housing bubble?

[Coronita]

Welcome to Carmel Valley-ish 08/09 pricing…

….in mira mesa ’13…

http://www.redfin.com/CA/San-Diego/8680-New-Salem-St-92126/unit-145/home/6398469

Must be the lack of walls….

And just came back from bay area.. Where in Santa Clara, a “deal” in the better part (better meaning ok, not the best like Cupertino)… is now $529/sq ft for a 40+year dump…

Makes SD look like a bargain…..

[Coronita]

Middle class with no assets/low assets sure seems to getting clobbered with this economic “recovery”, which I think is pretty turning out to be what appears to be a wealth redistribution, which is the opposite of what I think our politicians intended (or claimed it would be about)…..

Afterall, I believe asset accumulation isn’t really happening at the lower echelon of middle class and below….It’s kinda hard to get a low interest/fixed rate lown and leverage up the ying yang if you were leveled during Real estate crash 1.0…..

I suppose though, that people haven’t come to the realization (yet)…Or at least are slowly beginning to realize it.

Corporations + wealth(ier) people + asset hoarders: 1
Everyone else: 0

Different names, different politicians, different rhetoric. Same game plan.

Welcome to the new economy…

Same as the old economy…

[bearishgurl]

[quote=flu]Welcome to Carmel Valley-ish 08/09 pricing…

….in mira mesa ’13…

http://www.redfin.com/CA/San-Diego/8680-New-Salem-St-92126/unit-145/home/6398469

Must be the lack of walls….

And just came back from bay area.. Where in Santa Clara, a “deal” in the better part (better meaning ok, not the best like Cupertino)… is now $529/sq ft for a 40+year dump…

Makes SD look like a bargain…..

Middle class with no assets/low assets sure seems to getting clobbered with this economic “recovery”, which I think is pretty turning out to be what appears to be a wealth redistribution, which is the opposite of what I think our politicians intended (or claimed it would be about)…..

Afterall, I believe asset accumulation isn’t really happening at the lower echelon of middle class and below….It’s kinda hard to get a low interest/fixed rate lown and leverage up the ying yang if you were leveled during Real estate crash 1.0…..

I suppose though, that people haven’t come to the realization (yet)…Or at least are slowly beginning to realize it.

Corporations + wealth(ier) people: 1
Everyone else: 0[/quote]

I’ve been trying to tell Piggs all this stuff on and off since 2008 and was accused of being a rallying bull and/or NAR Lackey by some.

Indecision breeds not having. A few Piggs have decided not to buy, even though they needed houses for their families and were qualified to buy when pricing was much lower than now. This was all due to chronic indecision leading to self-inflicted “buyer fatigue.”

Thanks for your realistic and eye-opening post, flu.

[CA renter]

[quote=bearishgurl][quote=Jazzman]

. . . [S]igns of “buyer fatigue.”…

[/quote]

I don’t understand the term, “buyer fatigue.” I had never heard of it until I read the term here.

Let us examine the possible causes of “fatigued-buyer syndrome.”

If they are actually a perpetual shopper who never makes any offers, then they aren’t really a “buyer.” They are a “shopper” who is undoubtedly trying to familiarize themselves with what’s on offer (not using their agent to his/her fullest advantage).

If they are a prospective buyer who makes offer(s) (lowball?) which repeatedly get rejected in favor of other offers offering better terms or more money or both, and they refuse to accept or counter any counter-offers presented to them, then they are undoubtedly “shopping” in the wrong area(s) and wasting their time (AND their agent’s time).

If they are prospective buyers who have not been properly pre-approved for the size mortgage they need which is enough to consummate a deal on any property they make offers on, then again, they have chosen to waste theirs and their agent’s time.

If they are consistently looking at properties and in areas where they know they cannot qualify to purchase in, that is another self-made time waster. If they DON’T KNOW that they are unqualified to make offers in the area(s) they are shopping in, then they (and their agents) have not properly done their due diligence prior to beginning a house hunt and thus, are wasting everyone’s time.

If they have an “accepted” (lol) offer on a SS in which they have been waiting for months to hear if the deal is going to fly, they have consciously chosen to deal with the deadbeats they are dealing with (instead of “traditional” or institutional sellers) and so deserve whatever “fatigue” that comes with that territory. If their offer did not end up being accepted by sellers’ lender(s), then they, at all times, were free to shop elsewhere and terminate the SS escrow at any time so have no one to blame but themselves that they don’t yet have a consummated deal to show for all their “effort.”

And I don’t want to hear the excuse, “I’m `fatigued’ and so will suspend my search for now (or indefinitely) because every property I wanted (to make an offer on) already had all-cash offer(s).”

The key phrase here is “…every property I wanted…”

If all the properties you wanted were sold to all-cash buyers and you didn’t have access to as much cash as they did and/or needed a mortgage for purchase money, then those properties were located in the wrong area for you or their condition was too good for you … or both.

Again, self-inflicted “fatigue” … all just whining.

******

My gut feeling is that “fatigued buyers” (IF they actually exist) create their OWN fatigue. REALISTIC, PRE-APPROVED buyers with extremely knowledgeable agents don’t get to the point where they become “fatigued” because they have already made a deal, likely closed it and moved in.

“Dearth of inventory” be damned.[/quote]

BG,

There are plenty of examples of people who did all of the things you’ve mentioned above (low-balling, “shopping” for years in particular areas, refusing to bid against over-eager buyers with low-down mortgages or too much cash, etc.). Many of these posters eventually managed to buy in their #1 areas at, OR BELOW, non/pre-bubble prices that they had been comfortably willing to pay.

The only reason these buyers were able to make these good deals is because they’d spent YEARS studying their target markets, familiarizing themselves with particular properties and areas, and studying the causes/effects of the bubble mentality. It was because they waited for so long that they were able to be the winners instead of the losers in the housing bubble game. They were able to do this because they did NOT listen to the vast majority of realtors out there who were insisting that people buy now, or be priced out…FOREVER!

We are still very much in bubble territory. With interest rates and housing inventory at/near historic lows (with both more likely to go up from here, rather than down), this is NOT the time to buy.

[Jazzman]

Buyer fatigue is referring to the drop in sales due to changing market conditions. It’s not a personal stamina issue inflicting buyers.

[scaredyclassic]

i was thinking buyer fatigue is camo wear for searching out houses. like maybe you dress as a shrub.

[FlyerInHi]

I don’t see buyer fatigue. I see investors pulling back.

Plenty of buyers want to buy but cannot. I’m renting a condo to a guy who makes good income but doesn’t quality to buy because of a foreclosure.

Investors come in and drove the market in recent years. Prices are stabilizing now. But I don’t yet see a drop in prices on the horizon.

[Jazzman]

[quote=FlyerInHi]I don’t see buyer fatigue. I see investors pulling back.

[/quote]
I think that is part of what it refers to. Investors are buyers after all.

[bearishgurl]

[quote=CA renter]BG,

There are plenty of examples of people who did all of the things you’ve mentioned above (low-balling, “shopping” for years in particular areas, refusing to bid against over-eager buyers with low-down mortgages or too much cash, etc.). Many of these posters eventually managed to buy in their #1 areas at, OR BELOW, non/pre-bubble prices that they had been comfortably willing to pay.

The only reason these buyers were able to make these good deals is because they’d spent YEARS studying their target markets, familiarizing themselves with particular properties and areas, and studying the causes/effects of the bubble mentality. It was because they waited for so long that they were able to be the winners instead of the losers in the housing bubble game. They were able to do this because they did NOT listen to the vast majority of realtors out there who were insisting that people buy now, or be priced out…FOREVER!

We are still very much in bubble territory. With interest rates and housing inventory at/near historic lows (with both more likely to go up from here, rather than down), this is NOT the time to buy.[/quote]

CAR, I was referring to self-proclaimed buyers (or, in actuality, “shoppers”) between 2008 and 2011, who, although prices were falling and already fell substantially from the “peak” of 2005 and there was quite a bit of available distressed listings in most zip codes, they just couldn’t seem to make a deal. That was roughly a 3-1/2 year time period … a “window of opportunity,” so to speak.

CAR, do you think prices will ever come back to the late 2008 to late 2011 level in SD County?

I don’t … because the fundamentals which caused the 2004-2007 bubble and subsequent crash (primarily “loose lending”), are long gone.

For all we know, these “prospective buyers” during our market downtown are still renting today. And that’s okay. Perhaps they really just wanted to continue to rent, regardless of their “desires” they posted here. For years, we heard numerous complaints on this board of sewed-up REOs and SS’s that couldn’t be touched by a buyer who needed a 90%+ mortgage … or even in some cases, an 80% mortgage. Where, in many areas of the county, single family homes DID sell traditionally and also with 95% LTV and FHA/VA mtgs during that era. And these homes continue to do so today. Sure, they’re a little more expensive now, but still “affordable.” Most of the distressed properties are now gone, so the SFR market is a little cleaner. For example, we no longer see listings with stripped fixtures and 4′ high weeds. So what if the same type of properties on the market are $30 – $60K higher! The vast majority of the listed SFR stock actually has working appls and fixtures in them now and a cared-for landscaping. You pay for what you get.

I was just referring to the handful of Piggs who missed the boat, complaining of “taking a break” or “suspending their search.” That ship has already sailed and now if they want to become “shoppers” again in SD County, they’ve got to completely change their search parameters or come up with a lot more cash.

Had they been more realistic with their search parameters when many SFR’s were selling at or below land value, they might have been able to strike a deal. But they were too fixated on their “wants” and so those “wants” ended up to be too unrealistic for their available resources.

That was and is the cause of “buyer fatigue,” IMHO, at least in CA coastal counties. As I have posted here before, this phenomenon wasn’t present in previous generations in their prime homebuying years because there wasn’t all the new subdivisions and zip codes to choose from that there is today which are undoubtedly confusing prospective buyers. In addition, work centers were scattered in primarily four places (a) dtn SD; (b) MV; and to a very small extent (c) SV, consisting of one dead-end st; and (d) SR, consisting of one st and one cul-de-sac. In addition, there were more large employers at that time around Gillespie Field (EC) that have since folded or located out-of-state.

The Golden Triangle and Sorrento Mesa had not yet been developed.

I think the MR CFD Act had the effect of creating a dizzying array of choices for SD County homebuyers in recent years and thus many of them were/are confused and have a hard time comparing apples to apples.

Even though some of us here do our best to wade thru the confusion and try to offer down-to-earth advice and suggestions to homebuyers, ESP FTB’s, some of them are obviously so paralyzed by confusion that they can’t make a decision in their family’s best interest and so end up buying nothing.

I think it’s a shame that some qualified buyers with minor children have not yet bought or have decided to leave the local market (but continue to rent) because it is not going to get any easier to buy as time marches on.

Prevailing mortgage interest rates be damned (since history has proven time and time again that they don’t affect pricing in CA coastal counties).

And no, I’m not a CAR/NAR lackey who preaches, “Buy before you’re priced out.” But I think families who NEED a home for their children should buy one and if they have had trouble doing so in the past while being otherwise qualified, then they need to change their strategy. Their kids will grow up right before their eyes as their rent increases almost every year and then they may not need or want a family home anymore.

In a nutshell, today’s family-raising buyer’s “expectations” are w-a-a-a-y too high for life’s little realities, IMO. Those soaring “expectations” have kept more than a few prospective buyers perpetual renters.

[CA renter]

Yes, I think we’ll see 2008-2011 pricing again, and possibly lower. The bubble lasted from about 2001-2005/2007, depending on the area. It did not start in 2004. Loose lending drove that bubble, but artificially CHEAP money — lots of it — and artificially low inventory are driving this one.

I also don’t think that buyers are “confused” in any way. They understand that buying when prices are high/interest rates low puts them at a potential disadvantage if they ever need to sell in the future, when rates are high/prices low. It’s never a good idea to bid against others when buyers are in a frenzy. That’s almost always a sure way to lose your a$$ on an “investment” unless you have extremely good timing and are able to get out at the very top…which is not very likely, statistically speaking.

And yes, there is no doubt that interest rates affect prices. The fact that prices went up along with rates in the 70s and 80s is due to the fact that Baby Boomers were entering their peak buying years, and women were entering the workforce en masse. Wages were rising, and unions were still fairly strong, so people were willing to pay a high price because they believed that their future pay increases would make their payments go down, relatively speaking, over time. Additionally, we went off the gold standard in the 70s, and everyone was afraid of inflation. I think that bogeyman is slowly being put to rest these days; deflation is the greater undercurrent. Wages are NOT going up, and probably won’t be going up anytime in the future, at least not for most people. People will have to sell off their assets in order to make it through their later years, as well, which will put even more downward pressure on pricing.

There is no reason to believe that housing prices will go up along with interest rates going forward, IMHO. If a buyer wants to wait things out for a bit to see how it all shakes out, that is a pretty sensible thing to do, IMO.

[scaredyclassic]

how long can people wait?

[paramount]

Great posts….here’s thing CAR, I think as investors exit the market and cheap money ends, wall street will figure out a way to rejuvenate the loose lending side of things.

The housing rally must continue.

But it will end badly….start preparing now.

Think about survival housing/strategic relocation.

How about a Pigg community in the Sierra’s?

Cities will be a dangerous place to be: If famine and disease don’t get ya, roving gangs will.

Of course, WW3 (in the works right now starting with Syria) might delay that even further.

Have a Great Sunday.

[an]

[quote=CA renter]Yes, I think we’ll see 2008-2011 pricing again, and possibly lower.[/quote]I sincerely hope you’re right. I’m kicking myself for not buying more in 2008. If it happen again, I’ll be fully prepared this time.

[scaredyclassic]

The devaluation of the currency will send prices up next?

[flyer]

Whether an extreme, moderate, lite, or no “doomsday” scenario prevails, it’s always wise to have huge reserves so you can react as necessary.

We’ve been investing in films for quite awhile, and my wife, who works in the entertainment industry, (film exec) informs me that we will see more and more films, TV shows, books, games, etc., in this genre going forward.

Because no one really knows how things will go in the future, the doomsday premise, in it’s many variations, is pure gold for Hollywood, and generates millions if not billions of dollars in revenue in the US and abroad–so, I guess you could say there is a silver lining to our cloudy future.

[Author]

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