National Home Prices Remain Stable While Millions Remain in Forbearance: The Covid-19 Effect on Housing
Home prices remain stable in the face of a global pandemic, record high unemployment, and millions of Americans actively not paying on their mortgages through forbearance. Not exactly a rosy picture. On the surface, the stable prices would seem to indicate all is well. But the reality is more problematic in that millions of homes are off the market right now as people are not paying their mortgage via forbearance. For those wanting to buy a home, they are competing with very little inventory. Selling a home right now just does not seem like the best time given the pandemic we are in. In California, housing prices remain stable while millions are out of work and half the state is made up of renter households. The math doesn’t seem to add up but this isn’t a “market†in what many would think as a free market. Â
Home Prices are Stable
Home prices are remaining stable despite the flood of negative economic data. Here is a look at home prices:
A few key reasons why home prices are stable despite the negative economic data:
-The Fed is flooding the system with easy money and interest rates are at record lows
-4.1 million Americans are in forbearance so these homes are off the market until things resolve
-Few are selling given the pandemic, so inventory is even lower than it once was
-Home is now the office in many cases sucking funds out of commercial real estate into the residential sector
If you go through each of the points above, these do not reflect a robust and booming economy. It highlights a machine pumping artificial juice into the market. So we are seeing these distorted numbers but like the Great Recession as well, the Fed injected steroids into the market to stabilize it, but once the crisis phase was over, home prices continued on their downward trend in a steady glidepath, not an all-out collapse.
Forbearance
Under the CARES Act, Americans have the ability to not pay on their mortgage if they are impacted by Covid-19 related economic pain. The number of mortgages in forbearance is startling:
These are the largest holders of mortgages and once March hit, the numbers went off the charts. Once the payment moratorium ends, there will be many that will lose their homes. Also, many households now have extra funds to spend in the economy because of this forbearance act – which inadvertently makes other sectors look better than they are. The impact of the pandemic on our US economy is going to accelerate change in many industries and jobs are unlikely to come back in certain sectors.
In large part you get this current housing market because there is so much artificial support propping up real estate. Yet there is no free lunch in life and this stimulus is going to cause issues elsewhere. It is hard to see where it will ignite another economic challenge but many more cracks in the system will be seen once the forbearance windows end.
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371 Responses to “National Home Prices Remain Stable While Millions Remain in Forbearance: The Covid-19 Effect on Housing”
Housing to TANK Hard in 2021
Actually, prices are going up very fast. Experts say it’s because there is no inventory and rates are historic low. I tend to agree with the experts.
Lack of inventory is because of covid. When it is over (which is will be very soon), there will be a glut of inventory. People are also gettng nervous now that this is the top so if they plan on selling, they don’t necessary want to wait. That’s not even touching on the fact that MILLIONS of homes are severely delinquent on payments, and they only reason they aren’t being foreclosed on is due to current forbearance. That will be over at the end of this year. There are also already loads of foreclosed homes waiting in the wings that haven’t been put on the market yet. Get ready, a GLUT of inventory is coming.
I would like to add to the article that forbearance means the owes money will be ADDED TO THE END OF THE LOAN.
Yes….that means you haven’t paid 6 months of your PI and the servicer (in most cases) will be extending the loan by the owed amount.
It’s not like often portrayed by perma depression bears that you owe the amount right when forbearance ends.
Perma depression bears have only one thesis left: when forbearance ends we will see a flood of inventory. They set themselves up for failure. Again and again.
If a homeowner is suffering a financial hardship and can no longer afford the home, then it doesn’t matter where the forbearance amounts are added. The result is a distressed sale. Lost employment and incomes will take years to recover.
@Butch, this is the correct answer. Forbearance works if the jobs and incomes are coming back. I don’t see this happening for everyone.
Forbearance is one year. It takes another year to foreclose.
When I was working for a real estate management during the last recession, many banks refused to foreclose until the HOA threatened to foreclosure to recover HOA dues.
This means we are at least two years away from any type of home price adjustment.
Thanks for highlighting why prices right now are not dropping. It’s not the least bit surprising. What will be surprising is if things stay as “good” as they are now.
If a person can’t resume payments after forbearance ends, what will they do? Cashing in seems like the best way out of that pickle. People have equity, after all.
17% of FHA loans in San Diego are delinquent. Unemployment is 13%. That’s worse than at any point during the Great Recession. This situation is major.
Buying a house in Q1 was one of the best things I have done. The internet depression bears told me I will lose a ton of money by buying. It shows how useless these comments were….housing appreciated significantly in Q2…..the exact opposite of what bears told us.
I agree with the doctor on the reasons:
Historic low inventory
Historic low rates
fED printing money like there is no tomorrow
And: FED can continue to print if they need to. AND they can lower rates to negative if they need to. See Europe…..
House prices can go a lot higher with rates declining.
Now, one scenario the doctor hasn’t mentioned in his article: what if we see significant inflation in the near future? That will crush people sitting on cash waiting for a crash……absolutely crush them.
It will not absolutely crush them That’s an absurd and alarmist statement. You would have to see a very very high rate of inflation to see your cash savings crushed. And if that happens we have much bigger problems than seeing your savings depleted.
@Mark L,
I dunno man you’re kinda underestimating inflation. It’s definitely coming, the FED is actually taking monetary measures to allow inflation to run higher than normal and the FED’s numbers are actually lower than real inflation, that’s a proven fact. They’re always under-reporting inflation figures. Let’s take a conservative scenario to put it into perspective. If inflation over the next 5 years is 5%/year and housing appreciates 5% year then a permabear waiting for this imaginary crash is losing 5% a year in purchasing power and the real estate that he/she is trying to buy is gaining 5% a year for a total net opportunity cost of 10% a year. In a five year time period, you lost 40% in purchasing power towards real estate. There’s your 40% crash, it was in your bank account the whole time.
You think I’m BSing you? Okay no problem. Lets use actual historical data. In the last 5 years inflation has officially averaged 2% a year resulting in a 10% loss in purchasing power in that time frame while housing has appreciated by 30% in that same period resulting in a net opportunity cost of *drumroll* 40%. Permabears are literally strangling themselves with their fear. It’s so sad but the numbers don’t lie and I always use numbers to make investment decisions. Take it from someone who has a proven track record of investment success across multiple asset categories. I run laps around Sad Money Jim Cramer.
New age, they should teach this in school and the good dr housing bubble should write an article about it!
Your post should be repeated and re-posted every month…..it’s so important for people to understand it and most don’t……as you said….it’s sad. Staying in cash has been a losing position and people see how they are getting further behind. Instead of changing their strategy they call for a bigger crash which is impossible to happen in a low interest environment and with all this money printing.
I’m starting to think New Age and M are the same person. Or M is hijacking New Age’s name. Their posts are way too similar.
“I am starting to think…â€
That’d be a first.
@Josh
Oooo I like a good conspiracy! Maybe we are the same person? I’ll let you figure that out yourself. I mean, it could go one of two ways. We’re either the same person or we’re not. If we are, well New Age (me) has been a bull on this blog for a while and that negates the current arguement that M just flipped his position since he’s been a bull this whole time under this name. If we’re not, then we’ll I guess we’re not. I dunno, maybe instead of getting to the bottom of who said what and when who said it you can bring forth some substance? If you don’t agree with me that’s at your discretion but at least give me something to debate here. It was cute when I was reading the back and forth about M flipping his position (as if changing your mind is illegal) but now I’m the target of this petty gossip too? Come on man, you can do better. Give me something worth my time to discuss. Anywho, I’m gonna ignore anything that isn’t on topic so y’all are free to say what you wanna say. Don’t mind me.
Josh and SOL remind me of the fake news media. Always coming up with some nonsense BS instead of focusing on the market and interesting topics. Gets old.
M: Buying a house in Q1 was one of the best things I have done. The internet depression bears told me I will lose a ton of money by buying.
WHO “told you”?
YOU were the TOP “internet depression bear.” YOU were spamming every thread with “perma bear” posts, cut & pasting the same “perma bear” talking points multiple times on every thread, even this past January.
Then within two weeks this past February, you suddenly claimed to have received an inheritance and allegedly bought a house that was still under construction, and were all moved in by April.
Any arguments you had with “internet depression bears” prior to February was with yourself, in your own head. You certainly weren’t arguing with any bears on this site.
Son of landlord you are mixing up a lot of things. To build a house takes 6 month or so. I did see some part of it yes. It was nice….I have picture of the studs….nice to know where they are. If you want I can email you some pics?
SOL – I think it’s time you re-post your epic post that eviscerated M in the last thread. He thinks that now that there’s a new thread, we’ll all forget how much of a fraud he is.
SOL did a great job putting together my timeline. I am actually maintaining the timeline. It’s spot on. Where do you see a “fraud� lol
M – no one takes you seriously because you flip-flopped in the biggest way possible after buying a house. That means you have horrendous confirmation bias, which you continue to prove with your posts to achieve self-validation that you didn’t make a bad decision. So, how is anyone ever to take your opinions seriously if they’re draped in confirmation bias?
X
My posts are exactly the opposite of confirmation bias.
My posts are based on market data. How many times have I posted about the inventory levels, expected market time, interest rates for SoCal?
For SoCal, the data comes from the housing report (Steven Thomas) and other articles.
I did ONE flip: from bear to long-term bull. I admitted I was wrong in the past.
I don’t care less who takes me seriously or not. One sign that your are not taking seriously is when nobody reacts/responds to your posts. Look at poster “realistâ€. Almost nobody responds to his weird perma depression posts. The opposite with me, I have many that agree with my long-term bullish posts and market data. On the other hand you have people that are obsessed with me and try sooo hard to put words in my mouth to “find something wrong with my timelineâ€.
Many also know the data I post reflects the market situation. Many bears actually suffer from confirmation bias and are unable to absorb the market data. People like me who base it on data are on the safe side.
My piti is well below 3000 dollars. I could easily rent this place for well above 3000 dollars.
I have yet to find ONE person that says you shouldn’t have bought this house…..why? Because it was the best thing ever AND the people I meet are usually smart people. Smart people know: in places like SoCal it’s a requirement to buy a house. Trying to time the market is the worst thing you can do. Especially when facing higher inflation.
I post a lot so other perma/ depression bears can learn from my experience. I don’t need to convince myself. I am over 30 and live in a big house in SoCal that I can easily afford….You cannot win much more. The next thing for me will Be investment property.
“M – no one takes you seriously because you flip-flopped in the biggest way possible after buying a house. That means you have horrendous confirmation bias, which you continue to prove with your posts to achieve self-validation that you didn’t make a bad decision. So, how is anyone ever to take your opinions seriously if they’re draped in confirmation bias?”
He’s right about some things (low supply, low interest rates). But, it does seem like his predictions are based on his own current circumstance. Before receiving an inheritance, he was predicting a 50% – 70% drop in prices. That was extreme and perhaps matched his need or desire. When he could suddenly afford the house he wanted, his predictions did a total 180. That seems more like self-justification than rational thought.
If I received a windfall that allowed me to comfortably buy what I want right now, I might. I plan to buy a house I will live in for the rest of my life so wouldn’t care much about value. Would I then start imagining a perpetual peachy economic present and future like M? 18% may be on unemployment insurance, but bears imagine a future that favors them too. Commenters have been expecting a crash for many, many years now.
“I have been Foolish and Deluded,†said he, “and I am a Bear of no Brain at All” – Winnie the Pooh
There is no confirmation bias at all.
I changed my mind.
Just because you were a bear at some point doesn’t mean you have to be for the rest of your life.
I had so much cash that I couldn’t justify not buying anymore.
I am proud of myself and I am celebrating the move. Best move I’ve ever made. I see many posters that had similar views than me in the past. That’s not how the market works though…..
It’s actually very simple. In places like SoCal you buy as soon as you can comfortably afford it. Everything else is noise. Rents and prices will ONLY GO UP IN THE LONGTERM.
It’s that simple
Still waiting for the name of that housing development you purchased in? What is it called? You know the one in coastal SD that doesn’t exist?
I never said I am at the coast. Why would I tell you where I live? Are you telling us where you live? What’s the point? You are too obsessed with me for some reason. Maybe because you were telling me I will lose a ton of money cause I bought at the alleged peak in Q1 you but In reality, prices have gone up? Is that what it is? You are butt hurt?
Why do you keep deflecting? I’m not going to debate what “coastal” is. Don’t you see everyone attacking you because you are full of crap? I’m not asking for your address. I don’t live in a planned sub development otherwise I’d be happy to share the name of it. I think that’s still rather anonymous.
You can’t say the name because it doesn’t exist and would expose your BS and your timeline that SOL has already pointed out. You are the ultimate bear and troll.
Thanks for confirming me.
“Everyone attacking me†🤣 🤣
There are three posters:
SOL: who post my exact timeline which I agree with. Somehow he thinks there is something wrong with it and he tried sooo hard to put words in my mouth to make it look like something is wrong with it. I offered to even send him pictures but he didn’t bite.
Josh: who thinks the timeline is epic and says that timeline shows I am a fraud. Lol?
You: who wants to know where I live but refuses to tell us where you live. Also, you told me I will lose a ton of money because I bought a house, now you change your story and state I didn’t buy a house because I don’t publish my address online. Lol?
It’s mediocre entertainment.
This is a common troll tactic:
M: Thanks for confirming me.
Someone disagrees with M. Whereupon M ignores the comment, and pretends he was confirmed.
It reminds me of that annoying little kid in the schoolyard. After being accused of something, he’d reply. “I know you are. But what am I?”
I guess M was the annoying kid in his schoolyard.
Also, all these fake laughs: 🤣 🤣 🤣 🤣
Anyone can post an LOL or a laugh meme. Doesn’t mean they’re not sweating nervously.
M: I offered to even send him pictures but he didn’t bite.
You want to email me a picture of a house? What would that prove?
There are billions of photos on the internet, of anything and everything. I can download pictures of mansions in Bel Air and Malibu, a private jet, and a yacht, and send those to you. Would it prove that I owned them?
Pictures of the track when it just had the slab foundation, pictures of the studs, pictures of when the drywall was in, pictures when we moved it, pictures now fully furnished.
I know, I have to spell everything out in a little bit more detail. But there is still important details you will miss. You still think I work in IT because I posted That i work for a tech company. 🤣
As I said, you can find pictures of anything on the internet. Pictures of slabs, studs, etc. Doesn’t prove it’s yours, or even that it’s in San Diego. Could be pictures from a development in Florida, or Texas, or Belize.
Why not answer SoCalGuy’s question, and tell him the name of this mythical development.
However, it is odd that on January 31, you were still opposed to buying a house.
Then you claim to have bought a house still under construction in mid February. A house so raw that you were able to take photos when it was still in slab, studs, etc.
And yet, two months later, in April, you were already moved in.
Two months is an awfully short period of time to complete such an unfinished house, get a Certificate of Occupancy, get it painted, furnished, and be all moved in.
Well, if pictures of my house won’t convince you I am afraid you are out of luck. I gotta leave you with your belief. If it makes you feel better, that’s fine with me!
For some reason it bothers you too much that I bought a house and you won’t accept it. That’s confirmation bias which I have no chance of winning against.
M: For some reason … I bought a house and you won’t accept it.
What’s with this “some reason”? I gave my reasons. I’ll give it again.
* January 31, you were still opposed to buying a house.
* Mid-February, you claim to have bought a house still under construction. A house so raw that you were able to take photos when it was still in slab, studs, etc.
* By April, you claim to have already moved in.
Two months is an awfully short period of time to complete such an unfinished house, get a Certificate of Occupancy, get it painted, furnished, and be all moved in.
In fact, it is impossible.
Huh???? You buy a house and move in 2 month later?! Lol f.ing lol. How long does it take you to move Into a house son of a landlord?? 6month? A year?
Is this guy serious or high or trolling? I can’t tell anymore.
In January I was still a bear??? Sooo??? I can be a bear and buy a house…..if you inherit money and can’t justify any longer not to buy….then you throw in the towel and buy….that’s what I did. And now I have a much better time hoping for the market to do well. And if not, okay, then I probably should buy my first rental.
This back and forth is so freakin hilarious. “No, you didn’t buy a home. No you were still a bear on January 16th at 9pmâ€. 🤣
I don’t know how it works in CA but this wouldn’t be an unusual timeframe in Texas for a house that was already under construction. Is California really so much slower? Why in the world would he lie, anyway? Do anonymous people really care about impressing strangers on the internet? I can’t imagine. I think we’re more apt to speak our minds and say things as they are when we’re anonymous.
The only thing I question is the location because what he said about sold out phases and coming soon phases matches Harmony Grove exactly. He said that place was really nice, but no, that’s not it – a little to the west. 😉 Not that I looked at Vista or other places further west. How many communities are there in North County, I wonder – that fit that precise description of phases. I don’t care to check, but I do believe he purchased a home.
Escondido is not so great (nor is Vista or most of Oceanside). All that graffiti close to the nicer neighborhoods is troublesome. But Harmony Grove has that nice back road into San Elijo and Carlsbad (now those are nice places). I’d do my shopping and pleasure out that way. And who knows, maybe Escondido will grow up like Chula Vista did, which now is mostly good or great east of the 805. Too bad it still has a bad reputation thanks to I-5 and 805 only showing people the lesser side.
M: Huh???? You buy a house and move in 2 month later?! Lol f.ing lol. How long does it take you to move Into a house son of a landlord?? 6month? A year?
That’s not what I said. Why are you lying? Why do you misquote me? You can see what I said right about your response.
I said: Mid-February, you claim to have bought a house still under construction. A house so raw that you were able to take photos when it was still in slab, studs, etc.
Yeah, it would take a lot longer than two months.
Turtle: I don’t know how it works in CA but this wouldn’t be an unusual timeframe in Texas for a house that was already under construction. Is California really so much slower?
I’ve seen many homes being constructed in Santa Monica’s North of Montana neighborhood. So much construction going on up there. A new house every few blocks, it seems. Those houses can take years to complete. So much red tape.
Turtle: Why in the world would he lie, anyway?
Good question.
For most posters, I accept what they say.
But M’s (aka Millennial) posts have always seemed troll posts, calculated to goad. Over the years he’s often gloated over the prospect …
* Of Boomers dying, so he could scoop up their homes cheaply.
* Of people losing their homes in the next crash, so he could scoop up their homes cheaply.
* Of tricking his landlady into giving him a low rent, by lying about how poor he was.
* Of trespassing into his neighbor’s pool.
His gleeful tone over other people’s misfortunes, of taking advantage of people when they were down, of hoodwinking people through trickery and deceit, seemed calculated to goad and to troll.
So I doubt M’s announcement of a sudden inheritance and home purchase. It’s just a troll upping the ante, because he’s become bored with his previous antics.
Ironically, M changed his story just before the Covid lockdown and economic distress. Think how much fun he might have had had he kept his old persona.
How to Spot an Internet Troll: https://getkidsinternetsafe.com/how-to-spot-an-internet-troll/
SOME excerpts:
* Offensive and controversial posts or interactions with controversial comments.
* Take extreme political or opinion positions on certain issues and repeatedly focus on them.
* Aggressively Poor Reading Comprehension. … the troll claims you wrote/said something you did not and then using “your own words†against you.
* Theoretical laughter (i.e., M’s laughing face memes).
🤣 🤣 🤣
I feel bad for SOL but also feel entertained. He’s trying so hard and puts many hours into this. At some point he will realize it’s an effort without any hope of succeeding.
M: At some point he will realize it’s an effort without any hope of succeeding.
Succeeding? What do you imagine that am I trying to “succeed” at?
SoCalGuy: Still waiting for the name of that housing development you purchased in? What is it called? You know the one in coastal SD that doesn’t exist?
M: Why would I tell you where I live? Are you telling us where you live?
Well, M, you told us this much on February 19 (8 days after announcing your inheritance, 19 days after you were still posting as a bear).
M: SoCal is a great spot to buy RE. Just signed.
Carlsbad / sorrento valley is a tech hub with great job opportunities.
I found great pockets of value properties with great schools at an affordable price.
Love it here already.
Source: http://www.doctorhousingbubble.com/why-are-californians-moving-out-in-droves-to-texas-a-trend-that-goes-beyond-one-year-a-two-city-example/#comments
Still searching for that “lie†you can’t find huh? 🤣
Sorry, not telling you my address 🙂
So lets pretend that rates go negative and a typical house now costs $2mm.
Riddle me this batman (aka M), how are these folks going to pay holding costs?
Major amount of *cash* money to pay for property taxes, HOA, insurance, maintenance and the like.
Here in my hood (OC, Socal) just the property tax for a $2mm sugar shack is over $22K/year. Add in HOA, and all the rest and a ‘homeowner’ now has to come up with at least $30K+ *cash* each year.
And please don’t tell me that everyone makes $200K/year in the OC. They don’t. In fact employers (mine included) are cutting back by stripping benefits.
Doesn’t look sustainable to me.
If rates for the 10 y treasury yield goes negative, yes we will see mortgage rates for to 1-2%. Which means house prices skyrocket. A house in OC costs about a million. With lower rates the house prices will continue to push higher. 200k for a professional couple is not unheard of. You can’t make it by making only 50k each in California. In that case you got to move. You won’t be able to afford a house here unless you buy with another family. That’s what many Hispanics are doing.
What sort of ROI are you receiving with your recent purchases
A house is not necessarily an investment but it can be later.
On paper a house to live in appreciates above inflation.
But you lock in your payment while rents keep going up over time.
The kicker is that you can refinance.
If there’s significant inflation, Fed will be forced to raise rates and house prices will crash.
So you’re patting yourself on the back for an on paper increase two quarters after buying your home. Congrats to you, I guess!
I know Edge!
I am proud of myself. I did nothing but working and vacation the last two month. Yet, my net worth went up on paper! All while perma depression bears told me that I will
Lose money (a ton of money) by buying the peak in Q1.
I guess as a perma depression bear your just move the peak conveniently to the next quarter and the next quarter and the next….
I wonder how so many houses can be selling at such high prices during a time like this. It just doesn’t make any sense to me. It seems like no matter how bad the numbers look for the economy, housing prices continue to rise and rise and rise. And it’s not just here. It seems to be going on like this all over the country. The housing market continues to be red hot. I’ve been here for five years and there has been no end to it. It’s really a very hopeless situation for my family and me.
Right there with you, Mark L. People are still using cash to buy. Houses that go up for sale in my hood seem to go to corporations that are flipping them. The rich are still rich. East coasters with Porsches seem to be pouring in…
We will still apply for a loan (pre-auth) as soon as we get back to work, but being a homeowner anywhere within 500 miles of our jobs seems hopeless. My husband and I both have specialized jobs that we can only do here in LA. We have pensions, etc; so leaving isn’t in the cards.
However, I am starting to think that using the money we have to buy a place in Mexico might happen before we ever own anything in the U.S. At least we’ll have a beach home with land to retire to? That’s the only realistic outlook I have for the so-called, “American Dream” of home ownership.
Instead of investing your money in Mexico you could ride the tech bubble train. Amazon, Netflix, Apple, Tesla, Microsoft, Nvidia are killing it. Why not invest some money in the stock market? That’s what I am doing, I have so much stuff I want to buy for my house and don’t want to spend my savings….so I decided to put it in tech stocks.
In the northern beach areas of OC I feel like I’m starting to see more listings and some price cuts as folks get the sense that this is not sustainable.
Also, with Newsom having decided to change the reopening standards this week to ensure the economy stays closed until after the election, it’ll be interesting to see how this plays out. I know there are lots of retired people who were living on the income from a rental or two that have been absolutely screwed by the eviction moratorium as renters who were laid off, even if they were working again two weeks later, just stopped paying. The idea that they can all stop paying rent or mortgage for a year with no impact strikes me as folly, but this is all so artificial now that it’s hard to read which way is up.
Anybody that owned a home over the last decade in California made tons of equity. Won’t people cash in on their equity by selling instead of just sitting around not paying the mortgage and waiting for the bank to take over their home? The market is hot right now, everything is selling. Even if they don’t want to sell right now because of COVID- people looking to cash out before loosing there houses should have plenty of time to arrange things, no?
RedondoCondo: I don’t think issues stemming from the pandemic (or plandemic depending on your viewpoint) have been felt significantly for many homeowners, particularly professionals. Therefore, I’m assuming many of them have no immediate need to sell. However, I have to wonder if they will be safe in the long run. It might be just a matter of time before they (I?) start losing jobs as well. Sure, mostly only lower-level workers have felt the sting so far. But maybe some (many?) professionals are next… Ultimately, many professional jobs are closely intertwined with retail jobs in some capacity or another. For instance, if a large retailer goes out of business, they no longer have a need for accountants, advertising firms, lawyers, HR people, etc. I think it will be a while before we know exactly where this all will end up. Selfishly, I would like for there to be a circa-2011 style recession whereby I can keep my job and I can scoop up a decent place to live for an affordable amount of money. I know it probably wont happen, but I can dream.
Investors are currently unloading units by selling to frenzied buyers taking advantage of low rates. They know market conditions are not favorable and are exiting at the top.
they don’t have a ton of equity if they have been draining the equity out over the years and constantly refinancing like most of the people I know.
You bought a house 10 years ago and refinanced and pulled out money. Now you rent it out for a big monthly profit and with the money you pulled out you buy another house.
In a couple of years you refinance to push your monthly payment down. Both houses appreciate over time but the first house provides you with a profit each month now and is paid off by a renter.
Holy smokes…
Thank you FED for making it so easy on homeowners to build wealth! On the other hand it’s unbelievably unfair to renters.
If you’re planning on living off of your property you better be prepared for every possible scenario. As I was working yesterday I was noticing all the homes for sale and at least a third of them had sold signs on them. 2021 is going to be interesting.
Houses are selling like hot cakes to well qualified buyers.
Zillow is telling me my value went up significantly since Q1…..
I made a lot of money with stocks but I have a hard time keeping up with those gains that my house is making…..the market is smoking hot!
M is celebrating the recent tech stock gains. So am I.
Apple
2019 – $200/share
2020 – $500/share.
However, back when I was M’s age, The Renowned Bell Labs was spun out to become
Lucent. What could go wrong?
1996: $45/share
1999: $110/share
2002: 76 cents per share.
Many others tech stocks had the same outcome, Oracle, HP, Agilent, Sun
Moral.
Don’t put all of your eggs in one basket.
Cash in your chickens while the chickens are good.
Bob, like almost always, I agree with you.
Back in the dot com bubble tour taxi driver was telling you how to get rich quick. Everything with “.com†in the name was quickly going up in price.
Today, the Robinhood / millennial crowd is buying Tesla/Apple stocks. However, is everyone including your grandma buying those?
Warren buffets portfolio shows he is heavily invested in Apple but I haven’t heard that from your avg Joe Schmoe. Especially during these times where savings rates are going up. The avg guy is lucky to still have a job.
My entire point is that I doubt that too much stupid money is flowing into tech stocks at the moment. I think it’s driven by money printing and excess cash in the market. No doubt Tesla is in a bubble but the market can stay irrational longer than you can stay solvent. As long as you are not doing leveraged trading I don’t see an issue with putting a significant amount in tech stocks. Especially leading up to the election…..what happens then is everyone’s best guess.
One thing is for sure, when the music stops the stupid money panics and sells. Nothing goes up on a straight line forever. I enjoy looking at my tech stocks and 401k….insane gains Since the March lows. The problem with bears: they don’t buy…..they always wait for a lower low and if it goes up they hope for a bigger crash.
The better way is to dollar cost avg in stocks and forget about market timing….and for RE, you buy as soon as you can comfortably afford it in places like SoCal.
I guess my point above is that buying a primary home should be a priority.
If you don’t own a primary home now, and own tech stocks or bitcoin, it is probably time to sell enough to purchase a primary home. Having a mostly fixed cost associated with a home and diversification are primary reasons.
Stocks can drop to zero forever (Lucent, Enron, General Motors, United Airlines) with bankruptcies. A primary home will never drop to zero. A home may drop to underwater levels but over history, they have recovered within 10-15 years and you are immune to rent increases forever.
Unless you have enough cash to rent for 30+ years, it will be difficult to ever retire comfortably without owning a home.
The question is: Should you wait until the housing bubble pops? The stock/bitcoin bubble will pop sooner and faster than housing so don’t have your eggs in one basket. Look at 2008 or March 2020 as an example.
The bitcoin bubble??? We have been in a bear market since 2018. We just started a new bull cycle for bitcoin. It’s too early to call it a bubble. Bitcoin will trade over 100k in the next 1–2 years. It’s only at 11-12k at the moment. There are a ton of gains to be made.
@Bob
Just cashed in my chickens on Rocket Mortgage just before the close of the bell today. Another 70% return in under one month. Unbelievable. Taking my gains and putting them on WLMT now. A little late to that party but plenty of room to grow for that strong stable company. Too much speculation but then again I said that 2 months ago before I went in yet again. You just can’t lose in this market. Anywho I’m done playing with fire, hopefully I mean it this time. I’ve made millions this year by far the best year I’ve ever had and to think I haven’t touched a single screw or nail flipping homes. That was a good business in 2019 but 2020 is all stocks. 2021 crypto boom? 🤫😈
“Home prices remain stable in the face of a global pandemic”
That is a joke. Prices are going up so fast. If you don’t have a large down payment, sellers are just throwing your offer in the garbage can. I would hate to be a renter.
@JT: What price range are you referring to when you say that “prices are going up so fast?” 350k to 750k? Which area in Southern California?
I’m not seeing this in the 1 mil plus ranges in West LA/Valley area. I’m seeing inventory increasing and price drops.
Exactly, SDMan. Prices are not “going up so fast” everywhere. In select markets and in select price points, sure. But overall, housing is up with inflation and that’s about it. The $1M+ market is taking a dump. It’s only a matter of time before that trickles down to the lower price point. If the $1.3M house drops to $1.1M, then the $1.1M house has to drop to $900k. And on down it goes. This is EXACTLY how the 2008 housing bubble popped – it started at the top, people (like M) ignored it. Lower priced homes kept climbing as higher priced homes were dropping. And before you knew it, even the lower priced homes started dropping too.
This is how boom/bust cycles work, and it’s designed to be this way. Those in power want and need as many suckers (like M) as possible to turn into true believers (housing always goes up, fear of missing out, etc). Then it crashes, the banks get a bailout, and huge corporations get to buy foreclosed homes for pennies on the dollar. Rinse and repeat. People need to be smart and time the market (it’s called a market for a reason), and not buy into this ridiculous notion that the Fed cares about home values or homeowners. Idiocy!
“People need to be smart and time the marketâ€
Alright genius, let us know when you buy so we all know how we should have done it…..
Best of luck to you Einstein!
South Bay beach cities, as well as Orange County beach cities are selling like wildfire with big big price tags … millions.
The clock is ticking on these when time runs out- Home Debtors are Fooked, especially if you live in CA.
-The Fed is flooding the system with easy money and interest rates are at record lows
-4.1 million Americans are in forbearance so these homes are off the market until things resolve
-Few are selling given the pandemic, so inventory is even lower than it once was
-Home is now the office in many cases sucking funds out of commercial real estate into the residential sector
Remember, great weather solves everything, especially if you are homeless
please stop talking about the non-existent “pandemic”.
it is a SCAMDEMIC, a PLANNEDEMIC, a hoax by the people
who want a one world totalitarian government. it is just the
normal, annual, seasonal flu that kills about 1 in 1000 people.
no “SARS Covid-19” virus has ever been isolated and identified.
the inventor of the Gold Standard PCR test, kary mullis, says
the test is “useless” for any virus, much less a corona virus.
Through FEAR, you can control most people and you can implement the most draconian forms of control to the point that people willingly trade freedom for safety; in the process, they lose both. Fear is what will bring the most fascist form of government which will bring the most concentration of wealth and power in the hands of few tech executives.
Power corrupts and absolute power corrupts absolutely.
The markets and politics are moved by two forces: greed and fear. If you understand these two forces and how they are played you understand almost everything. FEAR being such a strong component in the politics dynamics, and this year being an election year, you can understand a lot of what is happening with all the lawlessness in the big cities and the corona virus politics. A lot of this will tone down after November unless the globalists regain the power.
Actual number of Covid deaths in the U.S. (i.e., deaths of people who did not have pre-existing conditions) is under 10,000: http://www.freerepublic.com/focus/f-news/3879022/posts
A shark ate a man who died on covid.
If you have stage 4 cancer and have covid they will call it a Covid death.
They politicize the shiat our of covid until the election. Then magically covid will be gone.
“They politicize the shiat our of covid until the election. Then magically covid will be gone.“
Kinda like the brown-skinned caravans of 2016 that magically disappeared when trump didn’t need to scare anyone anymore after he was elected.
No, those caravans couldn’t get far since they were stopped at a wall and by armed men with automatic rifles at the border.
If these caravans don’t scare you then you haven’t been in Europe in the last 5 years. They call these people “rapefugeesâ€
Europe is turning right wing very quickly since they have massive problems with immigration. Be happy and thankful you live here….
Rich – you must be a CNN type always watching the lying mainstream media. If you actually dug for the truth, you would find that these migrant caravans were the lowest of the low looking to take advantage of a situation and other people’s resources. The people of TJ even disliked them and it caused a bunch of unrest in the area. The people in these caravans spiked crime, tensions, left trash everywhere, etc. Why on earth would we just let them in to effectively steal our resources and disrespect our lands / people. These are not good people. Yeah maybe some good ones were sprinkled in, but we have laws for a reason and people need to be vetted. This has nothing to do with skin color. I have no problems helping people if they take the initiative and want to be proud americans. I have great respect for those who come to this country and do so the right way and follow our way of life. On the other hand I have zero tolerance for those that don’t and won’t take any personal responsibility. A rising tide lifts all boats. That is what made America the greatest country on the planet.
Incognito,
Great post! So true….
I have seen it in Europe….the Muslim immigrants/caravans have no interest in adapting and accepting western values. They get free healthcare and get unemployment money. They came without papers in many instances and have now multiple ID’s, collecting unemployment under several identities. This isn’t a conspiracy theory….it’s the sad fact that people have no problem coming to your country and finding ways of abusing the system instead of being thankful that you gave them a new home.
It really is disheartening. I was born an American but my household is 75% immigrant. Legal immigrants. We’ve done everything the right way. We’ve waited, kept every law, paid for it and so on. When you do it this way, you agree not to be a burden on society, to not use government benefits. You can’t. The sponsor (me) agrees to support the immigrant. That’s how it should be. Legal immigration is generally a good and productive thing for America.
So, to see politicians (Democrats) encouraging lawlessness and the spending of legal immigrants’ tax dollars on things they themselves are not even eligible for is frustrating. California is insane when it comes to illegal immigration. Completely insane.
Depending on which biased source you are reading depends on the number of Covid deaths.
The ridiculous ones I’ve seen lately are:
1) MN man gets on his Harley and bikes to Sturgis.
2) Bikes all the way back home and finds out he has Covid.
3) Dies in the hospital on a ventilator due to Covid.
4) Right-wing media claims he had a pre-existing condition so it shouldn’t count as a Covid death.
No idea on what the Pre-existing condition was but if he was well enough to ride his Harley to and from Sturgis, the pre-existing condition shouldn’t count. Or stupidity should be the cause of death.
roger mason: I think that there’s an adequate amount of data to debunk the rumor that PCR tests can’t detect the virus. Kary Mullis has been dead for a year, by the way. While I believe you may be correct that the SARS COVID-19 virus has not been isolated (a gold standard to which the accuracy of the PCR test can be compared), I think there exists an adequate amount of evidence to suggest that the PCR tests for COVID-19 are pretty accurate. Reportedly, the leading PCR tests have been tested on SARS-CoV-2 RNA from infected patients, isolated, and grown in cells in the lab. In summary I believe that COVID-19 exists, and I believe people can and do die from it (though most don’t).
All that said, I think shutting down the economy, shuttering schools, wearing masks, and all other related measures are harmful to everyone, will do absolutely nothing in the long run to stop infection in most people, and are a complete waste of time. My guess is that most people are going to be exposed to COVID at some point or another, shut downs or no shut downs. All the shut downs are doing are delaying the inevitable. We can’t stay shut down forever, and the virus isn’t going anywhere; what difference does it make if you get the virus now or in 6 months after the showdowns end?! Ultimately, the outcome is going to be the same (or maybe worse, since everyone will be older!). We might as well let people carry on with their life as usual and let whatever happens happen. It’s going to happen either way.
^Covidiot
I’d rather be a Covidiot than a Covid Nazi:
http://www.enterstageright.com/archive/articles/0520/covidnazi.html
Is a SoCal tax trap brewing?
ATH RE prices plus a future property tax hike to cover budget deficits could put a strain on household budgets. This, at a time when employment, incomes and spending are in decline, could be a knee on the neck of home prices. Just a thought.
Prop13 is the best thing since sliced bread. Similar to bitcoin. I would actually argue that one bitcoin is even better than sliced bread. I expect one bitcoin to be worth more than 110k in the near future (1-2years).
Back to taxes: we must keep prop13 in place otherwise renters will have a very hard time….landlords will pass any tax increase on to renters.
Renters are the ones that are hit the hardest by this low interest rate environment.
Rents are a product of supply and demand, and ability to pay. NOT costs of the homeowner. You act as if homeowners are charging less rent now than they could otherwise get because their costs are low. Lol just stop. They’re charging the max that the rental market can get them. If their costs go up, it’s not as if renters will suddenly have more money to pay rent. If Prop 13 goes, then many homeowners will be forced to sell, which would drive prices down, which would drive rents down (because then many renters would just buy instead of rent).
Prop 13 inflates home values and helps homeowners tremendously. It DESTROYS renters. You used to post this very same thing. Now that you’re pretending to be a homeowner, you’ve done a 180 on EVERY SINGLE stance you once took.
Honestly, your presence here is a distraction and the good doctor would be wise to ban/block you. You’re a troll and your posts only serve to incite people and create arguments.
Josh,
Supply and demand. That’s correct but you have to keep in mind we have a housing shortage in SoCal. You do know/acknowledge that, right?
So, the limited supply Is met by high demand for cheap housing. Renters who cannot afford to rent close to work have to move further east. I know people in SoCal that pay more in rent than I do for my house. (Because they don’t have a large downpayment).
To say that a landlord doesn’t pass higher costs on to a renter is ludicrous. Have you talked to a real landlord before and asked them how many people call when he has a vacant unit for rent? Hint: it’s much more than one.
Repealing Prop13 is bad for renters and homeowners. Higher taxes are almost never a good idea.
Yes I’ve talked to many landlords, and I was one. Landlords charge what the market will bear, period. Your example of limited supply has NOTHING to do with landlord costs rising. Supply doesn’t tighten if landlord costs go up. And demand won’t go up either. There is no magical money that renters will be able to fork over to landlords for their additional costs. So if prop 13 goes, landlords are FOOKED. Many would be forced to sell and property values would plummet. That’s not even including all of the vampire baby boomers who are benefiting from capped property taxes while younger people pay more.
Josh, you nailed it.
If your hope is that prop13 will be repealed you are setting yourself up for failure.
You were a landlord in the past??? Since you don’t believe that landlords pass higher taxes on to renters it’s no wonder you are no longer a landlord….
I believe in the idea behind Prop 13, which was to keep homeowners from being blasted out of the houses they struggled to buy and pay for, by escalating property taxes. I was an adult when that law was passed in the late 70s, and remember well how many people, elders in particular, were driven out by the double-digit inflation of the era.
However, the law definitely needs to be re-jiggered, for as it is, it is extremely unfair to those not fortunate enough to inherit a house in CA. The law should stand, but no one should be permitted to inherit a low tax base. When the house changes hands, whether through sale or inheritance, the taxes should be re-assessed. The idea behind the law is to protect those who bought the place, not give their heirs an outrageously unfair advantage over a buyer who wasn’t fortunate enough to inherit it.
You know Dr. Housing Bubble, I’ve been a fan of your blog for a while. But its been bit of a chicken little if everyday calling for a housing crash. I use to agree with you, and I still like your reasoning, but the thing is the banks, feds, and every who else doesn’t want housing to fall, and will do everything to stop it. Other than the banks becoming insolvent. I don’t see too much changing with housing. Corrupt propped up market. Even now with all the stimulus given, just going to cause more inflation and guess what house prices are going to go up. Maybe 20 years ago housing would have crashed, but now too the stock market and housing are too over manipulated by the feds.. Fact. Thank you I’m still a fan and enjoy your content, but hopefully rethink or everyday gloom and doom.
I agree with your statements of market manipulation but housing is affected most by stability of employment and income at all levels.
BINGO, and according to that statement, a CRASH is coming, especially in CA.
Employment, we just lost 56 MILLION jobs that are going to take 10yrs to come a back.
Incomes- with inflation, incomes have lagged for years, that’s why the FED lowered rates to historic lows. The jobs of the future will be 40k and less.
Thank you for proving that a crash is coming.
Go outside, enjoy the weather. Yes, thats a Housing Bubble off the coast of CA, pay no attention to it.
Weren’t you perma depression bears saying we will have 25-30% unemployment in the US? What is it in reality? Like 8.4%? Nothing burger?
M, I wouldn’t put too much faith in that number for unemployment (8.4%).
I would trust more the numbers of those actually collecting unemployment, which are closer to 20%.
5 star post! I came to the exact same conclusion!
What have I been saying for years on this blog. The Fed holds all the cards and can generate any outcome they desire. Anybody who thinks they can outlast or outsmart the Fed is delusion. Just like anything in life, trying to time markets rarely ever works. Have a long term when buying a home. Buy a place you can comfortable afford, enjoy your home and tune out the noise. Do not over complicate this!
W
The crash never happens until all are convinced it can not.
We must be far far far away from a crash….
The internet is possessed by doom and gloomers who predict a crash next year.
(It’s always next year)
Most house materials went up 300-500% in a matter of months. The inflation on housing is going to be massive for 4 reasons: higher cost to build, massive shortage of materials will cause very little construction or unfinished homes, very low interest and very low supply. After a big jump in price, the FED will be forced (doesn’t mater what they want) to raise interest rates…A LOT!…. That will cause a crash in prices.
People thought that they can all stay home (because of COVID), collect government checks and everything will stay the same. And, if trillions of dollars printed were not enough, Pelosi wants to spend another 3.4 trillions; whose money???….Unfortunately, money can not buy too much if they are debased….and she is not happy to debased further the dollar with just 1.2 Trillions, she wants 3.4 trillions (my way or the highway).
All prices will go through the roof, but house prices (after a spike) will eventually crash because they depend on financing.
Regarding: interest rates have to go up due to inflation.
That’s what they said In Europe and the US After the Great Depression/QE/money printing. The opposite happened. Rates kept declining.
Raising rates crashes not only housing but the entire economy (consumer spending and business loans are driven by lower rates)
Maybe this time is different but I believe we won’t see significant higher interest rates in our life time. But if that’s the worry on the horizon I am glad to refinance soon at 2.75% for the next 30 years.
material costs
I could not believe cost of lumber on a recent home depot project.
I built a 6 foot high fence, on a span of 15 feet and used treated wood for weather resistance. for one 4×6 and two 4×4 and a few 2×4 and some 1×6 panels, I ended paying over $500 in material.
That’s crazy.
I need to rebuild a fence also. Maybe I’ll wait until this insanity stops.
“After a big jump in price, the FED will be forced (doesn’t mater what they want) to raise interest rates…A LOT!…. That will cause a crash in prices.”
This makes sense but the Fed is run by the big banks. The mortgages today are under 3%. Does a bank want to service a 2.5% mortgage when they are paying 4% for savings accounts?
Likely, the banks don’t own the mortgages. Fannie and Freddie own them and the taxpayer is on the hook. However, nobody will be motivated to sell or foreclose on a 2.5% loan when they are making 4% in the bank and inflation will theoretically also lift their pay.
If interest rates go up, I would be motivated to hold onto my house with a low mortgage rate and enjoy the ride.
If interest rates and pay go up, rent will likely go up. Landlords would be motivated to hold onto their rentals.
The US debt would eventually be inflated away.
However, high savings rates would lure people away from stocks and the stock market may plummet or level off for a long time.
I think higher rates would be a good thing for most savers financially.
It would be a repeat of the late 80’s when CDs were paying 12% and my parents had a 1960’s house with a 6% fixed mortgage along with Prop 13 protections. Their house doubled in value but they had no motivation to sell and move and take out another mortgage at 15%.
You forgot that when rates go up, house prices go down. Remember what happened in 2018? Rates went up by 2% and the whole housing market was struggling. And when valued prices go down, people panic, especially those who just bought. The banks might even ask for more collateral. It’s a downward spiral and this time the Fed might not have any choice.
That’s absolutely correct. Rates go up, house prices go down.
I doubt we will see 5% rates anytime soon. In fact, we just hit another low in rates. Until inflation goes out of hand, we won’t see higher rates.
3 years ago when we bought our house I was so worried that we were making a mistake and buying at the top of a market peak. But even the modest gains over those years means a 20% crash is nothing to worry about. Now we are refinancing and our payment will drop by $700+ per month. Fact is, prices move very slowly in housing compared to the stock market. Declining prices may come next year, but the bottom could take 4-5 years to hit. If you are buying to live, save up and do it when you can afford to. If you are buying as some sort of get rich investment, wait for prices to drop and park your money in some other appreciating asset while you wait. You might be waiting a while.
Great post Mind1! Totally agree.
The only thing I would question is:
“ park your money in some other appreciating asset while you waitâ€
Sitting in cash is a losing position. What other options do you have? The stock market has been fantastic over the last ten years. We had a little hiccup in March but are back at ATH’s now. However, perma bears who wait for a housing crash don’t believe in the stock market either…..where should they park their money?
Maybe bonds or a CD….I think a CD pays now 0.25%.
I guess, Good luck waiting for a crash and sitting on cash…..
I’m not sure he said anything about cash. In any case, it depends what the money’s purpose is. Do you keep your emergency fund in stocks? Look, Tesla is down 8% today and I haven’t even had lunch yet. Cash is the place for a home purchase, unless you’re planning on waiting a long, long time (some here clearly have been). Ally no-penalty CD is at 0.75% and dropping. I locked in a 0.9% a couple months ago. There are no ideal options right now.
“Declining prices may come next year, but the bottom could take 4-5 years to hit.”
That could be, and when that happens you want as much cash as possible. Most of my home purchase cash was in one of my businesses, which I recently sold. Now it’s mostly in a CD. It’d be reckless to stuff that into tech stocks right now. Stocks are for long-term goals, not home purchases – unless you’re a gambler or maybe you live in California and will actually have to save for 15 years to have a downpayment. 😉
“Mostly in CDâ€
Man, good luck! I would put at least some money in the stock market. We just had a nice dip in tech stocks. Those are good opportunities.
The stock market is for long-term goals, like retirement, and I take full advantage of it for that purpose via mutual funds every time I pay myself.
Turtle,
100% Boglehead
Okay that makes me feel better. At least for retirement you are investing in stocks. I think you will be fine. Eventually you will see a dip in housing. My hope is you will but then and not wait for a deeper dip and miss the boat. Best of luck!
Thank you. I’m not waiting so much for a massive drop as I am simply to be in the position you were, which is to buy what I want on my own terms. The timing depends on my savings and/or a price drop. I won’t do anything worse than 50% down and 15 years because I abhor debt. I intend to either live nice in CA or live nice in TX. I won’t settle for less and buy a crap shack for a fortune. I’ll only buy something I love and keep it forever.
@mind1 give it time, prices are going below where you bought at.
Funny how the renters wanting to buy a house are experts in market timing. We (homeowners) must have been doing this all wrong
M: Funny how the renters wanting to buy a house are experts in market timing. We (homeowners) must have been doing this all wrong.
You’re not a homeowner. As has been amply proven.
Well technically, the lender still owns part of it.
When you purchase a home, the lender will give you a loan with a 30y fixed rate that is lower than real inflation. However YOU keep all gains/appreciation on the entire house value!! Buying a house is a no brainer! It took me a while to get it but I am finally on the right side!
M has proven to be a tool. That’s about it.
@whatever
And somehow My guess is we will never see that Proof…
It’s possible, but my house is where I live and I don’t have to sell it to realize any gains or losses. If prices start to decline next year due to the end of forbearance programs, it could take until 2024 to hit bottom. The last decline lasted 2006 to 2011. I was worried in 2017 about the peak. If I had decided then to wait for a crash it could have been 7 years to bottom, and probably $250k in rent down the drain. Don’t try to time it unless you are on your 2nd or 3rd property, just buy when you can afford the payments.
At the moment there are still gains so I’m taking advantage of that to get a better rate on my refinance by having better LTV. If conditions are still favorable in 2 years, maybe I’ll sell and trade up, if not then I’ll stay and build onto my current home. Or maybe I’ll buy a cabin up in big bear while prices are low.
Are house prices likely to rise dramatically between now and next summer? At least in the UK with the end of forlough, end of stamp duty and Brexit?
Ideally I would like to sell my house after Easter and buy a bigger more expensive one at the same time. If house prices were to rise I could still afford the move(Though not ideal) but would struggle with a big rise in prices.
I feel like it would be a gamble at the moment. Also the timing of now is bad for personal reasons.
cromwelluk: If anyone could tell the future, they wouldn’t be here. They’d be too busy counting their money!
@Responder except for “New Age.” He’s “made millions” this year yet finds time to come on here and tell us how he can predict everything that’s going to happen. Lol.
Ha!
Your right it’s just I’ve had a lot of good advice on here that has helped me save money and have a less stressful life.
Josh, when you actually read/understand NewAge’s posts then you would know he’s the real deal and gets it. He doesn’t shill anything but he is open about what he invests in and why. I appreciate that more then most other posters that make blanket statements without any substance. You can actually learn from guys like him and a few others.
@Josh
Sorry for the late reply, been busy counting my money. Anywho, I’m not sure what your reasons are for coming onto this blog but it sounds like there isn’t anything that comes out of your posts that are worth lint. I don’t have to sit here and defend myself like millennial does (although he doesn’t have to either imo). I’ve been encouraging everyone to dig up my posts like guys have with millennial but you guys are too lazy and you’ll probably conclude what haters like you are deathly afraid of which is that I am absolutely winning. Every time I make a move, I post it on here well before it actually materializes into profit. It kinda ties to why I’m on here. I read what everyone says, I debate with differing viewpoints and I make an investment prediction that I can hold myself accountable to. I’ve also been an active reader on this blog since my college days back in 2011ish so there’s a bit of nostalgia to it too I suppose. The thing is, I originally came to this blog to read and learn and in the meantime, I’ve also read and learned on my own and thru some hard work, perseverance, creativity, and a dash of luck, I am no longer that poor college student that I was when I joined this discussion a long time ago. Now, I feel like I have experienced quite a bit and might have something to offer people on here so I like to contribute every now and again. Of course, posters like you have made the comments a bit of a cesspool but that’s okay because it’s safe to say that nobody really cares what you have to say. Individuals that truly want to become professional investors read posts worth the time and effort it took to generate them. Individuals that want to become professional losers read what good ol’ Joshy boy has to say!
New Age: I’ve been encouraging everyone to dig up my posts like guys have with millennial …
Why would I dig up your posts? I don’t suspect you of lying.
New Age: … you’ll probably conclude what haters like you are deathly afraid of which is that I am absolutely winning.
No hate. No fear. And I don’t mind if you’re “winning.”
I don’t care if a person’s a bull or a bear. I don’t care if they’re winning or not. I only mind if they’re lying.
M is lying. As has been amply proven.
From May of 2019 when I was still a “wannabe flipper”
New Age:
Inflation will be the biggest factor in the housing market in the next few years. You cannot ignore it and if you do, you will pay the price in opportunity cost. What most people including millennial fail to understand is that what seems like a sour deal on the outside is actually a steal once you analyze the price with inflation in mind. I just closed on a flipper in Riverside for $400K, about 5000 SF on a acre lot with mostly usable land on top of a hill, three stories a HUGE overhanging deck with 360 degree views of lush forest and city lights. It needs about $70K of work to get it up to it’s maximum potential but it could easily sell in this market for $750K to $800K. My parents 4000 SF cookie cutter house in a standard neighborhood in Riverside peaked at $750K in 2006…that’s almost $1M today. THAT is outrageous. The house I’m sitting on now is a bargain by comparison but let’s assume the bubble deflates which I admit is looking like the case. It’s not overnight so there’s no rush to frantically unload it. On it’s worst day I can put it on the market for $600K and sell it in seconds. Boo flippin hoo. You can’t tell me that there’s no money to be made even in this market. That’s why I ignore doomsdayers and keep racking up my money.
Millenial:
New age, your last post was very telling and is typical for recent buyers. Recent buyers often go on the internet and seek confirmation that buying at the peak of the market was a good purchase and the right choice.
We all have to own our decisions but it can help if someone on the internet tells you good job, I guess. Best of luck to you and thanks for sharing. You did great. Keep buying.
New Age:
I don’t need confirmation from anyone on the internet about my investment decisions. The point I am trying to make is that there is money to be made in this real estate market despite a deflation in assets in the near future. An epic rise brings on an epic fall but a slow and steady rise deflates slowly and steadily as well. I will keep buying deals and steals not just any property and I’ll keep making money while you sit on the sidelines rotting your money away in the bank for 0.5% interest.
Millenial:
You are a flipper in the worst market for flipping. Terribly overpriced. You probably never got a career going and now you have so much time and frustration on your hand that you need to tell us on a housing bubble blog how your house flipping business is making money. Sure! Keep buying! It’s a great time to buy!
New Age:
It’s ok to feel bad about missing so many wonderful opportunities over the years since you’ve been crying wolf since 2013. It’s not OK to take out your frustration on people you wish you could be like. That doesn’t do anything for you, it doesn’t turn back time, the only way to move is forward but your crippling fear is holding you back. Maybe you should see a therapist.
Millenial:
Does this look like I am unhappy?
Let’s see:
Six figure tech job
No debt
800+ credit score
Made a killing in crypto (5,000% in 2017 on litecoin) and stocks and sits on large cash balance
Can buy a nice house now but waits for a nice correction to pick up a Dream house on the cheap cheap
Currently rents 15 min from the beach 2b/2b for under 1400!!
Continues to make fun of RE cheerleaders who try so hard to lure in the last sucker
Dude, i can’t lose by winning. You on the other hand….
New age Says “Buy now†because he just bought a flip.
Buys at the peak of the market and seeks confirmation on a housing bubble blog to feel better about himself.
Josh:
It all makes sense now. New Age bought a flip at market peak, got nervous and Googled “housing bubble†and found his way here. Now he’s trying desperately to convince HIMSELF that he didn’t just commit financial suicide by attacking people on a housing bubble blog website. Classic.
Anyway, you better get to work and sell that thing quick. The crash is underway and the only way your prediction of a 10 year selloff and 50% drop comes true is if EVERYTHING in the economy stays the same. The chances of that are slim to none.
New Age:
@Josh I’m been on this blog for quite some time. If I was panicking, believe me I wouldn’t be on a blog lying to myself I’d actually be mitigating my losses actively. I’m just here to provide some experience and insight.
Anywho, since you’re all probably wondering, the house is almost complete! Should be done next weekend just in time for selling season. Total investment: $525K with a few off market offers of $650K but I want at least $750K for it so I’m in no rush to sell. Not bad for three months of work! Now what were you guys saying again? I didn’t quite catch that…
Millenial:
New age is so full of shit. All the flippers I know personally don’t just hang out on a housing bubble blog to “share their experienceâ€. First you pretended you are just here to tell us this time is different and that the market isn’t overpriced. Now you that we know you are actually a peak buyer and wannabe flipper you have lost all credibility. Who buys high and tells everyone in 500 posts that it was a good purchase?! Your panic screams through your posts.
Fast forward to today and nope, no panic on my end.
People are not fleeing the cities except in a few pockets.
If you haven’t been living under a rock, you’ve probably heard the narrative that cities are dead and that white collar workers, now unburdened by the ability to work from home, are fleeing to the suburbs as fast as they can. Logan Mohtashami, lead analyst at Housing Wire, explains to Real Vision’s Ash Bennington why it is nothing more than an interesting narrative. He goes on to add that, aside from a few pockets in New York and San Francisco, the relative strength in the suburban housing market is being driven by the only factors that matter — demographics and mortgage rates. Bennington and Mohtashami also drill down on the relationship between bond yields and mortgage rates and the knock-on effects into housing demand that you could see depending on different scenarios for those rates. Filmed on August 26, 2020.
https://www.realvision.com/mohtashami-cities-arent-dying-demography-and-rates-drive-housing
The FED…..read this….so unfair for renters and no end in sight.
It benefits homeowners greatly….why torture yourself? If you can’t beat them, join them. That’s what I did. I switched from bear to bullish-long-term.
https://www.ocregister.com/2020/09/02/feds-mortgage-buying-spree-at-1-trillion-with-no-end-in-sight/?fbclid=IwAR3Dnjx767oCAx8W3T1zEc85RJedlAlOOsSqqv8AWh4BY37bMr5ggCuhqyg
Best move I have done so far!
You are a tool and a liar.
M… I have been reading this blog for years and I have never commented one time. I have watched people eat you alive for saying that housing will not bust. Your comments have convinced me to buy. Just got my offer accepted. There is no way the Fed does nor deflate the value of our dollar. Cash is a bad investment. I have been hoarding mine for the last 4 years. Corona has showed me two things, 1. This Fed will stop at nothing from inflating assets (housing included) 2. The gap between Rich and Poor is getting larger. I chose my side. All others will be left behind. Cheeseburgers are going cost $40 in a few years.
COnGRATULATIONS!!!
This is awesome! You won’t regret it….the opposite…..housing will continue to push higher and what better hedge is there against inflation?
Hope the transaction closes smoothly and your got yourself a freakin fantastic rate!!
…..the chances that rates continue to decline are higher than rates going up. In a few years you might refinance at a lower rate. How cool is that? Your piti is already fixed for 30 years but you have the possibility to the reduce it even further thanks to lower rates. No better way to say “F U inflationâ€.
“Your comments have convinced me to buy.â€
Haha, this is hilarious. Which person were you listening to? Millie or M?
This same person flip flopped this year. So obviously you weren’t reading his bearish comments for the past four years in which He used to scorn us all, using the derogatory term of ‘Real Estate Cheerleaders‘ for thousands of posts.
I sure hope this is sarcasm. M did not buy a house, man. If you have any sense, find a way to back out of the deal, otherwise you’re buying at the peak of an impending crash.
But honestly, the more suckers like you that jump in, the better it is for savers like me ready to pounce once this crash happens. Less competition.
Josh,
Why do you think I didn’t buy a house??? That’s the dummest thing I’ve ever heard. What motive does someone have to post about a made up story like this? Do you hear yourself?
I think it’s pretty pathetic that you advise someone to back out of their house purchase just because you are jealous! People buy houses daily and they are happy with it. You are not a sucker if you invest in real estate. This is were people raise their families, have beautiful memories and build equity. It’s also an excellent inflation hedge.
You on the other side believe you can outsmart everyone and time the market…..come on man….give me a break.
Remember when you called a peak in Q1? Since then my house appreciated – according to Zillow. Now you call a peak again in Q3. Are you just going to move the peak every quarter now? In a few years we will hear this is the peak in Q4 2024.
I have lived in SCal, a long time. Owning a house is one of the few ways to accumulate wealth, but it has become a game like poker. The odds favor the house, and over time The House will make the most money. People believe housing in SCal is the way to make money. Because few jobs pay enough here any more. But the game is changing, no middle class person wants to live here anymore, they are exiting en mass like never before. In 5 years Southern California, will start wanting to rejoin Mexico. I speak a little Spanish and I’m O.K with that, read La Opinion, compare it to the LA times. In Mexico you have the very rich and the very very poor, and the Cartels. Southern California is doomed. Take a look at Mexico City, that is SCal future.
FLASHBACK FRIDAY
for those of us who are old timers on this blog, who remembers
REAL HOMES OF GENIUS?
Here we go
For just a little over $1M you too can own a crapshack in the hood of West Adams.
Hope of daily ghetto birds (police helicopters)
Steal this property!
https://www.trulia.com/p/ca/los-angeles/2134-clyde-ave-los-angeles-ca-90016–1012862443
I remember the Real Homes of Genius.
At least this house doesn’t have bars on the windows, trash cans out front, and the nice granite counter tops in the kitchen should stop any stray bullets.
“If I Had a Million Dollars.” – Barenaked Ladies – 2006.
I wouldn’t buy this house. It may be that I’m old or possibly that it sold in for 550K in 2014. Did it really double in 6 years?
However, according the Zillow, at today’s mortgage rates, the PITI would be about 5K/month. It was rented recently for 4300/month.
You could buy it, and rent out the ADU for $1500.month and beat renting in that area by about $800.
Also, at $540/sq ft, isn’t this cheap?
Maybe I’m just an old optimist.
I agree with, Bob. That area is actually pretty nice too. And I’m pretty sure it’s not even West Adams. A very central location close to the 10. Kaiser has a big hospital right there. The ADU makes the price look better. There are many many other houses I would say are overpriced in LA before I picked this one out, especially since it actually has curb appeal.
I remember RHOG from back in the old days. There were a few homes profiled that a true genius ended up buying. I remember we were all laughing at the small shitbox in Manhattan Beach with all the trashcans out front. What idiot what actually spend 700K on a dump like that? That idiot had the last laugh.
I was a little surprised that Street View didn’t show power lines going every which way and an auto shop across the street. Oh wait, look at picture 27. I count six lines, three of which go directly over the back yard!
Holy cow, buyers! Look at a $1M house in Texas or Arizona for some perspective. Anybody spending that much money to buy this house is clearly unaware of the world existing outside LA. This house would be considered a total undesirable dump at $200K in TX. It’s hard to understand how people value pleasant summers at $800,000. They just must not know.
https://www.redfin.com/TX/Frisco/5150-Normandy-Dr-75034/home/33058167
https://www.redfin.com/TX/The-Colony/3720-Millbank-75056/home/109680122
^^^ This is where white collar Californians are migrating to Texas as their companies relocate. Real estate agents are calling it Orange County 2.0 for obvious reasons. A much nicer home for half the price and more disposable income is a no-brainer for many.
I know that area, and of course with Kaiser nearby and other new developments nearby like The Ivy in Culver City and The Cumulus (with a Whole Paycheck Foods) at LaCienega and Jefferson help to spruce up the area.
That being said, the area is downright a hazard at night. Not as bad as East of La Brea or even worse East of Crenshaw but still West Adams is nasty at night.
At the tech company I work you get a salary adjustment when you move to a lower cost of living place like Texas….it’s a big payCUT. plus, not all positions are approved to relocate and work 100% remotely.
If you want to get a job in Texas then good luck making the same as your California job.
There will always be people who can afford to live in California. If you want a bigger house and can deal with the weather, sure, move.
My original plan was to sell in California and retire in 30 years somewhere else but now I am just planning on accumulating rental property and let the renters pay for my lifestyle in California.
Turtle: I agree, it’s amazing how expensive CA is relative to buying power elsewhere. That L.A. house is a total beater. Power lines are not good for your health, and you’re surrounded with them there.
At the same time, however, it’s not just a hot summer in TX. 85+ degree weather exists from May through Sept (5 months). 80+ degree weather lasts through Oct. A friend of a friend who lives in Dallas area told me that summer months are spent driving from one air-conditioned place to another. It’s unbearable to be outside. From a few trips to Austin and Houston I’ve taken in summer, summers are not pleasant in TX. That said, I spend a lot of time inside anyway (likely as do many people), so what difference does it make if I sit inside in CA or TX? TX seems to get more appealing every year that goes by with me renting. I could buy a $500K house in TX and have something way nicer than a $1M house here (coastal OC), along with an overall lower cost of living as you stated. Definitely something to think about. I’d miss the beach, but probably not that much.
Maybe you didn’t know that Texans earn almost 10% more real income than Californians.
Have you not been aware of California’s decline? Quality of life is in the dirt these days. Real income is below the national average. It ranks somewhere between Louisiana and Mississippi, which is really sad. Most millennials with “well paying” jobs have a raw deal in CA without the financial help of their families (imagine why Lennar doesn’t offer NextGen suites in Texas).
And they don’t even know it, because most haven’t looked at the rest of the country. They just believe what the TV shows tell them about how special California is. It was special for the middle class a few decades ago. Now the upper-middle class live a barely average lifestyle. What happened, anyway? I’ll lose thousands in disposable income every month when I move.
Toy with this and be sure to check the boxes for “Cost of living” and “Income taxes”. It’s a pretty neat tool. https://www.hamiltonproject.org/charts/where_work_pays_interactive
These are awesome houses in Texas!
However, did you notice the property taxes, HOA, and insurance monthly (TI) costs are almost as much as the PI for these Texas houses?
Texas has high property taxes and no Prop 13. I’ve seen some areas with 2-3% property tax rates in TX.
It will be harder to retire in that home since TI part of your payment is unbounded.
Since TX has no Income Tax, it would be smarter to move there if you have high income. For the long term, CA may be cheaper with Prop 13 on a fixed retirement income. CA income taxes are low if you earn less than 100K. ie if you can retire on the median 70K/year then your state tax rate is less than 5%.
In TX:
2% on a Frisco $1M house = 20K/year. unbounded. ie if your house doubles in 20 years, you will be paying 40K/year in property taxes.
In CA
5% income tax in CA on 70K income = 3500
+
1.1% property tax on a 1M house in CA = 11K/year and bounded to not increase by more than 2% per year. If your house doubles in 20 years, you pay 16K/year in taxes.
= ~15K/year.
Nobody looking at a $1M crap shack in CA will buy a $1M ultra-luxury home in Texas. They’ll spend 1/3 as much to get something much nicer than that junk. Know what that means? It means the property tax is about the same as the house in CA. So, you spend way less, get a better house and on top of it have no income tax.
Turtle: If California sucks so much, why would you ever want to come back? It’s an honest question. I’d be out of here for sure if there were somewhere cheaper with comparable weather.
Responder: Primarily for family but also would like nice weather year round. I do miss the beaches. Texas wins in every other area. I realize the quality of life in California is declining so we won’t do it unless we can get into a home/location we absolutely love for a price that is comfortable for is. That means either a reduction in prices or we wait and keep saving longer. We might never move back to California.
One more example of a property listed for under $800K that sold muy rapido. On the West side of Orange Co (not far from the LA County border) in a middle class neighborhood, some folks I know sold a fixed up 2100 sq ft house on a 6000 sq ft lot after less than 30 days on the market for more than the $790K asking price. The house has 4 Br and an office. This was an inherited house. They borrowed to fix it up, but it still will be a big inheritance. Just like in my neighborhood, where a smaller house sold super fast for more than asking price.
I know of another house in Orange Co that was sold in mid August for over $950K in half a month. 4 Br 3 Ba 3000 sq ft on a 8700 sq ft lot. The owners want to move further south in OC. Plus they co-owned with family and wanted to go on their own. Plus they want a cul-de-sac. Oh, those millennials! The profit from this house should help, but they may have to settle for a smaller place in South County, or at least a smaller lot. Meanwhile, free rent with family.
Low interest rates, and not a lot of job losses in the upper middle income brackets are fueling this.
What a strange time we live in. 18% are on unemployment and people are buying crap homes draped in power lines for $850K. At least the auto shop is across the street.
https://wolfstreet.com/2020/09/03/big-setback-for-the-unemployment-crisis-week-24-of-u-s-labor-market-collapse/
Seriously, how could there not be a correction? Household incomes are only at $70K in SoCal, with high taxes. I take back what I said earlier about people having equity. Every home for sale in SD seems to have had an $100K remodel. And people did that with their mediocre incomes while making house payments? Unlikely.
2021, what has thou? 2022? Eventually I will be right. 😉
Turtle
Living with margin in TX
I was like you….thinking if the median household income is 70-80k how can people afford 700-1m homes. Median household income is a terrible indicator.
Two professionals in California make easily 150-200k along the coast. Immigrant families usually cramp together and buy a larger fixer upper together. You see ten cars in front of there home and not permitted shacks/additions in the back and/or the garage converted into bedrooms.
People who have middle class incomes and can’t afford to buy depend on friends/family giving them a loan or inheritance.
The only way I see this not being sustainable is if we would give people loans based on stated income (liar loans/ninja loans). We are far from it. They sourced every penny when I applied and the week before we closed we had to provide additional documents because everyone was freakin out about covid.
“People who have middle class incomes and can’t afford to buy depend on friends/family giving them a loan or inheritance.”
What a sad state of affairs in California. Borrowing from or purchasing together with family is risky for relationships. I’d rather move to AZ or NV and preserve my dignity as an independent adult. Those multi-generational stock photos on builders’ websites. Oh my. I’m not knocking an inheritance. That’s a different… unless somebody’s still alive. Haha
Found out one of the owners in our community lives with two roommates in his house plus his wife and kid. That’s also a way of buying a brand new house in a nice location…..in this area you can rent out two rooms for 2k total.
What part of Texas are you in? I’m relocating from San Diego to Dallas and telling California to kiss my ass when it comes to taxation. Voting with my feet. I finally had enough of the politics here.
@Incognito You are one of many! We moved from SD to the Dallas-Fort Worth area. The cities north of Dallas and west of the airport are worth looking at. Southwest Fort Worth is also good. Coincidentally (or not), these areas also tend to vote opposite of California. Nice rural neighborhoods exist on the outskirts of these areas. Try the AreaVibes website.
You might go through some culture shock and find the summers to be hot but we adjusted and find much of everything else to make for a good life. Definitely a friendlier place with less stress.
@Turtle – I’m renting for 9 months near Deep Ellum while I shop for a new home. I’m still in my 30s (barely) and I like the nightlife. However, when not out socializing I want to be 20 min from the action in my own house; not living on top of neighbors. I also plan to build my own custom pool.
I was in Dallas about two weeks ago. The heat doesn’t bother me at all. The hail and violent storms will take some getting used to. Overall it’s just another adventure in this short thing we call life. Because life is all too short I won’t be spending it slaving away in California or dealing with the virtue signaling idiots here. If I play my cards right I should be able to retire in 10 years.
The federal budget deficit is expected to hit 3.3Trillion this year. Triple of 2019’s deficit.
Think about your own debt. My biggest debt burden is my house. Other than that I only have a little bit left on my Home Depot Card – only because they give you interest free credit for 12months. Now, when you finance a good junk of your house at 3 or less than 3% what’s the best thing that can happen to you?
Inflation. Prices and income rise. Your debt becomes less valuable.
While this is true for homeowners that still have an outstanding balance it’s also true for the government. Never before could the government borrow for such low rates but debt is ballooning and needs to be paid back eventually.
Why wouldn’t the government have an interest in higher inflation? Repaying the bond holders requires a smaller % of government total tax revenue. It easier for the government to pay back. Inflation is good for the borrower but savers/bond holders are worse off.
This is also true for people sitting on cash. Your purchasing power reduces – just by sitting there in your account. You basically earn no interest on your cash balance but on the other side, inflation pushes asset values up. To keep inflation under control the FED may raise rates, but the cash investor will never get an interest rate from the bank that is above inflation.
An excellent hedge against inflation is to invest in real estate/gold/stocks/bitcoin.
While 2020 was the big hope for perma bears it actually turns out to be one of the worst years for those people (the vast majority of perma bears are renters and low income people). It’s pretty depressing for them. I guess the only hope for them is to allocate some money into stocks/bitcoin and save for a downpayment on a house.
The hope that we’ll have a big crash that somehow improves the situation for the low income folks/renters is a pipe dream. The US has many tools left to keep the economy from Crashing. The fed will do anything to keep Real estate and stocks inflated. Good luck betting against the US money printer. I’d rather put some money in those asset classes.
Dear M,
You seem to think every real estate “bear” is in a boat similar to the one you were in before your inheritance and subsequent purchase at the cusp of an economic crisis. That’s not the case and don’t be surprised that many of us are standing on the sidelines with cash on hand. This is how things work in California real estate. Suckers buy high, then winners buy low.
I don’t think you understand that how a person invests depends on their goals. There are short-term goals and long-term goals. Stocks, bonds and cash all have their place in a portfolio according to a person’s goals. Look, Tesla is down 30% in just one week. This is why a person shouldn’t gamble their cash for short-term goals on individual stocks like you advise.
As for debt, even a mortgage is a loser’s game in my book. We paid our house off several years ago in TX and nearly maximized my SEP-IRA last year. We paid cash for a new SUV six months ago. Debt eats your margin. Imagine being able to invest your house payment. That beats paying interest to your slave master and refinancing over the course of 40+ years.
No, I’ll buy low in California when the opportunity presents itself, if I don’t grow tired on my declining home state first. Otherwise, I’ll enjoy moving up in TX with my fellow ex-Californians. Good luck to you. Some with your style of handling money win in the end but most have just an average retirement. I still recommend reading a Boglehead book. You might love it.
Not counting on the federal government,
Turtle
Bogle also says every investment eventually Returns to the Mean (around inflation) but cautions that trying to time this is a fools game. That’s why none of his books say wait for a crash before buying index funds. In the long term, there will be highs and lows for any asset price but not buying is as dangerous as buying at any point. With interest rates at record lows, it is an incentive to buy. That fixes your expenses.
I believe in Bogle also so I am still buying index funds in this inflated stock market.
If there is a crash, I will re-allocate some of my cash/bond assets into more index fund stocks to keep up diversification. I don’t count on it happening but if it does, I’ll deal with it.
Turtle, you already have a house paid for so you are diversified. I’d buy a primary home today if I didn’t have one. To diversify and to lock in most of my expenses to survive to old age.
If RTM happens again for savings interest rates (it will), I will be the life of the party and this blog with my FIXED 3% mortgage. 5% insured savings account, and that I am happily enjoying my primary home. I will neglect to say that that the home value is 20% less than what I paid for it because I will have no intention of selling it then. My mortgage costs are fixed at the lowest rates in history and will never go up. That is the only certainty.
If the housing market does crash 20%, I would be tempted to re-allocate some of my stocks into a rental property to maintain diversification.
Just like with Index funds, I am not stopping investing in them now even though I think the stock market is peaking.
My crystal ball is broken and Bogle tells me it is a fools game to try to predict the market.
Thanks Turtle,
“ As for debt, even a mortgage is a loser’s game in my book.â€
That’s exactly my strategy, to buy more RE on loans and to refinance existing loans to push down my monthly payments and to rent out properties.
Maybe we compare net worth in 10 & 20 years of we are still around here to see if this losers game worked out for me or not.
I’ll look into the boglehead books. Several roads lead to rome. Whatever you feel comfortable doing should be fine. Why expose yourself to risk that doesn’t let you sleep at night.
Yes, you’re right. It is a fool’s game to try and predict the market. Nobody knows what will happen. But as you said, I already home a home free and clear in another state. So, if prices drop in CA, I’ll buy. If they don’t and I’ve saved enough to be comfortable, I’ll buy anyway. I just won’t do something I’m not comfortable with and right now I am uncomfortable buying in CA. That may change when I’ve saved more or if prices come down, which I think is likely – though my crystal ball is broken too. We’ll see.
Kudos to you with index funds. I keep buying, too. Staying the course.
Yes, I have become a Boglehead.
The NASDAQ run-up this year reminds me too much of the Janus Fund debacle in the early 2000’s. Back then, I had some money and growth in Janus Funds and then lost the rest in Janus funds. RTM happened very fast in 2001 for the NASDAQ and Tech stocks. The NASDAQ market FINALLY regained it’s 2000 high in 2015. 15 years of loss. I broke even in the end but would have done much better in a S&P 500 index fund as Bogle recommends.
These young-uns have to learn the hard way. 🙂
How are your tech stocks and bitcoin doing the past couple of weeks? Lol.
Thanks for asking. I bought some more APLE and Tesla. Tesla was down over 20% this one day. Bitcoin is also a buy.
Hey, Tesla’s up 5% today. Down 20%, up 5% and the rollercoaster continues. Long-term, I don’t know. But short-term for a home purchase in the next few years is not something I know of anybody but M recommending the stock market for.
Maybe if you’re in your early 20’s and know you won’t buy until your 30’s. You don’t want to see the stock market tank just before you’re ready to buy. The potential benefit just doesn’t justify the risk for most people in a home buying situation.
Maybe now it does make sense in California because it does take most people 10 years to save for a downpayment! They should teach that in 11th grade economics. “Okay kids, it’s time to start saving for a downpayment. Can anyone tell me what HCOL stands for?” 😛
20% down, 5% up….the real Tesla story is that it’s up nearly 700% in the past 12 month.
If you had invested in Tesla you could buy two houses in California.
My crystal ball is broken. That’s why I buy the “whole market” in index funds.
I know the last decade has been amazing but the odds are against somebody beating the market long-term by cherry picking stocks. I think you’ll find the research cited in a Bogle/Boglehead book interesting. There are aggressive and conservative Boglehead investors. I’m on the slightly aggressive side in terms of stock versus bond ratio for my target retirement age.
Based on how good the last 10 years have been, I bet you’d practically lock in a killer retirement by getting out of individual stocks while your luck is still hot and moving to index funds. I know, that’s not very exciting. The Boglehead approach is as dull as it gets! 😛
I suppose I’ve said enough about the Boglehead approach.
There is more than one way to skin a cat and you’ve gotta be comfortable.
All the best!
A coming eviction crisis?
Change my mind….
US EVICTION CRISES: 30-40 Million Americans at Risk! And the Housing Market?
â—Even before Covid, 47.5% renters were considered RENTAL COST BURDENED!
â—What’s rental cost burden? When households pay over 30% of income as rent.
â—25% (10.9 M) of all renter households PAID OVER 50% of their income as rent.
â—MOST ‘below poverty line’ paid OVER 50% of income, 1-in-4 PAID OVER 70%.
â—Princeton University estimates 3.6 M evictions were filed annually, 2000-2016.
â—7 evictions per minute were filed in 2016. Renters with children got HIT MORE.
â—Fewer than 10% renters have legal counsel. 90% of owners have legal access.
â—NOW, 30 to 40 Million US renters are at RISK OF EVICTION by the END of 2020.
â—Mom & Pops (M&P’s) own 22.7 M out of 48.5 M housing market rental units.
â—58% M&P’s do not have access to lines of credit that can help in an emergency.
â—Owners face court, vacancy, reletting, & debt collector costs, i.e. 90% of arrears.
â—Owners struggling with mortgage, taxes & maintenance, face risk of foreclosure.
â—What happens to the housing market as risk of eviction escalates across the US?
https://www.aspeninstitute.org/blog-posts/the-covid-19-eviction-crisis-an-estimated-30-40-million-people-in-america-are-at-risk/
Short sale in Temecula, CA. Bought for $453,000 in 2014. Zestimate says $604,000. How can they possibly be underwater, you ask? Obviously they did a cash-out refi or got a HELOC and spent it. But the permabulls in here would have you believe that all of these homeowners have equity and don’t/won’t need to sell. Lol.
https://www.zillow.com/homedetails/39141-Trail-Creek-Ln-Temecula-CA-92591/69267292_zpid/
Get your popcorn ready!
It looks turn-key, but was only built in 2014. They might not have done much to it. Something I can’t figure out is that in Temecula I don’t see a lot of remodels. They still have the kitchens from the 90’s and 00’s with brown cabinets, carpet, etc. But, in San Diego and OC most look like they were remodeled yesterday with hard flooring, modern white cabinetry and so on. Maybe the Temecula folks are pulling cash out to pay for their commutes. 😉
Turtle you know San Diego county very well. Which area are you looking to buy in case prices come down? Curious to know which area you like the best from a value perspective. Obviously anything at the coast but is there a specific area you like because of a good balance between traffic, schools, value, shopping etc?
First picks (near water): Carlsbad, Lake San Marcos or Dana Point / San Clemente.
Second picks (big lot): Fallbrook, De Luz – if can get Target and health foods delivered 😉
Crazy idea: Canyon Lake – might take the heat if can have a boat dock in my yard!
Carlsbad and Dana Point are poor values IMO but they are fantastic, established places. Lake San Marcos is awesome and cheaper than Carlsbad. If it had “Carlsbad” in the name, the homes would cost 20% more. Fallbrook and Temecula are a good value, IMO, for work at home types like us. Canyon Lake is a good value for waterfront property in SoCal, but hot.
What’s that neighborhood in Vista south of 78? Shadow… something. That’s a cool place, even though it’s Vista. Nice weather, good shopping and really it’s more like Carlsbad or San Marcos than Vista. Expensive but seems like a good value for the location, relatively speaking. I’d also consider some of the souther neighborhoods in Escondido as well as Valley Center.
Anyway, that’s my opinion about SoCal real estate. California as a whole may be declining but there are certainly some nice places to live. You just have to PAAAAAAAY for it! Big time.
Thanks Turtle! Interesting and very different places.
Shadowridge? Close to the HS.
San Clemente is beautiful. we went to Catalina a few times from Dana point.
Canyon lake seems interesting. Out there in the inland empire it’s pretty cheap to buy but getting a high paying job there without commuting 1+ h (one way) seems to be the challenge.
This reminds me of the cash out refis of the oughts. It was common place back then. As much as I despise these people, they are keeping the economy going. All that money that was cashed out went to buy fancy cars, go on vacations, shopping sprees at the mall, dining out, etc. Let them lose their home and go into the penalty box (a rental) for a while. If you are in the market to buy a home, you need these type of people also.
Pending home sales in SoCal up 6% YoY.
Not confirmation bias….just a fact….that shows how strong demand is…..despite bears telling us the opposite.
Just facts people
BREAKING NEWS
Purchase application data is up 40% YoY. 🤣
This is not an error…..40% year over year increase in purchase applications!
Holy freakin smokes. 🔥
I am usually not interested in politics but to re-tweet Trump:
This isn’t just a V shape recovery. It’s a SUPER V. Let’s go US housing market!
Insane how strong this real estate market is! Prices will go 🚀🚀🚀🚀
Just thought I would share news of my home sale. I have a full remodeled and upgraded condo 3bd/2.5bth w/ two car attached garage and a very small backyard. One shared wall, corner unit and two stories. Gym, lap pool, tennis courts, hot tub. Located in central San Diego. My place went pending on day 4. I had about 8 showings, 2-3 flaked as they didn’t want to get into a bidding war. All 5 offers at or over ask. It ended up going for 25k over ask. To be fair we priced it the same as the last exact comp in this neighborhood which closed about 3 weeks ago and it wasn’t as upgraded / nice. My home sold for the exact price I predicted and I honestly think the buyer got a fair deal. This community is very desirable. However, the main point of my post is to indicate the market is still hot and there is pent up demand. If you have a good turnkey property buyers will want it. I was slightly apprehensive about listing it over the holiday weekend when temperatures also hit 100 degrees, but it didn’t seem to have much of a factor.
Congratulations!!!
Congrats. I think you sold at an excellent time. What will you do next?
I’m off to Dallas in exactly two weeks. Very stressful packing up your life and moving as a single guy with two senior dogs, but I’m looking forward to it. The only constant is change and I’m really looking forward to no state income tax in year 2021.
Best of luck to you, Incognito. That would be cool if you let everyone know how it’s working out. Moving to TX has crossed my mind a time or two.
CA is gonna fold like a cheaply built house in a hurricane, but the sun will come out tomorrow. Yah think?
The Santa Monica Daily Press in California. “The California law is important because it allows tenants to find a way back to financial balance, assuming they can find work, and get caught up on their other bills as well. How will that impact the landlords who right now are struggling to pay their mortgages while they are receiving drastically reduced, or in some cases eliminated, income. They will be filing for relief in the bankruptcy courts themselves in order to reorganize their debts. Will that impact property values? Most certainly.â€
“As the pool of distressed properties grows and come on the market for sale, that means that prices will start to drop, that can trigger lines of equity to be called on borrowers, who are then faced with coming up with large sums of cash, or they will have to liquidate their properties.â€
“Banks will be impacted by this domino effect of lost revenue, which is the lifeblood of our economy. As banks have to foreclose on properties and take them into their inventory, that means they will be experiencing losses, which lead to job cuts, increased holdings of devalued properties which they must then sell in order to keep their monies on hand high enough to satisfy the federal regulators. That means that even more properties will be sold at lower prices and now we have a downward spiral.â€
“What does this mean for Santa Monica? It’s already begun here. You may have noticed that there are many open stores on the Promenade. Sur La Table is having a going out of business sale due to the shutdown and the transition to online shopping. The number of For Lease signs are multiplying along Wilshire Blvd like rabbits. The loss of both foot traffic due to the stay at home orders and the transition to online shopping means that it’s more and more difficult for a retail shop to survive, which translates into lost revenue for the commercial property holders and that whole downward spiral is at play for them as well.â€
“There is a great shakeout coming in both residential multi-unit apartment buildings and in the commercial real estate market.â€
The Los Altos Town Crier in California. “A local real estate developer who invested in a major, city-approved housing project at 5150 El Camino Real is suing Dutchints Development LLC – the owner of the property that is facing several other lawsuits alleging unpaid debts and breach of contract – along with its managing director, Vahe Tashjian.â€
“Richard ‘Tod’ Spieker, president of Spieker Companies, manages nearly 3,000 multifamily units in Silicon Valley. In a lawsuit filed in Santa Clara Superior Court Aug. 18, Spieker said a $2.5 million investment he and his wife, Catherine, made in the development at 5150 El Camino was instead used to pay Dutchints’ and Tashjian’s existing debts and operational expenses.â€
“Three weeks ago, the Town Crier published a report on Dutchints – a Los Altos-based real estate developer involved in several major projects in Los Altos and the greater Bay Area – that found the group was being sued by several construction companies and investors for millions of dollars. Additionally, the Town Crier obtained records indicating that property owned by Dutchints adjacent to 5150 El Camino is in the process of being foreclosed.â€
The Los Angeles Times. “Greg Glassman couldn’t quite work out a profit in Hawaii. The CrossFit co-founder, who stepped down as CEO over the summer, just sold his coastal retreat for $5.65 million, or $100,000 less than what he paid for it four years ago. He originally sought $7 million for the property in December, according to the Multiple Listing Service.â€
A report from Mortgage News Daily. “Mortgage delinquencies spiked in June and the serious delinquency rate, loans 90 or more days past due but not in foreclosure, reached its highest level in more than five years. CoreLogic predicts that, barring additional government programs and support, serious delinquency rates could nearly double from the June 2020 level by early 2022. Not only could millions of families potentially lose their home, through a short sale or foreclosure, but this also could create downward pressure on home prices – and consequently home equity – as distressed sales are pushed back into the for-sale market.â€
“‘Sustained unemployment has pushed many homeowners further down the delinquency funnel, culminating in the five-year high in the U.S. serious delinquency rate this June,’ the report says, ‘With unemployment projected to remain elevated through the remainder of 2020, we may see further impact on late-stage delinquencies and, eventually, foreclosure.’â€
“All states logged annual increases in both overall and serious delinquency rates in June with those hit hardest by the pandemic showing the most damage. In New Jersey and New York serious delinquent rates were up 3.7 and 3.6 percentage points, respectively. Nevada’s rate rose 3.4 points and Florida’s by 3 points. Similarly, all U.S. metro areas logged at least a small increase in serious delinquency rate in June. Miami and Atlantic City, both hard hit by the collapse of the tourism market saw increases of 5.1 and 4.3 points while energy dependent markets such as Odessa, Midland, and Laredo Texas had similar increases.â€
From DS News. “Not only could millions of families potentially lose their home, through a short sale or foreclosure, but this also could create downward pressure on home prices—and consequently home equity — as distressed sales are pushed back into the for-sale market. ‘Three months into the pandemic-induced recession, the 90-day delinquency rate has spiked to the highest rate in more than 21 years,’ said Dr. Frank Nothaft, Chief Economist at CoreLogic. ‘Between May and June, the 90-day delinquency rate quadrupled, jumping from 0.5% to 2.3%, following a similar leap in the 60-day rate between April and May.’â€
From Bloomberg. “The U.S. mortgage market shows a widening gap between winners and losers as affluent borrowers take advantage of record-low rates while protracted unemployment drives serious delinquencies to their highest levels since 2010. About 2.25 million mortgages were at least 90 days late in July, a 450% increase from pre-pandemic levels and the biggest number since the global financial crisis, according to industry tracker Black Knight Inc.â€
“More borrowers with ability to refinance are using their equity to get cash. About $44.5 billion in equity was tapped through cash-out refinancing in the second quarter, the most in more than a decade. Markets with the biggest delinquency increases in July were Miami, Las Vegas, Orlando, New York and New Orleans.â€
Just remember kids, CA is different, and the weather is oh so nice.
Have fire ants made it to SoCal yet? My wife got bit yesterday (again) and had a terrible allergic reaction. I can’t stand these creatures! In my anger, I told her that between the fire ants and the hot summers, I was ready to pay $1M for crap shack in North Park just so we can go outside! Fortunately, I am thinking straight again after having slept the night.
Fire ants no, but the stupid “aedis” mosquitoes have. I just moved back to SoCal and am dismayed that I now have to worry about freakin’ mosquitoes eating my feet while I’m in the backyard wearing flip flops.
How in the world are they surviving? It seems to get more and more dry.
Aedis mosquitoes lay their eggs in small containers of water, like discarded tires or even bottlecaps. What’s worse is that the eggs can go for several months (maybe years) without water. Plenty of opportunity for these jerks (they bite aggressively during the day) to thrive here.
I usually just read the first and last lines of your comments.
“CA is gonna fold like a cheaply built house in a hurricane, but the sun will come out tomorrow.”
“Just remember kids, CA is different, and the weather is oh so nice.”
These parts I like. The inner portions read like a bot.
Hope you guys bought the dip in tech stocks?
No, index funds. Not gambling on individual stocks. Read a Boglehead book for why. 😉
I’ve only owned one individual stock in my life and that was a long, long time ago.
Everything is fine as long as people aren’t forced to pay their bills. Fed reserve “nothing to see here. Move along!”
There’s too much money to be made in housing, it won’t go down too far, especially in hot areas like coastal CA. Between the Chinese, Wall Street, and flippers, there is always demand. Unless the government regulates speculation out of the housing market, housing will always be a stretch to afford for the average family.
Inflation throughout the 2020s higher than you’ve seen in the last 40ish years will take up the slack where demand gets soft.
The time to buy housing is before a full recovery (whatever that looks like) gets underway, which isn’t really on the table until 2022. Because 2023 forward, high inflation is going to make getting into the housing market really more difficult than it even is today, as I don’t see wages rising fast enough to keep pace with it. COVID (and the general shift towards more automation) has likely resulted in additional structural unemployment.
This market is insane! We just sold our house in Oregon and moved to Southern California (I know, moving the wrong direction, but my family is in SoCal). Before we sold, I was getting really worried that the pandemic would pop the housing bubble, but it just inflated it even more. For now, we’re planning to rent and see how things shake out for a few years. I am hoping for a bit of relief on pricing in the next few years, but if not… well, there are a lot of other beautiful places in this country.
I have friends and relatives that encourage me to buy while interest rates are low, but that seems like the most illogical thing in the world to me. What if rates rise and prices drop because payments are less affordable? All my equity would evaporate! Also, who in the world actually has money to buy anything in SoCal right now? Most of the young people I know have lost income due to the Pandemic (lost job, reduced hours, furlough days, etc). This is not sustainable.
The market is behaving how you would expect it to.
Low inventory, low rates and high demand=prices go up.
No more liar loans means qualified buyers are purchasing homes.
The people who bought in our new community either have two working professionals, retired people who sold another house, a family who sold another house or people inherited or other reasons (investments??). At least one guy is renting out two rooms to make it work. I also know that at least one family backed out as the breadwinner lost his job.
We have a housing shortage and SoCal has great weather and high paying jobs at some world class companies. Some lucky ones can buy here and a ton of people struggle. I would also like lower prices to buy a second home as an investment property.
No, it’s not sustainable. But, a lot of unnatural things are happening. All the best to you!
Like CA, looks nice, sunny, beautiful beaches, mountains, but LA lays in the back ground like herpes monthly breakout, you can’t get ride of it.
A Tale Of Two Housing Markets: Mortgage Delinquencies Spike 450%, Yet Refis Boom With Low-Principal Loans
https://www.zerohedge.com/economics/tale-two-housing-markets-mortgage-delinquencies-spike-450-yet-refis-boom-while-borrowers
refis accounted for around 70% of home loans issued during the period.
Also notable is that the average loan-to-value ratio is above 90%, as borrowers are having no trouble securing loans with just 10% or less down.
mortgage delinquencies are up 450% from pre-pandemic levels, with around 2.25 million mortgages at least 90 days late in July – the most since the credit crisis
It’s sunny out side, but the homeless people are taking up all the best spots on the beach, aint CA beautiful.
The take away is –
Perma depression bears told us we will see a crash this year. When I bought my house in Q1 I was told by many that I bought the peaks and I will lose a ton of money. 🤣
Fast forward, here we are in September already!
And the housing market? Smoking hot…..more than half of the homes faces bidding wars according to Redfin:
https://www.redfin.com/blog/august-2020-real-estate-bidding-wars/?fbclid=IwAR39BiOtZ0blqRapdUmTBh4XfwBMQhdGtl-t233IvOc1uDCnW6c0XCZQeUE
🔥🚀🔥🚀
M: “Perma depression bears told us we will see a crash this year.”
YOU told us we would see a 50-70% crash this year.
YOU were the loudest, most relentless “perma depression bear” since Jim Taylor.
Nobody was as insistent about a coming crash as you. Nobody. No one told you not to buy a house. You were too busy telling everyone else.
Until you pretended to buy a house February, and changed your narrative.
Stay on his neck, SOL. What a joke M is. He should be banned.
And? Who cares. I don’t. I changed my mind.
“Banned†🤣
Yeah ban me!
I used to be a bear and changed my mind!
That’s One of the seven deadly sins! Once a bear always a bear. 😂
M: I used to be a bear and changed my mind!
Then why not just say you changed your mind, and leave it at that? Why pretend there were all these mythical “perma depression bears” telling you not to buy?
Nobody told YOU not to buy. YOU told others. A couple of dozen times per thread.
M: That’s One of the seven deadly sins! Once a bear always a bear.
In typical troll fashion, you’re arguing against straw men. Nobody cares if someone changes their mind. It’s your lies that bring you into disrepute.
Check the threads. I’ve always called myself “a reluctant bull.” Most everyone was more balanced in their views than you. In typical troll fashion, you were the extremist. From extremist bear to extremist bull, but always an extremist.
Another article saying foreclosures are not likely to be as large scaled as 2008.
https://www.seattletimes.com/business/real-estate/why-the-coming-foreclosure-crisis-will-look-nothing-like-the-last-one-jeff-ostrowski/
Who knows. We’ll see. Remember what the news media and experts said in 2006. Buy high or get priced out forever! Forbearance will end and people will need to resume payments. 18% are on unemployment… still. That wasn’t expected. Everything was supposed to be peachy by now, but it’s not. Uncle Sam is propping everything up.
Forbearance. 18% on unemployment.
Is that the Sun behind all those clouds, Nope, it’s a ball of fire weeping across the CA hillside.
“The number of ‘seriously delinquent’ mortgages in Southern California have skyrocketed to levels not seen since 2013, a new study shows. CoreLogic’s monthly tracking of late-paying borrowers shows a steep rise since late winter of very late first mortgages — those ’90 days or more past due, including loans in foreclosure.’ Stubbornly high unemployment — 15.9% in July in the four-county region — has crushed many family finances and made house payments a challenge.â€
Rebuilding is like a season in CA, it’s always around the corner for smoke.
July is irrelevant. It’s September now. Unemployment is supposedly 8%. But that’s impossible because 18% are receiving unemployment benefits. Methodology and election year games. Wolf Street reports that auto loan defaults are lower than last August because the “stimulus” has been so massive (hilarious). At this rate, we’ll have universal basic income before Christmas. No, not really. It’ll hit the fan at some point, likely with the end of forbearance next year.
Been awhile since I’ve been on here and I’m curious; what ever happened to Millennial?
Millennial=M
I bought a house. Brand new in SoCal.
M claims to be the former Millennial. He’s also changed his rhetoric 180 degrees.
He received an inheritance, bought a house right before COVID and did a total 180 to become our fiercest bull. His new name is “M”.
True story.
Spot on, I had so much cash that I couldn’t justify not to buy a house any longer 🙂
I am a medium bull. Long term bull for sure.
He changed his handle to M, pretended to buy a house in February, and changed ALL his opinions 180 degrees. From one extreme to another.
The “50 to 70% epic crash” Millennial overnight became housing bull M.
50-70% crash 😂🤣
Maybe if covid turns into a zombie apocalypse…..the other option I could think of is if there will be an alien invasion.
He (M now) bought a a house and is now the biggest housing cheerleader in the comments. LOL
I am def a housing cheerleader. Everytime there is good news I can’t help but post it. And there is so much good news about the market. Historic low rates, historic low inventory and high demand. Can’t get much better than this.
The housing market is on fire. And I post about expected market time and inventory levels. In 2007/2008 we had 115k active inventory. Now it’s below 30k.
Those aren’t extreme views but facts.
It would be nice if we could go back to the old days and focus on the market and stop the trolling. You guys have to get over it that I am no longer a bear. Why is this such an obsession for some 🤣😂
Home seller asking prices jump 34% in SoCal 😄
https://www.ocregister.com/2020/09/14/home-sellers-asking-prices-jump-34-in-california/?__FB_PRIVATE_TRACKING__=%7B%22loggedout_browser_id%22%3A%22de030eb27c6e052b0a7b9d14589f980a656a5ae7%22%7D&fbclid=IwAR2wDT8fuUkd9_81FWj62sICA5ri9cLWsRtzJcJS0cR7Q9Jd9kfBGH8nWDg
I still think the Ghosts of Housing Future visited him one cold night after Christmas and he woke up the next morning a changed person.
He may have a paranormal advantage over all of us.
This place is amazing–in the middle of the worst civil unrest, rioting, burning, looting and destruction in American history, nobody here thinks that the current revolution will affect anything in Southern California housing. New York City is turning into a nightmare with people fleeing left and right. San Francisco is literally a $hit hole. And because of Covid-19, companies are finding out that people don’t need to live close to their offices.
Everyone here thinks that L.A. has some strange mystical power to avoid the disaster that are hitting American Democrat run cities all over the country. The fact that Democrat politicians are using the Covid-19 to literally destroy local and state economies in a desperate attempt to stop Trump seems oblivious to everyone here.
The Covid-19 epidemic is not the end of the world and can be controlled without the stupid measures now being taken–mass lock downs, closures and masks don’t do anything to protect the at risk populations. Covid-19 has become politicized up the whazoo and it’s become the biggest violation of Civil Rights in our nation’s history.
But none of this will affect housing prices here in California, right? You guys need to get out more and see what’s going on in the rest of the world.
ZZy,
You do realize everything you’ve stated about Covid and “boy who cried wolf” panic induced by the democrats can be quickly reversed. 1) Trump loses in November 2) Trump wins and 4 more years means they throw in the towel on the draconian measures
3) The vaccine comes out.. and fear is reduced and this becomes another flu shot
Either way… everything goes back to normal.. so why would housing drop? If this were a life-altering pandemic.. which you obviously don’t believe. Then housing should plummet… otherwise.. you kind of made the point as to why housing in Los Angeles will be fine!
We seem to be repeating what happened a hundred years ago with the Spanish flu. The great depression of 1920 began after the Spanish flu problem ended, not when the flu was raging. The economic damage, caused by the Spanish flu, had a delayed effect on the world economy and asset prices.
There are several people on this site that think that SoCal housing is overvalued and due for a correction. I’m honestly flabbergasted that COVID didn’t bring things crashing down. I guess we’ll see what happens after the election.
I guess you never heard of the New York City Draft riots of 1863.
From the Zinn Education Project:
“When recruiting for the army began in July 1863, a mob in New York wrecked the main recruiting station. Then, for three days, crowds of white workers marched through the city, destroying buildings, factories, streetcar lines, homes.
The draft riots were complex — anti-Black, anti-rich, anti-Republican. From an assault on draft headquarters, the rioters went on to attacks on wealthy homes, then to the murder of African Americans. They marched through the streets, forcing factories to close, recruiting more members of the mob. They set the city’s colored orphan asylum on fire. They shot, burned, and hanged African Americans they found in the streets. Many people were thrown into the rivers to drown.
On the fourth day, Union troops returning from the Battle of Gettysburg came into the city and stopped the rioting. Perhaps four hundred people were killed. No exact figures have ever been given, but the number of lives lost was greater than in any other incident of domestic violence in U.S. history.”
From Wikipedia:
“The New York Times reported on Thursday that Plug Uglies and Blood Tubs gang members from Baltimore, as well as “Scuykill Rangers [sic] and other rowdies of Philadelphia”, had come to New York during the unrest to participate in the riots alongside the Dead Rabbits and “Mackerelvillers”. The Times editorialized that “the scoundrels cannot afford to miss this golden opportunity of indulging their brutal natures, and at the same time serving their colleagues the Copperheads and secesh [secessionist] sympathizers.””
What this had in common with today’s incidents was the role of the Democratic Party in acting as apologists for the mobs.
When tech stocks have a Downday the perma depression bears grab the cheerleading gear. Next few days the stocks recover and push higher….crickets.
Q1, when I bought a house, it was the peak according to the perma depression bears. 2 quarters later, housing appreciated 10% YoY….crickets.
See a pattern here? That’s the problem with the depression bears. They won’t ever buy. Seems so sad: To always hope for a bigger dip/crash.
Nevermind, I’d be repeating myself for the 19th time. Just like you. 😉
What’s a good hobby?
“There are several people on this site that think that SoCal housing is overvalued and due for a correction. I’m honestly flabbergasted that COVID didn’t bring things crashing down. I guess we’ll see what happens after the election.”
Sheetrockero: It is clearly overvalued in SoCal. Look at the mean price trend line. Look at the median household income. San Diego and LA are not San Francisco or New York with mega-salaries. The reason for what you are seeing is mortgage forbearance. People have been allowed to not pay for one full year. It’s all part of Uncle Sam’s “Extend and pretend”. 18% are in unemployment and time is ticking. Will forbearance be extended beyond one year (shocking prospect)? Will employment recover in time? Those are my questions.
You said ” San Diego and LA are not San Francisco or New York with mega-salaries. ”
The bottom line is, last year, the LA/OC area had more million dollar+ sales than the Bay area. A lot more.
For this to happen, there must be more high income people in LA/OC than the Bay area.
We’re all just waiting for our inheritances so we can buy pretend houses in pretend housing tracts in the coastal but not really coastal part of San Diego like you.
I’m pretty bearish. I bought my first home in 2012 after ignoring constant advice to buy back in 2005 to 2007. I sold it just a couple months ago. I can wait a couple of years before I get back into housing. Things seem pretty frothy to me right now. I don’t want to compete in bidding wars, but it was nice being on the other side of a bidding war.
“nobody here thinks that the current revolution will affect anything in Southern California housing”
Actually, So Cali homeowners are aware of the wacko housing propositions coming from SF and Sac pols. and hopefully are gearing up to defeat many of these props in Nov.. What those clowns don’t seem to get is that in So. Cal. RE is not just a market or housing. It’s a downright religion! And it’s always been that way. No matter what your
political stripe, red, blue or green housing is sacred. Paying more than 30% of your gross for housing ? Big deal, nothing new. You’ll have to make that sacrifice just like previous generations. Don’t like the ranch with a backyard ? Thou shall not touch. Want that beach house ? Fine, get on the housing ladder and start climbing. And as witnessed herein, neither fire nor Covid nor riots or dopey pols can change the course of So Cal RE. It’s not day trading or speculation, but a lifelong journey. So you’ll have to sing the gospel to find your way.
From SB to the Bay area homes are flying off the market. Going over asking prices, lasting at most a week or two. I for sure thought that there was going to be a correction, but just is not happening. Economy looks sluggish, lots of metrics suggest its a super inverted V recovery, but real time, housing is selling.
Thanks to forbearance. 18% are still on unemployment and that’s been flat for a while now. If the employment situation hasn’t improved (don’t believe that 8% number; it’s an election year) when forbearance ends, are people going to be able to pay their mortgages?
The frenzy in home purchasing is just that. An artificial urgency has been created by COVID anxiety and low rates. Also keep in mind the RE industry moves slower than other markets. Could be 1-2 years before the pandemic shows in RE prices.
The reason housing is not crushed according to Logan Mohtashami (google his blog) is due to 2 things
1) Demographics – there is an enormous about of 24-36 yr olds moving through the population of US and they will be the largest swath of buyers in decades.
2) Low interest rates here forever
Note that have you seen what these young professionals make in salary?
I saw one of the big Web IT companies hiring internet engineers. Salary ranged from $150K to $300K per year! to sit at a computer all day and write code.
Further, those in the food, service and travel industry were mostly renters and were not potential buyers anyway, they were renters.
I understand that unemployed low wage earners may not be RE buyers but their wages are lost. Wages that don’t exist in the future economy. Wages that will not contribute to economic growth. A contracting economy will shed more high wage earners as companies scale back. It may take some time, but the pain will climb the corporate ladders.
The travel industry took the hardest hit airline layoffs are significant. Not that many low wage earners in that industry.
Spot on
Hypothetically: I am a young married techie living in San Francisco and we are both making 300K combined income. My one bedroom apartment lease just dropped to 3K/month and my manager has told me to work from home.
At a 3% 30 year mortgage, my payments on a 600K loan in the burbs would be 2500/month.
What would you do? Buy in the burbs or renew the lease?
Number 1 would make sense, if (and only if) those prospective buyers in that demographic have the capital to buy. I don’t think they do, generally speaking. Yeah, some younger people make a ton of money at tech companies and elsewhere, but they are not the norm. The median age in Orange County, CA (where I live) is 39. The median household income is 95,000. The average household income is $125,000. And this is according to a realty-related site! Do you really think extremely high buyer demand is going to be there for an average home, in the event that a lot of people lose their homes? Maybe from investors, but probably not from 20- and 30-somethings. Just an educated guess- not saying I’m necessarily right.
Regarding interest rates, I don’t know if that will affect things significantly in the long term. Interest rates were pretty low in 2011-2012 (not as low as now, but historically low), and yet house prices were still depressed.
Home builder confidence is at an all time high!
https://www.nahb.org/News-and-Economics/Housing-Economics/Indices/Housing-Market-Index
Of course it is. Builders need to show confidence to make buyers feel confident. Sales 101.
VMware Cuts Pay for Remote Workers Fleeing Silicon Valley
https://www.bloomberg.com/news/articles/2020-09-11/vmware-twitter-cut-pay-for-remote-workers-fleeing-bay-area
This will most likely be the trend as companies look to offset losses.
Stripe is paying employees $20,000 if they leave big cities — but they’ll also get a pay cut
https://www.cnn.com/2020/09/16/business/stripe-employees-new-cities/index.html
They SHOULD cut teacher’s salaries, for as long as “remote learning” continues.
1. Teachers save time and money by not commuting, so cutting their salaries by the amount saved would not reduce their net income.
2. Governments are running deficits. They need to cut expenses.
3. It’s the right thing to do. The private sector is making sacrifices. Why not teachers? Especially since it’s not even a sacrifice, as they’re saving money … (see #1).
But of course, teachers unions, so no pay cut.
you are an idiot and a fart sniffer. Seems like you need to go back to school yourself. Maybe, if teachers got paid more they could teach your dumb ass. Wish I could meet you on the street.
Totally agree with Mr. curry.
🙂
Son of a landlord: Responses like Mr. Curry’s confirm that you were spot on with your assertion. Same goes with police (especially in Santa Monica), but we’ll leave topic for another day.
Many teachers are brain damaged, low IQ ideologues, who use their classrooms to spew left-wing, toxic hate.
And with online lessons, teachers now worry that parents will discover how their children are being propagandized:
https://www.americanthinker.com/blog/2020/08/schoolteachers_worrying_about_parents_overhearing_their_brainwashing_of_students_in_online_classes.html
I am 97% sure SOL is a bitter, single dude without children.
Mr. Curry is indeed correct, you sniff so many farts. Make yourself useful and help one of the thousands of teachers spending their own damn money just trying to get their students hot spots and mother fricken crayons. I say we take away your internet and give it to a kid who needs it.
Could you see someone like SOL teach kids? No way! I doubt he ever had kids.
It’s easy in his position to gossip about teachers. I doubt someone like him had a successful career in life.
“VMware’s senior vice president of human resources, Rich Lang, said the company adjusts salary based on the “cost of labor†in different regional zones and benchmarks salary variations among firms competing for its workers. ”
This has been true for most tech companies for at least a decade. If you work in an expensive city (Silicon Valley or Coastal CA), you tend to get a premium salary.
I think this is fair to attract new talented people. When SF one bedroom apartment rents average 3K/month, you need at least 100K income.
However, I know some Boomers who purchased a house in the 80’s in Silicon Valley. Their house is now worth 5X what they paid, have no mortgage, and they are benefiting from the enormous local salaries. These are the people starting to retire and cashing out to move somewhere else. Or they are staying put with a 1M+ house, no mortgage, and $250/month in Prop 13 property taxes.
It’s not just Tech. I also have a friend in Silicon Valley who is a high school teacher. They are doing well after buying a house in 2010 with a 100K+ salary with 15 years experience. They had a job and some job security and dove in in 2010 when everyone else was fearful.
I wish I were them.
I am seeing a TON of houses go “back on the market” on Redfin lately. Anyone else noticing this? I’ll be very curious to see inventory numbers as we head towards fall and winter. If that many home sales are falling through, combined with sellers seeing this as the peak, and with forbearance ending – watch out.
anecdotal BS
YoY sales are up 14.6%
I am seeing a lot of “Accepting Backup Offers,” which indicate that the accepted offers are weak. Certainly no bidding wars. And yes, many do fall through.
OTOH, I did buy a $50 million mansion in Bel Air last weekend, located on the beach, after I won the Irish Lottery. So that’s pretty cool.
You are on to something Sherlock!
Sales falling through left and right goes well with our data line that sales are up 14.6% and asking prices jump 34%!
https://www.ocregister.com/2020/09/14/home-sellers-asking-prices-jump-34-in-california/?__FB_PRIVATE_TRACKING__=%7B%22loggedout_browser_id%22%3A%22de030eb27c6e052b0a7b9d14589f980a656a5ae7%22%7D&fbclid=IwAR2wDT8fuUkd9_81FWj62sICA5ri9cLWsRtzJcJS0cR7Q9Jd9kfBGH8nWDg
You guys are geniuses!
“ The Fed said it expected interest rates would stay near zero until at least 2023 but signaled that the road ahead for the economy could be a long one, despite the run-up in equity values this year, as the U.S. is still dealing with millions of people who are unemployed.â€
No rate hike in sight.
The guy who used to call himself “no crash in sight†then changed his name to “big depression in sight†should call himself “no rate hike in sightâ€
Maybe I can refinance at 2.5% in the near future! Or even at 2.125%? Doesn’t sound so crazy anymore.
Lower rates and historic low inventory mean house prices will go 🚀 🚀 🚀
M, Rates and inventory are only two of many factors that will determine future RE prices. But you keep hanging onto those like a toddler grasping his blankey.
Oh yeah?
What else is there besides demographics, rates and inventory?
Pls don’t tell us median household income or unemployment rate. The perma depression bears told we will see 25-30% unemployment 🤣
We seem to be repeating what happened a hundred years ago with the Spanish flu. The great depression of 1920 began after the Spanish flu pandemic ended, not when the flu was raging. The Spanish flu, had a delayed effect on asset prices with that damage occurring after the pandemic eased.
I’ll let the Wall Street Journal tell you.
https://www.wsj.com/articles/covid-unemployment-debt-middle-class-family-finances-11600122791?mod=lead_feature_below_a_pos1
I knew it, your headline says it all “no job, but loaded with debtâ€
As if the middle class has lost their jobs and is near bankruptcy.
Dude, have you been outside lately? Do you see how people buy shit left and right? I looked into getting a jet ski. The used ones are as expensive as the brand new ones. Problem is you can’t even get a new one: it’s ok backorder.
I can’t get a pool at the moment because every company I contacted is freakin busy. It’s a record year for these guys. People work from home and want pools.
The landscapers see it similarly. They raise prices to keep up with the demand.
Unemployment, according to the perma depression bears will be at 25-30%. Instead we see what? 8%?
Not everyone here is a waiter oder stewardess. The tech company I work for will most likely have one of the strongest years ever recorded. (Judged by q1-q3 actuals and forecasted Q4 based on order book)
M, I do see consumers buying and they are racking up more debt. So far, $45B has been withdrawn from US homes during this latest frenzy of refinancing. Did you even read the article? I personally know of 2 dozen people that have lost all or partial income, all white collar high earners.
California homes sales are up 14.6% year over year
https://www.car.org/aboutus/mediacenter/newsreleases/2020releases/aug2020sales?fbclid=IwAR0RIi0U3jwA405SUNPG_ubn0pnd56ySGoXon9ici3tb_PrZNuLP-wUfIiI
Insane how strong demand is….
Insane is right. One might even say the market is being irrationally exuberant. Now where have I heard that term before….
When you try to understand the current state of the housing market you need to argue with the factors impacting the market: Demographics, interest rates, inventory and demand.
2021 will see a hot start. Why? Because expected market time is way above previous years. Only a dramatic event could turn this market drastically.
$700,000 price PLUMMET:
This Santa Monica townhouse: https://www.zillow.com/homedetails/1032-3rd-St-APT-104-Santa-Monica-CA-90403/80390914_zpid/
They’ve been trying to sell it since March 2016.
* March 2016 … Offered for $2,995,000.
* Dec 2016 … Delisted.
* Nov 2018 … Offered AGAIN for $2,995,000.
* Sept 2020 … After numerous price cuts, offered for $2,295,000.
I dont know what the market value is but obviously at $2.95M they were not serious sellers. We” see if their dramatic price drop is now a realistic price.
Only newbies look at asking prices. Asking prices have no meaning.
Pros Look at sales data and YoY price increases across the categories, expected market time, inventory levels and rates.
Everything else is entertainment for the pros.
M: Only newbies look at asking prices.
That would be YOU. Less than a year ago, you were still citing asking prices as evidence for your “upcoming 50-70% crash” prediction. While simultaneously calling yourself a “real estate expert” here to teach “newbies.”
Whereas I, and others, told you that asking price is meaningless. That YOY sales price is what matters.
M: Pros Look at sales data and YoY price increases across the categories, expected market time, inventory levels and rates.
Thanks for calling me a Pro.
Greedheads trying to take advantage of one of those suckers born every minute.
The house was listed and didn’t sell in 2010 for $1.7M.
They think they can get $1.2M more now?? I don’t think so.
It can’t hurt to try. I think I’ll put my house on the market for $10M to see if some sucker buys. I bought it for $200K so if it does sell, I will be set for life.
Expected market time increased to 37 days in SoCal. Inventory rose slightly and demand dropped slightly. We are still significantly above the trend lines of previous years but adjust to the new season. As a reference, a slow market is between 90-100days of expected market time.
From MarketWatch: The COVID-19 lockdown is squeezing real estate from all sides and threatens to burst the housing and mortgage bubble.
https://www.marketwatch.com/story/the-covid-19-lockdown-is-squeezing-real-estate-from-all-sides-and-threatens-to-burst-the-housing-and-mortgage-bubble-2020-09-21
I wonder if there will be any impacts due to the air quality and fire trends recently, especially with work from home becoming more popular. I’ve had several friends mention possibly moving out of state due to wildfire activity and smoke in the air. The thought crossed my mind too. Wouldn’t be surprised if there is at least a drop in demand in fire risk areas. In many communities the locations up in the hills have historically demanded higher prices.
My recollection is no amount of earthquakes, mudslides, fires, riots, have ever caused more than a momentary dip in home prices.
And if it does cause a decrease in home prices, 5%? 10% in the hilly areas or condos in the downtown area who cares?
Dang, number of existing homes listed for sale is plummeting for SoCal.
Glad I got my house in Q1 2020. It’s getting tough out there for house hunters.
Not a lot of homes listed for sale yet. If you cant afford your house why sell when you can go into forbearance and then foreclosure?
Of course number of existing homes listed for sale is plummeting. Why sell your house when you can go into forbearance and then foreclosure for years on end. New housing hack?
M: Glad I [pretended to have] got my house in Q1 2020.
Fixed it for you. No charge.
Great article by Logan motashami
https://www.housingwire.com/articles/wow-6-million-existing-home-sales-however-context-is-key-with-2020-housing-market-data/?fbclid=IwAR0h-Dhenmf4NiDLhZSyNaeoz1n_xWQ2b9zpwVFw2ZuCMiLdh_jO2xqwFuQ
Since we have so many depression perma bears I feel confident housing isn’t going to crash. A bubble means that everyone rushes into the asset to get a piece of the pie. When your taxi driver and grandma tell you to buy it’s time to sell!
With housing, the avg joe thinks values are too high. There is No speculation in sight, people don’t buy to make money but to simple have a house to live in. we will see price growth over the next years due to demand, affordability and limited supply.
For years I tried to find arguments why the market needs to crash. None of them played out or were valid. I am spending a ton of money on buying stuff since I have the space now. So what? We love every minute in This house. My life changed drastically – I lived in a cheap apartment before. Life is too short…..if you can comfortably afford it you can’t go wrong buying a home. Cheers!
Here’s an excerpt from a current LA Times article:
The six-county region’s median price reached $600,000 in August, up 12.1% from a year earlier, according to data released Wednesday by DQNews.
That was the largest percentage increase since 2014 and the third consecutive month during which prices set a new all-time high. Sales rose 2.4% from a year earlier.
“We have had houses with 40 to 50 offers,†said Syd Leibovitch, president of Rodeo Realty, which has offices throughout the Los Angeles area. “It’s just bizarre.â€
“We have no inventory,†said Heidi Ludwig, a Redfin real estate agent who specializes in the South Bay.
Of course, with 3% interest rates, this is not so bizarre.
Record in new home sales! Over 1M….haven’t seen this since 14 years!
Yep perma depression boys, the crash is almost upon us.
Since nobody’s has a job or money. We are all debt burdened and unemployed.
M: “Yep perma depression boys, the crash is almost upon us.”
Are you talking to yourself? You’re the only “perma depression boy” in the room. Or were, until you changed your mind.
Nobody else ever believed in your 50-70% crash, much less a “perma depression.”
Where I disagree with you is that all the people I know buying houses now are completely irresponsible and 1 week from going broke. They are all lying on their loan applications and the bank is okay with it because they are approving the loans. They are all speculative and not buying homes just to live in them. Some people buying 2nd homes and renting them out to net $100 a month LOL. They have told me their plan is to let them go if the market drops. Im not s permabear. I just think there are good times to buy homes and bad times, there are also good reasons to buy them and bad reasons. What i see now is too many bad things. 5 years ago was a much better time to buy a home.
SV That sounds like BS to me or from a foreign country.
I went through the loan approval process and there is no way you can lie. Even the week before we closed we had to provide additional backup to source the funds. That’s unusual but other homeowners in our tract told us the same. Lenders were extra careful during the covid times.
What could I possibly lie on my loan application when you have to submit your W2’s and the source of your downpayment? Thinking that you can simply lie and buy a house that you can’t afford is delusional. I think you might be dishonest to yourself.
Why don’t you fill out a loan application to see how it works and to see what you can afford? Getting pre-approved is an important step in your journey.
That’s the problem with perma depression bears, they aren’t looking at facts but instead build their thesis on anecdotes.
Housing market is on fire.
interesting podcast on urban and suburban markets
https://thereformedbroker.com/2020/09/25/the-suburban-housing-boom-is-only-getting-started/
Housing market is on fire.
First 10 minutes interesting podcast on urban and suburban markets
https://thereformedbroker.com/2020/09/25/the-suburban-housing-boom-is-only-getting-started/
Yep, market is one 🔥 🔥 🔥 and prices will go 🚀 🚀 🚀
No end in sight due to low rates, high demand and historic low inventory. A bad time for people on the sidelines waiting for a crash. I am so glad I am on the other side now.
This Calabasas house was listed over 14 months ago — still no sale: https://www.redfin.com/CA/Calabasas/23555-Summit-Dr-91302/home/3533998
A really nice home in Calabasas:
https://www.redfin.com/CA/Calabasas/4464-Alta-Tupelo-Dr-91302/home/3511653
Nice homes like this won’t last long on the market.
Under Obama the military changed the retirement system from a 20 year retirement and you get a paycheck for life to a 401k style retirement where the government puts those dollars into the stock market. I wonder how many extra billions get pumped into the stock market through this program? Either way its evident the stock market doesn’t reflect the true economy anymore, but it reflects a 401k program that’s too big to fail.
You make it sound like the stock market is a bad thing.
Invest, jump on the train and make some 💰 💰 💴 💵
That’s not exactly true. They went to a blended system so you still get your pension after 20 but you can participate in the thrift savings plan (TSP) as well. For people like myself that did a short stint (or the 80%+ people who never make it to full retirement) it’s a better deal and portable when you separate. I would have done it if I had the choice.
As a contractor and union employee, we opted for an employer direct contribution that essentially maxes out 401K each year on their dime. The pension is still there but it’s nice to know I still have my nest egg if I leave for some reason, early retirement, etc.
Really good article about the 2020 housing market:
https://www.businessinsider.com/how-2020-broke-the-housing-market-inventory-could-run-out-2020-9%3famp
We couldn’t be happier to have purchased in Q1. While many on this blog cheered and celebrated that I bought at the peak and housing will crash it seems that just the opposite will happen: real home prices are expected to go up.
More and more People take advantage of super low rates and want to live in a larger house with a backyard. Away from busy cities and density. It also seems we might run out of inventory. We are not building enough. It’s a double edged sword, as a homeowner I don’t mind appreciation but on the other hand we have to be careful to not increase too much too fast. Slow and steady wins the race in my book.
Good luck everyone!
M: “We couldn’t be happier to have purchased in Q1.”
Ah, no, you didn’t. As proven by your logically inconsistent posts:
* January 31 — M (aka Millennial) still promoting his “perma depression bear” outlook.
* February 11 — M claims to have inherited a lot of money.
* February 19 — M claims to have bought a house.
From perma depression bear, to notice of inheritance, to home purchase, in less than 3 weeks?
That’s too quick to clear probate. And M can’t claim he knew about a pending inheritance before February, because he was still a perma depression bear in January.
By April, M claims to have moved in. Yet he later claims (in June) that his house was so unfinished at time of purchase, it was still stubs and slabs. That he was able to inspect the materials used, to assure they were of top quality.
A house so unfinished in February, would not be move-in ready (and govt inspections finished and done) by April.
M: You’re just jealous!
Others here have claimed greater wealth than you, yet I’ve never expressed skepticism or disdain toward them. So it’s clearly not jealousy.
Out of the 300 posts on this thread, M has made nearly 100. If that’s not troll like behavior, I don’t know what is…
How many times can a person state over and over that they bought a house? We all know it’s BS, but even if it’s true, who effing cares? Great, congrats, move on. No one is arguing with you.
I also agree with the construction timeline. It’s impossible. But why bother arguing?
🤣
Unfinished house???! Clearly, this guy has never bought a brand new house before. There is no way in hell you can move into an unfinished house.
It gets inspected and appraised, then you have your final walk through and there were a few things we had them fix (mainly cosmetic). Yes during the construction process you can visit the site and see the house progress. It’s a cool experience to see your house built.
Look, I get it’s hard for you that I switched from
Being a bit bearish to a homeowner and more Bullish.
I would suggest you save and invest some money. At some point (probably 10 years from
Now) you will Be able to afford a new house in SoCal. Don’t be so jealous. You gotta work for it.
I am posting market updates, stats and articles to help keep you informed. That’s the opposite of what a troll would do. A troll makes up shit and tries to provoke: exactly what SOL is doing: “teachers are all brain deadâ€, “m didn’t buy a houseâ€, “m moved into an u finished house†etc. those lies/posts are indicating he’s trolling.
I do the opposite
For example: when bears believe the market will crash you can argue against it by pointing out the expected market time is in sizzling hot territory.
Those forward looking indicators tell you that instead of a crash, the market will remain hot for a while and prices cannot decrease in this environment.
M: I am posting market updates, stats and articles …
Amid much else.
M: A troll makes up shit …
Oh, the irony.
Everyone can see SOL is a troll and everyone can see that M posts market updates and stats.
Those facts can be seen by everyone here.
M, Thanks for sharing. If his link is dead, try this one:
https://www.businessinsider.com/how-2020-broke-the-housing-market-inventory-could-run-out-2020-9
“Buyers are willing to pay more for a house than I’ve ever seen — I’m talking $30,000 to $50,000 over the listing price,” one Baltimore real estate agent told Redfin recently. “They’re desperate because homes are flying off the market so quickly. I’m selling all of the homes I’m listing within three days.”
That all sounds strangely familiar.
55% of 1,000 Homeowners Surveyed Regret Taking Out a Mortgage During the Pandemic
https://lendedu.com/blog/mortgages-during-coronavirus-report/
Regret taking out a mortgage???? I don’t regret paying for my mortgage for a second.
We love every minute in our house and I have many projects to work on. We had already a few parties at our house and I can’t wait to Have the extended family here as well for the holidays.
In the near future I am planning on refinancing. That’s another great advantage of being a home owner. Your monthly payment can only get lower not higher.
M, I had no idea you bought a house and were happy with your purchase. Thanks for sharing.
Ouch…that article is damning for the housing market. As far as the next 12-18 months go, look out below!
It’s because I don’t mention it often
Every time I read an article like this one I am proud and happy that I bought a house in Q1 2020:
https://www.ocregister.com/2020/09/29/orange-county-home-price-hits-new-high-800000-after-11-6-jump/?fbclid=IwAR1V69xHagFnz2GVrDSleR07LrXrkZZ-YJ50xPX6NWXHIV4Bn9UJgnwtslI
Housing in OC just hit another all time high. Up year over year by more than 11%
🔥 🔥 🔥
Pending home sales at an all time high…..
https://www.housingwire.com/articles/pending-home-sales-at-an-all-time-high-now-what/?fbclid=IwAR2fyxPgNidjw10_GmqT7li4axNHC49XkL2pW7mQ8adv_xMybvGE2cc-e4c
Perma depression boys told us the market will crash…..the opposite is happening. Demand is mega strong!
“M
Perma depression boystold us the market will crash…”Fixed it for you. No charge.
Huh?
🤣 😂
I am the exact opposite of a perma depression bear.
I invest in the market (bought real estate in Q1 and lots of stocks)
A perma depression bear thinks the market is crashing and even when the market crashes the depression bear thinks it will go lower. So a perma depression bear always waits for even lower prices and never ends up buying .
We on the other hand create memories in our beautiful new home and take advantage of low rates and prop13.
Mortgage Refinancing Boom Is Too Automated
Computer-driven appraisals are an innovation that nobody needs right now.
https://www.bloomberg.com/opinion/articles/2020-09-25/mortgage-refinancing-boom-due-to-automated-appraisals?srnd=opinion&sref=ZtdQlmKR
“The average equity extraction on a cash out refinancing these days exceeds $60,000, and more homeowners will be enticed to extract equity with every uptick in home prices. The latest data from property research firm Redfin shows median home prices have reached record highs and are up 13% over the last year. That helped propel aggregate cash withdrawal volumes to about $100 billion in the past six months based on AEI calculations. And even with refinancing volumes up more than 200% over the same period in the last year, the mortgage analytics firm Black Knight figures nearly 20 million homeowners are still eligible to refinance their mortgages.”
Homes as ATMs? Cashed out equity? What could go wrong?
In 2005 the joke was, “my house makes more than I do”.
“The average equity extraction on a cash out refinancing these days exceeds $60,000”
Explains how those little ancient homes in SD look like a million bucks inside.
I like those modern white kitchens.
Perma depression bears told us 30% unemployment. In reality it’s less than 8 🤣
https://www.foxbusiness.com/economy/september-jobs-report-coronavirus-pandemic-2020
M, the Perma Depression Bear, told us housing would crash 55-70%.
M, the Perma Depression Bear, told us this several dozen times in every thread, over several years.
M, the Perma Depression Bear, “guaranteed” this crash (his word) based on his “real estate expertise” (his words).
So in mocking Perma Depression Bears, M is only mocking his own “real estate expertise.”
I’m glad that M finally agrees with me (and others) that he is no expert.
Show us one post under M that is bearish. Lol
M: Show us one post under M that is bearish.
I can show you plenty of posts “under Millennial” that were bearish. Since you are Millennial, those bear posts are yours.
You’ve admitted that you are Millennial.
On April 10 you posted:
M: “@New Age
That’s exactly me. M=Millennial (50-70% crash guy).
A few of my posts did not appear on the site so I tried with a new name (M).
Source: http://www.doctorhousingbubble.com/coronavirus-impact-on-california-housing-market-escrows-tumble-and-1-million-californians-file-for-unemployement-insurance/
So, not one bearish post under M?
Thought so, because they don’t exist.
Posts under millennial don’t count. They are almost a year old. Almost….move on and don’t get stuck in the past 😉
M: So, not one bearish post under M?
You changed your handle. So what?
The “perma depression bear” posts are YOURS.
M: don’t get stuck in the past.
Not stuck in the past. Stuck on your lying about it in the present.
All these “perma depression bears” you keep attacking — it was you. No one else came close, aside from Jim Taylor. And he stopped being a bear at the end of 2014.
Lol, you can’t even provide ONE bearish post under M?
Not even one?
What are we even talking about then ? And what lies? 🤣
Have you shown us one lie? Just one? 🤣
M: you can’t even provide ONE bearish post under M?
I already did.
I’ll post it again.
This post was “under M.”
M: “That’s exactly me. M=Millennial (50-70% crash guy).”
In that post, under M, you’re claiming to be the “50-70& crash guy.”
But you already knew that.
Source: http://www.doctorhousingbubble.com/coronavirus-impact-on-california-housing-market-escrows-tumble-and-1-million-californians-file-for-unemployement-insurance/
So not one post under m that is bearish? Not one?
San Francisco rent prices down 20% YOY. Los Angeles down 11%. San Diego down only 1.7%. The trend looks geographic for the major cities, from north to south. It’s hard to imagine San Diego not following Los Angeles.
https://wolfstreet.com/2020/10/01/san-francisco-rents-in-free-fall-new-york-rents-swoon-expensive-cities-college-towns-cities-in-texas-other-states-sag-but-in-16-cities-rents-jump-double-digits/
I wonder, will less people feel like they “couldn’t justify not buying right now” with low interest rates as rents keep coming down?
Forbearance is on the rise again and COVID is still a thing. Can’t imagine any working person wants another shutdown, but what will Joe do if he wins? He sounded like he was stuck in April when he said we can’t fix the economy until we get rid of COVID (paraphrasing).
Santa Monica, Housing Prices Crater 22% As The Rotting Stench Of Mortgage Fraud Settles In On Los Angeles Area
https://www.movoto.com/santa-monica-ca/market-trends/
As one Los Angeles broker decried, “We’ve been lying for so long how are we now supposed to tell the truth?â€
Only a fool would think 3rd World Shithole CA isnt the biggest turd swirling in the toilet, the flush will take them down.
I’ve seen a surprisingly large number of townhomes and houses on the Westside (Brentwood, Santa Monica, Pacific Palisades) that were sold around 2018, give or take a year, that are up for sale again.
I wonder, how many people are selling because they suddenly can’t maintain the monthly payments?
I would not worry yet.
All over SF, NYC, LA the wealthy are selling their 2nd homes.
I friend of mine lived in a beautiful condo project on Ocean Avenue near Montana Avenue in upscale Santa Monica. She said half the condos (which were worth $2M – $4M each) were only vacation condos for the 1%.
I friend of mine lived in a beautiful condo project on Ocean Avenue near Montana Avenue in upscale Santa Monica. She said half the condos (which were worth $2M – $4M each) were only vacation condos for the 1%.
I live in a condo on Ocean Avenue, near Montana. Most of the people in my building are full time residents.
The HOA even passed a rule a while back, that rental leases must be for a minimum of 4 months. That was to prevent people from turning their units into Airbnb rentals.
# of for sales signs are going up in SoCal.
Inventory is flat.
I am getting the second payout of my inheritance soon and I am wondering if I should buy a rental or stocks or remain in cash. Tough decision
Rule #1 when receiving a windfall: WAIT (a few months, at least).
Also see the video X posted below. 😉
All the best!
Stay in cash so if you have to flee from BLM/ANTIFA rioters you can easily move elsewhere.
Notice the run on guns and ammo? Plus shortage of gun Supply by manufacturers?
I got my guns but not enough ammo yet. Nothing is easy these days but I have a feeling as soon as you rack that shotgun in front of the rioter he will pass 🙂
Or you just stand there with your AR and wave. Why flee when you can easily defend your castle? I know I know, someone will say you will go to jail if you defend your home. My answer: bulls***, let’s wait and see.
I don’t know. It’s California. The law says you don’t get to protect your castle in the same way as in Texas or other states. You have to run and hide then wait to be attacked before you do something, right?
Have you seen videos of these rioters charging people that are holding a firearm? They’re nuts. That lawyer couple in Missouri literally just stood on their property with an AR-15 and pistol and are facing jail time. Meanwhile, the trespassing vandals have all gone free.
And that’s Missouri. It’s not likely you’d fair any better in California. What happened to my beloved California, anyway? It was all Ronald Reagan and patriotism when I was a wee lad. I wish I could convince my family to move.
Anyway, the good news is that you’re not going to have rioters on your street. That’s a worry for the folks spending $1M on trashy bungalows in North Park or some other urban “paradise” that psycho justice warriors would be attracted to.
Turtle, various websites say this:
“The Castle Doctrine is a set of laws that applies to the situation when a person uses self-defense inside his/her own home.
Under this doctrine, there is no duty to retreat if a resident confronts an intruder inside his/her home.
In addition, the resident has the right to use deadly force (in self-defense) inside his/her home when someone uses force to break in.12
Under Penal Code 198.5 PC, a person is presumed to have a reasonable fear of imminent harm when someone breaks into his/her home.13â€
Google California penal code section 198.5, says nothing about run, hide, retreat….
Banks are clamping down more on cash out refi’s and with a lower interest rate
a cash out doesn’t necessarily mean higher house payments. In fact, with the
lockdowns the savings rate is at around 31%, the highest in 30 years. There’s
no where to spend it or the trillions in gov. stimulus except maybe a home remodel
or expansion. Chris Thornberg of Beacon Economics has stated that for every $1
of economic loss due to Covid, the gov. has pumped $2.50 dollars back into the
economy. It’s just not being spent yet. Those savings, he mentioned will be like
rocket fuel to the housing market when Covid restrictions are lifted. Forget the “U” or
Biden “K” shaped recovery. It’ll most likely be a sharp, quick “V” recovery, if the
pandemic doesn’t drag out forever. Which it won’t. I just feel sorry for the new
working generations that will have to deal with the ballooning national debt. Politicians
are spend happy during an election year.
Great video on how to prepare for the coming housing recession:
https://www.youtube.com/watch?v=h56S5BA7AyI
Ken digs a little deeper than most. His U-haul comment inspired me to dig a little deeper.
Renting a 20′ truck on Oct 10:
SD to PHX is $1435
PHX to SD is $213
SD to Denver is $2254
Denver to SD is $965
SD to Austin is $2908
Austin to SD is $776
Bringing U-haul trucks back to SD could be a business opportunity.
How do they get them back, anyway?
Penryn, CA Housing Prices Crater 21% YOY As Dead-Broke California Borrowers Liquidate And Default
https://www.movoto.com/penryn-ca/market-trends/
As one Placer County broker advised, “If you’re a seller, you’re out of luck because there isn’t a buyer at any price.â€
See This:
https://www.placer.ca.gov/5852/Ready-Placer
And This:
https://ucanr.edu/sites/fire/Safety/Current/
Placer and Nevada Counties are on fire. I wouldn’t buy until I was sure it was still there.
Of course there is no buyers.
It’s Pentryn California.
A no-name dumpy town in the boonies of California.
Do you want to live there?
Penryn is beautiful. Lots of land and privacy, right by the lake, zoned for a great HS and only a couple miles from shops and restaurants. Hidden gem. And it’s not on fire 😉
No terribly familiar with the area so I pulled it up on Google Maps, hit street view in a random spot and saw two beautiful homes, each with their own little “lake” in their front yard! White rail fences, mountains over the horizon and all that.
Anyway, cherry picking this or that little area is rarely helpful.
Unemployment below 8%
Sry perma depression bears. You told us we will see 25-30% unemployment. 🤣
When BLS was announcing 8.4% unemployment a few weeks ago, 18% were claiming federal/state unemployment insurance from all programs. How do you reconcile that?
Powell couldn’t, so he claimed it was actually more like 11%. In any case, the employment situation right now is comparable to the worse point of the Great Recession.
Don’t let Uncle Sam manipulate your decisions, especially during an election year.
M: Sry perma depression bears. You told us we will see 25-30% unemployment.
Who told us unemployment would be at 25-30%?
Can you actually name one of these “perma depression bears” and cite a past post? Or are you fighting straw men?
Most of the perma depression bears left by now as stocks and housing has been on the rise. Go back to q1, when I bought my house, the depression bears came
Out telling us about the big crash this year, 25-30% unemployment and waves of foreclosures. Lol. It’s pretty much the opposite what they told us! People are in bidding wars….. Glad I bought in Q1!!
LOL…M’s mantra while meditating…
“People are in bidding wars….. Glad I bought in Q1!!”
“People are in bidding wars….. Glad I bought in Q1!!”
“People are in bidding wars….. Glad I bought in Q1!!”
“People are in bidding wars….. Glad I bought in Q1!!”
An singular un-employment rate is informationally incomplete.
What does 8% un-employment really mean?
So M, throw a few numbers at us.
For a region such as SoCal, what is the mean and median household income?
For that same SoCal region, what the mean and median home price?
To be credible, be sure to include your data source, not just some numbers that you picked out of the sky.
Thank you.
As if median household income has anything to do with it…:
It’s historic low rates: you can get 30y rates for 2.65%!
And inventory levels: we have about 30k active listings. In 2007/2008 you had 115k active listings.
Who cares about median household incomes? I bet none of my neighbors here have median incomes….you need to make a ton of money in order to make it in California….if you have an avg job, there is only one way to be a homeowner…..leave!
M
“…you need to make a ton of money in order to make it in California….”
Please convert “ton” into “dollars”.
Is there any hope left for any of the ‘little people’?
Really depends on the area. If you are in the Inland empire you can probably live okay with 150k household income.
Bay Area, I would say at least 300k household income and SoCal you are fine with 200k.
Little people can survive if they rent cheap apartments and keep moving further east.
Unemployment for SD county:
https://www.bls.gov/eag/eag.ca_sandiego_msa.htm
The housing market is wonderful as long as the government keeps controlling it, right? If we truly had free markets right now I wonder what things would look like with all the foreclosures and people out on the street because they couldn’t pay their bills?
Reality eventually finds its way back.
The eviction moratoriums and mortgage forbearances are coming to an end, at the beginning of 2021.
THEN we will probably see a mega wave of evictions, foreclosures, etc.
Eviction and mortgage moratoriums were supposed end by June. Then by August or September. Then by the end of the year.
Of course, the lockdown was only supposed to be the last two weeks of March. Then till the end of April or May. End of June. End of Summer. End of the year.
And still they are calling for extending moratoriums, and even to outright “cancel rent” for the entire year. Or two years. And more stimulus packages.
I don’t think anyone knows when the moratoriums or lockdowns will end. Or how this will all play out. Not specifically. Only that there are “interesting times” ahead, as the Chinese might say.
Didn’t have to be so. Covid is exaggerated This lockdown is a calculated attempt to destroy and reset the economy, and to strengthen the oligarchs. But they might easily lose control of events.
Follow Logan motashami for SoCal housing.
Look at his recent article about purchase application data year over year:
“ The MBA report shows the year-over-year growth for the last eight weeks has been +21%, +22%,+25%,+6%, +40%,+28% +33% and +27%. â€
This is a forward looking indicator. This is poison for the perma depression boys. It’s been a bad year for the crash crowd.
“We have no demandâ€
“Unemployment 25-30%â€
“Waves of foreclosuresâ€
“No buyer leftâ€
All these statements are for the trash can.
These numbers are a result of pent up demand from the lock down and some FOMO created by the pandemic and low interest rates. Demand is not really that high. It only appears high because of low inventory.
100% agree!
I would be kicking myself if I would have left the news, coronavirus and perma depression bears scare me away from buying in Q1.
So glad I bought in Q1!!!!
Are you glad you bought Q1?
M: I would be kicking myself if I would have left the news, coronavirus and perma depression bears scare me away from buying in Q1.
You lie.
There were no “perma depression bears” trying to scare YOU from buying. YOU were telling others not to buy.
You admitted this “under M.”
M: “That’s exactly me. M=Millennial (50-70% crash guy).”
Source: http://www.doctorhousingbubble.com/coronavirus-impact-on-california-housing-market-escrows-tumble-and-1-million-californians-file-for-unemployement-insurance/
It’s amusing that the top commentator on this housing bubble blog is a housing bull >.<
He has double the # of comments compared to second place lol
All I post is my own experience and lots of data in order to help people. Th Problem with perma bears is that they don’t seem to have valid reasons why the market is going to crash.
If you are in a good financial position, you buy a house in places like SoCal. Waiting for a crash doesn’t work for most.
A year ago, Our Millennial was the only housing bear on this blog.
I made the same comment about Millennial providing the only counter to all of the housing cheerleaders on this housing bubble blog.
What a difference a year makes.
From DS News. “Californians continue to feel the economic effects of the pandemic, including its impact on the housing market. The state’s rising unemployment rate along with its competitive and costly housing market has caused a housing crisis throughout the state. A recent study from UC Berkeley reports that nearly half of all Californian households have lost employment income since this March, and over 20% of households report ‘no or only slight confidence that they have the ability to pay their mortgage or rent next month.â€â€™
“Californians now find themselves struggling to keep up with their housing payments. Berkeley’s study shows that 14% of renters and 9% of homeowners with a mortgage in California had fallen behind on their housing payments as of August.â€
“That same month, nearly 18% of homeowners in the state reported that they might have to face foreclosures within the next couple of months. Californian renters are grappling with even greater fears of eviction. In August, 42% of Californian renters reported they were likely to be evicted from their homes in the next couple of months.â€
“Paying rent and mortgages isn’t the only financial hardship on the minds of Californians right now. Nearly 38% of households that have fallen behind on rent and mortgage payments are also facing credit card and loan debts that they needed to get in order to pay for housing.â€
“Landlords are also facing the impact of Covid-19, as more than half of all California renters who are behind on paying rent are living in smaller properties with four or fewer units. This puts extra strain on landlords trying to make ends meet while handling smaller properties. In the wake of the pandemic, households are now not only dealing with the loss of employment and housing security–they will also have to confront missed payments in the long run.â€
LOL, remember, the weather is really nice, yah just gotta step over the shit n needles on the beach to get to the fukashima radioactive water, enjoy :)))
The crux of the issue is valuations. Whatever exogenous events occur, they are incidental to this fundamental view that valuations of all asset classes have been impacted by financial repression. Recent research by two university professors show clear evidence of the existence of the Fed put. The Bank of International Settlements issued a report stating 50% of post March gains were influenced by central banks stimulus. The fact that Covid has not caused a major crash in asset prices reflects the power of monetary policy. However, now that markets acknowledge the existence of the Fed put, its effectiveness will be diluted or priced in. Whether we’ll see the Fed’s direct intervention in housing remains to be seen. Buying up GSE debt may already be on the cards, or even happening. One thing remains clear; the Fed will do anything to ensure asset valuations remain where they are. The twisted logic is that the cost of letting them deflate is calculated to be much worse than the risks posed by bubbly prices. So, short of another Sigma or Black Swan event, which would need to be worse than the pandemic, the best we can hope for is inflation erosion of home prices. That of course means home ownership will skip a generation and has already started. Aside from monetary policy, there is fiscal stimulus that also plays a role in supporting the economy and markets. Governments are in a unique situation of being able to issue huge amounts of debt at record low rates. No investor (with mandated exceptions) in their right mind would buy negative yielding debt, except central banks. So much for central bank independence. The other possibility is when investors believe valuations are unsustainable, independently of what the Fed does, or says. So far, the wool still seems firmly pulled over investors eyes.
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