housing bubble?

[carlsbadworker]

[quote=AN]I just have to make sure to only touch RE related topics :-D.[/quote]

Well, you can waste your time on RE related topics too. I didn’t jump into this thread because I think predicting what will happen to the RE is a waste of time.

And talking about non-RE related topics can also be productive, as this site usually has quite diverse perspective for things happen in life.

By the way, speaking of non-RE related topic, does anyone know if there is any company in SoCal that has an NLP (Natural Language Processing, not Neuro-linguistic programming!) group? There is even a meetup in Bay Area: http://www.meetup.com/Bay-Area-NLP/ So I am wondering if I can find similar groups in San Diego to learn more about NLP.

[all]

[quote=carlsbadworker]
By the way, speaking of non-RE related topic, does anyone know if there is any company in SoCal that has an NLP (Natural Language Processing, not Neuro-linguistic programming!) group? There is even a meetup in Bay Area: http://www.meetup.com/Bay-Area-NLP/ So I am wondering if I can find similar groups in San Diego to learn more about NLP.[/quote]

I believe UnitedHealth has several linguists/CS working on NLP. SDSU has graduate program in Computational Linguistics under the department of linguistics – you might be able to take some classes through their open university program.

[livinincali]

[quote=The-Shoveler]My guess as to what will happen,
Remember this is what I think is most likely to happen IMO, not what I think should happen but what I think is most likely to occur.

The Gov will first raise minimum wage to around 9 or 10 dollars then tie it to CPI.
Wage inflation will then reach about 5 to 6% and may even get to 7% by 2018.
Anyway that’s what I think is most likely to occur but we will see.

There were way too many differences in Fed Gold deposit requirements which kept the fed from printing money during the great depression, so there are no comparisons to what is occurring now and what happened then. Even Minimum wage did not start until 1938.

The wheel barrows of money to buy a loaf of bread thing is not likely in any event.[/quote]

There’s only about 3.5 million worker at or below minimum wage which represents only 2-3% of the total labor force. Over half of those worker are 25 or less. Do you really think a slight boost in minimum wage is really going to get the ball rolling on significant wage inflation across the board. I have my doubts especially with globalism and automation.

BLS Stats on minimum wage.
http://www.bls.gov/cps/minwage2012tbls.htm#5

[livinincali]

[quote=AN]What was the interest during the great depression?
[/quote]
10 year treasury rates declined during the Great Depression. From 3.6 in 1929 to 1.95 in 1941. Then then went up once we got involved in the war.

[quote=AN]
Were we the currency reserved?
[/quote]

I’d assume you mean were we the reserve currency at the time. The answer would probably be no but during the great depression ‘beggar thy neighbor’ of currency devaluation in order to increase competitiveness was prevalent. Seems a lot like the current version of currency wars where central banks are desperately trying to devalue right now. Reserve status probably doesn’t really play much of a role in all honesty, but if you think it does then by all means elaborate.

[quote=AN]
We we the super power then as we are today?
[/quote]

Why does our super power status matter in terms of deflation or inflation. Not sure what the point is here.

[quote=AN]
Also, if you’re counting a great depression as a possibility, then shouldn’t you also count in a hyper inflation as a possibility where you have to cart around a wheel barrel to buy a loaf of bread?
[/quote]

I believe I did with this comment

[quote]
Certainly congress could cause hyper inflation. They could credit everybody’s bank account with $1 billion dollars but that would detonate ever retirement portfolio in the world in a matter of minutes. One person’s debt is another person’s credit. You can’t get rid of the debt without getting rid of the corresponding credit. Although that’s pretty much the game the economists play in their solutions to the problem. Solve one side of the equation and bury the loss on the other side of the equation with complexity.
[/quote]

The reason I discount the possibility of hyper inflation more so than deflation and depression is that hyper inflation makes every debt worthless and blows up all the big banks, social security, medicare and every pension fund in the nation. It also takes an act of congress rather than an act of the fed to come into play. Will congress do something dumb enough to produce hyper inflation. Maybe but considering it would blow up the banking institution and the campaign contributions I doubt it. It think it’s easier to bleed off bad debt in deflation politically. The government give away program that leads to hyper inflation will probably look pretty good on paper before it blows up into hyper inflation.

[an]

livinincali, IIRC, I asked if we ever saw deflation AND rising rates. You said we did during the great depression. But now you said we saw rate drops. Which is what I always assumed.

I’m pretty sure none of us experienced hyper inflation like in Germany or great depression in US. So none of us can say which one is better. I vote for neither to happen. If either one happens, then we’re screwed either way, so who really cares.

Being a super power and being a reserve currency I think goes hand in hand. You can’t be one without being the other. With us being both right now, it changes thing quite a bit compare to when we weren’t. But we can agree to disagree on this whole topic and since none of us have a crystal ball, we’ll just leave it at that.

[The-Shoveler]

It’s all about the margins, next guy up the ladder needs a little more to differ from the guy below etc..
Effect would probably be a lot less the further you go up the ladder.

But these days there are a lot more people being reduced to the lower rungs.

[no_such_reality]

[quote=The-Shoveler]It’s all about the margins, next guy up the ladder needs a little more to differ from the guy below etc..
Effect would probably be a lot less the further you go up the ladder.

But these days there are a lot more people being reduced to the lower rungs.[/quote]

Actually has you go up the latter the effect is more pronounced. The reality is sans buying entire businesses like the bankrupt Hostess for cash, the money is irrelevant past $25 million yet, particularly in public companies, and steadily creeping into top level government entities, the compensation issue is a massive ego item and has greatly become distorted and promotes short term thinking.

While the lower end has been compressed, the upper tend is trying to distinguish value from something that marginally has no value beyond a number on a piece of paper.

In general their base pay is relatively appropriate but there is increasing a perverse nepotism in executive compensation increasing compensation thru stock that isn’t performance based.

[treehugger]

I believe/hope that house prices are going to tank again, I am seeing open houses like crazy in our neighborhood and the prices have to be above the comps. How is this sustainable? We went from nothing on the market and the houses selling above asking with multiple offers to lots of listings with high prices (I attached a recent comp sold at $611,000 and a new listing at $699-759,000, I went in both open houses and they are very nice homes, same realtor). Don’t get me wrong I hope it sells for $759,000….husband says I can’t sell this one, but if I could…

http://www.sdlookup.com/MLS-130044671-3670_Sutter_Ct_Oceanside_CA_92056

http://www.sdlookup.com/MLS-130031352-4947_Marin_Dr_Oceanside_CA_92056

[spdrun]

It’s amazing how the SD market can turn either way within (practically) weeks.

[SD Realtor]

treehugger what you are seeing is perfectly normal and representative of a lot of the submarkets in SD right now. We had a market with no inventory that drove prices way up. More inventory comes on, more sellers feel confident that the momentum will carry their own homes to unrealistic sales prices. Inventory builds, some sellers pull the homes off the market, some reprice and the system comes to an equilibrium eventually.

Unfortunately some people confuse those mechanics with a tanking market. A tanking market is driven by an external force. If rates get super high then that can push the market down, if a huge wave of foreclosures and unemployment happens causing a glut of inventory and loss of confidence then that can as well.

I see none of that happening but I do see the market going through a normalization.

[spdrun]

This assumes a normal market. With the current market, anything bought from say 2003-2008 (or refi’d during that period) becomes a short sale if prices drop even a bit from the spring madness. Yeah, yeah, but they won’t sell … people move, loan mods typically lower payments, but you still owe the original principal upon sale, and not everyone wants to be a landlord (if the loan mod even allows non-primary use).

External force: Look at the effect that the end of the $8k housing credit in 2010 had on SD prices and consider that a rise in rates from 3.25% to 4.5+% has MORE than that effect as far as monthly nut.

I don’t think the market will tank to 2011 prices, but prices not too far off from fall/winter 2012 prices are quite plausible, followed by a gradual (though maybe spiky) rise in the future.

The past five years seem to have been marked by a few periods of frenzy and a few periods of extreme slowness. I don’t see why this whipsawing should not continue.

[skerzz]

Buy a house with as little down as possible with a 10 year outlook while interest rates are low and I’d be willing to bet you will be better off financially in 10 years than if you had rented an equivalent house. Even those who purchased during the peak will have some equity in a few years (if they don’t do so already). Don’t do stupid sh*t like take a HELLOC out to buy a hummer and boat and you should be OK.

If the market crashes, the government has made it clear they will be there with the bailouts. It will take a serious economic collapse to leave you underwater on a home in 10 years from now. If such collapse were to happen, your negative equity won’t matter. What will is how much guns/ammo/food/gold/supplies you have stashed away.

[spdrun]

“It will take a serious economic collapse to leave you underwater on a home in 10 years from now.”

That really depends if you buy at a stupid price or a smart one. I wouldn’t give an aluminium penny for the finances of some of the people who bought during the April-June frenzy of this year.

Anyway, you should be buying something that cash flows positively AS A RENTAL in this market, and yes, it’s still possible right now.

[spdrun]

Housing market has been purged of weak hands already for the most part.

.

[skerzz]

I agree that buying during the ” frenzy” is not the best move if you are looking short term (some may have overpaid up to 10% or so), but in 10 years that difference will not leave you underwater and will most likely have been a better long run financial decision than buying at today’s/tomorrow’s higher rates(assuming buyer is financing the transaction).

I am in escrow now on a second “move-up” home and in hind sight would have gladly traded paying a little more during the “frenzy” so I could have taken advantage of the extremely favorable mortgage rates a few months back. However, I’m more concerned with carrying costs than overall principal (purchase price) as I plan to hold LT. I also prefer the “fixers” that don’t get caught up so much in the” frenzy” pricing.

Everyone is so concerned with a “bubble” and quickly appreciating prices. Anyone else believe that the price move we saw early this year was the adjustment needed to bring prices back to sustainable market levels after a post bubble over correction? From here, I project modest price increases (5% per year) coupled with interest rate increases over the foreseeable future.

[Author]

Posts