Real Estate Crash thread

[4matic]

Bay area is bar none the most retarded real estate market out there.

The numbers in the article are skewed as described. It's a fragmented market and I anticipate a lot of inventory this spring but I'm no expert.

[cramer]

The numbers in the article are skewed as described. It's a fragmented market and I anticipate a lot of inventory this spring but I'm no expert.

I'm not sure where the inventory is going to come from. They are building houses again all over the place in the outer bay area communities. The banks have had to modify loans, short sale homes, principal reductions, etc. Not to say the loan mod and reductions folks wont default again, but thats why there is no inventory right now. The one's who will be hurting are first time home buyers. There's nothing out there anymore. Too many investors bidding up REO's and snatching them up at auctions. As stated, if you didnt buy in the bay area between end of 2008 to the end of 2010 you might as well sit on the sidelines another 10 years for the next recession/depression. My value has increased since mid 2011. And im out in BFE that would barely qualify as bay area. People in the closer and nicer areas, their values must be skyrocketing.

[Benny Profane]

Bay area is bar none the most retarded real estate market out there.

Yeah, basically.

[mud]

Corelogic reported yesterday that home prices rose by 7.4% ended in November 2012 increasing for nine straight months, which is the largest year-over-year increase since 2006. This reading includes the sales of distressed properties and short sales.

[13]

Maybe I'm an idiot, but I think the spike in prices right now is temporary.

[mud]

Doubtful, inventory is dropping fast and the number of homes listed for sale at the end of 2012 stood at the lowest level in more than five years, it’s been a buyers’ market for a while. Inventories were down in 30 of largest housing markets.

Housing Starts also climbed by 12.1% in December which is the highest reading since June 2008. Building Permits, moved higher as well which is atypical for December.

[Benny Profane]

Doubtful, inventory is dropping fast and the number of homes listed for sale at the end of 2012 stood at the lowest level in more than five years, it’s been a buyers’ market for a while. Inventories were down in 30 of largest housing markets.

Housing Starts also climbed by 12.1% in December which is the highest reading since June 2008. Building Permits, also climbed higher which is atypical for December.

What flavor kool aid did you drink.

Seems the banks won. They are holding an enormous amount of inventory off the market, as they have been for years now. Include the millions of pre foreclosures and product backed up in the judicial pipeline in certain states, and there is plenty of inventory. One can only speculate about the pent up selling demand that has been sitting dormant for five years waiting for prices to rise. Buyer's demand? Where is it? Money has never been cheaper. Why aren't there bidding wars in cheap markets? It's just cash buyers buying distressed. The first time buyer is still living in Mom's basement, and the move up buyer is underwater.

[liv2ski]

Maybe I'm an idiot, but I think the spike in prices right now is temporary.

What I find interesting is how low US rates are compared to the rest of the world. Many countries do not even offer a 30 year fixed loan and on ltv's above 80%, the rates go up a lot. Contrast that to the US were you can get a 30 year FHA loan at 3% with only 3.5% down. Obviously the FED is doing all it can to support US home values. Can the Bernank continue to hit the Ctrl P button into infinity, to buy up all the MBS and Treasury paper out there, to keep rates low for the years needed for wages and the economy to catch up to home prices? I don't know and honestly no longer care. However, I do agree with you that it is tough to defy the natural forces of the marketplace forever and at some point rates will go up and then my business will be very slow and prices will likely come down a bit, but not a bunch or the FED will step in to kick that can down the road some more. All that said, if you have a long term ownership opportunity that works for you. Go for it, as rates are low and the chances of prices going down 20% are likely slim.

[mud]

What flavor kool aid did you drink.

Can't handle the facts?
Everybody has to live in your shitstained world?
You're obviously not in the business and enjoy talking out your ass on things you know nothing about.
Keep yapping, it's entertaining.

[Benny Profane]

Can't handle the facts?
Everybody has to live in your shitstained world?
You're obviously not in the business and enjoy talking out your ass on things you know nothing about.
Keep yapping, it's entertaining.

Are you in the business? Don't tell me, you're a broker.

[mud]

Nope, evil banker.

[Benny Profane]

Oh, well, then, back in your hole.

[13]

What impact do you think the upcoming deluge of retiring baby boomers will have on pricing?

I know, location location location... Still interesting to ponder as a shitton of waterfront homes in my area are owned (ahem) by boomers.

[Hugh Conway]

Doubtful, inventory is dropping fast and the number of homes listed for sale at the end of 2012 stood at the lowest level in more than five years, it’s been a buyers’ market for a while. Inventories were down in 30 of largest housing markets.

Spreadsheet's to justify your feelings.


Still plenty of pentup demand for people to sell their homes and move on. A majority of the locals failed to sell their house, often repeatedly, in the past 5 years. A few (~20-30%) have relisted and sold recently but there's still plenty looking to sell. And that's not counting the people still way underwater from buying at the height. (in the Bay Area)

[iceman]

Spreadsheet's to justify your feelings.

Here's some stuff to reflect upon at least: Redfin Blog

My gut is that a lot of money is going to be made in desirable markets over the next three years.

[liv2ski]

Spreadsheet's to justify your feelings.

Read this link, as I feel it is well written and has the charts/spreadsheets to back up the guys thoughts.
http://www.doctorhousingbubble.com/i...+Love+SoCal%29

[Benny Profane]

What impact do you think the upcoming deluge of retiring baby boomers will have on pricing?

I know, location location location... Still interesting to ponder as a shitton of waterfront homes in my area are owned (ahem) by boomers.

It's huge. Most Boomers have no savings. Most of their net worth is tied up in their home, which is far from liquid - you gotta live somewhere. Their kids will split it up after the funeral. But, that said, they have much more in assets than any younger generation.

[Hugh Conway]

Here's some stuff to reflect upon at least: Redfin Blog

My gut is that a lot of money is going to be made in desirable markets over the next three years.

Maybe so, I dunno. Guess I look at places like this (if it's not exactly this place,it's the one either side):
http://www.zillow.com/homedetails/19...16112539_zpid/
Where rental income:
http://sfbay.craigslist.org/scz/roo/3552085029.html
won't cover a mortgage for a current sale, much less depreciation and still think things are overvalued locally. (though based on the assessed value, the owner is sitting pretty and raking it in on that one). Particularly when the rental market is now it seems dominated by UC students who's parents are forking over serious $ for rent <- a situation that I'm not sure can continue.

That said, there's probably markets and properties that will do well

[4matic]

Read this link, as I feel it is well written and has the charts/spreadsheets to back up the guys thoughts.
http://www.doctorhousingbubble.com/i...+Love+SoCal%29

Reasonable, although assuming a 7% return in the stock market for 30 years is optimistic. Another point I would question is his 1% rule. With rates less than half what they were a few years ago the 1% rent rule is obsolete.

[Hugh Conway]

Another point I would question is his 1% rule. With rates less than half what they were a few years ago the 1% rent rule is obsolete.

New metrics! Wooohoo

[4matic]

New metrics! Wooohoo

A $400,000 property should rent for $4k dollars a mo? Who is he kidding? That's not realistic on any metric.

[chatton18]

I probably shouldn't join this shitshow, but a few points.

1. Based on median rents and conventional mortgages, it is cheaper to own than rent right now, however you need 20% to put down and good enough credit to qualify for a good mortgage. Most young people (the net new buyers) don't have this money and/or credit as they are faced with building student loans, car debt, credit card debt, etc. and tend to remain high spending singles for later in life as they are getting married later in life.
2. The myth of ever rising home prices has been busted so people don't think it's a fail safe investment anymore. They aren't willing to over allocate money into a house that they may lose.
3.

Obviously demographic trends don't favor things as our old age dependency ratio increases.
4. Hidden supply remains at banks and at vacant units that are being held off the market for other reasons by owners.
5. A recent increase in housing starts will come back to bite builders in the butt, household formation has been low in recent years and look for this trend to continue.

[4matic]

Baby boomers will create jobs in health care, travel, leisure, and home services as they age. The dire predictions of demographic shift are overplayed.

[chatton18]

4matic - How are they going to pay for those jobs?

[Hugh Conway]

4matic - How are they going to pay for those jobs?

Oh no you didn't