Real estate bubble 2013

[kev374]

Interesting information, Los Angeles is ranked at 26% over historic norm and San Diego at 13% overvalued.

http://blog.redfin.com/blog/2013/04/the-2013-real-estate-bubble.html

[SK in CV]

I have no way to access historical data, but I suspect the article is might be misleading on one of the bubble criteria. It says that we are now experiencing record low listings. Anyone with access to historical data, it would be appreciated if you could look this up. I’m thinking listings are also pretty average, maybe even higher than in the last few post-bubble years, but properties are selling at a pace fast enough to keep inventory low.

[kev374]

SK, I think the low inventory is being caused due to banks holding on to their stock of foreclosed homes. I know many people who are saying that houses around them are vacant and sitting idle and not for sale…bank owned.

My personal belief is this:

Banks have a HUGE number of assets on their balance sheet at very inflated valuations, they cannot sell these houses bulk because if they did there would be Armageddon….literally! Perhaps the entire banking sector itself would collapse. Washington knows this as well hence QE infinity etc.

For this reason inventory is being released at a snails pace, WHILE, there are secret efforts (banking+political) to re-start easy money policies – FHA/government backed programs – to further bid up prices. The inventory will then change hands to these poor suckers who buy the houses and then subsequently foreclose when they cannot make payments – the tab will go to the taxpayer.

It will all be labeled in 2017 as a tragic affair and how everyone should pull together and pitch in to save the economy by paying a special tax – ala Greece.

The banking cartels meanwhile will be laughing all the way to the “bank”…LOL!

[SK in CV]

You know kev, we’ve been hearing of this phantom inventory now for most of the last 5 years. Having worked with the back offices of lenders that deal with foreclosed assets in prior cycles, I’m pretty sure there is no secret conspiracy to keep properties off the market. They really are that incompetent.

I don’t think it exists. But beyond that, at least in the handful of zip codes that i’m following, there is no shortage of listings. New listings are coming onto the market as fast, and closings are at occurring at an even faster pace than they have in years. I think that the possibility is that we don’t have an under-supply of sellers, but rather an over-supply of buyers. There should be data available to either confirm or dispute this.

[bearishgurl]

kev, where are all these “vacant” REO’s that you or your “friends” are seeing today? I’m seeing the few REOs left get snapped up within hours of coming online in the MLS … even in the *newer* areas where they used to be released at a snails pace, due to too many of the same floorplan either being already foreclosed upon or being somewhere in the foreclosure process.

IF there is actually a true “lack of inventory” in some areas, it is due to “owners” who are now paying on a permanently modified mortgage and are not yet in a position to list and sell the property for enough to satisfy either all of the lender’s equity portion (for back interest owed but “forgiven”) or the lender’s portion of equity PLUS whatever amount of equity the “owner” believes they need to recover in order to exit the property. IOW, their “modification agreement” has strings attached and until the lender makes enough interest off them, they won’t be able to sell and thus exit it cleanly so these many thousands of owners are essentially “stuck,” either voluntarily or involuntarily.

Thus, the reduced numbers of inventory you see today, especially in the newer tract developments.

[The-Shoveler]

Just my 2 cents, I think the closer the home(s) in question are to QCOM the faster they sell (got no hard evidence for that however, just looking at what’s going on).

QCOM Market cap now exceeds Cisco’s that huge !! (and growing maybe 20-30% a year?)

Cisco is an enormous company BTW I know people working for Cisco in almost every state.

But with Intel’s new chip… Can QCOM keep the mojo going ?
(Personally I hope so but we will see).
Everything is local in RE.

[bearishgurl]

True, shoveler. All areas are not “on fire” to the extent that sellers have to field several offers above asking price.

It depends on the area and I also suspect that condos take longer to sell than SFRs in most areas.

[HLS]

Artificial low interest rates are creating a bubble of a different kind.
Within reason, many people don’t care about how much they pay for a house, they only care about their monthly payment. Thus they are bidding up properties which benefits previous buyers.

A $400,000 loan has an $1800 monthly payment today.
Depending on taxes&insurance, total monthly housing expense is $2500+/- ($30k annual) which is affordable for many, perhaps cheaper than renting.

If interest rates were 6% payment would be $600 a month higher and would be harder for borrowers to qualify.
If interest rates were higher, would prices come down?

[SD Realtor]

The theory about the banks holding inventory is as wrong as it gets.

[spdrun]

There’s a lot of inventory in limbo in CA, I suspect. Currently still underwater, but banks are very slow to foreclose or force the owner to short-sell because of the homeowners’ bill of rights.

[Jazzman]

I don’t think Redfin would be saying inventory is low if that isn’t the case. I followed inventory levels for awhile in a few soCal areas, and the lack of choice, especially quality homes was very evident. What’s interesting is three of the four “bubbly” cities are in CA, but I don’t agree with Redfin that’s due to an over correction. Las Vegas yes, but that is one of the least bubbly cities. I do agree with them that now it is not a good time to buy, but that things should improve. There’s never been any data to show where inventory levels are lowest, or in what price ranges, but my guess is many lower end homes are either still in foreclosure process, or have been bought by institutional investors. By contrast higher end homes are either still underwater, or sellers anticipate more appreciation and are holding out. Low interest rates are bringing in buyers, and low inventory is leading to frenzied buying behavior, which is where the similarities with the previous bubble are.

[SK in CV]

[quote=Jazzman]I don’t think Redfin would be saying inventory is low if that isn’t the case. I followed inventory levels for awhile in a few soCal areas, and the lack of choice, especially quality homes was very evident. What’s interesting is three of the four “bubbly” cities are in CA, but I don’t agree with Redfin that’s due to an over correction. Las Vegas yes, but that is one of the least bubbly cities. I do agree with them that now it is not a good time to buy, but that things should improve. There’s never been any data to show where inventory levels are lowest, or in what price ranges, but my guess is many lower end homes are either still in foreclosure process, or have been bought by institutional investors. By contrast higher end homes are either still underwater, or sellers anticipate more appreciation and are holding out. Low interest rates are bringing in buyers, and low inventory is leading to frenzied buying behavior, which is where the similarities with the previous bubble are.[/quote]

In case this was in response to my comment….I didn’t suggest that inventories aren’t low. They are, though nationwide they’re higher now than they were a few months ago. The part I think may not be accurate is the claim that listings are very slow. I’m not sure that’s the case. If it was, sales of existing homes couldn’t be at the high level they’re at.

[kev374]

went to a couple open houses today and spoke to a few Realtors who did mention that in the past couple of months prices as well as demand are softening. Supposedly over $500k market is quite slow…the house that I saw at $575,000 has been on the market for 2 months.

[ltsddd]

Acccording to Zillow. Jan & Feb of 2013 saw two of the lowest total homes (SFH & condos) sold in SD Co in the last five years, 1130 and 1172, respectively. That figure did spike up to 1553 for March 2013. It’ll be interesting to see what the numbers are going to be for the next few months.

[earlyretirement]

I noticed this weekend just driving around in my neighborhood there are more for sale signs going up that weren’t there a few weeks ago. Looks like more people are starting to list their houses now that prices and demand have risen.

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