Why it’s not a good time to buy a house in San Diego!

[millennial]

I would agree that typically rates have an inverse correlation with price. But as others have pointed, is that inflation (natural or artificial) will counteract to a larger degree. If you’re a renter holding cash you would be hoping for the former and owners will hope for the latter. Based on historical experience of watching the fed throw the kitchen sink in when necessary makes me bet on the latter. Sorry savers you should buy a house while you still can.

[spdrun]

You’re assuming that nominal pricing of anything is linear, which it is often not. Especially when we’ve gone from no-drama Obama in charge to the drama queen in chief with his retinue of clowns.

A significant % of SD County’s population is very worried right about now, and worried people don’t like to sign long-term leases, spend money, or invest in property with family. It’s depressing, because the situation of most immigrants (legal or not) isn’t much different than my family’s 40 years ago.

Question is, will the left side of the aisle do everything in its power to provoke chaos before the 2018 and 2020 elections? It’s telling that Yellen (Obama appointee) is yipping about raising rates, even with crummy growth estimates for Q1-17:

http://seekingalpha.com/article/4053152-u-s-economic-growth-slowing-q1

A recession might be seen as “less damage” than GOP being successful.

[an]

[quote=spdrun]A significant % of SD County’s population is very worried right about now…[/quote]A significant % of SD County’s population can’t afford to buy here, so why does that even matter? In several zip codes, we have < 1 month of supply and anything house that isn't run down, on/back a busy street, and isn't way overpriced flies off the market pretty quickly. So, your assumption is totally off here. [quote=spdrun]Question is, will the left side of the aisle do everything in its power to provoke chaos before the 2018 and 2020 elections? It's telling that Yellen (Obama appointee) is yipping about raising rates, even with crummy growth estimates for Q1-17: http://seekingalpha.com/article/4053152-u-s-economic-growth-slowing-q1%5B/quote%5DFor the sake of the nation, I hope that a fed chair isn't a political hack. I would assume she has more integrity than you and won't bring down a global economy just because she doesn't like the sitting president.

[quote=spdrun]A recession might be seen as "less damage" than GOP being successful.[/quote]Only if you're a total nut job.

[spdrun]

A significant % of SD’s population might not be able to afford to buy, but still drives rental prices, which in turn control valuation metrics.

Nutjobs — yeah, there’s enough crazy to go around this year and then some.

[an]

As long as they’re still living here, then they can only drive rental price up, not down.

[millennial]

[quote=AN]As long as they’re still living here, then they can only drive rental price up, not down.[/quote]
What if no one can afford to buy higher rental apartments due to wages not increasing?

[moneymaker]

[quote=spdrun]
Thirdly, a 7-10% of SD County’s population are people who could be directly affected by immigration policy, hitting rental demand at the lower end.[/quote]

Not sure where you got this from spdrun but I suspect the numbers could be way higher. If Donald deported all illegals living in San Diego I believe it would bring down rents in San Diego due to the number of vacancies. I don’t see this happening, but is something that is possible.
Now if rents were to drop, would that affect home prices? Is there any anecdotal evidence out there? Almost not worth worrying about, but none the less a very interesting point that I had not even considered.

[ocrenter]

[quote=moneymaker][quote=spdrun]
Thirdly, a 7-10% of SD County’s population are people who could be directly affected by immigration policy, hitting rental demand at the lower end.[/quote]

Not sure where you got this from spdrun but I suspect the numbers could be way higher. If Donald deported all illegals living in San Diego I believe it would bring down rents in San Diego due to the number of vacancies. I don’t see this happening, but is something that is possible.
Now if rents were to drop, would that affect home prices? Is there any anecdotal evidence out there? Almost not worth worrying about, but none the less a very interesting point that I had not even considered.[/quote]

Somehow I don’t think the illegal population is responsible for driving up cost of rent…

[ocrenter]

[quote=spdrun]You’re assuming that nominal pricing of anything is linear, which it is often not. Especially when we’ve gone from no-drama Obama in charge to the drama queen in chief with his retinue of clowns.

A significant % of SD County’s population is very worried right about now, and worried people don’t like to sign long-term leases, spend money, or invest in property with family. It’s depressing, because the situation of most immigrants (legal or not) isn’t much different than my family’s 40 years ago.

Question is, will the left side of the aisle do everything in its power to provoke chaos before the 2018 and 2020 elections? It’s telling that Yellen (Obama appointee) is yipping about raising rates, even with crummy growth estimates for Q1-17:

http://seekingalpha.com/article/4053152-u-s-economic-growth-slowing-q1

A recession might be seen as “less damage” than GOP being successful.[/quote]

A recession will likely occur regardless of Yellen.

Reminds me of Gingrich blaming high gas prices on Obama.

[ocrenter]

[img_assist|nid=26260|title=Rich’s valuation graph|desc=…|link=node|align=left|width=100|height=86]

Just roughly looking at Rich’s valuation graph. Peak was 180, historic median at 105. That was roughly 40% reduction. You got a few folks that lucked out and hit 50% reduction, just like you had some folks that got 30% reduction, the average thus being 40%.

Now we are at 125, getting down to historic median of 105 takes a 15% drop, not 50%.

Very likely given timing wise we are due for a recession soon.

The question here is it is a no brainer to wait for the bubble crash. Is it worth waiting for a 15% cyclical adjustment.

[no_such_reality]

[quote=Rich Toscano][quote=no_such_reality]True, but only because the Government intervened and allowed all the weak hands to hold properties. Especially the banks.[/quote]

What’s that got to do with it?[/quote]

In order for prices to fall, homes have to be allowed to sell. That banks were allowed to constrict supply, not liquidate their repos, not foreclose and float their balance sheets to prevent steeper falls on home prices. You add HAMP, HARP and HARP 2.0 and homes that would have ended up on the market were all kept off the market.

[Rich Toscano]

[quote=no_such_reality][quote=Rich Toscano][quote=no_such_reality]True, but only because the Government intervened and allowed all the weak hands to hold properties. Especially the banks.[/quote]

What’s that got to do with it?[/quote]

In order for prices to fall, homes have to be allowed to sell. That banks were allowed to constrict supply, not liquidate their repos, not foreclose and float their balance sheets to prevent steeper falls on home prices. You add HAMP, HARP and HARP 2.0 and homes that would have ended up on the market were all kept off the market.[/quote]

I meant, what does that have to do with the current conversation? I don’t see the relevance.

[an]

[quote=millennial][quote=AN]As long as they’re still living here, then they can only drive rental price up, not down.[/quote]
What if no one can afford to buy higher rental apartments due to wages not increasing?[/quote]
Then they would move out of SD or become homeless. If they’re here, then they won’t be driving down rent.

[no_such_reality]

[quote=Rich Toscano][quote=no_such_reality][quote=Rich Toscano][quote=no_such_reality]True, but only because the Government intervened and allowed all the weak hands to hold properties. Especially the banks.[/quote]

What’s that got to do with it?[/quote]

In order for prices to fall, homes have to be allowed to sell. That banks were allowed to constrict supply, not liquidate their repos, not foreclose and float their balance sheets to prevent steeper falls on home prices. You add HAMP, HARP and HARP 2.0 and homes that would have ended up on the market were all kept off the market.[/quote]

I meant, what does that have to do with the current conversation? I don’t see the relevance.[/quote]

I was responding to the comment that prices didn’t fall 50% post bubble, which they didn’t, but only because the market was massively tampered with.

For going forward it’s not, other than we didn’t have the shake out we should have and many are still priced in constricting supply. They can get the price they need to get out, but really can’t get a new place short of leaving the State.

That actually points to continued rising prices. It’s kind of like Irvine. Why are prices so high in Irvine? The answer is simple, IMO, from 2010 to 2015 Irvine has built several thousand homes, they’ve only built 4000 detached SFRs. Since 2010, Irvine’s population has grown, from 2011 to 2015 the number of Irvine household’s making over $200K/yr has grown by 4000+ households.

JIMHO, but for suburbanite living like in Irvine, the detach SFR is the style of housing the vast majority desire.

[moneymaker]

I realize my original post is not 100% logical, if house prices just keep up with inflation and interest rates rise from here on then now, and I mean right now, might have been a good time to buy, but going forward with rates potentially going up and house prices not softening then I would say no, it’s not a good time. I guess I just want to be the first in a while to say we are in a bubble. It feels like 2003/2004 all over again with differences of course. Fewer ARM’s most flippers being REIT’s and have to prove income for individuals/households. Don’t know what will pop this bubble, but I know it will deflate at some point. And as to house prices dropping only 15%, that would mean you would only save about $1000 on the average home reassessment,which would be a smaller savings.

[Author]

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