2015 @
1:14 PM
The number of homes for sale The number of homes for sale in OC has shot up 34% from December 2014 trough, which is considerably faster than the previous year. Levels are still about half what they were at the bubble peak. It is only back to September 2014 levels, but will probably shoot past at that rate. Sales (condos/SFHs) have dropped nearly 15% from 2013 to 2014 peaks. The February troughs were apart by 5%. Sold $/sqft has been flat so far this year. 2013 saw a 19% increase in price per sq ft whereas 2014 saw an 8% increase.
Overall inventory has increased, sales are down, and price increases muted. The combination of the former two will keep downward pressure on the latter.
spdrun
March 8, 2015 @
3:26 PM
Does anyone have data as to Does anyone have data as to what’s selling and what’s not, as far as ZIP codes or price ranges?
fun4vnay2
March 10, 2015 @
12:01 PM
I was talking to a realtor I was talking to a realtor and he warned me that buy now otherwise I’d be price out for ever.
Per him, golden period of CA just started and lot of manufacturing jobs would be here.. π
All the tell-tale signs of impending bubble?. I heard similar stories in 2006 as well.
FlyerInHi
March 10, 2015 @
1:38 PM
rockingtime wrote:I was [quote=rockingtime]I was talking to a realtor and he warned me that buy now otherwise I’d be price out for ever.
Per him, golden period of CA just started and lot of manufacturing jobs would be here.. π
All the tell-tale signs of impending bubble?. I heard similar stories in 2006 as well.[/quote]
I don’t see a bubble.
The lack of inventory is contributing to “this bubble”, but when building activity picks up again, price increases will level off and the people who waited might get better houses (of course, depending on the location they prefer).
Also “this bubble” is only in certain areas, more reminiscent of the regional bubbles of the late 80s. Nothing akin to the Bush Era bubble.
fun4vnay2
March 10, 2015 @
1:50 PM
Thanks FHI,
So this time is Thanks FHI,
So this time is indeed different.
CA renter
March 10, 2015 @
4:32 PM
rockingtime wrote:Thanks [quote=rockingtime]Thanks FHI,
So this time is indeed different.[/quote]
Touche!
The-Shoveler
March 10, 2015 @
4:47 PM
The two things I see The two things I see different than the 2006-8 housing bubble.
1) There are not the Absolutely crazy (no-Doc, No-Down) $1500.00 dollars moves you into a new home loans happening.
(seriously there were huge billboards in 2005-6 all up and down the I15 with that message).
2)It’s more a coastal Regional thing right now.
That said I don’t think there is a lot of upside in the coastal area’s IMO (but I think I said that last year as well).
CA renter
March 10, 2015 @
6:00 PM
The-Shoveler wrote:The two [quote=The-Shoveler]The two things I see different than the 2006-8 housing bubble.
1) There are not the Absolutely crazy (no-Doc, No-Down) $1500.00 dollars moves you into a new home loans happening.
(seriously there were huge billboards in 2005-6 all up and down the I15 with that message).
2)It’s more a coastal Regional thing right now.
That said I don’t think there is a lot of upside in the coastal area’s IMO (but I think I said that last year as well).[/quote]
But we’re hearing similar stories in the heartland, as well. While the coastal communities (both east and west coast) seem to be seeing very hot housing markets, other areas are seeing strong markets, too. Note Vegas, Phoenix, areas where the oil & gas industry were thriving (we’ll see what happens now, with gas down). This is going on overseas, too!
We don’t see the same kinds of NINJA mortgages this time, but that doesn’t mean that the leverage being used outside of the mortgage market is any healthier today than the mortgage market was in 2008. A lot of those “cash” purchases — which have made up about 25-50% of the purchases in many areas — are leveraged in other ways. Speculators/investors have been leveraging up and moving further out on the risk curve in their search for yield due to the central banks’ manipulations around the world. Some of these speculators are very vulnerable, IMHO. They might be even more vulnerable than the NINJA mortgage borrowers of the last housing bubble.
FlyerInHi
March 10, 2015 @
7:34 PM
CAr, I’m seriously wondering CAr, I’m seriously wondering how your deflationary scenario would play out. I want to be prepared if it comes to pass.
We have asset and commodities inflation now (less so in commodities these days), but how would that suddenly reverse itself?
CA renter
March 11, 2015 @
1:06 AM
FlyerInHi wrote:CAr, I’m [quote=FlyerInHi]CAr, I’m seriously wondering how your deflationary scenario would play out. I want to be prepared if it comes to pass.
We have asset and commodities inflation now (less so in commodities these days), but how would that suddenly reverse itself?[/quote]
Deleveraging. Think of margin calls (of sorts) on all types of accounts if interest rates go up and/or asset prices start to fall because fewer buyers step up to the plate who are willing to pay the same or more than the most recent buyers. Many borrowers are able to afford their debts because interest rates are so low and, if they are using collateralized loans, asset prices are high enough to enable them to borrow far more than they would be able to if rates and asset prices were normalized (just like the “homeowers” who would add to their mortgage debt position every year by HELOCing or refinancing cash out of their houses every year during the previous bubble).
If you just look at government financing alone, if rates went up levels that have been the norm for the past say 50 years, many (most?) public agencies would be broke in a very short amount of time because most of their revenues would be redirected toward paying interest. Many borrowers are in this position, not just public agencies.
“Only when the tide goes out do you discover who’s been swimming naked.”
CAr, I’m trying to see that CAr, I’m trying to see that that scenario might work out in reality. You’ve said that deflation would wipe out the gains since 2008. I can’t see it happen, but you never know….
FlyerInHi wrote:CAr, I’m [quote=FlyerInHi]CAr, I’m trying to see that that scenario might work out in reality. You’ve said that deflation would wipe out the gains since 2008. I can’t see it happen, but you never know….
That looks like an interesting book, Brian. I agree that public debt isn’t as much of an issue as private debt, though both are too high at this point, IMHO. Everything is interconnected, so a problem in one area will likely cause problems in other areas, like what happened in 2008. The next time, though, the Fed/govt won’t have nearly as much ammunition. We should have allowed the internet/housing bubbles to collapse completely, and then followed a much more prudent path forward from there. I think that the Fed/govt responses to the bubbles were completely irresponsible. It’s as though they want to make things worse and worse with each new crisis that they create.
livinincali
March 12, 2015 @
9:00 AM
FlyerInHi wrote:CAr, I’m [quote=FlyerInHi]CAr, I’m trying to see that that scenario might work out in reality. You’ve said that deflation would wipe out the gains since 2008. I can’t see it happen, but you never know….
I wouldn’t worry about it too much. You won’t see the next bubble popping until well after it’s too late to do anything about it.
Coronita
January 19, 2016 @
5:44 AM
Reading all the gloom and Reading all the gloom and doom comments about housing on this thread gave me a good laugh.
Warning: subscribing to the doomsayer mentality can be hazardous to one’s financial health. Almost as hazardous as being a permabull.
But hey, eventually doom and gloom will be correct. House prices will correct, one of these days. Just like you can “accurately” predict that it will be 2pm sometime in the future.
jimmyle
February 23, 2015 @ 8:05 PM
I am watching this townhouse
I am watching this townhouse and like it a lot. It is closed to my friends and family, near Little Saigon, and has good schools. Currently it is priced at $494k. I can afford it, as my income allows me to borrow up to $450k but I will only borrow around $350k. Currently I am planning to buy near the end of 2016. My hope is that price for this townhouse would drop to around $450k, it would be much more affordable for me. What is your prediction? Many thanks,
https://www.redfin.com/CA/Fountain-Valley/10598-La-Rosa-Ln-92708/home/3862279
CA renter
February 24, 2015 @ 1:06 AM
jimmyle wrote:I am watching
[quote=jimmyle]I am watching this townhouse and like it a lot. It is closed to my friends and family, near Little Saigon, and has good schools. Currently it is priced at $494k. I can afford it, as my income allows me to borrow up to $450k but I will only borrow around $350k. Currently I am planning to buy near the end of 2016. My hope is that price for this townhouse would drop to around $450k, it would be much more affordable for me. What is your prediction? Many thanks,
https://www.redfin.com/CA/Fountain-Valley/10598-La-Rosa-Ln-92708/home/3862279%5B/quote%5D
That’s a really cute townhouse. Why not make an offer of $475K or so to see if they’ll bite? You’ve got nothing to lose if they don’t accept it. If you wait a year, you have to consider the rent that you’ll be paying between now and then, too. Will the drop be enough to offset that rent expense?
While I really like the look of the townhouse — nice end unit with more light and one fewer neighbor, some patio space, looks fairly well-maintained, more distance between buildings than newer units, more vegetation, two story instead of tri-level, etc. — just think about the detached garage a bit as carrying groceries and other stuff between the garage and house might get to be a pain, especially on rainy days. The bedrooms are a bit on the small side, too.
Other than that, it looks very desirable…AND it’s close to good schools and your family and friends! You might not get something like that next year. Make an offer! π
teaboy
February 24, 2015 @ 6:12 AM
Also, I have it on very good
Also, I have it on very good authority (a realtor) that now is a great time to buy.
tb
FlyerInHi
February 24, 2015 @ 11:42 AM
I believe that as long as
I believe that as long as interest rates stay low and GDP grows, housing will continue to grow at about 3% or more, especially in the coastal metro areas.
The large metros are contributing larger share of GDP and attracting new residents, even as the Internet allows improved telecommuting. So I see bifurcation between the desirable areas, such as San Diego and Orange County, and other lesser areas.
I would guess housing appreciation will be more than the rate of GDP growth in the desirable metros.
Now, if you believe that the Fed is manipulating and running out of tools, that rates will shoot up and the economy will crash…. then house prices will drop.
Act accordingly.
spdrun
February 24, 2015 @ 12:30 PM
Looks like even low rates and
Looks like even low rates and loser-loans are losing their effect on housing… (and GOOD!!!!!!!!)
http://www.housingwire.com/articles/33021-existing-home-sales-collapse-in-january-despite-low-mortgage-rates
Home sales (and inventory) are about steady from last year despite lower rates and Mel the Skell’s 3% down program. Prices are still going up, but for how long if demand isn’t rising?
As far as the economy, it won’t be what’s expected that will lead to a recession (aka buying opportunity). It will be something unexpected by 99% of the sheep.
FlyerInHi
February 24, 2015 @ 1:18 PM
spd, I would grant you that
spd, I would grant you that lower rates did all they could for an extraordinary recovery from the trough.
Housing now depends on economic growth. And housing growing at the rate of GDP is not out of line, especially in the desirable metros.
On a local level, Fountain Valley is very desirable. One of my friends was bitching that the Koreans and Vietnamese are taking over. I tell him to be happy to watch property values rise.
There are larger houses and large lots in Fountain Valley without HOA (better than surrounding areas). The ppsf may be higher than Irvine (have not confirmed lately) because it’s further north so it’s better for business people who want to closer to North OC and LA. There are lots of Asian small business owners who need a place to call home.
spdrun
February 24, 2015 @ 1:55 PM
Well, good thing is that when
Well, good thing is that when (not if) the next recession comes, the Fed won’t be able to lower rates much further … buying opportunity, baby!
BTW – why was the recovery a good thing? If anything, it bailed out Gen-X’ers and Boomers who took on stupid amounts of debt at the expense of affordability for more deserving younger people. Basically, unless you have medical issues, a loss of job, or a death in the family, if you took on a loan without engaging your brain, you didn’t deserve a bailout.
FlyerInHi
February 24, 2015 @ 2:25 PM
spd, going forward, I feel
spd, going forward, I feel positive about America. We have energy, flexible labor markets and immigration.
We will see economies crash in Europe and China before here.
The recovery is a good thing because it’s good for the country. It’s not about punishing people who made bad choices. It’s about the country becoming better off.
Do you want unhealthy people to become healthy for the benefit of us all? Or do you want to punish people who made unhealthy choices, to our overall economic detriment?
On a personal level, you act to your benefit. But on a policy level, we want our leaders to act to our aggregate benefit.
spdrun
February 24, 2015 @ 2:47 PM
Why do YOU want to punish/tax
Why do YOU want to punish/tax younger people who made responsible choices (via higher property prices) in order to bail out olds who made irresponsible choices and likely will do so again given the opportunity? Who says that the country will be better off if the olds get to keep their houses versus if young people (and immigrants) are able to buy at more reasonable prices? Cuts both ways.
Speaking only to San Diego, if anything, lower prices would be economically beneficial, even if some olds who bought at over-inflated prices in the mid-2000s get pushed out to Florida or Arizona or (Allah forbid!) have to rent.
Lastly, about the sick people, if they got sick through their own bad choices, it’s their problem.
FlyerInHi
February 24, 2015 @ 2:47 PM
Spd, if you don’t believe
Spd, if you don’t believe preserving and growing GDP is a worthy policy goal, then you clearly fall outside the mainstream.
Btw, the young lose their jobs sooner than the olds because they olds have “experience” and hold the levers of the establishment.
Also the young bitch a lot but they don’t vote so they don’t have much less say over policy.
spdrun
February 24, 2015 @ 2:57 PM
All the more reason why the
All the more reason why the young should be given a leg up over the codgers rather than bailing out codgers who should have known better and still fucked up bigtime π
And no, increased GDP isn’t always a worthy goal. It’s only a good goal inasmuch as it increases standard of living. Expensive housing actually increases expenses without necessarily increasing productivity much and tends to benefit established people vs relative newcomers. Immigrants and newcomers tend to be driving forces in an economy. Especially an economy as based on knowledge and technology as San Diego’s.
FlyerInHi
February 24, 2015 @ 3:08 PM
The Fed does not care about
The Fed does not care about prices. They care about new construction.
Unfortunately, in many markets there is no profit in construction unless there are higher prices.
spdrun
February 24, 2015 @ 4:45 PM
And I disagree with
And I disagree with construction as a welfare program for extreme southerners and high-school dropouts. Construction should occur where it makes sense. Demand will raise prices to where it does in places where it makes sense. If you have construction for the sake of construction, you end up with sprawled shitholes like the outer burbs of Phoenix and Vegas.
FlyerInHi
February 24, 2015 @ 5:15 PM
Not my cup of tea, but the
Not my cup of tea, but the outer suburbs of Vegas are better than the close-in burbs. Look up summelin and herderson anthem. High end 4000sf houses abound. Vegas had a phenomenal crash but also an awesome recovery which still hasn’t made everyone whole on a nominal basis.
I hate McMansions but they do provide jobs and lots them.
spdrun
February 24, 2015 @ 5:26 PM
Places like Summerlin are the
Places like Summerlin are the exception. So you support over-building where there’s not much demand in order to provide jobs? That’s not terribly productive nor good for the environment.
Last I checked, people in a given industry (construction workers, auto workers, etc) aren’t entitled to jobs just because they’ve always worked in it.
FlyerInHi
February 24, 2015 @ 5:43 PM
Not over building. There’s
Not over building. There’s plenty of demand otherwise the houses would sit unsold.
Btw Howard Hughes got the land for almost nothing. One of the best land deals in history.
spdrun
February 24, 2015 @ 5:48 PM
Vegas and Phoenix areas have
Vegas and Phoenix areas have no shortage of vacant buildings in areas that were overbuilt.
http://lasvegassun.com/news/2015/feb/22/southern-nevadas-flight-against-blight-only-intens/
FlyerInHi
February 24, 2015 @ 5:57 PM
Irrelevant. The new ones are
Irrelevant. The new ones are selling.
When it comes to houses, builders buld only when there’s a buyer.
spdrun
February 24, 2015 @ 6:15 PM
Maybe the new ones are
Maybe the new ones are selling now. Presumably, they took a crowbar to the yarbles in 2009 and are being a lot more careful about where, when, and how to build. But your quip about building only when there’s a buyer is factually incorrect. There have been many buildings and developments that have ended up unsold. Builders build when buyers are forecast, generally not after they’ve all paid.
A return to the conditions of 2005-2007 (which is some idiots’ idea of a “full recovery”) would be idiotic.
FlyerInHi
February 24, 2015 @ 6:23 PM
Bulilders no longer mass
Bulilders no longer mass build on spec. Inventory is low. And building is not robust like in haydays.
also sometimes developers got projects for pennies so they can afford to be patient. look up the gramercy complex in Vegas.
spdrun
February 24, 2015 @ 6:29 PM
Exactly — they’ve gotten a
Exactly — they’ve gotten a lot smarter. For now.
The-Shoveler
February 24, 2015 @ 5:09 PM
AS long as there is not a
AS long as there is not a severe recession, I don’t see a housing crash, and I don’t see a severe recession coming without severe stupidity on the part of the fed (not likely IMO) or war (which is unfortunately somewhat possible IMO).
In absents of those two I think there will be demand until 2020 just based on demographics.
Anyway IMO.
svelte
February 24, 2015 @ 9:36 PM
Get a room, you two!
Get a room, you two!
Jazzman
February 26, 2015 @ 10:29 PM
You can’t predict how severe
You can’t predict how severe a recession will be but one is due. You also can’t predict how much of an effect it will have on housing, but recessions impact prices negatively. As worrying are levels of debt globally, and the effects of QE on asset values. Although Greenspan has lost credibility, he recently said he believes there is no exit from QE without severe consequences. Prices increased very rapidly in 2013/14 and that seems to have been driven by low interest rates, low inventory, and high investor activity. None of that seems ‘normal’ to me so I’d argue it is unsustainable. We’ve seen a slow down in prices more recently, and I don’t think it would take a lot to turn the tide. If affordability measures still indicate values are on the high side, its seem reasonable to assume some kind of reversion to the mean is written into the script. So late 2016 gives plenty of time to see how all these elements play out. I’d keep a close eye on sales, inventory, prices, price reductions, days on market, list to sales ratios for any other signs of an end to the sellers’ market.
FlyerInHi
February 27, 2015 @ 12:14 AM
QE lowers rates for sure.
QE lowers rates for sure.
But don’t higher levels of debts equate to higher levels of savings? Debt to one party is savings to another. That could just be indicative of a larger global economy.
CA renter
February 27, 2015 @ 3:33 AM
FlyerInHi wrote:QE lowers
[quote=FlyerInHi]QE lowers rates for sure.
But don’t higher levels of debts equate to higher levels of savings? Debt to one party is savings to another. That could just be indicative of a larger global economy.[/quote]
No, because of fractional reserve banking. There is always more debt in the system than real money (however one might want to define that). When debt levels and debt ratios are high, problems usually follow.
Jazzman
February 27, 2015 @ 10:59 AM
CA renter wrote:FlyerInHi
[quote=CA renter][quote=FlyerInHi]QE lowers rates for sure.
But don’t higher levels of debts equate to higher levels of savings? Debt to one party is savings to another. That could just be indicative of a larger global economy.[/quote]
No, because of fractional reserve banking. There is always more debt in the system than real money (however one might want to define that). When debt levels and debt ratios are high, problems usually follow.[/quote]
That is my interpretation as well. Debt and savings sit on different sides of a balance sheet so are opposites. Higher levels of debt equate to higher levels of consumption, spending, and investment, which is not quite the same as ‘cash’ savings. If you borrow to buy a used car, that money goes into the seller’s pocket, which he may save, spend or pay off a loan. You could argue either way it goes back into the economy, and that even ‘cash’ savings are circulating. The distinction has become somewhat blurred I suppose, but I see savings as fenced off in terms of proprietorship. It represents the most fundamental individual right to value (‘backed by the full faith etc…’).
Levels of personal debt to income expanded during the debt crisis, and although de-leveraging has been impressive, it is still high and needs to be viewed in the context of the cost of borrowing, which as we know is very low. Levels of debt to income and GDP vary globally and some countries seem to court disaster. If central banks worry about one thing, it’s probably not so much asset bubbles, but levels of debt.
I don’t know how interconnected the world is in terms of personal debt, but we’ve already seen the results of exported collateralized risk around the world.
Perhaps it’s old fashioned to want to go back to the days when people saved, banks lent based on savings, and productivity grew the economy. If the last couple of decades is the new normal, we still haven’t got to grips with it …IMHO. Any that to me represents volatility.
CA renter
February 27, 2015 @ 8:20 PM
Agreed, Jazzman.
Agreed, Jazzman.
FlyerInHi
February 28, 2015 @ 12:12 PM
Someone owns the debt that
Someone owns the debt that someone else incurs.
Remember your college accounting class?
The problem is when value of the collateral drops and debts aren’t repaid which lowers the value of the debt (savings for whoever owns the debt).
It doesn’t matter if the money was created through fractional reserve banking.
Plus higher levels of consumption, spending and investment are good to improve our standards of living.
Cash savings as a store of wealth sucks as it should be. You should rightly be required to do some work and purchase assets that do store value.
Economics is an evolving field of study. And I believe that economists understand a lot more today that then did a few decades back.
Back a few decades ago, only the “first world” practiced good economics. The “second/communist world” was managed through crazy 5-year plans. And the “third world” was dictatorships by uneducated strongmen/revolutionaries who had just come out of jungle.
Now, the whole world is becoming integrated in a worldwide economy.
spdrun
February 28, 2015 @ 3:30 PM
And that’s where we disagree.
And that’s where we disagree. Humans shouldn’t be required to work for work’s sake. A truly evolved economy would follow Keynes’ prediction of a 15 hour work week.
FlyerInHi
February 28, 2015 @ 6:19 PM
I don’t think we disagree on
I don’t think we disagree on economics. Maybe we disagree on happiness. I just assume that more economic goods and services such as massages and vacations equal more aggregate happiness.
Free stuff such as walking around don’t count because that what unemployed people do which don’t contribute to the economy. Unemployed Italians walk around Rome practicing thievery. But a paid trip to Rome is great for the world economy.
There is more money now and more savings/debt sloshing around the world. A lot of wealth was created when the Second and Third worlds joined the global economy, esentilaly since the 1990s. With lots of savings around low rates are the new normal.
Want to earn more on your savings? Don’t hold cash. Do something with it. I think economists would agree that’s the way it should be.
spdrun
February 28, 2015 @ 7:05 PM
Nothing wrong with just
Nothing wrong with just walking around — it’s healthy. I try to walk at least 6 miles a day. Personally, I think that a lot of the US’s woes would be solved if people took the time to walk one or two hours out of the day.
Not every activity that promotes human happiness and health needs to involve the exchange of money.
It might even render a few doctors, personal trainers, and liposuction specialists unemployed, but if so, good riddance. On the other hand, sales of comfy walking shoes should go through the roof!
scaredyclassic
February 28, 2015 @ 7:40 PM
All of man’s unhappiness
All of man’s unhappiness stems from his inability to sit quietly alone in a room.
Or go for a simple walk.
NotCranky
February 28, 2015 @ 8:17 PM
I walked 9 miles yesterday
I walked 9 miles yesterday and didn’t steal anything. Of course , I wasn’t in Rome.
I like your lifestyle attitudes SPDRUN, a lot of really important things wouldn’t get done if everybody lived by them though. It truly takes all kinds. A lot of the economy is driven by war machines , toxic shit, and conning the “consumer”, bullying the little guy, and more, more, more, types like, Brian. it’s good that some people refuse to get real into those things. We need honest people who sometimes refuse to play. They , we , are an important part of nature’s checks and balances.
spdrun
February 28, 2015 @ 8:24 PM
I’m going to jump to Brian’s
I’m going to jump to Brian’s defense here and say that while cynical, I don’t think he’s a bad type.
Maybe he was thinking of the Romani (not so much from Rome), which have a reputation for certain activities?
FlyerInHi
February 28, 2015 @ 9:11 PM
spdrun wrote:
Maybe he was
[quote=spdrun]
Maybe he was thinking of the Romani (not so much from Rome), which have a reputation for certain activities?[/quote]
Italy has always been known for pickpockets.
Maybe it’s worse now with freedom of movement in Europe so the Romani have come to various capitals. I don’t blame them because they don’t have economic opportunities (read money). Too much idle time combined with desires for consumer goods is a really bad situation.
CA renter
March 4, 2015 @ 12:12 AM
scaredyclassic wrote:All of
[quote=scaredyclassic]All of man’s unhappiness stems from his inability to sit quietly alone in a room.
Or go for a simple walk.[/quote]
And be content with what he already has.
The #1 way to guarantee unhappiness is to always wish for more than what you already have. There is a lot to be said for low expectations and simple desires.
(I know you already know this, scaredy; just chiming in to back it up!)
FlyerInHi
February 28, 2015 @ 9:12 PM
People say they want the
People say they want the simple pleasures of life. But when money/goods are in short supply, all hell breaks loose.
Walking is not at odds with good economics and capitalism: New York and London.
But another example: Hong Kong. People over there walk miles and miles everyday, but they are busy and have places to go. When I last visited, I did not see any free public or private bench for resting (except at the park). There are acres of malls and shops to through. But want to rest? You gotta pay! (American malls have benches everywhere).
40 years ago, HK was a Third World place producing cheap toys. Now, one of the wealthiest on earth, on par with NYC, and always ranked near the top on OECD reports. And frequently declared by Cato as a example of good economics, with the highest degree of economic freedom.
http://en.wikipedia.org/wiki/Economy_of_Hong_Kong
CA renter
March 4, 2015 @ 12:17 AM
FlyerInHi wrote:People say
[quote=FlyerInHi]People say they want the simple pleasures of life. But when money/goods are in short supply, all hell breaks loose.
Walking is not at odds with good economics and capitalism: New York and London.
But another example: Hong Kong. People over there walk miles and miles everyday, but they are busy and have places to go. When I last visited, I did not see any free public or private bench for resting (except at the park). There are acres of malls and shops to through. But want to rest? You gotta pay! (American malls have benches everywhere).
40 years ago, HK was a Third World place producing cheap toys. Now, one of the wealthiest on earth, on par with NYC, and always ranked near the top on OECD reports. And frequently declared by Cato as a example of good economics, with the highest degree of economic freedom.
http://en.wikipedia.org/wiki/Economy_of_Hong_Kong%5B/quote%5D
If people feel safe and secure, you’d be surprised how content they can be with relatively little. I think the tendency to hoard, including the impulse to constantly shop for new things, is due to a feeling of vulnerability.
It’s true that we need those ADHD, Type A folks to really grow the economy, but one can also grow the economy to the point of extinction if we use up resources in an unsustainable manner, or if we create such inequality/oppression that non-stop wars become inevitable.
We need to find a sustainable middle ground, IMHO.
Jazzman
March 4, 2015 @ 11:30 PM
FlyerInHi wrote:
Want to earn
[quote=FlyerInHi]
Want to earn more on your savings? Don’t hold cash. Do something with it. I think economists would agree that’s the way it should be.[/quote]
That is central bank speak for invest is risky assets as a rising equity market is good for the economy β¦or so Ayn Rand disciples thought. What it means is the economy is in dire straits and is the equivalent of a financial ‘draft’. A monetary Vietnam if you will.
Jazzman
March 4, 2015 @ 11:47 PM
FlyerInHi wrote:Someone owns
[quote=FlyerInHi]Someone owns the debt that someone else incurs.
Remember your college accounting class?
Plus higher levels of consumption, spending and investment are good to improve our standards of living.
Cash savings as a store of wealth sucks as it should be. You should rightly be required to do some work and purchase assets that do store value.
[/quote]
Consumption is not what used to drive economies. A trade surplus was the goal. Think where it ends with finite resources. If Chinese consumers have what US consumers have, we would very quickly run out of natural resources. Make no mistake, they want it. Now add in India.
Cash savings were always put to use. It was how banks lent money and enabled home ownership. A debt dependent system is a zero sum game. Ownership is substituted for debt enslavement. It drives up the real cost of living. Look at house prices and education.
FlyerInHi
March 5, 2015 @ 1:04 PM
Absolutely, everyone in China
Absolutely, everyone in China and India can enjoy a high standard of living. The future won’t be what we have now…. lifestyles evolve.
debt is savings. you cannot prove otherwise. the only problem is that during recessions, debts go unpaid, so savings lose value, thereby resulting in a contraction in spending.
Also, some accounting standards are unhelpful, requiring markdown of debt assets, even though default has not yet occurred.
Jazzman
March 6, 2015 @ 10:02 PM
Ultimately, it will depend on
Ultimately, it will depend on your definition of ‘savings’. Borrowed money is purchasing power, but that is where the similarity ends. Doing the same thing doesn’t mean they are same the thing. Savings guarantee certain rights. Debt reverses those rights.
FlyerInHi
March 8, 2015 @ 3:27 PM
Jazzman wrote:Ultimately, it
[quote=Jazzman]Ultimately, it will depend on your definition of ‘savings’. Borrowed money is purchasing power, but that is where the similarity ends. Doing the same thing doesn’t mean they are same the thing. Savings guarantee certain rights. Debt reverses those rights.[/quote]
Yes for your own personal well being….
But in the economy, your savings are lent out to other people. They borrow because their have economic uses. Good.
If they default, the value of your savings go down. That might cause you psychological pain thus prompting you to cut back on your own spending. Bad.
So debts are savings. The more of both, the greater the size of the economy.
spdrun
March 8, 2015 @ 3:34 PM
I’m not convinced that an
I’m not convinced that an infinitely high level of spending on Far East made crap that people don’t really need is good for anyone.
FlyerInHi
March 8, 2015 @ 4:19 PM
Incorporate the Far East into
Incorporate the Far East into the interlinked world economy and all is good.
More debts, more savings, larger economy, more prosperity in the aggregate. I would argue more aggregate happiness also.
svelte
March 6, 2015 @ 11:23 PM
I’ve got realtor friends in
I’ve got realtor friends in San Diego and they say the traffic through model homes and tour requests through other homes is off the hook right now.
Multiple offers on every offer they write.
That can’t help do anything but raise prices.
Can’t speak for OC, but I doubt it’s much different.
spdrun
March 6, 2015 @ 11:33 PM
What kind of homes are they
What kind of homes are they selling. This doesn’t appear true for the market as a whole…
http://www.utsandiego.com/news/2015/feb/17/dataquick-january-realestate-home-sales-mortgage/
svelte
March 6, 2015 @ 11:45 PM
spdrun wrote:What kind of
[quote=spdrun]What kind of homes are they selling. This doesn’t appear true for the market as a whole…
http://www.utsandiego.com/news/2015/feb/17/dataquick-january-realestate-home-sales-mortgage/%5B/quote%5D
Those are lagging indicators.
Check back on what is written two months from now…
spdrun
March 7, 2015 @ 12:16 AM
It’s also spring, we’ll
It’s also spring, we’ll see.
Indicators (and markets) have been all over the map since October 2014.
fun4vnay2
March 7, 2015 @ 7:30 AM
If properties have multiple
If properties have multiple offers, it reminds me of the days of 2004/2005, at the top of the bubble.
Are we back to bubble territory ? The wages have not grown for sure..
svelte
March 7, 2015 @ 7:43 AM
Rising prices are also being
Rising prices are also being confirmed by Jim the Realtor:
http://www.bubbleinfo.com/2015/03/06/nsdcc-prices-improved/#comments
http://www.bubbleinfo.com/2015/03/04/verifying-comps/
fun4vnay2
March 7, 2015 @ 7:54 AM
I remember a realtor
I remember a realtor predicting a 21% increase for SD for 2014 in a news article.
The prices may be going up. Personally, I think the SD home prices are over the roof for working families. The wages have not grown fast enough.
My gut feeling is: a correction is coming. No one knows when.
People may argue with “this time is different”. I was told similar story in 2006 when I was looking for a house. Everyone told me that unless you buy now, you’d be priced out for ever.
They had facts in their side about SD home prices never going down: awesome weather, zoning restriction, good job market blah blah blah..
But in 2007/7 looking at the state of the housing market, I decided to wait for the madness to cool down and finally bought in 2011.
Let’s see. Uncertainty is another name for fun
svelte
March 7, 2015 @ 8:12 AM
Absolutely prices will go up
Absolutely prices will go up and down.
I don’t think anyone on here thinks otherwise.
Right now, I do believe they are going up. I think that’ll be the case through 2015 since the job market is improving.
There will be another downturn for sure, but I doubt that’ll happen for another year or two. I’m certainly not gonna go “all in” on that prediction, but that’s what my gut tells me.
I am predicting home price increases in San Diego on the order of 5% for 2015…maybe a little lower but I think a little higher is more likely than lower. I doubt they’ll top 10% though.
spdrun
March 7, 2015 @ 8:17 AM
#1: Is the job market
#1: Is the job market improving? Feb jobs report was a blowout, but unemployment claims have started holding above 300k/wk again.
#2: Look at the North County report that you posted. DOM is up to 68 so far this quarter, which doesn’t indicate such a frenetic sales pace. Could the rise in the median be reflective of the market being distorted in favor of higher-end homes. Either owners of more ordinary homes aren’t selling them, or buyers aren’t biting at them.
svelte
March 7, 2015 @ 8:43 AM
Listen, buddy, you appear to
Listen, buddy, you appear to want to sit there and take pot-shots at everything I say.
I’ve made my prediction, but reading back through this thread I notice you have said nary a word as to what yours is.
So it’s time to put up or shut up: what is your prediction for OC? What is your prediction for SD?
At the end of 2015, will those markets be:
– down 10%
– down 5%
– even
– up 5%
– up 10%
Time to pay the piper, dude.
We can compare who is closer to right come Jan 2016.
[quote=spdrun]#1: Is the job market improving? Feb jobs report was a blowout, but unemployment claims have started holding above 300k/wk again.
#2: Look at the North County report that you posted. DOM is up to 68 so far this quarter, which doesn’t indicate such a frenetic sales pace. Could the rise in the median be reflective of the market being distorted in favor of higher-end homes. Either owners of more ordinary homes aren’t selling them, or buyers aren’t biting at them.[/quote]
spdrun
March 7, 2015 @ 8:53 AM
Even — +- 3% for both. This
Even — +- 3% for both. This doesn’t mean the mix of sales can’t change, but I’m betting that the value of given homes won’t change that much from Q4 2014 to Q4 2015.
Not giving you a hard time, but I did find the rise in DOM to be interesting.
svelte
March 7, 2015 @ 8:53 AM
spdrun wrote:Even — +-
[quote=spdrun]Even — +- 3%.[/quote]
OK you’ve taken even +/- 3%
I’ll take +5% +/- 3%
See you in Jan! π
spdrun
March 7, 2015 @ 8:56 AM
Cheers – may the best win! π
Cheers – may the best win! π
scaredyclassic
March 7, 2015 @ 10:24 AM
Doesn’t it seem as if things
Doesn’t it seem as if things would be clearer in the future with more time passed more informatuin?
If anything things become increasingly less clear.
Could be macular degeneration
FlyerInHi
March 7, 2015 @ 6:45 PM
spdrun wrote:Cheers – may the
[quote=spdrun]Cheers – may the best win! :)[/quote]
I’m with svelte. The market is getting sizzling hot because of lack of inventory.
The Homepath email updates I get show increase in prices.
spdrun
March 7, 2015 @ 7:28 PM
Less inventory, but
Less inventory, but properties sitting for longer, at least per the stats posted for San Diego. And on Friday, 30-year rates shot up to summer 2014’s levels (~4 to 4.1% depending on source), in time for spring.
Question remains whether it will spur more people to buy before rates rise further, or cause people to sit and wait. The rise in 2013 had the latter effect.
What areas are you getting Homepath updates for? San Diego or Vegas?
There’s really nothing on Homepath in CA that would interest me. More locally to me, I can see that NJ has 3x the amount of properties below $150k as this time last year. Delaware County, PA (near Philly) is about steady. Not selling really quickly either. The rise in foreclosures locally, both at the sheriff auction end and the REO end in the last year has been pretty shocking.
The only inventory reductions I’m seeing are within NYC itself, but nowhere as dramatic as San Diego from 2012 till today.
zk
March 8, 2015 @ 8:12 AM
I’m looking on Redfin,
I’m looking on Redfin, Zillow, and a couple other similar sites, and I don’t see a single house for sale in zip 92121 (Sorrento Valley). Not one single-family home on the market in that zip code. There aren’t tons of homes there to start with, but there are usually a number on the market. The last couple months it’s dwindled down to zero.
FlyerInHi
March 8, 2015 @ 5:29 PM
spdrun wrote:
What areas are
[quote=spdrun]
What areas are you getting Homepath updates for? San Diego or Vegas?
[/quote]
Vegas is one example. Nothing under $100k. There used to be a lot.
I don’t see price drops unless interest rates go up.
spdrun
March 8, 2015 @ 5:34 PM
I’m seeing some listings
I’m seeing some listings coming on line in Vegas under $100k on the site itself. What ZIP codes are good or bad in your book?
Rates essentially hit last summer’s levels this part Friday. Bond rout.
svelte
January 18, 2016 @ 9:57 PM
svelte wrote:
I am predicting
[quote=svelte]
I am predicting home price increases in San Diego on the order of 5% for 2015…maybe a little lower but I think a little higher is more likely than lower. I doubt they’ll top 10% though.[/quote]
[quote=svelte][quote=spdrun]Even — +- 3%.[/quote]
OK you’ve taken even +/- 3%
I’ll take +5% +/- 3%
See you in Jan! :-)[/quote]
Results are in!
http://piggington.com/december_2015_housing_data_rodeo
Prices up 7% for the year!
Bet spdrun is glad we didn’t bet any cash!
spdrun
January 18, 2016 @ 10:03 PM
It’s December 2016 now? Who
It’s December 2016 now? Who knew — must have slept 11 months.
Also, the data are for SD not Orange County.
svelte
January 19, 2016 @ 7:25 AM
spdrun wrote:It’s December
[quote=spdrun]It’s December 2016 now? Who knew — must have slept 11 months.
Also, the data are for SD not Orange County.[/quote]
I guess you don’t remember the conversation. I’ll refresh your memory:
[quote=svelte]Listen, buddy, you appear to want to sit there and take pot-shots at everything I say.
I’ve made my prediction, but reading back through this thread I notice you have said nary a word as to what yours is.
So it’s time to put up or shut up: what is your prediction for OC? What is your prediction for SD?
At the end of 2015, will those markets be:
– down 10%
– down 5%
– even
– up 5%
– up 10%
Time to pay the piper, dude.
We can compare who is closer to right come Jan 2016.
[/quote]
[quote=spdrun]Even — +- 3% for both. This doesn’t mean the mix of sales can’t change, but I’m betting that the value of given homes won’t change that much from Q4 2014 to Q4 2015.
Not giving you a hard time, but I did find the rise in DOM to be interesting.[/quote]
svelte
March 9, 2015 @ 6:50 AM
spdrun wrote:
#2: Look at the
[quote=spdrun]
#2: Look at the North County report that you posted. DOM is up to 68 so far this quarter, which doesn’t indicate such a frenetic sales pace. [/quote]
From the area in North County that I’ve been watching, I would believe DOM is rising.
Here’s why. Not a lot has been coming on the market, but the homes that do come on with a reasonable price sell relatively quickly – 1 to 2 weeks.
But there are quite a few overpriced or completely rundown homes that have been listed for a looong time. They aren’t selling now and likely won’t be selling due to unrealistic pricing.
That’s probably throwing the DOM stat to the high side. And why trying to figure out the market simply by watching stats is full of peril. Need to do deep dives into individual listings to see what is really happening.
spdrun
March 9, 2015 @ 7:45 AM
I think Jim’s stats are for
I think Jim’s stats are for sold properties, not properties that are unsold or are pulled from market.
FlyerInHi
March 9, 2015 @ 2:25 PM
Not different this time. But
Not different this time. But we have low rates which make mortgages cheaper to carry. And maybe 15 to 20 years to get back to overall peak nominal prices sounds about right to me.
spdrun
March 9, 2015 @ 8:04 PM
No reason why the “getting
No reason why the “getting back” has to be in a straight line.
FlyerInHi
March 9, 2015 @ 10:31 PM
It’s not in a straight line.
It’s not in a straight line. The Fed really helped it along. Different regions went at different rates. And different neighborhoods moved differently.
But we will get back to former nominal peak. Over about a couple decades, with inflation… Not too bad. Talking very generally about national housing maket here.
spdrun
March 9, 2015 @ 10:47 PM
It will likely have ups and
It will likely have ups and downs over the next 10-20 years. Unless it’s “different this time.” *snarf*
CA renter
March 9, 2015 @ 11:19 PM
FlyerInHi wrote:It’s not in a
[quote=FlyerInHi]It’s not in a straight line. The Fed really helped it along. Different regions went at different rates. And different neighborhoods moved differently.
But we will get back to former nominal peak. Over about a couple decades, with inflation… Not too bad. Talking very generally about national housing maket here.[/quote]
Prices are above nominal peak prices in our neighborhood. π
We know a couple of people who’ve sold in the last few months. The market is sizzling hot — multiple offers, with many cash offers. These are probably upper-middle/lower-upper tier homes.
FlyerInHi
March 10, 2015 @ 1:07 PM
CAr, do you still believe in
CAr, do you still believe in deflation?
CA renter
March 10, 2015 @ 4:32 PM
FlyerInHi wrote:CAr, do you
[quote=FlyerInHi]CAr, do you still believe in deflation?[/quote]
Absolutely. Deflation is, and has been, the major undercurrent since ~2007 (some, including myself, would argue that it goes back quite a bit further than that). All of the central bank/govt manipulation that’s been going on around the world since then has been used specifically to fight deflation. And the fact that it’s 100% manipulated is why we’re getting all of the asset bubbles; it’s the gross misallocation of resources. It’s why the top 1% have gotten ~95% of the benefit of this growth. It’s why capital expenditures are down vs. speculative bets. It’s why companies are borrowing money to buy back shares instead of spending money on growing/investing in their companies.
svelte
March 8, 2015 @ 9:51 AM
Inventory does seem light.
A
Inventory does seem light.
A realtor told me a client wanted to tour 12 homes this weekend. Within 24 hours of him receiving the list from the client 4 of the 12 went pending. 33%.
Not saying this pace will go on all year…but it might!
spdrun
March 8, 2015 @ 10:15 AM
Market could also be
Market could also be splitting, with high-end homes selling quickly, and low-end homes selling at average to slightly slower pace.
That actually happened in NYC. For all the talk about expensive condos being sold to Russians with f-u money, the price of the average studio or 1-bedroom below a million in a good area hasn’t changed dramatically.
Some areas gentrified in the past few years. But take Fort Greene, a “nice” area of Brooklyn that’s hasn’t changed much over 10 years. You always had a handful of 1/2 bedroom apartments (some had an alcove converted to a second bedroom) selling in the high $300k range. There are still a handful for sale at this price range if 5-10% more expensive than before.
Jazzman
March 8, 2015 @ 1:14 PM
The number of homes for sale
The number of homes for sale in OC has shot up 34% from December 2014 trough, which is considerably faster than the previous year. Levels are still about half what they were at the bubble peak. It is only back to September 2014 levels, but will probably shoot past at that rate. Sales (condos/SFHs) have dropped nearly 15% from 2013 to 2014 peaks. The February troughs were apart by 5%. Sold $/sqft has been flat so far this year. 2013 saw a 19% increase in price per sq ft whereas 2014 saw an 8% increase.
Overall inventory has increased, sales are down, and price increases muted. The combination of the former two will keep downward pressure on the latter.
spdrun
March 8, 2015 @ 3:26 PM
Does anyone have data as to
Does anyone have data as to what’s selling and what’s not, as far as ZIP codes or price ranges?
fun4vnay2
March 10, 2015 @ 12:01 PM
I was talking to a realtor
I was talking to a realtor and he warned me that buy now otherwise I’d be price out for ever.
Per him, golden period of CA just started and lot of manufacturing jobs would be here.. π
All the tell-tale signs of impending bubble?. I heard similar stories in 2006 as well.
FlyerInHi
March 10, 2015 @ 1:38 PM
rockingtime wrote:I was
[quote=rockingtime]I was talking to a realtor and he warned me that buy now otherwise I’d be price out for ever.
Per him, golden period of CA just started and lot of manufacturing jobs would be here.. π
All the tell-tale signs of impending bubble?. I heard similar stories in 2006 as well.[/quote]
I don’t see a bubble.
The lack of inventory is contributing to “this bubble”, but when building activity picks up again, price increases will level off and the people who waited might get better houses (of course, depending on the location they prefer).
Also “this bubble” is only in certain areas, more reminiscent of the regional bubbles of the late 80s. Nothing akin to the Bush Era bubble.
fun4vnay2
March 10, 2015 @ 1:50 PM
Thanks FHI,
So this time is
Thanks FHI,
So this time is indeed different.
CA renter
March 10, 2015 @ 4:32 PM
rockingtime wrote:Thanks
[quote=rockingtime]Thanks FHI,
So this time is indeed different.[/quote]
Touche!
The-Shoveler
March 10, 2015 @ 4:47 PM
The two things I see
The two things I see different than the 2006-8 housing bubble.
1) There are not the Absolutely crazy (no-Doc, No-Down) $1500.00 dollars moves you into a new home loans happening.
(seriously there were huge billboards in 2005-6 all up and down the I15 with that message).
2)It’s more a coastal Regional thing right now.
That said I don’t think there is a lot of upside in the coastal area’s IMO (but I think I said that last year as well).
CA renter
March 10, 2015 @ 6:00 PM
The-Shoveler wrote:The two
[quote=The-Shoveler]The two things I see different than the 2006-8 housing bubble.
1) There are not the Absolutely crazy (no-Doc, No-Down) $1500.00 dollars moves you into a new home loans happening.
(seriously there were huge billboards in 2005-6 all up and down the I15 with that message).
2)It’s more a coastal Regional thing right now.
That said I don’t think there is a lot of upside in the coastal area’s IMO (but I think I said that last year as well).[/quote]
But we’re hearing similar stories in the heartland, as well. While the coastal communities (both east and west coast) seem to be seeing very hot housing markets, other areas are seeing strong markets, too. Note Vegas, Phoenix, areas where the oil & gas industry were thriving (we’ll see what happens now, with gas down). This is going on overseas, too!
http://www.ocregister.com/articles/texas-647038-energy-hilts.html
http://www.forbes.com/sites/anaswanson/2015/01/30/what-do-falling-oil-prices-mean-for-real-estate-markets/
We don’t see the same kinds of NINJA mortgages this time, but that doesn’t mean that the leverage being used outside of the mortgage market is any healthier today than the mortgage market was in 2008. A lot of those “cash” purchases — which have made up about 25-50% of the purchases in many areas — are leveraged in other ways. Speculators/investors have been leveraging up and moving further out on the risk curve in their search for yield due to the central banks’ manipulations around the world. Some of these speculators are very vulnerable, IMHO. They might be even more vulnerable than the NINJA mortgage borrowers of the last housing bubble.
FlyerInHi
March 10, 2015 @ 7:34 PM
CAr, I’m seriously wondering
CAr, I’m seriously wondering how your deflationary scenario would play out. I want to be prepared if it comes to pass.
We have asset and commodities inflation now (less so in commodities these days), but how would that suddenly reverse itself?
CA renter
March 11, 2015 @ 1:06 AM
FlyerInHi wrote:CAr, I’m
[quote=FlyerInHi]CAr, I’m seriously wondering how your deflationary scenario would play out. I want to be prepared if it comes to pass.
We have asset and commodities inflation now (less so in commodities these days), but how would that suddenly reverse itself?[/quote]
Deleveraging. Think of margin calls (of sorts) on all types of accounts if interest rates go up and/or asset prices start to fall because fewer buyers step up to the plate who are willing to pay the same or more than the most recent buyers. Many borrowers are able to afford their debts because interest rates are so low and, if they are using collateralized loans, asset prices are high enough to enable them to borrow far more than they would be able to if rates and asset prices were normalized (just like the “homeowers” who would add to their mortgage debt position every year by HELOCing or refinancing cash out of their houses every year during the previous bubble).
If you just look at government financing alone, if rates went up levels that have been the norm for the past say 50 years, many (most?) public agencies would be broke in a very short amount of time because most of their revenues would be redirected toward paying interest. Many borrowers are in this position, not just public agencies.
“Only when the tide goes out do you discover who’s been swimming naked.”
Warren Buffett
Read more at http://www.brainyquote.com/quotes/quotes/w/warrenbuff383933.html#l1WHZemDzQRrIDSq.99
FlyerInHi
March 11, 2015 @ 11:06 AM
CAr, I’m trying to see that
CAr, I’m trying to see that that scenario might work out in reality. You’ve said that deflation would wipe out the gains since 2008. I can’t see it happen, but you never know….
I guess I should read this book:
The Next Economic Disaster: Why It’s Coming and How to Avoid It Hardcover β July 15, 2014
by Richard Vague
http://www.amazon.com/gp/product/0812247043/ref=ox_sc_sfl_title_1?ie=UTF8&psc=1&smid=ATVPDKIKX0DER
CA renter
March 11, 2015 @ 1:47 PM
FlyerInHi wrote:CAr, I’m
[quote=FlyerInHi]CAr, I’m trying to see that that scenario might work out in reality. You’ve said that deflation would wipe out the gains since 2008. I can’t see it happen, but you never know….
I guess I should read this book:
The Next Economic Disaster: Why It’s Coming and How to Avoid It Hardcover β July 15, 2014
by Richard Vague
http://www.amazon.com/gp/product/0812247043/ref=ox_sc_sfl_title_1?ie=UTF8&psc=1&smid=ATVPDKIKX0DER%5B/quote%5D
That looks like an interesting book, Brian. I agree that public debt isn’t as much of an issue as private debt, though both are too high at this point, IMHO. Everything is interconnected, so a problem in one area will likely cause problems in other areas, like what happened in 2008. The next time, though, the Fed/govt won’t have nearly as much ammunition. We should have allowed the internet/housing bubbles to collapse completely, and then followed a much more prudent path forward from there. I think that the Fed/govt responses to the bubbles were completely irresponsible. It’s as though they want to make things worse and worse with each new crisis that they create.
livinincali
March 12, 2015 @ 9:00 AM
FlyerInHi wrote:CAr, I’m
[quote=FlyerInHi]CAr, I’m trying to see that that scenario might work out in reality. You’ve said that deflation would wipe out the gains since 2008. I can’t see it happen, but you never know….
I guess I should read this book:
The Next Economic Disaster: Why It’s Coming and How to Avoid It Hardcover β July 15, 2014
by Richard Vague
http://www.amazon.com/gp/product/0812247043/ref=ox_sc_sfl_title_1?ie=UTF8&psc=1&smid=ATVPDKIKX0DER%5B/quote%5D
I wouldn’t worry about it too much. You won’t see the next bubble popping until well after it’s too late to do anything about it.
Coronita
January 19, 2016 @ 5:44 AM
Reading all the gloom and
Reading all the gloom and doom comments about housing on this thread gave me a good laugh.
Warning: subscribing to the doomsayer mentality can be hazardous to one’s financial health. Almost as hazardous as being a permabull.
But hey, eventually doom and gloom will be correct. House prices will correct, one of these days. Just like you can “accurately” predict that it will be 2pm sometime in the future.