Getting that 2006 feeling again …….

[sjk]

……this Will end very badly IMO…..

http://milliondollarshack.com/

[Anonymous]

Interesting video.

The part about investment properties going unoccupied is pretty strong indicator of a bubble.

[spdrun]

Or very well, if you’re looking to pick up some cheap property.

[phaster]

anyone else try and save time by watching videos played at faster speed?

for example instead of watching the video on

http://milliondollarshack.com/

found the same video on YouTube

saved the mp4 video to my hard disk and used the VLC media player

http://www.videolan.org/vlc/index.html

to watch the video at 1.84x

WRT the video, huh rent going up 300% to $8000 per month and security deposit going up to $12,500 and “ghost houses” yup seems to be more evidence of global bubble in RE

[The-Shoveler]

Meh,

Maybe closer to a 1989 feeling, we are no where near the situation of 2006.

You need crazy loan officers OKing every loan to anyone with a pulse, then you got to let that run a few years to get to 2006.

[Jazzman]

This could be the trigger for the next crash. I recently saw a “bubble” post that attracted +600 posts so the bubble noise is getting louder. When prices relative to perceived value get so seriously out of whack, it trumps all stats. It will be interesting to see what tips the apple cart, and how the crash plays out. For example, how will lenders be effected this time, and will there be bailouts again. It will also be interesting to see whether a crash follows in other high end markets, or the RE market as a whole. This is all the evidence anyone needs that prices are so ‘stupidly’ high that you have to be a complete moron to be paying them. It, of course, plays into the hands of the vultures who largely hope and prey for the big event. This could also be good for buyers who show patience and wait.

[ocrenter]

[quote=The-Shoveler]Meh,

Maybe closer to a 1989 feeling, we are no where near the situation of 2006.

You need crazy loan officers OKing every loan to anyone with a pulse, then you got to let that run a few years to get to 2006.[/quote]

what if the crazy loan officers are in China?

[The-Shoveler]

Here is what Americans DON’T get about China,

If a housing bubble gets inconveniently in there way,
They will just plow them under and start again.

(or just give them to the workers, start new loans and hide the inconvenient numbers)

[sjk]

The irresponsible loan party this time around is the federal reserve.. They are great enablers of financial bubbles!The response to the previous housing crisis by the “FRB”was designed to save a corrupt and predatory banking system of which they oversee and are responsible for…..

There are gross inbalances in the financial system and the housing market is one of the chief areas of its manifestations……….

Regards,

[Rich Toscano]

As I’ve grown fond of pointing out, the current situation in San Diego bears little resemblance to 2006:

However, I don’t know that the same can be said for Silicon Valley and its environs. A lot of the stuff going on up there seems blatantly unsustainable, and not just the housing market.

It seems to me that an awful lot of what’s going on in SV resembles a bubble, or at least (if a less controversial term is desired), is economically unsustainable. What’s going on in the venture capital space seems particularly wacky. Hell, there are not one, but TWO tv comedies about trying to get venture funding in/near SV! (Silicon Valley, which btw is comic genius, and Betas).

Of course that’s just anecdotal, but there is an awful lot of bubble-like behavior taking place as far as I can tell. I read an article recently about some startup shooting money onto the street at some conference. The shockingly high price of housing in the area also fits into the bubble narrative quite well.

I wouldn’t be surprised to see a serious retrenchment in many aspects of the SV economy in the years ahead.

[no_such_reality]

I just realized your chart is price versus equally waited rent/income. Rent seems just as crazy as housing, how’s the chart look versus just income?

I agree today is much more rational than 2006, just with the incredibly low interest rates, I’d expect a higher multiple for lower income.

[FlyerInHi]

[quote=The-Shoveler]Meh,

Maybe closer to a 1989 feeling, we are no where near the situation of 2006.

You need crazy loan officers OKing every loan to anyone with a pulse, then you got to let that run a few years to get to 2006.[/quote]

Rich’s chart shows above 1989. Sounds about right with the tech we now have in SD. Back then, we had regional bubbles and I think we have that now.

[Rich Toscano]

[quote=no_such_reality]I just realized your chart is price versus equally waited rent/income. Rent seems just as crazy as housing, how’s the chart look versus just income?

I agree today is much more rational than 2006, just with the incredibly low interest rates, I’d expect a higher multiple for lower income.[/quote]

It’s about the same. That’s why I started combining them, they were basically saying the same thing…

[no_such_reality]

[quote=Rich Toscano][quote=no_such_reality]I just realized your chart is price versus equally waited rent/income. Rent seems just as crazy as housing, how’s the chart look versus just income?

I agree today is much more rational than 2006, just with the incredibly low interest rates, I’d expect a higher multiple for lower income.[/quote]

It’s about the same. That’s why I started combining them, they were basically saying the same thing…[/quote]

Thanks. A case of my gut and anecdotal observation being completely off. I’d have never guessed that rents over the last eight years have been essentially flat (in the macro measure). http://www.deptofnumbers.com/rent/california/san-diego/

Income is down close to 10% though still.

If I look at Case-Shiller for SD, I see July 2006 at 249. For August 2015, 215 If I use per capita income from the above site I get a ratio 7.37 for peak and 6.62 today. Checking the 2009 low spot, I get a Case Shiller at 144 and income at about equal to today for a ratio of 4.47. The 2012 looks shows CS around 149 with income around lower by about 10% compared to 2009. Giving a ratio of 4.95. The 2013 run up across median has CS ranging from 164 to 195. Income with about a 1% change. Giving the flat bar equiv around 5.45. Scaling the crossover by a 5 factor puts the flat line around 110, the peak around 147 and current around 132. the 2009 low around 99. Massive napkin calcs involved.

Seems when I run the numbers from http://us.spindices.com/indices/real-estate/sp-case-shiller-ca-san-diego-home-price-index and http://www.deptofnumbers.com/income/california/san-diego/
Things seem a little more bubble (at a quicky high level look).

Im I getting something crossed between real and nominal or missing some other scaling multiple?

[Rich Toscano]

Yeah, the dept of numbers thing looks like it’s using real rents, whereas Case Shiller is nominal, so you can’t compare them. For rents I use the BLS numbers, which you can find for SD by poking around here:

http://www.bls.gov/cpi/

(I use rent of primary residence). This isn’t completely up to date so I use Zillow stats to fill in the blank for the most recent period. But I use CPI rent as the main thing.

[Author]

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