Not an expert so take my opinion with a large grain of salt.

IMO we are still way way underbuilt so this can go on until that is resolved (seems that could take a few more years IMO).

Plus any crash would be not even close to anything like 2007-10 crash unless two things happen IMO.

1) Builders way over build (not as likley this time IMO).
2) Lenders go crazy like last time (also not likely this time but you never know LOL).

There is still a lot of stimulus sugar for housing being talked about (like 25K grants to first time home buyers) so that will just make it go up more IMO.

IMO only your mileage may vary.

Dude, he doesn’t even live here

[quote=spdrun]I don’t think it will crash, but it will normalize this summer, since people will be more comfortable listing their homes and having open houses if COVID is no longer a major issue. People will list to take advantage of higher prices.[/quote]

Certainly it can’t stay on this trajectory forever. When Covid and it’s associated policy changes peter out the market will certainly cool off.

But as discussed ad nauseum in other threads, a major market correction or crash is unlikely to happen unless the Fed raises interest rates and takes away the proverbial punch bowl.

Unfortunately, the Fed induced “wealth effect” is basically the entire economy so they know they can’t pull the plug. Just like in the 2000s the housing market basically was the economy. They let it crash and it nearly took down the entire financial system. This time the bubble is much bigger and broader so I don’t really think the Fed cares about inflation regardless of their so called “mandate”.

Last year Powell said he wasn’t even thinking about thinking about inflation. Now that inflation is clearly visible to everyone, he is calling it “transitory”. So not holding my breath.

Meanwhile

https://www.bloomberg.com/news/articles/2021-05-21/mega-landlords-are-snapping-up-zillow-homes-before-the-public-can-see-them?sref=AtMgUiWa

The other day I got a call from a “buyer” asking me for a price on one I had bought a few months ago 92027 4BR 2400 SF. I threw out 950K partly to be ridiculous but partly as I think that is where the market will go in a year.

Sure enough, just down the street one is now listed at 990K (with a pool) and they are lining up to buy with 600 views in one day and 36 saves. Rule of thumb, every save on Zillow adds 1K above list.

Back in 2000 when I bought my first home, I thought about the theoretical possibility if the US went to Japanese interest rates of 1% or less.

I guess my point is, in a world with zero rates, US/So Cal and specifically San Diego real estate is a very appealing asset class. I’ve seen a few asset price collapse Texas in the 1980s, Russia in 1999. There will be a softening here, but not at all on the radar now.

Sellers can simply choose the highest offer even if it has a loan contingency.

I never got the whole “cash offer is king I’ll take that over the higher financed offer” thing.

If I get an offer that includes a bank statement showing the ability to easily put 25% down and a preapproval letter for the whole amount, I will take that over a cash offer 1% lower.

Maybe “cash offer” is being used as a short-hand for “very firm no-BS offer” and the buyers who complain about losing out to lower cash offers have shaky finances and picky contingencies.

I also have some solidarity with people who don’t have huge piles of cash, as long as they show me strong evidence they can get financing.

[quote=gzz]

Sellers can simply choose the highest offer even if it has a loan contingency.

I never got the whole “cash offer is king I’ll take that over the higher financed offer” thing.

If I get an offer that includes a bank statement showing the ability to easily put 25% down and a preapproval letter for the whole amount, I will take that over a cash offer 1% lower.

Maybe “cash offer” is being used as a short-hand for “very firm no-BS offer” and the buyers who complain about losing out to lower cash offers have shaky finances and picky contingencies.

I also have some solidarity with people who don’t have huge piles of cash, as long as they show me strong evidence they can get financing.[/quote]

In certain times, there was value for someone that can close quicker than someone who has a loan contigency. For example, if someone is selling to buy another place, the seller sometimes would rather choose a more “sure” thing IE someone like me who could remove all contingencies within 10-15 days, versus say 17-19 days + still have a loan/appraisal contingency because maybe part their funds used for selling their current place is needed for the new home because the longer someone takes to close, the greater the chances are for people to back out or get cold feet and then restart the process and find another buyer.

But these days, when there’s like a 20:1 or 30:1 buyer to house ratio, quick closing is much less important because chances are if the first buyer can’t perform, there’s probably 19-29+ other buyers that will gladly take their place. And who knows you might even be able to get even more money for it….
So sellers are more inclined (probably) to go with the highest offer, even if there’s a possibility that the buyer can’t perform.

And there’s no way I probably will beat these people getting a loan to try to buy their primary home..Because for me, there’s a point which I think this doesn’t make financial sense and can’t push myself further to buy. But for others who are buying this home as their primary, some aren’t thinking purely financially but looking at it as something they plan on living for a long time, and so it’s probably ok to spend more for home ownership. Me, I’m not as attached to that specific property, and just want any property that makes slightly sense. So in this market, I’ll probably lose close to 99% of the time…But that’s ok, because I just need that 1% win every so often so i can park my money somewhere in between a 0.1% CD and a overheated stock market….And i like rental properties when the target audience is for your seasoned professional, like a qualcomm engineer just starting out or someone similar who is more than well qualified to rent… The search continues…

The only way housing will tank is if something hits employment and the government doesn’t ease the pain by giving them cash.

That would force some homeowners into selling or foreclosure, but any of that happening is still awhile away. At least in SoCal. It will happen again at some point in the future but not this year.

The stock market, on the other hand. That’s a different story.