Despite economic carnage and a raging pandemic, housing prices remain steady. 4 charts highlighting where things may go.
It seemed that 2020 was already turning out to be a relatively challenging year with a massive global pandemic ravaging the world. Now we have nationwide unrest with protests and rioting. Yet somehow with all of this disturbing news, housing values remain strong. Now is this simply a lag factor? Is it because people are stuck at home now for nearly 3-months and are hunkering down? There are many reasons as to why home values remain strong at the moment, but the next few months will be very telling in terms of where things will go. I’ve talked about California becoming a renter’s paradise and how the majority of people that don’t own are not going to continue voting for things like Prop 13 especially when we have such massive wealth inequality in the country. I think many people are living detached in a small bubble and this nationwide unrest is a culmination of anger, frustration, and economic inequality that has created a two-tiered system. In the end, it reflects in our social fabric and housing is the cornerstone of the American Dream. Where is housing heading if only a small portion of the population can even afford to think about the dream?
Chart 1 – Unemployment and Home Values
Overall it would be helpful to take a look at home values and unemployment to see if there is anything we can spot. We have never seen this level of unemployment in our lifetimes, so we are truly in uncharted territory.
Take a look at this chart highlighting home values and the unemployment rate:
During the early 1990s we did have a recession. Unemployment shot up, and homes values went down. In Southern California, home values actually took a big hit. But once the unemployment rate came down, home values went up.
We then have a mega bull-run in housing starting in the late 1990s. That culminated with the grand housing bubble and once it popped, the unemployment rate shot up. This was a case of our nation being obsessed with housing and it seemed like everyone had some hand in real estate during this bubble. So the argument at the time was “the unemployment rate is low, why would housing ever come down?†Of course this was circular logic since the housing market was a house of cards just waiting to pop and once it did, it took down the real estate industrial complex.
Fast forward to the current market. Home values are at record levels yet we now have an unemployment rate that is on par to levels last seen during the Great Depression. Past cycles would indicate that home values will be coming down shortly since housing lags the overall economy.
Chart 2 – Inventory
Home values remain high as well since inventory is incredibly low. Not only are people staying at home but so is inventory. I mean think about selling a home today. Do you want people walking through your place with Covid-19 still out there? Probably not and with so much uncertainty, people are just hunkering down. It felt like things were slowly opening up after Memorial Day but we are now seeing nationwide unrest. You had major protests in Santa Monica and other areas that are supposedly affluent. This notion that you can keep people out of your enclaves only works if you want to stay at home indefinitely – not likely and not a way to live either.
With inventory remaining low, prices will be sticky moving down.
Chart 3 – Median Days on the Market
Homes are still moving in this market. If you need to buy, there isn’t much inventory so your options are limited. Based on the above chart, homes are moving fast. You would think that a global pandemic would slow housing down but not in this situation. It is a supply and demand situation – low supply is keeping prices steady at the moment.
Chart 4 – Living at Home
And finally, we have younger Americans having a tougher time buying homes:
You can see that many young Americans are taking much longer to move out on their own. High rents, high home prices, and overall economic uncertainty doesn’t bode well for housing long-term. But in the short-term, you have very little inventory so those seeking to buy have to contend with what is out there. Yet once things “open up†are people going to be anxious to sell? What was a feature of a city (density, tons of people, etc.) may be a bug when it comes to a highly infectious virus. And with many baby boomers essentially in the “high risk†group, this may unlock more inventory in high density areas. You also must wonder how many older Americans want to live in nursing homes now given they are essentially the main place where Americans are catching Covid-19 and dying.
If history is any guide, the pattern seems clear here. Housing prices will come down but lag the employment situation. But this is also dependent on when things open up. As we recently discussed we have close to 5 million Americans that have stopped paying their mortgage and are now in forbearance. We will likely get a true sense of sentiment once things fully open up which doesn’t seem like it will happen until we have a vaccine or the number of infected individuals decreases dramatically.
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193 Responses to “Despite economic carnage and a raging pandemic, housing prices remain steady. 4 charts highlighting where things may go.”
CA Doesn’t Look So Dreamie- The La Jolla Light in California. “In the weeks following the state’s stay-at-home coronavirus order in March this year, some communities saw a break in the turnover of short-term rentals. Gordon and Maureen Dunfee, who have lived in the same Barber Tract home for 30 years, said short-term rentals took over their street.â€
“‘We had a beautiful neighborhood, beautiful community with kids and families,’ Gordon Dunfee said. ‘Things change, which is natural. But with the short-term rentals, things changed drastically and negatively and it became a hotel zone. We were surrounded by short-term rentals; we have no neighbors now. Every two or three days … we would have new people come in and celebrate something like a graduation, bachelor party, etc.’â€
“But during the pandemic, Maureen Dunfee said, ‘we have enjoyed peacefulness in our neighborhood. But it has also profoundly shown us that we have no more neighbors in our neighborhood. We feel alone on an island, so to speak.’â€
The Associated Press on Hawaii. “Hawaii County has processed nearly all of its short-term vacation rental applications, but it could be months before the units are allowed to operate as a result of the coronavirus. Under emergency health restrictions issued by the state, the rentals can be used only to house tenants who were already there when the restrictions went into effect or workers for essential businesses or operations, such as first responders.â€
“Vacation rental occupancy statewide was 5% in April, the first month after Democratic Gov. David Ige’s March 26 mandatory 14-day quarantine for travelers. Hotels that were allowed to remain open had an occupancy rate of 8.9%, according to data provided by the Hawaii Tourism Authority.â€
“Honolulu Mayor Kirk Caldwell estimated there are 800 legal vacation rentals on Oahu and another 8,000 operating illegally. ‘As we come back to new normal, (they) should be in resort areas and not in our neighborhoods,’ Caldwell said. Maui Mayor Mike Victorino said he would like to keep visitors in the resort areas of his county without ‘utilizing our residential facilities.’ Hotels and resorts should open first and reestablish themselves, he said.â€
“‘We have a large number of illegal vacation rentals, and many are closing them down,’ Victorino said.â€
https://www.youtube.com/watch?v=u7jFsH5QbsE
If You Just Bought in CA, You Can Always Take In Renters- From Curbed San Francisco in California. “Zumper, the San Francisco–based apartment-rental site, just released its latest rent figures and, according to CEO Anthemos Georgiades, the ‘price drops are unprecedented’ in the seven-plus years the company has published rent reports. ‘All this talk of people leaving S.F. for a future of remote work is now backed up by hard data.’â€
“Georgiades isn’t being hyperbolic. Per Zumper’s report, one-bedroom rents in S.F. fell 9.2 percent year over year in May, the largest S.F. drop ever in the history of the company’s monthly reports and the lowest price point in over three years. The average price for a one-bedroom in S.F. stands at $3,360; it was at $3,700 the same time last year.â€
“The plummeting numbers fell even further down in Silicon Valley. In Mountain View the price for a one-bedroom home dropped 15.9 percent in consecutive years in May. Menlo Park saw a 14.1 percent tumble, while Cupertino and Palo Alto saw prices plunge 14.3 percent and 10.8 percent, respectively. Georgiades says that these rent drops may be even higher than the company’s published data, ‘since some landlords conceal price drops in ‘lease specials’ like six weeks of free rent to move in.’â€
“A cursory glance on Craigslist reveals major price cuts, with landlords all but begging you to sign a lease: ‘Newly Reduced Rate’ reads the headline for a new East Cut studio offering eight free weeks, while this contemporary SoMa loft dangles ten weeks of rent-free living to interested takers. ‘I’ve never seen anybody giving that much free rent as an incentive the whole time I’ve lived here, since 2003,’ Bay Area property manager and landlord Carlos Carbajal tells KQED.â€
From Livable on California. “Median rent prices across Los Angeles continued their downward slide in May, making it the third month in a row that one- and two-bedroom rents have declined on a year-to-date basis. The city ranked as the seventh priciest rental market nationwide, according to Zumper. One-bedroom rent dropped 1.4 percent from April to May and 3.6 percent over the same period a year ago to a median price of $2,170. Two-bedroom apartment rent experienced a more modest decline, falling 0.7 percent month-over-month and 1.7 percent year-over-year to $2,980.â€
“One-bedroom rent in San Diego decreased 0.6 percent month-over-month. Two-bedrooms saw more pronounced declines, falling 2.1 percent between April and May and 1.3 percent over 2019 levels. ‘As more and more companies move into remote work, many renters don’t want to pay the big city price tag when they are unable to use the amenities and are looking for more affordable options outside of large, metropolitan areas,’ wrote the report’s author, Crystal Chen.â€
“This, combined with a record-shattering unemployment rate of 15.5 percent in April, could slow the demand in California’s urban rental markets even further, causing landlords to cut their prices or offer incentives to attract new tenants.â€
Sure is sunny out today, you can see the homeless for miles.
Are you JamesJim Posting under another name? Seems like it.
Stick a fork in it!! CA real estate is done!! 🤣🤣🤣
Good article. Yes, I agree – low inventory will make home prices very sticky even as demand will start drying up, once the waves from the drop in consumer demand starts impacting middle class and upper middle class jobs.
Remember, the corporate leadership still needs to see post COVID-19 demand for goods and services, before they budget for next year and decide they need to let go X% of workforce or not rehire X% of furloughed. Similarly, governments will also be letting go people as they start planning for the new normal, lower tax revenues and a whole lot more debt service costs.
I won’t even be looking at supply and demand stats for real estate until late 2020. Right now a few house horny optimists are hunting the very few houses on the market, so owners have few reasons to drop the prices. A lot people are still pretending that we are about to go back to normal roaring economy. I doubt that very much, although I do wish I was wrong.
I work for a midsized company in San Diego that wasn’t impacted by the shutdowns. We are working from home through at least the end of the year for 90% of the workforce. This is a cost savings measure for the company. We have reduced the amount of parking/commuter benefits we pay for, utilities, and all the office accoutrement that goes with having people come into the office. We’re also looking to start dropping commercial space as we downsize the amount of office space we need per person employed and are looking to go work from home for the majority of the company going forward. The shut down forced many companies to field test having their employees work from home and for most cases, it seems to have been successful.
This has also started some of the people I work with to start moving outside of the city (since they no longer need to commute) and, in some cases, outside of the state. We did a layoff a month ago. Annual increases have been canceled for the year and senior management took a pay cut. There have been many other cost saving measures done as well that means other companies are no longer going to be receiving revenue from us.
My company is not the only one taking these measures and we’re a company that has maintained 100% of operations during the shutdown. My friends who are small business owners have also had credit lines reduced or shut down. Buying power is disappearing from the market. You’ve got to be delusional if you think everything is going to be fine 6 months from now. The measures taken early on have managed to delay the reckoning but it’s not going to save this market.
I also don’t see the riots and pandemic lock downs helping matters and will only drive more people out of the urban areas. They no longer have to commute and their house being close to work also means their house is smaller, has less outdoor space, and is close to areas prone to urban unrest. You’re going to see a flight to the suburbs an hour or more outside of the city or even further, especially for people with families.
@ JR Yes, you are right – what the Fed and the governments are doing is just slowing down the speed with which this recession is unfolding.
Yes, lower demand for commercial real estate, addition of formerly short-term rentals to the long-term rental market, frozen pay increases, layoffs, and other cost cutting measures by corporations and large not for profits, disrupted auto-dealership industry (see prices Hertz offering on used cars), disrupted fitness industry (a lot of people including me not going back to gym for a while), disrupted education industry (3rd tier colleges will for sure have massive permanent layoffs and/or will go out of business – already in plans from my friends in leadership positions), etc.
San Diego does have some positives that I see – biotech industry will remain strong, especially since a lot of them repurposed operations to COVID-19 testing, the Federal Government jobs and defense industry will keep jugging along. So not everything is doom and gloom.
However, the headwinds to the economy that I see are just too strong and that is why I am preparing for a major recession beyond COVID-19 (was just a catalyst to expose structural economic problems).
I know the regular commenters will post some irrelevant supply and demand stats from Zillow because they are desperate to feel good about their alleged recent home purchases. 🙂 I hope they are right and I am wrong. Then I will throw in the towel and buy an “overpriced crapshack” next year. Be assured though that I will not be coming here after that to try and feel better about my decision.
Lol, talk about understatement! LA and other big cities are not just toast, they are going to be the new city states for Wakanda or whatever comes out the other side of this civil/race war. The blue states/cities will form their own nation – they’ve already taken away most of your gun rights – and those remaining will either be killed or enslaved. They’ll lay off cops, hire Antifa and muslim brotherhood instead and it will be open season on the white middle class. This isn’t my fantasy, this is what those who planned this have been writing about for years and the foot soldiers echo on social media. Just look at santa monica now: https://www.youtube.com/watch?v=yWaVREhLw_E
But everyone one wants to live there! Such great weather! Yeah, keep checking Zillow to see how rich you are while looting and violence engulf your neighborhood. Some of us tried to warn you for years but your greed blinded you to the reality that is about to crush you.
Perpetual growth with construction in high cost areas is just not sustainable long term as now with the ability to work from home appears to be the new trend and maybe new normal for future employment. Why move to different states or counties if you like living where you are but can still get a good pay with anyone that needs someone to do specific work that does not require being in front of a client or a colleague. There will be a percentage of the population that will likely never enter an office at all and means cost of everything about funding these jobs will be potentially less going forward.
The positive is more rural towns may likely see a surge in people moving away from the city establishments just to get back to normalcy.
The negative large cities will have a harder time justifying their growth numbers with less buyers needing to stay in crowded cities. In addition, surrounding towns near the epicenters will be potentially impacted as well.
All those wealthy Santa Monica liberals who claim they love diversity got a good wake up call last weekend. They love diversity as long as it is in somebody else’s neighborhood or school. I think SM is also a gun free zone, but bad guys can still own them because they don’t follow laws or rules. Let this be a lesson for the future!
Couldn’t agree more Lord B!
Limited Inventory: Homeowners learned in the housing collapse, the safest place was in a home. They can pay no mortgage for years. Can’t get that in a rental. They all know this now. If bank’s didn’t kick the can down the road historically, people may selling their properties now and fleeing to a lower cost of living. Big picture though market is way over-priced, and the silver wave of baby boomers selling in coming years does not have enough new market participants that can afford the homes that will be sold.
All of the government intervention of the last 50 or even 70 years to fix our housing market is coming home to roost. Neighborhoods are a mess ,prices are through the roof and areas become gentrified Air BnB enclaves.
I’m sure a couple more laws will fix everything.
Would you possibly have a chart that could or would potentially describe the Covid-Induced movement of urban households to lower priced (but still expensive) suburbs in California and its impact, of any, on the prices of the suburbs? I wonder if we have any speculation or data on that yet. I suppose the volume of the demand for lower priced housing has yet to be seen. But this would make an interesting addition to your collection here.
“Market remains steadyâ€
Lol
A bit of an understatement….purchase application data is 18% up YOY.
Yes, we have more people buying houses than a year ago.
Lol fuc*** lol
Sry crash boys, the big collapse has been delayed.
Maybe the reason is NO inventory and historic low interest rates…..and maybe the FED printing money like there is no tomorrow?
Have you looked at stocks lately. Gosh I should have bought more. Some companies just make an all time high….in midst of the covid recession.
This time is really different.
I would have never expected such a heated housing market. I can put my plans on hold to buy a rental anytime soon
shocking how strong the LA market still is given Covid. But lets give this 6 months, as there is no end in sight to the falling dominoes such as what San Diego CPA has alluded to that businesses are just beginning to assess the fallout and ensuing layoffs.
I am trying to encourage Snowflake to buy a house and move out of my home. Yeah, a little self interest here, and I will give him 20% for a down payment. He asked when prices will drop…..I told him “Right after you buy, just like the stock market”
QE,
Less than 4 months until election and then it will crash. People rarely live to 100+ years so rarely the economy can expand to 100+ months.
In El Segundo we have seen the failed Airbnbs show up as long term rentals on zillow. Homeowners that bet they could cover their mortgage by making 2x as a short term rental are freaking out. They are in a delusional panic asking for rents that cover their mortgage (way above market rates) because they can’t afford to only charge market rate. Not to mention if they find a long term tenant they now have a storage bill or I expect some yard sales as fully furnished homes and condos are emptied as people leave the short term rental “business”. Homes are still selling, quickly and at the usual ridiculous prices at or above $1000/sqft.
I just sold a home in Las Vegas. There is a program called Home Is Possible that lets you buy a home with no downpayment (more specifically, the downpayment is financed by a second no-interest loan that will be forgiven if you stay in the home for 2 years or something like that). In addition, you can ask a seller to pay the closing. The person who bought my home probably paid nearly nothing to buy and move into the home. The key requirement for the Home Is Possible program is a credit score of 640, so not everyone qualifies. The monthly cost, including PMI, ends up being lower than the rent. When I think about it from a risk-reward perspective, why wouldn’t you buy rather than rent? In fact, is there even a rule to prevent people who just bought from making a forbearance request and avoid paying the mortgage altogether? If you can get 1 year rent free and then wait until the home is foreclosed on, then you might be able to enjoy several years rent-free. As we witnessed in the 2005 US housing bubble, the punishment is ridiculously lenient. Wait a couple of years, rebuild your credit, and they let you to go right back and buy another house.
The data-lines lately have been absolutely terrible for our bears. It seems like posting more data is somehow not fair. I feels like dancing on someone else’s grave. They got so excited about me being able to afford to buy at the peak. A sure signs the market would crash. And now? Not even our good housing doctor is agreeing anymore that the crash is upon us. A V shape turn.
V shape in housing, v shape in stocks.
Looking to refi under 3% when the time is right. When I started my buying process I locked in the price in an environment that had high 3 to low 4% rates. Shaving off almost a % point translates into significant monthly savings.
Not Good for CA HomeDebtor, Rents dropping followed by Values, NO END INSIGHT- From Bisnow on California. “Residential rents in some Bay Area submarkets have fallen by double-digit percentages compared to the same period last year. Though the longer-term effects on the region’s multifamily market are unclear, it is possible that both lower-end Class-B and Class-C properties, as well as luxury units, end up faring worse than average, according to Strada Investment Group Vice President William Goodman.â€
“As many of the Bay Area’s residents working in tech or other remote-friendly industries have carried on work from home, its service industries have been decimated with job losses. Farther down the Peninsula, developer Anton DevCo has seen leasing slow and some tenant departures that Managing Partner and Chief Investment Officer Trisha Malone said are tied to new remote work policies in the tech industry.â€
“She said collection is nearly its normal rate, but that some of the company’s Menlo Park residents started leaving the day after Menlo Park-based Facebook announced its shift to remote work. ‘Right now, something we’re seeing in the Bay Area is the effects of Facebook’s work-from-home policy,’ she said. ‘We’re seeing an uptick in tenants who are paying the breakage to get out of leases and relocate. There’s a lot of them moving out of state.’â€
From Variety on California. “Though coronavirus chaos has hit all sectors of the economy hard, the luxury real estate market has been especially affected. Jumbo mortgages have dried up, many would-be buyers backed out of escrow, and even Jeff Bezos decided to back out of a $90 million deal to buy one of the late Paul Allen’s Beverly Hills estates. And many for-sale properties have been price-chopped or sold with big discounts.â€
“Apple’s Mike Markkula is hoping the exodus will finally sell his massive Carmel Valley estate. He’s listed the property, known locally as Rana Creek Ranch, for the third time. Now carrying an improved pricetag of $37.5 million, the estate was initially put on the market in 2013 with a sky-high and profoundly unrealistic ask of $59.95 million.â€
Home prices are sticky. Rent is fluid. The 1990-91 recession hit, home prices did not bottom out until 1996. The 2008 recession hit, home prices did not bottom out until 2011-12.
GSE backed single family mortgages can have up to 12 months of forbearance due to CV-19. Then it takes 6 months to 12 months to foreclose. That’s 18 months to 24 months of no mortgage payments due to CV-19.
Multifamily mortgages can get up to 3 months of forbearance. So rent can potentially plunge like a rock in the next 6 to 12 months.
Single family residences should see no price plunge for at least two years. Exception, people moving out of California and wanting to sell quickly.
Just like that…. regained 2.5m jobs. As people said multiple times here. Those low paying jobs can be re-hired in a minute. Still don’t believe it? Where are all the people foreseeing the Great Depression 2.0? It got quiet quickly 🙂
Just watch while my stocks skyrocket and housing pushes higher.
2.5M down. 40M to go.
They forecasted 7-8M additional unemployment and instead we gained 2.5M.
That’s a 10M miss to forecast! Let’s go! The recovery has started.
And how much of the jobs gains are from the PPP (Paycheck Protection Program)? I would like to see 3rd and 4th quarter jobs report before throwing rocks inside a glass house!
Businesses were forced to rehire in order to get their PPP loans forgiven (have to spend 75% or more on payroll). Unless you think there was some organic growth of the economy in May? Lol please. The government is simply delaying the inevitable contraction that was coming even before C19.
Once PPP funds dry up, and Q2 earnings show a huge dip – the stock market will crash again. Unemployment will go up. And housing will finally see it’s correction. I don’t think it will be 50% to 70% like you predicted for so many years, but it will likely still be in the 25% to 40% range. Unless unemployment lingers for 3+ years, then the housing dip may very well test your previous predictions.
But hey, you keep coming back here with your cheer-leading if it makes you feel better!
So Q3/Q4 will See a correction in housing?? Is that 2020 or 2022?
I can almost say with certainty it CANT be 2020. Purchase applications (up 18% YoY) are a forward looking indicator. Extremely low inventory and extremely low rates mean prices will go up.
Where do you live? Are you trying to buy your first house or what? With good credit and 20% DP you can easily Get 3%-3.25% for 30y. Your payment already went down significantly. How much do you need it to go down in order to afford to buy?
In 2008 you had 115k active listings in SoCal.
A month ago we had 31k and now 30k.
It’s going in the WRONG direction. You need more inventory not less.
You are betting against the US money printer and lost out on this buying opportunity. Now you are predicting a 25-40% haircut in housing. There’s no way we see this anytime soon. prices will actually go up.
If you believe a stock market crash in July during earnings season then get ready to short stocks. You will make a fortune if you are right.
“As people said multiple times here. Those low paying jobs can be re-hired in a minute”
That is true, in this Trump economy, there are masses of people who are waiting to be hired at minimum wage as dishwashers, burger flippers, receptionists, etc.
As everything re-opens, millions will be hired back Likely at a pay decrease due to the generous unemployment.
They aren’t buying houses at minimum wage and never were.
The people buying houses have been fully employed during this time working from home. They were not roaming the streets looking at open houses. Now they are emerging.
A friend put a house on the market in Colorado. On the first day, they had a full-price offer and an offer with 7K over with some contingencies. IMHO, the house was priced at about the comps in January so it was priced about right. Tract homes are easy to find comps when thousands have the same floorplan. The house was vacant so both buyer and seller had no Covid fears. The inventory is low.
add essential healthcare workers such as CNAs and LVNs to your list of min wage workers who were never going to buy a house and are getting more on UI and can be rehired in a minute or what not. What will our economy do when our essential healthcare workers are in the same shoes as the burger flippers?
nurse,
Here is a link for LVN salaries locally:
https://www.salary.com/research/salary/listing/lvn-salary/los-angeles-ca
And here is a link for fast food cooks:
https://www.salary.com/research/salary/benchmark/fast-food-cook-salary/los-angeles-ca
Why post that LVNs are in the same order of salary as fast food cooks when a simple search would show you that they make over double the salary? You can live on $50K but God help the schmo who makes $25K.
Unfortunately, at 25K or 50K, neither can buy a house in S. CA.
Yes, but a married couple both working as LVNs could afford a house in some areas around here (or at least a condo). A couple working in the fast food industry below management level wouldn’t have a prayer.
Do I hear Dow 27K! Thank you rich uncle Fed. Just 60 days ago, the world was going to end and stock market has gone up 50% since. Anybody still here who thinks they can outsmart or outlast the Fed. Forget about it, the Fed holds ALL the cards. The Fed is a speeding freight train and you are a penny on the track.
Anecdotal evidence is that housing in desirable coastal CA is red hot. A house went into escrow the first day. An acquaintance of mine recently tried to buy a home (no competition right), try eleven other offers. To think you will get fire sale prices in desirable coastal CA ain’t gonna happen. And 2.X rates are on the way!
Lord B.
If I keep borrowing, I can last a long time also. I dream of borrowing trillions to buy what I want.
Then I wake up and realize, I will owe it all back.
However, when I die, my heirs will not be responsible for my reckless borrowing.
Will the heirs to the current US debt be responsible for 10’s of trillions of reckless borrowing? Likely not if the US dies.
I was wrong. I expected all time highs in Q4. Looks like we will see that in Q3.
Oh well, buy buy buy. Stocks are skyrocketing.
Poor Poor CA – San Ramon, CA Housing Prices Crater 15% YOY As Bay Area Rental Rates Plummet
https://www.zillow.com/san-ramon-ca-94582/home-values/
*Select price from dropdown menu on first chart
As a noted economist stated, “If you have to borrow for 15 or 30 years, you can’t afford it nor is it affordable.â€
A House in my friends neighborhood had a “coming soon†sign.
They Tried to contact the neighbor but they had already moved. Sign disappeared and now it shows as sold. It sold within 2 days of the sign going up (“coming soonâ€.
Gathering more detail as I cannot believe it.
Other than that I barely see any existing houses for sale in my neighborhood. The new construction buildings in my community are selling like hot cakes
A recent news segment talked about Boomer wealth transfer to Millennials. The dollar amount was staggering – 38 trillion. The transfer is happening via gifts and wills. This will help keep demand going as Millennials are itching for space and homeownership. Thought it was especially appropriate to share as we have anecdotal proof of this on the blog!
A recent news segment talked about Boomer wealth transfer to Millennials. The dollar amount was staggering – 38 trillion.
That’s good. Because according to Wikipedia, the national debt currently stands at nearly $25 trillion: https://en.wikipedia.org/wiki/National_debt_of_the_United_States
As of May 1, 2020 federal debt held by the public was $19.05 trillion and intragovernmental holdings were $5.9 trillion, for a total national debt of $24.95 trillion.
And that does not include unfunded liabilities, which, together with the national debt, comes to $62 trillion.
Adding this to the national debt and other federal obligations would bring total obligations to nearly $62 trillion.
And this still does not include the debt or unfunded liabilities (e.g., employee health & pension benefits) of state and local governments.
All federal, state, and local government debts and liabilities should easily come to over $100 trillion. And these debts and liabilities will only continue to increase exponentially as Millennials reach retirement.
Finally, there are many poor Boomers out there, so a whole lot of Millennials will inherit nothing. These Millennial Have-Nots will deeply resent the Millennial Haves, and will demand ever higher taxes, to fund ever more entitlements. Either that, or they’ll burn down the cities.
These current riots are but a practice run for what our Milli can expect before he even reaches 50. Hell, maybe before he’s even 40.
The looting will soon stop. Unleash the national guard.
Btw if the looters decide to come to my neighborhood I will greet them with my friend Remington.
You got to have home protection and I thought I’d start with a shotgun 🙂
M: The looting will soon stop. Unleash the national guard.
Trump wanted to bring out the Army, but the Deep State generals refused his orders — ignoring that Trump is Commander in Chief. As for the Guard, they’re unarmed, and the rioters know it, so unleashing the Guard does no good. The Deep State sent a signal, rioters welcome!
M: Btw if the looters decide to come to my neighborhood I will greet them with my friend Remington.
That’s nice. Some store owners tried that. They were arrested by police for brandishing a firearm, and face felony assault charges. Meanwhile, looters who are caught in California are arrested — then released with a citation.
Your guns won’t protect you if the legal system isn’t on your side.
You have a choice. Stand aside and be looted. Or resist and go to prison.
When I stop posting you know I’m sitting in prison for shooting at looters.
Hey Doc, I’m glad you finally defrosted from perma-bear to aware. I’ve been saying this for YEARS. This is a NEW AGE in ownership. Serfdom here we come! Look at the macro picture I’m talking over centuries and it’s sure to come. We can always look at recent history and draw conclusions but it’s quite misleading. I’m not saying this time is different I’m saying it’s the same thing thru centuries of human existence.
YUP- Real Estate is a BAD Investment- Why buy a house when you can rent one for half the monthly cost? Buy it later after prices crater for 70% less.
Seattle, WA Housing Prices Crater 13% YOY As Demand Plummets On Skyrocketing Inventory
https://www.zillow.com/seattle-wa-98102/home-values/
*Select price from dropdown menu on first chart
As a leading economist advises, “Mortgage debt is the most toxic and damaging debt of all. Avoid it at all costs.â€
The “peaceful protesters” are coming to Idaho: https://www.politico.com/news/2020/06/06/protests-after-floyds-death-reach-rural-america-303892
In Boise, thousands of people attended a peaceful vigil this week honoring Floyd, the black Minnesota man who died after a white police officer pinned his neck for almost nine minutes, and others who lost their lives to police abuse. Demonstrations after the Tuesday evening vigil lasted until 2:30 a.m. for the third day in a row. …
Demonstrations of more than 50 people in Sand Point, Idaho Falls, Ketchum and Twin Falls have also taken place over the last four days in the conservative state. Ketchum, with a population of about 2,000, and Twin Falls the with 86,000, saw up to hundreds of people gather to march, block traffic and mourn Floyd.
Even Flyover’s beloved Sandpoint, ID is not being left alone.
SOL, I grew up under tyranny where protests of any kind were not allowed. I don’t mind if people protest peacefully; I cherish that right guaranteed by the Constitution. You can never have a society where all people think the same. As long as loonies don’t have the power to impose their lunacy on others, as long as loonies are not in power, then all is good. Crazy people can be found anywhere; what counts is the percentage and if they are in power or not.
I don’t agree with rioters and looters – that should never be tolerated in any civilized society. I have a problem when cities are talking about defunding the police department. Without police, why do you have laws and judges?!?….Without laws you have Mogadishu.
I did not hear about any looting or riots in Idaho. If that happens in the near future, it will be in Boise which is under a continuous process of Californication. Many who move from CA continue with the same bad habits expecting different results. Eventually they get what they run from. That is why I told Karin to stay out of Ada County. Big cities attract lots of loonies and crazies. Seeing 50 people who protest peacefully because they watched too much CNN, is OK. There are some people relocated from Seattle in both, Sandpoint and CDA. They will continue voting Democrat, but they are a minority and they will continue to be a minority for the foreseeable future.
I don’t agree with police brutality when there is no point in what they are doing. Most reasonable people are on the same page with that. However, going to the other extreme of defunding the police department is a different type of crazy. Jumping from one ditch into the other ditch does not mean you are not still in a ditch. For everything it should be common sense which is not so common these days. In WA the rioters and looters destroyed lots of malls and businesses while the police had orders not to interfere and the politicians were encouraging the rioters and looters. In ID, the politicians encouraged the population to use open carry guns and protect private and public property. That is the difference. Regardless of how liberal or democrat someone is, everybody saw in the past week that police does not interfere and if people do not protect themselves and their property nobody will. How many black and other minority businesses were destroyed this past week? How many black police officers and how many hundreds of black people were killed just in the last year in one city – Chicago? Does the media says anything? Do those black lives matter? Apparently they don’t matter to the MSM because they do not serve their agenda. They always single out when a black person is killed by a white police officer and they run away with it. If thousands of blacks are killed by other blacks, it is not news worthy and they don’t publish anything regardless of the number of deaths. If a black police officer is killed by other blacks, they do not consider that newsworthy. What they want, is to leave the cities with black people with no police (defense), no stores and no businesses to create employment. They want to keep all poor and dependent on Democrat plantation.
In Minnesota, the governor is democrat, the mayor of Minneapolis is democrat and everyone there was democrat for a long time. They hired the chief of police responsible with the training and hiring of police officers. Why are people protesting against the occupant of the White House instead of protesting against those in MN responsible with all of the above?!? All this mayhem is organized and instigated with very evil purposes, but that is another subject for another time.
In the previous thread I stated on May 30th:
“My guess is that the police union has protected this bully for years. And the DFL may love Black folks but loves public employee unions more.”
Diversity in the Minneapolis City Council is having one Green Party member on it. Oddly, that person might just be the only one not beholden to public employee unions. It can take years to get rid of bad cops like one in Sandusky Co. Ohio:
https://www.thenews-messenger.com/story/news/crime/2018/09/13/oconnell-sentenced-two-years-prison/1281907002/
Flyover: I did not hear about any looting or riots in Idaho. … Seeing 50 people who protest peacefully because they watched too much CNN, is OK.
The problem is, the Deep State and its agents (e.g., Antifa, BLM) have Sandpoint and CDA on their radar. These are test protests. How far people can be pushed in this city, how far in that city? How much are people willing to take?
The Deep State is collecting intelligence, taking note where the soft spots are, and what areas of the country need further diversity and refugee settlements before they’re ripe for revolution.
The Deep State has Northern Idaho on its radar. It won’t be left alone. The protestors and activists will be back someday, in greater numbers, with greater resources.
The FBI is kneeling to BLM/Antifa protesters: https://theconservativetreehouse.com/2020/06/07/fbi-pledges-allegiance-to-black-lives-matter-antifa-nation-of-islam-and-new-black-panthers-protesters/
And yet Trump expects the FBI to investigate Antifa as a terrorist group?
Flyover,
We all agree looting should be punished severely. So should murder done by suffocating a person while kneeling on their neck. You can’t say all police officers are doing this just like you can’t say protestors are all looters.
“Why are people protesting against the occupant of the White House”
This one is easy. If you believe in the Constitution and First Amendment Freedom of Speech why are you asking this question? Trump/Stalin sent his troops into a peaceful First Amendment assembly in a park and dispersed them with pepper spray and rubber bullets. Are you Anti-Constitution now? Do you believe Stalin tactics are justified? You are losing credibility. The ACLU is bringing a lawsuit based on a thousand witnesses. Why would a sane President do this?
Also, as I have said multiple time before, people are protesting because they are part of the 99% who work for minimum wage and are very similar to the serfs under the Tsar who eventually took matters into their own hands. The Illuminati should do something about this before it is too late. Good thing we have elections and can vote in a Democratic Socialist like FDR again.
Flyover – been reading and agreeing with your insightful and well-informed posts for a long time. Keep up the good work.
Watched the youtube video referenced by Erika regarding the rioting in Santa Monica. Utterly disgusting. California was once a wonderful place, then the people started arriving.
Bob: people are protesting because they are part of the 99% who work for minimum wage and are very similar to the serfs under the Tsar who eventually took matters into their own hands.
Alexander II freed the serfs in 1861.
Thus, serfdom had already been abolished for 56 years before the 1917 Bolshevik Revolution.
Seen it All before Bob, pretends he didn’t understand my post in order to create a straw man argument. Please read it slow and careful! You will not notice my total support for peaceful protests.
My point was that I didn’t see the people protesting against those in Minnesota were the murder occurred. It was not Trump who elected the socialists democrat governor, it was not Trump who elected the socialists democrat Mayor of Minneapolis, it was not Trump who hired the socialists democrat chief of police and it was not Trump who hired or trained the criminal police officer. It was a democrat issue from the top to the bottom and it has been a democrat issue in Minnesota for a very long time. It is a state and city issue.
Those protesting today are the same people who elected those illustrious leaders and put them in power. You are free to choose, but you are not free to choose the consequences.
The future of Minneapolis is the same as other former prosperous cities like Baltimore, Detroit, Chicago and others. Those same illustrious socialist democrats from Minneapolis now they came up with something smart again – no city police. I am sure all the property values in Minneapolis will increase and all employers will want to do business in the city. When the city will look like Mogadishu, at fault (like always) will be Trump and those evil republicans the MSM is accusing; it is so predictable with the socialist democrats. When you elect socialist democrat leaders brought from Somalia (see Omar), then expect that your city is going to look like Mogadishu. Of course, you don’t need too much brain to connect the dots of cause and effect.
If you want to eliminate the politics from the comments, then focus on the FED who created the wealth inequality.
Regardless of who or what is behind the looting, riots, and protests, I think the underclass is sick and tired of the gross inequity between rich and poor in this country, as well as the three-tier legal system (one for the ultra-wealthy/elite, one for police, and another for everyone else). So even though some or many of these events may have been organized with nefarious intentions in mind, there is a clear motivation for people to participate in them. I don’t think there would have been many eager participants if not for the current degree of societal inequity. I don’t have the answers, nor do I pretend to. But I do see the problem. I believe the problem is cause by both sides of the aisle, including allowing so many manufacturing jobs to move overseas resulting in a job dichotomy of sorts (many low end service jobs, many high tech jobs, but not much in between), excessive corporate welfare and cheap money which only makes the rich richer, the list goes on and on.
I think criminal conduct by police can be mitigated to a significant degree by the following:
-Abolish qualified immunity so that police are personally accountable for their actions in civil court, just like every other member of the public
-Separate the cozy relationship between judicial, prosecutorial, and policing entities so that none have an incentive to cover each other’s back
-Eliminate useless police (most traffic enforcement, enforcement of victimless crimes, and general patrols which generally results in harassment and very little positive effect on crime overall); police need to focus on violent crime, not handing out $600 traffic tickets for rolling through a stop sign or attending to drug overdose situations and throwing a person in jail who needs medical and psychological treatment
Flyover,
I responded exactly to your post. Perhaps you didn’t understand why they are protesting against Trump?
Trump sent his Stasi through a public park with with rubber bullets and pepper spray to disrupt a peaceful First Amendment protest. Just so he could get a photo op. This is a criminal act and Trump should be prosecuted. It is a tactic Stalin used. You are defending this?? Wow! I thought you were anti-Stalin?
Responder is replying with mostly what I believe: Thank you!
-Abolish qualified immunity so that police are personally accountable for their actions in civil court, just like every other member of the public
Yes! The police should not be immune to the responsibility for their actions. Nobody should. Especially our President Trump.
-Separate the cozy relationship between judicial, prosecutorial, and policing entities so that none have an incentive to cover each other’s back
They are all in the Executive Branch and appointed by someone in the Executive Branch. Cronyism is happening and should be stopped. Flyover and I hate cronyism so he should agree.
-Eliminate useless police (most traffic enforcement, enforcement of victimless crimes, and general patrols which generally results in harassment and very little positive effect on crime overall); police need to focus on violent crime, not handing out $600 traffic tickets for rolling through a stop sign or attending to drug overdose situations and throwing a person in jail who needs medical and psychological treatment
The entire Defund Police movement is mostly driven by a desire for Community based policing. When Bank of America burned in 1970 in Isla Vista CA near UCSB during protests, the Sheriff’s department founded a foot patrol with community interaction. No more banks were burned during that time before the end of the Vietnam war. It worked. More of this needs to happen for multiple reasons.
1) The police should tied closer to the community. The police are hired within the community.
2) China utilized external police very effectively to quash Tianammen Square protests. Rural police “rednecks” were brought in to shoot and kill the city protestors. We should not let this happen in the US.
As far as traffic citations, we need to enforce laws. I have seen people driving 120 MPH drunk on the interstate which later resulted in an entire family being killed by an idiot. We need traffic enforcement. However, we should not rely on funding for the police to be driven by 5 MPH-over $400 speeding tickets. This leads to abuse.
People who have an addiction to drugs should not be thrown in jail. They should be provided help.
Flyover~
You were so right about Ada County. Thank you for the head’s up:
https://www.idahostatesman.com/opinion/editorials/article243057911.html
Sex education for pre-K students? Free abortions, eliminating juvenile detention centers, developing green infrastructure, etc. If this is creeping into Idaho, pretty soon there will be no place to run.
As for BLM and Antifa, the lower day to day operations are run primarily by upper middle class white people. Notice how black businesses are burned down even when their owners stand in front begging the protesters not to do it. And yes, there is a much bigger agenda, that you know about as well. The coronavirus lockdown and BLM looting was just the intro. People will look back on these days as the manageable part.
Btw, Flyover, are you familiar with the Deagel Report?
son of a landlord~
I agree about the Deep State having Idaho on its target list. Particularly when I saw militia lined up on the streets of Couer d’Alene during the BLM lootings. They will not let that stand.
Also, they are always beta-testing to see how far they can push the public. That’s what the 2009 H1N1 scare was all about. America pushed back that time. But not much any more.
Bob: Trump sent his Stasi through a public park with with rubber bullets and pepper spray to disrupt a peaceful First Amendment protest. Just so he could get a photo op.
Police in the Uber-Progessive city of Santa Monica used tear gas on “largely peaceful” protesters. The protesters even claim that rubber bullets were used, though I can’t confirm that from a reputable source.
https://www.youtube.com/watch?v=s8q0rcKq4C4
https://www.youtube.com/watch?v=-u9JBdge0Dw
https://pagesix.com/2020/06/01/madison-beer-says-she-was-tear-gassed-at-santa-monica-protest/
https://www.latimes.com/california/story/2020-06-05/santa-monica-mayor-and-police-chief-face-anger-from-protesters-you-called-in-the-national-guard
If Trump is guilty of sending the “Stasi,” so is Santa Monica’s police chief and mayor.
BTW, Antifa is decades old organization. Many of their German members went on to work for the Stasi after the Soviets set up the East German government.
https://en.wikipedia.org/wiki/Antifa_(Germany) – in East Germany the Antifa groups were absorbed into the new Stalinist state.
Ketchum is full of spoiled, bored rich kids so….protesting was something cool they could post on social media.
In the previous thread, I mentioned a house in my neighborhood that was going up for sale. I mentioned that it sold the weekend it first came on the market to a family with young children. The street is a cul de sac, and that was a big selling point. Now I’m hearing that someone we know wants to sell their large 2 story house on a through street (not a major thoroughfare) and move further out into the Orange Co suburbs to a house on a cul de sac. They also have small children. As millennials’ kids get old enough to play in traffic, we may see a rush to the quiet suburbs with lots of houses on cul de sacs. I’m not planning on moving out of my place a cul de sac. But values may be going up even more if more people with kids flee to the suburbs due to urban disintegration and want houses like mine.
Bidding wars are back…..
I guess I can stick a fork in it.
I Won’t be able to get a good deal on a rental unless I find a fixer upper without competition.
The Cesspool CA is Toast, Stick a Fork in it, IT’S OVER – A report from the Sonoma County Gazette in California. “Some communities have established Vacation Rentals by Owner (VRBO) Exclusion Zones to keep housing and their neighborhoods protected from commercial use of residential homes, while others have tried and failed to to establish Exclusion Zones. It’s a complicated process, requires entire neighborhood agreement, and costs fees many cannot afford. In Sonoma and Marin Counties, some residential neighborhoods have more VRBOs than residents.â€
The Los Angeles Times in California. “The average asking rent for an apartment in Los Angeles County fell last month from a year earlier, according to RealPage. The 3.3% decrease to an average of $2,254 for units of all sizes followed a 0.8% drop in April and reflects how the coronavirus-related economic downturn is sweeping through the rental housing market.â€
“Some landlords and property managers said they’re giving concessions such as a month of free rent or dropping their asking price to get units filled as concern over the economy grows. According to RealPage’s data, the last time rents declined was in 2010 in the wake of the Great Recession. ‘We’ve had a big dropoff in overall demand,’ Greg Willett, the company’s chief economist, said, citing the coronavirus.â€
“In addition, RealPage’s numbers cover professionally managed apartments and thus leave out many mom-and-pop landlords who charge lower rent. The RealPage data showed declines were focused on the middle and high end of the market. As president of property management firm Eberly Co., Chuck Eberly manages about 2,700 units in the Los Angeles area across the market spectrum, from high-end properties to working-class apartments.â€
“Eberly said he’s had to offer a couple of weeks of free rent and in some cases dropped rent outright, mostly for his more expensive properties. Although he called the rent declines ‘small adjustments,’ he expects he’ll be forced to make more cuts down the road. ‘I see a lot of product right now and just not a lot of lookers,’ he said.â€
From 6 Sq Ft in New York. “The summer months are typically the busiest when it comes to real estate in New York City, especially the rental market. But with the city still not out of the woods of the coronavirus crisis, and with so many facing job and financial uncertainty, the idea of signing or renewing a lease becomes increasingly complicated.â€
“It’s also important to note that rental listings are in high supply right now, so by many accounts, it’s a renters’ market. As was previously reported, ‘Listings website CityRealty saw 7,793 rental listings in early January. Buy mid-April that number had grown to 8,244 and as of May 15, it was 10,641.’ However, as Douglas Elliman agent Eleonora Srugo noted in a recent email, this could all change come the fall: ‘The seasonal rental market has been impacted by the pandemic with large discounts and incentives being offered on all new leases.’â€
The Wall Street Journal. “Greystar Real Estate Partners LLC said it is acquiring a business that manages nearly 130,000 housing units, a deal that extends Greystar’s position as the country’s largest operator of rental apartments. The Charleston, S.C.-based firm is buying the business from Alliance Residential Co., the country’s fourth-largest apartment manager.â€
“‘This is how consolidation is happening in this industry,’ Greystar Chief Executive Bob Faith said. ‘A lot of real-estate owners that own and manage their properties look up one day and say, ‘I’m not making a lot of money [at management]. I’m going to give it to Greystar.’â€
The Real Estate Journals. “Just look at the most expensive rental market in the United States, San Francisco. Zumper reported that one-bedroom rents in San Francisco are down 9.2 percent this June when compared to the same month a year earlier. That median monthly rent is still high at $3,360. But that figure is the lowest median rent for one-bedroom apartments in this city since March of 2017.The next three most expensive rental markets in the country — New York City, Boston and San Jose — also saw one-bedroom median rents fall on a year-over-year basis.â€
“In the Midwest, Milwaukee saw a big drop in its median one-bedroom rent, falling 4.7 percent on a year-over-year basis to $1,010. Chicago, not surprisingly, ranked as the most expensive Midwest rental market, with the median one-bedroom rent coming in at $1,510 in June and the median two-bedroom rent hitting $1,810. The one-bedroom rent was down 3.8 percent from a year earlier, while two-bedroom median rents in Chicago were down 4.6 percent.â€
From Mortgage Professional America. “According to a new report by Lease Lock, first day rent payments in June saw a 2% drop in total rent collected compared to May and April, and a 6% drop compared to the pre-COVID average. ‘This decline is a foreshadowing of what’s to come if we don’t see some more government intervention,’ said Rochelle Bailis, vice president of marketing at LeaseLock. ‘This issue will progress without more comprehensive relief.’â€
“According to the report, rent payments at Class C properties continue to decrease, which Bailis warns could trigger a ripple effect. Traditionally, Class C properties house working class residents, who were more greatly impacted by recent service industry lay-offs and after slipping downward for the last two months, Class C properties saw another 3% drop in first-of-the-month rent payments.â€
“‘When service workers get laid off, the industry suffers and executives begin losing their jobs as well, affecting Class B and Class A residents as well,’ she said. ‘If renters can’t pay their rent, then owners can’t pay their mortgage, that affects the banks and that’s really what the multifamily industry is trying to stop. We are trying to prevent those dominoes from falling.’â€
From Multi-Housing News. “With June’s rent payments now due, a voice in the wilderness is questioning whether statistics showing how many residents made their April and May rents are accurate—or if this month’s numbers will be, too. Jonas Bordo, the founder of Dwellsy, a 15-month-old rental search engine, doesn’t think so. Bordo bases his claim on an admittedly random, unscientific poll he took on May 21 and 22 in which he asked renters on Twitter if they will have difficulty paying their rents this month.â€
“More than 4,600 responded. ‘I was shocked,’ Bordo said in a phone interview. ‘It clearly caught people’s attention.’ More stunning, perhaps, is that less than half—48.5 percent—said they were not confident they’d be able to meet their June obligations. That compares to the 87.7 percent who paid their rent in May, according to the National Multi-Housing Council, and the 89.9 percent NMHC says paid in May 2019.â€
“Bordo decided to query renters because he couldn’t square the fact that 38 million people are out of work and that 39 percent of all households don’t have $400 on hand to cover an emergency with the NMHC’s rental figures. ‘How on earth is it possible that more than 38 million Americans, many of whom had little to no emergency funds, all lost their jobs and were still able to pay their rent?’ he wondered.â€
“The Dwellsy founder doesn’t doubt the NMHC’s figures. But he doesn’t believe they tell the entire story. He supposes that because of the way they are sourced—from five property management software companies that serve the largest management companies, Bordo says—they are skewed toward luxury properties.â€
“‘The apartment communities that those property managers operate are overwhelmingly higher-end properties,’ he said. ‘As a result, this data is representative of the more affluent end of the market, where apartment dwellers are far more likely to be working from home than unemployed.’â€
“What the database does not include are the millions of rentals owned and operated by Mom and Pop investors who don’t use sophisticated software. Bordo pointed out that according to the Department of Housing and Urban Development, 75 percent or so of the U.S. rental market is comprised of properties owned by individual investors who only have just one to four units.â€
The Houston Chronicle in Texas. “In May, 7.15 percent of commercial mortgages that had been bundled into securities were at least 30 days delinquent, up 481 basis points from the month before, according to securities data company Trepp. That’s the biggest month-over-month increase Trepp has recorded since it began tracking the metric during the Great Recession in 2009. Another 7.6 percent of commercial mortgages that back securities missed May payments, but were less than 30 days delinquent. Even more are in forbearance.â€
“‘Everybody who invests in commercial real estate has felt the pinch in one way or another,’ said Manus Clancy, senior managing director at Trepp. ‘Texas has a double whammy of COVID and the oil and gas issue, where the price of oil dropped so sharply that firms in Houston are pulling back in terms of their space needs and the number of employees.’â€
“Commercial real estate investors are confronting issues similar to those faced by investors in residential real estate in the years leading up to the housing bust of more than a decade ago. As with homes, most commercial properties are purchased with mortgages, which are then bundled into securities and sold to investors, whose returns depend on property owners making their monthly payments.â€
“Cash-strapped commercial tenants are missing lease payments and their landlords missing mortgage payments, undermining the value of the mortgage-backed securities. If the debt goes bad, it could blow a hole in the balance sheets of investors, dry up the capital needed to revive the commercial real estate market and hurt the returns of institutions, such as pension funds, on which millions of Americans depend.â€
“The most heavily hit sector, according to Trepp data, was lodging. Nearly 20 percent of hotel loans packaged into securities were at least 30 days delinquent as of May, and Clancy said he expected that number to rise in June. Lodging was followed by retail, which had a 10 percent delinquency rate, multifamily with 3.3 percent and office with 2.4 percent. In February, before the pandemic became strongly felt in the United States, the overall delinquency rate for commercial mortgage-backed securities was 2.04 percent.â€
“Investors who own commercial mortgage-backed securities have seen the value of their holdings fall. Banks that had agreed, pre-COVID, to make commercial loans that would be packaged into securities and sold to investors are facing significant losses.â€
“For example, JPMorgan Chase & Co., Credit Suise Group AG and Macquarie Group Ltd. agreed to lend more than $7 billion to Eldorado Resorts, a casino business, before the need to social distance, according to a Bloomberg report. The sudden change in the company’s financial stability made it difficult to find investors who were willing to take the debt off of the banks’ hands, meaning they may have to offer the debt at a discount or even come up with the cash themselves.â€
Translation = things are a lot worser than the industry is admitting.
JamesJim, why do you post such long pieces?
And why did you change your name?
I think he cuts & pastes entire articles from HousingBubble.blog.
Next the bulls will tell us that rising mortgage interest rates are good for housing prices lol.
https://www.ccn.com/dow-surging-awful-news-for-housing-market/
Bawahahahaha have you actually ready your article!
“ The average interest on a 30-year mortgage was 3.18% this week, up from 3.15% a week ago, according to a report released Thursday by mortgage buyer Freddie Mac.â€
That is the most desperate attempt I have ever seen or read to fool people into thinking that historic low rates at 3.18% is somehow decreasing demand.
It’s pathetic
Zillow economist Matthew Speakman said:
“After Treasury yields rose in recent days in response to some favorable reports on the labor market, service sector and factory orders, mortgage rates did the same. As reports continue to emerge that show the economy may be beginning a modest recovery, suddenly there appears to be upward pressure on bond yields, and thus mortgage rates.
It’s going to be ugly. Today is the first time since the Covid-19 market reaction settled down in March that interest rates truly have a reason to panic. Until further notice, this looks like liftoff. Things can change, but until and unless they do, you have to treat last week’s all-time low rates as the bottom of the market.”
Have not read a housing blog since I sold my home in Valencia, 10/2005. I found the last fool, he worked for Countrywide…He sold at a loss in 2018. I rented around SoCal for 10 years after that and then moved out of state and bought in 2015.. Everything is so much cheaper and easier. I see some of the same comments, everything is great, blah blah, I was reading before I sold. It will be worse this time..
Inventory in 2007/2008 in SoCal: 115k active listings
Inventory in May 2020 in SoCal: 30k active listings
Interest rates right now: 3-3.25% for a 30y Fix
Rates in 2008 were like 5-6%?
Back then you had NINJA loans. I recently bought and they required a ton of documents (paystubs, credit score, Origin of large down payment).
In my neighborhood (new construction) are many well paid professionals (doctors, executives, vp’s etc) do you think they give a crap if the market goes down or up?
Most of them can work from home. I haven’t seen one laid off waiter or stewardess who bought a house lately. Sry but some people will remain renters for a looong time.
And just like that, the nasdaq made an all time high.
I predict we will see Mr Landlords comeback in the very near future.
Poster realist should have listend to me and bought stocks. He could have made a pretty penny with this monster rally. My 401k recovered and is higher than right before covid. What a giant buying opportunity this was. I am glad I bought stocks in March and April but man do I wish I would have bought much more.
Remember when people here were predicting we won’t open the country until 2021?
Remember when they called the Great Depression 2.0?
Remember the housing market was supposed to crash in the second half of the year?
And Just like that…. the mega bears have disappeared again.
Yeah, I remember. I am still making that prediction, because the fundamentals still point in the direction of a severe recession. I could still be right, but of course I don’t know what will happen, so I could also be wrong. If I knew the future, I would not need to try and save money on my house purchase.
That leads me to point out the really annoying thing about your posts. You act like you know it all in a very smug, self-congratulating way, a true investment guru, who only was able to buy a house after inheriting money. But the things you post indicate that you are just guessing and making uninformed bets, and, moreover, you mostly just try to justify your ALLEGED actions in hindsight. In fact, I think half of sh!t you say you bought or sold is made up. I think you are a compulsive internet liar.
Good post, San Diego CPA. I’m really not sure what m’s deal is. It’s very strange, to put it mildly.
I, like you, am thinking there will be a recession because all signs point to one. Every market top ever has ended with the exact irrational exuberance that we’re seeing now.
As a cpa you should have known better. Don’t fight the fed. Don’t bet against the us money printer!
But don’t beat yourself up. There will be more buying opportunity in the next 5-10 years
Just remember, buy the dip in stocks. Also it’s always a good idea to buy RE as a place to live in. Don’t try to be a market timer. Have cash on the sidelines
It worked well for me
He’s just a troll.
😄 couldn’t agree more
Lol couldn’t agree more
M, I am a real estate bear and I am still posting here occasionally. I just sold my investment property in Portland, OR for $367,000 which was slightly befow its asking price. It really appreciated since I paid $150,000 for it in 2004. I have decided to pay my capital gains taxes rather than try to make an exchange–unless home prices suddenly start to fall soon. That means that I am expecting to see a large drop in home prices in coming years–greater that the $45,000 or so I expect to pay in capital gain taxes.
I think M is making very valid arguments. They are the same arguments Mr Landlord used for the last few years for a perpetual Bull Everything Market. M’s arguments are just a 180 turn from his alter-ego, Our Millennial. I find this amusing. It keeps the conversations going.
It could be worse. He could be saying the Illuminati with the Rothschilds have teamed up with the Lizard People to forma a sinister cabal and are controlling our brain waves with Sonic Screwdrivers while either intentionally killing us all with Covid OR possibly Covid doesn’t really exist since they control the MSM.
I wouldn’t know how to respond to that. That’s what I like about this blog compared to Zero Hedge.
Back to the point.
The Fed has promised to do ANYTHING to keep asset prices high. Negative Interest rates?
I am getting calls offering sub 3% 30 year loans and low 2% 15 year loans. These are still high compared to some other countries (Europe and Japan). This will stabilize housing prices
They also have to keep the 401K/IRA pensions inflated or there will be pitchforks (or worse).
Also, Cronies will be upset if assets drop too much.
Finally, based on history, the Spanish Flu pandemic in 1918/1919 killed 600K+ US citizens. Given the population then, even more horrific than Covid. Same economic business shutdowns during that time as now.
By 1921, the virus was magically gone or herd immunity developed. That was without a vaccine, antibiotics, respirators, etc.
I think we will have a rough 2 years with massive instability. Another Covid spike will happen just like when the cities reopened too early in 1918. Businesses will be shut down again and the stock market will re-plunge. The weak businesses will die. That’s my worst case if we don’t have a vaccine.
The housing market has a low-pass filter so I don’t think we will see that kind of instability but may drop 20%
After 2 years, we will recover and have another Roaring 20’s just like what happened in 1921.
2 years is a short time to own any investment. Especially a house.
Oh, Dear, Real Estate is Toast, Numbers Don’t Lie- CA Numbers show Markets Are Crashing Harder.
Oh, Dear, Real Estate is Toast, Numbers Don’t Lie- CA Numbers show Markets Are Crashing Harder. A report from Go Banking Rates. “The pandemic has caused people to slow down and rethink their approach to the homebuying process, said Rebecca Brooksher, an agent with Warburg Realty. ‘Everyone has a new perspective, so you are less likely to find the pushy broker or the buyer who will overbid because it’s the perfect house,’ she said. ‘Everyone is on their best behavior. People are grounded and know their priorities.’â€
“‘There are certainly prospective buyers who were actively scouring the market pre-pandemic that have now endured severe financial hardship, and may be forced to hold off on buying until they recoup funds that have been lost,’ said Jeremy Kamm, an agent with Warburg Realty. ‘The demographic of first-time homebuyers has likely shrunken to a certain extent, and therefore there is that much less competition, i.e. room for opportunity.’â€
“As competition shrinks and real estate inventory rises, homebuyers will have the upper hand. ‘As inventory that appeals to these buyers begins to increase as restrictions are lifted and business resumes, those buyers that remain active and interested will hold much of the bargaining power,’ Kamm said. ‘There will be opportunities for great deals to be made with sellers who understand the new environment that we are in, and are genuinely realistic about selling their homes.’â€
“In addition to having more realistic expectations, some sellers may give great deals to new homebuyers out of desperation due to their own changed financial circumstances. ‘First-time homebuyers may run into sellers that must sell to get their cash out,’ said Brett Ringelheim, a licensed real estate salesperson with Compass. ‘In these scenarios, the buyer might be getting a better deal due to unforeseen circumstances that occurred in the seller’s life.’â€
“In addition to low mortgage rates, buyers may be able to get better loan terms due to the smaller pool of buyers. ‘Lenders will be more likely to negotiate their fees and costs when issuing loans because there is a lower number of qualified buyers this year compared to others,’ said real estate attorney Rajeh A. Saadeh.â€
“‘The pandemic is making it easier for first-time homebuyers to find the right house,’ said John Castle, a realtor with Keller Williams. ‘The demand for short-term rentals has collapsed. Consequently, a large number of condominium apartments have come on the market, and condominium prices in the most expensive cities are down substantially.’â€
From Realtor.com. “As more people struggle to find their footing amid financial and economic uncertainty around the COVID-19 pandemic, many prospective first time homebuyers could be dipping into their down payment savings to cover their everyday expenses. Because of this, millennials — who make up the majority of all mortgage originations — may find their dreams of homeownership delayed until long after the coronavirus situation is under control.â€
“In fact, the average millennial would take 9 months to recoup a single month’s expenses that were taken out of their savings. If millennial renters are forced to dip into their down payment savings for several months, their transition to homeownership could be delayed by years.â€
“Adding to homebuyer challenges, some lenders are tightening their lending criteria by requiring higher credit scores and minimum down payments for certain types of loans. Major banks have recently changed their criteria for home lending by requiring borrowers to secure 20 percent down payments, significantly higher than the millennial median down payment of 8 percent. The 20 percent wall is likely too far out of reach for many prospective homebuyers, especially first timers, meaning these buyers will have to look for supported loans such as FHA, VA, USDA or Fannie and Freddie loans. The national median listing price in April was $320,000; a 20 percent down payment would be $64,000.â€
“Even though San Francisco has the highest millennial incomes in the country, it also has the highest expenses, primarily due to the very high cost of housing. Therefore, saving money becomes even more challenging in that market. In addition to the tight balance of income and expenses, homeowner hopefuls in these markets also face listing prices often much higher than the national rate. Eight of the top ten toughest markets had a median listing price higher than the national price of $320,000 in April.â€
“Moreover, if more major lenders increase their minimum down payment to 20 percent, millennials in San Francisco who were aiming for a target of 10 percent would need to save for an additional 16 years to meet that new lending criterion.â€
The Arizona Republic. “Banks across the nation felt headwinds even before the coronavirus pandemic hit, and a new, more rigorous accounting rule isn’t helping. Banks could face eroding profits on a scale they haven’t seen since the Great Recession. The October-December report marked a second straight quarter of declining profitability. Then the coronavirus pandemic hit, pushing the nation into a recession and raising the specter of loan delinquencies, defaults, bankruptcies and other fallout.â€
“Profits already are tumbling. Three of the nation’s biggest banks – Chase, Wells Fargo and Bank of America – reported combined net income from January through March of about $6 billion, down from about $21 billion in the same period one year earlier. The economic ramifications of the coronavirus outbreak weren’t fully felt in the first quarter. The impact for April through June will be larger.â€
“Many banks have started to adjust their earnings lower, reflecting a new accounting standard that requires them to estimate credit losses over the lifetimes of their loans, not just as losses accrue. It’s a big change that will require executives to factor in future losses under various scenarios and incorporating many factors.â€
“For the first quarter of 2020, Chase, Wells Fargo and Bank of America included roughly $17 billion in combined provisions or charges for credit losses, well above the $3 billion or so they had reported one year earlier and explaining much of the profit erosion.â€
The Star Advertiser in Hawaii. “‘I’m seeing more interest in single-family homes. Some buyers want more space, and many are finding that condominium maintenance fees are pretty high, even in the old buildings,’ said Margaret Murchie, a Coldwell Banker real estate broker who is based out of the Diamond Head Kahala office.â€
“Sales will pick up as more inventory becomes available, she said. However, whether pricing holds will depend a lot upon whether Hawaii’s high unemployment rates and weak economy cause too much inventory to come into the market at once, Murchie said. ‘If the economy doesn’t improve, people who are laid off or furloughed will think about moving. We could get such a glut of inventory that prices go down,’ she said. ‘We’re not seeing it too bad yet, but in the midst of the uncertainty, we are seeing it, depending on the seller’s circumstances. Some buyers are asking for concessions.’â€
From Socket Site in California. “With the number of homes newly listed for sale in San Francisco having outpaced the number of purchase contracts that were inked for the eighth week in a row, there are now 1,000 homes listed for sale across the city. That’s 40 percent more inventory than at the same time last year, another 9-year seasonal high, and within 4 percent of hitting a 9-year high in the absolute (keep in mind that inventory levels typically don’t peak until October).â€
“The percentage of listings which have undergone at least one official price reduction has been ticked up to 20 percent, which is five (5) percentage points higher than at the same time last year.â€
Like Taking Money From a Millenial, Easy.
More Bad News if You Recently Over Paid for a Home in CA – The Los Angeles Times in California. “David Geffen turned L.A.’s real estate market on its head once again last week when he entered escrow on a Beverly Hills estate owned by L.A. Olympics Organizing Committee president Casey Wasserman. Now details are starting to surface, and real estate sources say the media mogul is paying about $68 million for the ultra-modern mansion. It’s a staggering sum but still quite shy of the $82.5 million Wasserman was asking (and significantly less than his original price tag of $125 million).â€
1st Inning, man this is gonna hurt.
As I’ve posted before, you can’t deduce much from the price of ultra-expensive homes. Show me a photo of any vast estate in Bel Air or Beverly Hills. Is it truly worth $68 million or $125 million? Who can say? Maybe far less or far more.
House like that are not like normal properties which have a far more comps, falling within a much narrower range of prices.
Rodney King didn’t even take this bad of a beating- The San Francisco Chronicle in California. “Rents are down 9% from a year ago in San Francisco and over 15% in some tech hubs in the South Bay, according to a recent report by Zumper. That trend will likely accelerate as layoffs mount and workers, newly liberated by work-from-home options, flee the Bay Area for cheaper cities, according to housing experts. Owners are increasingly scrambling to get tenants to sign leases, offering months of free rent, signing bonuses, and other discounts.â€
CA swirling the toilet bowl, going down the schitter.
This has all worked as expected. The Federal Reserve will print an infinite amount of money to prevent asset prices from declining. Crappy, indebted American companies (think Boeing) are trading at all time highs thanks to Uncle Jerome Powell. Housing (which is worth something) will not collapse at all. The big fix is in, and the “this time it is different” doubters can bite it. America has moved on from working people and their “wages” as the basis for equity valuations. America has essentially nationalized the capital market and abandoned free market pricing. Corporate socialism reigns supreme in the USA, and personal responsibility is for rubes.
So, the lives of working Americans will get worse and worse, and asset holders will be fine.
Until working Americans learn how the banking system works, they will continue to live under the boot of capital. Until then, those of us with housing and stock will continue to party at their expense.
And sorry millennials, unless you inherited money — no soup for you!
Couldn’t agree more. Stocks and RE is the way to go! And bitcoin.
Love those boomers! Be good to them, you will be rewarded with a nice big inheritance!
It’s all fun and games until the rioters come to your neighborhood. The past few weeks were a mere taste of things to come unless things improve. Historically speaking, an unhappy populace has not worked out very well.
Spoken like a true boomer (or son of one trying to be like his dad). Worst generation in the history of humankind. Straight up vampires. Truly disgusting.
Your prediction could be right. It appears the Fed has dug in and views the deflation of this asset bubble as an existential threat.
I view the current situation as a continuation of 2008 recession where the problems were never addressed and the default response has been to just reinflate the bubble. Maybe that is the only option that is not catastrophic to the economy.
As a CPA you must like data. I encourage you to follow economists like Steven Thomas who track the SoCal housing market closely.
He just showed that demand is up 17% in the last two weeks. Yoy, demand is higher now.
Rofl. Sooo many beats predicted I bought at the peak, yet the housing market is stronger YoY. I am having such a good time! Cheers!
Uncle Jerome just triggered a 4.6% drop in the S&P 500, so far today.
For everyone who matters, there’s plenty more money on the way. Make no mistake, he’s going to go all in on stopping deflation, even if he has to throw every working American under 50 into a meat grinder to do it.
And you can see his point: there are massive protests all over America now, but nothing at the Federal Reserve. Probably not 1 in 100 people under 40 even knows what the Federal Reserve does. Financial illiteracy has a cost and these younger generations will spend the rest of their lives wondering where all the money went.
And to be clear, I don’t think this is right or fair — just how it is.
Prop 13 is unlikely to change. If property taxes go up, so would rents. And if there’s rent control, then many housing providers would either go under, sell or convert their buildings. And for many small landlords (who make up 60% of all rentals in CA), it would mean sell.
The end result would be less affordable housing, higher rental prices, and down the road less property tax income for local governments due to falling prices.
You can already see the effects of AB1482 (the rent control in CA), where new deals to build rentals are drying up, and the number of conversions is on the rise. Rent control means less affordable housing.
Changing Prop 13 would have similar consequences.
But I never discount the destructive tendencies of CA Democrats – they have a knack for doing incredibly bad things to those in need and the poor, all in the name of helping them. In reality, they just want more power for themselves today, future be damned.
Prop 13 is unlikely to change. If property taxes go up, so would rents. And if there is rent control, then many housing providers would either go under, sell or convert their buildings. And for many small landlords (who make up 60% of all rentals in CA), it would mean sell.
The end result would be less affordable housing, higher rental prices, and down the road less property tax income for local governments due to falling prices.
You can already see the effects of AB1482 (the rent control in CA), where new deals to build rentals are drying up, and the number of conversions is on the rise. Rent control means less affordable housing.
Changing Prop 13 would have similar consequences.
But I never discount the destructive tendencies of CA Democrats – they have a knack for doing incredibly bad things to those in need and the poor, all in the name of helping them. In reality, they just want more power for themselves today, future be damned.
Don’t touch prop13!
I enjoy my low house payments and like them to go down further not up!
Lower rates=I refi.
Property taxes are high enough in CA. Higher taxes are never a good idea.
Lower rates and therefore lower PI means I have more excess cash to spend on a rental or a pool or other stuff.
But M, you always said that eliminating Prop 13 would lower property taxes for recent home buyers. That were Prop 13 eliminated, taxes would increase for home owners who bought decades ago, but decrease for recent home owners.
Old Milli: For recent home buyers to pay less taxes, Prop 13 must be eliminated.
It’s not that you just changed sides. You even changed your “expert” analysis of the economic effects of eliminating Prop 13.
If your “expertise” was so off, on so many issues, only a few months ago, how can anyone trust your expertise now?
That’s easy. Why should I care what I said before I bought a house? Now that I am a homeowner and landlord my view has changed 🙂
The US benefits stock and RE owners. Keeping prop taxes down is a no brainer. Why would I want to pay more taxes? I use that excess cash to buy more stocks.
Given the state of the ekonomy; I dont see how Prop 13 revisions can be enacted on commercial property either.
Most commercial rentals are triple Net – tenant pays taxes, insurance. Now tell me, what small retail shops will be able to stay in business let alone pay higher taxes.
https://www.sfchronicle.com/politics/article/California-s-Proposition-13-ballot-fight-15293809.php
The folks who are trying to buy the house on our block told the neighbors that they own a small business a couple of miles away. They are open for business again, and have money from the sale of a condo. I hope they aren’t biting off more than they can chew with this house. Small business that is undercapitalized is pretty risky even under the best of circumstances, which I think we all can agree isn’t the present time.
This whole thing with the Floyd riots and the Covid shutdown is stressing our nation’s small businesses badly, and the internet business barons are the ones profiting. No wonder they give money to the Democrats and Black Lives Matter!
If you value freedom, try to patronize your local small businesses.
“If you value freedom, try to patronize your local small businesses.”
I agree! Went to a pleasant dinner at our favorite local hole-in-the-wall Mexican food restaurant last night. (10 feet away from other diners). I hope they survive!
confirmation- The Shit Has Hit the Fan- A report from Forbes. “What surprised Brian Carberry, Apartmentguide’s managing editor who crunched the numbers was, ‘some of the areas with significant rent decreases were located near more expensive major cities.’ Apartmentguide looked at annual average price declines on one-bedroom nationwide. Cities included in the top 25 rankings are Virginia Beach, Virginia, West Hartford, Connecticut, Santa Rosa, California, Huntington Beach, California, and Montgomery, Alabama.
“Heading west to California it is surprising to see five cities made the top 25. Santa Rosa, about an hour drive north of San Francisco, posted a 19 percent decrease with the average rent at $1,980. Consider West Sacramento one of California’s fastest-growing cities was at number one with a hefty rent decrease of almost 44 percent. The average price for a one-bedroom there fell by $1,628 to $2,115. In Southern California, Huntington Beach long known for surfing and casual living saw a 22 percent decline with the average one-bedroom renting for $2,194.â€
“The east bay city of Berkeley also saw a dip in rental prices. Berkeley ranked number twelve with a 22 percent decrease. Oceanside, California a beachside city about 38 miles north of San Diego is at number six. A hefty 26 percent rent decline brings the average one-bedroom down to $1,958.â€
“Carberry’s advice for renters, ‘Even some higher-priced areas are seeing declines and becoming more affordable. There was a construction boom in luxury rental properties around the country. Today they might have trouble filling those units. You may be able to negotiate a better rent because of that.’â€
“Well, that’s good news for renters and not so good for multi-family owners.â€
The Real Deal on California. “The average asking rent in Los Angeles County declined 3.3 percent in May year-over-year, the first major drop in rent since the Great Recession a decade ago. The drop followed April’s 0.8 percent year-over-year decline, the first since 2010. The coronavirus pandemic resulted in a ‘big dropoff in overall demand,’ according to RealPage chief economist Greg Willett.â€
“Some landlords may also be offering concessions such as free months of rent in lieu of dropping rents, allowing them to maintain higher asking rents on paper. That was already happening before the pandemic in Downtown L.A. where demand didn’t keep up with supply. The 4.5 percent decline in the Class B segment was the largest decline among the three segments. The company projects that rents will continue to fall on a year-over-year basis throughout the year and could reach 5.6 percent in the first quarter of 2021.â€
The Los Angeles Business Journal. “‘This is returning to our roots. We started out by buying distressed opportunities,’ said Reuben Berman, founder of Entrada Partners. Today, Berman added, Entrada is looking at buying defaulting loans and unsold properties that were on the market before the pandemic ‘with a pricing adjustment post-Covid.’ The company has a $300 million portfolio, largely in Texas. Berman said Covid-driven market dislocation is creating ‘opportunities across the country, and we are interested in areas outside of Texas.’â€
“‘The dislocation is so widespread it’s almost like the entire country’s for sale right now. The opportunities are everywhere,’ he added.â€
“Berman said one of the biggest challenges is making sure not to buy too soon, before prices bottom out. So far, he said, prices are down about 5% to 10%, but buyers want a 10% to 20% reduction in multifamily, industrial and office properties, and even more for retail and hotel properties.â€
“MJW Investments has created a $500 million fund to invest in value-add multifamily and student housing, joint ventures, and distressed debt and note sales. Mark Weinstein, MJW’s founder and president, said the company was ‘making lots of offers, but nothing is really in escrow.’ ‘We’re finding there’s a lack of realization on part of the sellers that their income stream is diminishing, rents are declining and vacancies are increasing,’ he said.â€
Oh Boy, Got Popcorn, This is Gonna Be a Bloodbath for HomeDEBTORS in CA
I agree with you that there will be COVID related sales and defaults, but due to the ridiculously low interest rates, a lot of people will be able to refi at lower and lower payments also. And there will be folks with some money saved who will jump in to take advantage of low interest. Not all the low interest rate buyers will be rich speculators. That is what happened on my block. (See previous posts.) With buyers waiting in the wings (the family moving into my neighborhood lost out on 6 houses before snagging this one) the price drops will be minimal except in marginal areas. I could be wrong, but I’m betting inflation over deflation.
Will the bulls say that housing prices are also not affected by declining rents? Lol
“What surprised Brian Carberry, Apartmentguide’s managing editor who crunched the numbers was, ‘some of the areas with significant rent decreases were located near more expensive major cities.’ Apartmentguide looked at annual average price declines on one-bedroom nationwide. Cities included in the top 25 rankings are Virginia Beach, Virginia, West Hartford, Connecticut, Santa Rosa, California, Huntington Beach, California, and Montgomery, Alabama. Take the Boston suburb of Peabody. Located 13 miles north of Boston, Peabody saw an 18 percent decline to an average monthly rent of $2,276. That was a $512 price drop.â€
Heading west to California it is surprising to see five cities made the top 25. Santa Rosa, about an hour drive north of San Francisco, posted a 19 percent decrease with the average rent at $1,980. Consider West Sacramento one of California’s fastest-growing cities was at number one with a hefty rent decrease of almost 44 percent. The average price for a one-bedroom there fell by $1,628 to $2,115. In Southern California, Huntington Beach long known for surfing and casual living saw a 22 percent decline with the average one-bedroom renting for $2,194.
The east bay city of Berkeley also saw a dip in rental prices. Berkeley ranked number twelve with a 22 percent decrease. Oceanside, California a beachside city about 38 miles north of San Diego is at number six. A hefty 26 percent rent decline brings the average one-bedroom down to $1,958.â€
“Carberry’s advice for renters, ‘Even some higher-priced areas are seeing declines and becoming more affordable. There was a construction boom in luxury rental properties around the country. Today they might have trouble filling those units. You may be able to negotiate a better rent because of that.’â€
“Well, that’s good news for renters and not so good for multi-family owners.â€
https://www.forbes.com/sites/ellenparis/2020/06/09/top-25-cities-with-the-highest–apartment-rent-decreases/#366c80a73fa3
I noticed that the rents in single home market – softened even before COVID-19 hit in SD area. I got into my new lease in January after spending like 3 months before that on Zillow and Redfin.
The houses for rent were sitting longer and, for example, the house I now live in went from $3,500 (zestimate) to $3,400 to $3,300 to $2,995 within 3 months, at which point I jumped at it.
Either way, I expect SoCal rental market to soften A LOT by year end. Would not be surprised if I saw 10% decline by fall. So many things are pushing rents down right now.
By the way M’s stock rally is over. ” A somber economic outlook from the US Federal Reserve and the 2 millionth coronavirus case in the United States has investors questioning whether they had boosted the stock market too far, too fast.”
Yeah I rent in Fletcher Hills for $2,900/mo. Had to renew my lease on June 1, was sure wishing it was 4-5 months later. Although I still only had a $50/mo increase; the landlord knows he was in for an uphill battle getting another renter in during these conditions. I contemplated playing hardball, but I just don’t want to move. 2 more years, our oldest will be out of high school. And like you, I’m pretty much going to buy no matter what. Hopefully there will be a crash by then, but if not I may just bit the bullet and join the drunken party of QE forever. I’m 45, I can’t wait forever to buy a damn house (again).
M’s stock rally is over. †A somber economic outlook from the US Federal Reserve and the 2 millionth coronavirus case in the United States has investors questioning whether they had boosted the stock market too far, too fast.â€
Milli will say that’s fantastic news, because … well, he’ll think of something.
You are spending 36k a year on renting a house?
That’s more than my gross PITI. My net payment is of course much lower due to a renter in the granny flat.
Where are you located?
You are calling an end to the stock market rally because of one red day?
Some of my stocks are up 100% off the March lows. If stocks continue to decline I will buy more.
Are you saving a lot of money each month? You better put that aside and save for a down payment. Renting long term in SoCal is financial suicide.
Reading these comments from guys like Josh and Millie just prove my point even more. NOBODY has an unlimited time horizon when it comes to buying RE in socal. Putting your life on hold for years or decades and then hoping, wishing, praying for a certain outcome is asinine. Buy when you can afford it and plan on owning for the longterm and then tune out the noise. This is what millions of others have done. With the recent pandemic and civil unrest, having your own place (as in you own it) to hunker down and provide shelter and stability has never been more important.
To everyone who is saying that the Fed is going to make it Ok.
The stock market is crashing back down again, even AFTER Powell basically promised zero interest rates and unlimited money printer in the foreseeable future.
The only way I see home prices holding is through dollar devaluation. But then again having appreciation through inflation is not really a benefit, if money made on your real estate investment buys you less stuff, right?
At some point, QE becomes deflationary because the population loses faith. We’re at that point it seems. I agree, the only way this bubble stays here is through currency devaluation. I just don’t see the FED going THAT far. Nothing in it for them. Let it crash, and then proceed with more QE. That’s how they got all their rich buddies rich the last couple of cycles. I see that happening over and over as the new normal.
The past month+ was just a bear market rally. The economic news was uniformly bad but day traders bid up dumb plays like Hertz and hedge funds covered their shorts. If anything the reality of economic destruction has yet to be accepted – lots of businesses closing, municipal budgets will get cut and everyone will have a lot less income. RE being 30% overvalued (at a minimum) is the fattest pig in the butcher house.
Lol broodwich
Yeah, expected market time for San Diego is 42 days but I guess who cares about data if some bubble boy on the internet tells you to stick a fork in the market.
Keep waiting for the crash. Won’t be this year my friend
POOF! Just like that, there went 1.5 million of those 2.5 million jobs that were “created.”
https://www.nytimes.com/2020/06/11/business/economy/unemployment-claims-coronavirus.html
But nothing to see here, none of these people were buying houses anyway. And the Fed is going to keep QE going forever, because they really care about real estate bulls and their houses. Lol.
If the bulls weren’t so smug and arrogant, I’d feel bad for them. Instead, I’m glad that they’re going to get a lesson in market cycles. Some people just never learn.
You want to get wealthy? Buy stocks and Real estate.
Forget the crash boys. They wait and wait and wait. And on downturns they wait for a bigger downturn. I have been there and don’t miss is 🙂
Now I own a beautiful brand new house and are up highly since March. You can do it too. Buy stocks on red days. Dollar cost avg. slow and steady wins the race.
Whenever stocks are in trouble they get another boost. The US rewards asset holders of you haven’t noticed yet. You are screwed if you don’t hold stocks or RE.
holy crap….the housing market is insanely hot right now.
no inventory, bidding wars, super low rates, houses are selling like hot cakes…..do you want to see the actual data?
Q1 was the perfect buying opportunity….now you are competing with other buyers.
Thats the problem with bears, even if there is a great opportunity to buy, they dont. They keep waiting and renting….
I couldn’t resist….expected market time in San Diego…..if you are a bear, you better take a seat right now:
42days!!!!!!!! 42days!!!!!
Are there still perma bears that predict a crash this year???? Laugh out loud!
Karin, yes, I am familiar with Deagel Report. In regard to the article, it just confirms what I said about big cities and the CA transplants – voting the same way like in CA expecting different results. Some people never learn even when they see the result with their own eyes. It is like hitting your head on wall a hundred times hoping that eventually it will hurt less.
Flyover, re: the Deagel report, our population goes from the current 327 million to just under 100 million by 2025, just 5 years from now. When I researched it further, the two primary reasons given for the population decrease were suicide and ‘relocation’. Relocation to where? Maybe to Hillary’s ‘Fun Camps for Adults’?
Relocation might equal deportation and closure of any immigration. I could believe that under President Trump.
Mass suicide in 5 years? Not many cults around to cause this. The working poor under Trump might all become homeless and commit suicide. I would consider that homicide.
Bob, seen it all Before – The working poor were poorer under Obama than under Trump till liberal democrat media created all the hysteria with the virus and demanded to ruin the economy with lockdowns due to TDS.
Some pioneers of liberal utopia just prepared some prime RE for you in downtown Seattle; no police, no justice system, free college education, no final exams, just pure socialist democrat paradise. Too bad they were not more inclusive in their new territory to include Amazon, Microsoft and Bill Gates house of 66,000 sf; that alone can house the whole tribe and give him some diversity so needed for increase in RE prices. The reason Bill doesn’t invite them over to “share” is because they don’t practice social distancing and they don’t wear a mask, but that can be solved. Seattle, under new leadership is very much up and coming – good place to invest in a business and RE. Very soon it will look like Mogadishu; the new millions invited from Somalia want to feel like home. Also an added benefit are the new Somali-Nigerian fusion restaurants. Hill billies like me, don’t have the privilege of so much restaurant variety; on the other hand we still enjoy our white privilege to pay taxes to help the new socialist democrat being created in our back yard.
Good thing the media just let the governor and the mayor know what is happening in their backyard; otherwise they claimed they didn’t know about it. I hope you will reward me handsomely for giving this RE tip before even the Governor of WA knows about it. Knowing how much you like the socialist democrats I trust you will be generous.
Flyover,
I don’t know how this is related to the Deagel Report?
But with respect to CHAZ, Fox News has already been exposed with spreading Fake News. Shame on the Conservatives! Good thing we still have honest people in the MSM to expose this.
https://www.seattletimes.com/seattle-news/politics/fox-news-runs-digitally-altered-images-in-coverage-of-seattles-protests-capitol-hill-autonomous-zone/
Bob, you didn’t mention anything about Deagel Report in your comment.
You also provided another link to an article mentioning another socialist Democrat city burning- Minneapolis.
With leaders like socialist democrat from Somalia – Omar, no wonder it looks like Mogadishu.
It doesn’t matter what socialist democrat city you provide, it is just a matter of time till it turns into a Mogadishu. It is inevitable. Same policies, lead to the same outcomes.
Sry for spamming…I just can’t get over it.
We had the corona crisis/depression 2.0, murder hornets and now riots and autonomous city blocks.
And what’s the housing market doing? Bidding wars. Lol
M,
If you don’t see how crazy it is, then how are we supposed to help you?
Help me with what?
Understand that low inventory and historic low rates fuel the market no matter if 40M are unemployed?
The avg joe hasn’t been buying homes and won’t be buying homes. Lower sales doesn’t mean lower prices. Inventory and rates dictate prices.
M, You fail to understand the deeper significance of 40M unemployed. Or just ignoring it.
https://corelogic.com/blog/2020/6/single-family-rent-prices-post-lowest-growth-rate-in-more-than-nine-years.aspx
Rents went up YoY…. yep just a few more weeks and you can buy that dream home for 70% off. Just keep that dream alive.
The house in my neighborhood that is being sold has a termite tent over it this weekend. Both Redfin and Zillow have it listed as awaiting loan approval. My guess is that the tenting was needed to get the approval, and it will be closing soon. We’ll see what it sold for probably before the end of June.
They need to establish CHAZ ala Seattle in LA, SD, SF and Sacramento, preferably within the mansions of these mayors and governor. That would be a party. Antifa are you listening.
I read the rioting maggots tried to post up at the mayors mansion in Seattle a few days ago. And just like that, they were designated terrorists, lol! Kinda like the whiplash about the covid planDemic. Guy paddling in the ocean alone or a barber trying to give people haircuts is public enemy number 1, but thousands of rioters destroying businesses under the guise of protesting are a-ok.
The powers (posers?) that be want a civil war. They want the cops to quit and the ferals on the rampage.
Bad enough that the police aren’t shooting the rioters. Even worse, if the rioters attack you with deadly force, and you defend yourself with deadly force, you will be prosecuted.
Riot, burn, assault innocent people — just fine.
Defend yourself, family, or property from rioters — you will be prosecuted.
Retail core sales data positive YoY now and housing confidence index positive as well.
Yep, the Great Depression 2.0 is almost here.
Oh and stocks, remember when we had a Down day and our CPA called for the W crash?
That story changed quickly. Perma bears jumping on anything they can find these days.
And what happened to poster “bigrecession in sightâ€.
His name used to be “no tank in sight�
This guy completely disappeared. Lol
@joe R
I am a nurse from the inland empire, nurses do make more in LA than the IE. CNAs are paid minimium wage. LVNS are not, but my point was, that LVNS are not paid a living wage in california. average pay for LVNS in the inland empire is very low. anywhere from 18-25 a hour typically. Kaiser pays LVNS well, but kaiser also happens to be one of the few remaining hospitals that still uses LVNS, as most hospitals phased out LVNS and only use RNs. Kaiser is also extremely difficult to get hired on, as every LVN in california wants to work there. The majority of jobs that are available to LVNS are Home Health Jobs, or Working in SNFS (skilled nursing facilities) aka the place grandma lives for a few months before she dies. Most of these jobs are low paying LVNS jobs around 20 a hour or so. I have been a nurse for 10+ years, I currently am paid 25 hr, which is on the higher end of the spectrum for LVNS in the IE.
The whole point I was really trying to make, is that our essential healthcare workers, CNAS and LVNS are underpaid, despite being “ESSENTIAL HEALTHCARE WORKERS” they are basically paid shit. Because we are paid shit…….I am not going to and never will be able to afford to buy a house in california on a LVNS salaray……….and that is what LVNS have in common with the min wage workers…….they were never going to buy a house……and neither are our essential healthcare workers. I am not buying a 300K house on $25 a hour……..no one is buying a home in LA on 50K a year.
Riverside LVN Salary:
https://www.glassdoor.com/Salaries/riverside-lvn-salary-SRCH_IL.0,9_IM727_KO10,13.htm
Lets say Im wrong and your right…….how many nurses are going to be buying homes in LA on 50k a year? NONE……..so you can add LVNS to the list of unerpaid workers that werent going to be buying homes whether this covid19 thing happened or not……..and in fact………I am taking home exactly $250 a month more now on Unemployment than when I was working thanks to the $600 a week stimulus…………god bless america!!!!
What is an ESSENTIAL health care worker? Apparently not dentists or optometrists. Both my dentist and optometrist’s offices were closed for Covid-19.
Are LVNs essential? I’m not sure if there’s an objective answer.
Liquor stores are apparently essential, because they were kept open. But not dentists. Go figure.
Los Angeles median household income: $62,474
Los Angeles median home sale price: $760,200
Is unemployment in LA even as low as 20% right now? How many LA mortgages are in forbearance? Clearly this is not sustainable. I predict a correction within 2 years, but nobody really knows. It’s true there is a shortage.
In IE, there’s plenty of land to build if you don’t mind the heat. Or, frankly, Texas if don’t need amazing beaches or have family ties. It’s like IE but with grass, half the price, no income tax and friendly neighbors. $400K can put you in 3,000 square feet on an acre close to the city. Or, $250 for something more typical.
IE…..no high paying jobs unfortunately.
Folks in Temecula/Murrieta earn 20% more than in LA but a three hour round trip to SD or OC for work is really brutal. Nice opportunity for those who work from home. Certainly nicer than the rest of IE and much of Los Angeles (weather aside).
@ joe R
wishfull thinking……how many married couple LVNS do you think are out there? How many couples do you think are out there that work in the same job field, or where the couples make equal salary? I can assure you there are a ton of LVNs out there making 50k a year, with a spouse who makes 25k a year. Again point being, they are not buying a home and never were. Essential healthcare workers should be able to buy a house, and not be in the same position as burger flippers, neither is buying a house and never were. So work your life away to pay over priced rent in some shitty apartment complex, why your neighbors dont work and get everything for free for having a bunch of kids. Everything is just screwed up. Lower middle class work to never get head with no possibility of getting ahead.
Why can’t you work towards becoming a RN? They make good money.
Also, are you investing a little bit of money in the stock market? Dollar cost avg for 5-10 years and you should have a small downpayment ready.
Nurse,
There is much truth to what your a saying. The key is a BS/BA degree.
An LVN and CNA are critical jobs but require an Associate Degree. They make 30K-50K less than an RN with a BS degree.
A Master Sergeant in the Army makes 30K-50K less than an officer with an BA/BS degree with the same number of years experience. As they often say, they are not officers and work for a living.
An Engineering Tech makes 30K-50K less than an engineer with a BSEE degree.
Are these fair? No. After I got my BSEE, I relied on my EE Tech for a lot since they had 15 years experience. They were paid much less.
The key is the BS/BA degree. It opens so many doors and comes with higher pay.
These are the rules. Whether it is fair or not.
I believe that wages should be higher so everyone can afford to buy a house without some right-wing Republican telling you that you need to get married with dual incomes to get ahead.
In summary, Until this economy becomes rational again, the fastest way for you to earn more to afford a house is to go back to college for a BSN for 2 more years.
2 ways to solve this problem. A Huge crash like in 2008 or more earned income.
More earned income is under everyone’s control. Both would be ideal. Our Millennial was predicting a crash. M has changed his mind. I think a 20% drop is possible in the next 2 years. After that, the Roaring 20’s will happen again before an enormous crash. Can you wait 10-15 years?
CNA salaries are 50% more than fast food cooks, but not up there with LVNs:
https://www.salary.com/research/salary/alternate/cna-salary/los-angeles-ca
So they won’t be able to afford a house, I’ll grant that, but they will live a lot better than a fast food cook with about $12K per year more income. And they may be able to put away savings in a retirement account that can appreciate over time as much as housing. Remember, with a mortgage, you’re paying a lot of interest on the borrowed amount. You are basically betting that we will have massive inflation that will make the paper value of the part that the bank “owns” go way up and that it will accrue to you since what you owe isn’t indexed to inflation. A lot of people on this blog are predicting a major deflationary catastrophe that will hammer housing. So an IRA with a mix of bonds and stocks might better protect your future? Who knows?
Yup, CA Housing is DEAD, Especially when a Kardashian is your example.
From E! on California. “How does one sell houses for a living when they can’t even leave their own? That’s something Million Dollar Listing Los Angeles star Josh Altman was forced to figure out when the coronavirus pandemic hit earlier this year. ‘It is a buyer’s market right now,’ Altman noted. ‘It was dead before. And you know, we just kind of roll with [it]. We got to adjust.’â€
“He continued, ‘Because rates are low, right? So you see people like Kylie Jenner, who obviously is extremely wealthy, right, saying, ‘You know what, now’s the time to buy. It’s a buyers market, I can get something that might have been 25 million for 15 million.’â€
The Los Angeles Times in California. “Demi Lovato couldn’t quite turn a profit on her Hollywood Hills home. After shelling out $8.3 million for the sleek three-story in 2016, the singer-actress just sold it for $8.25 million, records show. The sale wraps up a multiyear effort from Lovato, who first asked $9.495 million for the property in 2018 before trimming the price to $8.995 million last year.â€
The Santa Fe New Mexican. “Is it a doomsday scenario for vacation rentals in Santa Fe? Some rental owners and managers think so. A draft city ordinance would tighten regulations for short-term rental properties, in part prohibiting new permits to be issued for units in residential areas that lie within 75 feet of an existing rental. The goal of the provision is to limit the density of vacation rentals in residential neighborhoods, the draft ordinance says.â€
“‘It’s just a complete decimation of short-term rentals,’ said Richard Woodruff, co-owner of Adobe Casitas Vacation Rentals, who manages 18 short-term rentals in the city. ‘If you look at the turnover of homes in Santa Fe, over the longer term, four to 10 years, a majority of short-term rentals would not be granted licenses,’ he said.â€
“As of May 28, Santa Fe had 830 permitted vacation rentals — 743 in residential areas and 87 in areas zoned nonresidential, according to city data. Woodruff said he has analyzed how short-term rental properties are situated and believes as few as 250 would comply with the 75-foot rule as ownerships change.â€
From Inman News. “April rent prices grew at the lowest level in nine years — a drop caused by widespread, pandemic-induced unemployment. Experts had been predicting the drop in price growth as the coronavirus pandemic closed down large swaths of the economy and put millions in industries such as travel and hospitality out of work this spring. Unemployment in April reached an 80-year high, and tenants struggled to pay rent while owners in all but some luxury markets struggled to find tenants to pay the same prices that they had asked in the past.â€
“‘As the pandemic-induced recession took hold in April, the single-family rent index posted its lowest growth rate in over nine years,’ said Molly Boesel, principal economist at CoreLogic. ‘While disruptions in the economy affect all parts of the housing market, the impact can often be seen in the rental market sooner than the for-sale market. This means changes in rents can foreshadow changes in home prices.’â€
From Crain’s Cleveland Business. “New data from Solon-based MRI Software, a producer of real estate software, underscore the way the COVID-19 pandemic is reshaping the U.S. multifamily property market. Among the trends it identified: Lower prices: Pricing for new leases of 8-14 months decreased by 5% in May 2020 compared to May 2019. Last month’s pricing is also 7% lower than that of February 2020.â€
“Wider use of credit cards for rent payments: Card usage in May was 58% greater than that of February 2020. Brian Zrimsek, industry principal at MRI, in a statement raised one red flag, noting, ‘The use of credit cards could signal increased risks if residents are paying with cards because of restricted cash flows as opposed to a desire to accumulate reward points.’â€
From Austin Culture Map in Texas. “The impact of COVID-19 has not been lost on Austin’s hot housing market — including the rental sector. When the pandemic hit Texas, Austin’s upward trend of rent prices stopped. These losses are even more significant because they have occurred during the traditionally strong summer rental season.â€
“In order to fill apartments, some landlords are offering concessions and making deals they would not have pre-pandemic. One condo renter recently reported that he was able to negotiate a three-year lease for new construction in a very hot area, even though he did not want to move in until September. The landlord even agreed to leave the property vacant (without trying to find an interim tenant) until the fall.â€
From Community Impact in Texas. “Median house prices in five of the seven ZIP codes in The Woodlands area decreased in May compared to the previous year, according to data gathered by Community Impact Newspaper. House prices increased by about 5% in the 77384 and 77386 ZIP codes, and the largest price drop occurred in 77389, a 17.55% decrease.â€
CA Housing Prices Headed LOWER, Much LOWER.
If people want to read the Housing Bubble blog, they can go there. You needn’t paste all their articles here. It’s annoying. It’s even getting to be M level annoying.
The ONLY thing that will drive down prices in CA is higher rates. That’s all.
Inventory continues to decline….2% lower since last week. It’s getting scary
Funny. I see inventory exploding. I follow several markets on Redfin. Every day I check in, look for new listings, and it’s a flood of new homes. Every day.
Son of a landlord,
What are the zip codes?
Or if you won’t give me that, can you let us know if it’s within LA’s borders?
Not so much L.A. Northern Idaho, Las Vegas, Scottsdale, AZ, parts of Washington east of the Cascades.
It seems that many expensive resort areas, among mountains and lakes, had a lot of AirBnbs, which are now being dumped. This seems an excellent time to buy property, especially a condo, for those who want a second home in a resort area. Not to rent (AirBnB is dead for now), but as a vacation or retirement home.
Hmmm, inventory IS rising in Santa Monica. Three high-end townhouses (built after 2000, listed in the $2 million range), all north of Santa Monica Blvd, were listed within two days. Buyers are beginning to have choices.
Ah! Thanks, that makes sense now. So you were comparing areas in other states to my statement that was solely for SoCal. I only track SoCal.
I like those places you mentioned. A friend of mine sold his 1+ million dollar condo in the Bay Area and bought a very nice home in Idaho. He’s happy and had lots of cash leftover.
I might have to look into buying a rental out of state. I just don’t like the idea of being far away and having to call a contractor for everything.
SoCal active listing last year 43k. This year 29k and in 2007 we had 115k.
The market is freakin hot in San Diego for instance. Bidding wars and homes sell within days.
After a month on Redfin and Zillow with a contingency offer going through the process, both sites now say “Pending”. The termite tent left yesterday. Guess it should close in a week or so. I’ll bet it went for full price or more. Bulls and bears stay vigilant, I’ll give you the final update soon.
Remember this Santa Monica house I posted in a previous thread: https://www.redfin.com/CA/Santa-Monica/254-17th-St-90402/home/6770883
North of Montana. Sold for $2.9 million. Some were shocked at so much money being paid for such a small house.
I walked by that house yesterday. It already has a PENDING DEMOLITION sign out front.
Whoever paid $2.9 million for it is about to pay several additional million to tear it down, and build a new house on that lot.
I also posted prior that the land value North of Montana for 7500 sqft lots is $3M.
Bawahaha
Purchase application data…..folks…..not only a v shape recovery. No! Better!
11 year high….and 21% growth year over year!
Un-freakin-believable! Btw., This is a forward looking indicator.
Demand is stronger during this covid depression 2.0 than it was last year!
It must be miserable to be a housing bear these days!
Calm down. Just three months of applications compressed into one month.
A V is 1/2 a W.
I predict a W. But even a W means M made a good choice to purchase a house.
This Covid economic impact will go away within 2 years. Just like it did in 1918.
There are hoards of businesses waiting to hire their minimum wage workers back.
These are not the people who are buying houses. The people buying houses have been working from home with six figure incomes. They have been saving more for a down payment because they have avoided $500 bar tabs during this time.
The stock market is lagging a bit in the DOW/S&P500 but if they had NASDAQ stocks, they are now extremely rich with massive down payments compared to last year. Thank you Uncle Fed for all of the free 0% interest money sloshing around!
This is not a jobless economy. There are 30M+ jobs waiting. As soon as we can avoid a W, we will have a Roaring 20’s again! At least until 2029.
Sorry, Hordes
M,
Please remember Japan in 1989, dotcom in 2000, housing crash in 2000, and Covid in 2020. The market crashes every 10 years.
And the SoCal housing market is especially cyclical. It looks ripe for a correction. We’ll see how things look in two years.
Every ten years huh? Like an unwritten rule?
Sounds to me we have another bull market until 2030!
Just stop parroting Our Millennial. He said this repeatedly 6 months ago. Housing Crashes every 10 years. The new M is retracting this statement.
I’m not sure.
The Fed is now actively keeping housing values high. Interest rates keep dropping, Capital is sloshing in the stock market to keep stocks high for large down payments on houses.
I don’t think we have ever seen this before. I’ve never seen it before.
I suspect when this all comes crashing down, there will be hyperinflation and a loaf of bread will be $100 and a 1960’s crapshack will be worth $10M. Buy Now! 🙁 Crapshacks are only 600K now.
I Take one of my comments back.
The Fed is trying to keep asset prices stable in a bubble market. This will work if typical inflation is allowed to catch up.
I have seen this happen in an uncontrolled inflationary economy before.
My parents bought a house in 1975 for 45K. They sold it in 1988 for 300K. A 7X increase in price over 13 years. That was uncontrolled inflation and not a bubble. That same house is now worth 1.2M according to Zillow in 2020. Only a 4X increase in price over 32 years. Are we really in a bubble?
Yes, M, every 10 years just like you and I can rarely make it to 100 years old.
Seen it all before Bob, Thanks for your posts! I enjoy reading them.
The housing market in 2020 isn’t in a bubble.
When my parents in law bought houses 25-30 years ago, their 100k houses seemed expensive to them.
I just bought and when you put price in relation to income and interest rates, my brand new house doesn’t seem that expensive.
The bubble I have experienced had similar attributes to previous bubbles.
People fomo in. The 2017 bitcoin bubble had a parabolic price movement and shitcoins were going up in price by 100, 200, 300% in a single day!
You could have thrown money at any coin and would have made a fortunate for a short amount of time until it all crashed down.
It was similar in 2005/2006 with the housing market. Buy now or be forever priced out. I didn’t experience it myself but read a ton about it. People were rushing in to get a piece of the pie before housing becomes so expensive that nobody can buy anymore.
Or the dot com bubble. Anything with .com was a gold mine. Same as above. I only learned about it later.
In 2020 we are nowhere near a bubble with the housing market. Ask the majority of renters if we are in a housing bubble. They say yes, but they don’t buy. They all wait until it crashes down. That’s the opposite of what happens during the last stage of a bubble. In the last phase, everybody rushes in to buy. The truth is these renters would be buying if we wouldn’t have strict guidelines to ensure only those that can afford it actually buy homes.
If we were in a housing bubble we would see extreme price movements at the later stages.
Housing feels expensive for those that can’t afford to buy the dream house they want at the preferred location. If they would go out of their comfort zone and move 10-15 min away, the same house magically reduces in price.another way of saying it’s all about location, location, location.
M, I somewhat supported you back when you were our beloved Our Millennial and I somewhat support our beloved M now. There was an element of Truth in both of your phases.
It becomes an honest debate.
Nothing you said was wacky before or now. It was all based on fact and history.
My crystal ball is broken. I don’t know how this will all turn out but I will contribute my opinion like you and we can all decided on the blog on how to proceed.
If we have a Covid vaccine tomorrow, M will definitely be correct. If we have a Covid vaccine a year from now, Our Millennial might be correct.
What we know based on history, that the Spanish Flu that killed nearly 1M in the US in 1918 disappeared in 1920 without a vaccine and the Roaring 20’s started. We didn’t truly crash until 1929 which launched the Great Depression.
If you bought a house in 1918 during the peak of the Spanish Flu, you were doing very well until 1928. In 1929, you were not. 10 Years! Sounds like a normal cycle.
Yup, it’s a FACT, Housing Headed LOWER- No ‘V’ Here – US Housing Starts Hugely Disappoint
https://www.zerohedge.com/personal-finance/no-v-here-us-housing-starts-hugely-disappoint
Like an old man slip into a warm bath, slowly sinking.
Yawn
Only a Fool would argue with numbers like this, CA Housing Tanks Hard 2020
111,810 vacant properties in LA, CA housing sales DOWN 41.4% from previous year.
And you know what they say about Fool, he’s always the last to know.
From My News LA in California. “The Los Angeles City Council took a preliminary step Tuesday toward putting a vacancy tax measure before voters that would be aimed at compelling landlords to put vacant units on the market to alleviate the city’s housing crunch. According to Councilman David Ryu’s office, the U.S. Census Bureau estimates there are 111,810 empty housing units in the Los Angeles.â€
The Orange County Register in California. “The coronavirus lockdown walloped California house sales in May, resulting in a 41.4% drop in transactions from the previous year, the California Association of Realtors reported Tuesday. It was the biggest year-over-year decrease since November 2007. Median house prices, meanwhile, also fell from year-ago levels, the first such drop in eight years. The statewide median house price fell for the first time since February 2012, dropping 3.7% to $588,070.â€
The San Francisco Chronicle in California. “The coronavirus pushed Bay Area home sales off a cliff in May. The number of existing, single-family home sales that closed last month fell 51.1% compared with the same month last year and the median price dropped 2.5%, according to the California Association of Realtors. ‘San Francisco is one of the most beautiful cities but between COVID and restaurants and bars closing down, that romantic feature is gone,†he said. ‘Now (they’re) working from home in a two-bedroom apartment and it’s like, ‘Get me out of here,’ Compass agent Paddy Keohe said.â€
“Chris Meadors, a Compass agent in Napa, said, ‘The only phone calls we have received in the last three months’ are from people wanting to move from San Francisco to someplace like Napa County.â€
CA Housing Tanks Hard 2020
You need to change your name. You couldn’t be further from reality.
Do you even know what’s going on in the real world? There is no inventory. Buyers are in bidding wars and houses sell way above asking prices. Prices are going up, up and up.
Do yourself a favor and submit an offer at asking price. You won’t even get a call back.
Here’s the chart of $SPX (S&P500) vs GLD (Gold ETF) since the peak of the S&P500 in February. I added 9 & 25 day moving averages for the S&P. This chart has been quite interesting, and I’ve been using it to adjust my 401k contribution percentages.
https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Index&symb=%24SPX&x=33&y=14&time=100&startdate=2%2F19%2F2020&enddate=6%2F18%2F2020&freq=1&compidx=aaaaa%3A0&comptemptext=GLD&comp=GLD&ma=3&maval=9%2C25&uf=0&lf=1&lf2=0&lf3=0&type=64&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=15
Since early April, every time the S&P 500 hits the 25 day moving average, it seems to rebound (support level). And GLD has been pretty much flat since early April. (Up about 4-8% since the peak of the S&P500.) We seem to be in the doldrums, waiting for the other shoe to drop.
Retail auto sales rebounding to pre-covid levels….
Yep, folks, the Great Depression has been delayed.
Stay off of zerohedge and get on the train!
CA Dumb- 50% PLUNGE CAR SALES
https://www.bloomberg.com/news/articles/2020-04-22/carmakers-headed-for-50-sales-plunge-can-breathe-sigh-of-relief
Dude, who are you trying to fool.
Your article is from
“ April 22, 2020, 11:43 AM PDT
Updated on April 22, 2020, 12:45 PM PDTâ€
We are in the middle of June right now and the car market is rebounding from front he lows.
St Louis financial stress index below zero……not a good thing if you are a bear.
For those that don’t look at data and hope for the crash:
Great Depression is just around the corner. Just a few more weeks and you can buy real estate for 70% off. 😉
30% off in two years. 2014 was a reasonable time to buy in CA. Nobody really knows what will happen. Not with the housing market, not with the stock market — not with anything. We’re all guessing.
That would be sweet. I will buy a rental 20% off. Don’t even need 30% discount 🙂
Yah, Buying in CA is a BAD Idea, and Millenials are Taking it in the Shorts- A report from National Mortgage Professional. “Close to 70% of home sellers are willing to accept a lower purchase price just to reach the closing point, according to a new LendingTree survey. This comes as the coronavirus has made it difficult for folks to sell their homes and those who are most willing to take a cut happens to be millennials. When asked what their biggest fears were when it comes to selling during the pandemic period, 33% said they were afraid they would have to accept a lower offer price. Another 33% are fearful that they won’t be able to sell their home within the time frame they hoped.â€
From Socket Site in California. “While the number of homes newly listed for sale in San Francisco having outpaced the number of purchase contracts that were inked for the ninth week in a row, there are now 1,050 homes listed for sale across the city. That’s not only a 9-year seasonal high but a new 9-year high in the absolute and 50 percent more inventory than at the same time last year, despite the fact that inventory levels typically don’t peak until October.â€
“And the percentage of listings which have undergone at least one official price reduction has been ticked up another two percentage points to 22 percent, which is five (5) percentage points higher than at the same time last year, for twice as many reduced listings on the market in the absolute on account of the jump in inventory levels.â€
DOWN DOWN DOWN the CA Housing Market Goe$$$$$$$$$
Perhaps it doesn’t even matter if people make their mortgage payments? The Fed will save them!
https://www.cnbc.com/2020/06/16/30percent-of-americans-missed-their-housing-payments-in-june.html
I saw something about LA proposing to allow 10 years for rent repayment.
Not kidding. This is a total nothing burger
Here is why: when you a day late on your rent it’s counted as missed. Most of these renters paid. But LATE.
“ That’s up from 24% who missed their payment just two months earlier in April and about on par with the 31% who missed payments in May. Renters, younger and lower-income households and urban dwellers were the groups most likely to miss their housing payments, Apartment List found.â€
Dumb n Dumber – CA is full of Late Payment Dumbness- Americans Have Already Skipped Payments On More Than 100 Million Loans, And Job Losses Continue To Escalate
https://www.zerohedge.com/markets/americans-have-already-skipped-payments-more-100-million-loans-and-job-losses-continue
The article I posted was about missed mortgage payments, not rents.
Mainstream media, with helpful comments from the ADL, are once again focusing on Northern Idaho: https://www.greenwichtime.com/news/article/As-protests-spread-to-small-town-America-militia-15348677.php
Full of cherry-picked factoids to make the protesters look peaceful and innocent, and the locals with guns look scary and hateful.
So Much for The “Limited Supply Theory”, CA Housing To Tank Hard- Nearly Half Of Americans Consider Selling Home As COVID Crushes Finances
https://www.zerohedge.com/personal-finance/nearly-half-americans-consider-selling-home-covid-crushes-finances
Get used to the new normal:
“Sold within days, above asking priceâ€
M: Get used to the new normal: “Sold within days, above asking priceâ€
Really? This Santa Monica townhouse was listed last October, delisted and relisted several times, and after several price cuts, remains unsold after 8 months: https://www.redfin.com/CA/Santa-Monica/718-Lincoln-Blvd-90402/unit-3/home/8102124
This Brentwood home has been seeking a buyer for a full year – listed, delisted, relisted, price cuts, etc. : https://www.redfin.com/CA/Los-Angeles/1015-Amherst-Ave-90049/home/6760643
This West L.A. condo’s current listing is 135 days, and that’s after a previous failed attempt to sell in 2018: https://www.redfin.com/CA/Los-Angeles/1658-Camden-Ave-90025/unit-307/home/8127023
Brentwood house — 44 days and still seeking a buyer: https://www.redfin.com/CA/Los-Angeles/1156-S-Carmelina-Ave-90049/home/6760581
This Santa Monica house sat for 7 months before the seller gave up early this month: https://www.redfin.com/CA/Santa-Monica/1437-Berkeley-St-90404/home/6763553
Sold within day, above asking? In many cases, not even close.
Hey Milli,
This Woodland Hills house has been sitting for 14months, listed, delisted, relisted, etc., despite a price drop from $2 million to $1.7 million: https://www.redfin.com/CA/Woodland-Hills/20700-Wells-Dr-91364/home/4230805
This Woodland Hills house has been listed for most of 8 years, on and off. Most recently delisted last May: https://www.redfin.com/CA/Woodland-Hills/23135-Dolorosa-St-91367/home/3244421
Would you like more examples? They’re not hard to find.
Lol, I should have clarified. I am excluding luxury.
Luxury in riverside means something else than luxury in LA.
The be normal “sold within days above asking†applies to properties that are priced right and not considered luxury/high end.
In San Diego for instance, that means anything below 700k sells within days above asking if the price is at market price. For OC county that can mean anything below 1m sells within days. It heavily depends on the location.
This is all coming from experts like Steven Thomas who tracks the local markets in socal.
M: I should have clarified. I am excluding luxury. Luxury in riverside means something else than luxury in LA.
These are NOT luxury homes. The most expensive on my list is a tiny crapshack in Brentwood for just under $2.5 million. That’s crapshack pricing for Brentwood.
The other examples are all over a million, but under two million. Not luxury for the Westside or Woodland Hills.
You only showed luxury.
A 1.9m condo in Santa Monica I’m walking distance to the beach is considered luxury.
You don’t get the basics. You pick some very expensive properties close to the. Each and draw conclusions. That’s not how you Analyse a market. You need to listed to experts like Steven Thomas who track the markets and give you indicators like expected market time.
Below 1m in SoCal is flying off the shelves. Talk to any realtor. They will tell you the same thing.
You have been on this blog for a while. You should know better. You act like a noob
The house near us that has a pending offer is still in that status on both Redfin & Zillow. So until it closes, I’ll need to wait to find out how much above or below the asking price it went for; but since the offer was made on the weekend it went on sale, I’m sure it was not below asking price! That’s a fast sale in anyone’s book. Keep waiting for updates. Happy Father’s Day.
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