[millennial]

[quote=AN][quote=millennial][quote=AN][quote=millennial]It really could be as simple as people just making more money due to raises, inflation, or investment income.[/quote]Inflation isn’t huge over just 5 years time frame. As for the rest, does it really how more households are making their money? As long as they make more money, I think that’s all that matters.[/quote] I guess what I meant was that those are rationales for why median income in an area might have nothing to do with new affluent people moving in…and probably way more likely. Not sure what % of your zip code moves in a year, but I doubt it’s more than 3%. I[/quote]Off the cuff calculation, ~11% of household changed hands over 5 years give or take a few %. Which is a little less than 3%/year.

I never said median income have anything to do with more affluent people moving in. However, data showing more affluent families increasing while less affluent families decreasing in # does say exactly that.[/quote]

If that 11% is correct then it probably means exactly that. Still not sure how it relates to higher property values. I think it may also have to do with older people moving out and younger families moving in

[millennial]

[quote=AN][quote=millennial]I think NSR had 8.7% increase and AN said that inflation adjusted medians decreased[/quote]8.7% is the inflation rate over the 5 years between 2010 to 2015. $63069 * 1.087 = $68556.[/quote]

Yes that’s what I said

[millennial]

[quote=no_such_reality][quote=Rich Toscano]
From 2010 to 2015, nominal per capita income increased by over 21%. (Per capita is different from median household, but in terms of growth rates they are extremely similar).

To argue that nominal incomes from 2010-2015 increased less than 2% (no_such_reality) or that they decreased (AN) is way off base.[/quote]

Rich, you’re confusing Average (Mean) and Median.

Per Capita is average income per person. i.e. Total aggregate income divided by number of people.

Median is income is 547001st household making.[/quote]
I think he gets it. I think he’s misreading

[millennial]

[quote=AN][quote=millennial]It really could be as simple as people just making more money due to raises, inflation, or investment income.[/quote]Inflation isn’t huge over just 5 years time frame. As for the rest, does it really how more households are making their money? As long as they make more money, I think that’s all that matters.[/quote] I guess what I meant was that those are rationales for why median income in an area might have nothing to do with new affluent people moving in…and probably way more likely. Not sure what % of your zip code moves in a year, but I doubt it’s more than 3%. I

[millennial]

I think NSR had 8.7% increase and AN said that inflation adjusted medians decreased

[millennial]

[quote=Rich Toscano]

I don’t understand what you are trying to say here. I’m not talking about the ranges (over 150k or whatever), I am talking about this sentence:

“During that period median income was essentially flat moving from $63K to $64K.”

INFLATION ADJUSTED income went from 63-64k. Nominal income (which is what’s implied when you just say “income”) increased a lot more than that.[/quote]

He’s trying to pull inflation out of the variable so that he can take an apples to apples approach and make a hypothesis that the difference between haves and have nots increased during that timeframe. Either way it’s not very good research and has a billion homes in it

[millennial]

[quote=AN][quote=millennial]It’s called data mining and selection bias to try and prove a point. To which I am not sure of. So bifurcation is creating home values to go up? Why did you choose San Diego county as a whole? Why did you choose 2010? Is it cause it served some purpose comparing a time soon after the collapse? Why did you choose households greater than $200k?[/quote]Not everyone need to be able to afford to buy a house. You just need the population who can afford to buy here to grow. Hence the $150-199k and >$200k group. You can look up data for your own sub area if you want. I looked up mine and it reflect similar to SD county numbers. My area have no new housing, so no new household addition. Just long time owners being replaced by newer more affluent owners. $100-149k group went from 22.1% to 25.7% of the area, $150-199k group went from 9.6% to 10% of the area, and >$200k group went from 4.5% to 5.5% of the area. When you have more affluent people moving in, they tend to push the the price.[/quote]

To be honest it’s hard to say that your hypothesis is true without looking at other additional variables. Other variables I would include off the top of my head would include but not be limited to: home turnover %, average ages, and inflation. I would also have to look at the candlestick to see which % are on the cusps of each of those segments. It really could be as simple as people just making more money due to raises, inflation, or investment income. Not sure exactly how much the Dow went up during that timeframe but I imagine that it did.

[millennial]

[quote=no_such_reality]That’s the bifurcation of income we’re seeing and often talk about on the blog. If you break it down into the ‘more desirable’ living areas, I suspect it’s more pronounce.

Essentially, we have the top 20% growing their income (and as you go up the gains get greater) and 80% holding or losing ground.[/quote]
It’s called data mining and selection bias to try and prove a point. To which I am not sure of. So bifurcation is creating home values to go up? Why did you choose San Diego county as a whole? Why did you choose 2010? Is it cause it served some purpose comparing a time soon after the collapse? Why did you choose households greater than $200k?

[millennial]

[quote=kev374]I think I still did not get an answer to the question – if you had $300,000 sitting in the bank in CASH, what you would do with it now???

How would you diversify? What type of funds would you buy?

I want to get neutral advice from regular people without vested interests because I DO NOT TRUST financial advisers, I think they are scam artists.[/quote]

If you are putting it all in the market it would probably depend a lot on your personal financial situation (age/personal liquidity etc.) and what you are planning on using it for (extra income/retirement/day to day living expenses/gamble).

I’m not a professional, but my strategy is to put it into low fee index funds that are based on the S&P 500. Personally I would put in about 5% or so a week (dollar cost avg) until I reach the amount that I feel comfortable with. Again depending on your age, you will want to diversify you funds with more/less in bonds, international, small cap/large cap etc.. For investment firms, I personally like Vanguard funds. They have a lot of no load options.

[millennial]

[quote=gzz]In the long run pop growth is important. But the reason we have weak native population growth is women are delaying children and marriage or not marrying at all. So that is bullish for the market as single women earn more and for a longer time than their married peers, and may also buy a house or condo and live alone. The technical term for this trend is a decrease in household size. Even when they do have children, once a woman hits three kids daycare usually is more expensive than working at even a upper middle class job. But this happens much less often. So instead of a one income couple with three kids we have more dual income couples with one kid who use that double income to bid up rents and house prices. [/quote]
Sorry I think this is all BS. Less people = less people who need a place to live = smaller house = smaller amount of $ spent on housing. Even your second point doesn’t make sense. less people having to be at office = less requirement to live close to office = more people being able to move in less expensive areas like Temecula and Murrietta.

Your basic premise that people will spend every cent they have to buy a bigger, or more expensive house is ridiculous. I bought my house with 5 bedrooms because I have 3 kids. If it was just my wife and I, we would live in a 2 bedroom house and spend our money on traveling and investments. Whoever thinks a house brings happiness is a fool. If anything, I would rather have less so I could be tied to nothing (including my job) if I want to take off.

[millennial]

.

[millennial]

[quote=gzz]Millennial, rates do not need to fall to support appreciation.

Right now buy v rent comparisons strongly favor buying in SD, even without assuming rising rents making renting even worse and rising prices making buying better.

My Nov 2016 condo purchase is already rented out well above the mortage payment, and on top of that each payment reduces my balance and the tax and interest is deducted from expenses from ordinary income too. I got a pretty good price on it, but even if I paid 15% higher it would still not only be profitable, but more profitable than risk free gov bonds. I would happily buy a 4th property but I am close to tapped out on DP and current condo inventory in rental income. For first and 2nd home buyers, they can deduct these 92107 stands at a whopping 3. (In March 2011 condo inventory in 92107 was 53!).[/quote]

I said that rates are one of the major variables on the demand side of the equation. Regarding the rent vs. buy decision, although there is some correlation for investor owned properties that can cash flow (such as condos, apartments)where valuation is dictated by NOI/Cap Rate(ROI)it doesn’t lend itself well with Residential Real Estate which is determined by a different set of factors. The majority of homes, mine included, wouldn’t be able to cash flow for my purchase price; but would still appraise significantly more due to recent comps. Do I feel that the value of my home is going to continue to go up with increased interest rates? Probably not, but why do I care; it’s not like I bought my house as an investment, it’s a place for me to raise a family. If it was just me, I would probably sink the liquidity into another apartment building.

[millennial]

[quote=no_such_reality]You forgot the tickle down expectations issue. AKA, settling for less.

From 2010 – 2015, detached housing in San Diego county grew by just over 8800 units.

In that same period, households in San Deigo county making more than $200K/yr grew by 15,400 households. Household making $150K-$199k grew by 8900 households.

During that period median income was essentially flat moving from $63K to $64K.

And with 606K SFRs in the county, not really a dent. However in the same time period of 2010 to 2015, total housing in San Diego grew by 26K units of all types while the population grew by 128,000 or roughly a housing need of 48K units of all types at historical owner/renter mix rates.

Finally, in 2010, homeowner vacancy rate was 2.6%, in 2015, it has fallen to 1.5%. Rental vacancy has also fallen from 4.9% to 4.1%.[/quote]

So basically supply and demand. I get where you are coming from, but I think that it would affect rental rates much more, which some would argue increases the $ threshold in the rent vs. buy decision. The only counter I would have to that would be the down payment requirement. Although people do like San Diego because of the weather, at some point if wages do not increase to match living costs with a little cushion to save; San Diego will end up like other places like Santa Barbara, or Hawaii which cater mostly to upper middle class retirees who are not reliant on a 9-5 job.

[millennial]

From the demand side of the equation I don’t really see how we can get away from monthly P&I vs. Income when a considerable % of people rely on mortgages in order to pay for their home. So in my equation I only can see two ways for valuations to continue to increase; 1) lower monthly P&I (interest only/creative financing/lower rates), or 2) increases in income or inflation. Based on laws enacted since the last bubble and interest rates increasing I don’t see scenario 1) playing out. scenario 2, is a possibility, but I don’t see income rising anytime soon in San Diego. From my perspective, it seems that San Diego will always be a Tier II market falling behind in pay when compared to large cities or metro areas like LA and OC/SF and Silicon Valley, and NYC. Unless we can get there income wise, property values will always have a comparative glass ceiling to keep SD prices in check. Inflation…I can see the government wanting controlled inflation somewhere around the 6%-8% range on the 30-year.

[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?

[Author]

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