California heading to a majority renter state: How will this change the way Californians view housing?
The trend of having the most populated state in the United States becoming one where the majority of households are renters is on track. California is morphing into a renter’s paradise. This reality isn’t a surprise and we have some sizable generational shifts that are occurring. We have millions of adult Millennials living at home with their parents. You also have an interesting situation where home prices are high relative to what people can support but sales volume still remains low. Looking at the California Association of Realtors (CAR) for some data you can find that this is also perplexing the group. Ultimately you want sales volume to be high to churn those commission checks but that is not occurring. Builders are building more multi-family unit housing to satisfy the market demands. Yet in the end, it is clear that most Californian households are unable to afford a home and are opting to rent.
California heading to renting majority
California is steadily heading to a renting majority. We called this trend a few years ago and now the CAR is also calling it:
Cow why this is important is that voters are going to perceive issues like Prop 13 becoming something less about them and more about the “other†and in our political climate, this is going to be an issue. Affordability is important and many in California are stretched thin on their budgets. The amount of debt flowing through our economy is troublesome. Even a minor recession at this point can unlock some potentially devastating economic waves in our economy. Waves that will undoubtedly hit housing.
People at this point are stretching their budgets to get into homes with low mortgage rates. Yet we’ve already seen selling volume stagnate and price reductions becoming more common. Take a look at some ratios that may be of interest:
Prices again seem out of line with the trend here. While not as high as the previous housing bubble they are high nonetheless. If you want to value a home like a business, things at this point seem a bit inflated. I’m sure there is a desire to buy a home but builders have pulled back on single family homes and have focused more of their attention on multi-family units. This is creating supply issues but when we look at households, they are opting to rent over owning.
A changing mindset is also happening with Millennials. As mentioned before, many live at home with their parents and for many the next logical step is an apartment, not purchasing a crap shack. Also, the stigma of renting is probably going to be less when the majority of the state rents. I’ve seen in many prime neighborhoods where rentals are popping up in large numbers for single family homes. These are areas that were largely owner-occupied regions but something is now shifting.
People have also gotten savvier that there is an opportunity cost to buying a property. Just because you bought a place does not mean you “own†it in the sense of how it is marketed. You typically have a giant 30-year mortgage that serves as fixed rent. Also, once you pay the place off (aka mortgage), you will still continue to have expenses like property taxes, insurance, and maintenance that will continue for as long as you live.
What this means is that people are now wiser to other options. Maybe the only thing they can do is rent. Some will buy and it will make sense. Some will opt to rent and invest the difference in stocks or their business. And like many others, people will move out of the state to more affordable locations.
With California heading to a renting majority state, expect to see perceptions on housing change. Â Â Â Â Â Â Â
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340 Responses to “California heading to a majority renter state: How will this change the way Californians view housing?”
Can you imagine sometime in the near future with a 80% of population renting their home?
This will modify the way people is voting on elections.
One day one politician will start the speech of rent regulation/socialism and people will vote him/her…
Capitalism is destroying itself. Wait a few years.
It’s not just a millennial versus boomer issue. Sure, housing costs are high for millennials, but hospital costs will eat the Boomers alive. Hospitals are extra expensive in CA: http://www.clinicpricecheck.com.
They are already looking to go after Boomer housing equity.
You may be right about the end to capitalism.
https://getpocket.com/explore/item/the-end-of-capitalism-is-already-starting-if-you-know-where-to-look?utm_source=pocket-newtab
This is more globalist propaganda in order for people willingly to embrace a global totalitarian regime. Concentrating more and more power in the hands of few mentally deranged is not going to bring people higher standards of living and more freedom (imagine AOC president with Maxine as VP).
Presently we do not have a capitalist economy. A capitalist economy implies a free market. For example, the interest is set by free market forces, people are not coerced to buy a product from a private sector company (see Obamacare). The FED has as much power as the Central Committee of the Politburo and act as such, planning the economy. Banks under free markets are allowed to fail when they make stupid decision; TBTF is not a feature of capitalism but communism. The moral hazard will ensure more of the same in the future, on a larger scale.
Rent control is not a feature of free markets and capitalism (it is practiced state wide in OR and many cities controlled by communists – I mean democrats). If we control prices for housing (in the name of human right), pretty soon will have price control on food (even more so a human right). At that point, you will see empty shelves and no farmers (see Venezuela).
Capitalism is the best form of economic system devised to date, but US, in gradual steps is eliminating it, by brainwashing the younger generation.
Churchill made an accurate assessment of capitalism and socialism:
“Socialism is the philosophy of failure, the creed of ignorance, and the gospel of envy.â€
“The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of Socialism is the equal sharing of miseries.â€
As someone who lived for decades under socialism and decades under semi-capitalism I agree that he was correct 100%.
Given the concerns about our Republic I think it is important we hear arguments from the other side to reveal the holes they have in them. I agree the story is still out what becomes of the future for the economy. However, in order to maintain capitalism we need to keep reminding ourselves why we have it and how it has allowed the world to work more free-minded.
Flyover is correct.
Concentrating more and more power in the hands of few mentally deranged is not going to bring people higher standards of living and more freedom
However, the Mentally Deranged Communists did quite well in Russia, Cuba, Vietnam.
Flyover is blind to the danger here. When the majority of the population is pushed by extreme capitalists into situations where not even the majority of people’s income is providing for basic needs, rent, food…, then there will be a huuuge political change.
That is the failure of capitalism. It is like the great game of Monopoly where there is only one winner. The rest are starved to death. Unlike Monopoly, there is a Democratic voting system in the US and the majority react by voting for Socialists like FDR, Warren, and Bernie. In Russia, Cuba, Vietnam, there was no voting. Look how that turned out.
True capitalists are like lemmings and will march themselves over a communist cliff with no regard for all of the warning signs. “Let them Eat Cake” as one failed ruler said before she was beheaded.
It does remind me of a memorable comic strip from the 1960”s
https://starlogic.ca/2018/12/13/the-peasants-are-revolting/
It is the arrogance of the capitalists, crony capitalists, dictators, monarchists, that will bring about change. Whether it is by democratic voting in the US or violent revolution like Flyover has seen, it will happen.
Even the true capitalists like Flyover see the change is coming and now blame crony capitalists. I agree. However, what are they doing about it to prevent the obvious outcome? Absolutely nothing! Rents continue to rise, and wealth disparity continues to increase.
Like Nero, they will continue to fiddle while Rome burns.
Capitalism needs to destroy itself, or at least evolve into something that works for everyone.
Its hard to blame the younger generation for not wanting to support something that is so skewed to benefit a privileged minority.
Exactly, why should millennials support this market. Instead we want a beautiful economic crash so we can buy stocks and houses at a discount. 50-70% less would be a good number to buy in. Why overpay now just so some old fart gets rich. It’s very likely that old fart received freebies all his life already (cheap housing, prop13 scam, free tuition). Doesn’t make any sense to support the inflated housing market that only screws younger generation and benefits boomers.
Jesus christ Bobc, your comment is so irresponsible.
We haven’t had a pure capitalist economy in ages now. You’re mistaking capitalism with crony capitalism or corporatism and as such spreading horrible misinformation that is truly damaging. If you’re old enough to think for yourself, then I pity you. Critical thinking is only lost on the Millennials, or so I thought.
Capitalism in this country has changed because we have allowed those in power to grab more power. In turn they grow the size of government and inherently you get big biz in bed with big gov, which of course favors those in power. Why do you think they want to stay in office? Nancy Pelosi doesn’t do this for her botox injections. Look at all those perks. Power is addicting like drugs. Absolute power absolutely corrupts. What did you think would happen with such a recipe? The answer isn’t socialism which will destroy us all and the life we are used to. History will not reflect well on this period in time. Instead, how about we go back to basics and figure out how we became the great USA. It was free markets, free speech, free trade. Less gov, less taxes. All we need to do is literally throw this thing in reverse and put a hard cap on political careers. I would even go so far as to make representation a volunteer position, therefore these idiots must maintain a day job and get a W2 like the rest of us peons. You get Obamacare too so any federal law you pass you get to share the burden.
I’m almost 40 years on this planet and I’ve realized over the last 10 or so years that I’m witnessing idiocracy. People are F’n dumb. They can’t think. They can’t rationalize. They can’t even have dialogue without TDS. They have have never faced adversity or anything that breeds character. The younger generations are walking ignorant zombies offended at the sound of a pronoun. They deserve and will own this disaster and hopefully I’ll be dead before it hits rock bottom.
What the current millennials don’t realize is that the Boomers also paid for the generations before them. It is how the system is set up. For example, social security.
I just heard what the current generation, teenagers and early 20’s, is calling themselves: Zoomers! They believe they are here to clean up (including the environment and global warming and all) the mess the Boomers made. They are even recycling the name Boomers into Zoomers!
Unlike big-ego millennials with their oversized….name! 😛
What have we been saying for years and years and years. Long term renting in places like socal is equivalent to financial suicide. If you can’t afford to own here, it’s in your best interest to find cheaper alternatives. Nobody is forcing anybody to stay put in California. As times goes on, the wealth divide between haves and have nots grows and so does the price of desirable CA RE. But what do I know. Listen to the Millie, the blog RE expert…the 50% to 70% will be soon!
For the past 30 years Los Angeles has been 60-70% renters.
Nothing has changed.
In the future expect more landlords and more renters.
More landlords or just landlords with more rentals?
I let my kids stay with me. Why have them pay horrendous money for rent if they can live with us. Sure, they are in prime age for starting a family but the world has changed. In California, the wages are not enough to support the cost of living. A recession might be painful but needed to move the moron out of the White House and to lower asset prices. I am all for it.
Rents are also high due to democrats importing millions of illegals (many times they pool together the financial resources of few families) in their sanctuary state and failing to cooperate with ICE. The high rents give a higher ROI to investors. A higher ROI push up RE prices. The extra millions illegals make also the commuting time an inferno. Absent the extra cars, would allow the commuters to still buy homes further from their job and still have a decent commute time.
All these high RE prices, rents and long commute times lower the standard of living for everyone, with or without money. It is good only for the largest banks who give lots of money to politicians. But keep voting democrat every election expecting different results – that is the definition of insanity. I agree that some republicans are the same when it comes to immigration, being paid by the same crooks – they are RINOs. A true conservative wants strong borders and the illegal immigration eliminated.
You may disagree with what I am saying, but you are the one to suffer the consequences, not me. I live in a small town where I don’t have to deal with all of that. I truly enjoy high quality of life. I bailed out from CA years ago. I gave up fighting millions of stupid and brainwashed voters. There were millions of other smart people who did the same – moved to other states when they could not deal with CA politics anymore.
Amen to this. There is a very simple solution to the illegal immigrant problem in my opinion, and one that doesn’t even require a wall.
1. Eliminate birthright citizenship
2. Eliminate all forms of welfare (including free school and free medical care for illegal immigrants
3. Enact strict enforcement and very stiff penalties for hiring illegal immigrants
If we were to do the above, they would leave on their own- no wall required, no ICE required. And the ones that stayed would actually be productive and would not be a drain on society.
So why are you on this blog constantly if you don’t live in California? Get a life.
You and I are both Ron Paul fans. As a California resident and someone who is trying to figure out an escape route, please share some info about where you currently live.
Incognito, where I live is irrelevant. What works for me does not work for others. On top of that WA state, where I live, is become more and more like CA (not there yet). Those communists in Olympia try to impose their communists ideas on the whole state, even if Eastern WA is conservative. I am thinking of moving again to a more conservative state, maybe in 2 years.
There are lots of places I like one way or another. In general I like small towns; big cities stress me too much. I can live pretty much anywhere; I am not tied to any place. I can take my business with me, therefore I am not looking for a place with high paying jobs.
In terms of climate, every person is different – some people like it hot and some people cold, some people like it wet and green and some like it dry. You know what you like.
As states, I like ID, TN and UT. I used to like AZ, but it’s getting too purple/blue.
Unless we have massive money printing, the RE prices in CA will go down (same for NY, Chicago and NJ). The communists in these states discovered (surprise, surprise) that higher taxes send the wealthy to other states which tax less. That causes them to collect less taxes not more as they expected. Pretty soon they have to make an iron curtain like in Easter Block countries (during communism) to keep these wealthy by force so they can continue to tax them.
https://www.foxbusiness.com/money/california-tax-hike-significant-migration-of-millionaires
Hopefully we can send all the entitled arrogant rich people I don’t like to other places. Appalachia and the South could probably stand to have more rich people–and those states generally have low taxes.
Don’t worry; the rich people leave by themselves -no need of your encouragement. The crooked ones who get rich by stealing, will stay there in CA to suck you dry (governor Newsom). He will increase all your taxes till there is nothing else to tax.
In the 1990s homes were actually more expensive with 8-10% interest rates and a 5:1 price to income ratio.
With 3.5-3.75% interest rates a price to income ratio of 7.5:1 isn’t that bad. The future of interest rates will obviously have a huge impact.
We are nowhere near the 10:1 ratio we had in 2004-2007… despite what people say here.
Low and behold we also don’t have 5 different blogs anymore dedicated to SoCal Housing with hundreds of comments a day.
We are really down to one dedicated SoCal bubble blog… this one. The 1990 housing correction which was 18 years before 2008….. not 8-10 years like Milllenial likes to quote… is the correction to study here. One caveat is SoCal defense Company layoffs caused a ton of local job loss. That may be a big difference in the next recession…in 2008 there were a ton of local mortgage banker job and income loss. Will there be a major local industry hit? If I had to guess it’s Tech but that is much more dominated in NoCA. SoCA tech could get destroyed though.
Oh and rents just keep going UP UP UP
Are you saying less housing bubble blogs means that it’s less likely we are in a bubble? I have seen lots of stupid comments from you before but that would trump it all.
Btw, didn’t you promise there are houses in soca that show rental parity? We are still waiting!
8-15% interest rate is a dream come true for buyers. Boomers got freebie after freebie. The higher the interest rate the lower the purchase price. You simply re-fi when rates go down. Tank in sight has little to no experience when it comes to the real estate market.
In the 80’s real estate was dirt cheap. We live now in boom and bust times with 8-10 year cycles. The next crash will be much bigger than 2008. You will be able to buy nice homes at 50-70% less.
Millennial,
As per usual you never post any facts. In the face of facts you just post the same nonsense over and over again. No matter how many times you post it, it will never be true.
Try to be more useful here the act is a yawn fest.
More WOMP WOMP WOMP for you:
Phoenix Real Estate: Sales up 10% YoY, Active Inventory Down 14% YoY
In Seattle, sales were up 12.3% year-over-year, and inventory was down slightly year-over-year.. The year-over-year increase in inventory has ended, and the months of supply is still low in Seattle (2.6 months). In many areas it appears the inventory build that started last year is ending.
Las Vegas Real Estate in September: Sales up 14% YoY
Black Knight Mortgage Monitor: National Delinquency Rate near Series Low
As per my usual advice, buy at rental parity…. knock yourself out Millennial:
https://michaelbluejay.com/house/rentvsbuy.html#mdt
I’m not doing the work for you
Agahahahahaahahaahhaah tank in sight! Rofl
Tankinsight: there is rental parity in California!
Millennial: oh really, why don’t you show us your finding?
Tankinsight: I am not doing the work!
Millennial: huh? If you haven’t done the research, how do you know they are at rental parity???
See what’s happening here? The RE shills have nothing left but to blatantly lie.
Millenial,
I said to buy at rental parity. I didn’t tell you there was a property for you at rental parity. That’s your job.
Here is an idea use the calculator to show us how inflated your dream 2 bedroom condo is in a decent SoCA neighborhood.
Use the calculator, show us, let’s see the facts.
SPOILER ALERT: it’s not 50-70% inflated. Not even remotely close.
A great question is why did you not buy in 2016 when it was easy to find properties at rental parity. 2017 got a little harder. Today you can find rental parity in some area but it’s few and far between.
Good news is that with 60-70% of SoCA renters you are not alone.
Tank in sight, yes you said there are many!
NoTankinSight
September 2, 2019 at 6:10 am
QE Abyss,
“That is an an excellent rent vs buy calculator. I would recommend using that one or create your own in a spreadsheet.
Always buy at or below rental parity. Many areas in CA are already at rental parity or below. I would forget the premium coastal areas, completely unrealistic… but the very nice areas 5-12 miles from the ocean in Orange County are either right at rental parity or about 10-15% above.
Don’t make the mistake Millennial is going to make.. waiting it out and letting it pass him by. Once you get rental parity… jump on it and never look back.â€
I am not asking you to find me a property. I am asking to show us an example of rental parity. Obviously, that should be an easy exercise for you as you have claimed tonfound many! So show us, just one. Or two. Out of the many you have found. (Your words).
Prices are way out of whack. Buying is not even close to rents. Even if you massage your spreadsheet in your favor. Renting is much, much cheaper.
Houses in the 80s were still much cheaper, even with the much higher interest rates… which I wish we still had.
Higher interest rates not only keep house prices lower, but they reward savers and pension funds, who can realize a decent return without resorting to high-risk investments.
A home buyer is better off paying less for a house and more interest for his mortgage, because you can always pay down the mortgage- make extra payments against the principal, or pay it off altogether. However, when you pay more because you are getting a lower-interest loan, you are stuck with the high price you paid, and are also more likely to take on more debt, making yourself more vulnerable to recessions and downturns in the housing market.
The only people who benefit from low interest and the speculation, asset inflation, and debt creation they foster, are lenders, speculators, and government workers who are guaranteed COLA raises in both their salaries and pensions.
It’s funny how liberals always drone on how CA is the 5th largest economy, the mostest richest state in the country, blah blah blah. When in fact it’s a quasi 3rd world entity with a small ultra rich elite, surrounded by poor people, aka renters. Adjusted for cost of living, CA has the highest % of people living in poverty. It’s basically Brazil.
I’ve lived in Cali most of my life, but spent 4 years living in Sao Paulo, Brazil from 2010-2014. We are not Brazil. Not by a LONGSHOT. Give me the 3rd World Hellhole of SF or LA anyday of the week. Compared to the majority of Brazil, even the worst ghetto here feels like Beverly Hills.
I spent a lot of time in Brazil. You are correct we are a long way from Brazil! That said in 50 years things may be getting closer.
Statistics still suggest that the housing market will be strong next year and that home prices will not decline next year despite what common sense would suggest:
https://tradingeconomics.com/united-states/housing-starts
There is no sign of a real estate crash on the horizon. Housing starts and permits tend to be a leading indicator which means that a RECESSION IN 2020 is extremely unlikely.
The good Dr. is strong and wise if even a bit less prolific these days. In my demo. we have massive imbalance of multi unit development, it’s like a pandemic. If it’s going to be like that in the 805 along the coast, I can only dry sweat thinking about places like the 909 and similar Inland, soon to be acutely water deficient locals.
It’s incredible how short sighted the capitalistic investment cycle is.
“Scientific method, hell! No wonder the Galaxy was going to pot.â€
Good article.
The last graph in the article clearly shows CA real estate is overvalued at ratio of 7.5 vs 5.0 historical. I don’t buy the argument that the 7.5 is the new normal. So a 25%-30% drop would put things in line for me, where real estate in CA would still be ridiculously expensive, but where I would still clench my teeth and buy a house for long-term.
You need to take into account interest rates.
Mortgage rates in the 1990s were 8-10%.
Now mortgage rates are 3.5-3.75%.
A 7 price to income ratio at 3.5% mortgage rates is actually more affordable than a 5 price to income ratio at 8-10% mortgage rates.
Mortgage rates will play a big role going forward as will inflation. If you have inflation like the 1970s it won’t matter that mortgage rates go higher. If you don’t have inflation then it matters big time. The interest rates cycle is very long, like 50-100 year long. We may not even be near the bottom for interest rates. Other countries like Japan and the Netherlands have 0-1% mortgage rates.
Yawn, now he’s coming again with the “inflation is coming inflation is comingâ€!
We heard that BS for years now. People aren’t that dumb anymore tank in sight.
They don’t buy your overpriced crapshacks. Just get a real job and stop trying to find the next sucker for a commission check.
Low interest rates are terrible for people trying to buy. It artificially pushes house prices up. The only winner here are the old farts who bought a long time ago and received freebie after freebie in their life. Younger generations are now supposed to support the bubble by buying at the peak? Lol…. nice try!
Just goes to show you that artificially low interest rate inflate asset values – so we have a Fed induced asset bubble. Any shock to economy – like even a moderate recession – this bubble pops.
Been following this blog for a few years and it seem to be the same story: prices too high to buy and not comparable with rent. Makes sense. For those who can afford it, why buy?who can afford to buy in the city centers close to high paying jobs? My kids are in their mid 20s and it seems unattainable for them to buy. Their rent is high but the cost for them to buy with a sizeable down payment, insurance,property taxes and maintenance on a home is outrageous.
Look for the millennials to move out of California or wait until we are ready for the nursing home and take over our family home.
Hey Doc:
What shocks me is if you look at the cities on the far left of the first graph, you see a very high percent of renters who are in both ends of the income spectrum right next to each other (East LA and Santa Monica). Of course through the rest of the graph you see others like San Fran and Inglewood next to each other also.
However, I think there is some skewing here because cities like Santa Monica and San Fran have massive apartment building development whereas cities like East LA or Inglewood are not as dense with apartments as the former.
In my experience, people who I think of perma-renters tend to be working class. They live in terrible areas and have blue collar jobs. That being said, individuals who are high earners will only rent for so long until they get married/co-habitate and then they start looking to buy. A crap shack won’t look so bad when you’re willing to put in some money saved up to make the upgrades. Finally, you have a home that a flipper isn’t bilking you for plus the interest on the new flip price.
I think renter’s HELL is more like it. Rents may be a better deal than the hyper-inflated houses available to purchase, but it is still high enough for most Los Angeles renters to be severely rent-burdened in rental housing that no way can be described as luxury, if it’s even adequate.
Young people are not exactly “opting” to rent- they’re lucky if they even can make the rent, what with the college debt; low-paying jobs for most, or unstable “gig” work, a decent down payment and a mortgage on a relatively-affordable $400K-$500K house, are both out of the question.
As for Prop 13, methinks it will have to be rejiggered. It’s obscene for people to be taxed out of houses they spent their lives paying for, but the law as it stands really is atrociously unfair to young people, and first time buyers, and it needs to be rejiggered. For starters, nobody should be able to inherit low Prop 13 taxes- as long as Grandma is in the house, her tax base can be frozen at the low level she bought the place at, but when she passes, the taxes should be immediately adjusted to reflect the current value of the property. And only the primary owner-occupied dwelling should be eligible for the freeze- no second homes or rental properties.
I daresay Prop 13 wouldn’t be necessary, or even thought of, had it not been for the monster inflation of the 70s, and that which has occurred since, thanks to our destructive, inflationary monetary policy.
It’s just a matter of time until prop 13 gets repealed. It’s the biggest scam in history. A new buyer of a condo pays 7-10 times more in property taxes than someone who lives in a mansion (just because that old fart bought in the 80’s). That scam has to end. Let these old farts pay their fair share. They had freebies all their live. And let younger generations pay for it. End the scam
Milli: Let these old farts pay their fair share. They had freebies all their live. And let younger generations pay for it. End the scam
The older generations paid for your FREE 1-12k education, and every other freebie you enjoyed as a child.
Because of Prop 13, parents had more money to buy food, health care, travel, and other goodies for their children.
Prop 13 benefits have always trickled down to the kids, including inheritance rights.
You talk as if you had to work for a living ever since you were a baby. As if nothing were handed to you from the moment you rented your first crib.
I’m so glad I have prop. 13 and you don’t. Haha.
I own my home outright and you don’t. Haha.
So let’s hear you whine, you little baby. When our old landlady dies, your tent wil double when her heirs inherit the house. Poetic justice, you self-repeating troll.
Whenever you call out the prop13 scam, the scammer who take the freebies and don’t pay their fair share get upset. You would think they gladly pay back what they owe, but nope! They are spoiled and are used to the freebies they took. Isn’t it time we end the scam? End prop13 and the bubble ends tomorrow. Boomers can easily pay 1.1% in property taxes based on current market value. There is no reason to give out freebies that younger generations have to pay for. Why are we doing this? Think about it people 🙂
Bill, why would you think I am a troll? I am just a realist that hopes for a nice crash so I can buy a dream house in all cash. And, I am younger than you. Much younger 🙂
I noticed our RE shills get a bit angrier each month since the bubble is slowly deflating. Now imagine how they act when we have a full on crash. It’s going to be very entertaining here soon!
I am one of the PROP 13 inheritors of Grandpa’s 2,000 sqft home, which he purchased in 1955. My mother inherited it in 1989. Now, me and my siblings have inherited. The tax base is $2500/yr and the land value is $3M. We rent it out for $9K per month. If Prop 13 was abolished, the taxes would be $30,000+ per year. We would sell it. It doesnt matter much to me. I would take the money and invest elsewhere.
If and when Prop 13 is changed, I believe it will happen in the following manner;
1) Massive changes to Prop 13 for commercial properties (but then the tenants of those Triple Net leases would be stuck paying, which means you and me in every retail shop would get hit with higher prices for merchandise).
2) incremental increases on residential properties (again passed on to tenants)
3) incremental increases on SFH
I might be wrong – but if Prop 13 is abolished on commercial property dont we all suffer with higher retail prices?
I think you maybe right, but my guess would be like the article I posted. It would probably hit businesses first. Question would the FED/banks let homes start deflating slowing or fast if they know what is coming?
I think the Prop 13 change now would likely prompt people to lower prices to avoid the repercussions going forward. Most likely people will not want appreciation on a home if it is going to be too expensive to maintain along with new tax hikes.
Another question what are these new tax assessments going to be funding? Calpers, Unions, city/county jobs or lining pockets of politicians?
NOt all NNN leases allow for full pass-through of property tax increases or increased assessment. BUt I agree that MFD and commercial will be repealed first.
Prop 13 might have not occurred if Nixon did not agree to the FEDs terms to get us off the gold standard imo.
However, now it looks like Prop 13 could be stripped of it’s powers.
https://www.hjta.org/legislation/major-threats-to-prop-13-and-homeowners/
Just a matter of time.
This is a natural migration as housing prices outstrip wages. Southern California will be compared to Singapore, London, Paris, Rome, Tokyo and other cities around the world. You can barely afford to buy a property in any of those cities too.
The gig economy and internet connectedness makes for an easy comparison if you can work online.
Once they clean up the trash and homeless one could easily compare Southern California to London and determine that the weather is better and traffic less than London so $1M on a house here is a better bet than there.
As long as our borders are so porous many foreigners can also make the reverse comparison and compete with you for the $1M house.
“…A changing mindset is also happening with Millennial’s….” “…many live at home with their parents…”
Yet another unstoppable force keeping Millennial’s at home is the ever increasing [un-affordable] cost of elder care.
Millennial’s stay home, care for parents, and [presumably] inherit residence when parents pass away.
California Prop 13 keeps the property tax rate in check.
Arrangement is Win-Win for everyone except the REIC agent who is not generating a commission check.
You’ve got the generations wrong. It’s the boomers, in their 60’s mostly, caring for their parents in their eighties and nineties. The parents of millennials are still relatively young, and are not yet incapacitated.
RE shills, RE cheerleaders, lenders and realtards hate, hate, hate when adult millennials live with their parents. They hate this more than anything for a simple reason: there is no script for it. There is no sales pitch. You can’t say “buy a house now or continue to waste money on your landlordâ€. There is no landlord. You can’t say “buy now or rent foreverâ€.
You can’t say, “stop throwing your money away by renting. Buy overpriced houses now!â€
These smart adult millennials don’t waste any money on renting and they already live in a nice house. Their parents home, which they will eventually inherit anyways.
That’s why you see bitter comments about adult millennials living at home by those that can’t get a commission check off of it. You can see the hate. This isn’t supposed to happen, right? The younger generations are supposed to wanting to buy your crapshack that’s overpriced by 50-70%. And it’s supposed to be a bidding war because there is “no inventoryâ€. (Remember the laughable “there is no inventory lieâ€?)
Everything is going wrong for our RE cheerleaders. Sales volume is down, price reductions left and right and people have no issue waiting it out because they stay at their parents home – FOR FREE.
How do you “force†someone into overpaying for rent or forcing someone to sign the purchase agreement for a highly inflated price just so the realtard and seller gets rich? You can’t. You simply can’t. The only thing you can do is watch this ship go down and be bitter about it. 🙂 doesn’t sound like much fun to be a RE cheerleader.
WOMP WOMP WOMP
https://www.calculatedriskblog.com/2019/10/seattle-real-estate-in-september-sales.html?m=1
In Seattle, sales were up 12.3% year-over-year, and inventory was down slightly year-over-year.. The year-over-year increase in inventory has ended, and the months of supply is still low in Seattle (2.6 months). In many areas it appears the inventory build that started last year is ending.
More news that the cycle is ending and the crash is coming
https://www.zerohedge.com/markets/bostons-commercial-real-estate-market-hints-looming-recession
Milli: How do you “force†someone into overpaying for rent or forcing someone to sign the purchase agreement for a highly inflated price just so the realtard and seller gets rich?
You don’t have to “force” anyone to buy or rent. Increasing population creates ever more demand — and higher prices — for housing, whether to rent or buy.
No need for real estate “cheerleaders.” Inflation and a rising population guarantees increasing profits for realtors and landlord alike in the coming decades.
No, Milli. Nobody hates Millennials who live at home. They’re not worth hating. Only mild contempt for those who post the same message, with autistic repetition, a couple of dozen times per article.
Lol, as if prices can only go up. You must have forgotten the last few recession/crashes huh? No worries, that’s why I am here, to remind those that have a short memory..
And yes, RE shills hate it when adult millennials house hack….living with your parents is smart, saves a lot of money and prepares you well for buying opportunities. And there is no sales pitch for it 🙂 as you confirmed, you can’t force them out.
Instead of playing it smart, you could be like son of landlord: buy at the top and tell yourself it can only go up because of increasing population! Rofl! Please don’t go anywhere, we need those laughs!
Milli: you could be like son of landlord: buy at the top and tell yourself it can only go up because of increasing population!
You’re not paying attention. Whoever said I “bought at the top”? I bought my Santa Monica, Ocean Avenue condo 32 years ago. It’s now worth several multiples of what I paid for it, no mortgage on it, and the Prop 13 taxes are ridiculously low.
I began looking to purchase a house in 2013, but I foolishly listened people like Jim Taylor (an early version of you) who predicted another crash. My mistake. I missed a great buying opportunity because I was overly cautious. I wish I had bought.
Don’t worry son of landlord, the next crash is coming. In fact it’s right around the corner. You saved a lot of money during these years. The gains in housing are just on paper and vaporize during the crash. You should be able to pick up a nice object for 50-70% less during the next crash.
How will the government prop up the economy the next time and bail out the large investors in RE? Freeze pricing on RE if the market tumbles? The neverending manipulation of Fed monetary policy through free money rates will end up inflating every price, but where will the single family home buyers come from? Incomes are not on the same trajectory and never have been except in bubble economies as the bay area has experience though various tech booms.
The only ones who will suffer will be the individual home owner the RE lobby and crony capital will figure a way to shelter the big RE money from the ultimate downside. RE is the ultimate bubble that has deflated slightly (correction), but refuses to pop.
This time its forever. Serfdom for renters and the rest of the riff raff and rabble who weren’t hard working and smart enough to bootstrap themselves into home ownership. Let them be priced out forever as the landholding class profits until armegeddon.
Thanks Doc for the insightful post, but the winds have yet to shift strong against the contiuous rise in property values in the desirable locations along the coast.
Housing Bubble 2.0 Already Popped-October 8, 2019
A report from the California Globe. “While driving down a few streets in the suburban Orange County city of Fullerton, an unusual by-product of the housing crisis presented itself. Rows and rows of large houses known as ‘McMansions’ built within the past 20 years lined the streets, many with ‘For Sale’ signs pounded into the front yard. A small stretch of street nearby the California State University – Fullerton campus brought a succession of three houses with signs out front.â€
“â€There’s another,’ said ‘Mary Jo,’ an Orange County realtor who did not want her name used, pointing at another of the large houses, this one advertising over 4,000 square feet. ‘I had a showing there last week and some people left without walking out of the foyer.’ ‘Younger people just don’t want them,’ she added, shaking her head as another large McMansion came into view. ‘That’s why so many of these houses are empty.’â€
“Many McMansions also have a stigma of being cheaply made. Mary Jo has been selling houses throughout Southern California for years and notes that older houses she sells come in much better condition.â€
“‘I’ve shown houses, both in Orange and LA, where ten year old houses were literally crumbling apart,’ remembered Mary Jo. ‘A lot of these houses were built so quickly, or had unusual parts on them, that builders were often rushed or couldn’t make heads or tails of what to do next. So some buildings have cracks in them ten years later. Some don’t have insulation because it was simply forget. Odd angled walls are coming apart because the construction crew didn’t know how to handle it. High ceilings get mold or permanent stains because they couldn’t be reached. Cheap plaster, cheap wood. Thin walls. You name it and chances are at least a few houses I’ve seen like this have had it.’â€
“All of this has spiraled to a large number of hard-to-sell homes that are overvalued, expensive, that the owners don’t want to take a loss on, and younger people don’t want to buy. It’s difficult to estimate the average number of unsold McMansions, but real estate agents have reported that McMansions are hard to turn around. So much so that some neighborhoods are estimated to have half of their McMansions unsold or in foreclosure.â€
“‘Some of our buyers only hang on to them for a year,’ said Mary Jo. ‘It’s the crisis hitting us. People can’t afford these, raise the money for a decent down payment, but then after a job loss or plain can’t affording it do to other higher costs, they foreclose or they sell the house. I can’t say how many are unsold in California, especially since many of them go in and out of being sold or on the market. But in Orange County it’s at least 10 to 15 percent of McMansions in states of not being sold in some developments, like if it’s in foreclosure or escrow. But it depends, become some neighborhoods have a much higher rate,’ Mary Jo explained, motioning to the row of houses with signs in front of them down the street.â€
My Daughter was smart to trade her recently built (2006-2007) 3 Br townhouse for a large tri-level from the 70s. it was about $140K more at the time.
Always wondered why anyone would want to maintain 4000 square feet, unless they intended to house multiple or extended families.
That is a good point, Dennis. However, due to corporate cost cutting and flexibility, many work from home now.
I work from home and my wife has a home business. With 3 kids, 4000 sq feet is kind of cramped.
I see more of this in the future. Corporations are cutting costs and putting people in home offices. Online home businesses are popping up that don’t need storefronts.
Essentially, the future is replacing 500 sq ft of cube space/meeting space/coffee space per employee from corporations and moving it to the home. Also, to run an online home business, you may need 1K sq feet of inventory space. 3 kids are an 18 year temporary thing but we are living it.
A 2000 sq ft house would be very cramped for all of this. This kind of puts us all in a 500 sq foot living space for a family of 5.
Just my thoughts.
A wise RE agent friend once told me: ” Never buy a house in the era where there was a housing market boom.”
1) The houses are slapped together so fast in the cheapest manner to satisfy demand.
2) Skilled labor with experience is in extremely short supply so the slapping together is being done by people who have never done it before.
I rented a “boom” house about 20 years ago. It was appalling. Walls were crooked. Outlets and light fixtures were crooked. Cracks were forming even though the house was only 1 year old. I hate to think of what it looks like now.
Always check the build years. Avoid 1997-2000 and 2004-2006 in CA unless it was a custom build.
As a millennial, I wholeheartedly agree that the current housing situation is unsustainable politically and financially,
However, I also wonder about the ability of boomer’s to afford healthcare and nursing home care in California. Hospitals will look to California Boomer’s houses to pay medical debts.
Hospital costs are extremely high in CA, check out http://www.clinicpricecheck.com.
I also wonder about the ability of boomer’s to afford healthcare and nursing home care in California. Hospitals will look to California Boomer’s houses to pay medical debts.
Good point. I suppose many Boomers will opt for reverse mortgages, thus destroying their children’s hopes of inheriting.
OC homes below $1,000,000 are selling like hotcakes. There is NO sign of a real estate top. It remains a seller’s market accept for expensive homes.
LOL Thats like 5 houses for sale under $1 million in the hood of OC! I guess the sales number for houses over $1M is cratering so bad to discuss it here.
A crash is unlikely. I am living with my parents since 34 years now and I don’t think i will ever move out. I mean, unless there is a crash. I talked to a realtor and a lender and I would have to pay 3.5k more than now just to buy. PLUS a 20% downpayment! That’s insane. My current monthly cost is about 50 dollars that I pay my parents for the additional electricity. I convinced them to get solar panels for my Tesla and help them pay for the increase in electricity.
Dude, what an incredible smart guy! 50 bucks a month for rent! That’s called house hacking, winning, killing it! Congrats!!!!
LOL….great story. Must be hard coming up with that $50/month considering you got that $100k Tesla in their garage. I bet they thoroughly appreciate you throwing bills there way even though most other adults would think you’re a loser. Have you ever gotten laid? If not go try it out, it’ll make you a man!
This right here folks is the epitome of the Millies. What a bunch of losers!
Paying only 50bucks a month to live in a house that he/she inherit one day sounds like losing to you? It sounds a lot like winning to me! I feel bad for RE shills who can only get laid by woman that think these RE shills “own†a house. You are renting it from the bank.
This person, paying only 50 dollars a month has virtually no expenses and saves all of the income. Who would you rather date? Someone who bought at the peak and has no money left (house poor) or someone who lives with their parents as an adult and has lots of cash? I would say it depends on that person 🙂 but in general, woman like people that are financially savvy/independent. Not someone who invests all of the money in real estate at the wrong time and is tied to an overpriced mortgage for 30 years. That’s not very sexy. Maybe that’s why our RE cheerleaders are so angry? They thought by buying at the peak their single life would end? As I said before, some learn the hard way.
Congrats again to the person who lives with their parents for 50 bucks! You scored. I am jealous!
LOL typical Millie thinking….pay $100K for a depreciating car but don’t buy an appreciating home. This may well be the dumbest generation ever. Like going back thousands of years.
Slumlord, I am not sure he bought the Tesla. Maybe he got a good deal on the lease. Anyways. Housing isn’t really appreciating. It’s losing value during the next crash. Experts believe housing will lose 50-70% in value which I agree with.
No need to move out from mom and dad’s. Why would millennials move out? They aren’t that silly to spend all their cash on an enormous mortgage. I can’t blame them.
Housing bubble popped.going down from now on.
Expect 30-35% crash in prices
It there any correlation between percentage of renters and the economy? From what I gather, there doesn’t appear to be much association and perhaps even an inverse association based on these rather older data showing Germany and Switzerland have one of the lowest rates of home ownership.
https://qz.com/167887/germany-has-one-of-the-worlds-lowest-homeownership-rates/
Not leaving hotel mama until crash. F u lol
LOL…..some day you got to get off yo mamas teets? Maybe next year will be your year right? Baby steps dude. Just think you’ll be out by your 40th bday, congrats!
I am waiting for a collapse
“Looking at the California Association of Realtors (CAR) for some data you can find that this is also perplexing the group. Ultimately you want sales volume to be high to churn those commission checks but that is not occurring”
The realtor we worked with when we bought our place and our daughter’s place has been buying up bargains for years and is as much a landlord as a realtor. Also real estate professionals often manage rentals for others who can’t do it themselves. The smart ones will try to grow that business with a lot of Californians moving out of state but keeping the house they bought on the cheap years ago (or during the crash like my former neighbor). Managing rentals brings in a steady stream of income unlike the boom and bust of selling houses.
Just like last time…..people that are heavily invested in the RE market tell us: this time is different. Until the shit hits the fan
You know, I hate to say it but I’ve been tellin’ y’all this for a few years now and I’m glad the Doc is acknowledging it. IT’S A NEW AGE OF HOUSING! If you want to look at it through the trends of the last 100 years then you’re not doing yourself a favor. The last 100 years of civilization in America has zero resemblance to today. Lets take a look at it from a macro POV.
In the old days, taxes on the wealthy were much higher leading to few ultra wealthy individuals, there was a overwhelming middle class, very few that live below the poverty line, and the upper middle class was almost non-existent. Today it’s damn near the opposite in every category. Far more ultra wealthy individuals that own tons of real estate and rent out to their ever-increasing poverty stricken serf tenants, almost no middle class (the “middle class” of today is actually quite poor by comparison) and a considerably larger upper middle class tech white collar tech employees.
What has this translated to? Exponentially more renters coming from the lower serf class that change jobs like they do underwear and need a cheaper alternative to buying a home, the consolidation of RE ownership to the hands of 21st century lords, and a housing market that doesn’t quite make sense but is sustainablely fueled by working professionals and DUAL INCOME HOUSEHOLDS (that didn’t exist back then, did it?) that simply want a house because they can afford it even if it’s not the best financial housing option. And mind you these guys are extremely rate sensitive.
When interest rates peaked late 2018, the housing market dropped considerably and when rates dropped, the market picked right back up like nothing happened. And rates aren’t going anywhere. Everything in finance depends on interest rates. Do you know what else happened in late 2018 when rates peaked? Oh you know, just a 20%+ drop in the stock market. And do you know what happened when those rates dropped? A rally and a new all time high. So we can all agree the financial future of America depends on these all powerful interest rates and if we let them get too high, then policymakers run the risk of collapsing the economy to an ultra-bear market that is near impossible to come back from.
So what’s the forecast you say? Well since I have a amazing track record of making educated predictions, here’s what I think will happen:
1. Interest rates are not going up. Not because of the reasons I mentioned above but because there is no reason for them to go up. Inflation is much lower than expected and the dollar is much stronger than expected and an increase in interest rates would alleviate high inflation and a weaker dollar both of which do not exist.
2. Interest rates WILL come down to historic lows. The economy is in limbo right now, it’s not weak but it’s not strong. It’s not going up but it’s not coming down. And with low inflation and a strong dollar, we can afford to lower interest to keep the party going. And global interest rates are MUCH lower than America’s. Meaning we can bring them down and maintain steady, healthy inflation and a solid Greenback. This will have a positive market impact on RE and put much more money in the hands of home-owning Americans when they re-finance their appreciating homes. Asset prices (stocks, RE, even gold) shoot up in low interest rates environments don’t even attempt to argue that with me. It’s a fact.
3. The housing market will fluctuate between +/-10% for the next few years. Don’t expect a “50-70%” discount for the next decade. Just please don’t. There’s literally no evidence based on the current economic climate that something like that would happen. If you still believe that would be the case, go to a psychiatrist and show the doctor where the big bad 2008 recession touched you and they’ll probably prescribe you some happy pills. The +/- in price movement largely depends on two factors: wage and interest rates.
4. Commercial real estate is a great investment right now. If you can buy a property with cash flows that cover mortgage, taxes, insurance, and repairs buy it. You might break even the first two years but will gradually be growing your investment value as cash flows increase. Some think that CA’s new renter laws that limit rent increases to 5%+inflation will inhibit growth in this sector of RE, I think it will do the opposite. You’ll have a steady stream of quality long term tenant to choose from and will not be competing against freshly built apartment complexes because it’s no longer lucrative to build those anymore. And when the tenant moves out, bring rent back up to market and enjoy the YOY increase in rent. In 10 years, sell for double.
Take it to the bank and cash it. You’re welcome.
Well said.
Whoever could have thunk the stock market would approach 30,000?
That alone tells us something is different.
I think a housing correction is in our future 2021? but a correction not a crash.
Logan Mohtashami (US Housing) and Bruce Norris (SoCal housing) still have optimistic views on housing. Bruce says the best place to invest in SFH is in Florida in cities with major medical centers, because medical care for senior citizens is recession-proof.
New age,
So your bottom line is
Interest rates will go down (no shit Sherlock) &
Somehow this is a magical new age without any downturns anymore?
Lol. You have never been through a recession before right? This will be a rude awakening for some RE shills that are highly leveraged with their flips and hope for sunny days until the rest of their life.
His advice, buy rental investment property. Oh wow, that’s a new idea! Have you been in California lately? If not, I can catch you up. At the peak of the market builders are building multi family homes like there is no tomorrow. Drive through the inland empire or coastal areas. My rent has never gone up, yet they are building additional units everywhere. Something isn’t adding up for the RE shills.
At least our shills acknowledge the slowdown….that’s a good first step. 🙂 they still can’t mention the R word. Because everyone who prepares for a Recession is a doom and gloom guy. They simply missed the 101 economy classes that tell you that economies move in cycles and nothing goes up forever.
NewAge,
Or you could have just said “this time is differentâ€.
We get those people during every bubble. No need to write a book.
Translation: “This time is different.”
Lol, was about to write the same…..the old “this time is different†who is this joker trying to fool here?
CA = 3rd World Schitthole- The Desert Sun in California. “Hemet residents adorned their vehicles with ‘Hemet is Heaven’ bumper stickers to express their love for the city in the 1980s, but today the’ Inland Empire community is mostly known for high crime rates, unemployment and vacant homes. Hemet was one of 10 California cities to appear on a list of the 50 Most Miserable Cities in America published Sept. 28 in Business Insider, reflecting the struggles that continue to plague the city more than a decade after last decade’s Great Recession.â€
y sort of offer, up 19.3% from one year ago.â€
The Desert Sun in California. “Hemet residents adorned their vehicles with ‘Hemet is Heaven’ bumper stickers to express their love for the city in the 1980s, but today the’ Inland Empire community is mostly known for high crime rates, unemployment and vacant homes. Hemet was one of 10 California cities to appear on a list of the 50 Most Miserable Cities in America published Sept. 28 in Business Insider, reflecting the struggles that continue to plague the city more than a decade after last decade’s Great Recession.â€
“After decades of economic growth and housing construction, the city of tract homes and trailer parks located in the middle of Riverside County was hit hard by the 2007-08 economic downturn and the housing crisis that followed, which rendered many homeowners unable to keep up with their mortgage payments and ultimately forced them into foreclosure.â€
“Despite its location between wealthy communities in the Coachella Valley and coastal California, today, 17% of the city’s 86,000 residents live below the poverty line, according to census data. Zillow estimates the city’s median home value to be $272,000, which is still 20% lower than it was in 2006, before housing values plummeted. “
Nice, beautiful!
The job market is starting to slow!!! Woooohoooo
https://www.zerohedge.com/economics/job-openings-plunge-17-month-low-slide-hiring-quitting-confirms-job-market-slowdown
This is from a website that does excellent research and is not manipulated by the NAR. (National association of realturds)
So many price reductions across the board. Love this time. Remember when the RE cheerleaders told us a couple of years ago that prices won’t ever come down? They can only go up?
This is a lot like the previous crash cycle. Shills are in denial even though the housing market is about to fall off a cliff.
General speakin Im fine buying house but first need crash. I willing to pay half of house asking price. If house one million I pay 500k. Sound good? Make deal!
Not in midtown, downtown, east or land park Sacramento! Prices are SKY HIGH still, wtf? Why?
California is already split between renters and owners. The poor areas are filled with renters while wealthier areas are owners. I notice how so many renters drive expensive cars and they pretend they have money in the bank. But, renters are just a paycheck or two away from homelessness. Most homeless people were renters. Sad state of affairs.
Jt, the exact opposite happened. During the last crash we had 7 Mio foreclosures in the US. Zero of those 7 Mio were renters because a renter cannot foreclose on a home. Only people who realize they are WAY underwater leave the house and stop paying for a ridiculous overpriced mortgage. Wouldn’t you do the same if you bought at the peak and then a renter comes in and buys next door for half the price? These 7 Mio learned the hard way. But renters who saved and had no debt could easily buy a nice house for a great deal during the last recessions.
Experts (like me) predict the same will happen again. Renters who have a nice war chest can come in and buy once the market is reasonably priced (50-70% below today’s prices).
I probably have to explain “underwaterâ€. It means you owe more on the house than what someone is willing to pay for it. That happens every 7-10 years during the boom and bust cycles. Therefore, experts keep saying, housing is all about timing. I tend to agree and have been saying this as well.
Let me know if you have any questions. I am here to help!
Ignore.
Jt, if you would just listen and willing to learn, we wouldn’t have to explain the same things over and over. Ignoring educational posts (by me) just because you don’t like them isn’t helping you. I am here to help, utilize it!
Some night have done a strategic default. In hindsight I wish I had. However, most people who foreclosed did so because they lost their jobs due to the recession and couldn’t make the payments. Like you’ve mentioned before the gains are unrealized until you sell. Same with losses. It’s just on paper unless you have to sell. People didn’t sell just because they were underwater. When you don’t have a job, you may have to short sell or foreclose even if you have equity.
No way we have a 70% drop. Impossible. The average cost per sq ft of a house in the U.S. is $123. That would drop to $36 sq ft. Even 50% drop would be $62. Those are 1970s prices when minimum wage was $2.10
Inventory of homes decreased by 2.5% in Sept, following a decrease of 1.8% in August. Now I realize math is hard, but class….what happens to prices when supply shrinks? Anyone? Bueller? Simone? Anyone?
OK fine, I’ll give you the answer….prices go UP!! Median price in Sept increased 3.4% to another all time high of $305,000. Neat how that works huh? Supply down, prices up.
Womp Womp. Perma bears lose out once again.
Renting long term is financial suicide, don’t do it kidz!
NoTankingInSight has twice made the point of looking at interest rates when computing ratios. I’ll add to that. a $1M mortgage at 3.25% costs as much as a $400K mortgage at 12%. I know this is too hard for Millie to understand, but it’s worth mentioning again.
For real estate, price is almost irrelevant, what matter is interest rate since almost everyone finances their housing purchases. What you need to look at is monthly cost of owning the same house (same zip code, same sq ft, same bedrooms, same home age, etc) in 1980, 1990, 2000, 2010 and today, in inflation adjusted dollars. And when you do that, you’ll find the cost of owning hasn’t really changed all that much over the past 40 years.
However in real dollars (ie inflation adjusted) rents have skyrocketed, exponentially.
Which is why I always say…renting long term is financial suicide.
All good points Mr. Landlord. We hear so much whining on this blog that previous generations had ultra cheap housing. As you mentioned, just look at the monthly payment…that is all that matters.
A home bought today in socal is likely a factor of 3 or 4x more expensive than 30 years ago. When you factor in 30 years of inflation and interest rates going from double digit to 3.5%, simple math supports this increase. And rent has skyrocketed in that time period.
Rofl! We have a new one for the list! “Price doesn’t matterâ€
Yeah, the slumlord from Spokane-istan aka great mathematician comes up with a new theory. Price is irrelevant. Makes sense, doesn’t it? That’s why the luxury market is seeing declining sales
https://www.cnbc.com/amp/2019/05/01/luxury-home-sales-see-biggest-slump-in-nearly-a-decade.html
If price doesn’t matter why aren’t people choosing the nicer homes mr slumlord? Remember price doesn’t matter? Well of course he won’t answer that.
This happened in real life: there are two identical houses. The first house has a price of 1 Mio with 3.5% the second one 400k with 12%.
There are two buyers who “competeâ€. Mr slumlord and Millennial.
Millennial says, you go ahead, make an offer, and remember price is irrelevant.
Proudly, the slumlord offers 1m and gets the offer on the first house excepted. He sat a new record for the neighborhood and closed in 15 days. He thinks he got a great deal since 3.5% is much lower than 12% interest. And it’s for 30’years fixed! Boy, time to celebrate!
The millennial laughs all the way to seller and signs the purchase agreement for the second house. (400k)
Now it’s time to pay the 20% downpayment and think about property taxes.
Mr slumlord pays down 20% (to save on PMI )of his 1m Dollar home: 200k. Property taxes are about 12k per year (1.2% property taxes for the sale price).
Millennial has to pay only 80k down plus 4.8k in taxes per year. The millennial was a renter and never overpaid for real estate. Subsequently he is loaded and chooses to pay down 200k as well.
Now it’s time to pay the mortgage. For his 800k loan at 3.5%, mr slumlord pays about 4659 monthly. (Includes property taxes, insurance and P+I).
The millennial would pay for his 12% interest loan about 2526 a month in PITI.
Even if the loan would be at 20%, his PITI would still be much cheaper compared to what the slumlord has to pay.
Both buyers are very happy. Slumlord still thinks: hahaha I got a 3.5 % loan, that fool next door pays 12%. Millennial thinks: thank the universe for RE shills like the slumlord. It would have sucked to get into a bidding war for the 400k house. One can only hope we actually have more people thinking that price is irrelevant!!
Now the story has not ended yet. The millennial has way, way more cash available per month and decides to buy another house at 400k. Again, he pays 12% interest.
He rents out the second house because it’s at rental parity and cash flow positive.
Here is the kicker, millennial can re-finance his two houses for a lower interest.you ask, so isn’t it always better to buy at a lower price with higher interest rates because you can refinance later? Psssshhhh don’t say this too loud. We want people to buy high and think price is irrelevant. Do you think slumlord will figure it out? Maybe, but he is already tied to the 1m dollar house. He’s already out of option and won’t compete. That’s what we want. As many people as possible buying at the peak. They won’t be your competition when it crashes 🙂
Bro it’s time to give up on these morons. “Price doesn’t matter” lol I can’t. As if incomes don’t rise over time, or people get married and now there’s a 2nd income, or debt is paid off which frees up more capital to pay off housing debt.
“Price doesn’t matter” is about the dumbest thing I’ve ever read on any blog, ever. I used to sell cars and I would salivate at the customers who came in talking only about monthly budget. You could make the price anything you want, extend the terms out as far as possible, and they’d be happy because you got the payment you wanted.
Give me a lower price point and higher interest rate ALL DAY over the opposite. More interest to write off, and less principal to have to pay back over time. I can’t even believe I have to type those words for these clowns.
The next crash will be devastating for boomers who are greatly invested in overpriced houses and stocks. But it will also be a great buying opportunity for those who are sitting in cash.
Great advice!
However, if a major crash happens every 80 years like it has historically (1928, 2008), in 2088, the only cash I will be sitting on will be 6 feet under.
My point is:
1) Just frackin buy a house if they drop 20-30%. That is typical during the last 100 year boom/bust cycles (not counting 2008 or 1928).
2) Sometimes the 20% drop can be insidious. ie like in the 1980’s and 1990’s where housing prices were essentially flat but inflation was at 8-13%. If you are getting enormous COLA raises but housing is flat or slightly oscillating, buy.
History does repeat itself and 50-70% 6 sigma disasters only happen every 80-100 years.
My cash does me no good if I am 6 feet under.
The problem with your thinking is that the 2008 crash was never allowed to hit it’s natural bottom. The Fed started pumping funny money into the economy and lowered interest rates to artificially low levels. Because of that, people in this country (and really the entire world) are WAY over-leveraged with debt. The last 10 year dead-cat bounce fueled by bango bucks has only delayed the inevitable deflationary cycle. It’s coming, buckle up.
Boomers will get absolutely destroyed in the next recession and Millennials will prosper !!!
That’s the most ridiculous thing I have ever heard in my life.
Granted I am not a Millennial nor a Boomer and I’m not a real estate expert like you Millennial Lo-Effen-L
Let us all know when you run the rental parity calculation and confirm we are no where near 50-70% inflated. Not even half of that.
We are all waiting with baited breath!
Until then live on a prosper at mommy’s house Millenials!
TA TA !
Yes tankinsight, rental parity is key. Right now we are light years away from it. So we buying makes little to no sense at the moment. The good news is that the crash is basically around the corner. All you need is a bit patience and discipline.
@Millie, I hope you are right. Been patiently waiting for Sacramento, California real estate prices to drop and inventory to increase.
Didn’t anybody tell you? Millennial is a troll, doubles as a troll on Zerohedge also. Nothing he has ever said has proven true. This self proclaimed expert, is an expert at nothing but typing the same thing over and over and over and over….
Yo Millie and Scott ; TaDa , I’m back . Had a great VaCa touring the East Coast and talking to people who are seriously considering moving to a more hospitable area. Here in Sacramento and the surrounding counties , all within 30 miles of the KKKapitol we have either 30,00 homes under construction or land clearing and preparations for new construction. Prices in Sack-A-Tomato are level and after looking at the AdVert’s in the weekend paper , I am seeing the asking prices on New Construction being reduced by the builders. Brand New-Never lived in – still under construction homes, because the Sacramento area is awash in new construction. Sure , Millie and his friends want to live in a nice condo, then they get married and have children and then they start looking at a single family home with a yard for the kiddies and their poodle , but they find the homes are now out of their reach or they are already to deep in debt to qualify. So as long as I keep my rental homes close to rental-parity , they can park their high-dollar SUV in my garage as long as they can pay the monthly rent. For Scott , think long term and capitalize on your holdings and stop trying to impress the neighbors and friends. they are counting pennies just like you. As for me , I just want to impress my Wife , my banker , and my CPA. Remember – Happiness is a Positive Cash Flow .
“Yo Millie and Scott ; TaDa , I’m back . â€
As if anyone would have noticed you have left or
As if anyone would remember you
😉
Housing Bubble 2.0 Already Popped-
Keith Jurow: The Housing Market Recovery Is An Illusion
(the video is worth a listen too)
excerpt:
The so-called housing market recovery is an illusion built largely by panicked lenders and mortgage services, according to real estate expert Keith Jurow.
The housing market is on shaky ground from redefaulting mortgages, long-term delinquencies, declining sales, and a growing number of properties for sale.
As a result, Jurow advises against buying property right now, and says homeowners should seriously consider selling before things get worse.â€
Keith Jurow???
That guy is another crackpot who will lose you a ton of money.
In December of 2011 right at the bottom in housing he was saying there was no bottom in sight L-O-Effen-L
https://www.businessinsider.com/keith-jurow-housing-market-new-york-city-and-california-2012-12
Keith Jurow: Goldman Is All Wrong, There Is No Housing Bottom In Sight
Dec 6, 2011, 10:47 AM
Goldman Sachs released a report saying it expects a 2.5% fall in the Case-Shiller and a bottom in prices by mid-2012.
In an interview with the Wall Street Journal however, Keith Jurow, author of the Housing Market Report at Minyanville, said there is no housing bottom in sight.
——————————
It’s fun to go back in history and see how wrong the Jim Taylor’s and Millennial’s of the world were.
Why oh why didn’t Millennial buy at rental parity in 2016???
Why didn’t Keith Jurow buy in 2011 or 2012….. Keith Jurow is still renting folks… after the largest housing crash in history Keith Jurow is still renting calling for the next crash!!. Permabears will lose you a ton of money.
@tank in sight,
So your story changed quickly?
“NoTankinSight
September 2, 2019 at 6:10 am
QE Abyss,
“That is an an excellent rent vs buy calculator. I would recommend using that one or create your own in a spreadsheet.
Always buy at or below rental parity. Many areas in CA are already at rental parity or below. I would forget the premium coastal areas, completely unrealistic… but the very nice areas 5-12 miles from the ocean in Orange County are either right at rental parity or about 10-15% above.â€
Beginning of September you said “many areas in CA are already at or below rental parityâ€. Now it changed to 2016 and we can barely find any now?
That’s what I appreciate about this blog. It’s so easy to dismantle the made up stuff.
In his defense did anyone think the Federal Reserve would do this?
https://fred.stlouisfed.org/series/WSHOMCB
They went from 850 billion in mortgage backed securities to 1.75 trillion in two years. Somebody may understand the fundamentals of the economy but when there is massive artificial stimulus the models no longer apply. Guessing the whims of the central bank has historically been difficult.
Woody, we no longer have free markets – we have a central planned economy by the FED and for the FED. Consequently, you no longer make decisions based on market fundamentals, but based on the whims and interests of the FED (trying to guess their next move).
It is funny when the socialists say that capitalism failed; capitalism always fails when you no longer have free markets (the very foundation of capitalism). What we have is socialism and socialism ALWAYS fails.
There was no bottom in sight, had the Fed not stepped in and artificially inflated every asset there is. But as I’ve mentioned in other comments, they only delayed the inevitable.
You cannot abolish the free market. You can however suppress it for awhile but eventually all that pressure explodes.
Housing Bubble 2.0 Already Popped-
Keith Jurow: The Housing Market Recovery Is An Illusion
(the video is worth a listen too)
excerpt:
The so-called housing market recovery is an illusion built largely by panicked lenders and mortgage services, according to real estate expert Keith Jurow.
The housing market is on shaky ground from redefaulting mortgages, long-term delinquencies, declining sales, and a growing number of properties for sale.
As a result, Jurow advises against buying property right now, and says homeowners should seriously consider selling before things get worse.â€
here is the link to the video
https://www.youtube.com/watch?time_continue=191&v=anVN3xzlmcg
If we move from GA to CO, i’ll wait till we see a 20-30% in 2021
Milie gets another 50% off-Historic San Jose mansion for sale. Price cut over 1/2 off from dream price list.
https://www.zillow.com/homedetails/7871-Prestwick-Cir-San-Jose-CA-95135/19800118_zpid/
As has been stated, repeatedly, that is NOT a 50% crash. It’s 50% off the asking price.
They initially asked for $3,288,000, and are now asking $1,500,000. But look at the house’s most recent actual sold prices:
* August 2007 ….. $12,500
* September 2003 ….. $210,000
* June 2003 ….. $200,000
That $12,500 sales looks way underpriced, so perhaps an inside deal there?
It seems the last legitimate sales price was for $210,000. So if it sells for the current asking price of $1,500,000, the owner is still way ahead. Hell, the asking could drop to a million and the owner would still come out way ahead.
one thing worth pointing out regarding these inflated house prices and million dollar crap shacks. You can take a home right now thats in a ghetto gang and drug infested neighborhood in LA, these homes are selling for 400k plus. Yet the majority of the people that live in the neighborhood are not homeowners, they arent even renters, they are on section 8. So if you bust your ass to buy that crap shack for a half a million, the rest of the neighborhood is getting it for free. But dont worry, because you cant afford that crap shack anyways!! If your not ultra rich, and your middle class or lower middle class, your pretty much screwed. You want that million dollar crap shack?!?! just quit working, have a bunch of kids, go on housing and section 8, and youll get that million dollar crap shack in a drug and gang infested neighborhood…….for free!!! instead of slaving your life away for it. As others have said, california is a 3rd world shithole, with small elite ultra rich pockets, the rest of california is pretty much mexico.
Hello from san Diego,
I am not sure where the home prices are going but I vividly remember in 2006 before the home price crash, there were severe shortage of homes and there were bidding wars.
I also remember the euphoria that home prices would never go down.
I live in a good neighborhood where avg home cost ~$1million. Each home has got 4 5 cars and the local streets have become parking lot.
A lot of young people are sharing 1 bedroom apartment here..
I can’t understand how is this a good life… and on top of this acute homelessness problem
I can definitely see in my neighborhood the prices are come down tiny bit and homes are sitting here now longer but only time would tell. This is with historically low mortgage rate and historically low unemployment rate. What would happen if the recession hits or employment goes down..
it is possible that we’d never have recession and people would have access to cheap money all the time to buy expensive homes.
I am waiting for my kids to grow up a bit and I intend to leave CA for good. The quality of life is pretty bad unless you have millions stashed in. I make pretty good money though ( ~$500k/year ) but i think my money would go much farther in other places.
USA has so many other beautiful places to offer.
If you earn $500K per year, how do you not have millions stashed away? Particularly with the bull market of the last 7-10 years? Do you burn your money in the fireplace or something?
The ability to stash away “millions” depends on just how long you’ve been earning $500,000, as well as how many heavy obligations you may have, such as sending 3 or 4 kids through top universities- I sincerely doubt that any high earner would allow his offspring to be burdened with college debt, and would do his best to fund them at top schools where tuition, books, and board together can easily run $80,000 year, if not more.
If you’ve recently arrived at that income level, say from $350K a year, and have been supporting yourself and family in an upper-middle-class lifestyle in SoCal, you might not have very much stashed at all. I’ve talked to many people over the past 20 years, who make $250-_$400K a year, and are borderline broke in their lavish houses with 3 expensive cars. Hedonic adaption happens all too easily as you advance in income, especially if you had to struggle like crazy for the first decade or more of your career, working 12-hour days while shoveling all your disposable money into your business, or into retirement accounts, while you worked toward that great business success, or great promotion.
A successful and respected real estate agent friend of mine told me recently things are changing and my time may be coming soon. I’ve been waiting a couple years to buy and he never would have said that back in 2017 (it was all standard RE talk). But now? New listings (owners selling knowing the market is crashing). Many price drops over $25k. And where I live, TONS of new developments, apartments and assisted living facilities going up. Eating my popcorn over the next few months to see if this current trend turns into a deeper correction and buying opportunity. Fingers crossed!
Whoohooo, a crash is neeeded to adjust prices. A great thing if you have cash. Like me. Millennial here, hoping for a biggie and currently living with my parents. waiting for California’s housing market to go under so I can buy 😀
What an EPIC CRASH !!!
https://www.calculatedriskblog.com/2019/10/sacramento-housing-in-september-sales.html
OCTOBER 11, 2019
Sacramento Housing in September: Sales Up 5.7% YoY, Active Inventory DOWN 24% YoY
Active inventory was at 2,457, down from 3,236 in September 2018. That is down 24.1% year-over-year. This is the fifth consecutive YoY.
This last week RE columnist Lansner of the OC Register published an article on the prevalence of price drops in home listings. 43 of 50 major metro areas showed increased discounting in the 12 month period through August 2019 compared to the previous year. and 5 of the 11 big metro areas with the largest jump in price reductions were in…you guessed it… California. The biggest increase was in San Jose, although they are still ranking #25 in discounting out of the 50. The trend is found in most areas of California. But plenty of areas outside CA are on the list including Las Vegas, Seattle Denver and Atlanta.
To quote Mr Lansner, “Now remember, cutting listing process no guarantee that house hunters will bite. In fact, some real estate professionals think potential buyers are getting antsy about this discounting. Some wannabe owners think they could be buying at a potential cyclical price peak and will look but not act. That’s likely a reason why you see some of the nation’s once-hottest housing markets filling out the top 10 for increased price cuts.”
cutting listing price not process… Stupid spell checker!
Millennial though I agree with your belief that Ca. market will correct and likely 50% or more but what experience do you have to support your claims that you are a RE expert have you bought any RE in Ca.in your lifetime ?? or anywhere? what certifications do you have??
Great questions.
So, some people have the misconception that you have to buy real estate first in order to be a RE expert. That’s faulty thinking. The 7 Mio that foreclosed during the last bust bought, but at the wrong time. And walked, because they realized they overpaid. Not really a valid criteria right?
Certifications. Lenders, banksters and realturss have certifications. It means nothing. Those groups have only one goal. To sucker you into overpaying for real estate. The lie when they open their mouth and get paid more the more they lie. They are criminals in a way.
I am absolutely a real estate expert. Just follow this blog for a few weeks and you will see. Most here can vouch for me as well. I offer great insight to the market and call out cheap sales pitches and dismantle common real estate lies. I add a lot of value IMO.
He almost bought a place in 2013 but backed out of the deal (soiled his britches) – clearly an expert maneuver! He’s well versed in the art of renting and the glory of slinking about breaking into pools. Millennial is also a gifted thespian, capable of duping little old ladies with sob stories to avoid rent increases. His version or tourettes is a case study at John Hopkins…50-70!!! 50-70!!! 50-70!!! twitch twitch
Robbie, that made me really laugh. Thank you, that was great!
I would re-phrase the “breaking into poolsâ€. That sounds too illegal. I visit the neighborhood pool to make sure everything is in order and the key code still works.
When I finished college I moved in with my parents to save money. 7 years later I am still there and I call them my best roomates ever. It’s true that millennials are overburdened by student debt (it used to be free in California), low wages, and a high cost of living. The alternative is to move out of state but I like my cozy nest egg. There is something about the home I grew up in. Also, most of my friends are still here in the area. I have been searching online for indications that the housing bubble is ending soon. If the price is falling far enough I would be buying a small single family house, I think. By going through the comments here it sounds like millennials are very much okay with living at home as adults. I thought for a while this isn’t ideal but have come to realize it’s normal for California. My boyfriend is actually doing the same. Together we have saved an enormous amount of money but still maintained a nice lifestyle. We wouldn’t have been able to do both if we would have been burdened by rent expenses on top of everything else we have to pay for. Paying money for rent is like my least favorite. My boyfriend also says he expects a crash and so we are waiting to get married and having kids for when the time is right. Good luck to all and sorry for oversharing!
“maintaining a nice lifestyle” and living with parents as a 30 year-old adult are mutually exclusive. The latter, for all intents and purposes, is indicative of failure in the vast majority of western society and the former is likely the primary cause of that failure. No one cares about your Tesla and Iphone 11 when you need to make it home by 5:30pm to get the last scoop of mom’s tatertot hotdish. To quote the “real” Tyler Durden (not the zerohedge droog: “You are not your fucking khakis.”
Rene,
You (and your boyfriend) are incredible smart!
That’s house hacking. That’s how you get ahead during this bubble.
And to your point. It’s absolutely normal for California. We have millions and millions of adults living with their parents. It’s california’s best kept secret.
I would love to do it but I don’t like the additional commute. My rent is very cheap and I do a good job in making sure my old landlord lady thinks I am struggling financially. Another house hacking trick.
Keep doing what you are doing and hope for a nice recession so we get buying opportunities.
“My boyfriend also says he expects a crash and so we are waiting to get married and having kids for when the time is right.”
Yeah sure, LOL. Housing costs is why he hasn’t proposed. Let’s go with that.
See this is part of the problem with living at home in your 30s. You are still a kid and still have a kid’s mentality. You don’t realize there is never a perfect time to get married or have kids. People who insist on waiting for the perfect time are really saying they don’t want to do it and are using that as an excuse. People got married and had kid during the great depression, during WW2, during the Carter malaise. If you want to get married and have kids, you get married and have kids. You don’t wait for a 70% housing crash.
Slumlord, I think you got a point here. It doesn’t make sense to have kids and buy an overpriced house but it doesn’t mean you don’t start a family. If you want a family you can simply move back in to your parents house and start your family. They would love the grand kids nearby.
Obviously, buying at the peak is not really an option. that would be financial stupidity.
But if we get a nice crash you just buy a house at 50-70% less.
Millie is very angry these days. Lashing out, calling people names. Poor guy, I feel for him. Housing is on fire once again, unemployment is at 3.5%, mortgage rates are bouncing around 3%. For a perma bear this is hell on earth.
SAD
I recently had one friend sell her home. (it is suppose to close on Friday). Two others are planning on selling next year because they believe that prices are still going up. Personally, I plan to sell my home–if the real estate market is strong next year. I just don’t see home prices dropping for at least a year because of Fed intervention.
Will prices drop in 2021? Probably. yes. But that is far in the future. Millie may give up and move out of state by then.
Landlord,
You completely misunderstood my comment “slumlord from Spokane-istanâ€
That is funny, not anger. And I wouldn’t say this is name calling.
Gary,
Yeah I would move to another state if I had a reason too.
What would be a reason?
I pay 1400 in rent, close to my tech job and the beach. My tech job pulls in well over 100k plus bonus.
If you share a place on the US that would offer that I am all ears! Don’t forget the weather!
People have such a tiny time horizon. I have decades to buy. Remember, it’s never a smart idea to overpay for real estate? We don’t have to re-explain that do we?
It’s like with any other investment, you buy low and sell high.
Let’s assume a miracle happens and rents triple over night. We would have rental parity and I would buy. Or, let’s say, rents triple and house prices triple. All happens over night and my salary doesn’t catch up. I would move in to my parents or in laws or relatives the next day and add 20 minutes to my commute!!!!!
I wouldn’t like that but i would do it.
Now, we all know nothing triples over night but do we think housing is due for a correction? Even the most bullish real estate agents believe that will happen.
So again, name one reason I should move out of state?
Bruce Norris the famous hard money lender who predicted the 08 collapse says we still have at least a year to go before a potential drop in prices.
Logan Mohtashami also sees no major crash over the near future.
but again, it will happen, yet like others have said with a super low unemployment and low rates, that is keeping the market support.
The alternative is to move out of state but I like my cozy nest egg.
You mean you like your “cozy nest,” not “cozy nest egg.”
Your parents’ home is you nest. It might indeed feel cozy.
Your “nest egg” is your savings. It cannot be “cozy,” only large or small.
You might like both your nest and your nest egg, but those are two different things. And the context of your sentence (you enjoy staying in California with your friends and family), plus the the adjective “cozy,” indicates that you’re referring to your “nest” and not your “nest egg.”
Son of landlord, great catch on the cozy nest egg!
I didn’t even catch that but this is actually brilliant!
Adults living at their parents = cozy nest egg
Lol
Cozy because it’s the house you grew up in
And nest egg because it saves a ton of money and you are just maintaining the home you will inherit!
Brilliant! I am going to use this. I used to call it california’s Best kept secret but cozy nest egg is a great alternative!
Any of you guys noticed how there are fewer active RE agents YoY?
Funny enough, one of the agents who I have been talking to asked me what I am looking for. He will door knock for me. I told him there is enough inventory that I like but I am not buying at these prices. Not the answer he was looking for. Door knocking? Dang, some agents seem to get desperate. Wasn’t that the case during the last bust too? During the boom, you see an increase in agents, when it turns many agents can’t make a living?
The top 20 percent of agents do 80 percent of the selling. These are the pros that rake it in whether times are good or bad. The other 80 percent are part-timers and bottom feeders that struggle/live modest lives or do it for side cash when they “know someone”. When the economy is hot, part-time agents might put more effort into their real jobs/businesses. Doesn’t take much to get and hold a RE license for the onesie twosie stuff that comes up. I see it a lot in my law practice. Less active agents would certainly correspond with a cooling market but isn’t a perfect indicator either.
Mmmm mmmm mmmm…..thank you California voters. You’ve turned your state into such a cesspool that thousands and thousands of people are fleeing every month. The result is…..KA-CHING for your Mr. Landlord.
KHQ News
10/11/19
POPULARITY OF SPOKANE HOUSING MARKET CAUSING PROBLEMS FOR BUYERS
SPOKANE, Wash. – Experts say the housing market in Spokane is booming. Homeowners trying to sell houses in the area are in great shape, but potential home buyers might run into some issues. Spokane Association of Realtors executive vice president Rob Higgins says the demand for housing in Spokane is high, but the supply just isn’t keeping up.
“The market in Spokane is what we call tight,” Higgins said. “There’s about a… one month supply of houses out there right now.”Higgins says a normal market supply of houses is about four months.
It’s also becoming more expensive to buy the ones that are still available. Higgins says the average and median prices of homes in Spokane is up 11.2 percent from last September,
Was in Boulder, CO. lots of houses for sale, at crazy prices. We will wait, hopefully by end of 2021 we will have a 20-30% drop and then I’ll look to purchase. If we have the 20-30% drop, I would imagine that inventory will be 3x what i’m seeing now. Then I’ll offer 10-15% lower, all cash. See just how desperate they are, some will bite.
I am seeing more and more new houses that are “multi-genâ€. The “granny flat†should be renamed Millie-flat. Adult millennial will have their own separate entrance and kitchen within the boomer parents house complex. Very nice. That’s how you house hack as a millennial. Don’t pay rent by living with your parents or pay very cheap rent like me. Worst thing you can do is buy at the bubble peak (now). Instead wait for the normal correction to take place. You will save 50-70% compared to buying now.
A real estate expert is someone who quotes websites ans waits for a crash that many said would happen in 2016, 2017, 2018, 2019 (remember the 8-year cycle)
A real estate expert is someone who handles real estate and continues to profit from the highs and lows of the market. imo (owning rentals, buying and selling, just dealing with real estate in general and that might mean a loss every now and then) I have several friends who own real estate. One owns 250+ single-family homes and the other owns about 25. Both of these gentlemen do not call themselves experts and far from it.
However, keyboard warriors on here that own ZERO, yes ZERO real estate are claiming they are experts. Be careful what you read on the internet everyone.
House prices will fall significantly in Los Angeles because their price along with rents has been driven up by speculative investment activity unrelated to incomes. A few large investment companies, particularly hedge funds and REITs, turned the housing market around in 2011/2012 in Los Angeles and you can see that in the data. Other “investors†got into the market in about 2014 when they saw prices move up. Households, household income and mortgage rate which households pay have been irrelevant in the speculative market created by those investors. The dirty little secret of the housing market is that there no shortage of housing in Los Angeles that could explain the price rises. Anyone who bothers to look can see from the annual census data for Los Angeles that the number of household members per housing unit has been fairly stable over the last 2 decades even as prices have both risen and fallen. What has changed significantly in the data is that at the end of 2018 we had the highest level of residential vacancies in Los Angeles since the turn of the century. It’s the growing vacancy rates that will collapse this speculative investor created market. Investors are already struggling to find tenants for their rental properties and that problem is getting worse as massive numbers of additional rental units are about to come into the market at a time when the city’s population is static. Unlike stock market investments, housing investors have to generate revenues to cover significant holding costs such as insurance, maintenance and property taxes and that’s before you get to interest on the mortgage. Those investors who didn’t get out in time are just beginning to feel the pain. Housing prices will fall significantly in Los Angeles. The only real question is timing and how it will impact the rest of the economy.
Housing prices can never fall in So Cal because this time is different and we are special.
Please repeat after me: This time is different and we are special!
CNBC
10/15/19
“Anyone out hunting for an affordable home today knows that the pickings are slim – and they are about to get slimmer. National housing inventory fell 2.5% annually in September, a sharper decline than August’s 1.8% decrease, according to realtor.com. Roughly 5 million mostly entry-level homes have been turned into single-family rentals, and strong demand for those rentals means investors are unlikely to put the homes up for sale anytime soon. Demand also surged in the move-up market, causing supplies there to fall as well. The supply of homes priced between $200,000 and $750,000, which make up 60% of the market, flatlined in September, after 18 months of strong inventory growth. Supply is now expected to decline in the months ahead.”
WOMP WOMP for the perma bears.
I’ll probably be renting or living in a trailer the rest of my life because the housing isn’t cheap enough. Since I’m single I’ve been renting because you can’t afford to do anything else unless you’re making a lot more than $30,000 a year.
This whole economy is messed up because of housing. My father moved here in the 1960s. He has a GED, served in the Navy 20 years as a Sea Bee and then started a small construction business. He built a home in the city of Ventura in 1980 on one acre of land for $120,000. Today that home is worth $1.3 million. His wife had a low paying job at the time he built his home. He wasn’t even wealthy when he did this.
My uncle got a job at Vons in the 1970s and his wife held some minimum wage fast food jobs. They bought a home and today it’s worth $800,000. He was a meat cutter at Vons until he retired. They adopted two children too. This wouldn’t even be possible today under the same circumstances. Today you’d be lucky to be in an apartment with the help of Gov’t assistance.
So those of you here who are reading what I wrote above, don’t believe anyone who tells you we don’t have a housing problem in California. Affordability is the problem and it’s all due to greed. None of this will stop until the Gov’t takes the profit motives out of it.
Kent, I agree with a lot of what you say. California’s housing problem is about affordability. My research shows there is no shortage of housing and that we have a growing level of vacancies in residential units. In a competitive market, these high prices would not occur. The fact that prices have got so high relative to incomes as shown in the chart in the opening commentary while there is a surplus is because competitive market forces in housing have been hijacked by major REITs and hedge fund investors. They have taken a dominant position in the market since 2011/2012, driving rents and prices up and other foolish smaller investors have joined in. The government should not have bought into the industry lobbyists false narrative that there is a housing shortage and should have regulate the industry years ago. Now we have to wait for foolish investors to come to terms with their mistakes and unwind their housing positions
In general I see no issue with buying a home in California. You got to live somewhere and if you buy you build equity. Not to say you can’t build equity by renting but I am a believer in owning your own home. I am currently renting but as soon as the market corrects I’ll make the big step toward ownership. I have calculated that at a 40% price reduction the numbers make sense for me. The news are reporting an upcoming economic downfall daily. Let’s hope it’s a self fullfilling prophecy.
HOUSING CRASH!!! LOL
“Confidence among the nation’s homebuilders rose 1 point to 68 in September in the National Association of Home Builders/Wells Fargo Housing Market Index – well above expectations and the highest level of the year. It is also 1 point higher than a year earlier. The reading for August, meanwhile, was revised upward by a point. Sentiment sank to a recent low of 56 in December, when mortgage interest rates spiked. Anything above 50 on the index is considered positive.”
LOL, and you believe them? I’ve got a bridge to sell you then. LMAO what fools listen to a drug dealer who says “try it, it won’t hurt you”, a FOOL .
And down, down we go
https://wolfstreet.com/2019/10/16/housing-bubble-in-silicon-valley-san-francisco-bay-area-turns-to-bust-despite-low-mortgage-rates-startup-millionaires/
Low mortgage rate are not helping to avoid the bust. Check out those markets going negative…..beautiful news and charts.
Millie – Wolf Street? And Zero Hedge? Why don’t you use a source that economists use and is reliable…? Not some random, unendorsed financial quarterbacks…
Mix up your sources a bit and maybe someone will start believing you…
“don’t believe anyone who tells you we don’t have a housing problem in California. Affordability is the problem and it’s all due to greed. None of this will stop until the Gov’t takes the profit motives out of it.”
Kent, I agree with you that CA has a housing problem and I think that 100% of the posters here agree with you.
Where we part ways is in the CAUSE of it and the REMEDY for it.
1. CAUSE – the CA you dream of will never return. Ca was a beautiful state in the 70s with low population and more conservative politics than we see today. As the population increased (with millions of illegals), the poverty increased and the politics changed. Demographics are destiny. Higher population means higher rents and more competition on low paying jobs in a race to the bottom – your wage stays the same while the rents increase. Higher rents mean higher RE prices because of higher ROI for investors.
2. REMEDY – eliminate the cause (all the illegals be moved back to the country of origin). The laws are in the books but the democrats refuse to implement them; therefore, we have lawless politicians. A country where laws do not apply is a banana republic. That is what CA in special and US in general became.
If someone is sick, the first step is to put the right diagnostic. Only then you can talk about the correct remedy. The CA population in the 70s was not over 40 millions. If you vote the same (or don’t vote) expecting different results, you are mistaken. The lawless criminals in power who inflict so much pain on the middle class should be removed. More government intervention in RE market will not solve the problem – will just compound it.
Another big contributor to the housing problem is California’s anti-growth policies and all the stupid regulations that go along with it. Builders won’t build unless there is profit to be made.
Builders always have and always will build into a recession. Towards the peak of the business cycle the margins are higher.
Anywhere you look there are building multi family and SFH’s in California. Tons and tons of inventory is coming online.
Stupid racism. There is no data and no part of California’s history that supports the idea expressed. Its bigotry
I’m not claiming this is reality, but I think Our Millennial is renting because:
1) Our Millennial’s nice old lady landlord is actually his Boomer Mother-in-law.
2) Our Millennial is paying a discounted rent to his Mother-in-Law to keep his wife happy and as a caretaker to maintain the family estate.
3) Our Millennial and his wife are happy since they are not living in the basement of his wealthy Boomer parents-in-law house. They have their own private place to make all of the noise they want.
4) Due to the subsidized rent, Our Millennial can save his 6 figure salary for a nice house when the time is right. No pressure from Mom and Dad.
5) Eventually, they inherit the condo and Mega-Mansion with Prop 13 taxes to carry on the Millennial dynasty.
It is nice to have a wealthy family and dynasties.
or
6. Millie is not real and it’s all performance art
SeenItAllBefore- opinions are like ——–, everyone has em.
Daily news are flooded with recession artlices. I am prepared too. Lots of cash waiting to go towards real estate when the markets dump.
It’s comments like these that give me piece of mind that the housing market is not gonna tank. EVERYONE has cash ready to go for the “next big one” so I’m not sure how the laws of economics accommodates EVERYONE to get a house at half off. You have a better chance at making water flow up hill.
What we saw in 2008 was prices start to come down which encouraged everyone to to buy into the initial dip which helped stabilize the market for a moment before the effects of a collapsing economy took full effect and the money to buy was simply not there so the market went into a free fall. To get good deals, you have to be able to hold onto your cash and cover your ass during a downturn except the problem is that there is no indication the market is coming down and everyone is holding onto their cash. You will simply be holding your cash for a loooong time which devalues your money.
When every “expert” says something will happen you can take it o the bank the exact opposite will happen. I will start getting worried when there are no talk of a recession in the news.
More beautiful news from a well respected news/research powerhouse
https://www.zerohedge.com/personal-finance/69-percent-us-households-are-preparing-possible-recession
The US consumer is finally starting to scale back. The looming recession means less consumer spending, more retail stores closing, wage growth reduction and less jobs.
We are on track. It’s usually the dumbest idea to sign up for an enormous mortgage debt while being on the brink of a collapse.
As I said multiple times, “this is the year when millennials go out and buy in droves†has been the worst call. Millennials are much smarter and save, save, save. They don’t buy your overpriced crapshacks until they are 50-70% lower!
Millie, there will be a real estate crash someday, but it years away. Right now, a sharp increase in home prices is very likely. A crash will likely occur, only if and when, 30 year mortgage rates go above 4.5% and stay there. Where rates are now, home prices have to increase.
LOL…housing crash!!
Florida home prices up 4.9% in Sept, vs Sept 2018. Florida is always the canary in the real estate mine. First into a boom, first into a crash. And if prices are rising 5% a year in FL they’ll be rising 5% a year everywhere else in a few months.
Renting long term is financial suicide. Don’t do it kidz.
Never heard that one Slumlord. Renting actually let’s me save a ton of money.
Have you ever heard from a renter that he lost the house? Renters don’t foreclose during recessions. That’s for buyers who bought the peak. Buying at the top (like now) is financial suicide. That’s why experts (like me) suggest not to buy the top. Instead buy low and sell high. You should try it.
Hey Mr L
LA prices are not too shabby either.. breaking prior records in terms of the median prices.
https://la.curbed.com/2019/8/28/20837299/los-angeles-home-price-record-july-2019
Home prices in LA County surged to $635,000 in July, shattering an all-time record for the second month in a row.
The county’s median sale price rose 2.8 percent since June and a full 5 percent since July 2018, a new report from real estate data tracker CoreLogic shows. That was the largest yearly gain since November.
CoreLogic analyst Andrew LePage says in a report that the bump in prices may be due in part to falling mortgage interest rates, which have reduced monthly costs for homebuyers who aren’t making all-cash purchases.
Across all of Southern California, sale prices rose 2 percent year over year. But LePage points out that average mortgage payments dropped 7 percent in the same time period due to declining interest rates.
Here are the latest real estate statistics for Orange County, CA. They suggest a strong real estate market in 2020 with rising prices 4-5%.
Since peaking at the end of July, the Active Inventory has dropped from 7,601 homes to 6,615, nearly a 1,000-home drop or down 13%.
Demand, new escrow in the last 30-days, dropped from 2,505 pending sales to 2,311, a 194 pending sale drop or down 8%.
Both supply and demand are dropping at the same rate. That is why the market does not feel that different.
The Expected Market Time for all of OC dropped from 91 days to 86 days in the past month. Last year, it was at 105 days which is much slower than today. Millie’s crash is at least a year away–maybe two
Remember when RE shills told us that the Chinese will buy our overpriced houses and there is no end to this? Rofl
You don’t hear that lie anymore, right? Also, they stopped telling the lie that we have no inventory. Their newest addition to the RE cheerleader list is “price doesn’t matterâ€
Apropos China:
https://www.zerohedge.com/markets/world-stocks-drop-futures-tread-water-after-china-reports-worst-gdp-growth-30-years
Worst GDP growth in 30years. It’s all going terrible wrong for our RE cheerleadera
There are a few key pieces of advice:
1. Buy at rental parity
2. Follow Calculated Risk, the only unbiased and accurate news feed. Ignore Zero Hedge, Wolfs Street, and the myriad of crack pots.
https://www.calculatedriskblog.com/2019/10/housing-and-recessions.html
Some observations:
1) When the YoY change in New Home Sales falls about 20%, usually a recession will follow. The one exception for this data series was the mid ’60s when the Vietnam buildup kept the economy out of recession. Note that the sharp decline in 2010 was related to the housing tax credit policy in 2009 – and was just a continuation of the housing bust.
2) It is also interesting to look at the ’86/’87 and the mid ’90s periods. New Home sales fell in both of these periods, although not quite 20%. As I noted in earlier posts, the mid ’80s saw a surge in defense spending and MEW that more than offset the decline in New Home sales. In the mid ’90s, nonresidential investment remained strong.
Although new home sales were down towards the end of 2018, the decline wasn’t that large historically. As I noted last Fall, I wasn’t even on recession watch. Now new home sales are up solidly year-over-year. No worries.
There’s so little action here these days. Which is really all you need to know about the supposed housing crash. Other than Millie, the perma bears have by and large stopped posting. They’ve thrown in the towel.
And THAT, my friend, is why we’re about to hit a downturn…when the permabears throw in the towel. Sit back and watch.
Recently bought. Freakin expensive. Good thing is I put only 3 percent down. If I don’t make it I blame my parents. They wanted me to buy. Lol
Good point about permabears disappearing–I use to be a bear myself. But I was never a permabear. Last year, the real estate outlook did look grim; however, things really changed when the Fed changed course. Now 2020 should be good year with rising real estate sales and prices. There may be areas of weakness in the county, but on the whole, the real estate market for the U.S. looks very good for the coming year. I see no chance of a recession until after the Nov. 2020 election.
43% OFF, Score another for Millie- “Silicon Valley big shot Scott McNealy drastically slashed the price on his mega Portola Valley, Calif., mansion on over 13 serene acres. McNealy originally listed the estate, which includes a 28,000-square-foot house, for $96.8 million in June 2018. The new listing price is $54.8 million, an impressive $42 million price cut.â€
Bubble Already Popped, anyone who says housing will continue to rise in value, is a fool and knows nothing about the real estate market or economic cycles.
Nothing, I mean NOTHING goes up forever, the party is over and the pipper needs to be paid.
43% off LIST PRICE is NOT a crash. It’s only a crash if it’s 43% off the PREVIOUS SOLD PRICE.
What was this house’s previous sold price? Where is the link?
Haven’t posted in years here. Dang! 43% reduction! Looks like the crash is here! Finally!
This guy gets it….we are still in the infancy of the housing boom. There is untold wealth to be made from r/e investing. American real estate is still dirt cheap compared to the rest of the world and prices have a long way to go before leveling off.
Renting long term is financial suicide.
Forbes
Oct 14, 2019, 09:26am
The Biggest Housing Boom In History Has Just Begun
https://preview.tinyurl.com/y26q63rv
Forgot to add this from the above linked article…..
“There are a lot of rumors out there about Millennials. They’re famous for living in their parents’ basements, delaying marriage, and earning less money than their parents did. But as I explained back in June, Millennials are finally growing up and buying houses. According to the National Association of Realtors, one in three homebuyers today is a Millennial.”
LOL…..sorry Millie.
The Millenials are so over generalized.
There are millions of Millenials buying homes every year. That’s a fact.
They make up a large demographic of the working population in the US.
Hell….older Millenials are approaching their 40th birthday fast.
Housing Bubble 2.0 Already Popped, Some Just Can’t Face Reality-The Real Deal on Florida. “The Miami luxury condo market remains in a rut due in part to sellers overpricing properties, according to top residential real estate brokers. ‘If you look at the market today, even though there has been an increase in prices, there is also an increase in days on the market,’ said Oren Alexander, co-founder of Douglas Elliman’s The Alexander Team. ‘That has a lot to do with bad prices. We have to make sure sellers really understand where pricing is.’â€
“Phil Gutman, president of Brown Harris Stevens Miami said whenever he sees a media headline about a luxury condo selling for a 30 percent discount, he thinks, ‘It shouldn’t have been listed at that [high] price in the first place…you wonder what were they thinking? What were they smoking?’â€
From ABC 7 News in California. “One of the most expensive homes in Silicon Valley just went through a massive price cut at now 55-percent less than it’s original $88-million asking price. Tucked privately away on eight-acres 27500 La Liva Real in Los Altos Hills is a 21,000 square foot estate that could easily be mistaken for a resort.â€
“When the property first hit the market in 2015, the owner, the founder of a tech company, listed it at $88-million. Today the price is reduced 55-percent to just under $40-million. CEO of Deleon Realty, Michael Repka says while there is still a pool of buyers from the Bay Area many in the five-to-10 million dollar range are choosing to retire out of state.â€
“‘The market has definitely softened up and with the tax changes in the state and local tax deductions has had quite an impact on Silicon Valley,’ Repka said.â€
The Los Angeles Times in California. “Is another record in the cards for Casa Encantada? The Bel-Air home of financier Gary Winnick — a 40,000-square-foot 1930s-era trophy perched above the Bel-Air Country Club — has twice set the record for highest price of a residential real estate sale in the U.S. Now, the storied estate is listing for sale at $225 million, making it the most expensive home publicly listed in the United States.â€
“But the estate, graced with ionic columns and formal gardens, arrives on the market in the midst of a downturn. After years of record trading, the high end has cooled this year. Single-family home sales on the Westside of Los Angeles are down about 16% year over year, while sales of $10 million and $20 million or more are down about 20% and 25%, respectively.â€
“Overall, residential and multifamily sales across L.A. County have experienced an even greater dip. As of September, there were 968 transactions of $5 million or more this year, down from 1,204 transactions during the same period last year, a drop of 19.6%, according to Zillow. Sales of $20 million or more have declined by more than two-thirds (109 transactions as of September 2019 versus 352 transactions during the same period in 2018).â€
“One of the growing problems on the Westside: a market flooded with contemporary mansions built on speculation, with new ones entering the market each day, and a buyer pool that has remained static. ‘It is not unusual to start seeing a glut of supply in any property type, mansions included, this late in an expansion cycle,’ UCLA real estate professor Paul Habibi said. ‘Oftentimes [developers] have a herd mentality about introducing more inventory into the market.’â€
“‘The conventional wisdom is that so long as you’re not the last one without a seat when the music stops, you’ll make out OK,’ he said.â€
LOL @ using $225M houses as proof of anything. These houses exist in a world you and I will never know. They have literally NO EFFECT on anything related to anyone reading this. And does anyone even know what the real worth is? Is it $225? $150? They just pick these numbers out of a hat. It’s not like there are any comps to use against it.
When you start seeing single family homes, in neighborhoods that don’t require bars on windows, for under $1M in SoCal, then I’ll believe you when you say the crash is here. Until then…..not so much.
As for the tax changes, LOL. Sure, blame Trump. You build a $100M house and can’t sell it so it’s OrangeManBad’s fault. Priceless.
California need to keep the people here and they are not done as good job of this. I don’t know one family or person that says they plan to Retire here. Everyone says they are going to sell their home and move to a lower cost state. I’m just saying there should be a perk to keep people here. And when your old And barely leave the house, makes AZ weather not so bad.
The perk is Prop 13 to keep the prop. taxes lower.
Good news from a great source. Mainstream media continues to cite and copy his research.
https://wolfstreet.com/2019/10/18/another-chinese-mega-construction-project-in-california-is-halted-this-one-in-san-francisco-list-of-troubled-or-scuttled-chinese-projects-in-california-grows/
Oh look…what a shocker…Millie cited WolfStreet again! His only source of news…
The OC Register columnist Lansner’s article is “10 reasons to buy a home in California now”. Some of his 10 reasons seem to be pretty good, others may not be relevant (my comments in brackets follow his reasons :
1)Bosses are hiring. [That would be good if most jobs were in high paying fields, but he doesn’t document that.]
2)Wages are up. [That is a good one and he points out that tis is particularly important for 2 income families.]
3) Low, low interest rates are not forever. [No, but probably through 2020.]
4)Lenders are lending. [Again 2 income families are prime beneficiaries.]
5) Price appreciate is cooling. [Documented here over the past 2 months.ay also be a reason for caution.]
6) Multiple offers are also out of style. [ Again sign of a cooling market.]
7) It’s not build it and they will come, but… [ Price cuts for McMansions… make your own conclusion.]
8) Yes, we’re having a sale. [ Again, the documented price cuts we talked about recently.]
9) Thus relative affordability. [ The affordability may be in some place you don’t want to buy, e.g non-coastal areas.]
10) And finally, your landlord. [ He says “Do you want to make a landlord wealthy or take a shot at home-owning success?” I think this may now be the strongest reason.]
#10 also figures in a much more important article that was on the Opinion page, not the Real Estate page. Susan Shelley wrote an opinion piece about AB68 which creates the right to build two new units of rental housing on ANY single family lot in California (!!). This law takes away the power of cities impose conditions such as parking requirements, and it prohibits size and setback limits that are stricter than state law. This expands the ADU law which allowed one unit. This change could make individual owners of multiple single family residences and corporate owners such as Invitation Homes, Inc and several others she mentions a very large amount of money. This could push the price of single family homes in some neighborhoods higher as rental companies and developers start bidding on them. If enough houses on a block get converted, the remaining owner-occupied units would be a lot less desirable places to live as the street gets parked up and noisier. So then they sell to developers and move out of state? She recommends contacting your city council to see if they’re going to file suit against this bill. She also is hoping for a ballot measure to repeal it. Good luck on that one!
Good luck when existing HO climb barricades in order to stop the development of multi-unit housing next to their home.
Market is toast. No more demand. Crash is coming. Fast
The EPIC CRASH continues… the Market is TOAST:
https://www.calculatedriskblog.com/2019/10/phoenix-real-estate-in-september-sales.html#s05waOyQPFd8krE7.99
Phoenix Real Estate in September: Sales up 13.8% YoY, Active Inventory Down 16.3% YoY
by Calculated Risk on 10/21/2019 03:18:00 PM
This is a key housing market to follow since Phoenix saw a large bubble / bust followed by strong investor buying.
The Arizona Regional Multiple Listing Service (ARMLS) reports (“Stats Report”):
1) Overall sales were at 7,850 in September, down from 8,726 in August, but up from 6,897 in September 2018. Sales were down 10.0% from August 2019 (last month), and up 13.8% from September 2018.
2) Active inventory was at 13,936, down from 16,643 in September 2018. That is down 16.3% year-over-year.
3) Months of supply increased to 2.27 months in September from 2.00 months in August. This is low.
This is another market with increasing sales and falling inventory.
At a major financial company, when they interviewed a 40 year old worker, they noticed he rented for more than 10 years. They decided not to hire him because that was a poor financial decision … prices doubled while he rented. Clearly, he was not good with money.
This is how housing is crashing in the northern Seattle exurbs…
“The housing market in Western Washington is staying warm in the fall months, according to Northwest Multiple Listing Service data. On Camano Island, 99 homes were for sale in September, down slightly from a year ago. The median price of the 38 homes on Camano sold last month rose to $454,000 — about $50,000 more than a year ago.”
And this is what’s happening in the Portland suburbs…
“Sale prices also saw a drop from August but remained higher year-over-year. The average sale price was reported at $401,000 in September, compared to $415,100 in August and $392,000 in September 2018. The median sale price was reported at $366,500, dropping from the $380,000 median in August but rising from the $355,000 median reported in September 2018.”
Further down the coast….
“Sacramento home values have gone up 2.6% over the past year and Zillow predicts they will rise 0.1% within the next year.†As of September 2019, the median home price for the area was around $326,000. In September of 2013, the median was closer to $200,000. So it has risen by more than $100,000 in only six years.”
Month to month numbers fluctuate, but the trend is clear, long term renting is financial suicide.
For the cheerleader- Bubble Popped- Existing Home Sales Tumble In September, Despite Low Mortgage Rates
https://www.zerohedge.com/personal-finance/existing-home-sales-tumble-september-despite-low-mortgage-rates
US Housing Demand Craters To 1998 Level As 25 Million Excess Empty And Defaulted Houses Sit
https://bit.ly/2kpWDGR
Bellair Beach, FL Housing Prices Crater 30% YOY As Tampa Housing Demand Collapses
https://www.movoto.com/belleair-beach-fl/market-trends/
The links you post are beyond ridiculous. Do you even pay attention to what you post?
In Bellair Beach FL there are about 25 sales a month.
The median house sold in terms of sq ft dropped from 1875 sq ft to 1485 sq ft.
Median price dropped (obviously for the lower sq ft), but guess what Median price per square foot sky rocketed!!
Price per sq ft increased from $322 / sq ft to $393 / sq ft… that’s a 22% increase in price!
What you posted above this is even more ridiculous. The MBA Purchase Application index is in fantastic shape. It’s higher than it was at the bottom of the housing market. There is absolutely nothing negative about that chart. It shows the bubble in 2006 and then a return to normalcy.
When I start posting about the recession, years from now, you guys will be long gone.
Poor Millie…..LOL!! What do you know, Millies all around the country are out buying homes after all. Which means all the people posting here about living at home with mom and dad are a small minority. Womp Womp. Looks like Millies are listening to their uncle Mr Landlord when he says renting long term is financial suicide.
CNBC
10/22/19
Millennials are keeping the US out of recession, market bull Tony Dwyer says
It puts the group at an age when many of them are embarking on the next chapter of their lives, according to Dwyer. They are turning 30. They’ve had 10 years to be in the workforce. They’ve had 10 years to build a credit score. They’ve had 10 years to meet a significant other and get prepared to build a household, he said .We’re seeing this behavior show up in this millennial demographic which should help buffer the economy from a more significant slowdown.
https://www.cnbc.com/2019/10/22/millennials-are-keeping-the-us-out-of-recession-tony-dwyer.html
Than you president Trump.
“The latest Census Bureau Current Population Survey data now show that middle-class incomes, after adjusting for inflation, have surged by $5,003 since Donald Trump became president in January 2017. Median household income has now reached $65,976 – an all-time high and up more than 8 percent in 2019 dollars under the Trump presidency.”
This is why real estate is booming. People are richer, feel better about their financial situation and buying homes. And also why Trump will easily win a 2nd term.
Renting long term is financial suicide, don’t do it kids.
Housing Cheerleaders would have you believe this is a good thing- US New Home Sales Slow In September, Prices Plunge To Lowest Since 2017
but but but in CA and it’s always sunny, so we are differnet :000000000000
https://www.zerohedge.com/economics/us-new-home-sales-slow-september-prices-plunge-lowest-2017
Wow….interesting comments here. A lot of people clear have short memories or are young. Having lived 70yrs on this planet the complaints about affordability and how RE was cheap back in year XX I’ve heard in the early 70’s….the early 80’s….the early 90’s….the early 2000’s….and now the late 2010’s. Somehow it all worked out and every generation figured out how to buy homes.
Some of it is your CA-issued goggles. People livining CA refuse to understand that 80% of the USA doesn’t suffer from SoCal problems. There is affordable housing and high paying jobs for educated people in flyover country. Over the last 3 generations…how come so many young college grads are able to move to SoCal with $0 and within 5-10yrs buy their own house.
Just because YOU can’t figure it out, doesn’t mean others can’t.
I make 150k a year, have 0 debt, over 100k saved, and I can’t afford a home within 45 minutes from my work. I guess I just haven’t “figured” it out yet. smh
Yes you can afford a home it just won’t be the one you dreamed of.
What you make is irrelevant; those in Venezuela and Zimbabwe make more than you and save more than you – numerically.
What counts for every job and location is what you can buy after all the taxes. This is the most important factor and most young people don’t get it; some do and they end up doing excellent long term. Some from the older generations had more common sense in this respect. The money are not wealth; they are just a mean to an end – standard of living.
Some young people do have common sense, they plan long term and they sacrifice the present for the future. Some millennials live only for today.
Lurker,
You millenials get more and more ridiculous every year. What’s next? I make $150K, and still I can’t afford a Bugatti. Life is soooooo unfair!
With $100K down and $150K a year you could easily afford a $700K home. If that’s not good enough for you, then you need to rethink your outlook on life. Because for 80% of Americans, owning a $700K home would be a dream come true.
Growing up, my dad made what would be the equivalent of about $200K today. And yet between the train ride into the city, getting to the train from home and walking from the train station to his office, it was about an hour, each way. You’re not special amigo.
i’m in the same boat, and agree with you. you had someone that responded saying you could afford something but just a crap home. false. you cannot buy a home in los angeles with 100k down and 150k income. you might be able to get a 600-700k condo but it would be 600-800 sq ft studio or one bedroom. that’s not a home, homes are for families, 2-3 bedrooms, backyard, something that resembles an “okay” life. forget about any decent neighborhoods, you’ll be living with bars on your windows, weekly car break ins, drive by shootings, etc. download citizens app and browse around los angeles you’ll see the nonsense that happens. and everyone around you will be pissed because they think you’re gentrifying the neighborhood.
AMEN Sally!!
It’s funny that for all the hipness Millies likes to think he has, he’s really the old man on his porch talking about how gas was 10 cents a gallon back in the “good old days”. LOL
Here is one of those $700K crap condos with bars on the windows in Westmeinster. Methinks you are just making excuses and will continue to do so because you can’t get your DREAM home.
https://www.zillow.com/homedetails/5081-Kingscross-Rd-Westminster-CA-92683/25305125_zpid/?
I wonder how many Cali homeowners are sweating bullets in a hotel right now? An SUV full of memories they packed in a hurry to escape the wildfires that are becoming like furniture around the precious property. Glad all my properties are on the east coast. If you can afford a 2 mil home put in your own exterior fire safety equipment. Oh that’s right, permits, taxes, NIBMY issues. Rats, oh sorry that’s a different Calif issue. Good luck to the people running from the fires. No pun intended but in the voice of Eddie Murphy: You brought this on yoself! Didn’t you?
There is a thing called homeowner’s insurance if you aren’t aware.
And the structure is a small percent of the value, the wonderful CA dirt it sits on is what makes things so expensive here.
62% off-Score another for Millie- The Wall Street Journal on California. “After nearly three years on the market, America’s most expensive home has finally sold—for 62% off. With a price tag of $250 million, ‘Billionaire’—the elaborate Los Angeles spec house built by handbag entrepreneur Bruce Makowsky – was the priciest in the nation when it came on the market in 2017. After several reductions, it has found a buyer for around $94 million, according to people with knowledge of the transaction.â€
“Billionaire’s variable fortunes reflect the shifting Los Angeles luxury market. One of the most elaborate homes in the country, with a candy room and a crocodile skin-clad elevator, it made its debut at a time when the high-end Los Angeles market was riding high following a couple of record-breaking sales. Listings priced at $100 million or more were the order of the day.â€
“Nearly three years later, despite a handful of major transactions, prices are facing pressure amid an oversupply of extremely expensive homes. While the deals are evidence of demand for high-end real estate in the Los Angeles area, particularly from overseas, the sales have only made a small dent in the glut of properties on the market.â€
“In a 2017 interview, Makowsky justified the price tag by comparing buying a luxury home to buying a yacht: ‘To me it doesn’t make sense that somebody spends $250 million on a boat where they spend eight weeks a year, but they’re living in a $30 or $40 million house,’ he said.â€
“The home is directly adjacent to another spec mansion, which is currently on the market for $180 million.â€
Try posting some relevant data, JamesJim.
Two points I often made (and which have been ignored, but never refuted):
1. A cut in the ASKING PRICE proves nothing. The relevant indicator is the difference in ACTUAL SALES PRICE from current to previous sale.
Consider:
2014 ….. House sells for $1 million.
2019 ….. House lists for $10 million.
2019 ….. Listing cut to $2 million, whereupon it sells.
Whereas an idiot (or a troll) imagines an 80% crash, an intelligent person knows it’s a 100% gain.
2. Regardless of your example’s details, the house sold for $94 million, and thus proves nothing about homes in the $750k to $2 million range.
From your own post: Billionaire’s variable fortunes reflect the shifting Los Angeles luxury market.
What occurs in the “Los Angeles luxury market” indicates nothing of relevance to the concerns of ordinary folk on this blog.
Let’s face it. There is no sign of a popping bubble in real estate. Prices are going up slowly but they are still going up. There has been no increase in the inventory of unsold homes and no increase in the number of days it takes to sell a home. In short, there is no sign of a crash! Wishful thinking is all the bears have to show for evidence.
Hey, JamesJim. It looks like the “luxury real estate market” has hit a NEW HIGH: https://nypost.com/2019/10/24/new-york-billionaire-set-to-buy-americas-most-expensive-mansion-for-almost-200m/
A New York billionaire is in contract to buy America’s most expensive mansion, The Post has learned.
Hedge funder Steven Schonfeld is in contract to buy an oceanfront Palm Beach, Florida, estate for just under $200 million, say sources close to the deal. …
Schonfeld already owns a $90 million mansion in Old Westbury, which has his own personal chef and a private nine-hole golf course.
So, my billionaire’s $200 million home purchase cancels out your billionaire’s $94 million home purchase. And what does it all prove? Nothing.
If you want to prove a crash, try sticking to relevant data.
This is what you base that ridiculous post on “is in contract to” and I’m sure you thought Hillary was gonna win BIGLY, lmao
It’s always a good time to buy, you don’t want to be priced out forever?
A must read for all, recently presented at UCI’s 2020 Economic Forecast. If you want to time the next recession correctly follow Bill McBride at Calculated Risk Blog who was flawless in calling the last recession…. and has been correct every year since while the crackpots call for a recession every single year. I made a ton of money selling at the peak last time following Bill’s sage insight following key economic indicators….. and then buying at the bottom when he called the housing bottom in late 2011/early 2012. Both in housing and the stock market.
Slide deck link is here: https://cr4re.com/npbchamber2019mcbride1.pptx
Blog post here:
https://www.calculatedriskblog.com/2019/10/my-slide-deck-2020-economic-forecast.html
I discussed the two most frequent questions I’m asked: Are house prices in a new bubble? And will there be a recession in the next 12 months.
The short answers are:
House prices might be a little elevated based on fundamentals, but there is very little speculation – and there is no Bubble 2.0.
And on a recession: Don’t freak out about the yield curve – especially when the Fed is cutting rates, and housing activity is fine – so I don’t expect a recession in the next 12 months.
—————————-
Unlike others here I will change my view at the proper time…. in a number of years. Permabears lose tons of money and opportunity.
Sherwin Williams just had a blowout quarter. Net income INCREASED 60% compared to the same quarter last year.
SW is the type of company that lives and dies with housing. When their income increases 60%, only the most uninformed amongst us believe there’s a anything close to a housing crash going on.
The problem with perma bears is they think a slowdown in the increase of prices is the same as a decrease in prices. You’re right that instead of 10% or more appreciation yearly like we’ve had for the past decade, it’s more like 3-5% now and probably will continue in that range for the next couple of years. But prices are still trending higher. And every month you keep renting is another month of committing financial suicide.
Owning a home (just like investing) is a long term proposition. People who sit on the sidelines for extended periods of time will get eaten alive by either rent increases or home price increases. Homes that sold at the bottom nearly a decade ago for 600K go for 900K today. While many of the perma bears think this is insane, crunching some simple numbers will say otherwise. Assuming a yearly 3% inflation rate for a decade makes a 600K into an 800K house. Just like investing, time is your ally when owning a home. Listen to Mr. Landlord regarding longterm renting plans, don’t do it kids!
The permabear perma-renters also tend to ignore the slowly but steadily increasing portion of a principal payment. One more way time becomes your friend instead of your enemy with owning vs. renting. The assumption that rate doesn’t matter “because you just refi when rates go down” is a fallacy for the same reason. The principal to interest ratio resets, payoff horizon gets more distant, and you incur transactional costs. A thoughtful refi requires considering many factors beyond the rate/monthly payment.
Where’s the crash?
This Santa Monica crapshack sat for 2 weeks on the market, then sold for over $2.5 million: https://www.redfin.com/CA/Santa-Monica/845-Harvard-St-90403/home/6762635
Check out the photos. Small house, dated kitchen & bath. Built in 1938.
But the lot is 7,858 sq ft. I suppose the owner will tear down the house and build a bigger one.
It really is different this time. Sorry perma bears.
Bloomberg
10/28/19
Burned in 2008, Americans Are Refusing to Tap Their Home Equity
“But a resurgent housing market after the Great Recession hasn’t brought with it a return to Helocs, as they’re commonly known. Home equity lines have fallen by almost half in the past decade, New York Fed data show. The loans, which comprised 5% of the nation’s banking assets in 2009, now account for less than 2%, according to the Federal Deposit Insurance Corp.
Fallout from the housing bubble appears to have had a lasting effect on consumers’ willingness to keep using their homes as an ATM. Just 4% of households had an open home equity line in 2016, according to the Federal Reserve’s most recent comprehensive survey of households’ finances, a far cry from the 10% that annually borrowed against the equity in their homes during the 2000s.”
With all the wild fires and destruction of the power company in CA, I am sure that RE prices will be affected.
First, all the stupid environmental regulations turned CA into a tinder box.
Second, putting all the liability on PG&E made rolling blackouts a normal occurrence.
And then I hear that crazy communist Newsom saying he has aspirations of becoming president in 2024 and turning the whole US into CA (without the weather; just the craziness).
I am thinking who is going to pay for the incompetence of CA leadership (they are the ones in charge of all environmental regulations and utility regulations)?! Of course, those paying for power and the taxpayers.
Then, I am thinking about the CO2 impact from all these fires caused by mismanagement. They worry about a little bit extra CO2 from combustion engines making the gasoline double in price than the rest of the nation and on the other hand they create more carbon footprint than the rest of the nation combined (through wildfires due to mismanagement) – something like those rich democrat politicians flying private jets to Davos to talk about climate change and taxes on carbon emissions – as stupid and hypocrites as they come.
I noticed the same craziness with the other socialist democrats from Hawaii. Here you have few thousand people worrying about marginal extra gas consumption and the impact of the extra CO2 on the environment (literally on a rock in the middle of the ocean) and then you have volcanic eruptions spewing the equivalent CO2 of all the people on those islands in millions of years. However, it is not about CO2 and climate change; it is about bringing the standard of living of all people in US like those original Hawaiian populations (before colonization) while our communist leaders fly in private jets.
What a crazy world we live in!…The common sense is not common anymore.
While I agree that “climate change” is a political movement, not science, it is true that burning carbon gives off a lot of CO2. Volcanic explosions have caused famines, not because they give off CO2, but because the particulates they emit lower global temperatures (global cooling). Hawai’i may give off more CO2 from the volcano than from people using fuels, but on a worldwide basis, this isn’t true. Here is an article from Forbes:
https://www.forbes.com/sites/startswithabang/2017/06/06/how-much-co2-does-a-single-volcano-emit/#5267f9b05cbf
It’s OVER, Housing Bubble Already Popped- A report from the Douglas Digital Daily in California. “Forget what’s fashionable in floor plans, decor or color palettes. This year’s hot housing flavor is something every house hunter can agree upon: a price discount. It’s no blip. The frequency of price-cutting in Southern California statewide and across the nation is running at or near post-recession highs.â€
“When I filled my trusty spreadsheet with among the 50 largest metropolitan areas, I found 43 with increased discounting in the 12 months ended in August vs. the previous 12 months. Five of the 11 big metros with the steepest jumps in price reductions were in the Golden State. So, who’s lowering asking prices the most? Silicon Valley. The San Jose metro area’s 115% jump in its discounting rate over the past 12 months meant 15.9% of sellers had cut their asking price.â€
“In Southern California, more sellers are cutting prices, too. Los Angeles and Orange counties had the No. 7 jump with 28% increased discounting. As for the Inland Empire, it had the 11th-largest growth in price cuts: Up to 16.1% (No. 28) from 13.7% (No. 20) — an 18% increase. Big California upswings in discounts were also found in San Francisco. A 67% jump, to No. 3 nationally, pushed price-cutting to 12.2% of listings.â€
“Now remember, cutting listing prices is no guarantee that house hunters will bite. That’s likely a reason why you see some of the nation’s once-hottest housing markets filling out the Top 10 for increased price cut. Las Vegas had the second-biggest surge in reductions, running to 22.5% this year from 12.3% a year — an 82% jump. No. 4 was Seattle, 14.6% from 9.3% — a 56% increase. Then there was No. 6 Denver: 18.1% from 13.8% — up 31%; No. 8 Atlanta: 15.1% from 12.3% — up 23%; No. 9 Salt Lake City: 19.6% from 16.1% — up 22%; and No. 10 Kansas City: 13.2% from 10.9% — up 21%.â€
“Ah, housing price cuts. Everyone complains about affordability … and now house hunters get what they’ve wished for: Discounts! Of course, lowered prices can be a doubled-edged sword. When housing markets cool, plenty of buyers get cold feet fearful of overpaying for housing.â€
The Record Searchlight in California. “Build 3.5 million new dwelling units across California by 2025 and this state’s housing shortage will be solved, Gov. Gavin Newsom prescribed during his campaign last year and many times since. SB 50’s likely failure was implied last spring, when MetroStudy reported that 3,700 newly-built homes went unsold in Orange, Los Angeles, Riverside, and San Bernardino counties during the first quarter of this year.â€
“That left unsold housing inventory up 22 percent from last year and 37 percent above the five-year average. It caused a slowdown in construction at the very time Newsom and others wanted more building, with new home development in the state’s most populous region down 18 percent year over year.â€
“This was market forces at work: Even though builders dropped the price of new housing below the regional median price, they could not drop it below the $425,000 average cost of building an apartment or condominium in a typical 100-unit project. Instead, most new units must be sold for about $600,000 in order to push the price of ‘affordable’ new units in each development down to $350,000 or less.â€
“Such numbers are needed for developers to make any profit, a prerequisite if anyone expects them to build anything. But at those prices, there aren’t enough buyers to sustain the kind of building boom California needs.â€
http://housingbubble.blog/?p=2554
Look at those beautiful stats and charts.
I especially like those double tops (e.g. SF).
https://wolfstreet.com/2019/10/29/the-most-splendid-housing-bubbles-in-america-october-update/
For most normal people a double top indicates a bearish reversal pattern. “Downtrendâ€.
I say most normal people because if you are a RE flipper, shill or cheerleader common sense doesn’t apply. If you are one of those than this time is ALWAYS different.
We should all know what to do at this point. Good luck to all!
Hey Millie Vanillie
Of course a crash is coming but given the Fraud (Fed) just lowered the rates by 1/4, lets give this crash another full year before it starts. Then about 2 more years for rock-bottom prices. Dont pull your wallet out of your pocket until then.
Hey Millie does your expert stock market model take into account a new round of tax cuts for the middle class? If Trump wins a second term and these tax cuts go through the economy and housing will explode into the stratosphere. No recession in sight dumbass
https://www.washingtonpost.com/business/2019/11/12/trump-advisers-exploring-tax-proposal-that-would-lower-middle-class-rate-percent/
Suckh sounds like he might be a RE agent. Some of the agents I have been emailing for years started to get angry too. I understand. If you have never had a real career and can only make money when sales volume is high then times like this are no fun. The peak is here and sales volume is down. During the bust the numbers of agents reduces and reality sinks in. Agents have to find a real job.
The avg person always thinks: times are good now which means times must be good forever.
The smart investor thinks: right now is the time to save and when the discounts are here it’s time to invest.
Most RE shills here won’t agree which tells you a lot about their intelligence.
Say ADIOS AMIGOS to the housing crash.
Feds cut rate again today. This time by 1/4 point.
Another heavy dose of monetary methadone gets mainlined into the financial veins of Amerika. My guess is this will postpone the forecast for a housing crash for another 6-12 months beyond its forecast of 12 months from now.
https://www.youtube.com/watch?v=Xw-9EiRGT_0
https://www.cnn.com/2019/10/30/economy/federal-reserve-rate-decision-october/index.html
lmao, yup, these are the cheerleaders leading propaganda wtriggers, Rate Cut, Chineese Buyers, Millenial Buyers, blah blah blah, Housing Bubble 2.0 Already Popped,
The Extent To Which Values Have Fallen Is Yet To Be Determined As It Is Too Early To Know
A report from Market Watch. “Fannie Mae and Freddie Mac may stop offering certain mortgages as they prepare to privatize, but borrowers won’t be left behind, the companies’ chief regulator said. ‘Fannie and Freddie must not repeat the mistakes of the crisis by stretching to serve borrowers who are better served by FHA,’ said Mark Calabria, FHFA director.â€
“Historically, Fannie and Freddie have competed for market share with the FHA, and in recent years the two enterprises have offered more mortgages with low down payments and to borrowers with high debt-to-income ratios, similar to the types of loans the FHA was designed to offer to lower- and moderate-income Americans. Separately, Calabria once again raised the alarm regarding the risk that Fannie and Freddie could fail again. Currently, the dollar amount in loans that the two enterprises own or guarantee is roughly 500 times larger than the amount they have in capital reserves.â€
“‘We’re not forecasting a downturn, but if we do have a downturn in the next couple years, they will fail,’ Calabria said. ‘They will become insolvent, and they will run out of capital.’â€
From Inside Nova in Virginia. “In every major jurisdiction of the local area, the median per-square-foot price for housing for the January-through-September period declined, in many cases by double digits, according to MarketStats by ShowingTime, based on listing activity from Bright MLS. rlington led all local jurisdictions for the nine-month period, but its median per-square-foot cost of $436 was down 6.8 percent from $468. The negativity continued throughout the area.â€
“The median per-square-foot cost in the city of Falls Church was $375, down 13.2 percent from $432. The median cost in Alexandria was $368, down 5.4 percent from $389. The median cost in Fairfax County was $280, down 11.7 percent from $317. The median cost in Loudoun County was $200, down 11.1 percent from $225. The median cost in Prince William County was $169, down 20.3 percent from $212.â€
From DS News. “While in most cases a the price of a home should not exceed three times a buyer’s annual income, in some cities, many potential buyers may find it difficult to find a home within those parameters. Lending Tree examined the nation’s 50 largest cities to determine where buyers will have to take out the largest loans, and found that many are situated on or near the West Coast.â€
“Five of the top 10 cities where buyers are stretching themselves the most are in California, and Los Angeles and San Diego have remained the 2 cities where borrowers have to stretch their budgets the most. ‘Though there is some speculation that the housing boom in California may be nearing its end, home prices in the state are still high,’ said LendingTree Chief Economist Tendayi Kapfidze. Outside of California, Salt Lake City is the place with the highest leverage ratio.â€
From Bloomberg on California. “It’s meant to be one of the crown jewels of downtown Los Angeles’ urban renaissance but now it’s in limbo — plagued by lawsuits from subcontractors, and victim of an ongoing trade dispute between China and the U.S. and a Beijing crackdown on credit and capital flight. Construction has largely stalled at the three towers of Oceanwide Plaza across from Staples Center. In downtown San Francisco, Oceanwide halted construction this month on one of the two towers of a mixed-use development.â€
“While L.A.’s Oceanwide Plaza remains in limbo, the downtown market for high-end condominiums is becoming a buyers’ market, said Christiano Sampaio, founder of real estate brokerage Loftway. The influx of Chinese investment that helped inflate real estate assets from Vancouver to Sydney is abating.â€
“‘A few years back we had a lot of Chinese buyers but that has slowed down,’ Sampaio said. ‘There’s more inventory now and buyers are postponing making a decision.’â€
The Los Angeles Times in California. “In Holmby Hills, one of the biggest homes on the market just got a big price cut. Maison du Soleil — the 30,000-square-foot mansion of late fashion mogul Max Azria — has resurfaced for sale at $78 million, down $10 million from its previous asking price.â€
The Commercial Observer in New York. “The performance of the New York City multifamily sales market has always been of great interest to the investment sales brokerage community given the significant number of multifamily assets that are so evident across all the boroughs of New York. The new rent regulation reforms which passed in June have cast uncertainty over the market relative to where values are headed and have negatively impacted the volume of sales.â€
“Multifamily property sales in excess of $10 million in Manhattan are on pace for $2.6 billion this year, a 42 percent drop from the $4.5 billion which occurred in 2018. This total would be 78 percent below the record $12 billion of sales that occurred in 2015. Taking the $5.46 billion Stuyvesant Town / Peter Cooper Village transaction out of the 2015 statistics is appropriate given the massive size of that transaction. Removing that sale from the data, the present pace is still 61 percent below the activity seen in 2015.â€
“In the elevator sector, this year‘s pace is $2.2 billion which would be 30 percent below 2018’s $3.1 billion and 73 percent below the $8.2 billion achieved during the cyclical peak in 2015. In the walk-up sector, the pace of sales is a mere $400 million this year which is on pace to be down 70 percent from the 2018 total of $1.4 billion and an astounding 89 percent below 2015’s $3.8 billion total.â€
“Given the downward pressure on property values that reform has exerted, these performance metrics are not surprising. The extent to which values have fallen is yet to be determined as it is too early to know.â€
From KELO Land in South Dakota. “Population changes in South Dakota during the next 10 years point toward more retirees looking to sell their homes but fewer younger people being able to buy them. The director for the Black Hills Knowledge Network delivered that sobering message Tuesday at the South Dakota Housing Conference.â€
“Jared McEntaffer has looked at trends and sees imbalance. People reaching retirement age will nearly double by 2030, he said, while adults younger than 65 will grow only six to nine percent. At the same time, young people’s pay levels during the past decade haven’t kept up with their growing college debts, according to McEntaffer. He said they’re tending to live alone or with roommates longer than before, and they’re more likely to be in apartments rather than houses.â€
“There’s already a softening Midwest housing market. ‘What we’re seeing is the demand pulling back. And that’s the big component, that’s why nationwide, we’re seeing home prices falling even though the interest rates are falling. And that’s caused by buyers pulling back. That’s caused by people being less confident in the future of the economy and sort of delaying those purchasing decisions,’ he said.â€
http://housingbubble.blog/?p=2557
TL;DR – “but…but…mah crash!”
JamesJim ya lost me at hello. Sales are back up. Here comes more appreciation! Womp womp for JJ AKA Millie’s toady boy.
FFR has nothing to do with home loan rates.
Measured in gold, property prices have just taken a dip the world over (and in silver). Gold is at 1500 as of writing this, up more than 10% the last 3 months. Right after the new rounds of monetary expansion.
Measured in funny money, of course prices either take a small dip or continue upwards.
Problem is that you pay your house in funny money, you take a loan in funny money, and most important of all, you re-pay the loan in funny money. Often, you must also save in funny money, else, you are liable to pay canine capital gain taxes (more than 40% where I live). Get lucky beating inflation with that kind of burden.
Debtors are very vocal and make their concerns heard on elections. This has been going on for decades if not centuries. That’s why gold standards always ‘collapse’.
http://pricedingold.com/us-home-prices/
Perma Bears: Buy gold because inflation will destroy the value of dollars
Also Perma Bears: Don’t borrow money to buy a house.
LOL
If inflation is around the corner, as it always seems to be for the perma bears, then the best way to protect yourself is to take on debt with an underlying physical asset, like real estate.
Remember the Rentenmark that replaced the paper marks at the end of the German hyperinflation in 1923 (15 October 1923). It was backed by real estate mortgages. The underlying value of real estate was about as good as gold.
“The Act creating the Rentenmark backed the currency by means of twice yearly payments on property, due in April and October, payable for five years. Although the Rentenmark was not initially legal tender, it was accepted by the population and its value was relatively stable. The Act prohibited the recently privatised Reichsbank from continuing to discount bills and the inflation of the Papiermark immediately stopped. The monetary policy spearheaded by Schacht at the Reichsbank and the fiscal policy of Finance Minister Hans Luther brought the period of hyperinflation in Germany to an end. The Reichsmark became the new legal tender on 30 August 1924, equal in value to the Rentenmark. This marked a return to a gold-backed currency in connection with the implementation of the Dawes plan. The Rentenbank continued to exist after 1924 and the notes and coins continued to circulate. The last Rentenmark notes were valid until 1948.” (Wikipedia)
The US went on the gold standard in1873. Prior to that there was a bimetallic standard. The free silver coinage movement was a response (that failed) to the gold standard. The banks and bond holders loved the gold standard because of its stability. It was in the 1970s that the last link of the dollar to gold was removed.
Anyone notice a pattern?
Perma bears post links from doom and gloom blogs that have been predicting doom and gloom since the day they were launched. Day after day, year after year, decade after decade, non-stop END OF THE WORLD IS HERE!! nonsense. You know what old saying, fool me once shame on you, fool me twice, shame on me. Millie has been fooled about 800 times already. LOL.
Meanwhile, the bulls (yours truly included) post links from real sources with real data.
I wonder which side has more accurate info?
Say goodbye to your precious prop 13. No more big breaks for Baby Boomers while everyone else is left holding the tax burden.
https://www.ocregister.com/2019/10/22/california-is-in-big-trouble-again-3/
The reason why people say prop13 is the biggest scam
In history is: IT REALLY IS! It only benefits the super rich and boomers and screws everyone else. Prop13 is the biggest scam and needs to go.
Why “say goodbye”? Did you actually READ your linked article?
It’s NOT a news article. It’s an OPINION column. A guy saying he thinks Prop 13 should be repealed.
If a guy posts an OPINION on this site, saying he thinks Prop 13 should be repealed, what would that prove? Nothing. Ditto your link.
Hey, we all have opinions. Don’t confuse them with news pieces.
I’m not a bull or a bear, I am a realist and the data is pointing towards gradual upward trends in housing. This should not be confused with “great time to buy” but it is certainly not a horrible time to by. Rent is going to keep going up which means that home prices will follow. People that buy CAN afford their mortgage, no funny business like 2006, so no defaulting on loans. Asset prices across the board are rising, gold and stocks included. Wages are rising as well these are undeniable facts. The market is strong with no signs of slowing down. If the market were to hit a recession, a few people will lose their homes but nothing widespread like last time. The housing market will hit a hiccup, stagnate, maybe drop 10%, then pick back up during recovery. If you have the luxury to live a quality life without overpaying in rent like Millie does, then by all means go ahead and keep renting and saving money until you change your mind. If your monthly rent expenses exceed what a mortgage would cost and see yourself living in the area for a while, then it may be best to buy. There’s no real right or wrong here, it’s all about your individual situations that determine what you should do. And that’s the kinda market we’re in and the kinda market we’ll stay in for the foreseeable future.
@bears / perma bears / fence sitters
Please don’t wait any longer. Please buy now.
Here’s why:
It’s a great time to buy
Interest rates are (still) low
Millennials are going to buy in droves (this year and next year and the year after)
The Chinese millionaires that disappeared are all coming back
Housing can never go down
This time is different
This time is different
Repeat: this time is different
Interest rates are historic low now. Take advantage before rates go up
If you don’t buy now you will never own
If you don’t buy now you will rent forever
If you don’t buy now you will be single for the rest of your life
If you buy now you will be rich
Price doesn’t matter. Price doesn’t matter. Buy now
Buy now. The next crash will only be a 5% reduction
Buy now. Renting is throwing your money away. Buying is getting rich quick.
Buy, f-ing buy
Hope it’s working! More people buying now is better for all of us. We can’t all wait for lower prices. Some folks gotta buy now.
Fact: right now is the best time to buy
Fact: housing won’t correct. This time is different
Fact: if you don’t buy soon, you will probably never be able to own
Fact: millennials struggle a bit with student debt. There is a solution.
https://www.zerohedge.com/personal-finance/millennials-student-debt-are-getting-crushed-most-these-ten-cities
What if we help millennials to buy? We want/need them to go out and buy in droves.
Therefore: lower requirements to qualify for a loan and make it more attractiv.
1) credit score of low 500’s should be fine
2) 120% financing should be fine
3) free new iPhone plus 1k in cash if you apply for a loan and get approved
4) lower mortgage interest rates to 0.5-0.6%
5) penalize fence sitters and people who save money. Additional bank charges should apply for saving money.
Was in Vegas last week. They are building EVERYWHERE. They are basically doubling Vegas.
Fantastic!!!!!! During the next crash I will buy a house for 40-60k. They are going right now for 280k. Will be my investment property. Also, I am planning on buying a house in Oc California during the next crash for about 500k. They are currently going for 1.2m.
We already see that some prices have come down 60% for luxury properties. That’s how it starts.
I am an adult millennial currently living with my parents. I like saving money and hoping for market downturn. Will stay a few more years until the epic crash.
Only one person responded to my post on AB68. The bill that doubles the number of ADUs you can build on an R1 lot. How that will impact the value of single family residences and the supply of “affordable” housing is still unclear. Makes development in existing residential areas much easier, but most rentals are in large developments which this bill doesn’t affect. Prices always go with supply and demand. Demand for housing is dependent on incomes and the number of potential households. A drop in income hammers the affordability but not the need. I don’t see any looming drop in income or in demand (mainly from abroad). Tons of ADUS in working class areas may make profits for the developers, but will increase crowding and traffic. Neighborhood livability for middle class people isn’t a guarantee now in SoCal. So We’ll see what happens.
My guess is luxury homes on small lots (too small for ADUs) will become very popular. Who wants to pay top dollar only to have Section 8 trash in ADUs next door?
AB68 is a win for anyone with a single family on a large lot that is in a decent zip code. Like a big win. Hurts to be a renter.
Huuuuuuuge win for millennials/renters!!!
We need ADU’s in every single California backyard.
Increased supply of rental units means rents stay flat or decline which I am seeing daily.
We need to invest in company’s building tiny houses or 3D printed homes. That’s the future. More, more, more supply! Win-win for everyone except those that have a long commute or live in armpits like LA and SF.
I think that Mr L has little to worry about from Sect 8 ADUs in high rent neighborhoods. Maybe an occasional Kato Kaelin type? j.t: I think that most R1 houses in better neighborhoods will stay that way, unless there are financial reasons for a particular family to want one (like Jr wants to live next door to Mom and Dad). Millie: I think single family houses already owned by landlords will be the main ones to build to the max. And a lot of those are in working class neighborhoods. Like the Mexican neighborhoods in Santa Ana which are owned by the Pochos who moved out to the suburbs but bought up several cheap houses near their old one.
chearleaders be like cryin- People Are Cannibalizing Each Other, To Usurp A Buyer From One Another
A report from the Santa Cruz Sentinel in California. “September’s median price in the county dropped to $815,000, according to Gary Gangnes of Real Options Realty, who tracks the numbers. A year ago, the median home price was $920,000, according to Gangnes’ figures. One single-family home in the county that sold close to the median price was 140 Boulder Brook Drive in Boulder Creek. With three bedrooms, two bathrooms and 1,461 square feet, the home was listed June 12 for $840,000, according to Bailey Properties real estate agent Jo-Ellen Smith, the seller’s agent for the home. After the price was dropped twice, the house closed escrow Sept. 28 for $795,000.â€
http://housingbubble.blog/?p=2569
It’s different this time, bbbbbwwwaahhhhhaaaaaaaaa, yah, it sure is lol
Great article Jim! Unfortunately it’s not Fox News so our slumlord from Spokane-istan won’t read it. 😉
““He personally would suggest reducing the price within just 30 days if there are no offers. ‘If you have showings and no offers, it usually tells you that it’s overpriced,’ he said.â€â€
I barely ever send lowball offers but I like meeting with agents to look at their listings or visit open houses. Often I learn something and it’s interesting. Obviously I have to pretend I am serious buyer but in reality I have zero interest in buying at anything close to asking price.
Another quote I liked was:
“Frances Katzen, an agent with Douglas Elliman, recently listed in Sutton Place, on the east side of Manhattan, a two-bedroom, one-bathroom apartment with plenty of natural light and prewar bona fides for $599,000 — a 20 percent markdown from its previous price of $750,000. Two years ago, it listed and languished on the market with another brokerage for $995,000.â€
A reduction from 995k to 599k is what I am talking about. You often see the price history on house. Some houses sold for a million in 2005 and then for 500-600k in 2009-2012.
Now they are back at a million and soon they will crash again. Smart people buy at 50-70% below peak prices.
Oh No Chearleaders- Buyers Simply Aren’t As Willing To Pay Something Unrelated To Reality
A report from CNBC. “This oceanfront mansion in Hillsboro Beach, Florida, was on the market for $159 million in 2015. But for three years the 60,000-square-foot compound had no takers. The owner eventually decided to put the estate on the auction block, and in November of 2018, it sold for a fraction of the original asking price at $42.5 million. That’s a $116.5 million or 73% price cut. Broker Senada Adzem — who was not involved in the transaction — believes that ‘when it hit the market, the price was mandated by the sellers based on what they had invested in the property, not based on the current market value. The money spent on custom homes is not in direct proportion with the final sales price. There is a point of no return and diminishing returns in super luxury real estate.’â€
“When fashion mogul Tommy Hilfiger listed his Manhattan penthouse in 2013, he was asking $80 million for it. The 6,000-square-foot duplex sat on the market for six years. And over that time, it was incrementally reduced. In 2017, the asking price was lowered to $50 million. The duplex finally sold in September for $31.25 million. That’s a reduction of about 61% and a total price drop of more than $48 million from the original asking price.â€
“This Los Angeles mansion originally hit the market for $250 million. Back in 2017, that nosebleed asking price made it the most expensive listing in America. But the 38,000-square-foot home sat on the market for over two years. The price was eventually chopped to $188 million, and soon after it dropped again to $150 million. Finally, it sold in October for $94 million. While that’s an extraordinary amount of money and one of the largest residential real estate transactions in the country, it was also a 62% reduction from the original list price.â€
“The $156 million price drop isn’t just the largest dollar amount reduction this year, it’s also one of the biggest price cuts in residential real estate history.â€
The Los Angeles Times in California. “Real estate agent Tregg Rustad said he’s also seeing a surge in demand in the pricey Westside neighborhoods of Los Angeles, something he wouldn’t have expected a year ago when the market started to slow dramatically. While he’s now seeing multiple offers, he said buyers simply aren’t as willing to pay something ‘unrelated to reality’ as they were two years ago. ‘They’re a little more cautious,’ the Rodeo Realty agent said. ‘Instead of paying an arm and a leg, maybe they just pay an arm.’â€
“Whether demand continues to rise is an open question. The jump in sales in September was just the second increase seen in a year. The 10.4% increase was from September 2018, which had the lowest sales for that month in at least seven years. Setting aside that month, September 2019 still had the lowest number sales for a September since 2014. Sales did rise in all counties compared to a year earlier. But in Orange, San Diego and Ventura, the median actually dropped, indicating affordability remains a challenge.â€
From Realtor.com on New York. “It looks like ‘Hunger Games’ star Jennifer Lawrence is craving a quick sale of her New York City penthouse. After listing the three-bedroom, 4.5-bathroom abode for $15.45 million in July, Lawrence recently dropped the price to $14.25 million. It looks like she’ll lose a bit of cash on the sale; she purchased the home in 2016 for $15.6 million.â€
“‘It’s a lovely penthouse in a good building at an OK location,’ says real estate broker Martin Eiden of Compass Real Estate in New York. ‘The problem is, there are at least 100 other properties in this price range that have the same description. She bought it at the height of the market for $15.6 million. I’d advise to hold on if she could, or suffer a substantial loss and offer it at $12 million.’â€
As I’ve said before (and was ignored, but never refuted), a drop in ASKING for LUXURY HOMES says nothing about what’s occurring to normally priced, middle class houses.
You’re citing asking prices for homes in the $12 million to $250 million (sic!) range. If this is your best evidence of a crash, it’s clear there is no crash in sight.
Bbbut muhCRASH? LOL
LA Times
Nov 1, 2019
Southern California’s home prices and sales rise in September
“The six county region’s median price hit $533,000, a 2.5% bump from September 2018, according to CoreLogic data provided by DQNews. The number of new and resale houses and condos that sold climbed 10.4%. The number of homes listed for sale had swelled through much of 2018 and 2019. But inventory in L.A. County in September was nearly 12% below a year ago levels, according to online real estate brokerage Redfin. And similar drops were seen elsewhere in Southern California.”
I kept telling you people, last fall was your once in a lifetime opportunity to buy. Prices fell 5-10%. Since then prices have rebounded and now setting new records again on a monthly basis. Should have listened to me, your uncle Mr. Landlord. You missed out and will be stuck home with mom and dad forever it seems.
I rent at my parents. Fridge full, zero payment per month. Save big.
Why should I move? My wife lives already with me . House big enough. We like party in the backyard.
“Total loser†is what your mom says when her friends ask about you. Do yourself a favor and just give up. I mean I think you’re scared of becoming an adult so just stay in the basement where you’re safe. I’m sure your mommy really enjoys washing your skid mark underwear again, just like back when you were 5.
This is one stubborn seller: https://www.redfin.com/CA/Palos-Verdes-Estates/2600-Via-Campesina-90274/home/7723540
This Palos Verdes Estates house has been on the market for 265 days — and no price drops. The seller is sticking to his asking of $1,950,000.
Before its current 265 run, it was listed several times since 2015, initially asking for $2,450,000: https://www.zillow.com/homedetails/2600-Via-Campesina-Palos-Verdes-Peninsula-CA-90274/21339988_zpid/
The seller bought the house in 2007 for $1,399,000. So he can sell for well under the current $1,950,000 and still walk away with a profit. But he’s digging in his heels at his current asking.
So Much For MillennialsRushing in to Saving The Housing Boom-Generation ‘Rent’: How Millennials Are Fueling The ‘Lease, Don’t Buy’ Economy
https://www.zerohedge.com/personal-finance/generation-rent-how-millennials-are-fueling-lease-dont-buy-economy
Housing Bubble 2.0 Already Popped, Cheerleaders Still Don’t Get it, But They Will.
People here need to read: The Myth of Boomer Privilege: https://www.takimag.com/article/the-myth-of-boomer-privilege/
Boomers had freebie after freebie and created the biggest debt burden ever. It’s time to go for them. We need to take over and fix the mess
The article you linked is spot on, and a good read. However, as a Boomer myself, I daresay we brought it on ourselves, but not in the way the young people think.
We blamed our Greatest Gen and Silent Gen parents for the war in Vietnam, for the loss of our manufacturing in the 70s and 80s, for the despoiling of our environment, for racial oppression, and every other societal ill. They fucked up our world, we said, and we were going to change it…. by adopting the “hippie” lifestyle (on our parents’ money, of course), eating microbiotic food, and eschewing all old outdated conventions, and rejecting our parents “materialism” and conservative values.
Most of all, we were the generation that pretty much invented Youth Culture, and the idea that anyone past youth has nothing to contribute to the culture.. a notion being put back in our aging faces with vehemence.
A decade on, c. 1980 or thereabouts, we realized that youth is fleeting and it was time to grow up, swapped the blue jeans and stoner culture for oversized suburban houses and 4 kids and car loans.. and all the societal conventions of our parents. In short, we quickly became our parents, and so are the Millies.
Bad news for those hoping for a crash:
California attracting high-income earners: https://www.latimes.com/california/story/2019-11-04/california-conservatives-republicans-leaving
Despite overall out-migration from the state, California has been gaining people with higher incomes. The Bay Area has absorbed most of the influx of those residents.
Over the last decade, the Legislative Analyst’s Office report said, the state added about 100,000 residents with household incomes of $120,000 or higher. About 85% of these higher-income earners moved to the Bay Area counties of Alameda, Contra Costa, San Francisco, San Mateo and Santa Clara.
Yes, much of the middle class are leaving California. They’re selling out to people who can afford expensive homes and taxes — and will thus sustain higher real estate prices.
For those waiting for a crash, it appears rich people are flocking to California and cutting ahead of you in line for expensive houses.
Stupid boomers think millennials will go and buy their overpriced crapshacks. Lol
What is the effect of CA pension liability on RE prices? I guess the same as IL (Chicago) pension liability.
Despite the best economy in decades, the exorbitantly generous pensions for government workers have still not recovered to the minimum mandatory performance levels that are LEGALLY required by the pension contracts.
For all of you who spout on about CA being an unstoppable juggernaut economy that can never fail, take a moment to carefully read the following; this is how CA will slip into insolvency;
Each time there is a shortfall, the towns, cities, etc. who employ these future pensioners must make up the difference from their operating budgets by paying the pension a “true-up assessment”.
It’s sorta like an HOA that charges all of its homeowners a one-time fee to repave the community’s roads. Except these assessments are not one-time nor will they ever “fix” the shortfalls; it’s impossible for them to fully cover the ever growing gap.
When the economy eventually turns downward, these towns, cities, etc., will not be able to sustain operations while also meeting their legal obligation to pay these assessments. That will leave them with only one viable option to keep the police, fire, sewer, etc. running; bankruptcy protection.
As more and more towns, cities, etc. pile on with their bankruptcy filings and are now shielded from having to pay their assessments by those filings, the unfunded pension liabilities will quickly grow to exceed the maximum legal thresholds allowed by the pension, forcing the pensions to seek bankruptcy protection.
And then you will have thousands of cities and towns across California in bankruptcy, along with bankrupt pensions holding $2+ TRILLION in unfunded liabilities and MILLIONS of employees and their families set to lose most and possibly all of their retirement plan.
There are 40 million people in California, so it would require a one time tax of $50,000 for every person in the state, in order to bail out the pensions. However, the majority of Californians can’t afford to pay any taxes; the top 20% pay nearly all of what the state collects each year. That means that 8,000,000 people would have to each contribute $250,000 to bail out the pensions.
In a state that already has the highest welfare spending in the nation and the highest taxes in the nation, it will be impossible to bail out the pensions by taxing the citizenry. The only viable option will be for CA to formally file for bankruptcy in order to gain assistance from the Federal government.
And this, dear reader, is how CA will go bankrupt…not with a bang, but a whimper.
You have a good point, Flyover.
1) Pensions should be adjusted for realistic returns. No gaming the system with OT to get a 100K pension when you earned a 40K pension.
2) Pensions should have a requirement that the income be returned to the communities that are paying them. No taking your full CA pension and moving out of state. You should only get a smaller percentage of the pension if you move out of the area paying you.
3) Be like the military. only pay a partial pension if you have served a minimum of 20 years. 30 years for a full pension.
4) Pensions for new employees are much less than current employees. Most don’t include healthcare.
5) Control healthcare and they can put a huge damper on current pension costs.
This is a huge pension bubble that will pass when Boomer retirees ride off permanently into the great CA sunset.
Less than 1 comment per day. Millenial is AWOL. Looks like the perma bears have bugged out, and realized their worst nightmare has come true. There will be no recession, there will be no crash. Renters lose….AGAIN!
Womp womp
Yet you’re the one hanging around a housing BUBBLE blog lol
There are many new “one time only” handles here, repeating Milli’s talking points. So I wouldn’t assume that Milli is AWOL. Only his main handle.
Wow, what a crash!!
Nov 7, 2019
Seattle Times
Seattle home prices see largest year-over-year jump in 12 months
“In Seattle, October prices rose 3.3% from a year ago, to $775,000 — the largest percentage increase in 12 months, new data from the Northwest Multiple Listing Service (NWMLS) shows. In King County, there were 25.7% fewer homes on the market in October than a year previously. Snohomish and Pierce Counties saw similar dips, of 23.5% and 30.0%.”
Once again kidz, please, I beg you…don’t rent long term. It is financial suicide.
What an EPIC CRASH in Seattle !!!
Seattle Real Estate in October: Sales up 7.6% YoY, Inventory down 9.3% YoY
https://www.calculatedriskblog.com/2019/11/seattle-real-estate-in-october-sales-up.html
In Seattle, sales were up 7.6% year-over-year, and inventory was down 9.3% year-over-year.. The year-over-year increase in inventory has ended, and the months of supply is still low in Seattle (2.1 months). In many areas it appears the inventory build that started last year is over.
Student debt is a problem. Boomers didn’t pay for tuition. It was free back then.
https://wolfstreet.com/2019/11/08/the-state-of-the-american-debt-slaves-q3-2019-paying-the-university-corporate-financial-complex/
The definition of being American is simply put: debt slave
California’s Housing Nightmare Is Only Getting Worse
(Cheerleader Warning, TRUTH Ahead)
https://www.zerohedge.com/markets/californias-housing-market-most-unaffordable-nation
Yes, it is a nightmare for lifelong renters. But why do you care, you are in a nearly rent-free basement, right?
Yet here in LA, LA, Land developers built 16,000 more units in 2018 that no doubt got rented out.
https://la.curbed.com/2019/5/14/18623195/los-angeles-housing-production-2018
And more apt buildings on the way in 2019 and beyond.
https://www.brookings.edu/blog/the-avenue/2019/07/10/california-needs-to-build-more-apartments/
Remember, this blog is “How I learned to love SoCal and forget the housing bubble”.
Actually renting cheap let’s you save a ton of money. As a buyer who bought at the peak you are house poor and will see your house value be reduced by 50-70% during the next crash. The renter doesn’t lose anything but will be able to buy in cheap. Not bad if you ask me.
And you are right. We are building everywhere on California! That’s great! Keeps the rent low and stable. Build, build, build! Plus every SFH should have an ADU in their backyard.
Obviously, the best is to live rent free with mom and pops. Experts call this househacking.
“Redfin’s third-quarter sales surged 70% higher to $239 million, driven by a 23% increase in “services” ($159 million) and a more than 600% surge in the “product” segment ($80.2 million). The latter triple-digit rise was due to Redfin buying and selling homes on its own platforms.”
When real estate companies have 70% revenue growth that means a housing crash is happening right?
LOL
Poor perma bears. Womp Womp.
Bay Area is a great indicator. Prices are sliding. Good sign that the peak is in. If it walks like a peak, looks like a peak and behaves like a peak….it’s a peak!
https://www.zerohedge.com/markets/bay-area-home-prices-continue-slide-peak-likely
Starting to get the letters again. You know the letters … If you want to sell, I have a buyer … real buyers looking for my homes. For 1 year, these letters disappeared. Good times are here again. Just to think all the renters ranting about the crash that never happened.
Totally agree with JT. I also get phone calls and emails from desperate agents. With low sales volume Theo are getting creative and try everything they can to get a listing or someone willing to buy at the peak.
One RE agent lady told me she will go and knock doors for me if I tell her what kind of house I like /want. My response was, i am sorry to hear that. There are actually tons and tons of houses I like that are available for sale already! (good school district, good floor plan, good location, quiet and save neighborhood etc). She said, so what are we waiting for, let’s get a deal for you. I just giggled and said, well, we are just waiting for the market to be ready. Just the usual 10 year crash and I am buying!
She didn’t say much after that. Agents know very well, the longer the expansion goes the more likely we get a recession. Since my rent hasn’t increased yet I am happy to stay put and stash the money away.
The only ones not appreciating this are agents who need commission and boomers who want to sell an overpriced crapshack. Can’t blame them. There are always winners and losers in every market. It’s very easy to win in this market as a renter. Obviously, the best would be to stay with your parents or in laws for free. That’s called househacking!
jt, those letters are marketing tools. Realtor’s get you thinking your house is desirable (often with fake “buyers”) and you agree to list with them. Seen it a lot. It’s a trap.
Nope. The letters only show up when there is nothing decent available at a price point … sellers have nothing to make an offer on, so the letters show up. Right now, everyhing comparable to my home is pending. Good times.
By all means, go ahead and list. It’s a great time to sell. Hopefully you won’t be like a vast majority of sellers out there that can’t get what they want and end up taking their homes off the market. I’ve “favorited” many homes over the last year that never went pending or sold. Simply took their homes off because they weren’t getting the bites they were expecting.
Simply apply a hefty vacancy tax on properties. That will do it. Sellers with empty houses will be forced to sell 🙂 rich republicans always say it’s evil to increase taxes but it’s actually for the good of all people. Nobody but the rich and house flippers want a housing bubble. There’s a simple mechanism to bring prices down by taxing the shit out of those that make money off of housing.
As a member of GenX I have to say this Boomer vs Millenial stuff is funny AF.
Totally agree, it’s the ultimate battle of the entitled.
I laugh so hard at all of the Boomer vs. Millennial arguments on this blog.
As a GenXer we either don’t give a EFF and move on or we work for what we want.
Hey RE shills: what happened to “this is the year when millennials go out and buy in drovesâ€
https://www.zerohedge.com/markets/first-time-buyers-are-vanishing-us-housing-market
For The Cheerleaders of the Economy/Housing, It’s Called A Dead Cat Bounce, lmoa
That’s what the bears were saying on this blog in 2012 and 2013. A dead cat bounce. Another HARD TANK just months away. EPIC CRASH in 2013 … 2014 … 2015 …
And I listened, 🙁
Housing Crash!! LOL
SAN FRANCISCO (November 7, 2019) – An overwhelming majority of metro areas experienced price gains with very limited inventory growth in the third quarter of 2019, according to the latest quarterly report by the National Association of Realtors.
Single-family median home prices increased year-over-year in 93% of measured markets in the third quarter, with 166 of 178 metropolitan statistical areas1 showing sales price gains. That is up from the 91% share in the second quarter of 2019. The national median existing single-family home price in the third quarter was $280,200, up 5.1% from the third quarter of 2018 ($266,500).
My wife (30) and I (just turned 37) live with my in-laws. My in laws mention since a few years now that they want us to get our own place. They don’t say it directly but hint it. I told them that during a boom it’s not a good idea to move out and rent. It’s better to buy but first we need a crash in prices. They used to agree but are getting impatient. What is it with this older generation that they can’t just wait a bit. Everything has to happen right now. Annoying. Any ideas? I don’t like renting somewhere else because than I would have to pay. Right now my in-laws don’t charge us but that’s gonna be the next thing. Watch….in-laws asking for rent. Lol. Are you now making money of your kid and spouse? I could rant all day about boomers!
I told them that during a boom it’s not a good idea to move out and rent. It’s better to buy but first we need a crash in prices. They used to agree …
So you’re saying, they waited, yes?
…but are getting impatient. What is it with this older generation that they can’t just wait a bit. Everything has to happen right now.
They did wait. They’re not impatient.
But you can’t expect them to wait forever. And that’s how long they’ll have to wait for Milli’s 70% crash in beach front properties.
Wow, are you and your wife EVER entitled!
It’s one thing to live with your parents until you get a decent job and have some money saved, and I fully recognize that that is a lot tougher in today’s bifarcated economy than it was in my youth 40 years ago.
But not only do you and your wife still live with parents even though you are well into your thirties, you insist on a free ride, not even offering to help with utilities and other expenses. It seems not to occur to you that your in-laws might figure they’ve given quite enough while raising their daughter, and providing her and her husband with a FREE roof over their heads for years into their marriage. It also does not occur to you that your in-laws might like some privacy and peace after years of having kids underfoot, or that maybe it’s the turn of YOUR parents to carry you for while.
Do you and your wife have jobs? If so, the least you can do is cough up a few hundred a month rent. Hell, a rented room in a run-down SRO with a communal bath, would cost at least $700 a month.
Why didn’t you buy a few years ago? Were you waiting for the big crash then too? I’m sure your in laws are asking the same question and rightfully are getting impatient. For all they know, you could be freeloading for another 5 years. All these married adults living with mommy and daddy is just plain weird.
Your on the wrong website. The average iq on this website is too high for your trolling. X
Haluk, if you’re serious, you’re making us look bad. We’re in our early 30s and pay my (loaded) mom rent to live in one of her houses. We won’t buy in this environment, but we aren’t looking to freeload. She doesn’t need the money, but I’m not looking to mooch. We have more respect for ourselves and our family than that. No wonder your in-laws want you out. My advice? Pay them, help them, and show a little more appreciation for what they’ve done for you over the years… and keep praying for that correction. We’re right there with you.
I can relate Haluk. Multi generational living is normal nowadays. No adult children should feel that they are not welcome at their parents or in-laws house. Again, during a housing bubble/crisis this is normal. Once we have a normalization (big crash) I am fine moving to my own place, but first prices need to collapse. Otherwise…no way, Jose!
Sorry Cheerleaders, It’s OVER- Bay Area Home Prices Continue Slide, Peak Is likely In
https://www.zerohedge.com/markets/bay-area-home-prices-continue-slide-peak-likely
Thinking of buying. I would like interest rates to go down to minus 1% or a 50% crash in prices. Doesn’t look like it’s happening in 2019. We’ll try next year. Living with my mom pays very well. She doesn’t ask for rent 🙂 🙂 🙂 🙂 🙂 glad I am not a sucker who buys the top
Every fool in the world will jump into the market if interest rates are at 1%!!!! And prices go up when interest rates go down! Do not wish this to happen….
I’ve come to the conclusion the only way to deal with the rental crisis is a good dose of Gov’t intervention. The problem is that this landlord culture has arisen in the last 20 years that is akin to the plantation culture. We have people who are spending 50% of their income to rent a room and that’s not right. These landlords are often taking in 90%+ profits and that’s evil. One of Gov’t main function is to deal with evil doers. Here’s what I think needs to happen to change society to rid itself of this landlord culture that thinks tenants are it’s slaves.
Gov’t needs to take all profit motives out of rental housing now. What needs to be done is to limit these profit margins to 2% maximum. After 2% profit is made by the landlord a 50% tax should be implemented for profit margins between 2%-4%. After 4% profit has been made a 100% tax should be applied. After $5000 a month profit is made a 50% tax should be imposed for anything between $5000-$10000 a month and anything over $10000 should be 100% taxed. A special account should be created for the money made on the rental. This account will be taxed 50% at the end of the year for any money not spent and after a certain amount of money left in the account that gets too high it should be taxed at a higher rate.
“Gov’t needs to take all profit motives out of rental housing now.”
This is the most idiotic statement I read on this forum since inception. Do you have only a second grade education? If you take the profit motives, who is going to invest in housing? If no one will invest in housing, what is going to happen with the supply? If the supply goes down, what is going to happen to rents? Answer these questions one by one if you have two brain cells to give the correct answer.
If being landlord is such a good occupation, why don’t you become one? Interest is as low as it can be.
The problem with your “solution” is that government tried before to implement variations of this and the effect for renters was exactly the opposite of what they expected – renters were worse off than before.
If your idea is so “brilliant”, why don’t you apply it to food (even more of a “right”), restaurants, education, health care, cars, etc. Actually, all the communist countries tried different variations of you propose and they all went bankrupt; no exception. Only China didn’t because they applied market based rules. Go to SF, NY and other communist cities and see the result of decades of rent control; just check how easy and “cheap” it is for the renters there.
Shorter: I don’t like working, I want the govt to give me everything for free.
Reading these posts for awhile I’ve noticed two distinct perma bear traits. One, they constantly wish for market changes to fit their own particular circumstances, i.e.- hoping for a recession so they can afford a beach house, etc.. And secondly, they always try to predict the timing of market ups and downs, as if they really can. NO ONE can accurately time markets. If you believe that, you’re a fool. It almost seems that a bunch of stock day traders moved into the RE sector but have no feel or experience for RE cycles other than what clueless media types tell them. They love to put together short term data points to predict long term trends. Well, keep waiting, but soon in-laws will demand rent. Goodwill only goes so far.
A good article about homelessness, causes and how the leftist politicians compound a problem caused by the FED.
https://internationalman.com/articles/doug-casey-on-how-the-homeless-crisis-could-soon-become-an-epidemic/
Poor Millie, grasping at ZeroHedge straws. Yes Millie, Bay Area prices are down 10% after going up 100%. The $1M house which was once $1.1M could have been bought for $500K a few years ago. You’re a super duper financial genius for waiting (and paying someone else’s mortgage all these years. LOL
Meanwhile, virtually everywhere else in the country, prices are going up up up. Bidding wars are back. And remember this is happening in Oct/Nov, which is typically the slowest time for real estate. Buying in now means moving in December right around Christmas. Who wants that? The fact people are buying now means they’re desperate to buy something – anything – before prices skyrocket even more. Imagine the buying frenzy we’ll see March-June if it’s like this now.
Renting long term is financial suicide. DO. NOT. DO. IT.
Renting has been great! Let’s you save a lot of money. The worst mistake one can make in life is buying overpriced real estate. The best financial decision one can make is to wait until the correction comes. Experts (like me) know that housing is cyclical. In California you will see a 50-70% reduction in price. All we need is a beautiful nice recession.
Sure, the slumlord from Spokane-Istan thinks there is no bubble. That’s because in Spokane-istan you can buy 3 houses for the same price as one condo in California. But then you would have to live in Spokane-istan 🙂
No thanks! I rather live close to my six figure tech job, near the beach and watch my money grow. As soon as we get a normal correction I will buy 50-70% off peak prices. It’s smart and I can highly recommend this strategy.
If you buy a house at the wrong time you are stuck. A painful decline in housing will deteriorate your equity. Not a path to getting rich. Remember, buy low sell high. The other way around doesn’t work so well….unless you really hate your money.
https://www.zerohedge.com/personal-finance/oh-hit-moment-subprime-auto-loans-arrives-serious-delinquencies-blow-out
Crash! It’s coming
LOL, And Cheerleaders Says ‘BUY NOW”, – 70% of Americans say they are struggling financially, Sorry Girls The Housing Bubble Already Popped, And You Are The Last To Know.
https://www.cbsnews.com/news/70-americans-are-struggling-financially/
Stock market at 28,000 today!! Federal Reserve pumping billions into the economy through the repo market. More and more cheap money.
People waiting for a housing price downturn and are like people complaining about stock being too high: it’s true housing IS overpriced and stocks ARE too high, but none of that matters as long as the Fed keeps printing, and there is no sign of slowdown.
There is a slowdown written all over the California real estate market.
For instance, in 2017 we had bidding wars. Those days are long gone despite the fact the mortgage rates are low.
https://www.zerohedge.com/personal-finance/national-bidding-war-rate-homes-collapses-decade-low
“A new Redfin report specifies that only 10% of all offers written by Redfin agents on behalf of their homebuying clients faced a bidding war in October, down from 39% the same time last year and now at a 10-year low. Not even a plunge in mortgage rates this year could attract new buyers.â€
Bidding wars are down by 39% year over year: at a ten year low according to a Redfin report.
A correction isn’t gloom and doom. It’s part of the housing market since I can remember and I have been an agent for many decades now…
It Called It, And So Does He- “The Bubble’s Already Popped”: Peter Schiff Warns “Ignore What The Fed Says, Look At What They Do”
https://www.zerohedge.com/markets/bubbles-already-popped-peter-schiff-warns-ignore-what-fed-says-look-what-they-do
Cheerleaders, is it still a great time to buy ??? lmao
First the slowdown than the recession 😉 I like!
https://www.zerohedge.com/economics/q4-gdp-crashes-us-economy-growing-slowest-pace-4-years
Crash!
https://www.khq.com/news/washington_news/redfin-report-national-bidding-war-rate-on-homes-hit-a/article_3bac84e3-ddc5-52f1-8b83-6715918a2e76.html
More beautiful news/ bidding wars are a thing from the past.
And it makes sense. People just can’t be that dumb.
Participating in a bidding war is like committing a dumb crime and going to jail.
With soooo many houses for sale and price reductions left and right, why would anyone in their right mind participate in a bidding war? …..exactly! There is no reason!
The housing market has died in Ventura County, CA. I’ve seen houses in my neighborhood with the for sale sign on them for months. I’m seeing houses with reduced price signs or priced to sell signs. I’ve seen some houses in fire prone areas with for sale signs on them for at least six months. Until about a year ago the homes were selling within a month or tow tops. Things are coming down and fast.
Noticed that too. That’s why I started googling forums/blogs, and I ended up here. The slowdown is very obvious in my area too. Looks like they need to lower interest rates quickly to keep the bubble going until Election Day.
Hi all, has anyone experience with buying a house with unpermitted ADU in the backyard?
The community has no HOAs. As long as nobody complains could I just keep renting out the ADU if I buy this property? Any advice would be greatly appreciated!
We surely need more government in the housing market. Vacancy tax and repeal prop13.
As soon as that is done the bubble will deflate and we have normal house prices again. Republicans have shown that they only work for Wall Street and the rich. Warren for president!!
Glad the market is finally crashing. I am getting tired of living at my parents. It’s free and all good, but golly, I want my own place. So hurry up crash. I am saving like crazy to buy the bottom.
Love love love all the tax talk in the dem. Debate regarding housing. We desperately need more taxes. Prop13 needs to be replaced by something that’s fair to younger generations.
more taxes for boomers and a vacancy tax for empty houses for sure!!!!!!
I really needed that laugh! Thank you for the ugliest truck and that hilarious presentation!!!
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