New boom, or new bubble? I New boom, or new bubble? I vote for the latter.
spdrun
October 13, 2012 @
7:56 AM
Not unless rents (for Not unless rents (for investors) or incomes (for buyers with mortgage) go up dramatically. Deals have to make sense now, either from a dividend standpoint or from an underwriting standpoint.
scaredyclassic
October 13, 2012 @
8:00 AM
21% chance new bubble. no 21% chance new bubble. no chance of a new boom.
The-Shoveler
October 13, 2012 @
9:33 AM
In 2009 this was what I was In 2009 this was what I was predicting (within 10% of peak again between 2015-2017).
Now I don’t know, not seeing the wage inflation I was expecting.
Really minimum wage should be about $15.00 IMO.
We will see.
ocrenter
October 13, 2012 @
12:09 PM
the market seems hot because the market seems hot because the inventory is so low and the interest rate is so low.
but let’s remember this is the bottom, and no one wants to sell at the bottom if they can help it. plus banks are transitioning their strategy to encouraging short sales, which has dried up the foreclosure pipeline.
the prices will go up, the inventory will increase because of the price increase, which will slow down the trajectory of the rise. thus, not another housing boom by 2015.
ocrenter
October 13, 2012 @
12:45 PM
probably a normal market by probably a normal market by 2015. if they keep the interest rate low, then they may create another beginning of a bubble.
an
October 14, 2012 @
1:01 AM
Has there ever been a normal Has there ever been a normal market that didn’t turn into a boom that didn’t turn into a bubble that didn’t turn into a bust? I don’t expect price to grow at a “normal” pace for too long. My guess is, we’ll see normal, then boom, then bubble, then bust again. So, when I say boom, I simply mean that price is on an upward trajectory again. In some place, it’s much more drastic than others.
ocrenter
October 14, 2012 @
9:10 AM
AN wrote:Has there ever been [quote=AN]Has there ever been a normal market that didn’t turn into a boom that didn’t turn into a bubble that didn’t turn into a bust? I don’t expect price to grow at a “normal” pace for too long. My guess is, we’ll see normal, then boom, then bubble, then bust again. So, when I say boom, I simply mean that price is on an upward trajectory again. In some place, it’s much more drastic than others.[/quote]
I was looking at the more specific comment of “peak” pricing by 2015. And remember, there’s the typical up and down of real estate market, then there’s the bubble of 2005. was the peak pricing by 2015 relating to 2005 peak pricing?
If you define boom as simply price increase as part of the traditional up and down of the market, I guess we are in agreement.
peterb
October 14, 2012 @
1:35 PM
Restricted supply and a Restricted supply and a mortgage rate that may well dip below 3%!! Mini bubble is probably the outcome as this kind of cheap money will get a lot of people off the fence. Especially if it now makes them in the rent parity zone. All the while inventory stays quite low.
NotCranky
October 14, 2012 @
1:58 PM
peterb wrote:Restricted [quote=peterb]Restricted supply and a mortgage rate that may well dip below 3%!! Mini bubble is probably the outcome as this kind of cheap money will get a lot of people off the fence. Especially if it now makes them in the rent parity zone. All the while inventory stays quite low.[/quote]
The rates we have, let alone getting down to 3 percent on Primarys will enable a lot of young people to be first time rental buyers, and more seasoned investors to regroup and go at it a little more. I think we have seem some of that.
livinincali
October 15, 2012 @
9:24 AM
Blogstar wrote:peterb [quote=Blogstar][quote=peterb]Restricted supply and a mortgage rate that may well dip below 3%!! Mini bubble is probably the outcome as this kind of cheap money will get a lot of people off the fence. Especially if it now makes them in the rent parity zone. All the while inventory stays quite low.[/quote]
The rates we have, let alone getting down to 3 percent on Primarys will enable a lot of young people to be first time rental buyers, and more seasoned investors to regroup and go at it a little more. I think we have seem some of that.[/quote]
Leverage is way more important than rates for first time buyers. Nothing will kill the housing market faster than a return to 20% down. FHA and the 3.5% down is the biggest factor for first time buyer. If that were to go away or become too prohibitive via insurance costs (PMI), sellers would be in trouble.
CA renter
October 15, 2012 @
6:40 PM
Once again, have to agree Once again, have to agree with livinincali. FHA is the new subprime, though people do at least have to prove that they are living and earn an income, thankfully.
Jazzman
October 15, 2012 @
7:25 PM
A tax credit type bubble, A tax credit type bubble, which will bring forward buyers from the future and may eventually put many underwater as normal conditions return and prices fall in line with incomes.
CA renter
October 14, 2012 @
7:18 PM
peterb wrote:Restricted [quote=peterb]Restricted supply and a mortgage rate that may well dip below 3%!! Mini bubble is probably the outcome as this kind of cheap money will get a lot of people off the fence. Especially if it now makes them in the rent parity zone. All the while inventory stays quite low.[/quote]
Yes, and it will be a mini-bubble only if the Fed changes course in the near future (not likely). If they keep up with the ZIRP for much longer, then I believe this will end up being another larger, very damaging bubble.
They are playing with fire, and nobody seems to care.
spdrun
October 14, 2012 @
8:37 PM
Only differences between now Only differences between now and 2005 are that:
(a) appraisals are much lower and stricter
(b) lending standards are much tighter — try getting a -5% down loan without documentation in 2012
peterb
October 14, 2012 @
11:49 PM
I’d also add that there are I’d also add that there are many people still under house arrest as their mortgage is underwater. So they may not even get a chance to refinance at these levels let alone become new buyers. Again, I think this will motivate those that have been sitting on the fence. Who’s left that can qualify for these mortgages?
I know a couple that just purchased a $730K house. They said that they were put through the wringer to get the loan. But I did read the appraisal very carefully and it looked a bit massaged in order to get the deal done.
ocrenter
October 15, 2012 @
9:13 AM
did Rich ever do a chart did Rich ever do a chart comparing interest rate and housing trend?
October 12, 2012 @ 10:56 PM
According to this CNN
According to this CNN article, we might be seeing peak price as soon as 2015. Thoughts?
http://money.cnn.com/2012/10/12/news/economy/housing-boom/index.html?iid=HP_LN
October 13, 2012 @ 1:25 AM
New boom, or new bubble? I
New boom, or new bubble? I vote for the latter.
October 13, 2012 @ 7:56 AM
Not unless rents (for
Not unless rents (for investors) or incomes (for buyers with mortgage) go up dramatically. Deals have to make sense now, either from a dividend standpoint or from an underwriting standpoint.
October 13, 2012 @ 8:00 AM
21% chance new bubble. no
21% chance new bubble. no chance of a new boom.
October 13, 2012 @ 9:33 AM
In 2009 this was what I was
In 2009 this was what I was predicting (within 10% of peak again between 2015-2017).
Now I don’t know, not seeing the wage inflation I was expecting.
Really minimum wage should be about $15.00 IMO.
We will see.
October 13, 2012 @ 12:09 PM
the market seems hot because
the market seems hot because the inventory is so low and the interest rate is so low.
but let’s remember this is the bottom, and no one wants to sell at the bottom if they can help it. plus banks are transitioning their strategy to encouraging short sales, which has dried up the foreclosure pipeline.
the prices will go up, the inventory will increase because of the price increase, which will slow down the trajectory of the rise. thus, not another housing boom by 2015.
October 13, 2012 @ 12:45 PM
probably a normal market by
probably a normal market by 2015. if they keep the interest rate low, then they may create another beginning of a bubble.
October 14, 2012 @ 1:01 AM
Has there ever been a normal
Has there ever been a normal market that didn’t turn into a boom that didn’t turn into a bubble that didn’t turn into a bust? I don’t expect price to grow at a “normal” pace for too long. My guess is, we’ll see normal, then boom, then bubble, then bust again. So, when I say boom, I simply mean that price is on an upward trajectory again. In some place, it’s much more drastic than others.
October 14, 2012 @ 9:10 AM
AN wrote:Has there ever been
[quote=AN]Has there ever been a normal market that didn’t turn into a boom that didn’t turn into a bubble that didn’t turn into a bust? I don’t expect price to grow at a “normal” pace for too long. My guess is, we’ll see normal, then boom, then bubble, then bust again. So, when I say boom, I simply mean that price is on an upward trajectory again. In some place, it’s much more drastic than others.[/quote]
I was looking at the more specific comment of “peak” pricing by 2015. And remember, there’s the typical up and down of real estate market, then there’s the bubble of 2005. was the peak pricing by 2015 relating to 2005 peak pricing?
If you define boom as simply price increase as part of the traditional up and down of the market, I guess we are in agreement.
October 14, 2012 @ 1:35 PM
Restricted supply and a
Restricted supply and a mortgage rate that may well dip below 3%!! Mini bubble is probably the outcome as this kind of cheap money will get a lot of people off the fence. Especially if it now makes them in the rent parity zone. All the while inventory stays quite low.
October 14, 2012 @ 1:58 PM
peterb wrote:Restricted
[quote=peterb]Restricted supply and a mortgage rate that may well dip below 3%!! Mini bubble is probably the outcome as this kind of cheap money will get a lot of people off the fence. Especially if it now makes them in the rent parity zone. All the while inventory stays quite low.[/quote]
The rates we have, let alone getting down to 3 percent on Primarys will enable a lot of young people to be first time rental buyers, and more seasoned investors to regroup and go at it a little more. I think we have seem some of that.
October 15, 2012 @ 9:24 AM
Blogstar wrote:peterb
[quote=Blogstar][quote=peterb]Restricted supply and a mortgage rate that may well dip below 3%!! Mini bubble is probably the outcome as this kind of cheap money will get a lot of people off the fence. Especially if it now makes them in the rent parity zone. All the while inventory stays quite low.[/quote]
The rates we have, let alone getting down to 3 percent on Primarys will enable a lot of young people to be first time rental buyers, and more seasoned investors to regroup and go at it a little more. I think we have seem some of that.[/quote]
Leverage is way more important than rates for first time buyers. Nothing will kill the housing market faster than a return to 20% down. FHA and the 3.5% down is the biggest factor for first time buyer. If that were to go away or become too prohibitive via insurance costs (PMI), sellers would be in trouble.
October 15, 2012 @ 6:40 PM
Once again, have to agree
Once again, have to agree with livinincali. FHA is the new subprime, though people do at least have to prove that they are living and earn an income, thankfully.
October 15, 2012 @ 7:25 PM
A tax credit type bubble,
A tax credit type bubble, which will bring forward buyers from the future and may eventually put many underwater as normal conditions return and prices fall in line with incomes.
October 14, 2012 @ 7:18 PM
peterb wrote:Restricted
[quote=peterb]Restricted supply and a mortgage rate that may well dip below 3%!! Mini bubble is probably the outcome as this kind of cheap money will get a lot of people off the fence. Especially if it now makes them in the rent parity zone. All the while inventory stays quite low.[/quote]
Yes, and it will be a mini-bubble only if the Fed changes course in the near future (not likely). If they keep up with the ZIRP for much longer, then I believe this will end up being another larger, very damaging bubble.
They are playing with fire, and nobody seems to care.
October 14, 2012 @ 8:37 PM
Only differences between now
Only differences between now and 2005 are that:
(a) appraisals are much lower and stricter
(b) lending standards are much tighter — try getting a -5% down loan without documentation in 2012
October 14, 2012 @ 11:49 PM
I’d also add that there are
I’d also add that there are many people still under house arrest as their mortgage is underwater. So they may not even get a chance to refinance at these levels let alone become new buyers. Again, I think this will motivate those that have been sitting on the fence. Who’s left that can qualify for these mortgages?
I know a couple that just purchased a $730K house. They said that they were put through the wringer to get the loan. But I did read the appraisal very carefully and it looked a bit massaged in order to get the deal done.
October 15, 2012 @ 9:13 AM
did Rich ever do a chart
did Rich ever do a chart comparing interest rate and housing trend?