The housing market is turning, and Millennials are unhappy about their home purchases – California has highest months of supply for homes going back to 2012.
I was reading an article where it discussed how a small number of Millennials are now inching back into the housing market. But what was telling was that many of them were unhappy with their purchases. Why? As you might expect, buying a home always isn’t the right choice and there are expenses. You have taxes, insurance, maintenance, a 30-year mortgage, and other things that many people just don’t factor in. I’ve made this point before where many people buy a home and then start popping out kids. Usually the rush to buy is the external considerations of life versus the actual economics. So you get hit with big expenses all at once. For many professionals, childcare equates to what you would pay for college tuition per year! And of course, many Millennials are buying houses at near peak levels using mega mortgages just to squeeze in. In places like California we are already seeing inventory rising. Of course inventory is rising as fewer and fewer people can afford homes at current prices.
The turning market
The real estate market turns at the speed of a massive cruise ship. Little by little things start to turn:
-Inventory rises
-Sales drop
-Fewer people can afford homes
-Sellers slowly come to terms (more price cuts)
Eventually equilibrium is found. The fortunate thing right now is the economy is still robust but people are massively in debt. The Fed doesn’t have much more ammunition should we have a recession, let alone a severe recession.
Home prices are now back to peak levels:
These are new peaks being achieved. And home prices are once again disconnecting from the overall inflation rate:
What you can see from the last chart is that after the housing bubble burst, at the trough, home prices actually aligned with the overall rate of inflation historical trend. But the market is now clearly turning.
Take California for example. The amount of inventory floating in the market is slightly growing but more important the number of people that can afford homes is astronomically low. Take a look at Los Angeles:
This is the highest months of supply of homes in Los Angeles going dating back to 2012 during the trough. At some point something has to give and it looks like people are simply buying at a much slower pace. There have been many more price reductions as well in the last couple of years to entice buyers and Millennials to purchase homes.
As we all know, there is no free lunch and eventually things do find a balance, just like they do in nature. Â
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331 Responses to “The housing market is turning, and Millennials are unhappy about their home purchases – California has highest months of supply for homes going back to 2012.”
What were prices back in 2012? LOL
This article indicates that California real estate (at least in prime locations) will NOT tank anytime soon: https://www.latimes.com/politics/la-pol-sac-skelton-income-tax-california-wealthy-20190311-story.html
High taxes be damned, the rich keep moving to California
Are rich people fleeing California to escape astronomical state income taxes? That’s the word. But it’s fake news.
In fact, more wealthy people are moving to California than leaving, research indicates. It’s the poor and middle class who are departing.
It makes sense. If you’re getting rich in California and can afford to live comfortably here in this balmy climate, there’s little incentive to leave — except to stick it to the tax collector in Sacramento.
“If you’ve got your business here and you’re making money, it’s hard to leave,†says Allan Zaremberg, president of the California Chamber of Commerce. …
“California has a net out-migration of low-income folks who can’t afford to live in their state and are being pushed out by high-income homeowners. And there’s a whole other story of middle-class people struggling to pay their bills and the housing shortage hitting them hard.â€
The Stanford report concludes that California has “consistently become a more attractive place for millionaires,†adding that perhaps this is because California has become “a winner-take-all economy.â€
That would be Fake News….
Exactly! But here’s the irony: liberals in “planning” deplore “exclusionary suburbs” and yet the “liberal economic success stories” they boast about, are merely entire cities and entire States that are exclusionary. How plausible would an argument be, that said that exclusionary suburbs with their large lots, all had “above average income earners” and therefore exclusionary suburbs should be the urban planning model for the entire nation?
That is how logical it is to say that SF and California are the urban planning model the entire nation should adopt “because of economic benefits”. The whole system of belief in economic benefits from forcing cities to be “compact” is based on false assumptions. It is a form of cargo-cultism; it does not see where wealth itself comes from and how it is created. The “wealthy, compact” parts of cities are havens of “economic rent” such as finance and bureaucracy and media. Economic rent is not “created wealth” at all, it is a transfer of wealth that was created elsewhere, in the dirty, heavy-lifting rural and resource-extraction and manufacturing-suburban parts of the economy.
Contemporary western urban planners differ only in stupidity, from their intellectual ancestors in the former USSR, in the precise form of the harm they are doing. Hayek was right about the kind of mind attracted to central planning. Everything they do once they achieve power, thinking it to represent the optimum, is wrong anyway.
Nice explanation and exposure of the liberal mindset!!!…+1000
We have seen this all before. In Russia, under Tsar Nicholas, In Cuba, under Batista. Marie Antoinette had a quote for the poor who could not afford rent or food. “Let them eat cake”. Maybe she didn’t say it, but in the end, they said she did and her head was cut off.
Of course the most revenue is coming from people who live in gated communities with armed guards. They are the top 5%. We’ve seen this before under the tsar, and Batista. Republicans ignore the pleas of the poor while rents keep increasing and they are forced into being homeless.
Flyover has every right to hate communism. It is a failure. However he needs to look at how the majority of people voted it in Russia and now will likely vote it in the US, unless the Republicans do something about the situation of the poor and middle class who to not live in gated communities. History shows what will happen. The Democrats will save us. As history has shown, the Republicans will doom our great country with their “Let Them Eat Cake” attitude because history does repeat itself.
Republicans ignore the pleas of the poor while rents keep increasing and they are forced into being homeless.
High rents have nothing to do with homelessness. The vast majority of homeless are either alcoholics, dope fiends, mentally ill, or some combination. Among the longterm homeless, nearly 100% fall into one or more of those categories.
Normal people who can’t afford the rent either get roommates, move in with family or friends, or move to a cheaper building or city.
Bob, you are wrong about that.
The Republicans know that they don’t have anything to offer the poor except “money” (currency). The government does not produce anything that the poor need to consume. The money they produce creates massive inflation and INFLATION is the most REGRESSIVE form of taxation on poor and middle class alike. Therefore, they want to increase the pie and employment – true, productive employment, not government jobs like AOC. Higher employment is good for everyone. Today, the unemployment among the minorities is lower than it has been in decades under democratic rule, and that is a fact regardless of the spin you want to give. This is a situation where everyone (liberal or conservative) participate in the economic growth in the measure of their abilities and training.
The Democrats had the war on poverty since forever and trillions spent on it and the poor under Obama were still a very thick percentage. Do you think that the poor like to be beggars to the government for all their needs? Maybe a very small percentage of addicts but most want to feel useful and worth something. The Democrats, like all politicians, are afraid to tax the very rich, because they are their contributors, too. Therefore, in order to give to the poor, they tax to death the middle class creating even a larger class off poor, till you have only billionaires and poor.
I lived for over 3 decades here, and I always did better under republican leadership regardless if I was poor, middle class or rich. The biggest problem for the poor and middle class is massive immigration. They are attacked on three fronts to become poor:
1. Cost of living getting higher because massive infusion of people in the same living space.
2. More competition on labor driving incomes lower.
3. The FED via QE and low interests enriching those already rich and making those middle class poor.
All three of them create a thicker and thicker class of poor. On this I blame ALL Democrats and a good percentage of GOP made up by RINOs.
In my opinion this is a major driver of poverty and desperation among large percentages of minorities who don’t have capital and they have only labor to sell. The reason the doctors make so much is a very high barrier to entry for other doctors from outside. That is not the case for the average guy in the street, regardless of his training or expertise. This is one of the few issues where Trump gets it right and Democrats don’t. That explains the election of Trump regardless of what the whole MSM said. He has higher popularity than the GOP in Congress. The Democrats can bash Trump forever, but on this issue they are wrong and they will lose again next time to Trump. This phenomena is not unique to US only; you can see it in EU, too.
I agree with you that Trump is not trying to address ALL the issues of the poor, but he does at least on some of them where it is possible politically – the low hanging fruit. For example, immigration and employment is easier to fix that eliminating the FED. You have to remember that he is not an emperor (glad he is not) and whatever he tries to do, he needs the support of Congress. He has many traitors in his own party (RINOs).
I am sure Marie Antoinette, Tsar Nicholas, and Batista were just like the Republicans today.
They shook their heads and said “Those lazy drug addicts poor people really need a job and let them eat cake.”
If the Republicans should get their heads out of you-know-what and see that the median rent in the US requires a $20/hour job. The majority of the lower income people do not make $20 per hour. It seems really obvious to me that Democratic Socialists have a solution to this problem with higher minimum wage, universal healthcare. The Republicans have no solution. That is why AOC has been elected. That is why the Republicans will be voted out of office in the next election. People don’t make enough in wages to afford rent. Republicans only have a chance on winning if wages go up, or rent goes down.
One solution would be to pack 3-4 families into small apartments to share the rent. How many landlords allow this in their leases?
“The vast majority of homeless are either alcoholics, dope fiends, mentally ill, or some combination.”
After reading about all of the homeless and people living in RV’s in Woodland Hills below, how can you say this?
Another example of Republican’s saying “Let Them Eat Cake”. Bernie is guaranteed to win in 2020 with that attitude.
History repeats itself. We are in the same situation with homeless as the Great Depression. That Democratic Socialist FDR was elected for 16 years after that.
In a city not that far away….
https://www.youtube.com/watch?v=bpAi70WWBlw
“The majority of the lower income people do not make $20 per hour. It seems really obvious to me that Democratic Socialists have a solution to this problem with higher minimum wage, universal healthcare. ”
Bob, sorry to burst your bubble. I said it before and I will say it again. I’ll just state the obvious for you because you REFUSE to understand it. Repeat after me – a minimum wage job will ALWAYS offer a minimum wage lifestyle. The government you liberals so much look up to can not decree wealth and increase in living standards. The government NEVER creates wealth.
Money=store of value and medium of exchange
Currency=medium of exchange (ONLY); crypto and all the “money” we use today are not money and they are not wealth. They are just a medium of exchange, NO store of value.
If the minimum wage is $15, $150 or $1,500 is totally irrelevant. The standard of living for the poor will not increase one bit because the inflation will take everything away from them. Actually it will harm them more because the inflation is the most REGRESSIVE form of taxation (if you understand basic economics). It affects the poor and the middle class the most. They will also lose most of the jobs the higher the minimum wage is. A real study on this was published by the Univ. of Washington (three years ago), which is a bastion of liberal democrats. They could not go around the obvious and common sense like you and AOC do.
Because of this inflation, medicare for all and increase in minimum wage is no solution. You are terrible mistaken to buy into the Socialist Democrat propaganda. It will ruin the standard of living for most of the americans who are not billionaires. Maybe some studies of economics will help you understand this; on the other hand, if you take economics from the same school AOC graduated, you will waste your time and money.
The real solutions are those offered by Trump – stop the legal and illegal immigration so the workers have a chance to really higher pay with more purchasing power (leverage for wage negotiation). Higher pay with no increase in purchasing power are what the socialist democrats and Zimbabwe proposes. Decrease regulation on businesses so real productive jobs can be created is what sound economics and Trump propose. More immigration (what AOC and your socialist democrats propose) just lead to a race to the bottom for US workers and a decimation of the middle class. More pay with more inflation does not help anyone.
Sorry to bust your bubble.
Flyover, you are not listening.
Ask the voters living in the lines of tents and RVs in most US cities because of Republican policies whether they would ever vote Republican or for Trump again.
I believe in results. I don’t see them and the voters will only believe false promises for so long.
I agree communism is a disaster. However countries like Norway and Denmark have implemented Bernie type Democratic Socialism and their voters are doing well.
You can point to Venezuela, but you need to look at how many billions their corrupt government embezzled in oil money. Sort of like Trump is doing now. Democratic Socialism is working today in much of Europe and they don’t have people living in tents because they can’t afford food or rent.
You can ask how tariffs did under Hoover during the Great Depression. Look up Smoot-Hawley.
Also ask any Senior Citizen whether Medicare or Social Security is a failure and should be taken away. Trump and the Republicans are trying to cut Medicare.
This is the end of the Republican Party. History will repeat itself as it did when FDR was elected for 16 years (and when Trump style policies were implemented under Tsar Nicholas and Batista.) If we are lucky, like in 1930, we will elect a Democratic Socialist. Otherwise, due to these failed Republican policies, communism may rise again.
Bob: countries like Norway and Denmark have implemented Bernie type Democratic Socialism and their voters are doing well.
Norway and Denmark had the advantage of being full of Norwegians and Danes. As they import Third Worlders, they will increasingly have Third World problems.
Bob, you’ve mentioned Tsar Nicolas and Batista in three different posts in this thread.
You also mentioned Tsar Nicolas and Batista in the previous thread.
You’ve a major obsession with the Tsar and Batista. And a smaller obsession with Marie Antoinette.
Son of a landlord,
I believe History does repeat itself. We are repeating the times of Batista, Tsar Nicholas, Marie Antoinette, and Hoover.
We’ve seen it all before, yet we keep making the same mistakes.
“So the wealthy are not fleeing California in droves even though they’re being hammered by state income taxes. The top 5% of earners pays two-thirds of the tax. The bottom 80% pays less than 11%. That’s just bad tax policy because it leans too heavily on rich people’s capital gains that plummet during a recession.â€
Two mistakes here:
Yes, the wealthy are fleeing in droves. Why wouldn’t they?
Second, the rich (top 5%) should pay 80-85% of all taxes plus we need to repeal prop 13.
The discussion of the taxes from the very rich people always get blurred because the commentators don’t make a distinction between rich producers and rich cronies. There is a MAJOR difference in their behavior.
The rich producers (wealth creators), when they get taxed too heavily, they leave and nobody can stop them. They start producing wealth in a new red state.
The rich cronies (connected to the politicians) stay as long as what they steal is more than what they pay in taxes. The decision is made at the margin.
The problem is that when wealth creators flee, it doesn’t take too long till cronies flee, too (nothing else to steal). They move to low tax states and they bring their ideology of pillage with them changing the red state into a blue state. The previous blue city usually signs bankruptcy (nothing more to steal). The process is repeated the same way the locust move and stay till they eat everything in sight.
Flyover, in this mixed economy, I doubt there is a clear line between rich producers and rich cronies. These categories exist, but there’s a heavy overlap. Much of the rich are to some degree both producers and cronies.
Trump was a producer. But he also worked the system to his advantage.
Most productive businesses have lobbyists, and seek subsidies and tax advantages. If they don’t, they’ll be at the mercy of competitors who do.
SOL, I agree that there is some overlap. However, the principle still stands – if the taxes are greater than the benefits, they leave. The issue is that the government can never give anything unless they took first. When they take more than they give, businesses leave. One way or another, politicians have to be friendly to businesses if they don’t want to kill the goose who’s laying the golden egg.
Low-IQ post by ‘happy’ democrat
Clearly Ms. Happy is ignorant of how the elite in CA use ‘foundations’ to pay virtually zero taxes.
Welcome to the CON
#TheMoreYouKnow
#factsMatter
#SheepNoMore
Flyover – Wealth is created by the Fed. They create wealth out of thin air and then loan it to the Gov’t, which then gets deposited at a bank. The bank then creates 10 times as much wealth out of thin air and loans it to you, the “consumer”. You then turn around and spend it on houses and crap you don’t need.
That is our economy. It is completely fake. There are no wealth creators. Only bankers that create fake money out of thin air. Our economy produces nothing that improves anyone’s physical or emotional well being. The idea that there are “wealth creators” that flee when taxes get too high is ridiculous. The real economy died long ago and it has been replaced by the Gov’t and Fed creating wealth on a computer screen that then gets loaned out to companies that are very proficient at selling consumers crap at a high profit margin.
Real technological innovation is virtually non-existent because it impossible to create a product that adds value to anyones life that is actually profitable. The smartest people in the world “wealth creators” are creating technology that covertly tracks your location and preferences and makes it easier for companies to sell you crap. These “wealth creators” live exclusively in high tax states like California. Red states are innovation and cultural voids because nobody with a brain would ever want to live there.
@son of a landlord
That article is laughable BS.
The rich are a tiny minority of the population so they don’t buy that many homes and the homes they do buy aren’t the sort your average person would be able to buy ever and which compose the majority of the market of for sale property and homes.
IOW they can’t and won’t prop up the market by themselves.
Study is from 2007.
And yet, home prices and rental rates rose YoY in Los Angeles.
I dont think Trump will let the ekonomy tank, his pride will force him to do something to juice the ekonomy no matter what the consequences would be down the road. aka: kick the can on down the road.
According to Bruce Norris (RE professional in SoCal) the housing market wont tank until the affordability rate sinks to +/- 17%. It is still over 20%.
QE, I think you have a good point about housing affordability having to go below 20% before a crash can begin. In fact, I don’t even think home prices will top out this year. The spring of 2019 is the equivalent of the summer of 2006 so the final real estate top will likely not occur until about March of 2020.
We will know if I am correct if the stock market continues to make new all-time highs and the Fed starts to raise interest rates again in coming months. This is good news for President Trump since the next recession will likely not start until after the Nov. 2020 election.
House prices will only drop in LA if we hit a recession. The big question is how much will they drop when the recession arrives. They may drop a little, or they may drop a lot. But, a recession is required for prices to drop.
I’m a millenial and I’ve been reading this blog for quite some time. Jeez…bought a place back in 2009…so I’ve been on here since prior to 2009.
I’ve outgrown my starter home, and am currently renting it out…and renting a place myself. Essentially just waiting for prices to come back down to earth. If they don’t, then thats fine – I won’t overextend myself. My backup plan to living in CA is just moving to another state eventually. Either way…I will NOT overextend myself just to be an indentured servant.
Milenials aren’t happy about buying a house because they are clueless when it comes to doing anything. I’d bet 75% of Millies don’t know how to change an HVAC air filter. Alexa change the air filter!! Alexa? Hello?
That’s OK Millies, don’t buy and burden yourselves with all that silly maintenance. Keep renting from me. I’ll change the filter for you. And fix that leaky faucet too. It’s the least I can do for you as you’re buying me several houses which I will sell for millions of dollars in a decade or so.
Millennials know that they can learn and do anything by watching a YouTube video. You sound like the kind of guy that kicks someone out to upgrade one backsplash and double the rent because the market went up. You’ll be old soon and will need help wiping yourself. Who will be the ones helping you?…. I wonder if they would be as snotty to you and you seem to be to them.
You couldn’t be more wrong about me my renting friend. As I have said numerous times here, happy tenant = happy landlord. I have never raised anyone’s rent. Only time I do that is when one tenant moves out and I will raise rent for a new one. One of my rentals has had the same tenant in for almost 3 years, not a penny increase in the rent even though I could probably get 10-15% higher easily. So why don’t I? Well because I couldn’t ask for a better person in there. Rent is paid on time every month, and they take care of small maintenance issues, without bugging me.
@ Mr landlord
Nearly all Millenials are still making much less than their parents did when at the same age and are still saddled with far more school debt and a higher cost of living too.
The money just flat out isn’t there for them to be buying cheap homes much less homes that are near bubble peak.
https://www.businessinsider.com/millennials-kill-industries-because-poor-fed-report-2018-11
https://www.vice.com/en_us/article/8qq43g/millennials-are-way-poorer-than-boomers-ever-were
Bull, Generation M is in more professional jobs than baby boomers. Baby boomers were more in lower paying blue collar jobs while M are programmers. Baby boomers were layoff from the better paying factory jobs around 20 to 10 years ago and lost lots of pension money one reason why you see them working past 65 more.
“The money just flat out isn’t there for them to be buying cheap homes much less homes that are near bubble peak.”
Yet somehow the money is there for them to buy the latest tech gadgets and pack every Ethiopian Fusion bistro at night after sipping their $7 Starbucks Mocha in the morning.
Cynthia, Millennials are Gen Y, not Gen M.
@cynthia curran
“Bull, Generation M is in more professional jobs than baby boomers.”
That doesn’t matter. What matters is wages and cost of living.
Effectively wages are lower for millenials/genZ than for Baby Boomers while the cost of living is much higher AND mill/genZ are generally loaded with school debt that the Boomers never had to deal with.
Actually read the links that were given in the earlier post. It lays it all out for you and gives good sources. If you’re not gonna bother to read them then don’t post at all.
“Baby boomers were more in lower paying blue collar jobs while M are programmers.”
Those blue collar jobs had higher wages, more benefits, more job security, etc. Also most mills/genZ kids aren’t programmers and most programmers don’t make all that good money after you factor in the crunch time and lack of OT since many of those are contractors and not employees officially.
“Baby boomers were layoff from the better paying factory jobs around 20 to 10 years ago and lost lots of pension money one reason why you see them working past 65 more.”
LOL no. Boomers have had access to virtually all the of the last of the pension systems. For mills/genZ they don’t exist anymore. Even crappy 401k’s are going away for mills/genZ.
The reason why most Boomers are still working is because they were stupid and didn’t save a single thing despite living in what is looking more and more like the Best of Times for all of humanity. Virtually none of them saved anything, they were counting on SS and pensions to save them from themselves, and so the rising healthcare costs alone are leaving them screwed.
@Mr Landlord
“Yet somehow the money is there for them to buy the latest tech gadgets and pack every Ethiopian Fusion bistro at night after sipping their $7 Starbucks Mocha in the morning.”
Millenials/genZ don’t really do much of either of those things. Note how phone sales have been trending flat or declining for years and more and more of them aren’t going to Starbucks anymore. They’re making their fancy coffee at home and putting in those vacuum sealed metal thermoses to take to work now.
https://www.forbes.com/sites/gregpetro/2018/08/19/more-debt-less-stuff-the-millennial-spending-dilemma/#257baf18314d
Millenials/genZ are so loaded down with debt, have a higher cost of living, and have such low income that virtually all their money goes for essentials and they spend hardly a thing on anything else.
Boomers and previous generations (post WWI) all spent more when they were the same age as current Millenials/genZ!! And currently Boomers are still spending more than Millenials/genZ as a whole on discretionary spending too. Its actually considered a huge problem in retail. Everyone is struggling to figure out a way to get Millenials/genZ to spend more money because if they don’t they’re screwed and they know it.
It won’t work though. The money is just flat out not there.
You and other “olds” are just getting played for a sucker by establishment media that is trying to sell you books about how the kids these days are the source of all the problems while ignoring the reality of who has been running the show in Congress for decades (hint: its not mills or genZ).
“It’s a great time to buy!!! Housing never goes down!! Or Stocks!! Spokane is the most desirable metro on earth. You think the economy is bad? LOL LOL LOL LOL OL OL OL LLO L OLL L O LO LLOL OL L OOL oLoL !!!!!” -Mr,,,Landlord
First! I’ve always wanted to do. Nothing else to contribute.
You were so close!!!!
You’ll always be first in my book. Come on back to the ranch.
Maybe somebody will Pay off their student debt & mortgage. Then they can live a care free life while somebody else pays for it.
Student loan defaults are doing nothing but going up over time and there is over $1 trillion worth of student loan debt at risk.
Since jobs just keep doing nothing but getting worse in general (ie. stagnating or cut pay, no pensions, no benefits, no job security, irregular hours, etc) its unlikely that this situation is going to improve. Its almost a given at this point that there will be a major default once enough of the loans become underperforming.
There is no default on student loans and if they ever allowed it much more absurd things would start to occur. Why bother ever paying your student loans back just take out as much money as possible. Take as many classes as possible and get as many degrees as possible. Then immediately declare bankruptcy discharging hundreds of thousands of dollars in debt. Wait 7 years for credit to recover and you are all set by 30 years old.
Woody,
Aside from the utter injustice of consigning gullible, desperate young student borrowers to a life of debt slavery while allowing borrowers to default on any other type of debt- home mortgages (even FHA, which are government insured) up to any amount of money, the guarantees given student lenders assure careless underwriting, with loans up to any amount of money given on signature for fields of study that everyone knows guarantee a lifetime of poverty.
Reversing the vicious Bankruptcy Reform Act of 2005, and allowing college borrowers who cannot pay, would accomplish many great things that badly need to happen. Besides freeing up youngsters whose degrees have proven worthless from a lifetime of poverty, it will accomplish even greater things:
It will shut down the student lending machine completely. Watch how fast lenders become EXTREMELY PRUDENT when their loans are no longer guaranteed by the federal government. No more borrowing $40,000, $80,000 or even $175,000 to major in fine art, or archeology, or some other elitist, impractical field where there are almost no opportunities for decent employment.
And when the lending ceases, and students are forced to rely on part time jobs, scholarships, and working their way through as part time students, the legitimate schools will start looking for ways to cut their costs so they can bring tuition back within the pale of affordability. Gone will be all the layers of administration that have been added in the past 30 years. And there will be no more 5-star-hotel-quality residence halls built.
Better yet, it will be sunset time for all the for-profit diploma-mills. There will be NO money available to attend these schools, and Phoenix, Kaplan, National-Louis (is that one even still extant?) et al, will go the way of Corinthian.
I’m not nuts about Trump, but I support his proposal to put a cap on borrowing for any one student. That is a necessary first step. Sadly, neither he nor his corrupt billionaire Secretary of Education will take the next necessary step, which is allowing students bankruptcy relief, and sunseting Sallie Mae. But things will come to this, and the sooner the better.
Reversing the vicious Bankruptcy Reform Act of 2005 … will shut down the student lending machine completely. Watch how fast lenders become EXTREMELY PRUDENT when their loans are no longer guaranteed by the federal government.
The University Lobby would never stand for it. It would end lucrative salaries for top professors and administrators. Consider the compen$ation for UC President Janet Napolitano: http://www.capoliticalreview.com/blog/uc-president-napolitano-to-receive-570k-base-salary/
In 2013, the UC regents approved a base salary of $570,000 per year for the incoming UC president. She also gets an auto allowance of $8,916, free housing and a one-time relocation fee of $142,500.
The “progressive press” and teachers would scream that limiting student loans would be an “attack on education” and only allow “the rich elite” to go to school.
Can’t wait to see how the cheerleaders wiggle their way out of this data.
What headline are you talking about? Highest inventory since 2012. Wasn’t 2012 one of the best times EVER to buy a home in socal. Even back in 2012, inventory was extremely low compared to historic norms. This is all you need to know.
No recession, no housing tank! Meanwhile, rents keep going up and up and up (that’s unless you are Millie).
Keep hearing rents are going up since 5 years now. Are any of these RE shills capable of doing simple math? If not, there are good templates out there….its called buy versus rent or rental parity. Renting does not even come close to what buying would do to your cash flow.
The housing market is so overpriced that you could rent two houses and would still save money compared to buying one.
“Wasn’t 2012 one of the best times EVER to buy a home in socal.”
Only because prices had crashed. Prices haven’t crashed yet. And prices crashing despite low inventory is pretty far from a good or normal market.
“No recession, no housing tank! Meanwhile, rents keep going up and up and up (that’s unless you are Millie).”
Just give it a bit more time. Even with the funny money loans they reintroduced housing is starting to level off and rents are driving more to live with their parents even later in life. There is no way any of this is normal or good or plays out without any tears at this point.
The prices are just too far out of line with what people make for a living.
The bottom was 2009/2010. By 2012 the recovery was well under way.
I am seeing 3% down offers again. Good Times.
Speaking of rental parity… let’s look west of the 405 and north of LAX below Santa Monica.
If you want a 1 bedroom with washer/dryer and a parking spot or two, you’re looking at $2,600 – $2,900 for nice places.
Look at this place:
https://www.lincolnplaceapthomes.com/en/apartments/floor-plans.html
Cheapest 1-bed is $2,873 plus $100 for each parking spot if you want it.
Then look at a place like this:
https://www.redfin.com/CA/Playa-Del-Rey/8505-Gulana-Ave-90293/unit-4302/home/6632110
10% Down
P&I: $2,234
Taxes: $909
MI: $217
Homeowners Ins: $46
HOA: $450
Total: $3,407
The first year an average of $585 or so goes to principal. So money down the drain is $2,822.
The condo has 2 parking spots. The apartment would charge an extra $200.
Maintenance on a condo is minimal as HOA covers the big stuff homeowners typically need to worry about. Essentially appliances. I’ve been to the first apartment complex, it has very thin walls/construction. It used to be the projects. It does have a very nice pool and gym though. The condo has an older but in decent shape kitchen.
Similar apartments: Marina 41 ($2,800); the other one owned by equity on sawtelle/national ($2,750). Keep in mind comparing apples to apples: in unit laundry and parking and location.
Is this close to rental parity? Or should one not count the principal pay down when comparing? To me it sounds like after 10 years one would be better off in the condo…even during the last crash, 10 years later everything here had recovered and then some.
There are TONS of singles or couples making $130k alone or combined in silicon beach with $50k saved that could do this. Trust me. I know many of them. Many of them are indeed trying to wait for a correction… but if all those people jump on at a slight correction I suspect they’ll end up just driving the price back up on each other.
Long term, west of 405, north of Torrance, below the valley, I don’t think it’s ever going to see another 25% crash. Sooooooo much demand here. I seriously wish it would happen, but property in sunny SoCal biking distance to the beach falls by less during a downturn and increases by more in the next upturn…and I think the general landscape of west side LA has changed permanently with how many businesses have set up shop.
Google is about to take over west side pavilion. How many high paid tech workers will that bring in to compete?
I hate it because I think things are overpriced as well. But when you live here it’s really hard to fathom a giant crash…
Buster, you used the example of a condo. Comparing condos to houses in the same area, you have to remember that condos fall in price first and by a larger percentage than SFH. When recovery happens, condos start increasing later than single family homes and by a smaller percentage.
On SFH there is a premium you pay for this safety. I am not saying to not invest in condos, but you have to keep this in mind. I bought a condo at the bottom of the market for a song and I made good money on it. However that was the first and the last time I put money into a condo. I prefer SFH, commercial or duplex-fourplex. No more than fourplex because for more units than that you are at the mercy of loan sharks who take all your profits in fees every 5 years. You can not get 30 yr loans on multi family complexes.
@Buster,
I would personally never buy a 1 bed/bath condo for 500K, but somebody bought that property last week. Rental parity with 10% down, do this example again with 20% down and it is definitely cheaper to buy relative to renting.
And you are correct that part of LA (west of the 405, north of LAX to Santa Monica) isn’t ever going to be cheap again EVER. We may get the Millie 50-70% crash in highly undesirable areas, not going to happen in that area!
Yeah of course SFH will always outpace condos in terms of appreciation and weathering downfalls. And a 1 bed condo is the worst of condos for sure.
If you’re single with a 140-150k income, work in silicon beach, like biking to the ocean, and you want a complex with pool, in unit laundry, and secure parking … the rents in the area will be 2,700-3,000. The real luxury units can be 3,500. For 1 bedrooms. At $500k a condo’s math seems to make sense at 20% – assuming you consider principal paydown as money you’re keeping.
I think price will only drop with huge job losses. But I think silicon beach means the “discovery†of LA as being better weather and nicer beaches than Silicon Valley. I don’t see why it will ever get cheaper than Silicon Valley as it’s much smaller in area. Frankly I’m surprised at how cheap it was until 2014 (during which time I was admittedly browsing this board agreeing that it wasn’t overpriced…ugh).
I looked again and it is at least hitting a limit. Playa vista has a 1 bed listed for $589k that’s been sitting. Though a similar one in same building is in escrow at $585k. Go figure.
I am pretty sure when home prices start correcting for millennials or any recent owners the county/state tax collectors or going to hate hearing reductions in tax valuations once again. Prices can’t keep going up forever based on their annual assessments.
Like some have said recently, well priced (not low price) are still selling fast.
This home in Westchester sold in first open house for $150K over asking.
https://www.redfin.com/CA/Los-Angeles/6441-W-83rd-St-90045/home/6610932
in looking at price history, you will see that YoY average increase since last sold in 2010 was 8.8% per year.
I live about 7 blocks north of there. That house is a little too close to the airport for me, but it might be ok.
In this area, houses sell quickly. The original one-story houses (like I live in) are almost invariably torn down and a two-story put up in place.
Been in this house over 38 years. Paid for, never refinanced, probably never move (unless I have to). Nice quiet neighborhood.
Could never afford it now.
Now Jim Now!
Best comment ever hahaha!
Lol
I’ve noticed several houses in my SF neighborhood sitting on the market for much longer than usual. They’re beautiful, renovated and in one of the best neighborhoods. They’re just massively overpriced. The tax law change is a massive hit to CA and can add $2,000 to the monthly cost of one of these homes. They’re not mansions, just nice family homes that could hold two kids comfortably.
But if you have student loan debt and childcare expenses I don’t know how you would manage. And of course you need a massive downpayment. If you can swing all that, then you can start thinking about upkeep, cars, eating out, summer camp, clothing, commuting expenses, utilities, insurance – the list is endless. Even if your company IPO gets you $1,000,000, after taxes you’ll barely get your foot in the door of the sort of house you would expect to be able to buy.
“The tax law change is a massive hit to CA and can add $2,000 to the monthly cost of one of these homes.”
LOL. Can you show the math on this extra $2K please? Nobody seem to understand the new tax law. It’s quite amusing. Let me guess, you also think a lower tax refund = you paid more taxes? Snort.
There is a federal deduction cap on the combined deduction of Mortgage interest and State income tax. It sucks. Its a huge hit, if you are a high income earner, and used to deduct your state income tax bill from your federal total, that is limited, and worse, it is combined with mort interest deduction and the total is limited.
When your IPO comes through and you get your million, after taxes it’s not even a downpayment on a decent house.
Buy and Hold , lather-rinse-repeat . Do the routine maintenance myself and keep the renters happy, and yes , the renter pays of the house for me. Happy-Happy-Happy.
I have been reading this blog for several years now. Never commented before. The reason I ended on this blog is I was frustrated with home prices not reflecting economic reality (not being in sync with incomes and with overall inflation rates) and started researching trying to understand what the hell is going on. So I googled a bunch of topics and ended up here, among other places.
I am at the time in my life where I really should be buying (married with kids in school age, great career in accounting with steady income, solid savings, etc.). But here in San Diego it just does not make sense to buy at current price levels. Example, I am renting a nice big property (5 bedroom, over 3,000 sq feet, in Ok conditon) in a very nice neighborhood for $3,500/month. The Zestimate for this house is over $1M and it is not for sale by the way. It is the more modest house in our neighborhood, so it would be a smart purchase. If it was for sale, I could really stretch out and buy it – we have household income and savings to put down 20% and pull off the monthly payments. But this would be a stupid financial decision – my monthly interest and property taxes (“money wasted”) would be more than my rent, my savings would not be making return, and I would be on the hook for maintenance (low estimate is 1% per year at least $1M purchase price). So to me this is another indication the market is artificially inflated with cheap money, speculation, and unreasonable expectations about the economic future. The graph is this article showing the disconnect between overall inflation and housing prices tells you what I am waiting for before I am comfortable to put my money in housing – I am waiting for the blue line to go back to red line. I am waiting for there to be parity between incomes and home prices – I don’t expect it to be like in Texas – coastal California will always be skewed by rich retirees and rich immigrants. But everything I read in books, everything I know about the way the economy works, all this tells me the market will crash horribly and the blue line will go back to the red line or below for some time. Thanks!
SD accountant
“…California will always be skewed by rich retirees and rich immigrants…”
Yes, but
Here are some interesting stats about San Diego
https://statisticalatlas.com/place/California/San-Diego/Household-Income
To me, a median *household* income of $~68K hardly qualifies as “rich”
Even households at the 80th percentile $~136K doesn’t exactly have excess cash to burn
IMO, the “rich retirees and rich immigrants” argument is largely a wet dream fantasy conceived and promoted by the REIC.
Kinda like those who promote UFO’s, the REIC agent will say “Prove to me that the ‘rich people’ *are not* buying houses.”
BTW
I happen to live [and own] in the OC (Irvine) but your own rent/buy situation here is pretty much the same.
I live in San Diego as well, and in the the same situation you’re in. Sit tight, my friend. Keep stacking chips and wait. Those $1 million homes will be $500k in no time, and then you’ll be able to buy one to live in and one to rent out. It’s happened several times here and will continue to, as long as the game is rigged to blow and pop bubbles.
Hi Josh.
I hope you are right! I would put my money in real estate, if I saw a correction of 25%+. My plan was to wait for a news-worthy crash and then hunt for new construction bargains, since developers are not guided by emotions and ideas of what their houses “should be” worth. So the developer inventory prices won’t be as sticky on way down as ones for existing homes.
My expectation (or wishful thinking?) for a while has been that sometime in 2019-2021 there would be a major slowdown in the economy (or depression), followed by stock market correction (or crash), followed by default wave, finally followed by housing correction (or crash).
1% was the case in the 60s and 70s when houses cost $50K, and then budgeting $500 for maintenance made sense. But today, with house prices where they are, 1% of house price for maintenance is not realistic On average I spent $500-1000 a year on maintenance and repairs for my homes. Granted I do a lot of the work myself, but even if i hired someone for every little thing it wouldn’t come close to 1% of the value of the home. And for a $1M suburban house in SD, there’s no way you’d spend $10K.
The 1% number is like changing the oil every 3K miles. No modern car needs it that frequently, yet all the “experts” still use that number.
Thanks for your response Mr Landlord. I do not dismiss what you say, but I disagree with it.
I think $10K per year is a realistic or even low estimate for 25+ year old building, which is the case for the one I rent (my example) and most real estate I see on the market. As I said in my post, my profession is accounting, and we use a 40-50 year useful life estimate for spreading depreciation expense for even concrete and steel buildings. There is a reason for that. Budgeting 1% for maintenance is a long-term estimate. Yes, most years you can get away with patching and painting here and there. But deferring big maintenance issues does not make them disappear. Sooner or later you need new roof, new gate, new windows, new floors, new plumbing, etc. These are all crazy-expensive things and I don’t the time or desire to do any of that crap myself, even if I could. My spare time is too valuable as I already spend most of my days at work and not enough time with my family and doing other things I enjoy – painting walls is not one of them.
I thought the forecast for home maintenance was about $1 per sq ft per year.
On that basis, my 1950 home which I have owned for 6 yrs has averaged about 50-75 cents per sq ft per year.
SD Accountant: Fair enough. I’m quite handy and I actually like painting (don’t laugh). Fixing things is in a way a hobby for me. I also cut my own lawn, which I know for a white person in SoCal is incomprehensible 🙂
But I get your point.
QE Abyss makes a point about sq ft. The value of the home is based on land cost. So you shouldn’t budget repairs based on the value of the home itself. That $1M is is $1M due to where it is. Same home in flyover would be 1/3 the cost. Both houses would cost abut the same to maintain. Maybe a little more in SD since labor price is higher, but not by that much.
https://www.forbes.com/sites/juliadellitt/2018/06/20/why-you-need-to-adjust-your-monthly-budget-for-home-maintenance/#55eb5ac534a0
San Diego Accountant: My spare time is too valuable as I already spend most of my days at work and not enough time with my family and doing other things I enjoy – painting walls is not one of them.
I remember — was it back in the 1990s? — when Paint Parties were a thing.
A young single, or couple, would move into a new apartment or house. They’d invite their friends over for a Paint Party. The whole day was spent painting every room, listening to music, talking, ordering take-out pizza.
In some romantic comedies, couples would have paint fights during a Paint Party, flinging paint at each other, then breaking into laughs and kisses. And some non-romantic comedies had Paint Parties end in messy disaster.
Mr Landlord try and talk to an honest contractor and you will find they charge you more to do the same job if your house is more expensive. They will argue it’s because they have to use higher end materials and “your” expectations will be higher.
Sound, well-thought out advice. You are (or should be) solidly Middle Class in the peak of your earning years, but wisely, you are holding out to see where things go. Housing Prices are at nosebleed levels and anyone with an ounce of common sense can see that they cannot go up at the same clip forever.
My wife and I are in the same boat as you: we have a fat stash of cash for a down payment and a baby on the way, but if we bought in now (at what I think is the peak of the market) our monthly costs of mortgage, taxes and insurance + childcare would leave us without a penny of our income to save for a rainy day. The math just does not add up.
And if you or your wife do buy that overpriced house, and then a downturn or an illness leaves one (or both) of you without work- then what? Life is unpredictable, and the Cali economy since 2000 has been nothing but a roller coaster of boom and bust cycles. You have nothing to lose by continuing to save and seeing where this market is headed. It could be a hard or a soft landing, but either way- you’ll be far more prepared than the bewildered herd.
Then why are Irvine new homes continuing to increase in prices?! Irvine seems to defy all data.
Sure it did LOL. Someone didn’t save their commission checks during the bubble years.
https://www.movoto.com/irvine-ca/market-trends/
https://finance.yahoo.com/news/toll-brothers-orders-plunge-california-144209405.html
It is the destination for wealthy asians. I don’t understand the fascination with the place except the stellar schools.
You gotta have a few silly buyers who overpay massively. Can’t have a bubble without losers participating. In other words, when the bubble pops only a few will win.
Because Irvine’s housing market doesn’t play by the same rules as most cities. I used to build homes in Irvine back in 2014 and we did a market study on who’s purchasing these inflated homes. Turns out 90% of buyers were not American but mainland Chinese citizens and 75% of those buyers were buying 2 or 3 at a time all cash. Irvine is a city where wealthy Chinese people can park their money. And since they invest so much money, they can easily apply for a Green Card and ultimately citizenship. So they’re essentially buying the ultra valuable American citizenship. You and I are already American citizens so we have no incentive to buy at these ridiculous prices.
This is why the United States should follow the lead of most countries and either ban non-citizens from buying real estate or implement a hefty tax on foreigners. If that happens, the market will correct down to where it should be.
“This is why the United States should follow the lead of most countries and either ban non-citizens from buying real estate or implement a hefty tax on foreigners. If that happens, the market will correct down to where it should be.”
In principle I don’t like the idea of doing this. But I’d support this for citizens of countries that have similar laws. If I as a non-Mexican citizen can’t buy a beachfront home in Mexico, then Mexican citizens shouldn’t be allowed to buy property in California either. I’d also support slapping some foreign buyer sales tax on real estate. Of course the second that law goes into effect, leftist groups would file suits against it and imbecile leftist judges would throw the law out cuz racist!!!
Landlord – I agree. Its only fair if I cant buy property in country X that citizens of country X cant buy property here.
Next up, universities with an endowment should not get a single dime of taxpayer money! They cant claim they need it when they sit on – in some cases – billions. Those giant slush funds need to be used to bring down the cost of tuition.
Irvine is a modern day Chinatown. One can go for weeks there and not see a young person of European ancestry. The few of us who not Asian are dying off so the future is clear: Only Asians need to apply for residency in Irvine.
The are a few key point to this discussion 1) Unlike 2007 there is no evidence of massive mortgage fraud 2) Oil is affordable 3) The banking and world economies are not tanking, and 4) This clip “… found that significantly more people earning above $125,000 were moving into California than were leaving. And more earning less than $75,000 were taking off.”
Many rich NY/NJ want to leave for Florida for weather and taxes, however if you live in California where are you going to go? AZ – Horrible Summers, Las Vegas – Same summers as Phx with worse winters, Oregon – rain and fires, Texas – hot humid bugs, Utah, Colorado beautiful but nasty winters come on!?
The only world class cities on the West Coast are San Fran and LA, maybe Vancouver. If you are in a competitive professional career your salary in CA should have doubled since 2007. Back in 2012 people were screaming because inventory was low, then it got worse, now back to 2012 levels? I hardly think this justifies gloom and doom. I am sorry for the people who are forced out but I am happy I purchased when I did. Sure I could save a couple grand a month in another state but you only live once and you’re not going to take your money with you when you die. If you can afford to live in California then I recommend you buy in California. PS we’ll enjoy our upcoming 80 degree weekend while others are in the latest Arctic blizzard.
Oregon – rain and fires,
Yeah, we never have fires in California. And no mudslides when it rains.
“Oregon – rain and fires,”
Good thing it never rains and there are never any fires in California. LOL
Salaries have doubled since 2007? Sure about that?
https://arstechnica.com/tech-policy/2018/11/study-over-20-years-silicon-valley-workers-median-wage-has-fallen-by-14/
“Over the last two decades, 90 percent of workers in San Mateo and Santa Clara counties— the heart of Silicon Valley — have seen their real wages go down, according to a new study by the University of California, Santa Cruz and the think tank Working Partnership USA. “The median wage for workers in the Silicon Valley region declined by 14 percent,” the research showed.In short, most workers—regardless of whether they work in the tech sector or not—are getting poorer due to venture capital-driven business models that prioritize outlandish returns fueled by low-wage work that captures a given market quickly.”
In other words, making $150K a year in Silicon Valley, doesn’t mean much when rent for a studio apartment is $3000 a month. And it’s not just rent. Everything is exorbitant in coastal CA cities; gas, utilities, groceries, health insurance, you name it. Add to it high income and sales tax and that $150K is the equivalent of $75K in Phoenix. But the same job in Phoenix pays $95K. Which means someone in Phoenix is relatively better off doing the same job that someone in San Mateo.
And have you ever been to Phoenix and experienced the weather? Sure, there are 3 months of brutal summer weather. But between Sept and May, there’s no better weather in the country. And yes that includes CA. Compare weather in Phoenix on a typical January day vs LA or SF. 70, dry and sunny vs 50s rain/cloudy/humid/foggy. I know which I would choose. And even in summer, once the sun goes down, nothing better than those hot dry desert nights, sitting by the pool. You really should give it a try sometime.
Phoenix is a great deal for those with high school diplomas. Very nice city. You might not make boatloads of money on your house, but life is very good in Phoenix. The women are awesome.
3 months? Lol.
You will be running air conditioning non-stop from May till October, day & night, at home, in your car and at work.
I remember how ALL RE cheerleaders told us how there is no inventory!!! Fast forward a year and we see graphs showing inventory is as high as 2012. How quickly things have turned 🙂 the weekend is around the corner…..more open houses to visit. No crash>no purchase. Meanwhile I am watching my war chest get bigger while the cheerleaders keep telling me how high rents are. Pathetic, they have nothing left in their sales pitch portfolio! Almost boring. Almost 🙂
I am not seeing a bust yet, yes homes that are overpriced sit longer but that happens in any economy. On my south of Ventura Blvd. street a house across from me listed at 999,999 which seems like a fair price for 3000 square feet and just sold for $1.2 within 2 weeks. Over the summer a much smaller home listed at 799,000 and sold in a week for 950,000. I bought on this block for 725,000 a year ago improved the home and I am sure I could get 850,000 out the door. I would love to see a crash, I would buy a much nicer home and rent out my starter but I have a stable job and a niche skillset. Come on Trump, screw it up, I would benefit greatly…or do what you claimed you would do, and my home value keeps going up…
I really like Woodland Hills. I am surprised it is not more expensive … the location is great and west LA jobs are within a reasonable commute.
https://www.zerohedge.com/news/2019-03-15/housing-slump-foreclosure-activity-jumps-austin-miami-san-diego-and-seattle
Foreclosures are up. Big time. Crash is coming with big steps
One thing I am unclear on: Chairman Powell has made clear that he is a dove and will keep interest rates low, and throw in more QE if there is any sign of trouble. Warren Buffet says the stock market can go up forever if interest rates are kept near zero (because of fractional-reserve banking). If all that’s true, why would equities and real estate ever real tank hard? Just asking….
Nothing goes up forever. No manipulation of the market can drive prices up forever. Read about other fallen empires or japan for starters.
This is different. The banking elite are systematically devaluing the dollar, and the only way to protect yourself is hold something other than the dollar. So, these people sitting on the sidelines waiting for a crash are also watching their dollar evaporate. The fed is NEVER going to be willing to let the market decline meaningfully. With the world central banks buying stock and the fed still printing (nearly) free money, I don’t see any reason they can’t keep this run going for years (it’s already been 10). The social costs of this monetary policy(unaffordable housing, skyrocketing inequality) are obvious enough but, short of a political response, I don’t see any reason why the central banks can’t keep this dance going. I’m not saying it’s a good idea, I just don’t see what’s stopping them.
Keeping rates low forever will eventually trigger substantial inflation. And, substantial inflation will force rate increases to protect the US Dollar. There is no way around that.
I am usually bullish real estate, but it can not go up forever by keeping rates too low. Stupid.
I agree with you that this cannot go on forever, but it might go on for many more years. Again, most of the inflation in the system (housing, equities) is there by design, as part of general devaluing the dollar. This is killing savers and working people, but it’s paradise for people holding hard assets and stock. So, I don’t think there’s a big crash in real estate or stock until monetary policy changes. All of this cheap money has created a zombie economy and this zombie will be keep moving until the people feeding the zombie are forced to stop — i.e., political intervention.
Where’s Millennial commenting on this millennial article?
Did he finally throw in the towel?
If he did we may be at the top.
“Throw in the towel� Meaning what? Buying?
Why buy now if you can wait a few years and buy 50-70% off?
Btw, I have posted a year ago that the inventory-is-low lie is just marketing by RE cheerleaders. Inventory is increasing, sales decreasing. Need more signs?
I just went to an open house, for a new listing in Irvine, and witnessed a bidding war. In the one hour, I was there, 3 offers were presented to the listing agent–last being for more than the asking price. It ought to be interesting to see for how much the home eventually sells for above its asking price.
It went for 800K over asking!!! BUY NOW!!!! No time to waste. I SAID BUY NOW!!!! NOW IS THE BEST TIME TO BUY!!!! BIDDING WARS WITH CHINESE NOW
Our Millennial is still playing it smart and eating his 30 tubs of popcorn before the movie starts.
The FHA has tightened loan requirements that haven’t been this loose since 2000. 2000?? Wait, they are much looser than 2006/2007 during the NINJA heyday? See Dan’s comment below.
The good news is that we are no longer full-speed ahead and damn the icebergs.
Can the FHA turn the Titanic? Maybe they can and maybe they can’t. Stay tuned to this slow motion disaster movie. Meanwhile, don’t book a ticket to board just yet.
KA-CHING!
https://www.cnbc.com/2019/03/15/get-ready-to-pay-more-rent-even-as-home-prices-cool-off.html
“After taking a breather in 2018, due to new supply on the market, rents for both single-family homes and multifamily apartments are now rising at the fastest pace in nearly a year, according to Zillow. The median monthly rent in February came in at $1,472, an increase of 2.4 percent compared with February 2018. For the typical renter, this means about $400 more a year. This after rents actually fell last fall for the first time in more than six years.”
A 2.4% increase in rent means it just increased with inflation/wages. Nothing to see here as this is expected.
Isn’t Millennial going under the moniker “TheMillennial” ? Sounded a lot like him.
I’m sure he’s out there in the ether somewhere. Here, he mainly tried to convince shaky buyers to forego the pleasure or induce panic selling to speed up the RE cycle and get to some type of pullback. He loved claiming even seasonal pullbacks as a victory. Unfortunately for him, jobs are still being created at a fast clip, interest rates holding,etc., so he just couldn’t get any satisfaction, as the Stones would have put it.
But don’t lose hope, he’ll show up again and add to our entertainment. Meanwhile, the market keeps plugging away nicely, just at a slower rate.
HA HA HA HA HA HA
Poor milenials are so stressed out. Their top worries: not getting likes on social media, slow WiFi and their phone battery dying. Jezuz Fn Christ!
Every generation has its fair share of stupid. But come on Millies. You’re an embarrassment to all past generations. Grow up already. When you’re losing sleep 138 nights a year because WiFi is too slow, you need a serious lifestyle change.
https://www.studyfinds.org/survey-millennials-life-more-stressful-than-ever-before/
King county
February 2019: $655,000
February 2018: $649,950
0.08% increase YoY
Inventory very high, lower pending sales. Bubble popped. Going down from here on
https://seattlebubble.com/blog/
Two headlines in Sunday’s OC Register RE section:
1) Rents Still Rising in LA & OC
2) To Keep Prices Down, Homebuilders Thinking Small
Rents rose on an annualized basis 5.5% last month. Rents are the key reason local inflation topped the national rate. Other parts of the local CPI inflation rate are trending down.
We wonder if an uptick in legal/illegal foreign immigration to LA is a driving factor in rent increases?
Average home size for new construction peaked in 2015 at 2700 sq ft and has dropped below 2600 sq ft (national data). People looking to buy prefer suburbs and detached houses over urban areas and townhouses. And people surveyed only want “green” features if the savings are made clear up front. These are from a survey of builders and a survey of prospective buyers.
Sounds like buyers and sellers are approaching each other as non-performing construction trends are dropped in favor of realistic goals.
Long term renting strategies in places like socal are nothing short of financial suicide. Even that 3% yearly rent increase is murder after 10 or 15 years. We all know Millie never gets a rent increase, he is in the ultra minority. Most people who are on the fence to buy will throw in the towel after a few years of 5%+ rent increases. Unlike Millie, most people have finite time horizons…living in a cheap apartment in a shady part of town only will go on for so long.
Millie and his peeps spent too much time in school taking Trans Studies and not enough taking math and economics. They never learned about the magic of compound interest. A 4% yearly rent increase in 15 years is an 80% increase. After 30 years it’s 145% increase.
Meanwhile a fixed mortgage payment increases by 0%.
And at the end of the 15 or 30 year period, Millie is still paying rent and owns nothing, while the home owner is done paying and owns a home outright.
“We wonder if an uptick in legal/illegal foreign immigration to LA is a driving factor in rent increases?”
Joe, no need to wonder. It is ECON 101. More people means higher demand (no everyone wants to sleep in the streets) even if they stay more families in one dwelling. Higher demand for a relatively constant (very hard to build in SoCal and if they do, the cost is way higher than 10 years ago) supply mean higher rent prices. Higher rent prices mean higher ROI for RE investors who are bidding higher the RE prices.
Therefore, yes, the massive immigration does increase RE prices and rents even if the immigrants don’t buy RE (some do).
It is interesting that millennials and teachers, by and large (especially in SoCal) vote Democrat. But the Democrats push for more immigration, open borders and sanctuary cities. Then, the same millennials and teachers complain for not being able to rent (forget about buying) anything and being forced to live in mom’s basement. Still, being so illiterates in real economics, they can not connect the dots between cause and effect and the Democrats take advantage of them.
It is the same for the heavy traffic on the freeways – more people means more cars.
I know that my comment is not going to change anything – “you can not fix stupid”.
The ONLY beneficiaries of all of this are the largest banks who will continue to take advantage of people stupidity (touching all the right emotional buttons to have them where they want them).
You are 100% correct. I drive through formerly nice middle class neighborhoods in OC and the streets are filled on both sides with parked cars and many of the homes have multiple cars in the driveway and on the lawn. Without a doubt, there are multiple families – probably immigrants – living in those homes. That much demand is definitely going to put upward pressure on prices. The Democrats’ drive to import more voters by any means possible is increasing housing costs for everybody.
That “we” was an editorial “we”. Of course my family members all think that immigration is a big driver of rental demand here. It isn’t driving rentals in the area where I own a rental. Too far out in the sticks. But rents are also creeping up there.
Where’s the housing crash?
Consider this Santa Monica house: https://www.zillow.com/homedetails/2714-Washington-Ave-Santa-Monica-CA-90403/20469799_zpid/
* 2008 …. Sold for $2,550,000
* 2018 …. Listed for $3,700,000
* 2019 …. Sold for $3,249,000
Yes, it sat for five months before selling. The seller had an unrealistic price in mind. But when the price was lowering, it was sold at a nearly $700,000 markup since its last sale 11 years ago.
I don’t think Milli will get his beach house at a 70% discount.
Son of a Landlord,
“I don’t think”. That’s your first mistake….your thought process.
People who are familiar with the RE market know that you find a buyer once in awhile who overpays massively, especially during the peak of the market. Without having people who buy sky high you cant have a crash. Not everyone can win. Take 2008 for instance. We had 7 Mio foreclosures last time. They all had one thing in common…..they bought high. Most of them were on 30y conventional loans. They walked as they saw that their neighbor just bought for 50-70% off. Wouldn’t you walk as well? Btw, 50-70% discounts during a crash are a conservative estimate. Its out of the question that it will happen again. Just have some patience.
Say the owner put down 20% in 2008. There was 11 years of mortgage pay-down which at a 4% interest rate (which was the going rate in 2008) comes out to around $500K of principal pay-down.
So to recap. Owner invested $500K in 2008 and after selling, walked away with $1.1-$1.2M in 2019. And yes there were some costs along the way like closing costs, maintenance, repairs, taxes, etc. I will be generous and take off $200K for all that. We still have a profit in the $1M ballpark. And he/she did all this while living in a luxury home, 10 mins from the beach.
I keep saying over and over, it is virtually impossible to NOT make money in r/e in the long run.
Santa Monica is really volatile due to such low transaction volume but the median for SFR have fallen 20%. Median SFR price Feb 2018 $2,380,000 and Feb 2019 $1,913,000. Not a 70% crash but a 20% discount never the less.
27% Return in 10 years approx. ? Weak and actually terrible since the stock market tripled in price. Who would buy a house? Value destruction.
It’s not 27% my renting amigo. See my post above.
Remember, r/e is bought on margin, ie a mortgage. The ROI is on the down payment not the price paid. And the principal pauy-down is also considered since that’s money a buyer would have paid in rent otherwise. As a home owner you’re essentially paying yourself instead of paying a landlord. That is Inputed rent/income, look it up. And of course up to $500K of capital gains is tax free in real estate.
The fact you think it’s only 27% tells me so much about your financial abilities. And also why you think renting is a good idea. Each to their own.
Ok so in your example 500K became $1M i.e. doubled in Price TaxFree vs Stock Index Fund Triple? The Fund 500K investment tripled to $1.5M minus $150K in LTCG 15% = $1.35M minus Rent approx $3000/Month over 10 years $350K = $1M …..End Result seems about the same.
Class action lawsuit against the NAR on its way.
Pro tip to buyers and sellers: You don’t need to pay 6%. That fee is negotiable, for both the buyers and sellers.
Sounds good in theory. But, if you all think a massive class action settlement into the billions will make transaction costs cheaper for consumers, I have a nice bridge for sale in NY. Call me.
https://www.marketwatch.com/story/big-name-lawsuit-could-upend-realtors-and-their-6-fee-2019-03-19
I think the realtors are overpaid, esp 6% on a multimillion dollar home. The reason is that selling a multimillion dollar home is even easier than selling a crapshack. Why? people who buy multimillion dollar homes dont need all the hand-holding or explaining. Those buyers and sellers have prior experience in RE transactions and there are not nearly as many problems with loans, etc.
I think a 4% commission is plenty.
Real estate agents are operating like a cartel. It’s overdue that we get agents out of the real estate market. We need to let Software and technology solutions take over. An agent doesn’t deserve more then .5% IMO. Anything over 1% commission combined for both agents should be illegal.
Here some good news. Hopefully the NAR loses in court.
https://on.mktw.net/2FcM7cp
This is a frivolous law suit and they are going to lose. Yes, I agree that 6% is ridiculous and I never pay that. However, unlike social media, no RE firm has a monopoly. There is plenty of competition in the market. Every company is free to price themselves out of they so desire.
I always use owner/brokers who charge me 0.5% or flat fee (usually $500 to $1,000 depending on services provided) on the listing side and whatever % I decide to pay on the selling side. They are my money and my property and I am free to chose as long as I can live with the consequences of my decision. The employees of a RE firm do not have this freedom. They do what they are told by the brokers/owners and they should because they are employees. The problem is not with the brokers, but with people who don’t know and don’t want to shop around. As long as people are willing to pay 6%, the brokers will say “Thank You”. If the seller of shoes is asking $1,000 a pair who’s fault it is? The owner of the store decides the price not the desk person (the employee). The buyer decides if the pair of shoes is worth $1,000 by voting with his dollars. Who is at fault? The seller who is asking or the buyer who pays? It is the same in RE.
If they would have a monopoly, then I would agree with you. The fact is that they don’t.
Announcement today by HUD: FHA is tightening up it’s DTI (debt to income) ratios and credit score requirements.
There is no new established floor on credit scores; however, the automated underwriter will tighten up on the lower credit scores that have higher DTI’s. So, basically buyers that may have qualified or received pre-approvals in the past few months but are not in contract; may no longer qualify.
Here is the announcement: https://www.hud.gov/sites/dfiles/SFH/documents/SFH_FHA_INFO_19-07.pdf
This also applies to refinances; so, those looking to take cash out of their equity and have lower credit scores may no longer have that ablitity. BTW; max loan to value on a cash out refinance is 85% with FHA.
That is a smart move by the FHA. They see the potential hazard ahead.
Here is a concerning statement:
“FY 2018 were comprised of mortgages where the borrower had a DTI ratio above 50 percent, the highest percentage since the year 2000.”
Even above 2006/2007 when NINJA loans led to the Great Recession?
What does that mean?
This timing is also interesting. The FED announced today (and last year) they will be unloading the mortgage backed securities they are holding. What suckers will be buying these from the FED? The FED is bailing out of the housing market. That’s good so the taxpayers won’t be bailing them out also.
Impossible to measure DTI back then bc the income was “stated” and therefore fake
I’m confused.
The data was accurate under Clinton in 2000 and highly inaccurate under Bush in 2006?
However it is accurate now under Trump?
The warning sirens are going off in my mind. They are extremely loud.
Why should I
The Fed isn’t selling MBS, they are just not repurchasing MBS that undergo principle paydown, or that are fully paid off.
Sorry, I had a copy and paste problem above.
An increase in the concentration of mortgages with high debt-to-income (DTI) ratios, where almost 25 percent of all FHA-insured forward mortgage purchase transactions in FY 2018 were comprised of mortgages where the borrower had a DTI ratio above 50 percent, the highest percentage since the year 2000. The increase in higher DTI concentrations has continued in FY 2019, with more than 28 percent of January endorsements having a DTI ratio greater than 50 percent.
FHA is basically a housing welfare program like Section 8. Nobody every pays back FHA loans. Well, taxpayers pay it back, but I mean no borrower ever pays them back.
That OC Register writer I mentioned in a much earlier post was predicting this sort of thing for this year. So his info was good.
Excellent insight Dan.
Government dumping MBS and then in the 9th inning tightening lending standards on their way out the door is a pretty clear leading indicator.
Even Mr,,, Landlord’s beloved Spokompton will feel the pain. Even an impressive and substantial median HHI of $54k in Spokane won’t be enough to pack the wound. After hearing realtors in Spokane (I own 3 apartment buildings there, all north of 90 not fancy pants overpriced South Hill) for months brag about the expansion of Fairchild, it isn’t happening now. Did you see that? Thankfully I’m smart and I paid $20-30k a door for my units. Anything more in Spokane is idiotic.
Cryptocurrencies plummet 85% – https://www.wsj.com/articles/bitcoin-is-in-the-dumps-spreading-gloom-over-crypto-world-11552927208
Bitcoin is in the longest slump of its 10-year history. …
Signs of the crypto winter are everywhere, marking a sharp reversal since the manic highs of 2017. The price of bitcoin Tuesday was just below $4,000, down about 80% from a trading peak of about $19,800 in December 2017.
The total market value of all cryptocurrencies outstanding is down 85% from its peak in January 2018. And volumes on the largest U.S. exchanges have been falling steadily for the past 15 months, according to research firm TradeBlock. …
Bitcoin is still driven largely by momentum, and right now it doesn’t have it.
Cryptocurrencies have struggled to attract mainstream institutional investors. Regulation is still unclear, which has scared off some potential users.
While bitcoin is trading well above its December 2016 level, the severity of the recent drop is raising concerns that it may never recover.
These type of headlines are usually a good buy signal. On the contrary when headlines read “bitcoin is at an all time high†you should probably start unloading.
Crypto was used to move Asian big money to the US, Canada and Australia. Xi has cracked down on this (and other Asian governments also) so the need for crypto is now mainly with criminals and scammers.
White elephant?
Consider this Woodland Hills house: https://www.redfin.com/CA/Woodland-Hills/4742-Westchester-Dr-91364/home/4230839
* 2005 …. sold for $1,710,000
* 2018 …. listed for $2,199,000
* 2019 …. reduced to $1,999,999
Mr. Landlord, this house has not kept up with inflation. No profit here.
According to the BLS Inflation Calculator, this house should be listed at over $2,221,000 to keep up with inflation. And that doesn’t include holding costs (repair, insurance, property taxes, HOA fees, etc.). And selling costs. Plus, we know the BLS underestimates inflation.
This house is being sold at a significant loss. Of course, there is the pleasure of living in a very nice house for the past 14 years. But this does show that you can’t expect to get a profit on a home sale, even after holding it for a long time.
I wonder why it’s having a hard time selling? I suppose the HOA fees — $540 a month — don’t help. But you get guard gated security for that.
Because Woodland Hills is turning into a dump.
What was once a very nice area home to many celebs is slowly turning into one big homeless encampment.
The homeless are being bussed in from DTLA. There are homeless camps under every freeway bridge, panhandlers who are drug addicts at every freeway offramp. I can no longer take my son to the local park due to drug addicts living in the bathrooms and leaving their needles after shooting up. I found homeless sleeping in the playground just last week.
Yes, there are so many areas “south of the blvd†but you are a stones throw away from what is turning into a ghetto. RV’s have taken over many streets. Our city councilman has to hide because the neighbors constantly harass him for not doing anything. The city of LA gets $180 million for the homeless problem. What does the valley get? ZERO.
Violent crime is nil but property crime going up. I’ve been to the town hall meetings. The police have their hands tied. This just started happening a few years ago.
Santa Monica and Venice have been Homeless Central for decades, yet that hasn’t affected property values.
Thanks for that perspective Whatever. That’s almost never discussed here when comparing long term appreciation of homes. Go to any city and you’ll find areas that were once desirable in the 80s, 90s or 00s but have turned to garbage recently thanks to the homeless / illegal new way of life. Cops don’t do anything about it. And liberal courts have basically given illegals and homeless free rein to do as the please. So obviously on an inflation adjusted method , houses in those ‘hoods have lost value.
And it’s a risk when buying r/e. You always need to be vigilant of what is happening around you and be ready to bail at the first sign of trouble. No neighborhood, no matter how nice, is safe.
Here is one of many articles that back up what you are saying:
https://www.dailynews.com/2017/08/02/protesters-face-off-in-woodland-hills-as-anger-grows-over-panhandling-drug-use-in-valley/
So buy a house in smaller towns with their own police force and not inside a big uncaring city like LA ruled from downtown.
Joe R: So buy a house in smaller towns with their own police force and not inside a big uncaring city like LA ruled from downtown.
That’s no guarantee. Santa Monica has its own police force, and SM is full of homeless. An efficient police force is useless if the city council and mayor tie the police’s hands.
You can’t compare Santa Monica and Venice to Woodland Hills. Those are beach cities (i.e. desirable). There are bars, restaurants, the ocean- you have all that L.A. has to offer in terms of entertainment, attractions, sports, colleges, you name it.
Living in the valley (Woodland Hills) is having all the drawbacks of L.A. without any of the benefits. You have pollution, traffic, crowding, and homeless drug addicts roaming around. Its not exactly cheap either.
Not to mention it’s the hottest part of the valley. We had temps up to 118 last summer. LADWP restructured their pricing and if you hit a certain tier your bill skyrockets. People with moderate sized homes are routinely seeing $1000+ electric bills. If you have a pool, God help you.
People moved to places like Woodland Hills because back in the day it was a nice suburban environment. You wanted to be in close proximity to L.A. but maybe had a family and didn’t care about hitting up the bars every night anymore (but there still were a lot of good places on Ventura). So now you have a place where there isn’t anything to do and it’s no longer safe. Just head west on Ventura blvd from Encino and it turns into a wasteland real quick. Lots of chandelier, vac/sew repair and other odd shops. I’m convinced these are fronts for Armenian money laundering because there’s no way they can stay in business. There’s a handful of decent restaurants but not many.
People (who can afford it) are fleeing to Calabasas. If you can’t afford Calabasas then Agoura Hills. Both great school districts but that 101 traffic is now a killer because of everyone heading that way.
As I mentioned before, the city of L.A. received $180 million to combat homeless. The valley got nothing. They are cleaning up DTLA but zero investment for us. There’s always talk of cessation but it’s never going to happen.
You are completely right, Landlord.
I moved to Woodland Hills for job reasons not that long ago. Now that my son is approaching is school age I was looking to buy a home in a decent area until I realized I was losing my mind. The opposite of gentrification is going on here. I’m moving back to Orange County next month. At least if I spent a million dollars there the schools are good. No wonder people are having trouble selling a $2M home here. If traffic weren’t a concern, I’d move to Calabasss or Agoura for that much money.
SOAL: A smaller City council has to cater to a smaller constituency of which you stand a better chance of being a member of. If there are enough parlor pinkos and radical chic entertainment multi-millionaires in the smaller city, they will call the shots with the council to the detriment of the majority until the majority get pissed off enough to revolt. Low turnout municipal elections are a sign that people are not yet inconvenienced enough to do anything about their own miserable state.
Assuming you have the money to buy it cash, you end up paying about $36,000 year in property tax, HOA, house insurance and maintenance, or about $3,000 per month (ouch!!!…). If you need financing, then it is really bad.
That is one extremely nice house, much better than anything I’d expect to see for that price in Woodland Hills, which I hear is a desirable area. You’d have to go 80 miles out to do any better than that for a comparable here in Chicago. And I can’t imagine anyone buying in this bracket, in a gated neighborhood with security, being bothered by the HOA. What matters is what’s included in it.
Maybe there is some structural issue that is revealed upon inspection?
The OC Register Sunday RE section featured two houses of infamy that are on the market.
1) The Alhambra mansion formerly owned by Phil Spector.
2) The Newport Beach house forfeited to the Feds by college scammer Rick Singer.
Phil’s former place is a 8700 sq ft Pyrenees style chateau on a hilltop 2.5 acre lot, with an asking price of $5.5 Million. Rick’s old place is a 5200 sq ft Newport Heights house with a $2.6 Million asking price. Prices in Newport Heights for current properties range from $1.3 Mil. to $4.5 Mil.
I wondered where in Alhambra Phil had lived, thinking it might be on the San Marino border. No such luck. It sits on a hill south of Valley Blvd overlooking the freeways and Cal State LA.
I say it’s better to have an average house in the best neighborhood than the best house in an average neighborhood.
Joe, I agree with you to a point… if you are concerned about resale value, and you want a good school district for your kids, then it’s definitely better to buy a lesser home in a great neighborhood, than buy a spectacular home in an average or marginal neighborhood.
However, if you’re a well-off single with no heirs, and are really into to getting the finest house for the least money, then you might want to look at “marginal” or at least unfashionable neighborhoods where you can indulge yourself at a lower cost. At this stage of my life, that is my preference. Beauty, comfort, space, and proximity to retail and public transit, at a price that allows me to hold onto as much free money as possible and buy a place with no mortgage, means more than living in the hottest neighborhood in town.
Be careful Laura. Being single no kids I bought a home in a less than stellar neighborhood of LA. I didn’t care about the school district or perceptions. Problem is that when you live next to people who don’t care about their own stuff, they sure as heck don’t care about your stuff. After a few short years I really started to hate the neighborhood, even though I loved my home. Lucky I bought at a good time and was able to sell for a large profit. That time it worked out, but I wonder how miserable I would be if I was still stuck there. Today I would have to agree that it is better to have the worst home in the best neighborhood than the best home in the worst neighborhood.
This is for Grasping:
Thank you for making my point for me. Also see my new post about the Orange thrashed Old Towne house I mentioned in a previous post.
You always want the worst home in the best neighborhood. And even if it’s a great neighborhood, you still want the smallest/cheapest home vs the biggest one.
Good schools isn’t just about schools. Good schools means good people. Crappy schools means crappy people. What makes a school good isn’t the location, it’s who attends the school. So even if you don’t have kids, wouldn’t you rather live with good people instead of crappy people?
I didn’t mean buy in the WORST neighborhood, or one that’s well on its way to being the worst. It never serves to live in a neighborhood with high crime, filth on the streets, and slum conditions all around. Not only is it depressing and scary, but if you are visibly better off than everyone else around, you become a target and an object of local hatred, which can get you killed (and has gotten a number of people killed).
What I am talking about, is buying a great place for a gift price in a “forgotten” or non-trendy neighborhood, vs paying through the nose for something you’d otherwise find unacceptable, just because it’s in a high-end or sought-after neighborhood. Perhaps we have more of these nice, but “forgotten” neighborhoods in Chicago, than you do there. They’re nice places, with beautiful housing stock; clean, safe streets; transit close by; nice parks, libraries, shopping, and other urban amenities, but the schools are not the best and the people are stodgy, un-hip lower middle class folks who just do dull stuff like maintain their properties and hang out at the corner bar on weekends. Then there are neighborhoods that are more “marginal” in that they have problem pockets, but they are clean, well-maintained, with beautiful housing for reasonable prices, and transit, retail, and other urban amenities close by.
If I were in the L.A area and wanted a detached house, I’d be looking at some of the nice, but non-trendy post WW2 suburbs that don’t have a lot of hip places to hang out, or top-rated schools, but are still nice places to live, with nice (though non-wealthy) neighbors who take good care of their houses and neighborhoods. And there are some wealthier burbs there that appear to be priced much lower for much better, newer houses, than the trendy, pricey west side suburbs. Calabasas, for example, seems to be cheaper, yet is newer and seems like a nice place, at least from this distance.
Laura, Calabasas is known for its gated communities and rich celebrities. Very trendy, very hip, very pricey.
Joe, Asians pay premium $$$ to live in Asian communities. The entire SG Valley is becoming the Asian Beverly Hills and Alhambra might not be considered “marginal” to certain cultures.
Yes, but San Marino is ground zero for crazy rich Asians in the SG Valley. This place is SOUTH of Valley Blvd overlooking the Long Beach Freeway and CSULA. The OTHER side of Alhambra is in a better location (i.e. to the North). This one is practically in City Terrace. However, being in Alhambra is better than in LA or the unincorporated areas to the East of LA.
So how come downtown and midtown Sacramento real estate prices are sky high? Limited Sacramento inventory as well. I was walking around downtown and 2 bedroom selling for over 600k! WTF?
LOL…
Speaking on imbecile millenials…
Lib millies, who talk endlessly about inclusion and diversity will only f**k someone who thinks exactly like them. The left gets more and more insane. Trump has done a real number on these people. I can’t wait until he wins re-election, the insanity will hit level 11.
https://nypost.com/2019/03/20/millennials-care-more-about-dates-politics-than-good-sex-survey/
Fed turns dovish and mortgage rates fall to lowest in over a year. Looks like the dance will continue for a while longer.
https://www.cnbc.com/2019/03/21/mortgage-rates-just-fell-and-they-could-go-even-lower.html
Hey remember when rising interest rates were going to tank housing? Good times man!!
Good times.
Average 30 year fixed is down to 4.28 this week. It was 4.45 during this week in 2018. 15 year fixed is at 3.71 vs 3.91 in 2018.
And all this is before yesterday’s Fed announcement. We may see sub 4% 30 year rates in April.
PS: Where is Millie?
I have a 4.5% 30 yr fixed. How low a rate should i refi to? I plan to refi to a 15yr
Where is Our Millennial?
He is waiting for the impending 25% “Correction” in RE. The Fed will drop rates below 2% under Trump’s influence. Most of us with 3.5% mortgages will refi, buy Our Millenial’s rental, and the party will continue. Until it stops.
Our Millennial may buy at this point or may be stubborn and hold out for a 70% “Correction”.
I will be buying when this inevitable 25% happens. Both for the prices and the inevitable Fed interest rate actions.
The sky has not fallen so Millennial is hiding.
Where are this zerohedge posts? He won’t like this one..
https://www.zerohedge.com/news/2019-03-22/existing-home-sales-soar-february-rates-tumble
I don’t see a big dump in prices now until after 2020 when President Trump gets reelected and he will be a lame duck President.
You are correct! The Fed can probably delay the next recession until after the Nov. 2020 election, but real estate prices are clearly already doing down. I believe that home prices in South Orange Co., where I live, are about 5% lower than they were in the Spring of 2018. By the end of 2020, home prices will likely be down 15% more.
You are correct! The Fed can probably delay the next recession until after the Nov. 2020 election, but real estate prices are clearly already doing down. I believe that home prices in South Orange Co., where I live, are about 5% lower than they were in the Spring of 2018. By the Fall of 2020, home prices will likely be down 15% more.
Inverted yield curve….does that mean the selling continues and Mr landlord takes another timeout? Housing price drops continue in SoCal btw. Getting daily emails from Zillow, Redfin etc.
Looks like a top to me and going downhill from here on now. The only thing missing is the Buy now or be priced out forever crowd?
Interest rates are plummeting, which is wonderful for housing.
Another white elephant?
Check out this Calabasas house: https://www.zillow.com/homedetails/4507-Park-Verona-Calabasas-CA-91302/19896048_zpid/
* 2007 … sold for $1,735,000
* 2019 … offered for $1,868,000
They’ve been trying to sell this for over 7 months.
HOA fees $624 a month according to Zillow. Yet Redfin says this house’s HOA fees are $22 a month. Odd.
Either way, another house that did not keep up with inflation. I know 2007 was near peak, but it’s been 12 years. So much for profiting off RE if held longterm.
I MADE THE BIG STEP! My rent has been increasing for years now and I finally had enough!! I moved out of my rental!
My parents didnt like it at first but I committed to preparing dinner at least 3 times a week if my busy schedule allows it. No more renting!!!
Not sure if you’re joking or not. Maybe you are serious?
There’s a commercial for Wells Fargo where a milenial couple (Asian guy and black girl, LOL of course) eat out every meal. And they wonder why they’re broke. It’s a real mystery!!! Then they call up Jose, a nice 27 year old with a beard (of course, lol) at Wells Fargo who gives them advice on how to save money. What’s the secret Jose lets them in on? Get this….it’s not to eat out every meal. Jose must have a PhD in economics. I mean you need some intense training in economics to figure that out, right? And then the couple is shown actually – GHASP – cooking at home. Thanks Jose!! You’re a lifesaver bruh.
It’s amazing how way back in the olden days like the 2000s, when I was in my 20s, we didn’t need bearded Jose from Wells Fargo to tell us obvious things in life. What a crazy world it was. You’d only go out to eat once or twice a week and do this weird thing called grocery shopping and cooking at home. Madness I tell ya! Madness!! It’s also why back in the 2000s, I bought my first house in my 20s as did all my friends. It’s also why now in my 40s, I and all my friends are financially secure.
You and your friends were also extremely lucky to purchase right before the biggest artificial increase in real estate prices in human history. Powered by nothing more than funny money printed by the Fed. To act as if you are special or smart for your good fortune is laughable. Anyone with a brain knows it’s absolutely impossible for real estate prices to go up at that same rate from here moving forward.
Congratulations!!!!
Hold for the long-term and you will do well.
Bob, hold for the long term? Doesn’t sound like you understood what the guy said?
Or do you mean he should stay in his parents house for the long term? That I would agree with. Why the heck waste your ‘money on rent if you can live at home for free? Unfortunately, I don’t like to commute so I rent a cheap apartment close to the beach and my tech job. If my parents or in-laws would love closer I would move in there in a heartbeat.
You are right, Millennial. I misread and thought you posted you had bought a house and would stay home and cook meals instead of going out and buying $18 avocado toast ($9 at the Cheesecake Factory). 🙂
Buying a house is a great long term investment. People tend to spend up to their income but a house will initially take away discretionary spending. Just like having kids. More cooking at home and less going out.
Bob, couldn’t agree more. Going out and spending money on beer and food is a waste. There is a reason why I have a ton of cash sitting in my war chest. Live frugal and invest all the excess cash. Passive income is key to build your wealth.
No debt, rent cheap apartment, work hard at the right company (I work in tech since almost 10’years now). My wife loves cooking and we eat quite a bit of avocados as well. My father in law has avocado trees so they are free for us mostly. But even if you buy them you can get them at Trader Joe’s or anywhere else for less than a buck.
I wouldn’t recommend buying an avocado toast, just make it at home! At my tech job we have snacks for free all day. I don’t even buy any food for lunch as I usefully work out.
In terms of buying, yes I am a real estate bull. But buying in California depends on timing. We are just over the peak now and it’s going down for the next years. You dont want to buy at this time. Wait until it’s bottoming. Usually, 50-70% off the peak. That would be a good buy signal.
Hope this helps. Cheers.
Gasp!
https://ktla.com/2019/04/01/could-america-run-out-of-avocados-if-president-trump-shuts-the-u-s-mexico-border/?fbclid=IwAR0FEFfXinVrIBeE9sC7WbrXT8L-o-dJiSTn-Rn_Eo2bLyWxtnMLe81tGd8
Wow. Rates are wayyyyy down this week.
4% conventional
3.625% FHA
I know an older ne’er do well couple that are buying an IE condo this week by VA. Good timing on their part perhaps. Hopefully, they can pay the mortgage and condo fees. They are afraid of rent increases coming soon. Hopefully, their condo association is run by tight-fisted owners inside the development.
Will rates go down to 3% for 15yr fixed i plan to refi from 30yr fixed
That’s one good thing about an inverted yield curve.
That’s one good thing about an inverted yield curve. Long term Bond rates took a hit this week as investors fled the stock market. You lost 4% of your net worth in stocks? Reason to buy RE with a lower interest rate sweetener.
Only people who “lost” 4% are those who have 100% of their net worth in stocks. Which would be beyond idiotic.
401K’s have a majority invested in stock.
Gone are the days of the Silent Generation looking to maximize their CD rates.
CD’s(and bonds) have not been an option for too long.
There are a few good ways to park your cash for the upcoming crash. Some of my funds are in high yielding dividend stocks (6%). Yeah it’s ordinary income but hey if I pay lots of taxes that means I am making more money. Poor people don’t pay much taxes. Some funds are parked in savings accounts (discover pays over 2% in a savings acct and pays 200 bucks for 25k deposits). At this crashing market I want a little bit of yield but little to no risk. I’ll shift to real estate investments when the correction is here (usually 50-70% discounts). It’s just the 10year Boom and bust cycle in housing.
Right most 401k money is in stocks. But nobody’s net worth should be all in a 401k, that was my point. A diversified portfolio includes stocks (401s), bonds, real estate, cash, metals, etc.
And that 4% loss has been made up already, while mortgage interest rates keep falling.
Hey Millennial,
Qualified Dividend stocks pay dividends taxed at 15 or 20%. Much of my investments are in qualified dividends. You still might get hit if the market crashes on the stock price, but generally these high paying US company dividend stocks are not in Bubble Territory. And if people start fleeing the higher risk stocks, these stocks generally go up.
They announced on the news radio that the totally trashed Orange Old Towne Craftsman Bungalow (1100 sq ft on 9000 sq ft lot) sold for ~$50K over asking price in a bidding war. They were asking $600K. I told about this house in a previous post. Again worst house in best neighborhood that just needs a lot of TLC and can be turned into two on a lot.
https://www.redfin.com/CA/Los-Angeles/2339-Hillcrest-Dr-90016/home/23121794
Every hipster’s dream. Ultra modern new construction in a multicultural diverse neighborhood. Even has a unobstructed view of the 10 freeway. Think about how jealous your friends will be as you sit high above in your concrete box enjoying your avo-toast and latte while you gaze upon the morning traffic and local kids tag your fence. Ahhh…life is good.
Does it have 17 Ethiopian fusion restaurants within walking distance?
I know mid-cities area quite well. You are right, you dont want to walk around there at night, lots of freeway pollution which eats away at any outdoor fabrics or furniture and black soot on your lemon trees..
Yet, the area IS gentrifying. One only need to see some of the newer ‘hip’ cafes on Adams between LaBrea and Fairfax. I am not justifying the price. Just saying that as all these hipsters taking jobs in Culver City (Netflix, Google, Amazon, etc) they are motivating to buy something with short commute. West Adams is by the far the most affordable near downtown Culver City.
I highly HIGHLY doubt they would be drinking a latte with avo toast. It most certainly a pour over.
Ohmygod, that building is flaming hideous. I’m surprised the local planning commission even let it be built.
Most Bitcoin trading is fake: https://www.zerohedge.com/news/2019-03-23/vast-majority-bitcoin-trading-volume-fraudulent-study-finds
[I]n the latest blow to crypto’s credibility, the Wall Street Journal reported on Friday – citing data from a research firm that has been closely monitoring trading activity across dozens of exchanges – that the vast majority of bitcoin trading volume is an illusion – likely faked by the exchanges themselves using cunning trading algorithms to give customers the false impression of a deep, liquid market. …
That’s Zero Hedge, but they’re citing The Wall Street Journal.
What?!?!? You mean my CrapCoin is not trading at 3 billion dollars volume a day!?!?! Next you’re going to tell me that I my JunkCoin isn’t real currency?!?! You must be crazy!
For Bob, seen it ALL,
Maybe it is time for you, AOC and your socialist democrats to read this:
https://www.dlacalle.com/en/the-new-green-deal-is-not-new-not-green-not-a-deal/
There is nothing NEW in it. Of course, there are infrastructure, technology and green economy investments that make sense. They are being implemented as you read this article. The rest is just plain old white elephants for the glory of politicians… with your money. It is as new as the CA train from Nowhere to Nowhere – same waste of taxpayers money and nothing left for the teachers.
And no, this time will not be different.
For Bob, seen it ALL,
Maybe it is time for you, AOC and your socialist democrats to read this:
https://www.dlacalle.com/en/the-new-green-deal-is-not-new-not-green-not-a-deal/
There is nothing NEW in it. Of course, there are infrastructure, technology and green economy investments that make sense. They are being implemented as you read this article. The rest is just plain old white elephants for the glory of politicians… with your money. It is as new as the CA train from Nowhere to Nowhere – same waste of taxpayers money and nothing left for the teachers.
And no, this time will not be different.
Flyover,
“Not just that. The public sector had very little debt, a maximum of 45% of GDP. Compare that with an already unsustainable annual deficit that does not fall below half a trillion dollars, and debt to GDP of close to 100%.”
This is exactly why AOC and Bernie will be elected. Trump and the Republicans keep driving up the deficits while there is no benefit to 80% of the voters.
Tsar Nicholas and Batista rewarded their cronies at the expense of 80% of their people just like Trump. Look what happened to them.
If you want the US to fail and the commies to win, the Republicans are doing it. History does repeat itself.
To say again what you said with different words – lets elect a communist (Bernie or AOC) now to avoid a situation where people are going to elect a communist. Nice try!…
If you complain about budget deficits now, wait till you see Bernie in power. You haven’t seen nothing yet.
Actually, what I am saying is the majority of the voters in the US are renting and do not have a huge stock portfolio.
They were lied to by Obama with Hope and Change. What did they get? Increased rent, same wages, and .01% interest rates for any savings they had. At least they got ObamaCare.
They were extremely lied to buy Trump. What did they get? Double digit increases in rent, low single digit increases in wages, and no healthcare.
If you were one of this group, how would you vote? Likely Bernie.
Bernie has promised all of what they want. Just like what happened to Batista and Tsar Nicholas.
The question is: How many voters are paying more for rent than they can afford. How many have seen food stamp cuts so they are finding it hard to feed their families. How many don’t have a job to afford the above.
According to history, they will vote for Bernie. Just like the people in similar situations overthrew Batista and Tsar Nicholas for communism. And exactly like the people who voted in the Democratic Socialist, FDR in the 1930’s.
The Republicans are so shortsighted, they don’t look at history.
“Actually, what I am saying is the majority of the voters in the US are renting”
This is not true.
In 2018, 64% of Americans owned a home. For voting adults, the % is even higher since higher income adults and older adults vote more often than the yuuutes and the poor. If I were to guess I’d say 70% of voters are home owners.
Maybe in urban progressive utopias like Seattle your statement is true. Nationally, not even close. You need to get out of the bubble dude and meet some real Americans.
More Americans are renters now than at any time in the last 50 years
https://www.marketwatch.com/story/more-americans-are-renters-now-than-at-any-time-in-the-last-50-years-2017-07-19
https://www.marketwatch.com/story/more-americans-are-renters-now-than-at-any-time-in-the-last-50-years-2017-07-19
And they combined with the RV’ers and homeless are angry with Trump continuing to raise their rent beyond their incomes.
Bernie has a solution. The Republicans just tell them they are lazy drug addicts and they should eat cake.
Bob,
If the Democrats in CA would send all the illegals home, if they would not keep CA a sanctuary state, basic economics tells you that rents would drop and they would drop massively. There is exactly zero Bernie can do about the rents in CA.
I expected more logic from you.
OK, Flyover,
I do agree with unrestrained illegal immigrants. They are driving down wages while rent is increasing exponentially. However, that will never pass Congress unless we elect the correct people. Illegal immigrants are why the Trump economy is doing so well. They are all working sub-minimum wage to keep the economy afloat. Including at Trump hotels. If we get rid of them, inflation will soar due to more people actually being paid minimum wage and “Gasp!” up to $20/hour which is the minimum to afford rent in the US.
People will be able to afford rents due to the increase in wages and the US will be saved.
Please vote for the candidate who was pushing for increased minimum wage while enforcing legal immigration. The last I checked, this was Obama and Hillary Clinton.
You voted for Hillary, right? Don’t be a Republican hypocrite and try to suppress wages.
On another note, most illegal immigrants come in by boat or airplane. Don’t believe that a Billion Dollar Wall will solve our problem. Can you spell Gullible? If Trump is hiring illegals, don’t believe that he will not stop.
Its pretty much over and this time it will not come back. Expect 30% reductions in home prices forever, and it wont stop until 50% reduction is reached. Then it will become a buy over rent.
Correct, it’s already game over. The Real Estate market is like a slow moving cruise ship. Once the course has been determined the direction will be followed for a while (years). Also know as cycles. But if you mention economic cycles you will be called all kind of things (communist, doomsdayer, etc) by our beloved RE cheerleaders.
Millie’s dream of buying at 70% off will be like Russia Collusion…..a fantasy, a nothing burger, an illusion, a dream, something that never was and never will be.
SAD!
https://www.zerohedge.com/news/2019-03-24/too-big-sell-boomers-trapped-mcmansions-retirement-looms
Who would have thought boomers cant get the price they paid for? I did.
Prices are falling left and right during this turning market. Realtors call it softness or slowdown. RE Shills on the other side will tell you this is the best time to buy a house.
Increasing inventory, declining prices and plummeting sales….pretty much sums up the housing market.
We were told by the RE cheerleaders over the last year that there is no inventory and the prices can only go up. Zillow and Redfin must have been excluded when sending out this memo. Everybody knows by now that inventory is skyrocketing and both websites keep sending me notifications about price declines in my area of interest. One has to ask why buy a Tesla now if you can wait and get a discount in a few months. The same applies to housing. Why buy now and overpay massively? Why not wait until the crash and buy 50-70% off? I know that’s what I am doing, you save and invest when prices are reasonable.
30 year fixed under 4%.
15 year fixed at 3.5%
Housing Crash Status:
[ ] Happening
[X] Not Happening
Nice!! More and more apartment buildings means even more supply and lower rents in California! Build, build, build 🙂
https://www.latimes.com/politics/la-pol-sac-skelton-housing-policy-california-20190325-story.html
More and more apartment buildings means even more supply and lower rents in California!
Not if immigrants pour in at an even faster rate than the building of new apartments.
YoY will be deep red soon for the overheated housing market. Another cold spring season awaits us.
https://www.zerohedge.com/news/2019-03-26/us-home-price-growth-slowest-2012
LOL at the housing crash talk. Housing stocks are soaring. KB is up 20% so far in 2019. And today…..
“Shares of KB Home jumped 2 percent in extended trading Tuesday following the release of the homebuilder’s mixed first-quarter earnings. KB Home posted earnings per share of 31 cents on revenue of $811.5 million. Wall Street estimated earnings per share of 26 cents on $831.8 million, according to Refinitiv.”
WRONG
Hi Landlord, if you look at the chart of KB Home (and other builder stocks) you will see that it peaked at 36 dollars and a few cents back in January 2018. In 2015 the price was around 20 dollars and today it’s at around 24 dollars. Do you see my point? It easy to just pick a short time frame on the chart and say it’s up or down tremendously.
It’s like the guy who was bragging about AMZN stock when it hit 2k…..we know how that ended.
Btw, I am a 40 year old republican. So calling me a leftist, Millie or communist won’t help your case.
You’re a 40 year old Republican? Congrats!!
Now back to relevant items….
Yes housing stocks took a plunge last year, while housing prices declined slightly. I have said this 1000 times. There was a minor correction in housing last fall. Now that correction is done. Stock prices are forward looking, not backwards. The reason KB is up 20% in 2019 is because investors expect better results in the future.
Interest rates are below 4 again, if they go below 3, all bets are off the table. 25% decrease in interest rates means 25% increase in housing prices. Homebuyers (right or wrong) are only focused on the monthly payment and $4000/month for a 1 Million dollar home at 4% or $4000 a month for a 1.2 million dollar home at 3% is the same thing for them.
I’ve been saying for a while now we are about to enter the 2nd leg up in this mega real estate cycle. This is not going to be your average “every 10 years housing tanks….”. This is going to be a mega 15-20 year cycle and it will eventually make Los Angeles the priciest real estate location in the world.
2nd leg up? Hilarious!! Everything is pointing towards a crash but because interest rates are 0.25 lower some jokers think that this bubble has legs….boy is this going to end in tears for some people.
Agree 100% Johnny0. Finally, someone else on this blog who gets it.
It is always about the interest rate. Why did prices correct last summer/fall? Because mortgages went from 3.75% in mid 2017 to 5% in late 2018. And now mortgages are headed back to 3.75% and prices are increasing again.
And as I predicted, all the perma bears, once again lost out on the opportunity to buy at a discount.
I think interest rates only need to decrease by 0.25pts or 0.5pts for it to cause a major boost to housing market. In other words, I dont see that interest rates would ever dive below 3.5%.
On what basis are you making the statement that Los Angeles will be the priciest location in the world ?
https://wolfstreet.com/2019/03/26/the-most-splendid-housing-bubbles-in-america-deflate-further/
Nice charts on how the housing bubble is popping. Down, down we go. 🙂
Las Vegas crashed by 62% during the last correction. It’s very reasonable that California does the same this time (crash by about 60%).
https://wolfstreet.com/2019/03/28/the-less-splendid-housing-bubbles-and-crushed-markets-in-america/
I can’t imagine buying now and seeing my equity vaporize during the upcoming recession. Some experts say it will be worse than 2008. Oh boy, I better wait with my purchase. Thoughts?
Sales Have Fallen For Seven Straight Months, Swelling Inventory And Forcing Sellers To Trim Asking Prices
http://housingbubble.blog/?p=1341
Homes Are Sitting On The Market Longer, And Price Cuts Are Becoming More Common
http://housingbubble.blog/?p=1338
We are a young family 2 adults 2 children. 2 years ago we searched and searched for homes in the Los Angeles South Bay Area we started out with a 450k budget which was well within our means 150k+ and 60k+ incomes 80k+ in liquid savings excellent credit and no debt. We were willing to settle for an entry level home in an average neighborhood however our search saw us push our budget multiple times with our 10th and final offer being 620k for a small home in a great neighborhood in less than habitable condition where we were outbid. That was a wake up call for us we decided to stay put and continue to save until we came across the opportunity to purchase a very large mobile home in a great community. We remodeled the entire thing and now paying less than what rent costs in our area for over 2000 sq ft. We have also decided I would leave my job to raise our children while I attend school to seek higher income. Our frustration comes from seeing other people our age who bring in similar incomes to ours buying 700-800k homes as well as financing new cars and living it up. Are people buying beyond their means? If so how can that sustain and how soon can we expect to see a crash? It’s definitely frustrating to make that much money and not be able to provide a traditional home for our children. Our mobile home purchase should turn us a 100k profit as well as return our remodel investment but at this point it makes more sense for us to stay there and enjoy the freedom of a low monthly payment for a few years.
Millie89
At $210K income you can easily afford more than $450K house. For crying out loud man, you’re in the top 10-20% of income. Don’t slum it. You can easily afford $1M house.
I’m going to have to agree with Mr. Landlord here in big way. 210K income, you want to buy in the South Bay and your budget is only 450K. With that income, you can afford much more than a 450K home. Not to mention it will be almost impossible to find an SFR in that range. This is why there is such fierce competition in certain areas, people are willing to leverage themselves.
What area is the mobile home park? Thanks
Wow, you sound a lot like us – very similar situation. We were looking and the prices are too high for us. We’re living in a great rent controlled area with excellent schools, but have outgrown the place. Finding a decent place in Southern California at a reasonable price is pretty much impossible.
I don’t think we’re going to pay $1M for a home here, even though we could, as even at that price the school districts are mediocre (unless you want 2+ hour commute times). Additionally, that is way too risky for us. Not interested in seeing our down payment evaporate at the first hint of a recession, or losing it all if things go south.
Sounds like you made a great choice.
I’m probably a few years older than you Elder. I work as a software engineer and most of my Millenial coworkers live with their parents until they are married. They are able to save 6 figures downpayment living rent free until their 30s. My friend bought her Corvette when she was living at home as well. They also get help with the 800k houses from their parents, so I think they put a lot down to make the monthly payment manageable. I want to also mention that a lot of us who couldn’t or didn’t want to live at home and were renters in our 20s don’t really see the point in buying something so expensive. In San Diego, the market seems slightly more normal than LA, as the 700k-800k houses are getting bought by Gen-Xers with small children.
Personally, I think California is at a breaking point. There are just too many people here — more come every year and the Boomers aren’t leaving. My neighborhood is starting to look like a retirement community on LSD. Silver-haired Deadheads high off the latest strain of designer weed whining about living on fixed-income while rollerblading to their $30 hatha yoga class. It’s a weird scene for sure! Can’t wait for the healthcare to get socialized. The San Diego papers just reported that DMV appointments have 3 month lead time and a 4 hour wait without an appointment! State-run healthcare will mean lots of Baby Boomers will not get to see a doctor, that’s for sure. I hope they sell soon cause the peak is here. I’m seeing SD crap shacks sell quick then fall out of escrow cause the prices are too high for normal folk.
16% drop year over year in Santa Clara. And we’re just getting started….
https://www.eastbaytimes.com/2019/03/28/bay-area-home-sales-dip-as-prices-continue-to-rise/
Rents keep falling and supply keeps increasing.
https://wolfstreet.com/2019/03/28/rents-bounce-off-ceiling-in-expensive-rental-markets-but-surge-in-mid-tier-markets/
I cant imagine rates going up substantially-the govt is just too far in debt. We also dont have the number of stated income loans. If you wait for 50-70 percent you will die before you buy a home. If prices drop 25 percent and rates are low you should grab a few places
Doesn’t look like such a great, strong economy anymore…
https://www.calculatedriskblog.com/2019/03/q1-gdp-forecasts-mid-1-range.html?m=1
GDP growth of mid 1% for Q1?
Where is the pot boom our friendly OC Lender Dan told us about?
Where is the 5% GDP growth our Landlord forecasted thanks to Trumpenomics?
Looks like we are headed down…..maybe the experts were correct in forecasting a significant slowdown. Looks like it’s better to wait and not to catch the falling knife by buying now?
No crash in prime Santa Monica.
This North of Montana house sold $100k over asking: https://www.redfin.com/CA/Santa-Monica/517-11th-St-90402/home/6771724
This 1bed / 1 bath condo (674 sq ft) sold for over a million: https://www.redfin.com/CA/Santa-Monica/101-California-Ave-90403/unit-1103/home/6781236
That’s despite a monthly HOA fee of $1,029.
This 2 bed / 1 bath house (954 sq ft) in Sunset Park sold for $1,549k: https://www.redfin.com/CA/Santa-Monica/2441-14th-St-90405/home/6775544
Thanks for posting those, they are truly insane but its (hopefully) their money. That one house is about 100 years old and, while nice, is just average in size with a small lot. I would call that insane for 1/3 of the price. Plus with the small lot, where will they grow the money trees? Surely they have trees that produce fresh Federal reserve notes (or maybe bitcoins, lol) for them, otherwise it just makes no sense to spend so much and get so little.
There prices are not insane. What is insane is how much money people have on the west side.
White House hoping for rate cuts. Throw whatever we have to fuel the economy. We need to show strong growth for our campaign! Let’s do it right, how about setting the fed funds rate at -1%?
IMO the big difference between now and the last housing crash is that in 2007 everyone that wanted a house got one. Because of easy lending and no doc loans everybody and their mother got a mortgage, even if they couldn’t afford one. Today there are so many people who want to buy but can’t afford it. The demand is still there, but because of tightened lending and lack of affordability it goes unfulfilled. Because of this I do not believe we will have a crash as bad as last time. The buyers will create a safety net. Just look at how many posts are on this board by would-be buyers waiting for an opportunity. If prices dip 20% there will be a feeding frenzy. I would like a 50%+ dip as much as anyone here, but I just don’t see it at this time. Furthermore, you can bash CA all you want, but it is still a desirable place to live for many people, especially those with means.
It’s not necessarily certain that just because there are people who want to buy a home after a 20% drop that would ease any crash. You know, “fear of catching a falling knife” kinda thing.
People will stand on the sidelines to see what will happen to see if it will fall another 20%. Home prices have gone up 200% since the last crash so quickly.
I have enough cash assets to buy a home outright, but my fear is with all the uncertainty with various economic factors. Meanwhile I can rent and wait.
Feeding frenzy? Let’s say there is a 20% drop, you don’t think there would be any “fear of catching a falling knife”? Rates are already low. So feds will set interest to 2-3%?
People will stand on the sidelines to see what will happen to see if it will fall another 20%. Home prices have gone up 200% since the last crash so quickly.
I have enough cash assets to buy a home outright, but my fear is with all the uncertainty with various economic factors. Meanwhile I can rent and wait.
https://www.zerohedge.com/news/2019-03-30/americans-cant-afford-buy-home-70-country
Housing is unaffordable for most of Americans. I say raise rates to about 8-9% that will do it
Ausies’ hell hole openned up:
“The latest decline follows price falls in Sydney every quarter since September 2017, and in Melbourne, during the past 12 months. Sydney values have plunged by 16 percent since their peak in 2017, while in Melbourne, the price decline is approaching 10 percent.”
https://www.wsws.org/en/articles/2019/03/22/prop-m22.html
Start of the next bull run? Maybe load up on coins while they are still cheap?
https://www.zerohedge.com/news/2019-04-02/bitcoin-inexplicably-explodes-higher-biggest-surge-years
Big money from Asia driving recent demand?
Long time lurker… first time posting. I am no expert so please correct me if I am wrong. As I understand banks / financial institution makes loans for properties (based on the extremely scientific method of comps), once loan is finalized, they package it up and sell it to either Fanny or Freddie. Now when the Fed said they would stop all the rate hikes, they also said want all MBS off of their balance sheet by end of the year. So does that mean they will not be buying any more securities from banks / financial institutions. Who is going to be the bagholder for these overvalued collaterals?
“Who is going to be the bag holder for these overvalued collaterals?” Obviously the bag holder will be Fanny and Freddy; in other words – the taxpayers or more national debt to be paid (at least the interest) in taxes and inflation. That will lead to a society like in Russia – few corrupt oligarchs at the top and everyone equally poor.
Also, the FED is doing the QT at about 50 billions per month; they sell securities, not buying. They buy when they do QE.
There is no bag holder when the government is involved, they just shift tax revenue from one place to another. Or they print more money. Recession is coming after Trump wins in 2020.
Bank of America has pledged $5B in low income loans.
Maybe Millie can finally qualify.
I believe Our Software Engineer Millennial can “afford” a house now.
He just doesn’t trust the Perma-Bulls who want to make him a bag holder. Did I say that right?
Perma-Bulls have gone off the rails and no longer believe in the “Buy low, sell high” principle.
If you’re implying I’m a perma bull, you are incorrect. There was a correction in late 2018. That is now over and a new bull market was created, both in stocks and real estate.
Perma implies that I think no correction will ever happen again. Wrong. A correction will happen eventually, as it always does. But that’s years away.
On the other hand perma bears like Millie will never buy, always chasing that 75% crash that never comes.
Mr landlord, I got to catch you up on my situation.
To qualify for loan is not my issue at all. Credit score well above 800. No debt, Six figure income plus working wife. No kids but a big war chest sitting in CD’s and savings accounts waiting for deployment. What’s holding me back from pulling the trigger (purchasing real estate) is that I can’t find a reason to buy.
I asked the question many times but nobody has provided an answer yet.
Why buy at the peak of the market when you know the crash is around the corner?
The only reason I could come up with is if you are a person that doesn’t care about finances. You are either rich and have billions so a million or two for a house doesn’t make a dent or you are very poor. If you are poor you buy a house with 0% down, don’t pay mortgage bills and wait until they evict you. I am neither of those. I like crunching numbers and invest in things that make you money. I don’t like to waste my money so that others enjoy the profits.
Financially, there are many reasons to not buy:
Buying low is better than buying sky high. Sounds simple but there are many on this blog who think buying sky high makes somehow sense. Maybe only for them and not for you and me?
Renting a cheap apartment is a steal compared to buying a highly overpriced house
Why make someone else rich by buying at the wrong time if you can simply wait a decade and buy half off?
California has roughly ten year cycles in RE. Just wait for the downturn and buy 50-70% off peak prices.
how much is your rent right now?
Doesn’t sound like millennials will start a family soon. No family means no need to buy houses. If a whole generation skips buying and the older ones die off what does that do to supply and prices? Just a matter of time until the house of cards collapses.
https://www.zerohedge.com/news/2019-04-02/25-millennials-no-longer-having-sex-due-financial-problems
What a bunch of BS.
Millies aren’t having sex cuz they’re broke? LOL. Yeah cuz broke college kids never have sex right? And poor people in 3rd World s-holes never have sex either.
The reason they’re not having sex is cuz they spend 24/7 on twitter and have lost the ability to interact with other humans. And 20-something dudes who wear skinny jeans…..what woman wants that? I mean come on!!
This is preposterous. I’m a middle of the pack millennial. Every single one of my friends from high school (LA County) has gotten married and has kids. Almost all of my friends from university (also Southern California) have gotten married and have kids and almost all of my peers from grad school (also Southern California) are married and have kids. I would estimate that 3 out of every 4 are homeowners now. Obviously, my group of friends are not representative of the population at large, but if we were able to afford homes in the coastal counties of Southern California, you would think that other millennials in other parts of the country would have it easier. The notion that millennials aren’t buying or aren’t starting families is absurd. I think if we dove into the data, we would see that the data may be skewed by outliers and that if we weren’t to focus on certain regions, income brackets, and home prices, we would see data that are different from whatever these sources are using as measures of central tendency. My point is that we can’t simply look at all of the data and say that this is characteristic of educate do millennial buyers in the coastal counties of Southern California who are looking for 600-900k homes where supply is limited and demand is high. Luxury real estate probably tells a completely different story and podunk, Ohio may tell a different story as well. We need to avoid using the part to whole fallacy.
Boomer me has Millennial (Gen Y) kids and Gen Z grandkids born this decade. And they have lots of little friends over to play all the time. Of course I also have a Gen Y niece and nephew who AREN’T married and don’t have kids. Mine were born in the ’80s the N & N in the ’90s. And no, they aren’t just late starters. I doubt that either of them will ever have kids. One has a loser boyfriend who she has to support and the other one lives in Daddy’s basement and can’t get a job or a career going.
https://www.zerohedge.com/news/2019-04-02/bitcoin-inexplicably-explodes-higher-biggest-surge-years
Cryptos are back. Media is covering it. Millennials seem to be much more excited putting money into cryptos making 50% in a couple of days. Who can blame them. Do you want to spend 40% of your income on a mortgage and 10% on water, electricity, cable, internet, trash, maintenance? Another good junk goes out for student loans. Not much left in their pockets. Plus we have heard most millennial buyers are unhappy with their recent house purchase. There is just no excitement about buying a house in this day and age. The term is being “house poorâ€. What people don’t get is that a lower priced housing market would be good for the economy……recent buyers would actually have money left at the end of the day to go out and spend.
“What people don’t get is that a lower priced housing market would be good for the economy”
The people get it but can not do anything about it – they don’t set the interest rates and can not do QE or QT. Those are the functions of the FED. The FED understand what you say but they do what is in the advantage of their stockholders not the US economy.
Crypto market spiked on a April’s fool joke claiming that Bitcoin was going to start trading on Wallstreet. The real joke will happen when these suckers realize that it’s all a farce and cryptos are worthless.
@straws
You seem to be very clueless to what happened. It’s pretty simple to identify where the BtC went to. Massive amts of BTC went from exchanges to a few addresses suggesting that a large investor(s) (“whale(s)â€) came in and Moved the price. He timing on April 2nd was very favorable of that move as the order book was thin and a significant number of shorts lined up at the 4.2k range. The shorts got liquidated and This massive short squeeze skyrocketed the price. Then retail investors jumped in to get a piece of the pie. This has happened often in the past with BTC..
https://www.chepicap.com/en/news/8676/whale-watching-surge-in-btc-price-sees-over-200m-in-btc-transferred.html
When you refer to suckers I agree with you. The crypto winter isn’t over yet and many jump on the wagon when the btc price moves by such a percentage. This rally will fail. And there might be a few more failed rallies until we enter a bull market again. What’s really remarkable is the amount of people who went on twitter, YouTube etc after the price move. Cheering and calling it a bull market already. The media also picked up on it very quickly. It’s just a matter of time until this bubble gets blown up again. Until then I am Hoping the weak hands get shaken out and we see some big drops. Waiting for more buying opportunities.
From the Generation Xers who invested in internet stocks in the late 90s and thought they were smarter than their parents:
“Good Luck !!!”
LoL
Side note: What an Epic crash this spring – another LoL
I work with a few of these Millenials. “Why should I buy an overpriced socal house when I can make bank in tech stocks and crypto.” Let’s just say things got awful quiet at the end of last year, they actually got scared. Most of these young Millies have never seen a recession or full stock market crash in their adult lives. As we know, all markets eventually correct. Owning a primary residence is almost a requirement here in socal, unless your plan is to rent forever (bad plan!). Shelter is a necessity, owning crypto or high flying tech stocks is not (it’s nothing short of gambling).
If you can’t comfortably afford a home, don’t buy. If you can comfortably swing it, start thinking about…that is unless you have a crystal ball like Millie.
Hi blankfein, I could actually buy now (easily) but just because you can buy doesn’t mean the timing is right. People who have followed the housing market know about cycles. Most Experts know that right now is most likely the worst time in history to buy an overpriced house. If you just wait a few more years you most likely find yourself buying at 50% less.
JohnT: Millennials seem to be much more excited putting money into cryptos making 50% in a couple of days.
Fifty percent in a couple of days? So what. In any Vegas casino, you can make 500% in a couple of hours. Or not. Either way, that’s not investing. It’s gambling.
Make $10,000 one day. Lose $50,000 the next day.
I’d rather invest in practically anything — real estate, a diversified index fund, bank CDs, or Treasury Bonds — than “invest” in crypto, lottery tickets, or the roulette table.
Crypto exchange Coinbase in a new scandal: https://www.thedailybeast.com/crypto-fans-flee-coinbase-after-it-hired-hackers-for-dictators
… cryptocurrency users were not impressed when Coinbase, a major cryptocurrency exchange, partnered with former members of a notorious hacking company that sells spyware to oppressive regimes. Now some users are fleeing.
“#DeleteCoinbase before they delete you,†@btc, a major bitcoin Twitter account wrote Friday. …
Coinbase is supposed to make cryptocurrency easy. The company lets users buy and sell virtual money from a sleek smartphone interface, theoretically avoiding the scams that plague the crypto scene. But Coinbase users said the company invited the grifters into its corporate ranks when it acquired the analytics firm Neutrino last month.
Neutrino’s executives are former executives of Hacking Team, an infamous surveillance company that sells hacking services to law enforcement, corporations, and governments looking to crack down on dissent.
“The bitcoin community has historically been very close to internet freedom movements such as WikiLeaks, and Hacking Team represents the dark side of technology, used to restrict freedoms instead of liberate humanity,†bitcoin evangelist Francis Pouliot told The Daily Beast. “Hacking team, and the surveillance apparatus of which neutrino is a part of, are natural enemies of bitcoin users.â€
Big Coinbase fan here. Coinbase makes it so easy to purchase well established coins plus they keep adding new ones. With a few clicks I can buy from my cell phone app. A few years ago that wasn’t possible. Coinbase is very user friendly and I have had never any issues.
Thanks to Coinbase (and Binance) I made a ton of money during the last frenzy. Coinbase let’s you load the fiat and extract the fiat and if you do it the right way you can essentially buy coins without fees. Can’t get much better than that.
The Democrats agenda is nationalization – stealing of american assets. If you don’t believe it because of different words used, you are mistaken. What counts are not the words used but the actions.
Indeed, just yesterday a member of Congress proposed taxing UNREALIZED capital gains taxes… and not just any member, the top Democrat on the Senate Finance Committee.
The top Democrat on the Senate Finance Committee, Ron Wyden, is reviving a plan that would tax wealthy individuals annually on their investments, instead of when those assets are sold.
The plan represents a fundamental change to the timing of capital gains taxation — it would require wealthy investors to pay the capital gains tax on the appreciation of their assets each year, rather than paying the capital gains tax once when they sell an asset.
Source: Bloomberg
If you think this will stop with the “wealthy†you are mistaken mistaken. Nebulous financial concepts such as “fairness†are ALWAYS moving goalposts when it comes to taxes/ wealth grabs.
Keep voting democrats and we’ll end like Venezuela and N. Korea.
This is a great forum. Just found it today and read through comments from this article. My wife and I rented in Encino and Simi Valley before moving out of state in April of 2016. We were both transplants from the east coast and when we started a family we decided to move back closer to family. We have since bought a home and are settled into the slower paced suburb life on the east coast with family close and solid school districts for our children.
I still travel back to California for work 4-5 times per year. I have seen southern California continue to deteriorate since I’ve left. The homeless problem is much worse then when I left. I work in Anaheim/Placentia and often through neighborhoods where there never were homeless problems but now there are many are sleeping on the curbs. I also believe that many residents are sharing 1,500 square foot homes with multiple family’s or many people. I also see many family’s living in Holiday Inn Express when I stay on business. (These are not family’s vacationing. These are the same family’s I see on my prior trips). I’m sure they have worked out an agreed upon monthly rate with free breakfast and cable might work out better than a 1 BR apartment and might be safer. I believe the state to be in big trouble and would think they will eventually have to raise property taxes which would certainly result in price reductions.
With all that being said. I am working hard and preparing for the next crash in hopes to buy a 2nd home that I would rent for 20 years and then one day my wife and I can retire where it all started. I will be looking for 2012 prices and I believe it will happen again but will take at least 7-10 more years to get there. (I’m thinking 2012 level pricing in 2025). Record low interest rates combined with a Trump administration manipulating the economy should help keep things from falling off the cliff over the next few years but not sure much longer than that. I will continue to keep in touch and appreciate all of your insightful comments.
Sounds reasonable, but a lot will depend on how the government/banks are operating at the bottom of the market. In my area (different state), the state has made the foreclosure process extremely long and banks drag it out even longer so by the time a distressed house comes onto the market its rotten, vandalized, etc. – pretty much forcing the average person who isn’t a construction guy to buy retail at full price. The country is just a collection of frauds right now and only the most devious (and deviant) sociopaths rise to the top.
Manhattan RE market is crashing. Worst cold streak since 30 years. Inventory up 9% and rents are down.
https://www.zerohedge.com/news/2019-04-03/manhattan-housing-market-its-worst-cold-streak-30-years
I just noticed alot of houses sitting longer, more inventory, price reduction.
One house listed 838k last year drop to 800k, drop to 750k and still no buyer.
WOW!
This Santa Monica house just went for $4 million: https://www.redfin.com/CA/Santa-Monica/339-10th-St-90402/home/6771497
That’s $750,000 over asking.
@SOL
Santa Monica really is a part of coastal LA that seems to thrive despite the odds. What gives? Its got tons of traffic, no parking anywhere, and super expensive. And idiots for for a City Council. Get ready to fund those oversized pensions.
I know it sounds nuts, but my sister and her hubby (he has his own large construction business) just bought a house North of Montana on a worse street, with ugly street trees and no curb appeal for 3.2m!!! And it has 50% less space than the 339 10th St house!!!! Yep…under 1000 square feet!
So I guess I just admitted my sister and BIL are even bigger fools….sigh.
I think walkability is a big factor. I read that buyers are increasingly seeking houses that are walkable. People want to be able to walk to stores, restaurants, schools, parks, all urban amenities — and even the beach, if there is one.
Santa Monica is very walkable. (Apart from the risk of being hit by a cyclist, electric scooter, or skateboarder — all of whom use the sidewalks.) It almost has to be walkable, considering the traffic nightmare.
bbbbut bbbbut all those Zero Hedge articles say housing is crashing…..
LOL
I am part owner of a home of similar size a few streets away. First of all keep in mind ‘North of Montana’ is a highly desireable neighborhood. That home was underpriced to begin with. It could have listed for about $3.6M. Second is it is close to San Vicente Ave which makes it worth slightly more than if it were close to Montana Ave. Third, with a footprint of 7500 sqft of land, the new owners will be able to turn it into a McMansion as the City of SM is allowing up to 4,000 sqft of home on a lot that size. Some homeowners in that area are even building a subterranean garage in order to maximize home square footage. Lastly, lets not be shocked at the sale prices, lets all be shocked about the amount of money that rich people have. After all, they will pay about $4,000 per month in taxes alone! The home I am part owner of is similar in size and it rents for $9K per month!
That home was underpriced to begin with. It could have listed for about $3.6M.
Really? Consider the other SM house I recently posted: https://www.redfin.com/CA/Santa-Monica/517-11th-St-90402/home/6771724
* Only one block away.
* The lot is only 30 sq ft smaller.
* Sold only a few weeks earlier.
* Both nice houses.
* Both build in 1923.
VERY SIMILAR properties. Yet one sold for $3,395,000. The other for $4 million. An over $600k difference.
I guess it’s the luck of the draw. The second seller was lucky the right buyer — much money and willing to overpay — was looking for a house in that area a few weeks later, rather than a few weeks earlier.
About bears and bulls:
https://www.zerohedge.com/news/2019-04-06/heres-what-its-be-bear-rigged-market
The way the stock “market” goes, so will the RE market. The slowdown has begun, and Mr. Market will prevail. The pain will come, but bears may go extinct first.
I’d buy a house. If mortgage rates go down to MINUS 8% or asking prices go down 60%. If not; I’d rather shoot myself instead of being a life long debt slave.
All bubbles pop-eventually
https://wolfstreet.com/2019/04/06/update-on-the-housing-bust-in-vancouver-canada/
US next? Question is when? Not gonna buy now friends, gonna wait for the Big Bang
The Big-Bang to the ekonomy is probably not going to happen in 2019 but 2020 is looking good.
https://www.mauldineconomics.com/frontlinethoughts/capitalism-gone-wild
Housing was supposed to crash in 2015, then 2016 then 2017 then 2018 then 2019 and now I see 2020 is the year. Hope spring eternal, eh?
Perma bears are like the enviro doomsday people. The end is always sometime in teh very near future. Wasn’t Florida supposed to be underwater by 2010? Then 2020. Now it’s been pushed back to 2030.
LOL
2020 would be beautiful. I am ready. Got my cash and as soon as the market crashes by 50-70% I’ll buy a nice house.
Bob: “Flyover, you are not listening.”
Flyover: I do listen, Bob, but I’m trying to find the logic to what you say.
Bob: “Ask the voters living in the lines of tents and RVs in most US cities because of Republican policies whether they would ever vote Republican or for Trump again.
I believe in results. I don’t see them and the voters will only believe false promises for so long.”
F: The true result is visible for all to see in the WH, Senate and Supreme Court. Those lines of homeless increased exponentially during 8 years of Obama economics. Still they never connected the dots to understand the causes. If they would not have their brains fried by drugs and alcohol, they would understand. It is nothing Trump, GOP or the democrats can do to make them whole again. I am sure none of them ever voted republican and never will; therefore, the consequences on Trump and GOP are zero. It is personal responsibility they lack.
Bob: “I agree communism is a disaster. However countries like Norway and Denmark have implemented Bernie type Democratic Socialism and their voters are doing well.
You can point to Venezuela, but you need to look at how many billions their corrupt government embezzled in oil money. Sort of like Trump is doing now. Democratic Socialism is working today in much of Europe and they don’t have people living in tents because they can’t afford food or rent.”
F: Bob, have you ever been in those countries or are you just parroting the MSM propaganda. I’ve been there and I have friends and relatives there. I would not like to live in any of those countries. You can read the despair in the eyes of those people; taxed to the max and all freedoms reaped from them; sky high prices to pay for all the leeches. The Mexicans in the area where I live, who can barely speak English but work hard, have a higher standard of living than those soulless people in those countries. The ONLY exception I found in Europe is Switzerland; yes, I would live there, but they don’t have to pay for empire building and they are not socialists. Repeat after me: “you can never have the solutions of the Democratic socialists – socialism and open borders at the same time”. It is like pressing the break and accelerating at the same time. If you make US like Denmark and let all the people from South and Central America to come here, you break the system in one month at the most. That is what that clueless Democratic Socialist AOC is proposing. She is also clueless on economics and you follow her.
Also, you can not replicate Norway in US for many reasons. First, they have 4 mil. people with an ocean of oil. Their population, as a percentage, it is way more educated and civilized than what we have in US and with high IQ. They did not experience yet the invasion of tens of millions of illegals like in US. Norway is not involved in empire building like both GOP and DNC support. No serious democrat proposed to have the troops brought back in US. If they do, I am all for it. Because of these, the example of Norway to be applied in US is just unicorns and very disingenuous.
Bob: “You can ask how tariffs did under Hoover during the Great Depression. Look up Smoot-Hawley.”
F: The great Depression was caused by the FED, amplified by the FED and extended by the FED actions. It did not have anything to do with GOP.
Bob: “Also ask any Senior Citizen whether Medicare or Social Security is a failure and should be taken away. Trump and the Republicans are trying to cut Medicare.”
F: You either make up stuff or listened to too many lies. I never heard Trump or GOP saying that he will take away SS and Medicare. That BS is in the same category with “Russia collusion” – “fake news”.
Bob: “This is the end of the Republican Party. ”
F: Meanwhile I see the end of the Democratic party. WH and Senate are solidly republican and the Supreme Court, too. Get used to 6 more years of the same. The unemployment among the minorities is at an all time low.
Flyover, I had to have a rebuttal.
1) Obama promised Hope and Change. He delivered it from the Republican Great Recession disaster under Bush. Increased housing prices, Increased Stock market, Healthcare for all. Other than Healthcare, he did not help the people who did not own stocks and are renting.
Trump promised 1950’s MAGA. He continued the housing price increase to the point the majority cannot afford a house. He increased rents to the point most can’t afford rents. He destroyed healthcare for the poor and middle class He gave his cronies a Yuuge tax break and drove up the deficit much more than Obama.
Trump got elected to change this. After 2.5 years, he has delivered nothing to the poor and middle class. He will be tossed out in 2020.
Bernie also promised this in 2016 but he was forced out of the election by the Obama/Clinton democrats. He still promises to save these people. He will be elected. Just like FDR was elected in 1930. Hopefully not how the desperate people in Russia and Cuba overthrew Tsar Nicholas and Batista.
The poor and middle class who haven’t become wealthy with stocks and houses and are being forced into homelessness are so fed up with Trump lies and Obama neglect they will vote for Bernie in 2020. I guarantee it.
2) Have I ever been to Norway? Come on. Yes I have. (and don’t be a typical Republican and tell me to go back and live there.). They are a happy country with a long lifespan. Much longer than the US. Have you ever been to Venezuela? Do you have any experience to comment or are you being brainwashed by the Fox Network?
3) You deliberately avoided my question. You need to reply on Smoot Hawley tariffs done by Hoover. Tell me why these worked so well and why Trump who is doing the same thing will work better. Smoot Hawley is one of the main reasons the Democratic Socialist FDR was elected for 16 years. It will be the reason Bernie will be elected in 2020.
Bob, the middle class was not forced into homelessness. Some were pushed into renting, but not homelessness. Homelessness is a MENTAL issue caused by genetics, alcohol or drugs. One way or another, their brain is fried. It is nothing a politician can do to restore those brains.
With Norway, like I said, you are disingenuous. Will talk about this when US will have the amount of oil per capita that Norway has. You add to that a relatively homogeneous, civilized, educated, high work ethic and high IQ population and you can not replicate that in US. Norway also does not support with their taxes empire building. Norway does not have open borders or their socialism will collapse in one month if millions of people from ME and Africa will invade their countries. Sanctuary cities and states, open borders (all promoted by democrats) are sure way to collapse a country.
You are also disingenuous when you attribute things that democrats promote to the republicans. I did not meet a single mayor republican condoning sanctuary cities. I did not meet a single republican governor declaring their state a sanctuary state.
With Venezuela I don’t have any desire to go on a suicide mission. I traveled extensively in S. America and met lots of refugees from Venezuela who advised me not to go there. Maybe it is time for you to go there, and if you are lucky to survive, come back and share with us about the socialist paradise of Venezuela. I lived in a paradise like that before and I am cured for the rest of my life. Maybe it is time for you to experience socialism first hand and turn off CNN. I don’t have time for any form of MSM (Fox included) because it is just a waste of time. I have better things to do.
Trump will win again regardless of my wish or yours. After moving the US embassy to Jerusalem and declaring Golan Heights Israel territory, his second term is guaranteed. That and a most likely war with Iran so coveted by AIPAC. Netanyahu already anointed Trump and AIPAC is solidly behind him. Bernie will have zero chance. Even if Bernie increases in the pols, Schultz will enter the race as independent, and Trump still wins (he will take more votes from the left than from the right). Again I am talking about REAL politics regardless of your opinion or mine about what would be good for the country.
Flyover: Trump will win again regardless of my wish or yours. After moving the US embassy to Jerusalem and declaring Golan Heights Israel territory, his second term is guaranteed. That and a most likely war with Iran so coveted by AIPAC. Netanyahu already anointed Trump and AIPAC is solidly behind him.
True. And also disgusting that American elections are so heavily determined by which candidate earns the favor of a foreign nation.
The Iraq War (heavily lobbied for by Israel) was a crippling financial blow to the U.S. It put us an additional $6 trillion in debt. That includes the cost of caring for all the blind and crippled U.S. soldiers for the rest of their lives.
The Iran War will be another crippling blow. Crippling in the same way that Rome’s endless wars, and financial debts, helped bring about its collapse. Thanks, Israel!
Of course, after America falls, Israel will still be okay. It’s already cozying up to China, the next superpower.
There is Dumb, then there is Dumber, “voters living in the lines of tents and RVs in most US cities because of Republican policies” you pick.
CA is run for and by Democrats. But Republicans are to blame for the decay.
LOL
Liberals are if nothing else consistently idiotic.
JamesJim,
Please go home, think about what you said, and realise that name-calling does not work.
Well, I guess it works for Trump Supporters and Nazi thugs.
Please show some kind of intelligence and repost a response that does not use “dumb” or “dumber”.
Flyover has some good points.
Your post is disappointing. Please try again
Are you a voter? God help us all.
JamesJim,
Please go home, think about what you said, and realize that name-calling does not work.
Well, I guess it works for Trump Supporters and Nazi thugs.
Please show some kind of intelligence and repost a response that does not use “dumb” or “dumber”.
Flyover has some good points.
Your post is disappointing. Please try again
Are you a voter? God help us all.
Sorry, snowflake, I win and Trump2020 will continue to win, BigLY
Housing Bubble 2.0, but its different this time, lmao libtard hypocrosy
If you need for me to break it down for you snowflake, I can, and I can keep bustin you up all night if you wish. Like I said, There is Dumb, and There is Dumber, which one are you?
Wells Just Reported The Worst Mortgage Number Since The Financial Crisis
https://www.zerohedge.com/news/2019-04-12/wells-just-reported-worst-mortgage-number-financial-crisis
Oh JamesJim,
If you have to resort to reposting ZeroHedge, that makes you dumbest.
Please post some rational comments from your own mind without name-calling and some might believe you.
So far you are losing the argument and everyone see you are desperate when you resort to name-calling. Typical Trump supporter.
Bernie doesn’t name-call and he is promising a solution. Trump name-calls, promised a solution 3 years ago, and hasn’t delivered.
Most voters believe in results. Trump is failing to deliver. Biggly Fail as he would put it.
So the drug addicts, alcoholics and mental patients off their meds all stream to the polls every election day? So they’re not actually voters? Just potential voters waiting for the Dems to usher in the new Diddy Wah Diddy where money and fried chicken grow on trees, or the new Big Rock Candy Mountain where cops have wooden legs.
With sub 4% mortgages back, March sales and prices went up up up from seat to shining sea.
Sorry Millie. Looks like another decade of renting for you. You should have bought in the fall when you had a chance. This is why being a perma bear is never a good strategy.
Hi Landlord, i didn’t see anything during the fall that was priced realistically. People that buy during the bubble peak usually don’t really look at rental parity or financials in general. I would argue they don’t care about buying high as they wouldn’t even have the tools to see how renting would save them a ton of cash.
As soon as the crash is here (estimating within the next two years) I am happy to buy. Prices are a bit lower compared to the peak so I am still fine with my target at 50-70% below peak.
So the crash will be here in 2 years? LOL. I thought it was supposed to happen in 2017, then 2018, then 2019. Are we skipping the 2020 prediction altogether? That’s why being a perma bear is the wrong way to live. The great crash is always just over the horizon.
Meh, do what you want. It’s your money you’re burning every month. For every Millie like you who rents their entire life, a Landlord like me gets rich. So thank you for that.
Correct. The housing market moves in ten year cycles. We are due for another correction. My expectation is that you can buy houses in California for 50-70% less than today’s asking prices. That will happen within the next couple of years.
The dirt cheap rent I am paying is a great gift by my old landlord lady. If she gets rich and I save tons of money each pay period I would call this a win-win situation.
Copied from another forum, facts are facts. Even RE shills concede 2006 California real estate was at the peak of an epic bubble. But they insist that NOW it’s different. No bubble here. Well let’s review, shall we? Here are the first homes I found just randomly searching for homes that sold around the last bubble peak and are listed now. These are not cherry picked. So let’s compare the epic bubble prices of 2006 to the ‘no bubble’ prices of 2019.
04/2006 498k sold 04/2019 listed 610k
https://www.redfin.com/CA/San-Diego/10184-Summerview-Ct-92126/home/4853616
09/2005 459k sold 04/2019 listed 549k
https://www.redfin.com/CA/San-Diego/10223-Eagle-Rock-Ave-92126/home/4851759
08/2006 522k sold 04/2019 listed 699k
https://www.redfin.com/CA/San-Diego/9471-Compass-Point-Dr-S-92126/home/4793603
08/2006 600k sold 04/2019 listed 899k
https://www.redfin.com/CA/San-Diego/1866-Frankfort-St-92110/home/5219117
02/2007 650k sold 04/2019 listed 980k
https://www.redfin.com/CA/San-Diego/3553-Utah-St-92104/home/5383799
03/2006 480k sold 04/2019 listed 829k
https://www.redfin.com/CA/San-Diego/3120-Myrtle-Ave-92104/home/5387041
Sir, you need to account for inflation. $1 in 2006 is not $1 in 2019. In fact, $1 in today’s money was worth $1.28 in 2006. So, that $460k home in 2006 was actually priced at $590 when you adjust for inflation. Also, there are other factors that you have to consider. Back then, that home was priced at $590 (inflation-adjusted), but housing starts/permits/inventory was also high. When the number of suppliers in the market increases, this shifts the supply curve to the right, meaning that suppliers are willing to supply more at all price points. In this case, we should see quantity supplied (Qs) increase and Price goes down. However, in 2006, Price actually went up. Now, that’s what you call a bubble. Today, we see a low number of suppliers in the market. Housing starts and inventory are low. This shifts the supply curve to the left and what we see, rightly so, is that when Quantity Supplied decreases, prices go up. This makes sense intuitively and is what we’re seeing now. However, all of this assumes that demand is constant, but we can also see rightward and leftward shifts in the demand curve which may either further push prices higher until an equilibrium point is reached or if the demand curve shifts to the left due to a lack of demand, it will temper price gains. My point is that your conclusion is fallacious. It makes no sense because it doesn’t take into account basic microeconomics.
Inventory is high. Just look on zillow or open your eyes when walking through nice neighborhoods. For Sale signs everywhere. Zillow and redfin are bombarding me with price reductions across the board. A house that cost 750K…..you can easily offer 500k in todays market, which is still overpriced. I would just wait until its 50-70% lower (in about two years). Two more years of waiting sounds good to me. Renting lets you save big time.
Santa Monica townhouse sells for $76k over asking: https://www.redfin.com/CA/Santa-Monica/2008-Idaho-Ave-90403/unit-4/home/8136620
JamesJim, thanks for researching previous peak values in San Diego. Could you do the same for Hermosa Beach. I’d like to know about where the current cycle valley might be
whenever it comes. Historically, previous RE price peaks are a good bet.
Millie. As Landlord said. You missed a small buying opportunity this winter; however, keep an eye out for previous price peaks during the downturn and I think you might be able to still grab a deal. Good Luck.
Market Man, I doubt you follow the market as closely as I do. By how much did the market fall? Can you answer that?
It’s pretty obvious there is no “red hot spring season†this year. Just like last year. Tons of inventory is coming on the market and price drops across the board. I see absolutely no reason to pull the trigger now.can you answer one more question for me: why buy now at the worst time in history and not wait a couple more year to save several hundred thousands of dollars? Why such a hurry? Renting is playing it save. You build up your war chest and buy when the market is ripe and you have plenty of deals to chose from.
Cheers and looking forward to your response.
@ Millie – A few months back you mentioned the location you were interested in? Can you refresh my memory? Beach close? Valley cheap? Simi Valley? Santa Clarita?
Clearly less desirable areas in the I.E. and outside of 30-45 minutes commuting into job market centers will take a housing pricing hit first if history is any guide. I think you may have a different interpretation of desirable area, since you have no kids, telecommuting job (no drive time to factor in) and a wife who works full-time rather than stays home or needs ‘pilates adjacent’ hip areas.
What is your target area?
Even the beach ares took a Yuuge hit after the Republican Bush crash in 2008.
We sold a house in Santa Barbara in 1996 for 260K and it went up to 550K by 2006.
It then plummeted in 2009 and we could have bought the same house back for 330K.
We should have since now it is 800K.
Roller coaster bubble.
The coastal cities had less drop than inland but is still made many recent buyers short sale or foreclose.
The bubble is greater now, but will the economy crash like 2008? I doubt it.
“I doubt itâ€
I doubt it too. It will crash much harder than before.
Heartache in Seattle for perma bears.
https://mynorthwest.com/1338201/puget-sound-housing-march-2019/
“In January, the median closing price for residential homes in King County sat down at $610,000. That number jumped all the way up to $667,00 in March. Similar increases were also reported in Snohomish, Pierce, and Kitsap Counties.”
From the OC Register, rents in LA and OC jumped 5.6% in the last year. I know none of the resident bears here ever get a rent increase, but all other renters probably aren’t too happy about this. Five years of rent increases like this will bring many potential buyers off the fence. These are all factors that need to be taken into account when buying a socal house.
https://www.ocregister.com/2019/04/13/rents-in-los-angeles-and-orange-counties-up-5-6-thats-fastest-pace-since-2007-says-consumer-price-index/
Correct, rents are so dirt cheap compared to buying that it makes little to no sense to purchase a home. If prices fall by 50-70% you will see rental parity and a purchase will be acceptable (financially speaking). If money doesn’t matter to you, than I would say go ahead and buy during the worst time in history.
Hi Millennial,
A 50%-70% price reduction on a $600K townhome in irvine means that it will sell for 180k to 350k. That’s way below 2012 prices. It just doesn’t add up. What sort of systemic economic event would trigger such a severe reduction in home values?
Hey Millie
It is called Rent Parody not Rent Parity. There will be rent parity someday but for the foreseeable future it is a parody to think there will be parity.
So if you have already waited 3 or 4 years and the peak is at least 1 or 2 years away, then the bottom of the dip could be 3-5 years after the peak, maybe in 2024. So that’s 7 to 11 years of waiting. That’s a long time to sit on the sidelines for the perfect timing. If you had bought even just 3 years ago, you theoretically could sell next year with a 20% gain assuming a modest 5% per year. Waiting for a “perfect” opportunity, you missed a good one.
We missed our chance in 2011 because we had just moved to California and had zero money to buy, but when the opportunity came in 2017 we took it. Maybe in 2024 at the bottom of the next dip we will be ready to buy again and turn our starter home into a rental. That gives us 5 years to save at least $50k towards a down payment.
agree with all of you. Note how RE cheerleaders dont mention rental parity anymore? Because every time we use math they embarrass themselves.
Yes, 50-70% is a very conservative target. Housing is highly inflated and it will come down again just like every time.
Buying during a bubble peak is a great idea to destroy your wealth. Buying during the crash is a great idea to build wealth. Buying now and thinking the market will appreciate is financial suicide.
We cant do more than send you a warning. Dont complain when the market crashes and you lose your job (and the overpriced house you bought).
Remember how 3 months ago everyone was talking about a housing crash?
LOL. Good times man, good times.
Reality says otherwise. From the east coast to Hawaii, and everything in between, prices are going nowhere but up. You had the buying opportunity of a lifetime last fall. Shoulda coulda woulda.
NoVa (that’s Northern Virginia for you Californians who think the world ends 30 miles from the Pacific Ocean) home prices up 5% in March ’19 vs March ’18
Denver: Median price up 1.5% in March 19 vs March 18
Boise: Median price in March at $335K, a new record
Seattle: Median price up $55K in March vs January 2019
Honolulu: Median home price up 3% in March
OC Register columnist Lansner’s headline story today is on tightening renal vacancy rates and rising rents. LA and OC metro have the seventh tightest rental market out of 75 metro areas. Rents are going up faster this year here than last. Not likely that a supply increase will happen anytime soon says columnist Lansner. The shrinking supply of rentals is a national trend. My own experience as a landlord says that indeed, smaller non urban markets are seeing a rise in rents also where it was stagnant during the Obama years.
We have Dumb, then if you dont get it, we have Dumber, and we have all seen this before, so this time it isnt different.
Irvine, CA Housing Prices Crater 18% YOY As Orange County Inventory Balloons On Rampant Mortgage Fraud
https://www.movoto.com/irvine-ca/market-trends/
and then there is Kevin Bacon dumb in Animal House, ALL IS WELL, ALL IS WELL smh
Manhattan Housing Prices Crater 21% YOY As New York City Rental Rates Plummet
*Select price from dropdown menu on first chart
https://www.zillow.com/new-york-ny-10019/home-values/
Oh joy NINJA or now NINA is back:
https://www.housingwire.com/articles/48810-no-income-no-asset-mortgages-are-back-at-one-lender-at-least
Yah, Dumb if youve Seen It All Before and cant see it again, Dumber if youve Seen It All Before and keep crying “ALL IS WELL, ALL IS WELL.
A report from the Orange County Register in California. “House prices fell last month in Los Angeles, Orange and San Diego counties and in half of all counties included in the California Association of Realtors’ latest housing report. It’s the first year-over-year price drop for Los Angeles and San Diego counties in seven years and the third in Orange County in the past four months.â€
“House sales, meanwhile, were down in all major regions in the state – falling 12 percent year over year in the Los Angeles metro area, CAR reported. ‘It’s tough out there,’ said Jordan Levine, a CAR senior economist, ‘but there’s no reason (for sellers or their agents) to panic.’â€
“‘As a seller, you have a lot more competition for your unit than a year ago or even two years ago,’ Levine said. With more homes to choose from, buyers are taking their time.â€
http://housingbubble.blog/?p=1496
Rates are lower….how come there are price drops everywhere????
It’s supposed to be the hottest season?????? How come nobody is willing to buy at super inflated prices???!?! Aren’t millennials supposed to buy now so boomers can cash out and get richer????! Somethin’ isn’t right here?!?!
Just how Dumb are you if Youve Seen it All Before and cant seen the warning signs again ?
The Greenwich Housing Market Is Imploding As Prices Tumble As Much As 25%
https://www.zerohedge.com/news/2019-04-16/greenwich-housing-market-imploding-prices-tumble-much-25
I’d say VERY
Population is declining. Why stay in that hell hole? https://wolfstreet.com/2019/04/19/los-angeles-population-falls-san-francisco-bay-area-rises-least-since-2010-as-california-population-growth-turns-to-crawl/
Less people, less demand. Prices will continue to decline.
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