housing bubble?

[kev374]

I have been nothing but awed by the frenzy with which people are willing to stretch to buy. People are taking any kind of loan, 3.5% FHA down with 50% DTI, no problem they’re doing it with confidence. People are also readily settling for much less – $500,000 for a 1200 sqft home in a less than ideal neighborhood…no problem, they’re desperate to get in before prices go even higher.

Even though the market has slowed down, inventory is still incredibly slim, there are still way more buyers than homes available.

I thought it was a bubble but I now stand corrected. I think interest rates will remain close to 0 well into 2016 and people will switch to ARMs and interest only loans to afford even more expensive homes. They may compromise even more on their standards.

My guess is that prices may climb more 10-20% over the next few years. After that I don’t really know.

[FlyerInHi]

I think that in a more globalized world we are seeing a secular shift in people’s tolerance level toward higher cost of housing. Maybe that’s what it takes to live in a major metro.

Housing has always been cheap in America as a proportion of income. I know that in the rest of the world prices are higher.

[spdrun]

IMHO, there are only about a handful of metro ateas in the US that strongly correlate to the global market. Those are NYC, SF, DC, Miami, and maybe coastal LA County. Frenzy in SD may be slowing down. I just saw something that would have fetched a price in the $170-190k range even four months ago sell in the mid $130s. Good condition 1/1, too.

Not rental material (too good condition, so not enough upside) but still a deal I haven’t seen in the last 9-10 months.

[The-Shoveler]

Any town with a UC school in Socal is a global metro

even Riverside.

[spdrun]

Davis?
Merced?
Santa Barbara?

You’re dreaming. They’re about as tied to the global market as Ann Arbor, Charlottesville, or New Brunswick are.

Remember that residency in California is a requirement for in-state tuition. This does NOT mean residency in the city or county where the student’s chosen UC school is located.

[The-Shoveler]

I don’t think you have been looking much at the L.A. Market,

You would have to go there I think.

[spdrun]

Way too volatile and tied to the fortunes of the US property market as a whole to be considered part of the global market. Unless you’re speaking of specific, very desirable parts of the LA area.

[The-Shoveler]

Do a search on new and planned ranch 99 markets LOL.

[spdrun]

Large amounts of a given ethnic group don’t necessarily make a global market. I think the key is actually a MIXTURE of ethnic groups and international name recognition. The coastal and/or expensive parts of LA County have that. But ask the average person on the street in Bangkok or Berlin about Ontario or Riverside (I know, not LA County 🙂 ) and you’ll hear “River-what” or “that’s a lake in Canada…”

[The-Shoveler]

OK.
But it is known in at least one second and closing economy, they have bus tours even.

The really Rich do however focus on Irvine and Pasadena area.

The closest thing to coastal would be Irvine.

It’s more about the UC.

[CA renter]

[quote=spdrun]Large amounts of a given ethnic group don’t necessarily make a global market. I think the key is actually a MIXTURE of ethnic groups and international name recognition. The coastal and/or expensive parts of LA County have that. But ask the average person on the street in Bangkok or Berlin about Ontario or Riverside (I know, not LA County 🙂 ) and you’ll hear “River-what” or “that’s a lake in Canada…”[/quote]

Not sure how much time you’ve spent in L.A., but it is an international melting pot. That’s why my mom and all of her immigrant friends moved there, and that was back in the 40s and 50s. I grew up in L.A. and still go there on a regular basis, and it’s probably just second to NY as far as a “globalized market” is concerned. Americans of north/western European decent are the minority up there, now.

http://quickfacts.census.gov/qfd/states/06/06037.html

Keep in mind that the “white” category includes people from the Middle East and the Caucasus region, and there are very large Armenian, Persian and Israeli communities up there, among others. It’s more culturally diverse than the numbers seem to indicate.

————-

Aggregate diversity patterns mask striking contrasts among specific communities. Compare the
top 25 and bottom 25 metropolitan areas based on their
magnitudes of racial-ethnic diversity in 2010.
California dominates: two Bay Area metropolises—Vallejo-Fairfield (
E
= 89.3) and San Francisco-
Oakland-Fremont (85.3)—head the top 25 list (left half
of Table 3), followed by eight other California
metro areas. The traditional immigrant gateways
(Los Angeles-Long Beach-Santa Ana, New York-
Northern New Jersey-Long Island, Miami-Ft. La
uderdale-Pompano Beach, and Chicago-Naperville-
Joliet) make the top 25, but so do newer destina
tions (e.g., Washington DC-Alexandria-Arlington, Las
Vegas-Paradise, Atlanta-Sandy Springs-Marietta). Metro
areas in the top 25 tend to be large and heavily
concentrated in the West and South. All have
E
scores above 70.

http://www.s4.brown.edu/us2010/Data/Report/report08292012.pdf

[Sorry about the formatting. -CAR]

———

Interesting to note that the Bay Area is now #1. L.A. is #9.

Riverside is in the top 25, too!

[spdrun]

Difference being that LA prices seem to move much more with the national market rather than staying desirable. Wasn’t there a change of 40-50% peak-to-trough?

NYC and nearby boroughs (i.e. Brooklyn, Queens, Manhattan) never really went down since 2008, maybe 10-15%. Same went for the non-ghetto parts of DC.

[CA renter]

[quote=spdrun]Difference being that LA prices seem to move much more with the national market rather than staying desirable. Wasn’t there a change of 40-50% peak-to-trough?

NYC and nearby boroughs (i.e. Brooklyn, Queens, Manhattan) never really went down since 2008, maybe 10-15%. Same went for the non-ghetto parts of DC.[/quote]

I’d say it’s very local within the given cities and counties. From what I’ve observed, LA and SD peaked at crashed at about the same rates, though LA seems to have an even stronger market, IMHO. Their peak was a bit later than SD’s, and they didn’t seem to have the same inventory increases as we did in SD. FWIW, I focus mostly on the San Fernando Valley, so can’t be as sure about some of the other areas. I check on them, but don’t follow them as closely.

[Author]

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