Real estate bubble 2013

[zzz]

Who’s selling to capitalize on the bubble? Or considering listing their home to see what bites?

There are moments I think about putting our house on the market at 200k more than we paid for it- I think we can get it based on recent comps and we’ve done a bit of work on the house since we bought it. But I love my neighborhood, my neighbors and the home, plus where in the heck would we move? It took us years to find this house in the limited zip codes we were looking in. Rents are outrageous. And I became so tired of renting. At one point, I moved 4 times in 4 years. The first move was from a condo to a house. Then the owner wanted to move back in and I had to move out. I ended up moving into a property my SO owned, but was trying to sell. Then we sold that place and rented another house, until we bought the one we’re now in. I’m quite tired of moving!

On the other hand, my parents live out of state and they are getting older, and I’d like to move them out here. One of my parents became seriously ill and I spent a year and a half flying back and forth. It was very straining on my health, my relationship with SO, and on my career. I had to check out on my other aspects of my life to basically take care of my parents.

Im thinking of telling them to sell now while the market is hot as they need to sell within the next 5-7 or so years anyhow due to age/health. But ideally they will live on their own. It will be better for the sanity of all of us. Unfortunately what they would get for their house won’t buy them even a small condo in the metro area unless they buy in the less desirable areas which they won’t do.

Rents are so high, I don’t want to see them pay what little money they have into someone else’s equity bucket. Lets assume they rent a 1 bdrm condo nearby for $1500/month, they will run out of cash from the sale of their home in about 10 years. They would have to buy in cash as they are both retired and have very little in assets.

Ideally, we would take the cash from the sale of their home and I would purchase a property for them to live in but I’m not in a position to take on another mortgage. I spent 10s of thousands helping my parents financially during the illness, and I just started my own business so I’m not going to qualify for a loan anyhow.

Ideas on what to do?

[earlyretirement]

[quote=zzz]Who’s selling to capitalize on the bubble? Or considering listing their home to see what bites?

There are moments I think about putting our house on the market at 200k more than we paid for it- I think we can get it based on recent comps and we’ve done a bit of work on the house since we bought it. But I love my neighborhood, my neighbors and the home, plus where in the heck would we move? It took us years to find this house in the limited zip codes we were looking in. Rents are outrageous. And I became so tired of renting. At one point, I moved 4 times in 4 years. The first move was from a condo to a house. Then the owner wanted to move back in and I had to move out. I ended up moving into a property my SO owned, but was trying to sell. Then we sold that place and rented another house, until we bought the one we’re now in. I’m quite tired of moving!

On the other hand, my parents live out of state and they are getting older, and I’d like to move them out here. One of my parents became seriously ill and I spent a year and a half flying back and forth. It was very straining on my health, my relationship with SO, and on my career. I had to check out on my other aspects of my life to basically take care of my parents.

Im thinking of telling them to sell now while the market is hot as they need to sell within the next 5-7 or so years anyhow due to age/health. But ideally they will live on their own. It will be better for the sanity of all of us. Unfortunately what they would get for their house won’t buy them even a small condo in the metro area unless they buy in the less desirable areas which they won’t do.

Rents are so high, I don’t want to see them pay what little money they have into someone else’s equity bucket. Lets assume they rent a 1 bdrm condo nearby for $1500/month, they will run out of cash from the sale of their home in about 10 years. They would have to buy in cash as they are both retired and have very little in assets.

Ideally, we would take the cash from the sale of their home and I would purchase a property for them to live in but I’m not in a position to take on another mortgage. I spent 10s of thousands helping my parents financially during the illness, and I just started my own business so I’m not going to qualify for a loan anyhow.

Ideas on what to do?[/quote]

Nope. I wouldn’t sell my house even if someone offered to pay more than peak prices. Finally have our house how we want it with all the renovations finally done. Bought near the bottom and love our house.

We’ve received several unsolicited offers directly from potential buyers (without realtors) and we aren’t interested. The thing is even if we got a great offer, where would be go? There isn’t much inventory on the market and we love our house. I don’t plan on selling probably ever.

Even when the kids are out of the house I just plan to rent our house out. I don’t really care what happens with house prices now.

[patb]

give me another 18 months, and i’d sell this SOB if i could get peak price.

[Cube]

[quote=earlyretirement]I noticed this came on the market and went into escrow in only 4 DAYS.

http://www.redfin.com/CA/San-Diego/7575-Delfina-92127/home/6482881

I don’t think houses were flying that fast even during the bubble here…were they?? I will be really curious to see what this house sold at relative to the asking price.

The same realtor sold this house in my development earlier this year. From the time he listed it to the time he got an offer was only 5 DAYS.

http://www.redfin.com/CA/San-Diego/8419-Run-Of-The-Knls-92127/home/6541763%5B/quote%5D

ER, this is not surprising to me at all. We’ve been shopping for the past year or so, and since around late December, good properties have been flying off the market. Two that we offered on saw 7+ offers in the first 48-hours after listing. Both were pending in days without spanning a weekend on the market.

Most decent properties that list on Thursday or Friday are pending by the following Wednesday at the latest. We’re often told offers are being reviewed Sunday or Monday evening. If you tour a recent listing on a Sunday, you might have only until nightfall to get your offer in for consideration.

Lately, if something lasts longer than 7 days, it’s either grossly overpriced, or there’s something seriously wrong with it (though as Jim the Realtor would say, nothing price can’t fix).

[CDMA ENG]

There is bubble… I think Mr. Rich’s latest data confirms that.

My antidotal is that there is as well. My wife is very interested in a development in North County but I am not willing to spend that much and become house poor. Nice house though… Here is the price sheet from 2/25 and 4/29

2/25 4/29
R1 630K 632K
R2 628K 666K
R3 650K 663K
R4 666K 690K

Just to discount any critism…

These are not anything different from the other lots. They are not bigger or have better positioning.

Just in two months. I was talking to the sales associate and she said there is a bit of a bubble as well. They are releasing a final phase in June and to prevent people from camping in the neighbor prior to the release they are pre-qualifying people on a first come first served basis. I pressed her about this a bit and she told me that when they initially release phase I, remind you this was recently, they had people camped out two and three days to be first in line.

Sounds like a bubble to me…

But here is another observation… It seems like the bubble is indeed getting houses to the market. In the last couple of weeks houses have been popping up as owners test the waters. Into this there are two categories of homes. Nice slightly over priced homes that move quickly and houses that are way-over priced with granite counter tops that are next to the I-5 that sit forever…

There are some incrediable over valued homes out there…

Most depressing…

Keeping your RF environment pristine since 1997…

CE

[outtamojo]

I think the word bubble has become overused and under-defined.

[earlyretirement]

[quote=Cube][quote=earlyretirement]I noticed this came on the market and went into escrow in only 4 DAYS.

http://www.redfin.com/CA/San-Diego/7575-Delfina-92127/home/6482881

I don’t think houses were flying that fast even during the bubble here…were they?? I will be really curious to see what this house sold at relative to the asking price.

The same realtor sold this house in my development earlier this year. From the time he listed it to the time he got an offer was only 5 DAYS.

http://www.redfin.com/CA/San-Diego/8419-Run-Of-The-Knls-92127/home/6541763%5B/quote%5D

ER, this is not surprising to me at all. We’ve been shopping for the past year or so, and since around late December, good properties have been flying off the market. Two that we offered on saw 7+ offers in the first 48-hours after listing. Both were pending in days without spanning a weekend on the market.

Most decent properties that list on Thursday or Friday are pending by the following Wednesday at the latest. We’re often told offers are being reviewed Sunday or Monday evening. If you tour a recent listing on a Sunday, you might have only until nightfall to get your offer in for consideration.

Lately, if something lasts longer than 7 days, it’s either grossly overpriced, or there’s something seriously wrong with it (though as Jim the Realtor would say, nothing price can’t fix).[/quote]

Oh yeah..I have spoken to others that have been actively looking and they are running into the SAME thing as you Cube.

I agree with the other poster that said however that the word “bubble” is overused. At least this go around it’s not like the true “bubble” years when anyone with a heartbeat could get a no-doc loan.

I can’t say this time around if we’re in a bubble or not as there is so many cash buyers and most buying have steady jobs and higher FICO scores. At least it’s a much healthier situation vs. the last go around.

However, the speed at which the recovery is happening is very surprising. I’m just glad I bought back in 2011. I figured that had to be close to a bottom. And I was a big bear on real estate but it just got to be really compelling how cheap it was back then.

I’ve mentioned on a few message boards that I post on that I was confident that prices in desirable parts of San Diego would surpass peak prices. I just didn’t think it would happen for a decade or so.

I made a few offers last year on properties and even at the start of this year but I wasn’t going to chase the market up. Now, I am just stepping back and seeing how this plays out.

[CA renter]

Just in the past 2-3 weeks, I’ve had a handful of people ask me if they should be putting their houses on the market (they know I follow RE and bought and sold properties at good times in the past, etc.).

These people have various reasons for selling: some have been holding onto houses as “rentals” because they were underwater and couldn’t sell them after the bubble burst, some have been hanging on by their fingertips as they waited for housing prices to get them above water again so they could sell and move (usually to cheaper and/or out-of state areas), some are purely speculative and would like to cash out at a peak and rent while the market corrects (again). IMHO, people are smelling a bubble, and this is what will open the floodgates at the peak. I think we are about to turn a corner WRT inventory levels.

You do not need NINJA loans in order to create a bubble, IMO. You just need a lot of speculative activity where a critical mass of buyers are buying with the expectation that they will sell at some future date for a higher price. I also believe that there is a LOT more leverage in the housing market than people think. Just because they aren’t using traditional purchase mortgages does NOT mean that these buyers are un-leveraged.

FWIW, many homes in our area are being listed at **above-peak** prices, and many are selling for those amounts. This is a bubble as far as I’m concerned.

[all]

[quote=CA renter]
FWIW, many homes in our area are being listed at **above-peak** prices, and many are selling for those amounts. This is a bubble as far as I’m concerned.[/quote]

Above-peak prices, but not above-peak payments. The rates were ~6% in 2007 vs 3.5% today. I paid the bottom price in 2009, but my monthly payment in 2009 was higher than what the today’s bubble price payment would be.

[(former)FormerSanDiegan]

There certainly is a lot of bubble babble out there.

A bubble occurs when prices greatly exceed fundamental values.

As soon as Rich updates his affordability charts (price to income, price to rent, monthly payment to rent ratios, etc), we’ll have the evidence on this board to make an assessment. (Hint Hint).

Based on price trends and previous ratio published, I don;t believe that today’s prices significantly exceed long-term fundamentals. I think his numbers will show that price to income and price to rent are near long-term averages, and due to low interest rates monthly-payment to rent ratio is still below historical norms.

[CDMA ENG]

[quote=FormerSanDiegan]There certainly is a lot of bubble babble out there.

A bubble occurs when prices greatly exceed fundamental values.

[/quote]

Bubble babble… Love it! But to give credit where it is the other poster put it perfectly… Over used and under-defined… I think FSD placed a good definition on it.

At the end of the day this is just normal supply and demand though it is open to debate whether the supply side is “normal”.

CE

[SD Realtor]

Agreed CDMA.

Like the last bubble nobody has a gun to their head to buy the home. No harm in sitting it out.

Once the supply normalizes, and it has been growing the past several weeks, prices will normalize.

People thinking there will be big price drops are incorrect. Price drops will be due to inaccurately priced homes that were listed to high to begin with. Once the supply normalizes compared to previous years the only major source for depreciation in San Diego will be due to the lending rates. You may see a small depreciation that will accompany the “normalizing” of the market but that is not a trend setter. The larger declines will be only tied to lending. That will be off in the future, but not in the short term.

[CA renter]

SDR,

I totally agree with you about interest rates. Just pointing out that we may well be at a (multi-year??) low point WRT inventory, and that the normalization of inventory levels will help tamp down the rate of price increases.

[Jazzman]

I don’t think you can discount the effect another recession would have on any anticipated ‘normalizing’ market. There’s been about 12 recessions since the Great Depression–which itself was followed almost immediately by another recession–averaging a recession every 6 years. Since the Great Recession ended in 2009, we’re statistically 2 years from the next one, just in time for the effects of a rate rise to take hold. Since nobody seems sure what the effects of a prolonged period of very low rates will be, the future doesn’t hold much certainty. I sincerely hope there will be a shift away from real estate as an essential driver of a consumer driven economy. That has been the problem. Affordability issues are irrelevant in that context, and have only gained traction as a means of justifying over-inflated prices. If the economy gets a shot in the arm from a lift in real estate prices, you’ve still got to address the underlying problems.

[CDMA ENG]

[quote=SD Realtor]Agreed CDMA.

Like the last bubble nobody has a gun to their head to buy the home. No harm in sitting it out.

[/quote]

I have a wife who wants a baby and a nest to raise it in.

Isn’t that the same thing?!? 😛

CE

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