Real Estate inventory is piling up: Housing market unaffordable to most Californians so what happens next?
Price cuts. Cookies at open houses. Listings lasting longer than a few weeks on the MLS. The housing slow down is now officially here. Delusions usually end up on a direct path with reality. Housing is always a lagging indicator of underlying economic activity. People will fight to the bitter end to save their homes. Unlike the stock market, prices do not adjust overnight. However, in places like California the weak performance in the stock market last year is going to hit the bottom line for state tax revenues. It is also giving pause to VC money that was chasing absurd companies with nonsensical P/E ratios in search for the next billion-dollar unicorn. But little by little inventory is starting to pile up. People are opting to rent versus buy or in California, or as over 2 million adult “children†have opted to do, move in with their baby boomer parents. So what does the rise in inventory signal for 2019?
As the market shifts
Inventory is up in a dramatic way in California. Take a look at this chart and the year-over-year changes:
San Francisco inventory is up 61.5 percent year-over-year.
San Diego inventory is up 54 percent year-over-year.
Los Angeles inventory is up 44.4 percent year-over-year.
Sacramento inventory is up 30.6 percent year-over-year.
Riverside inventory is up 27.1 percent year-over-year.
I sorted the above based on annual percentage change for inventory. Of course, it is no surprise that most of the regions are in California. This is the land of the Jimmy Buffet Taco Tuesday baby boomer crowd. People that talk about how easy it was to buy a house on one income while working a blue-collar job rail against Millennials for not saving enough. Blue collar work unfortunately does not buy a house in most of California. And many of these people now have Millennial kids that are now back at home and they wonder why they can’t venture out and buy a home. This is at the core of the affordability crisis.
Housing inventory is now significantly up. But we are in the denial stage ebbing into the frustration stage for sellers:
This pattern played out in the last housing bubble bust as well. I need to remind people that while yes, NINJA loans made the crisis worse, the vast majority of foreclosures came at the hands of vanilla 30-year fixed rate mortgages. In other words, if you can’t pay your bills it doesn’t matter if you have an option ARM or a 30-year fixed rate mortgage.
Las Vegas is like a canary in the coal mine for California. Take a look at what is happening there:
Many places are getting no offers at all. If a home is priced to sell, you will get offers. But right now, people are still in deep denial and feel as if high prices are justified simply because things have been moving up for nearly a decade. Las Vegas is already feeling the hit as in many other places.
So what this means for the housing market is that buyers will have more options. Those that want or need to sell will have to adjust pricing or face the home not selling. The days of prices going up unhinged from underlying economic forces like wage growth are coming to an end if the stock market continues to have lackluster performance.
While people knew this day was coming, it is viewed through denial colored glasses. Â
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305 Responses to “Real Estate inventory is piling up: Housing market unaffordable to most Californians so what happens next?”
Burglar poses as realtor, attends Open Houses to case the joint and disable the alarm: https://deadline.com/2019/01/lapd-arrests-suspect-in-series-of-celebrity-home-burglaries-1202527916/
This burglar/realtor targeted celebrity homes in the Hollywood Hills.
Well, we have extremely low sales. We also have way too many realtards. If they can’t make money by selling they have to get creative. Just like lenders have to get creative by designing bad loans in order to get unqualified people into buying. This is normal for the last phase of the bubble cycle. Realtards get paid for lying to you. I would argue that disabling the alarm And taking a few things from your house isn’t better or worse of what they do on a day to day basis anyways.
Badly designed loans PRECEEDED the last housing crash by 5 years. Those good ol “no-docs” loans let anyone lie about their income. It’s difficult to be more cleverly stupid than that! But thank Congress for those loans. Especially Dem Barney Frank (House), and Christopher Dodd (Senate). They helped design those anti-American products. I know it was in 2003 because as a realtor then (and still today) I cold hardly believe what a mortgage broker friend was telling me when she described N0-Doc loans. It was so laughable and appalling that I went to a lender and purchased a cheap investment home based on No-Docs. The Only documentation I had to show was my driver’s license when my signature was notarized at closing. The problem this time is that the FED has held interest rates down to jack up the housing market. Now that the real estate market is sick again the FED wants to raise rates. Higher rates will destroy the housing market. Meanwhile look at all of the across the board debts. Individual, local, state, federal, corporate….. and we haven’t had a recession in 10 years!!! Government and the FED. Invest in ammo.
“Higher rates will destroy the housing market.“
Higher rates is the best thing since sliced bread. Let’s you buy a house at a cheaper price. Cheaper price is what matters. Nothing else matters.
Not to worry – the state is buying homes maybe to give them to the illegal people who come here. State housing!
Think everyone should have to give half their Social Security to a new immnigrant.
Housing to TANK HARD!!!!! soon, maybe 🙂
Already happening. Just follow some data for hot market on the west coast. I post sales, inventory and prices on a monthly basis for Seattle, San Diego, Oc county. In a few days I will have the December data.
Im starting to think “Jim” was a realtor troll making fun of all you housing bears! LOL. Now that the housing market is tanking for real, where is he or her????
Housing to tank hard soon!!!
Haha! We knew you’d get it right one of these years.
Jim!
Is this really you? We missed you all of these years.
in process Jim. Thanks for keeping the faith.
Nope. Inventory levels are still low. While they are up a lot in percentage terms, still, there is a shortage decent homes for sale. If you have two homes for sale before inventory jumps 100%, then you have 4 homes for sale. Big deal. Wake me up when something changes.
Many RE experts have warned the last few years of the upcoming crash. I prepared and saved lots of money. Now that the market is crashing I am ready to invest when a great deal comes up. Many who believed the lies from RE cheerleaders bought high and are stuck now. They can’t sell at a profit and their cash is tied to overpriced real estate. Good thing I followed the data and waited.
Prices are sticky on the way down. Be patient.
THIS: “They can’t sell at a profit and their cash is tied to overpriced real estate.”
Newly-minted homeowners who went all in the last 1-2 years are going to be feeling a lot of pain this year. Once folks start realizing that they’re paying 50% or more of their paycheck every month on a mortgage, taxes and insurance while their home value is not going up because they bought at the peak of the market- things could end up very ugly indeed.
I’ve been following RE news these past many years- my wife and I have saved up a considerable down payment- but housing values have wildly surpassed the absurd in terms of their relation to median incomes (we live in the Bay Area). Better to wait and see where prices and the stock market go this year and buy a place when things have settled down- hopefully in favor of affordability for the average person.
Yes, there is still a shortage of housing and prices are not dropping yet. The current real estate market appears to be similar to that of early 2006 so prices will likely remain strong thru Spring. A great buying opportunity is probably about 3-6 years away, but prices will likely be down 10-15% by this time next year.
We are at 2016 level of low inventory… you know when how prices went up:
https://2.bp.blogspot.com/-DrA52yPVLSI/XBphn6ISJFI/AAAAAAAAw1w/2-IaqYW8UckZuW8zWDEqGTe7BBTUDFKcgCLcBGAs/s1600/EHSInvRedNov2018.PNG
Talk to me when we get to me when we get to 12 months supply of inventory, we are so far away from that it’s not even funny.
It’s beautiful to see these high inventory numbers. Our RE cheerleaders told us we won’t see an increase in inventory! They also told us we will not see an increase in rates, they also told us we need to buy now or be priced out forever. They also told us that this is the year when millennials will Go out and buy in droves. None of that BS has come close to being true. The exact opposite is happening. Inventory is rising rapidly and prices are falling left and right. Most Experts are saying the same thing now: buy now and be screwed forever (financially).
I expect to buy at a 50-70% discount within the next two years.
Millennial,
It’s easy to just ignore all facts and believe what ever you want. You are a master at that with 100 post almost identical on every Dr Housing Bubble article.
You are going to be the first 40 year old real estate “expert” who has never owned real estate.
It’s hilarious to me that you even view living with your parents… or god forbid you in-laws??? LoL as an acceptable solution.
Seriously dude, WTF?
Tank in sight! It seems you are not happy for me? I was right about the market and that the low inventory lie was just that: a lie. Now, you can read it everywhere, If you like it or not.
Your posts are very much in line with this stage of the bubble: denial. I hope you keep on reading and posting as this crash unfolds. We run out of perma bulls and real estate cheerleaders very quickly! Buying high and early in your life doesn’t make you an expert. 7 Mio bought and foreclosed last time. Do you call them experts? Literally everybody can buy high. The smart ones wait and buy half off. It won’t matter if I am 31 or 35. and while you wait and save for the crash, why not live with your parents or in-laws to save even more? I would do that in a heartbeat. But my rent is so cheap I can save a lot each paycheck just by renting a little 2b/2b close to work. 🙂
%50 drop? no way is that happening, local and big government cant afford to let house prices drop. Nor can Too Big To Fail banks.
Housing inventory has been low for almost seven years now. Low as in low relative to historic norms. A house receiving multiple offers the first day it goes on the market is not normal. The market has been such a seller’s market, many views have been distorted. Do not confuse normal inventory with a tanking market. As was consisely stated by the Dr., housing markets don’t go down over night, it generally takes years to find a bottom. Millie may be able to wait another 5 years, most others don’t have that luxury.
Yep, waiting 5 or ten years for the bottom is a nothing burger. You save several hundert thousand dollars. Why wouldn’t you have the luxury of waiting? What could possibly a reason that forces you into buying high? I asked the question many times and nobody ever answered?!
I take it you haven’t seen it with your friends and peers, but social pressure and spousal/family are the biggest reasons not to wait from what I’ve seen. Next would be a desire for the freedom of ownership. Third would be for financial/investing reasons.
Totally! And herd mentality. Thats why I go against that. Let all your friends buy high….you buy during the crash you win. With dramatic financial results for the rest of your life. It’s just math to me not an emotion. A house is just a box….you either rent it from the bank or from a private landlord. When renting from the bank you better make sure you buy at the right time.
“A house is just a box.”
Uttered by someone who has never owned a home before. When you have a family one of these days, you’ll realize a home is much more than a box. Renting a cheap apartment in a sketchy part of town or moving in with mommy and daddy will not be part of the equation. Keep doing what you are doing Millie, but always remember you are in the minority.
Quite the opposite is true blankfein. We are a renters nation. Most people get that it’s much better to rent that house instead of buying it for a hyper inflated price. I am not the minority-at all. As most of us know there is no rental parity during this severe bubble. It’s much better financially to rent instead of buying during these times. Nobody here is saying a house doesn’t bring value to you. We are saying you pay much less during the bubble for that value by renting. This all changes when we see the crash. Than you just rent from the bank (“buyingâ€) because your monthly cost will be the same or less compared to renting from a private landlord. If you don’t believe there is no rental parity provide me with your zip code and I do the math for you.
Millie, quit trying to obscure the argument. I never once mentioned rental parity and you are correct we aren’t close to rental parity in any of the areas you would want to live in CA. Unlike yourself, most people can’t save even if their lives depended on it. Any opportunity is a buying opportunity. Combine this with spousal pressure, family pressure, instant gratification, supply and demand, policies that favor homeowners…and you get people buying even if the numbers don’t add up.
I’m with you preparing for any decline. If I could pick up a sweet beach close rental for a 25% off coupon, I would be one happy camper.
Its a lot like a bottle rocket. What goes up must come back down. Especially when its based on artificial stimulation that the fed has been providing for years. As that leaves so will this market. The Democrats will tank the stock market in hopes of getting rid of Trump in 2020. As that unfolds the recession will be in full swing and the housing market will tank.
One hope so, kind like Jimmy Carter in a period of high inflation and the recession hits the wrong time for the Dems for a changed. Maybe, the Republicans will comeback in 2024 with senator Scott of Florida. According to the US Census Ca, only grew 2 million in 8 years while Texas and Florida around 3 million. California days as the top dog is over when population growth has shifted to other states which also includes, Arizona, Oregon, Washington, Colorado and even small populated Idaho which in the past 8 years gain more people than New York. New York another high real estate market particularity in New York City.
You are correct. We could all be dead in 5 years and would have never been able to enjoy that dream home because we waited too long. The best strategy might be to buy in 2 years and say that whatever prices are then is low enough. Life is too short to wait 5 or more years.
At current prices that dream home is a shoe box. Not sure how they have convinced people that buying an old beat up shoe box is something to aspire.
No job loss recession, no tanking.
Bingo. A crash is an undervalue of an asset and is usually triggered by something. The bubble isn’t housing. The bubble is employment. Unemployment is too low along with inventory which means that the market was prime for an increase. Right now inventory is creeping up and that’s enough to take us back to 2017 levels but once massive unemployment hits, then the crash will happen. First vacancy rates in rental will shoot up, then prices will come down in the rental market which then means that housing will follow starting in major metropolitan areas then propagating to the suburbs. We’ll go back to 2013 levels AT BEST. Housing would ultimately have to be at 10-15% below equivalent rental before it bottoms out. There won’t be a spectacular bust like 2009 because those conditions that brought about that crash we’re unique to that era. There’s also no massive housing starts during this cycle so there won’t be an oversupply like before. I’ve been pretty spot on with my predictions so far so take it to the bank and cash it.
Would you call a 19% drop in home values a crash?
The stock market dropped 19% last year and the Bulls are calling it a correction.
If potential homebuyers have lost 19% of their downpayment last year and payment money from capital gains and dividends, I would suspect a similar drop in home values since home prices generally lag the stock market.
There is also the psychological fear that when you lose 19% of your net worth, you are not likely to spend on a house.
We know incomes from workers are not tracking the house price increases over the last decade. The stock market under Obama went up 250%. Now they are down 19%.
I think we don’t need a Black Swan event like in 2007/2008 to see a 15%-20% drop in house prices. If we do see a pseudo Black Swan (increased tariffs, prolonged government shutdown, fed raising rates again, etc), we may see a drop more than 20%.
I’ve been following this blog for a very long time and have never commented on any post. I love reading the banter and Millennial makes it all worth coming back. (Thank you Millennial!! Love your content!) I, too, am a Millennial. Married, high-income, dual earners. In a perfect position to buy a home (high down payment, great credit, young family). We sold a house within the last couple years and are currently renting our parents property in the community we wish to live. We will continue to rent and save until we feel a home price is actually worth what the seller wants for it. We refuse to buy in this inflated market. We’ll rent forever if we have to, but we are not stupid enough to buy high and weather the storm. To all you oldies, we millennials saw the housing crisis just as we were becoming adults. We saw a lot of destruction and have since watched carefully. Home prices are unsustainable given incomes, new tax laws, and interest rates. Also, while there aren’t NINJA loans, there are a lot of low down payment loans have been created in the last few years. Specifically, here in CA, so many people are leaving, that the rise in inventory is a bigger deal than you think. Companies leaving CA, new governor coming in. High, stupid taxes. No more foreign buyers. Prop 90 expiring. Stock market has been declining, recession talk everywhere. It’s finally starting to unravel. While I don’t wish ill on anybody, the housing market is distorted and needs to correct. California is beautiful, I was born and raised here. I want to stay. But there is absolutely no way that I’m spending my hard earned money on a complete fixer upper while somebody pockets hundreds of thousands of dollars selling me their crap shack. Looking forward to more banter on this thread, make me proud, Millie!
Sounds like you and Millie have all the time in the world to wait for a housing price decline. However, the vast majority are not nearly as fortunate as yourself with you rental situation. I’m sure the parents are giving you a sweet deal on the rent, will never increase it and would never “evict” you like other renters have faced on this blog. I would recommend staying put as long as possible or even buying the property from them (sweet deal guaranteed).
Blankfein, you still don’t get it. There is no rule that says Your life improves when you buy an overpriced house. It could be quite the opposite. As we know Decent homes are overpriced by 40, 50%. If you buy a house that you cant afford you suffer from financial stress and might have to cut back in other areas. So why not rent that nice house and save lots of money? As long as prices are overinflated it’s much better for your health and well being to rent cheap or live rent free (parents, friends, in-laws) instead of wasting your hard earned money to make someone else rich. There is not a single reason that would force you into buying high. No matter how hard you try.
I am a Millenial and I was not old enough to be looking to buy a house in 2008 but I was old enough to see the devastation it caused and be little traumatized by it. I think one of the points this blog is highlighting is that a lot of Millenials do not care about buying a home and I think that is really accurate. We were old enough to remember people being stuck and I know that is not a place I ever want to be, it sounds like a cage. I am happy renting in So Cal and I don’t have a sweet deal. My parents moved to Texas after the crash so I am not leaning on anyone to assist me.
Lord Blank, My best friend had your attitude, three kids, house-maker wife, single income family but he had a above average income being a programmer. Family needs was the major quote he layed out for buying his home. After losing his job, hit a rough patch, now he’s questioning his house ownership attitude. House ownership is not a liquid position.
Excellent post, im herefor a while and don’t post much. Milli’s posts are enjoyable, articulate and spot on. Wife and I talk about moving to CA all the time, she works for a company in Irvine, we live in South. Prices are stupid high, seen this movie before, worked in the mortgage industry for 16 years, saw that last bubble a year before the shtf, none of our friends would listen, they laughed and bought bigger homes, new cars, condos at the beach, traveled over seas. And then, BOOM, shtf, and they lost it ALL. Now they don’t want to talk about it, I LOVE TALKING ABOUT, we lived below our means, fixed up our starter home, banked a ton of cash, our lives are great because we didnt move and buy into the CA dream. So, we still would love to move to CA, untill we look at housing prices, homeless, trash, taxes, toxic water, shit on the sidewalks, fires, droughts, illegals, Libtards, Dumbacrats, Government spending, and more taxes, fuck that. We visit, enjoy, then get the fuck out of that shit hole. It’s happening again, but this time its different. Got a little off track, bottom line, excellent blog, housing will correct 10-30% depending on what market, live below your means, then buy what you can afford. Nobody is getting out unscrathed, just dont be a sheeple and follow the herd off the cliff.
I was following your post with interest and appreciation until you used devisive rhetoric. You are most likely right with your assessment of the market, but I question your critical thinking skills when you parrot propaganda. Those who know what is really going on would never use the words “libtard, etc…â€, especially when that class is among the most educated in the country, just as I’d never use rhetoric to insult “family values†middle-Americans who are truly hurting financially, due in some part to neo-liberal policy. It shows that you fall hook line and sinker for propaganda designed to destroy our country. I’ve seen far too much of that in these comments. Most have no idea what is really behind this latest bubble or where it comes from, but the enemy is not a “side.†That’s a hint. Learn.
JmaesJim,
You are correct that it is not about republican vs. democrat in the old sense of the words. It is about globalists (totalitarians) vs. nationalists (constitutionalists). There are plenty of globalists on the GOP (See Romney, Bush, etc) and in most of the Democratic party. The globalists have full support of the FED owned by the largest banks in US.
Those who desire globalism (NWO) envision slavery on a global scale where democracy is just a fancy word with no meaning in real life (look at what happened in Europe lately). Globalism serves the interests of the mega corporations who use governments to live above free market forces. It also serves the interests of those who control the IMF and the Bank of International Settlements (the central bank of the central banks). Many decades ago I lived in a microcosm of what these globalists envision. It is hell on earth for 99% of the people.
Those who desire nationalism want respect for national borders, truly free markets, a limited government and the Constitution. Without these, we end up like those who lived under bolsheviks (they did the same in USSR, eradicating national borders, the democracy was a sham, no free markets and super strong central government). Compare that to Switzerland, where everything is 180 degrees apposite than what the bolsheviks did – most of the power is at the local level (canton), they strongly defend their borders and strongly oppose EU with their open border policies. The Swiss (and I should also add Israel) are nationalists. They are a federation where the french can not tell the Germans how to live their lives and the Italians or germans don’t tell the french what they shall do in their cantons. That is true freedom.
I meant WhoKnows, not JmaesJim – I addressed the wrong person.
Team Millenial: Prop 60/90 isn’t expiring. I believe El Dorado County is the only one opting out. Here is the BOE’s list of counties participating.
https://www.boe.ca.gov/proptaxes/prop60-90_55over.htm
Team Millenial: Prop 60/90 isn’t expiring. I believe El Dorado County is the only one opting out. Here is the BOE’s list of counties participating.
boe.ca.gov/proptaxes/prop60-90_55over.htm
I’m GenX, currently home owner in Europe and on that same team I guess.
You did what I am planning to do, just some years earlier: rent for a while. Of course markets around the world don’t go up and down completely in sync. Not fully sure if Amsterdam peaked yet. One wants to sell in the month that the market peaks, but it’s only possible to make an estimate – it’s easy to get it wrong by a year or so…. Still there is a correlation between markets the world, and following the sentiment around the globe makes total sense. I love this blog!
Inventory going up, time to sell going up… Markets elsewhere starting to go down… Denier fanaticism… All signs.
An other advantage of renting for a while might be that you don’t have two large dependent deals going on at the same time.
I am Gen-X. Parents were Early Boomers. We are flyover-state people. A lot of Early Boomers built McMansions in golf course neighborhoods in the 1990s (once their kids were out of the house–what sense does that make?). We watched them pour big bucks as well as blood, sweat, and tears into those places, only to find by the early 21st century they couldn’t sell them if they needed/wanted to. Many of us watched that entire scene burn to the ground, and are happy to live without custom-built homes or ridiculous accoutrements such as 3-story-high entryways. We see Millennials like you learning lessons from the 2008 crash as we learned from the 1990s McMansion building boom, and it is heartening. Congratulations on your pragmatic attitude. You will do well.
Yup- I’m a “young” GenXer or “late” Millennial depending on whose definition you choose, but lived most of my life in the Bay Area. This is now the THIRD TIME in 18 years I’ve seen housing prices explode to unaffordable levels, tank, everyone gets laid off, and then things reset for another ridiculous boom just 1-2 years later. 2000, then 2008, now 2019…? It seems that people’s historical memory lasts no longer than Snapchat. We cannot keep repeating these destructive economic cycles and expect that things will turn out differently.
The human damage to working and middle class people who simply just aspire to a simple, stable life is truly a tragedy. Honestly, I do hope this time around the comedown is slow and not as sharp a bust as the boom we’ve just seen, but if just recent history is any guide…
Don Pelion, Buying a house has nothing to do with the ancient reasons to ownership anymore. Nowadays, it’s like the stock market. Pure speculation. The music stops every time after a ridiculous run up. Everytime you hear “this time is different†just to watch it crash again. There are no soft landings because it’s a money game. Buy at the right time and sell to the greater fool for a big profit. Entire neighborhoods are being flipped. Don’t complain about it. as long as people think you can make quick money with housing nothing will change. Just learn how to play the game and participate. I can’t even imagine how it must feel if you recently bought and watch your neighbors house sell for 150k-250k less than what yours was. And, this is just the beginning. There will be a ton of pain for some people who got suckered in recently. The good thing is, we are a very forgiving society. Just default on your mortgage and walk away. Try again during the next cycle.
Why do you even thinking about buying or not buying a primary residence when your parents have spare properties rent to you? If I were you, I’ll just wait for inheritance. Simple and easy.
This old millenial agrees with Team Millenial. I saw my father lose his job in 2005, followed by by parents divorcing and selling my childhood home in 2006, then my mother also lost her job a few years later. My father is basically a functioning opiod addict now and my mother passed away a couple years ago. I’ve definitely soured on the American Dream after seeing my parents left with nothing.
I have the means to buy but don’t plan on it until it’s time for babies. The area I rent is a lot fun but the schools are crap and the parks are filled with drugs and homeless. This is not the California I grew up in.
I would probably feel different if I thought the homes were worth it but I also have to factor in the cost of private school in this neighborhood.
There’s also a need to remain mobile. My boyfriend’s job site is about to have large scale automation followed by mass layoffs and we may have to move (they are trying to get it done before the $15 minimum wage kicks in). Governor Patrick Bateman and his wealth redistribution ideas scare the crap out of me and I want to be able to bail if he comes for more of my paycheck.
I grew up in CA when it was the GOLDEN state, leader in everything in the 70’s and 80’s. then it went to hell the last 20 years under democrat rule. Just like every other democrat stronghold, cannot name one that is not on its way to failure, or completely failed already. I left more than a decade ago and have taken my millions worth company and dozens of jobs away with it.
The future does not appear bright in CA. there are so many more cost effective places to live, the future population growth is negative (other than people who need handouts and free stuff and could NEVER afford to buy real estate), and the crap and homeless pile up in the middle of your ROTTING cities. You spend 20% of your work getting to and fro your workplaces, you spend 20% of your income for taxes to award free stuff to law breakers and you get more of what you buy!
I visit my remaining sibling there, around the cities it sucks, never a time without slow traffic, never a time without illegals begging for work or handouts. Then I see that the rich white people don’t want section 8 housing near their neighborhoods. Wonder Why? Soon they will all be your neighbors in their section 8 free handout shacks. See your property prices fall to that of watts.
I also grew up in CA in the 1970’s and 1980’s when Jerry MoonBeam Brown was governor.
It was a very nice place to live.
It seems to me CA went downhill when those conservatives became governor and planning went out the window.
Bob: It seems to me CA went downhill when those conservatives became governor and planning went out the window.
So millions of poor illegals soaking up public funds, and crowding into classrooms and freeways, and billions in debt due to public employee benefits, and lax treatment of criminals — all resulting from Democratic policies — would not be so bad if Republicans had better “planned” for these Democratic effects.
Its funny to visit this board and see all the home buyer wannabies. Covetousness and Envy is so evident in all the posts. Anyone with eyes to see know clearly that most of CA is an S-hole, a waste of 50% of your time and money, lost sanity is the norm.
Yes, Millennials and their blue collar parents are losers. For many older professional folks, the retired ones, selling the home can result in large Federal and state income taxes. Federal rate is capt gain 15%, and California, has no capt gain, the rate is 9.3% to 11%. After income taxes and real estate sells costs, the net amount is substantially reduced. This is why many old retired rich folks do not move.
Prof Watson,
$500K in gains is completely tax free both federal and CA.
Sorry you are just wrong.
Not everybody is married like you. In SoCal, due to divorce or death, most are single and it is only $250k. You must be thinking of Texas. By the way, the income tax rates in CA are much higher for single people at the same level of income of those in marriage bondage. But that is another subject.
Why would anyone complain about paying taxes on a property gain that you may be tax free up to $250k single or $500k couple? So what are you complaining about or are you just trolling?
https://www.nolo.com/legal-encyclopedia/the-250000500000-home-sale-tax-exclusion.html
I’ve been following this blog for a very long time and have never commented on any post. I love reading the banter and Millennial makes it all worth coming back. (Thank you Millennial!! Love your content!) I, too, am a Millennial. Married, high-income, dual earners. In a perfect position to buy a home (big down payment, great credit, young family). We sold a house within the last couple years and are currently renting our parents property in the community we wish to live. We will continue to rent and save until we feel a home price is actually worth what the seller wants for it. We refuse to buy in this inflated market. We’ll rent forever if we have to, but we are not stupid enough to buy high and weather the storm. To all you oldies, we millennials saw the housing crisis just as we were becoming adults. We saw a lot of destruction and have since watched carefully. Home prices are unsustainable given incomes, new tax laws, and interest rates. Also, while there aren’t NINJA loans, there are a lot of low down payment loans have been created in the last few years. Specifically, here in CA, so many people are leaving, that the rise in inventory is a bigger deal than you think. Companies leaving CA, new governor coming in. High, stupid taxes. No more foreign buyers. Prop 90 expiring. Stock market has been declining, recession talk everywhere. It’s finally starting to unravel. While I don’t wish ill on anybody, the housing market is distorted and needs to correct. California is beautiful, I was born and raised here. I want to stay. But there is absolutely no way that I’m spending my hard earned money on a complete fixer upper while somebody pockets hundreds of thousands of dollars selling me their crap shack. Looking forward to more banter on this thread, make me proud, Millie!
An ex-Californian who wonders if the ‘canary in the coal mine’ isn’t Las Vegas, but China! Is Apple just the tip of the iceberg? Will the wealthy Chinese now flee even faster to the U.S., namely California bringing more money, or will their economic slowdown become a slowdown for California? And finally, the nice little spot I found is now itself becoming overrun with the hoard fleeing California. This wouldn’t be a problem if everyone leaving left their political baggage behind and simply tried to adjust to a new way, small town values, but I can tell that isn’t happening … so it’s only a matter of time before the infestation spreads far and wide …
Interesting question here.
Red China is definitely showing cracks in their economy, whether it’s decades of shadow banking excess or BS numbers or the trader war w/ US, I wonder what the result would be on US (specifically west coast) real estate will be.
Are the chinese cash buyers that have gobbled up inventory over the past few years in order to hide their money from the Chinese govt going to be forced to liquidate in order to fund their struggling businesses?
Are these business owners now struggling after being flush with cash? Do they fear further tariffs and an economic crash and causing them to lose their cash cows which requires them to liquidate their US RE holdings?
Or
Will these same business owners go the opposite direction and figure China is past the point of no return for the forseeable future and further liquidate their businesses and Chinese holdings in order to transaction fully to “safe” US RE holdings?
Which way will the Chinese money flow??? That’s a big part of this US RE equation.
Dan, don’t overthink this like your “upcoming pot boomâ€. In the 80’s Californians (and others) thought the Japanese will buy up all the real estate. It was a marketing trick to sucker in people into buying high. If you make the public believe that there is an abundance of cash buyers you can easier justify overpriced property values. Nowadays nobody talks about Japanese cash buyers anymore, correct? So how come people where so wrong back then? Well, just look at what happens now. Lenders and realtards wanted to you to believe that there is a high amount of cash buyers from China for the same reasons. Sucker you into buying high. Now that Chinese cash buyers are disappearing experts (like me) prove to be right again: just like the Japanese, the Chinese will lose their shirt. Herd mentality….they thought buying RE in California, Vancouver or New Zealand will be a great investment. Now those overheated markets are crashing hard. As I mentioned many times before. There is not a single good reason to buy overpriced real estate. Once you are smart enough to understand when real estate is overpriced and when it isn’t you can easily make the decision to rent. Once the market crashes you buy.
This is from the 80’s and history repeats again.
https://www.google.com/amp/s/amp.businessinsider.com/japans-eighties-america-buying-spree-2013-1
Dan, nobody knows the answers to your questions and if they say they do, they lie. Everything depends on which way the top leaders go. In a centralized form of government like China, only the top leaders know what they want to do and even that can change overnight based on the dynamic between them – there is no loyalty among the thieves. Each one is an opportunist who wants to grab as much power for himself. Sometimes they make temporary coalitions to overthrow the top leader; sometimes they succeed and sometime they lose. There are too many “moving” pieces to this puzzle to know the final outcome beforehand.
You are right in your assessment that China today is big and strong enough to affect RE prices in CA, unlike the past. How is that going to play, nobody knows.
To Team Millennial , you spoke of the ending of California Prop 90 . I was under the impression that the original Prop 90 was not changed, only the expansion of the different counties willing to participate in the transfer of the tax base. That small fraction of eligible voters who did exercise their voting rights chose to vote against the new proposal. I, for one , would like to transfer my tax base to a quieter part of California, and let the young people move into the active and energetic part of the state. But until then , I will stay with my low-taxed property and take extended vacations when the weather gets bad, and transfer my residence to my heirs at the stepped up basis, and then they will sell at the new tax base with little gain to show for tax reporting.
I forgot to mention one thing: While the real estate inventory has only increased a little during the current slow down, the time it takes to sell a home has increased rapidly. In other words, demand is dropping so fast that even a moderate increase in inventory is enough to overwhelm buying interest.
To Millenial and the Team: Same here. I’m a bit older and considered borderline millennial.:D My hubby and I are both high income earners but not stupid enough to jump ship and buy a $ 2M crap shack to live the CA dream!!!
To the realtards and oldies out there who’s been misleading folks: Have you really thought we’re stupid to buy at ANY price???? Nope, we’ll wait and enjoy the show. Worse, we’ll leave CA, move to a cheaper place, buy cash, and early retire/ freelance with the cash we saved? How about that dream for one?
Mortgage rates are falling fast. Average 30 yr fixed is 4.5% with deals available at 4.25%. Great great news for the spring housing sales season. Great news.
Ah ahah jt comes again with this “spring season will be epic?†Just like 2018 when we hit a wall. Demand is in the toilet. Lower mortgage rates won’t save the market. Buyers sentiment shows there is no sucker left to buy high. The game is already over.
Milli, last spring we saw multiple offers with record high prices. What are you talking about?
I am glad you are asking finally. Since Spring inventory in OC, SF, Las Vegas, Seattle, San Diego and many other places is rapidly rising. In many former hot market the shift was so dramatic that we are now talking about a buyers market. 2 overpriced houses are now competing with one buyer. Buyers sentiment has dramatically changed. Buyers no longer fear rising prices, they fear catching a falling knife (lower prices in the future).
No. You are much better off buying a less expensive house at a higher interest rate than a more expensive house at a lower rate.
Yes, we all know that. It hasn’t been possible for decades. Interest rates went from 18% to 3% in the past 40 years. Buy only when YOU can afford it and plan on owning for the long term.
As the Lord said,
Plan on owning for the long term and take advantage of any rate drops with a refi.
However, rates are not likely to drop in the near future. Housing prices are dependent on income (both job income and stock market gains), wealth (stock market, gold, bitcoin, and savings), and interest rates.
If the overbloated stock market recovers its 19% loss from last year, then I don’t see any drop in housing prices even if the interest rates go higher.
If inflation and wages go up (like in the 1970s), then housing prices will go higher. In the 1970’s wage growth and inflation was at least 15%. Housing prices tracked these even though interest rates were also rising. If this is the case, I would say buy now and in 10 years your house payments will seem like nothing. (My lucky parents who had a 6% mortgage on their 45K house when I bought my first 200K house with a 10% adjustable loan (13% fixed).
Since my crystal ball broke, please take Lord Blankfein’s advice and buy what you can afford in a location you can stay for the long term.
Bob, you completely disregard cycles and buyers sentiment? How come prices are falling left and right and the moment? Are you not watching the market closely? Why is inventory going up rapidly? Why has demand dropped? We have heard this can only happen during a job-loss recession. BS! It’s happening now during a strong economy!
Bubbles feed on themselves. People think in linear terms, what goes up will keep going up. But the same happens On the downside. People expect lower prices now and wait. Again, they think it will continue to go that way. Sellers who must sell have no choice but to reduce prices. Now your comps are screwed and you can’t ask for what it sold for 6-12 month ago. Several homes start to compete for one buyer and down you go.
The advice of buying when you can afford it screws you in a massive way. It’s outdated and you only hear it from people who bought a long time ago or are profiting from bubbles (realtors, lenders, flippers and those who want to cash out and pocket a nice profit from the next sucker)
Btw. I have seen a significant change in what realtors say now. It’s seems they changed their mind accros the board. You don’t hear them Say anymore that prices will go up. Instead they all say, the market is turning, shifting, softening. Just like the house description “cuteâ€, “adorable†means that the house is tiny….current descriptions for the market are saying: this market is done. Pain is here. Price cuts are the new normal.
Millennial, Don Pelon had an accurate observation above.
House prices have always risen and fallen.
My parents bought their 45K house (possibly overpaid) in 1974 and then the neighbor sold the same house for 35K a year later. Yikes! A 20% fall!
When the house finally sold in 2016, for 900K, nobody remembers that incident.
Inflation is your friend if you own a house for the long term. It is your enemy when waiting.
I made the mistake of being jealous of my parents for their 45K house when I bought a smaller house in the same town for 200K in 1987. That house is now 900K. I should have kept it to rent. It was much too small for a growing family so I would not have stayed.
Your goal of buying a house at a low is admirable. If your family can survive in a small rental, keep the faith. It may be a while but history shows that within 10-20 years, you will likely get your 50% deal. 50% off what is the question.
If it were me in your situation when I was your age, I’d buy the right house for the next 10 years for my situation (you want 2 kids = 4 bedrooms) when housing prices drop 15%. They may drop 40% 10 years later or even 1 year later but you are there to stay so don’t look. In another 10 years when the kids all move out, you will have a gain (and owe the IRS something) no matter what the market does.
I had some money in my mattress that was waiting for a 50% stock market crash (which may still happen). When the Christmas Eve happened, and the market had dropped 19% for 2018. I put some of that money back in the market for the long term. I have no doubt that it will go up and then down, but in the long term, it was still buying low.
Buying when you can afford and wait forever is a strategy that might have worked in the 70’s. In the 70’s they did not have everything bubbles, historic low interest rates and QE.
For the last 30 years its heavy boom and bust cycles. Buy low or be screwed forever (or until you foreclose) Old people have a mindset from 40-50 years ago. Thats long gone.
Nowadays its all about buying low and selling to an idiot for 200-300k profit. Wait for the crash (happens every ten years), rinse and repeat.
Near the end of last month’s topic, I posted the OC Register columnist Lazerson’s results for his 2018 predictions, where he batted about 0.500. I mentioned his bearish 2019 predictions.
Well, here they are:
1) 30 yr fixed will average 3.75 %. My early millennial daughter raised her eyebrows one that one. She will keep an eye on the rates and may refi if interest rates get down that low soon.
2) Nationally, 2019 Refi activity will be more than double 2018 (well with rates like that, why not?)
3) The Fed will not raise short term interest rates (he whiffed on that one last year).
4) FHA Mortg. payment delinquencies will increase by 10% (His canary in a mine.)
5) FHA Commish. Montgomery will reduce max debt to income loan approval ratio from current 56% to 48 %. ( principal, interest, taxes, insurance, HOA, credit report payments, alimony/child support sum divided by monthly gross income).
6) The US will experience an inverted yield curve between the 2yr Treasury and the 10 yr constant maturities.
7) The GDP will see an average growth rate of 1% for 2019.
8) SoCal home Sales volume [LA, OC, SB, Riverside & SD counties] will decrease by 8% for 2019 compared w/ 2018.
9) SoCal Median home price will decrease 3% (same turf and time no doubt).
10) Fannie Mae & Freddie Mac will remain in conservatorship for the 11th year.
He will no doubt publish his batting average at the end of the year like he did just last week.
#5
Haven’t heard anything about FHA changing guides, but, it’s possible. If they do indeed change that guideline that will certainly have a big impact on the bottom of the market. FHA usually for first time buyers who have very little saved as the move up buyers roll their equity into the new step up buy and can go conventional.
Interesting to see what happens with this.
Here is what I see:
Rates are at 6-9 month LOWS. Yep we’ve been on a huge winning streak the past few weeks (my refi biz is up).
Inventory is UP with properties sitting longer and price reductions happening.
Sellers are starting to adjust their expectations and realize they are not going to get the standard 3-4 offers within a few days unless the property is turnkey and in a hot location. So, buyers are underbidding, not a huge amount but I am seeing between 1%-5% of the ask. Some offers are getting accepted some are getting rejected; it all depends.
Buyers are more picky in general. Again, if it’s a hot area then they don’t care, but, it is not like it was 6+ months ago when buyers w/o perfect credit and a huge down w/ over ask offer had no chance. It’s much more balanced now and sellers do not have the leverage they once did.
All cash buyers have slowed down too, whether it’s China or whether it’s flippers that are realizing the market is turning and margins are squeezed and they need to lower volume to chase higher margins and be more picky.
Not much has changed in the lending sphere, although I did hear that a couple credit unions are now offering HELOC’s to 100% ltv; which I do not like.
Definitely seeing at least a plateau, but, wages are rising and unemployment at record lows. So I think there is a mixed bag right now and a lot of variables so it’s best to ignore the fanatics on either side who fail to consider any viewpoint other than their own. You know the ones that argue that water isn’t wet type of people.
We all appreciate your input, Dan. Thank You!
You are embedded in the middle of it so can see what is happening in the mortgage market.
…home price will decrease 3%?
Impossible. I have it on good authority that prices will decrease by 70%.
70-3 = 67.
If they drop less than 33.5% in 2019, he wins and your “authority” loses.
Job growth in December was 312,000. That is a big number. News flash. There is no way the housing market will crash with 312.000 jobs being created in a single month. You guys thinking somehow the housing market will crash while 312,000 jobs per month are being created had better put the crack pipe down. A lot of buyers have stepped back because the negative housing stories being pumped out by those that want to damage the housing market for political or personal reasons. Soon, they will step right back in when they realize they made a mistake.
These are low income jobs, nothing more nothing less.
Seasonal hiring of course cannot be the reason for the high number of jobs, right?
Seasonal hiring of course cannot be the reason for the high number of jobs, right?
Does anyone know how these job reports numbers are generated, especially when the government is supposed to be shut down for the last two weeks. I can’t imagine that the Department of Labor would be classified as essential.
You are SoCalJim who posts on Wolfstreet. Am I right?
Most of you might already know, but JT doesn’t just deny that house prices are currently overvalued, he flat out denies that there was a housing bubble from 2004-2007 as well. He believes that since house prices have since recovered and gone on to new highs, that this proves there was no prior bubble. He believes also that there was no true housing crash in 2008 (you read that right) but it was a financial crash that just temporarily pulled down housing, and the “doom and gloom media” did the rest. He’s got his cause and effect all effed up. Not much we can do. Seriously, if one cannot learn from 2008, one cannot learn, period.
jt – why do you follow a housing bubble blog? You obviously think that real estate always and only goes up, and any time is a great time to buy. Do you just have low self-esteem, looking for some weird rejection from people who don’t agree with you?
You and your ilk don’t even bother to read the articles. Everything in this particular entry goes against what you’re saying, you understand that, right?
“Job growth in December was 312,000”
Part-time temp jobs paying less than miminum wage, exist solely for Christmas season.
All of them have already vanished as Chrismas season is over. Anyone who is using December employment numbers to anything, is basically lying.
If similar year-to-year increase happens in July, then I’m listening.
Hi where can I get this type of data for Florida. Interested in zip codes 33486 and 33432. I think the story here is very different from California.
Elliman has reports for a number of areas, including Boca Raton:
https://www.elliman.com/reports-and-guides/reports/florida/3q-2018-boca-raton-sales/17-1028
Does anyone know how these job reports numbers are generated, especially when the government is supposed to be shut down for the last two weeks. I can’t imagine that the Department of Labor would be classified as essential.
Housing bubble is not just popping at the west coast. It’s happening globally. Pretty amazing to be able to witness another epic crash!
https://www.zerohedge.com/news/2019-01-05/global-housing-markets-hong-kong-sydney-join-global-rout
Sorry to say that housing is not going to crash like 2007-2008. McMansions yes, but not workforce, affordable housing. Construction has not kept up and is not on track to outpace supply. The US will be short 4.6 million housing units by 2030.
https://www.naahq.org/news-publications/units/june-2017/article/united-states-needs-46-million-new-apartments-2030
Don’t waste your time here! Go out and buy! It’s a great time to buy! And if you don’t buy now you might be priced out forever!
Take the realtor BS out of here.
You are as bad as Zero Hedge or Millennial.
Can only see things from one side.
Real Estate is more about location than house size. “McMansion” is a pejorative for large houses on less than stellar lots. (My Definition.)
Maybe you prefer Wikipedia:
“In suburban communities, McMansion is a pejorative term for a large “mass-produced” dwelling, constructed with low-quality materials and craftsmanship, using a mishmash of architectural symbols to invoke connotations of wealth or taste, executed via poorly thought-out exterior and interior design.”
If you’re talking about big new houses in Rancho Cucamonga or Corona, I’d say probably yes. A similar house in Anaheim Hills or South OC, not so much. Anything by the Beach or on LA’s West Side, hardly at all.
Sure kid, whatever you say.
Never trust a boy in a tie dispensing financial advice.
” not workforce, affordable housing.”
I can believe that if I ever see even one workforce affordable house which doesn’t need full rebuild before it’s livable. Near my job of course, not just anywhere.
Boy, last weeks big big employment number, which reported many high paying slots, really shut up the housing crash nuts. What a shocker. Should be a good spring market, but only if the job market stays strong. Recessions do come out of nowhere, but so far, I don’t see one.
The economy is considered as strong, yet the housing market is turning quickly. A lot more inventory and asking prices are falling left and right. Apparently you don’t need a job loss recession in order for housing to correct. Now, add a job loss recession to the weak housing market and you have your 50-70% crash so many of us predict. Good times ahead (lower RE prices).
Re: Employment
1929: Unemployment rate —> 3.2%
1933: Unemployment rate —> 25%
So Peter schiff said in order to save markets fed will start dropping rates and this is going to lead to inflationary recession, so will home prices go up or down?
Gary, both, the inflation and interest rate influence house prices; however, the dominant drivers are interest rates, how easily people can qualify for a loan and the job market. The inflation per se is like a forth factor in terms of influence on house prices. If people would buy with cash, inflation would be the dominant factor. I explained many times before why that is so.
One point though – the FED can not keep high inflation and low interest for too long; the bond market would rebel and you have a financial crash. Sometimes they get a little bit behind the curve and they roil all financial markets. You can not punish the bond holders without major consequences; the bond market is three times the size of the stock market. Between the two, the FED will always save the bond market.
I hope that answer your question somehow. It is hard to give black and white answers in finance because you always look at 2 variables, all other things staying the same. The reality is that you have hundreds of variables always influencing one another. That makes the system very complex. Add to that the players emotions (which can not be quantified) and you see why the decision makers drop the ball so many times. Then, they get criticized by many who are looking only at few variables and who are right from their point of view. Also, when the dam breaks, the decision makers always try to save the stockholders (not the stake holders) of the privately held “FED”.
Just look at the 1970s for your answer. Home prices went up with 13% mortgage rates.
@NTiS – that’s a silly argument. It’s never that simple. There were numerous factors involved back then that don’t apply today. Different times entirely, different economies, etc.
LAS VEGAS housing update – market is getting very ugly very fast
https://www.calculatedriskblog.com/2019/01/las-vegas-real-estate-in-december-sales.html?utm_source=feedburner&utm_medium=twitter&utm_campaign=Feed:+CalculatedRisk+(Calculated+Risk)&utm_content=FaceBook&m=1
82% increase in inventory and sales numbers are crashing (like in other former hot markets as well).
Las Vegas and Phoenix were the canaries in the coal mine for the west coast in 2007. History repeating itself again.
When the last bubble burst LV went up something like 5 fold or more in about a year, year and a half. Still, 82% is no joke.
In my hood I see places being listed for joke prices. Then I look at history – invariably bought in the last couple years and looking to get out with a little profit. Sorry pal, but you just screwed yourself – time to mail those keys before the sheriff kicks in the door and throws you out on your azz!
Las Vegas Inventory is at 2016 levels…. it’s still a giant nothing burger, but certainly something to monitor.
Hilarious! Yep NoTankInSight, maybe time to adjust your position (and user name) slightly? How about to TankInSight? Or,maybe you desire to be the last person on this blog to acknowledge what’s happening? For those of us who have been through the rodeo before it’s a nothingburger to see that this will end in tears (for those who bought recently). Keep denying the bust notankinsight! Whatever let’s you sleep at night!
Millennial,
You love straw man arguments.
Your premise is for a 50-70% “epic tank”.
My premise is for a housing correction that looks a lot like the 1990s sometime between now and into the next recession. In nominal terms I don’t expect the drop to be that large in premium areas of California and elsewhere. However in real terms it will be large. I think you will see a 15-25% drop in nonimal terms extended over a 5 to 8 year period.
In nominal terms 20% over 8 years isn’t much… but when you add in real inflation of say 4% per year… in real terms that could be as much as 50%.
The hard part is predicting what curve balls can occur. Last time in 2004 it was negative amortization no documentation loans that shot the market up another 30-40%.
This time it could be something unpredictable like mortgage rates dropping to record lows with looser lending standards subsidized further by the government. Or run away inflation and devaluation of the US dollar. I am not saying either of these scenarios will happen but I have seen something unpredictable happen too many times before.
“This time it could be something unpredictable like mortgage rates dropping to record lows with looser lending standards subsidized further by the government. Or run away inflation and devaluation of the US dollar. I am not saying either of these scenarios will happen but I have seen something unpredictable happen too many times before.”
Or we have an alien invasion or maybe a zombie outbreak? Or what about Dan’s (OC Lender) prediction of an Californian POT boom that will translate into skyrocketing real estate.
The “INFLATION IS COMING” and “LOW INTEREST RATES FOREVER” crap has been screamed at us by RE cheerleaders since many years. We haven’t seen it-at all. At least you are not telling us anymore that there is no inventory and that there are millions of Chinese Millionaires. Looks like you finally (after a few year) got it. Inventory is rising sharply and asking prices are going down left and right. Foreign cash buyers have disappeared and flippers are getting burned.
Most of us – especially if you look at the data – know that the market is going down quickly. A 50-70% crash seems like a sure bet to me (and many experts).
OC County Inventory update – by Steven Thomas
Active inventory:
“The inventory more than doubled from January to mid-October, rising by 114%. With a late peak, the inventory dropped by only 20% by the end of 2018. In the past two weeks, the inventory has shed 9%, 566 homes, and now totals 5,829, the
highest level for an end to a year since 2011, seven years ago. That will translate to an elevated supply of homes to start 2019. The overall temperature of the housing market has everything to do with supply and demand. More homes will pave the way for a slower housing market.”
Demand: With rising interest rates, demand was muted all year.
Within the past two weeks, demand dropped by 205 pending sales, or 14%, and now sits at 1,303 pending sales, the lowest reading since January 2008. Last year at this time, demand was at 1,605, or 27% more than today.
Luxury End: Luxury homes dramatically slowed in the second half of 2018.
demand started to drop during the Spring Market. That translated into a slower third quarter with 1% fewer closings year over year. The brakes were pumped a bit more over the summer with even less demand, which resulted in 12% fewer year over year sales in the fourth quarter.
With more supply and muted demand, the market felt a lot more sluggish in the
second half of the year. There simply were not enough buyers actively looking to buy. On the other hand, there were plenty of sellers competing with each other, the higher the price, the slower the market.
Expected Market Time: As the market shifted from a supply problem to a demand problem, the market shifted from a
Seller’s Market to a Balanced market, and finally to a slight Buyer’s Market.
The expected market time for all of Orange County grew from 127 days two-weeks ago to 134 days today. The start to 2019 is going to be the slowest in eight years, and it will initially be a slight Buyer’s Market.
The 2019 Forecast: A sluggish year.
The bottom line, 2019 will continue shifting away from sellers and line up more in favor of buyers. It will finally be the buyer’s turn during the second half of the year. Sellers will not get away with overpricing Sellers will have to pack their patience in 2019. Gone are the days of multiple offers and instant gratification.
This is how Canada’s housing correction begins
Canadians are finally getting a taste of what a world with rising interest rates will look like, and one thing is painfully clear: we’re not ready for what happens next
Jan 3, 2019
“Pain. I predict pain.â€
“https://www.macleans.ca/economy/realestateeconomy/this-is-how-canadas-housing-correction-begins/”
This is how Canada’s housing correction begins
Canadians are finally getting a taste of what a world with rising interest rates will look like, and one thing is painfully clear: we’re not ready for what happens next
Jan 3, 2019
“Pain. I predict pain.â€
‘https://www.macleans.ca/economy/realestateeconomy/this-is-how-canadas-housing-correction-begins/’
This is how Canada’s housing correction begins
Canadians are finally getting a taste of what a world with rising interest rates will look like, and one thing is painfully clear: we’re not ready for what happens next
Jan 3, 2019
“Pain. I predict pain.â€
Just mind blowing how the Seattle bubble market is tanking hard:
Check this out! Make sure you sit down….
https://wolfstreet.com/2019/01/08/housing-bubble-trouble-in-the-seattle-bellevue-metro/
The great thing nowadays is that this information is available to everybody-for free!!
With a few mouse clicks the avg joe can find out the state of the market and understand its crashing hard. A few mouse clicks can save you hundreds of thousands of dollars….how? Well, who wants to buy overpriced real estate that is about to crash by 50%?
That’s right, not a single person, no matter how dumb and rich he or she is.
Seattle tanking HARD?
Give me a break, here is the reality with Seattle inventory:
https://seattlebubble.com/blog/wp-content/uploads/2019/01/KingCoSFHInventory_2018-12.png
60% increase of inventory in one year is a lot. And that can be seen from the graphs.
That basically means very small percentage of houses put to sale are sold, at any price.
Respectively that means either prices drop significantly or the inventory continues to grow, eventually leading to crash.
Obviously either must happen.
Good interview in regards to the popping of the bubble with housing bubble blog founder
https://youtu.be/ait7sKU_L1c
Hello Folks
Say ‘hola’ to the latest Real Homes of Genius.
You too can own in prestigious mid-cities. a 2bd 1 ba for only $950K
be sure to add bars to the windows and a rottweiler in the frontyard.
https://www.trulia.com/p/ca/los-angeles/2104-hauser-blvd-los-angeles-ca-90016–2077216652
Don’t you love when your email inbox blows up with price reductions and new listings?inventory is skyrocketing and prices will continue to fall sharply. 2018 should be fun for those who waited. I feel sorry for those who bought recently or worse: for those who need to sell (flippers). Just joking, I don’t feel bad for flippers at all.
Ha! I meant 2019 🙂
I just noticed some very large drops in the asking prices of 2 homes: one located in Riverside Co. and one located in Northern San Diego Co. The Riverside home’s asking price has dropped 20% in the last 3 months while the SD Co. home’s asking price has dropped 25% in 10 months. Both homes are currently for sale but should sell soon at their current asking prices.
My point is that prices can fall much faster and greater than people think. All it takes is one person who really needs to sell to drop his price and the comparable home price paradigm is destroyed.
My second point is that there are always some people who need to sell, but no one really ever needs to buy. Buying is always an option that can be delayed indifferently. Millennial is living proof of that.
Gary, spot on. Your best post since a considerably long time.
Gary, I hate to burst your bubble but some home sellers significantly overprice their house. It sits and reality sets in and seller reduces said asking price by a large percent. Do not confuse this with the entire area tanking in price by that large percent. The selling price should always be based on sold comps.
Just like Millie, I hope we see a 50% percent tank in the beach cities so I can scoop up a cheap rental. I highly doubt that since desirable beach areas didn’t decline anywhere close to that a decade ago. But one can only hope and dream…
Holy smokes, some houses I am watching were sitting for 4-5 month. They tried everything. Renting it out, auction, open house after open house. Now 100k-150k price reduction! We will get so many fantastic buying opportunities in the next year it’s not even funny!
I think it’s going to take more than a year, my friend. Give it at least two to three years to see a true bottom.
But yes, I’m seeing the same. Tons of price reductions. My personal favorites are the listings that pop up as “new” for the 2nd, 3rd, 4th time. Comedy!
At least it was cheaper than renting lol
Our real estate cheerleaders used to tell us: “everybody makes 200k except 18year old fry cooks†In other words, we won’t run out of high wage earners to buy that 1mio crapshack. Well, it seems they were off by a bit:
Shocker!
https://www.zerohedge.com/news/2019-01-09/nearly-half-us-workers-earn-less-30000
Here is a good entry home for a first time buyer. You will need to move quick on this one.
https://www.redfin.com/CA/Manhattan-Beach/1300-18th-St-90266/home/6703965
I am now starting to think you might be a satirist.” Entry level” at 1.25 million.
Early 30’s professional with nearly a million in savings here. No way in hell would I pay $1.25M for this dump.
Early 30s professional with nearly a million in savings here. No way in hell would I pay $1.25M for this dump.
Good on ya. There are quite a few of us actually. I’m late 30’s with over a mill too, all from real estate investments. Started in RE when I was 23. Did you get your cash from RE or another industry? Just curious. Good job man!
I bet on average the folks that consume data on this blog are pretty well-papered or if not they are on their way to being well-papered. Some people on this blog ‘get it.’
After this coming crash I will turn my $1M into several Mil. Did it last cycle and gonna do it again.
That property is land value only. You are paying for that beautiful piece of MB dirt. If the price is right, a developer will buy it, bulldoze and build a McMansion. Asking price for McMansion will be 2.5M. Welcome to CA RE!
Seattle housing bubble update for December
Massive surge in inventory – 143% increase YoY!
https://seattlebubble.com/blog/2019/01/07/nwmls-home-price-gains-vanish-as-sales-continue-to-slip/
Got the following spam email from a realtor:
Now may be the time to make your move.
The real estate market is once again shifting and homes are selling quickly – very quickly. Many people have been waiting for just the right moment to make a move; your time may be now.
* Demand is high.
* The number of days a home is on the market is down.
* Multiple buyers are bidding on the same property.
* Home values are increasing.
* Mortgage rates are still low.
Contact me to learn what is happening in your local market and how you can take advantage.
“your time may be now.
* Demand is high.
* The number of days a home is on the market is down.
* Multiple buyers are bidding on the same property.
* Home values are increasing.
* Mortgage rates are still low.”
SOL, that realtor is kind of simple minded or he looks like it. He has everything backwards. The conditions he is describing are good for selling not buying. For buying, it should be “blood in the streets”. You buy when all want to sell and sell when all want to buy. I feel sorry for people who buy when all buy and sell when all sell; that is a sure way to the poor house. All my life I made money by being a true contrarian and have nerves of steel. The brain has to control the emotions and that doesn’t happen easy. I am talking from experience. It is a real struggle between logic and emotions especially on the buying side. Many times I felt like the sky is falling, my emotions told me not to buy but my brain told me to do it; eventually I listened to my brain (“the heart is deceitful above all things”). In conclusion, don’t follow your heart in business; RE investing it is for the most part a business decision.
Hey Bubble Dummies/JT, new home sales are down 40% in Northern CA and 49% in Southern California.
Were you able to process that?
Here, let’s look at that stat again and this time read it aloud to yourself slowly and then reflect on the statistic itself for 10 seconds…
“NEW HOME SALES ARE NOW DOWN 40% IN NORTHERN CA AND 49% IN SOUTHERN CA.”
Let me know if you need the CNBC link to verify the authenticity of this data. I will gladly reply with the link.
A 3 bedroom 2 bath home built in 1959 located in North Hills in the SF Valley is listed for $675K. It’s a dump that has been on the market since Sept. 2018. North Hills has become a haven for illegals and homeless in the sanctuary sh*thole city of Lost Angeles.
https://www.zillow.com/homedetails/9249-Aqueduct-Ave-North-Hills-CA-91343/20142321_zpid/
Hey, jt, a couple of months ago you said there were no beach houses available for under 2 million.
Here’s a very nice Santa Monica house: https://www.redfin.com/CA/Santa-Monica/3214-Pearl-St-90405/home/6765473
Listed last August for $2.2 million.
Listing was already down to $1,795,000 when you made your post.
It finally sold at $1,597,000.
There is not been a statement by JT that turned out to be true yet. It’s usually the exact opposite.
Millennial, forget buying a home. You need to hire a therapist.
JT
Sounds a bit to me that you don’t agree? Has there bin a statement made by you that has ever made sense or turned out to be true?
“There is no inventory†– false
“This 2018 spring Season will be epic†– false
“This will be be the year when millennials go out and buy in droves†– false
“Don’t fight the fed. Interest rates will not go up†false
“I considered making an offer†– triple false. You say this every other month to pretend buying makes sense.
You are the worst RE cheerleader/troll I have seen so far.
That is a crappy area of Santa Monica, and Pearl Street is busy as heck.. I said there were no decent beach close homes in decent areas. That part of Santa Monica has gang issues … that is why it is so cheap. If you go to the better part of Santa Monica, which is north of Montana, it is hard to find anything under 3M. But, I do see one killer deal in Santa Monica … this home could be listed way under to generate a bidding war … but, if you could get this one anywhere near ask, it would be a huge win. Street is busy, but I would be all over this one … I almost put a bid on it myself, but I decided not to cause I want a better street. Still, what a deal.
https://www.redfin.com/CA/Santa-Monica/2223-California-Ave-90403/home/6769375
@jt…this California Ave house is on a small lot. With the new zoning ‘anti-mansionization’ they passed last year in SM, this may be a bad deal for a developer unless he can make a profit by building up to the allowable size of 50% of the lot size. 2500 square feet is hardly worth it for a new build in SM. But I agree it is priced to sell quickly at multiple offers…probably to an owner/user.
Jt, that part of Santa Monica — Sunset Park — doesn’t really have a gang problem. Santa Monica’s small gang problem is in the Pico District, centered around Woodlawn Cemetery. And the problem is diminishing with gentrification.
But there are plenty of other beach houses available for under $2 million. That was your criterion. Not whether it was in an area with a gang problem.
This Santa Monica Canyon (i.e., Pacific Palisades) house is only a few blocks from the beach. It originally listed at just under $2 million. Now it’s just under $1.5 million: https://www.redfin.com/CA/Santa-Monica/333-E-Rustic-Rd-90402/home/6840444
Redfin currently lists 13 other houses in Santa Monica proper, ranging from $1.049,000 to $1,815,000.
Sure, none North of Montana, but in EVERY other SM neighborhood — Sunset Park, Wilmont, Mid-City, Pico, Ocean Park.
And yes, some of those houses are very small, and at lease two have no garages.
But you said you were seeking investment properties. Rentals. So it’s not like you have to live there.
You said SoCal beach houses are a sure thing, investment wise, provided you could get one at under $2 million. Well, there’s plenty to choose from.
Apart from those SM houses, you’ll find more all along the coastal beach cities.
Son of Landlord, that rustic road is a trash property. It has a major cliff right next to it … and it is at the bottom. Just trash that is not worth buying.
Venice Beach looking guuuuud: https://www.zerohedge.com/news/2019-01-14/its-worse-it-has-ever-been-venice-beach-residents-rebel-homeless-crisis-intensifies
Them desirable beach areas where you get your tires slashed 6 times a year, taxed up the wazoo, and spend half your life in traffic – where do I sign up?
Google is expanding in West L.A. – https://therealdeal.com/la/2019/01/08/google-will-lease-all-of-massive-westside-pavilion-amid-redevelopment/
If this doesn’t increase real estate prices, it will at least put a brake on any HARD TANK in the area.
We are at 2006 in the market, act accordingly this time….. 2020 will not be pretty, 2019 I think is going to be a wash….just like 2007
recent headline
SP 500 off to best start since 2006……..cycles are just a reset, they are to be respected and they don’t come in days, it will take a couple years for the lows in housing to show….
2022 might be best bet…
Yes, we are in the equivalent of the 2006 real estate market. However, we are not at the beginning of the year 2006 but rather near the end of 2006. My best guess is that Jan. 2019 is the equivalent of July 2006 (so the current cycle is about 6 months ahead of the 2006-2012 cycle).
This is a little confusing, but the real estate bottom will likely not occur about Sept. 2022 and will last until about 2025. This is going to be a slow, painful decline. However, despite the fact that the sharp price decline is years away, I still believe home prices will be about 5-7% lower by the end of the year.
Two interesting articles in the Sunday OC Register:
Under Hot Homes -Pasadena’s Arden Villa had the price dropped from $28M to $19.5M. It was used in the show “Dynasty”. ~3 acres >17500 sq ft. + 100 yard tree lined entry drive. Guess it isn’t that hot after all.
Columnist Lansner gave data from surveys of sales in major new developments comparing 2017 with 2018. All are in the top developments for sales nationwide. From the most complete survey: Irvine Ranch down 45%, Ontario Ranch up 33%, Rancho Mission Viejo no change and Great Park Neighborhoods down 42%. So the biggest drops look to be in the most upscale developments.
I have been watching the market closely, and this is what I am seeing …
To me, it appears that some of the activity that took place at higher price points ( 2.5M + ) has moved down the market and is now taking place at a lower price point.
What does this mean? I think we will see more demand at well located lower price points while less demand at higher price points.
In my beach neighborhood, the realtors are pounding on doors for listings nf 50s homes in decent locations while walking by the big price tag stuff. There is a message in this. And, this makes sense.
Because of tax law changes and rate increases, many W2 earners have moved down the price ladder. Time will tell how this evolves.
So, things are getting tougher for W2 earners … people are bidding on lower priced homes meaning more demand for the average buyer. Only the wealthy are getting deals. As long as the economy keeps cooking, I would think this pattern continues.
Also, seeing strong rental demand. Very strong, even in marginal locations. This smells like a strong economy. If rates stay at their current level, things should work out just fine, as long as you ignore the higher price stuff.
Let me summarize JT’s statement above:
People are not buying overpriced real estate and they are demanding cheaper real estate or they aren’t buying and they’re renting until prices collapse.
I finally agree with you JT!
Except, no price collapse unless a significant recession hits. But, no recession in sight.
Your observation matches the Lansner article I mentioned about sales in new developments. (See Above.)
Some interesting things are happening on the housing front in Sonoma County:
1) Sonoma County population continues to decline after 2017 fires
https://www.pressdemocrat.com/news/9149705-181/sonoma-county-population-continues-to?artslide=0&sba=AAS
“New state data that indicates Sonoma County lost 2,207 people — more than any other county in the state — during the 12-month period ending July 1, 2018.
The figures suggest that an unexpectedly large and growing number of residents are leaving the county after the 2017 wildfires, which destroyed more than 5,300 homes countywide, including 5 percent of the stock in Santa Rosa, California’s largest city north of the Golden Gate.
A shortage of affordable housing before the fires became even worse as rents and home prices jumped in the ensuing months, forcing many to reconsider one of the most fundamental decisions in their lives: Where should they live and build a future for themselves?
Increasingly, the answer is not Sonoma County.”
The decrease is net, including birth, death, and immigration into Sonoma County. Reasons cited are rebuilding costs are too high (many were underinsured), housing is generally too expensive, and PTSD from the fires (fear of it happening again).
“If the estimates are confirmed in future studies, it would mark the end of more than a half- century of uninterrupted population gains in the county, which has doubled in size since the mid 1970s to 501,427 people last summer.â€
2) PG&E seeks bankruptcy protection over California wildfires
https://www.pressdemocrat.com/business/9169612-181/pge-facing-colossal-liability-seeks?artslide=5&slide=GAL
No recourse if homeowners’ losses were greater than what their insurance will pay out. PG&E is off the hook.
“The nation’s largest utility said Monday it is filing for Chapter 11 bankruptcy because it faces at least $30 billion in potential damages from lawsuits over the catastrophic wildfires in California in 2017 and 2018 that killed scores of people and destroyed thousands of homes.
The move will allow Pacific Gas & Electric Corp. to hold off creditors and continue operating while it tries to put its finances in order.â€
Veteran New York bankruptcy lawyer H. Jeffrey Schwartz said Chapter 11 will allow the company to operate without being burdened by its liabilities.
“The liability is too great. It’s too many claims, the aggregate amount is too great, and it looks at first blush to be indefensible because PG&E knew of this risk and didn’t clear the line areas as it should have,” he said.â€
3) North Bay residents face new risk after wildfires: insurers dropping their homeowner policies
https://www.pressdemocrat.com/business/9156943-181/north-bay-residents-face-new
And if you’re not dropped, the article states:
“Costlier policies
County homeowners now may find they may have to pay as much as $6,000 to $8,000 a year to obtain homeowner coverage because of precisely where they live, Smith said.
Such exorbitant insurance prices will have an effect on the local real estate market. Realtors are being encouraged to raise the issue with their clients at the beginning of the home-buying process so it doesn’t scuttle a potential deal.â€
On top of that, you have:
4) $10,000 limits on the 1040 Sch. A, Line 5 write-off of state income and local property taxes, affecting high-tax liberal strongholds like CA & NY;
&
5) a new law effective next year that limits a California household’s water useage to 55 gallons per capita per day, phasing down to 50 gallons on January 1, 2030. The mandatory water conservation standards will be permanent, according to their wording, and not just for use in times of crisis. In a nutshell, now that these bills are law, it’s illegal to take a shower and do a load of laundry in the same day because you’ll exceed your “ration.†Fines for violations:
“If you don’t plan to comply it’s going to be way cheaper to move. Here are the fines Californians will be looking at – and it’s not a typo – these fines are PER DAY.
If the violation occurs in a critically dry year immediately preceded by two or more consecutive below normal, dry, or critically dry years or during a period for which the Governor has issued a proclamation of a state of emergency under the California Emergency Services Act (Chapter 7 (commencing with Section 8550) of Division 1 of Title 2 of the Government Code) based on drought conditions, ten thousand dollars ($10,000) for each day in which the violation occurs.
(2) For all violations other than those described in paragraph (1), one thousand dollars ($1,000) for each day in which the violation occurs.â€
It’s going to be interesting to watch the real estate market up here for the next few years. Looking at the above, I’m not sure I’ll even stay in the state at this point. It’s a shame because it’s such a pretty state, but government is making it unbearable to live here at this point.
a new law effective next year that limits a California household’s water useage to 55 gallons per capita per day,
I don’t see how the rich & powerful will allow that. You have mansions in Bel Air, Beverly Hills, etc. that sit on vast, verdant acreage. Every day these mansion use more than that.
That’s $3,650,000 in fines per year, per “household.”
You think the rich & powerful will stand for that?
SOL, in this nation there are laws for commoners and laws for the rich (loopholes). The rich are always exempt. Did you ever hear about WallStreet investigations regarding 2008? Or Hillary Clinton crime cartel?
Therefore, do not shed any tears for those in BelAir and Beverly Hills.
To son of a landlord~
It depends on whether these ‘rich and powerful’ are connected enough to be above the rules. Then again, an outcry from the population overall might scuttle the rules, or at least up the limits to a more reasonable level. Brown’s new law on this is so extreme that I don’t know what to expect. Owning a home here is becoming more and more unreasonable, and that may be their plan. The super rich and their Chinese cohorts (and throw in the Saudis and whoever else they may be aligned with) may be trying to drive anyone with any money out of California, so they can take over the best parts for themselves. The rest will be dependent on government largesse, and therefore will be more easily controlled. Maybe it’ll be like The Hunger Games here in the future. I don’t know what they’re planning, since things are getting so crazy in this state lately.
The new laws and regulations do not apply to individuals, just water agencies, according to the city of Carlsbad’s website.
“The two bills, AB 1668 and SB 606, signed by the governor last week, got extra attention when conservative blogs and radio shows reported, erroneously, that residents would face $1,000 fines if they did laundry and took a shower on the same day,†the city reported on its website. “In fact, the water budgets apply to water districts, not individual residents or businesses, and allow local agencies to set up their own ways of staying within their total water allotment.â€
Lois~
OK, but the water agencies have to enforce it. Here’s the wording of the new laws:
Senate Bill 606 establishes a “governing body†to oversee all water suppliers, both private and public and will require extensive paperwork from those utility companies.
Assembly Bill 1668 is where it gets personal. This establishes limits on indoor water usage for every person in California and the amount allowed will decrease even further over the next 12 years.
The bill, until January 1, 2025, would establish 55 gallons per capita daily as the standard for indoor residential water use, beginning January 1, 2025, would establish the greater of 52.5 gallons per capita daily or a standard recommended by the department and the board as the standard for indoor residential water use, and beginning January 1, 2030, would establish the greater of 50 gallons per capita daily or a standard recommended by the department and the board as the standard for indoor residential water use. The bill would impose civil liability for a violation of an order or regulation issued pursuant to these provisions, as specified.
If you’re wondering how the government would know how much water your family is using, the utility providers will be obligated to rat you out or face massive fines. And they’re encouraged to spy in all sorts of creative ways. They “shall use satellite imagery, site visits, or other best available technology to develop an accurate estimate of landscaped areas.â€
Yes, the water agencies will be the ones facing the fines, but they will have to enforce the limits, either by raising our rates or rationing our supply. Either way, we lose.
So, shower with a friend!
Problem solved.
In CA it will be mandated that you shower with Bubba, a 300lb trans and Jorge, an MS-13 convicted rapist to save water and embrace “cultural diversity”
https://www.sacbee.com/latest-news/article212605634.html
Information on the water restrictions
Updated inventory graph….a beauty! Check out Las Vegas
https://www.calculatedriskblog.com/2019/01/housing-inventory-tracking.html?m=1
Coming to a city near you:
https://www.foxnews.com/politics/de-blasio-pitches-plan-to-seize-private-property-of-problem-landlords-opponents-cry-communism
Communists (aka “democrats”) doing what they always did – nationalization (stealing from the private sector). Since CA is also a communist state I see that coming there very soon; just wait till the recession hits. Property taxes are a form of nationalization. DeBlasio just decided to go faster with the nationalization. Since more and more of the power in CA gets in the hands of communists (see the new governor), what is happening in Chicago and NY will happen in LA and SF. Demographics is destiny.
You are correct. Although some will say this is not happening because you used Fox as your source.
In recent news, our new governor here has proposed a tax on drinking water. Making CA Great Again! Meanwhile anyone with means, and many without means, are fleeing the state. Thankfully the population isn’t declining because they are being replaced by our friends from south of the border.
I think this next mega-bubble deflating will be particularly unkind to CA, because as you correctly state, demographics are destiny. Churro vendors don’t buy houses. Sorry folks, too much candor for some of you. As you were.
It seems the government establishment is creating it’s own seeds of destruction for all of us. All it takes is a desperate mob to rally around extremists and look what you might get.
FALL 2021 BOTTOM. Using my charts of the stock and real estate prices and real estate statistics, I try to guess when the bottom of the stock and real estate markets will occur. My best guess is that the bottom for both will occur in the Fall of 2021. Time will tell if the chart predictions turn out to be correct.
Gary, the housing market for this entire decade was driven my unseen, unprecedented events. Do you think this will all of a sudden change? There is no way ANYBODY can predict when bottoms occur. If you think you can, go to Vegas or buy some lottery tickets.
I’ll play the broken record again. Buy only when it makes sense for YOU and plan on owning for the long term.
I think predicting the future is unpopular nowadays, even for the Fed. Some points: 2018 federal budget deficit surged 17% during fiscal 2018 to $779 billion. Even more troubling, current Treasury estimates peg the 2019 deficit at $1.085 trillion! In a mid-September report, Bank of America Merrill Lynch ranked 45 global economies by the quality of their domestic finances, measuring twin deficits (current account deficit plus federal budget deficit) as a percentage of forecast 2019 GDP. Among the 45 ranked countries, the U.S ranked fifth from worst, with domestic finances in better shape than only Argentina, Turkey, Brazil and Pakistan. Around 40 percent of Debt are “intragovernmental holdingsâ€. These holdings include social welfare institutions, whose assets, accumulated in order to be (halfway) able to meet future liabilities, are invested in special Treasury debt instruments, known as “intragovernmental bondsâ€. In other words, the paying recipient of, say, Medicare, the American health service, is an indirect source of finance for the Treasury. Unusual, remarkable, or rather, alarming? Debtors are now simultaneously creditors. These “intragovernmental bonds†are certainly not assets of genuine intrinsic value. Were we to consolidate both balance sheets – that of the Treasury and that of the institution concerned – it would produce a tautologous situation that would result in the total loss of value. $0 Good night!! Sleep Well!
Gary: Are you going to provide any facts/explanations for your predictions, or should we just trust you because you’re Gary?
Responder, the facts/statistics showing market declines are available everywhere. The crashes in both the stock market and real estate are underway right now. The art is trying to determine how soon the markets will reach bottom. The art of timing is learned after a lifetime of investing experience.
While that was quick. This Manhattan Beach starter home perfect for a first time buyer is gone gone. Hopefully, someone on this blog got it.
https://www.redfin.com/CA/Manhattan-Beach/1300-18th-St-90266/home/6703965
Not all is lost. This super deal in Santa Monica is still on the market. Better hurry before you miss this one.
https://www.redfin.com/CA/Santa-Monica/2223-California-Ave-90403/home/6769375
These two homes are too cheap. It is likely the owners got scared reading the fake real estate crash stories being put out by the fake news. Lucky first time buyers will score.
Deal of a century! Who will be the lucky one getting this? I can’t believe JT is sharing this treasure with us! Why wouldn’t he just buy it for himself? What a good soul he is!
Millennnial, let me guess. You did not win the bid on the Manhattan Beach property. Better luck on your next attempt.
True! I offered 220k (true value). For some reason I didn’t get it. Next time! There is always another opportunity to lowball!
jt, you are probably right with this one.
According to the Price History on Zillow, this house was worth $1.2M in the darkest days of 2010. The Zestimate in September 2018 was $2.6M. Now they are selling it for $1.2M???
https://www.zillow.com/homes/for_sale/2223-California-Ave-Santa-Monica,-CA,-90403_rb/
Millennial was right!! This house has crashed 55%!! Time to buy it, Millennial. Your dream has come true and it is time to act!
My point on an early post is valid. 50% off of ridiculous, is still ridiculous?
Based on the numbers, I would buy it. Based on my budget and rational thinking, I would pass. Even in the darkest days of 2010, this house was overpriced.
Yeah, 50-70% is what most houses will be reduced by during the crash. That doesn’t mean you jump on the first one. On that one, it’s too small, I like houses at 2,500+ sqft.
Also, the price is still about 50-70% too high. I would be willing to offer 450k of its in great condition.
The tax history is also interesting.
This house was assessed at $138K in 2017 and the taxes were $1737/year.
This could mean that poor grandma who lived on a meager SS check was able to afford to stay in the home until she passed away that she bought in 1950’s thanks to Prop 13.
Or it could mean that grandma’s greedy Millennial son was taking full-on advantage of Prop 13 and renting the house he inherited years ago for $7K a month while only paying $1700/year in property taxes thanks to the ridiculous loophole in Prop 13 that allows someone to inherit the house AND the current property taxes. Now the millennial son has realized that the gig is up thanks to the postings above from Our Millennnial and wants to cash out on his lottery ticket.
The tax history is also interesting.
This house was assessed at $138K in 2017 and the taxes were $1737/year.
This could mean that poor grandma who lived on a meager SS check was able to afford to stay in the home until she passed away that she bought in 1950’s thanks to Prop 13.
Or it could mean that grandma’s greedy Millennial son was taking full-on advantage of Prop 13 and renting the house he inherited years ago for $7K a month while only paying $1700/year in property taxes thanks to the ridiculous loophole in Prop 13 that allows someone to inherit the house AND the current property taxes. Now the millennial son has realized that the gig is up thanks to the postings above from Our Millennnial and wants to cash out on his lottery ticket.
And thanks to current state and federal tax laws, if the house was inherited in September 2018 when it was worth $2.6M and he sells it to Our Millennial for only $1.2M, he can legally take a $1.4M tax deduction on this loss. Crazy. This is likely why Trump doesn’t release his taxes.
https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
Son Of Landlord, here you go. Something in Newport Beach that is in a decent location … not under airplanes, not bounding costa mesa, and not on a busy street, with a backyard, and it is under 2M. 1.8M is the ask. I guess you might call this a decent beach property …
https://www.redfin.com/CA/Newport-Beach/518-Fullerton-Ave-92663/home/3242889
FYI … this is NOT a good deal.
Laugh track: deafening!
Thanks for that, needed a pick me up. Maybe they can turn all the horribly overpriced places in CA and elsewhere into a tv show where they show people ruin their lives trying to get rich in a deflationary environment. The show could be called “No they di-int!”
lol, good one! When displaying these overpriced crapshacks on that show, they should show JT’s ridiculous, laughable comments also.
Indeed, it could be called “What the eggsperts are saying” and feature in the corner of the screen the talking (lying) head giving their 2 cents.
Hollywood – call me – I got ideas like this for dayz!
“Flop or Flop”?
Taxes to be increased in CA – maybe eliminate some of the Prop. 13 provisions, maybe increase some other taxes or more school bonds to be added to prop. taxes. One way or another, the state can no longer pretend they don’t have a problem.
If the state give in to teachers union, would they give in to other state employees union?!?…Is the state going to to put all state employees in “Projects” (like slave plantation housing)? Or is the state going to increase taxation in a massive way? Either way, the quality of life for most in CA is going to suffer and that is just going to increase an already existing exodus from the state.
NorCal, please notice that this time I used a liberal site not Fox News.
https://www.cnbc.com/2019/01/17/california-housing-affordability-crisis-looms-over-education-problems.html
If the state gives in to the Teachers Union the quality of life will go up for students who need nurses, psychologists, music, art, college counselors, social workers, and lower class sizes.
Doug G., I don’t deny that. I just stated the obvious in respect to taxes – you can not give what you don’t take. Higher taxes on same income lowers the standard of living for taxpayers.
I think Zillow’s value on the Santa Monica house is a bit rich. The Zestimate is $1.9M. There’s a smaller house on Idaho nearby for $1.5M. However that’s a 3k sq. ft. lot whereas the Calif. St. house is on a 5K sq. ft. lot. Walla! The value’s in the land. Even the extra molehill of 2K sq. ft. extra. I’d give it a value of $1.7-$1.8M. The $1.2M asking is obviously an intentional start for a bidding war. It’s not going to sell for that.
The one I don’t understand is the 1800 sq. ft. on 25th St for $3M. It’s lot is 6K sq. ft. and has been upgraded. But not over a million dollars worth of upgrades. This one seems out of range, unless I’m missing something.
That $3 million listed house was allegedly sold last August for $2,820,000 — but I call BS.
It was allegedly sold in August, then was put up for sale again in November. Who does that?
I toured that house both before and after its August “sale.” The furniture is identical. I take pictures when I tour houses. Yup, same furniture.
I also couldn’t find a recorded sale at BeenVerified.com.
It seems that owner tried to get $3.1 million in February 2018 (its original listing date). Went lower, still couldn’t sell, so arranged a bogus “sale” in August at $2,820,000 to raise its apparent value, then offer it again at $2,995,000 million in November.
It’s official, I am joining the legions of Californians who have fled CA. My wife and I have liquidated our apartment buildings and single family houses and are moving to pseudo-flyover country. We have been eyeballing this region for many years and spending a lot of time there. All of our good friends most of whom are very successful in their respective fields are considering leaving to or have. Gavin Newsom will no longer be our problem, we are taking our business and Calexiting next month after having prepped for this move for some time. California is not the place I grew up in, it is no longer salvageable, and our children will not be putting condoms on transgendered cucumbers.
Our well-managed/maintained apartments with below-market rents and happy tenants will likely soon become CA Government Property with Soviet-era amenities. I don’t even care if the door slaps my ass on the way out! Spank me!
I hear you! Good decision! I totally agree with you.
Just for my curiosity, where do you move? I know hundreds of really nice places far better than anything in CA. Of course, I can not move to all of them. I am happy where I am and family and friends also played a role in my decision to live here. I am not saying that CA did not used to be nice. 70s and 80s were far different than the democratic plantation it became recently. As the civilized producers leave and they are replaced with leeches from third world countries with no education, CA will follow in the footsteps of other liberal strongholds like Chicago, Detroit and Baltimore. Sad!…
Thanks Flyover. You are correct, California was great. I’m a 3rd Gen CA. Until the 80’s California had the best educational system in the US for example, now it is the worst by many metrics.
I see no possible return to greatness in CA short of a large-scale plague or societal collapse upon which a decent society is rebuilt entirely. I’ve lied in LA, SF, Sacramento, San Diego, and many other countries and states in the union too (went to college in Boston.) CA truly a dystopian liberal hellhole governed by lunatics that could have starred in the Hunger Games with echoes of the Weimar Republic as well.
I do think money can be made in CA though in terms of RE investing. It is a predictable boom and bust market that has only two speeds. It is easy to get rich here in RE. For that it is amazing. But it has created a two-class state, the Haves and the Have-Nots.
If I talked to you privately or in person I’d gladly tell you where we are moving, but on this forum I will don’t want to state it publicly. Not that anywhere is a ‘secret,’ but I don’t want to be the one drawing attention to an area that has remained somewhat untouched from the far-left societal plague that is wrecking so many areas.
These are not democrats in CA–I lived on the east coast, many old fashioned Democrats on the east coast. Out here in CA we have a group of oppressive extreme leftist political elites that stir up issues of race, gender, and class to further cement their power. They have created urban plantations where people are unknowingly enslaved. As long as the masses can get their Whole Foods, cannabis and streaming porno, they don’t even notice.
CA has a way of polarizing you. There is hardly a middle anymore. One is told and subsequently believes that males are toxic, whites are evil, and being a sis-gendered Native American homeless post-app Zer is the Gold Standard of all humanity, or one goes hard right after living in the Orwellian decay for long enough. I believe the rest of the US will continue to get more ‘balkanized’ (like the Caucus region) with people moving to specific regions for political reasons creating more divide–more Red and more Blue, more US vs. Them. I don’t necessarily think that is a great thing but I think it is simply reality. I also think the once-great (and still in some ways) US is now the crumbling brick of civilization. So our move out of CA simply buys us some time is all.
But since this is a RE blog I will stop for now as I’m sure many Patagonia wearing progressives here are puking by now. Believe it or not I generally don’t even like being too political and was once very centrist, but I feel that these hard left politics cannot be separated from California’s precipitous decline. To discuss California’s decline without mentioning the extreme politics as a contributing factor is intellectually dishonest or delusional.
On a positive note I do believe one can make money a few more times in CA before it goes full Tijuana. You can probably play one or two more cycles and make money but after that your kids will be selling Chiclets in the street for lunch money.
Nice nor cal fella! Good for you! Keep us updated on how it goes! Congrats on selling pretty much at the peak. Well done! “Transgendered cucumbers†that was a great line! Lol
Fortunately I sold most of my stuff prior to last winter/spring when I really started to get nervous about this market. Sure maybe I missed an extra 5% in appreciation but the downside is massive. I don’t think I would have gotten any of the prices I got last year were I to sell now. I believe the downside is unlimited moving forward. Even though I’m leaving I think there will be money to be made in CA playing these obvious BoomBust cycles as I have for a few cycles now. I will keep following this blog and enjoy it, but I guess JT will accuse me of manufacturing this story so that people think I am not really Millennial in disguise with another handle. Classic peak-market delusion there.
This bad boy is coming down, hope you can score some good deals when it does.
@nor cal
I’m glad you found your slice of right wing paradise. But unless you are moving to Podunk, USA population 150, I’m sure your thousands of neighbors aren’t so tight lipped. I’m guessing the real reason you don’t want to disclose is so you can troll on here after you move while slamming CA. I think you should tell us so we are can tear a hole in your argument. Just please don’t turn into Landlord who disappeared after everyone found out he moved to crime/drug ridden Spokanistan. It’s a dump like most of eastern WA.
You made your money and got out. Good for you. It at least sounds like you had the means to stay. I just hope you didn’t trade that transgender cucumber for opioids which is rampant is most of “flyoverâ€.
SoCalGuy, I won’t stay on here to bash CA after leaving. I still do own one building here and know lots of amazing people in CA, I don’t think it’s all bad at all. I also agree with you that every place has its problems and yes opioids are a problem everywhere.
I by no means think where we are heading is a ‘right wing slice of heaven’ as you put it. I’ve lived enough places on earth to know that after being there a reasonable amount of time I will see all of the issues there as well, such is life. But I do think it will be an improvement for us in terms of our priorities. If not, there are other places.
The main problem I have with CA is that I’m a ‘live and let live’ kind of guy, a true libertarian. I really don’t give a crap what people do as long as they aren’t hurting anyone. I have no problem with anyone letting their freak flag fly and I don’t try and change anyone. I went to arguably one of the most liberal universities in the US and have lived in urban cores with ‘city’ friends my entire adult life. I truly don’t care what people do, my problem with the ‘extreme CA left’ as I call it, is that they disagree with me in terms of allowing personal freedom to go unchecked. Their head explodes when they cannot control and indoctrinate others. They are anti-freedom. This is a fact in CA with a overreaching government and toxic PC police culture.
So, enjoy your CA, and good for you if you like the environment here. I have no animus for anyone that loves it here. They can have it. Most the people I know want their independence and to be left alone though, hence the mass exodus out of CA. Others agree with me which is obvious if you study demographics.
You are correct, I had the means to stay here, and had/have an awesome setup here with some good family and longterm life friends and a very profitable real estate investing business. We are leaving by choice. It feels good to have choice.
But I won’t leave and bash CA, that is ridiculous I complete agree with you. I have better things to do with my time. I love this blog though and I love real estate and I own CA real estate so I will be occasionally posting when I feel like it. Cheers.
You can’t even give us the state??? No one is asking for the address or City, but, an entire state?
2019…..Still priced out……prices still too high………crapshacks still crappy…..still $250-350k solid annual income needed to buy median priced out dated mediocre 1,100 sq ft ranch house on postage stamp lot with neighbors 4ft away in any half decent coastal county area…….still $3,500-$4,500 a month to rent same 1,100 sq ft ranch house which makes saving down payment for crapshack in the next 5 lifetimes even more impossible……:::::::.California still a liberal wasteland full of yuppie scum and illegals and getting worse by the day………….Me still living here for some reason waiting for the market to crash and burn 30-50% so I can own my own dream crap shack next to a couple of boomers
lol, yep – no reason to shell out a ton of money only to be surrounded by a bunch of d-bags and their demon spawn. Fk the system and its crooked games – #vanlife it! Head to the middle of awesome, population YOU. Thats how you win.
Old black water, keep on rollin’
Mississippi moon, won’t you keep on shinin’ on me?
Article in OC Register Sunday on GOV N’s ambitious new housing agenda (millions of houses by the time he leaves as Gov.). Problem is that CA has lost about 200000 construction workers from 2006 to 2017. To go from 100,000 new homes to 300,000 would require 200,000 new workers. And when they can, workers are leaving lower paying housing jobs for commercial projects which are more likely to be union, and pay significantly better. One young electrical union worker in his mid 20s was quoted as saying that even with union commercial jobs, he’ll never be able to afford a house in Santa Clara Co where he lives with his parents. As an apprentice he started at $27/hr which is $10/hr more than for residential work.
So Google will have properly wired office space but no housing for workers!
December California Numbers have just bee released. Complete Bloodbath. The denial period has started where inventory is building rapidly as people refuse to drop prices, causing massive drops in Total Units Sold.
Total California Dec 17 Vs. Dec 18 Below…
Single Family Units : -11.7%
Condos / Town homes Units : -21.4%
Total Inventory : +30.6%
Price : +1.5 for SFH, +3.1 for Town homes
Sacramento Dec 17 Vs. Dec 18
-22.4% Units Sold
+4.1 in Price
Los Angeles Dec 17 Vs. Dec 18
-16.3% Units Sold
+1.8% in Price
Santa Cruz Dec 17 vs Dec 18
-31.7%
+11.4 in Price
Orange Dec 17 Vs. Dec 18
-18.3%
-0.1% in Price
San Diego Dec 17 Vs. Dec 18
-14.7%
+2.2% in Price
Your numbers are shown without explanation. An explanation is needed for the price increases Dec’17 to Dec’18; otherwise it does not make sense to have increase in prices along with decrease sales and increase in inventory.
The prices increased in the first few months of 2018, then leveled off and then decreased in the last few months of 2018. The top was in May of 2018. From there, is all down and getting speed down the hill. How much speed it gets and how fast they get down depends on the FED if they continue their interest raises (how far and how many), if they continue their QT at 50 BIL./mo and how the stock/bond market will behave.
It makes sense to me. The price did increase in the beginning of 2018 topping off in the summer then declining but it appears that the decline was not enough to fall below the YoY between Dec 17 and Dec 18. I see a pattern here: Areas with the biggest price increases have lower sales volume YoY. This means that buyers have drawn a line in the sand as to what they’re willing to pay and if sellers don’t follow suit, their properties sit on the market unsold.
This is the tide beginning to turn but not in a grand fashion that 2008 brought us. As I’ve stated before, prices could drop slightly but expect another upswing once YoY sales go back into the positives. Of course interest rates and a global recession could further accelerate those declines but I’d expect a 20% drop AT MOST. For what it’s worth, the previous housing crash resulted in a mere 27% drop in the Case-Shiller Housing Index. Of course certain regions are affected more than others but don’t expect a 50% discount on housing. It’s just not happening.
SAN DIEGO HOUSING DATA UPDATE
“December 2019 housing data: highest months-inventory since 2011; prices decline”
“Active Inventory is up 69% YoY”
“Months of inventory is highest since 2011 (which was right at the tail end of the bust).”
“The higher inventory seems to have started impacting prices. Single family price/square foot was down 3.3% for the month. Here’s how that looks on the Case-Shiller proxy (3-month average of single-family price/sqft):” see charts on website:
https://www.piggington.com/
enjoy the charts…..whats better than having a coffee in the morning and seeing the housing market to tank 🙂
California Home Prices are Crashing! Up to 25% Price Drop
https://www.youtube.com/watch?v=-jjk1dih8YU
More great news
https://wolfstreet.com/2019/01/22/us-home-sales-get-uglier/
The RE cheerleaders were telling us a year ago that sales decreased because the inventory was very low (not much to sell). Now, in some areas the inventory doubled but sales continue to decrease. Based on their explanation sales were supposed to double because it was more to sell. So that explanation did not hold water.
You are correct this explanation did not hold water, but those House Jockeys that were dispensing such advice will go back to holding water, at the restaurants where they were bussing tables before getting their RE license.
it was just typical holiday market swing. any houses that i personally know that were sale for more than 2 months have literally all gone into escrow in the past 2 weeks.
I am seeing this … a bunch of beach close homes pending in the last few weeks … but, I don’t know if this will last nor do I know how this compares to last year. Some of this could be sellers who are scared from all the “housing market crash” junkets being pumped by the MSM causing some dumb sellers to take a price hit that is not needed. I will wait till stats are available. Yesterday, redfin reported price increases Y over Y in every SoCal county … that is a promising sign.
Here yah good, watch it a few time if you get confused.
California Home Prices are Crashing! Up to 25% Price Drop!
https://www.youtube.com/watch?v=-jjk1dih8YU&t=27s
JT, see above my explanation why Y-o-Y price change is misleading when you have a turn in the market. You have to plot on a graph every month to see what is happening in the market NOW. That increase took place in the first few months of 2018 not the last few months of 2018. The prices at the end of 2018 did not drop to negate the full increase.
Yofoo, are you familiar with the term YoY? It means year over year. So what does year over year mean?
“Year over year (YOY) is a method of evaluating two or more measured events to compare the results at one time period with those of a comparable time period on an annualized basis. YOY performance is frequently used by investors seeking to gauge whether a company’s financial performance is improving or worsening.â€
I know, right over your head….so let me make an example: let’s say you read all over the internet that Sales declined, inventory surged YoY in December. What that means is that you see a percentage that tells you how the market changed from dec 2017 to dec 2018. If you are trying to find an explanation why the market shows higher inventory (e.g San Diego 69% increase in inventory YoY in Dec) the “holidays†would not be a valid comment. Most people know that in dec 2017 we also had holidays….Christmas wasn’t in a different month even if a RE cheerleader wants you to believe that.
They must be tiny homes because I have never seen a home inside of an escrow company. Since you know them personally though you would know better than me.
Epic Crash Coming
Lose my job, move home to mom
Parents fridge is full
That’s right! Epic crash is coming.
Here is how it works:
Crash>normal prices (50-70% below peak)>you buy
Impatient waiting
For epic crash, wait decades
Love fighting the Fed
True, the market crashes roughly every ten years.
2001, 2008, 2019
Avg, about ten years. In other words, once a decade 🙂
Damn you guys all mad and have resorted to trolling Milli because he’s right about the correction and soon to come crash haha. One thing I don’t agree with Milli on is at least in the OC beach cities. We’re not gonna see anything higher than a 30% drop and even then I think it’s pushing it. 15-20% is the best we could hope for.
15-20% does not equal a crash. Sorry. A very ordinary correction is all it is.
I think a 30% drop in beach cities would go a long way for affordability. I would be a buyer at a 30% discount (and a seller).
I’d buy another property myself. I live in coastal OC and we haven’t seen the run up in prices like LA beach cities. I think if we had a 20% correction you’d see all kinds of people looking to buy. These 50-70% crash predictions by the trolls might happen in Bakersfield but not where I live.
It’s been beautiful weather the last few days. Looks like we might have a couple days of rain coming this weekend. Meanwhile, the rest of the country is experiencing arctic weather.
imagine you bought recently and a savvy millennial buys next door for 20% less and laughs at you daily….what do you do? You walk….why overpay for the next 30 years – massively?
more foreclosures>more price declines….
And all you need for a 50-70% discount in housing is a job-loss recession.
SoCalGuy, CdM, NB, and Eastside Costa Mesa have seen prices substantially higher than the 2007 peak.
Millie,
The only way your scenario plays out if you buy at the very peak (who knows when) and sell at the very bottom (again who knows?).
My first property (rental) was purchased during the late 90s “bubble” (dot com) in my early 20s in HB that’s 1/2 mile from the beach. Ask me how I’m doing on that property? Oh, and I didn’t walk away when the value dropped either.
I purchased my current home in 2013. I didn’t buy at the bottom but it has appreciated. I have no intention of selling and couldn’t rent a property in my neighborhood for what I’m paying monthly. I’m dropping $30K on my kitchen next month. I made that last month working overtime.
You like to make 100 posts a month spewing all your investing knowledge when you have made zero dollars outside of your crypto gambling venture. BTW, I don’t hear you saying much about that anymore. Weren’t you saying 6 months ago how it was the greatest thing since sliced bread, all the investment banks were coming out with crypto ETFs and such? How’s bitcoin doing now? Only like 80% down from its peak?
If “savvy millenial” moves in next door for a good price I’ll hope he’s cool and not a d-bag like you. I don’t get off on other people’s misfortune.
@jt, NB is astronomical. I stay in HB with the tatted white trash. Eastside CM was always a gem in my opinion. I still kick myself for not buying another property there in the early 2000s. I think it was under priced for a long time.
A slowdown in housing market? yes.
A crash in housing, not coming anytime soon.
“With recent pressure on both volume and margin, many have become concerned that the housing market has completely stalled,” Miller said on the quarterly earnings conference call. “We still do not agree. As rates have started to ease, we have seen traffic pickup. Therefore, we continue to believe the market has taken a natural pause. It will adjust and recalibrate and demand, driven by fundamental economic strength, will resume.”
https://markets.businessinsider.com/news/stocks/housing-industry-slowdown-experts-throwing-cold-water-on-turmoil-2019-1-1027904107
“driven by fundamental economic strength” muhahahahahaha
fundamental economic strength???? Whats this guy smoking…i want some of that!
Moving company and truck rental company California statistics is the subject of OC Register writer Lansner’s article today.(Funny about that given the last week on this blog.) He says van companies are for the monied; my experience is that corporate moves, even middle class employees, are probably the bulk of their business. Anyway, van companies moved 8% fewer households between 2017 and 2018. (43 % below the last boom.) Net outflow was 3126 out of 48110.
U-Haul statistics rank CA 48th out of 51 (ahead of Michigan an Illinois). However internal migration inside CA (and some snowbird retirees) made some towns big winners in the U-Haul in-migration category. Sacramento/Roseville finished #1 nationally, and Palm Springs/Cathedral City finished #17. Other high rankers were Temecula, Murietta, Davis (#16) and Concord. Funny thing, I know someone who moved from San Mateo County to Davis, and rents out their old place.
I talked to a realtor I have done business with. He told me that he is struggling. He said the problem is sellers are mostly refusing to cut prices while buyers are demanding price cuts. So, no deals are being signed. He said in 2007/08/09, sellers were rapidly cutting prices and he was selling homes. This time, sellers are refusing to cut prices and deals are just not happening. Sellers are in control. Only a recession can cause price cuts.
The realtor is spot on. Sellers haven’t gotten the memo yet. Buyers have. The market is going down hard. Inventory is increasing rapidly (see stats I posted for Las Vegas, San Diego, Oc, Seattle).
It’s nice to see that JT finally jumps on the wagon (6 month after everyone else saw it).
We are now in a buyers market. “ A buyer’s market is a situation in which supply exceeds demand, giving purchasers an advantage over sellers in price negotiationsâ€
Several sellers are now competing with one buyer. All you have to do (as a buyer) is sit back and enjoy the ride. It’s fun watching inventory to go up and prices go down. The party has stopped. Which means, As a seller you want to make sure to price way below market otherwise you won’t sell. Your cash is tied to that empty house and you have little to no choice chasing the market down. I have seen houses sell after several 100k of price reductions, tons of open houses and 6 month of sitting on the market. I am also watching a fe flip that are losing money. They can’t sell after significant investments in upgrades. Most RE experts know that a slowdown in flipping is a sign that the market is in big trouble.
Several sellers are now competing with one buyer. All you have to do (as a buyer) is sit back and enjoy the ride. It’s fun watching inventory to go up and prices go down.
That’s only true of sellers who HAVE to sell.
Many sellers are only listing their houses because they hope to win the lottery. If they won’t get their ridiculously high prices, they won’t sell.
This is not (yet?) a buyer’s market. It’s a stalemate. It might break into a buyer’s market, or it might remain a stalemate for several years, with very little sales activity.
Sellers are not cutting prices because the economy is strong. Buyers are stuck paying higher and higher rents. Sorry, there is no price crash. There is a sales slowdown, but no price crash. Just because sales slow does not mean prices will crash.
Everything is on track for the stock market/real estate mania bottoms to occur in Spring 2021. Interestingly, the stock market is likely to go to new all-time highs in coming months while the real estate market is dead in the water for many years to come.
Sellers will eventually start dropping prices. Millennial will look a genius in 6 months.
There is nothing to do but wait patiently for the crash to start.
Coming to a city near you:
https://www.consumeraffairs.com/news/california-sues-huntington-beach-over-lack-of-affordable-housing-012819.html
https://www.hollywoodreporter.com/features/las-homeless-surge-puts-hollywoods-progressive-ideals-test-1174599
https://www.santacruzsentinel.com/2019/01/26/neighbors-protest-ballooning-santa-cruz-homeless-camp/
Welcome to the new California!
The liberals created the mess and now they have to live with the consequences of their own stupidity.
If that is not enough, they want to eliminate ICE, the “immoral” walls, and have open borders; in other words to get Tijuana type conditions across SoCal. I know, according to the liberal democratic socialists, Trump is at fault because he is rayceeest!….Stupidity= doing the same thing expecting different results.
There is an obvious correlation between high cannabis use and extreme leftists locked into their doxies. Look at the regions where drug use is highest, or where cannabis is pushed as nutritious mother’s milk. You will observe massive homelessness, crime, blight, and subpar schools. The best thing that ever happened for the progressive left is the average American lemming buying into the media peddled fiction that cannabis just relaxes you and makes you a better person. It has created a dependent class of sheeple that must continue to vote for free crap since they have warped their minds. This is the movie Idiocracy on full display. It is like an episode of the Walking Dead in many American cities now. Except that you cannot shoot the approaching zombies you have to revere them as open minded and progressive holy urbanites.
The states that legalized cannabis now have the highest priced homes in the nation.
QED: Cannabis usage enables an extremely high income such that people can afford these homes.
Poor red states who voted for Trump. They must have extremely low income. Maybe cannabis will help stop the exodus of successful people from these red states and improve their lives.
PS. I do not use cannabis. I only analyze data on what is working on how Trump states continue to fail.
Correlation does not imply causation. The ‘blue’ dtates you are referring to are the most densely populated and thefefor have more economonic demand-drivers that drive RE values. It has nothing to do with people being stoned, sorry. Nice try though. Sure you dont blaze? That was some teen stoner logic you just blessed us with.
“There is an obvious correlation between high cannabis use and extreme leftists locked into their doxies”
You said it and I agree.
There is also a high correlation between cannabis usage and people who can afford a home in a high priced housing state.
Apartments are overflowing with millennials who are renting and looking to buy a home. Many of these millennials have a good job and will push home prices higher for many years.
I guess you missed this article, lmao, you couldnt be more wrong jt, but most of us think you know that.
Multiple Offers Have All But Vanished, Price Cuts Are Rampant And Homes Are Taking Longer To Sell
A report from the Union Tribune in California. “San Diego County’s median home price ended the year at $550,000, one of its lowest points of 2018, CoreLogic reported. The median price for a resale home was $595,000, dipping from the all-time high reached in June and July of $630,000. ‘The market did an about-face in August. Come Aug. 15, it seemed like everybody came together and said, ‘These prices are too high and these interest rates are too high,’ said Gary Kent, a La Jolla-based real estate agent. ‘It was like whiplash. Like, what just happened?’â€
http://housingbubble.blog/?p=895
Another very strong jobs report. Trump is doing a great job pumping up jobs with his tax cuts that favor business and his regulation removal mantra. Apparently, Millennial never went to college, because if he did, he would have taken economics and studied business cycles. We are in a good place in the business cycle and the housing market will never crash when the economy is hot. It does not matter how many names Millennial is posting propaganda under, because a hot jobs market means a good housing market. End of story.
Your personal attacks against Millennial highlight the fact that you are in full denial of the current collapsing real estate market. You try to slam him personally because your intellectual six shooter doesn’t have any bullets in the cylinder.
Whether or not Millenial attended college or not has nothing to do with the data he presents and his conclusion from said data that the market will continue to deteriorate. If you have a problem with his opinion, then you should attempt to provide data which supports further price gains in the RE market which is your stated position. We all know that this data does not exist, so as a last resort you accuse every real estate bear on this site as being Millenial in disguise, which even my 5 year old could see is stupid based on clear differences in writing styles, grammar, syntax etc.
I will give you the benefit of the doubt and assume you are not delusional but rather someone with a vested interest in prices continuing to rise (you’re likely a relatively new low volume Realtor, or a marginal Flipper that got wiped our in the last downturn.) So it makes sense that you are so desperately fighting the obvious and overwhelming data that the market is cratering and prices are coming down. Your livelihood is at stake, I get it, but you should channel your energies into other things because your Millenial Derangement Syndrome will never change the course of this real estate market.
Jt, so everybody who attends a college had economics and finance classes? Lol….it sounds like you are the one who doesn’t have much college experience.
Btw, if you are so smart how come you never reference any data, stats or charts? The only two articles you ever referenced where realtor marketing material saying that now is a good time to buy. You didn’t have to do that….isn’t it always a good time for RE cheerleaders? Has there ever been a bad time to buy if you are a realtor or lender?
Why don’t you post some inventory data showing YoY increases? Why do you hate data so much and call it propaganda? Because it doesn’t fit your narrative?
Questions you will never answer 🙂 and most of us know the answer anyways….you want people to buy overpriced crapshacks to keep the bubble going for a bit longer.
More fantastic news.
Pending homes sales look terrible 🙂
https://www.zerohedge.com/news/2019-01-30/us-pending-home-sales-crash-most-5-years
If someone is thinking of selling, my advice would be to drop the price by about 30% as a start. You might get an offer in. If not, drop some mo
Dow back up to 25,000 and the Fed isn’t raising rates anytime soon. Unemployment is at record lows. I’m walking my dog in shorts/t-shirt while half of the country can’t even go outside for extended periods of time without frostbite. All the permabears on here trash CA for all its issues (and some are legitimate) BUT they’ll gladly forget all that nonsense and buy for the “right price”.
Prices in SoCal might be going up since south Chicago will relocate to CA after this “global warming”.
In other news, scientists have shown that global cooling is caused by global warming, and global warming is caused by global cooling!…..
Check out the Prop 13 taxes on this Brentwood crapshack: https://www.redfin.com/CA/Los-Angeles/301-S-Saltair-Ave-90049/home/6837963
* 1965 ….. Sold for $63,500.
* 2019 ….. Offered for $2,995,000.
Property taxes in 2017 ….. $2,774.
You know it’s a crapshack because the listing doesn’t include any interior photos. And because the listing says: “Attention Developers/Builders! Rare opportunity for major remodel/rebuild …”
It’s a decent sized lot. 9,832 sq ft.
Owned by the same family since 1965 — 54 years!
The owners probably weren’t even Boomers. Silent Generation, most likely. I’m guessing they’ve now died and some lucky Xer “kids” have inherited and are cashing in.
I know at least a dozen Silent Generation homeowners who purchased in the 1960’s and 1970’s.
I also know of a few Silent Generation parents who passed away and their Boomer/GenX kids are now living in their inherited houses.
They are all paying 1500-2500/year property taxes per year on million dollar houses thanks to Prop 13.
When these Silent Generation parents pass away into the California Sunset, the house is essentially free to their children from Federal Taxes and Prop 13. If I was a renter child, I’d move into the family home.
The Dynasties can continue into the Millennial and i-Generations.
Bought a second home last year and trying to sell our old house. 3rd listing agent now…..don’t want to sell at a loss. All they can come up with is price reductions. Is the market recovering soon? Looked into renting it out but can’t do that without being cash flow negative. Really frustrating situation. It’s eating me up inside and my savings. My wife is thinking of taking a break from work due to “stressâ€. That would be the last nail in the coffin.
JT, is that you??
JT vomits Realtor propaganda all day about how the market isn’t tanking, then the real JT comes for advice about his languishing flip flops under the name “Need Advice.”
My extreme apologies to Need Advice if this isn’t true.
I actually thought this was Millennial trolling us.
The general practical advice that I would follow is:
1) Don’t get into a situation owning 2 houses if you cannot afford to own 2 houses. This may seem like common sense but the housing conditions during the last 8 years have caused people to become extremely greedy. ie Why sell my old house before buying a new one when my old home is appreciating 30%/year?
Since you are in this situation. I need to give practical advice.
1) Sell the house at a loss now to Our Millennial and lick your wounds and move on with life. As the Dr has pointed out on this blog multiple times 7 Million people lost their homes in the last crash. You are currently one of the lucky ones who may only take a slight loss and save your marriage at the same time.
2) Rent it out at a loss. Our Millennial might rent it in the future when rental rates skyrocket during the next bubble in 5 years. Housing always goes up in the long term. Look it up.
I hope this is practical advice.
Well downtown and midtown Sacramento is WAY OVERPRICED. I walked around near work today and a 2 bedroom townhouse was listed for over 500k for a crapshack 1100 sq ft! Hope it crashes and burns.
Millennial, Patriot, Need Advice, Global Warming, ….. are all the same person. And, there are more Names by the same guy. At least have enough decency to post under a single name. Someone spends a lot of effort managing this web site, and many appreciate that. But, you disrespect all the effort he puts into this. People with good points to make are leaving. Grow up.
Add ‘Real Estate Expert’ to the list.
That’s it, i am moving to California! In my state I had to wear gloves and I really hate heaters. They are bad for the environment and can be toxic to humans. I am selling my 300k house and buy a 1.2 Mio crapshack in California which has no heater!!!! Eat that polar vortex! Thanks for making me move!!!! Jk, Lol
JT.
Due to Global Warming, AC will cost much more than heat.
You can’t dress for heat but you can dress for cold.
This is why most of the hot desert regions were not populated before AC was invented. See LAs Vegas and Phoenix. While NYC, Chicago, Minneapolis were booming.
Just some thoughts.
Preview of what’s to come to the US housing market? Global housing bubble bust? Check out what happens in down under.
https://wolfstreet.com/2019/02/01/im-in-awe-of-how-fast-the-housing-markets-in-sydney-melbourne-come-unglued/
On my short commute to work I drive by at least 5 new communities. They are building everywhere. Love it, lots and lots more inventory coming.
As expected, new home prices are dropping
https://wolfstreet.com/2019/01/31/new-home-prices-drop-12-as-supply-surges/
Millie –
If you are seeing ‘new communities’ being built on your commute to work, I would gather you are NOT in LA proper…not even in the West/East Valley.
They are maybe building new subdivisions North on the 5 fwy towards Sylmar/Tejon Ranch.
I understand now why you think LA is overpriced…you are not in LA.
Groovymom, you must be new here. Of course I am not in LA. La is the armpit of the US.
I said that many times before. Also, you must be new to market cycles. During a housing bubble EVERYTHING in California is overpriced. Check out the IE, OC county, San Diego county, LA, bay area. All of those markets are heavily overpriced and will crash by 50-70%.
Millie prob doesn’t even live in CA. 6 months ago he was bragging about all the money he’s making in crypto which has completely crashed. Then he brags about his cheap rent and everyone is idiot for buying because they should live cheap like him. What he failed to mention is he’s living in a trailer in Palmdale.
Home builders always build into the crash.
https://www.extension.harvard.edu/inside-extension/how-use-real-estate-trends-predict-next-housing-bubble
Great analysis! Thanks for sharing!
Millennial,
That is the type of high quality article you should be reading… not the Zero Hedge trash that will lose you money.
Please do note the 18 year rhythm… not 8-10 years like you ridiculously preach.
Some of the cycles are 40+ years. 80+% of the cycles are much longer than 10 years
Tank in sight, it seems you might have been away from this blog for a while.
I post articles from zerohedge, wolf street, calculatedrisk, piggington (data comes from sandicor) and various OC inventory articles that pull the data from “reports of housing, Steven Thomas, Quantitative Economics and Decision Sciences etc.
There are many more websites I post from like seattlehousingbubble or Redfin etc. speaking of Redfin, I will post their sad outlook for 2019 a bit later.
Your second point regarding cycles is good. The RE market in California moves in ten year phases. Every ten years (avg) there is a dramatic bust. The reason why you are confused on that is you don’t read any articles and l don’t look at charts or stats.or have you ever posted any inventory/housing data? Why not? because it doesn’t fit into your story that there is no tank in sight?
That’s what I am here for, to provide RE cheerleaders and normal folks with information so a purchase of an overpriced crap shack can be avoided.
Millennial,
You are a complete clown. Not sure why I even bother responding.
Before 2008 the last housing cycle was 1990.
18 years, math is your friend.
Oh and Bill McBride, still isn’t even on recession watch:
https://www.calculatedriskblog.com/2019/02/update-endless-parade-of-recession-calls.html
I wouldn’t get too caught up in the 18 year timeline at this point. The mortgage market intervention by the fed to re inflate the previous bubble has never happened before and I believe it will drastically shorten the timeline.
Housing bust is coming to a town near you. 🙂 not even realtor scumbags tell you to buy anymore. Market is losing faith quickly. Expect a dramatic increase in active inventory and price declines you haven’t seen in your lifetime before.
Depends what your definition of a “bust†is.
Also going to depend what area you’re living in.
LA/OC (Southern California) a lot of people call dropping 20-30% here a “correction†but what’s funny is people currently waiting on the sidelines, the correction range is our all in price point including me.
This property is in marginal condition and is a little over priced. But, this is a buy and hold for 10+ years. What a location and lot. If you could get the price down and fix it up, then live in it for a decade or two, it will be a gold mine.
https://www.redfin.com/CA/Los-Angeles/301-S-Saltair-Ave-90049/home/6837963
That’s the crapshack I posted further up the thread, three days ago.
Gold mine? It costs $3 million, and you think it’s enough to get the price down “a little bit”? Then hold for ten years?
Think of the property taxes you’ll be paying. At $3 million, the annual property taxes would begin at around $37,500 a year. That doesn’t include utilities, insurance, mortgage interest — with federal tax deductions now limited to $10k a year.
Plus, you’d have to remodel extensively, or tear down and build anew. It’s noteworthy that the listing isn’t showing any interior photos.
The lot has estate potential … all upside. Back in the 90s, when I was in my 20s,prime beach close fixers with a back yard were under 500K. Many made the same argument that you make. But, I went in with subprime mortgages and picked those places up. Now, the prices are 4 to 6 times that purchase amount. Why? Because they are building new large homes that are priced in the 4Ms. How this this happen? Because the rich are getting richer and there are more rich people. This will continue to happen so an investment in an area will the rich will invade is the ticket to big money potential. History repeats itself. The trick is to buying a livable tear down in an area that will be invaded by the wealthy in the future, then wait. If you do this, in 10 to 20 years, you will have a golden nest egg.
that’s a buy for 700k instead of 3mio
I thought the crash was coming by Dec 2018 and all of 2019 but it looks like things are calm. With the fires, many ppl have cash from insurance payments to buy those new listings. Inventory has been going up but I don’t see a crash anymore in 2019, Spring is around the corner and by summer families with young kids will be selling/buying/moving again before the new school year starts.
If only interest rates would go down again to mid 3’s so that I can refinance and just stay put in the valley.
Newhomeowner, you are a typical RE cheerleader. During winter we were told it’s just a seasonal slowdown (even though most people know that YoY analysis excludes seasonality. We had holidays at the end of 2017 as well).
Now, RE cheerleaders are telling everything changes in spring! The hot season is coming!! Just like last year, we heard the same story. But since May 2018 the market hit a wall. Buyers demand has vanished which can be seen when looking at the data.
The people-got—insurance money is also BS. Most were underinsured and can’t afford the house they used to live in.
Wait and see….it’s going to be fun!
Two really good articles in the OC Register Re section today.
First article by Marissa Kendall of the Mercury News is about a Santa Monica company called Domuso that finances rental payments like big move-in expenses or months where there is a shortfall. Six to 12 month loans at 18-27% annual rate. this company makes deals with big landlords and then you pay the rent to Domuso.. .even if you have to use a CREDIT CARD!! Some payment options have “convenience fees”. The company says “We’re really just getting started”. They only accept 30% of applicants. The company says that 2-5% of renters already pay with a credit card. They bill themselves as a “safe alternative that is digital”.
The other article is on the top 4 Mortgage and RE scams, and is too long and detailed for me to go into now. Suffice to say it’s a jungle out there!
I had heard this song on a 78 when I was a teenager:
https://archive.org/details/78_real-estate-papa-you-aint-gonna-sub-divide-me_cherwin-and-his-kruegers-lieder-o_gbia0068844b
“Real Estate Papa (You Ain’t Gonna Sub-Divide Me)”
I located it on an old record site tonight.
Looks like housing market is getting hot again. I had it right while most others did not.
New tax law driving Californian and New York homeowners to lower tax states: https://www.wsj.com/articles/out-of-state-buyers-flock-to-miami-11549325267
I wonder what percentage of people begin doing their taxes in January? In February? In March? The lowered SALT deductions won’t hit people’s awareness all at once on April 20th. Rather, it will sink in over the coming months.
I normally being my taxes in February. I like to do it early, as soon as I’ve received all my tax statements.
I start in late January when W2s and some other documents are available. I keep adding to it until the last documents come in (usually done by early March).
Most of the people I know turn their W2’s 1099’s etc over to their tax person and they look at the bottom line when they get it back.
Trump raised the standard deduction and lowered the tax brackets.
Even though the tax deduction on property taxes, state income taxes, personal property taxes has been capped at 10K and I deducted last year, I will be using the std deduction this year and because of the tax brackets, I will be paying less than last year. My tax person delivered good news for me. However, this is bad news for the US debt.
Since the lower brackets affect everyone, but the cap really only affects high income homeowners, ie in order to pay 10K per year in property taxes, you need to have purchased near a million dollar house. Prop 13 protects people whose houses have grown to a million so they don’t typically pay 10K in property taxes. If you are paying 10K in state taxes, you probably are making enough to afford the extra Fed tax hit. However, you probably won’t pay more since the brackets have been adjusted to benefit the wealthy.
My thoughts are that most people who have income that pays a mortgage, will see less taxes this year due to the lower brackets.
The $10,000 limit is for property taxes plus interest. Most of the new buyers of houses in SoCal pay at least $10,000 in property taxes. That means the interest is no longer deductible for the vast majority of homeowners.
From now on, the interest will be paid after taxes. Yes, the standard deduction increased, but that doesn’t change the fact that the interest is no longer deductible – standard deduction is the same, weather you rent or pay interest on the mortgage.
Flyover,
That’s the most ridiculous comment you ever made on this site…. and that’s saying a lot.
$10K property tax deduction is completely separate from the mortgage interest deduction. Homeowners can deduct up to $10K in taxes and all of their interest up to a $750K loan.
This doesn’t impact that many people, but at least get it right.
So now Donny is talking about removing the SALT cap.
No Tank in Sight,
Read here:
https://www.forbes.com/sites/samanthasharf/2018/01/09/what-in-the-final-tax-bill-could-impact-your-housing-costs/#2b1348162c08
Flyover,
Follow your own advice and read it again. Mortgage interest deduction (up to a $750K loan and $1M grand fathered) and the $10K property tax deduction are completely separate deductions.
Has anyone besides me noticed that RE cheerleaders usually don’t argue with data, stats or charts? They rather try to distract by personal attacks or post made up stories that can’t be backed up. Look out for it, they barely post any articles or inventory data because it doesn’t fit into their story.
I can’t look for anything because all I can see is 100 posts a month from you which are links to zero hedge. If I wanted to read zero hedge I’d go to that site. If you actually had something useful or thoughtful to share based on experience maybe people wouldn’t attack you. Instead, you are like a zero hedge Bot posting links.
Lets post some facts: You’ve made zero dollars in real estate. You never owned a home. You supposedly made money in crypto and was preaching to everyone they should be buying crypto while they wait for the next crash. Looks like Bitcoin is at $3411 this morning, only 83% down from the peak. Why are you so silent on that matter? We wouldn’t want FACTS to get in the way of your trolling. Do you need a link to the chart?
You troll everyone with your “cheap rent” old lady landlord story. You tell everyone that rent is still cheap yet you do not even live in LA.
As far as the RE cheerleaders making few posts, you’re right. No one is making 100 posts a month saying the same thing over, and over and over again. As someone else mentioned, all the people who used to post on this blog have disappeared.
More evidence of a decent spring market. Tear down purchased for 1.3M 6 months ago. Very very busy street was why the price was so low. Resold for at nearly a 30% profit. Absolutely nothing done to the home. This thing is below a crap shack. All they did was draw up plans for a new home. It was rented during the 6 months holding period. This is a positive development. I am sure Millenniial will chime in and say it is only worth 300K.
https://www.redfin.com/CA/Newport-Beach/2518-E-15th-St-92663/home/4585728
Nasty!
https://hotair.com/archives/2019/02/07/rats-fleas-garbage-caused-typhus-outbreak-los-angeles/
Here is a good one for the first time buyer.
https://www.redfin.com/CA/Torrance/5526-Via-Del-Valle-90505/home/7719984
Well for me to buy in any major metro area of California would cost me double what rent is currently. Plus the massive down payment that can be used to generate income via stocks.
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