The impact of COVID-19 on the housing market: A wake up call to markets.
COVID-19 is going to have a significant impact on the housing market. Global markets are facing significant volatility as we deal with the first major global pandemic that is hitting both developed and developing nations equally. This virus knows no borders and it is surprising how many people are still posting narrowly that this is somehow not going to impact the real estate market. They assume the Federal Reserve is going to have the power to generate demand out of thin air with low interest rates. But to who will you sell? This shock that we are experiencing is a global health crisis and entire nations are fully shutting down to save lives. The Fed has aggressively come out saying they will lower rates but low rates can’t help if you are out of a job or if the economy is shut down because the virus lingers longer than a week or two (by looking at China, South Korea, Italy, and Spain for example we are just starting to enter phase one). The hit to the financial system will be big and here in Los Angeles, the city is in essence slowly shutting down with schools closed, restaurants being limited in service, and grocery stores being cleaned out by panic. Yet somehow this is positive for housing?
The impact of COVID-19 on real estate
If you take a look at the Dow Jones US Real Estate Index the market has already taken a hit:
This index looks to track the performance of REITs and other companies that directly invest in real estate. Some (not all) may remember vividly the financial crisis of 2007 to 2009. The stock market bottomed out in 2009 but real estate is a lagging indicator to stocks. The market right now is as volatile as I have seen it because major metro areas are shutting down completely. While some small locations have experienced these short-term shutdowns, for example locations near a hurricane that is approaching, we haven’t had something like this. Regarding low rates, we need to understand that during the financial crisis we also had low rates and extreme lending and it still ended up with a big correction because people still need to service debt. With this level of uncertainty right now, many people are not willing to make the biggest purchase of their lives.
Beyond the obvious volatility, people are dealing with a system that is shutting down but not because of a financial crisis. This is a health crisis and all areas are being impacted. Quality of life for the short-term is going to be significantly hit. People are working from home, schools are shutdown, many colleges have gone to strictly online courses to end the academic year. Many Millennials are barely scraping by so this shock from COVID-19 is going to have an impact but it really depends on how long this virus lingers.
Yet people are also realizing that even if you have money, if your local area doesn’t have food stocked, then you are not going to be able to acquire goods even if you have the money. We’ve come to depend on a reliable supply chain but something like this will force businesses to change and people will also remember that the order of things can change so quickly.
This week Los Angeles went from monitoring the status of COVID-19 to shutting down schools and implementing strict restrictions on restaurants, going out, and large gatherings. This is how quickly this is unfolding so open houses are not part of the prescription in social distancing.
People are still in a fog here in Los Angeles. They think it can never happen here or it is always different in this area. That is until it isn’t. This is a health crisis of global proportions. Italy just a few weeks ago was simply “monitoring†the virus to being fully shutdown with strict controls and a healthcare system in severe strain.
To think that “housing only goes up†and forget that real workers need to earn real money and stay healthy, we are in for a correction here. For now, the focus is on getting this thing under control. Â
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140 Responses to “The impact of COVID-19 on the housing market: A wake up call to markets.”
COVID-19 is no big danger. Way more people die of the flu every year. The real problem is the panic and the resulting shortages, business shutdowns, and economic impact.
That said, and despite the suffering this will cause for many, I expect that M will say this is the best thing that could have happened to him, at the perfect moment, because … well, he’ll think of a reason.
We have no idea how many people will die from this because we’ve never encountered it before. We have no idea what the long term health effects are on people who are considered “healthy”. We have no idea what the dangers are because we have not come anywhere close to containing it, being able to provide adequate testing or diagnosis, let alone develop a vaccine for it. Saying it’s “no big danger” because “Way more people die from the flu” is about as ignorant as it gets.
This is nonsense. Yes in nominal terms, the flu has killed more in a year but this virus hasent been around even a year to make that a valid statement. Death as a percentage of effected by flu is around .02%. Covid-19 is around 2%. That’s 10× more lethal. Plus the rate at which it spreads is far more severe. Average spread of flu is 1-1. Meaning one person shares it with 1 more. Covid-19 is around 4-5; 1 shares it with 4-5 people. This virus is not to be taken lightly.
Isn’t a death rate of 2.0 100x more than .02? A death rate 10x more deadly than .02 would be .20, not 2.0.
you won’t know the actual stats until about two years from now. So any rates you quote are comparing apples and oranges.
Anyone who believes real estate is a good investment right now is the same as people buying Enron stock days before the meltdown. Wait for the Real estate meltdown, then buy. We will see who’s right.
The flu is nothing compared to COVID-19. For starters, there is no cure or vaccination against COVID-19. Second, it kills at least 3.4 percent of people who get it – one person in around 30. The flu kills around one person in 20,000 – that means COVID-19 is 900 times more deadly – not the same at all.
Forget percentage of deaths. The flu kills way more people in raw numbers: https://www.takimag.com/article/how-do-we-flatten-the-curve-on-panic/
We’ll get no BREAKING NEWS alerts for the regular flu deaths (so far this season, more than 23,000, compared to 533 from the coronavirus).
Nor for the more than 3,000 people who die every day of heart disease or cancer. No alerts for the hundreds who die each day from car accidents, illegal aliens and suicide.
Only coronavirus deaths are considered newsworthy.
You quoted the number of Covid 19 deaths at 530. That was 3 days ago. It is now at 1700 and doubling every 2-3 days.
By the end of next week, at this rate, it will be over 30,000.
The lag between infection and death is about 24 days. The death rate will start flattening out around Easter due to the strict state quarantines 24 days before.
NY has 11 times the cases of CA due to their high density housing and transportation. People that live in the suburbs have less of a rate of infection than the high density housing, and tenement housing of other places. I live on a lot with massive trees, a forest. This Corona virus has taught me to never to to a higher density housing. I also stocked up on a 4 month food supply before everybody else . I was like Noah and the Ark. Now whose laughing?
Number-wise, you may be right. However, I have never heard about hospitals’ keeping the deceased in freezer trucks because of flu.
Driving out on the PCH this afternoon (while we still can), I was shocked to see a number of open houses happening in Malibu. It really won’t hit folks until it’s too late. We’re screwed. I thought about trying to relocate temporarily, since L.A. seems destined to become a hot zone, but where to?
Meanwhile listening to the debate while I drove, the surrealism of it all — the whole economic system, the successive applications of QE, delivered to the top of the food chain, while real wages haven’t gone up in 50 years, is just beyond depressing to think about. We have created something that is staggeringly immoral and leading us down the path to real extremism and total ruin.
One almost finds oneself rooting for the virus (or a comet, or the rising sea level…).
I don’t think anybody ever said this would be positive for housing. Relative to other investments, housing should hold up quite well. Stock market down 25% in a few weeks, Bitcoin was down 50% in a day. Owning a primary residence in socal is a requirement to be protected from ever increasing rent.
Just like all the other times in past, events like this transfer wealth from weak hands to strong hands. People with large amounts of cash on hand are going to have some incredible opportunities very soon. And this is a perfect lesson regarding “saving for rainy day.” Something most Americans have long forgotten.
The PTB Globally, are already talking about that cash is spreading the virus and that this could be an excellent time for the world to go to a cashless system. So… cash in hand would not be excepted any more and would not have any value. REPORTS out of China is that they are burning cash as a preventative to virus spread. We are seeing the set up for a one world globalist government that has been in the planning for generations & will most likely be implemented in the not to distant future. Say good-b old days forever!!
Ron, ur a schmuck.
+1
The virus is real but it serves as cover for a very sinister plan. What you mentioned is just the tip of the iceberg.
All these engineered crisis are made for stealing more wealth and freedom from people. With 9/11 it was the Patriot Act. This one is to eliminate cash, bring one currency, with one central bank and a de facto global governance with the purpose the enslave the whole humanity.
Did you stock up on tin foil to make hats?
First aliens that probe your ass and now this…. what’s the world coming to?
Flyover, I agree universally with almost everything you’ve posted. You’re clearly a very wise and intuitive dude. But a one world government? Never say never I guess, but there’s enough hatred and differences between nations throughout the world that I don’t think this is a realistic scenario any time soon.
Please don’t post your nut-job conspiracy theories here. Keep them on the Reddit Bitcoin forums. This forum is for RE discussions. Thank you.
Responder, I have to apologize for expressing myself the wrong way. Some years from now, the administrative part of the earth will look like the states with local governments.
I don’t know the speed of centralization, but the trend is clear. We already have the BIS, the central bank of central banks. They might even allow various currencies tied to a common one, whatever you want to call it (I.e. SDR).
At that point, you’ll have a de facto world government- power in the hands of few individuals who can print money and buy any politician or agenda they want. In the US, you have many governors and state governments who are powerless against the FED.
Anyway, I can write a book on this but you get the idea. I was trying to be very concise and jump to conclusion for the sake of length of post and it came out wrong.
Flyover: Ah, gotcha. Thanks for clarifying. Yeah, I can see that scenario taking place.
I would prefer we see a United Federation of Planets come out of all this rather than a Vendetta scenario. At some point maybe money won’t matter any more for any of us. I would prefer that to happen. Technology lifts us out of our Tribal ways which is what we need. Hence we need it more than ever to beat this rogue bugs.
How will people with cash on hand benefit if housing will be golden as always and unaffected? Or will housing see a correction that some can benefit from?
Asking as someone with tons of cash on hand looking for my next investment.
People with cash on hand will benefit in a big way when the market bottoms. Housing is slow moving and a totally different beast. This crisis is completely different than 2008 when people couldn’t wait to walk away from their house. Your home right now may be the last form of refuge. Unless people sell en mass or walk away, prices will likely be sticky. If things get really bad, expect mortgage holidays. Not sure if renters will get a rent holiday.
Just like the last crisis, people who had liquid assets to put to work came out as winners. We’ll quickly see who was living beyond their means and who was saving for a rainy day. Nobody knows how this will play out, but it should be interesting to say the least!
The Los Angeles Times in California. “Even before, some agents were seeing signs of caution creeping in. One potential concern for home shoppers going forward is what happens to the money they were counting on for a down payment. Stocks, bonds, gold, bitcoin — assets are falling in value across the board. John Underwood, who manages Redfin’s L.A. office, said he had a buyer pull back an offer for a roughly $700,000 three-bedroom house in Lakewood because ‘most of his down payment was tied up in the stock market.’â€
“Luxury home builder Toll Bros. has also had a handful of delayed closings because buyers from China had ‘transportation or other logistical challenges … such as closed banks or offices in China,’ said Christine Sciarrotta, the company’s vice president for brand management.â€
It’s already happening, and will only get worse.
My starter house was scheduled to list this week. We are attempting to move up. I am not sure how this is going to play out, so we hit pause.
I don’t want a revolving door of strangers viewing our place, and contaminating our house. I fear that other sellers in the my “move up” market may do the same, further limiting inventory.
I am concerned that mortgage companies will not be able to close timely due to volume or availability of staff, or all the other people involved, escrow offices, inspectors, appraisals, ect. This will affect my both my buyers of my house and my purchase of the new place.
So for now, we wait and see….
Just buy the new house before you sell the old one. Simple. Or better yet- keep the old house as a rental. Your future self and your heirs will appreciate it.
JD- please wait to sell your house to get a better deal on your move up house. The housing market will drop within a year and upcoming winter will be great time to get at least a 10% discount while your starter home won’t drop as much. There is no way that the economy will improve much soon with the huge drop we had in the stock market and state of California being shut down and many large cities with growing infection levels. The housing drop will come in next few months as people are nervous about their 401ks and gun shy to invest in a new home. Some of the biggest stock drops have lead to housing drops and this time is not different. Stay safe, stay healthy and good luck no matter what you do.
On the darker side, this pandemic has the potential to solve the homeless problem and the inventory problem in socal beach cities, with the taco tuesday boomers and the rampant homelessness. Lets just hope it doesn’t get that bad.
Those homeless people have been exposed to so much by now they’re immune to rabies
Housing To Tank Hard!!!
Jim! Good to hear from you again!
You left out your typical “soon”
What does this mean?
All hail the Oracle of The HB! He may be right this time.
Thanks for the welcome and its good to be back. I do think it will be soon. But I must admit I was so grossly stupidly off before I don’t want to try to time it. But I still have made no home purchase over the whole time I have posted here. I think the lower prices are still coming.
Don’t worry, Jim.
I invested an inheritance entirely in the Stock Market back in January 2017.
After 50-100% gains, I am now back to where I started.
I’d have invested in a house back then if I needed one.
It’s always best to buy low and sell high.
I just remember that you never “lose” until you sell.
Our Millennial made the right choice and will be rejoicing at the next peak in 7-10 years after paying off most of his house.
There he is!!
hahahhaa…go Jim!!! This time you may finally be right!
hahahahahah!!! Go Jim!!! you may finally be right this time!
We are special and this time is different. Housing wont tank at all
Very less inventory, low mortgage rates would create bidding war in CA.
Tank hard baby! I hope you’re finally right this time!!
You would think that the amount of house horny bargain hunters on this forum would be an indicator that housing is not coming down but I guess some people don’t get it. Everyone you ask nowadays says they want to buy a house but they’re “waiting for the price to come down like in 2008” but man are they in for some bad news. Take advantage of this economic hiccup and pick a house up when it goes below 10% because it ain’t going any lower. As a matter of fact, you’d be lucky if that was the case.
I feel like this moratorium on evictions for renters in Los Angeles has the potential to affect the market. How many months can some landlords and investors continue to pay their mortgages without collecting rent payments?
https://www.youtube.com/watch?time_continue=140&v=PHwz9_A4sbM&feature=emb_logo
gbtn: I was wondering about that as well. I have one rental (a condo). I don’t think our renters will try to swindle us since we’ve been pretty good to them (cheap rent), but you never know. It’s not really fair to give the tenants a break (at the landlord’s expense), but not give the landlords one as well.
I feel like this new moratorium on evictions for renters in Los Angeles has the potential to affect the market. How many months can some landlords and investors continue to pay their mortgages without collecting rent?
The fact that Trump ordered the Federal Reserve Bank to purchase billions of dollars worth of mortgage backed securities would indicate that they are expecting an avalanche of mortgage defaults due to this extended virus event.
Incorrect. Fed buying mortgage backed securities is to help drive down mortgage rates which increases refinances and purchases. Quantitative easing from the Fed also has them buying up treasury bonds which also helps keeps mortgage rates down. They bought mortgage backed securities during the great recession to drive borrowing rates down. Why arent investors buying mbs? Because people are refinancing on average in 1 or 2 years since rates being so low.
From Socket Site in California. “The number of homes on the market in San Francisco has jumped 50 percent since the Super Bowl to 750. And in fact, inventory levels are now running 17 percent higher than at the same time last year and just hit a 9-year seasonal high. And the percentage of listings which have undergone at least one official price reduction – which doesn’t include any of the homes which were withdrawn from the market at the end of last year and have recently been relisted with a reduced asking price and a reset ‘days on the market’ count – has ticked up to 19 percent.â€
I believe we are all f..cked!
There goes the neighborhood.
But all the tough guys here and elsewhere said “it’s just like flu. More people die of flu. This is being over hyped.” Where are they now? I guess they will be hitting the bottle and then buying stocks cheap because they must tell themselves that the stocks are undervalued and this’ll all blow over in a month. Next month they’ll find out it’s not going to go anywhere. What will they do then? Buy more stocks, drink a little more and be even more optimistic?
I bought about 50lbs rice, 30lbs beans, 30 cans soup, 30 cans tuna, nature bars, condiments, spices and other things about a months ago. Now I go to the store and am so thankful because all the noobs woke up after they canceled sports and school. You can’t even find rice, beans and most soup on the shelves. What were these people going to do during an earth quake or other natural disaster? From what I’ve read about 60% of people can’t even afford to lose one pay check. It’s no wonder because most of them don’t save. I read a financial adviser guide a long time ago and followed the rules of saving at least 6 months salary before even considering investing. Sadly, a lot of people are living as if everyone else needs to pay their bills. I’ve had coworkers getting paid barely above minimum wage having multiple kids. They get the Gov’t to pay for their housing because now they can use the kids as a stage prop for their poor choices.
This is what has pissed me off and it’s why I decided to take a very long vacation and get away from it all. I got sick of seeing these type of people live that way, then turn around and preach to me about how to live my life. My brother’s exactly this way and I saw his wife post a meme on facebook about people on welfare eating lobster. They’re probably the perfect example of people who’ve been on welfare because of poor choices. Now with this coronavirus these same people are the ones who are rushing the stores at 6am, pushing seniors out of the way and clearing the shelves of all the food they can get for a month long quarantine. The government and stores are having to tell them “stop and think of others people.” when they never have done that.
We have yet to see the bottom of this stock market drop. I predict about 70%drop and we will need to see the curve flatten on the spread of the virus before investors being to get comfortable again. We have about another 14 months before people can start to be mass vaccinated and we don’t even know if that’ll be enough because the virus can mutate. What a disaster. This will make the Great Recession look like the the tip of the iceberg when it’s all over with.
Take care of you stress levels because you don’t want to end up in the hospital getting infected. If you do get infected, a guy in Japan said he survived COVID19 by doing stress related breathing exercises that he learned from a stress relief program. His blood oxygen was 93% and after doing the breathing exercises he got it up to 99%. If you can do this you may not have to end up in intensive care. Good luck.
And on the flip side of the coin, we got guy who will say “told yah so”, “shy is falling”, “it’s going to get worse”, “I was this coming”, and the most famous “Not Me”, these are the self centered fear mongers who will cause the most damage as this “Black Swan” runs its course and things get back to normal within 3-6 weeks. Good luck to all, stay safe.
PS, I order a weeks worth of Hello Fresh, i’m good to go.
Don’t you hate it when a person comes out and reminds you what an idiot you’ve been for saying coronavirus was just like flu for the last two months? Then to top off the idiocy the idiot complains about someone telling them they were and idiot. No point in helping these types of fools because their foolishness is ingrained to the very last atom of their being.
“these are the self centered fear mongers who will cause the most damage as this “Black Swan†runs its course and things get back to normal within 3-6 weeks. ”
Pandemia vanishing in 6 weeks? Good luck on that, currently (April 12.) doctors are wishing it will not be a major problem by summer 2021.
Year and a half.
I’m not a “tough guy,” but I think this coronavirus is way over-rated. It’s a new kind of flu. More people die of cancer, heart disease, car accidents, regular flu, etc. This is no cause for panic.
Yes, store shelves are empty. It’s not the flu, it’s panic buying. Fear and panic (not the virus) are creating an economic crisis.
Some oligarchs will make billions, not millions, from these stock fluctuations. I’m certain there are oligarchs out there with insider knowledge, who are repeatedly buying low and selling high.
And the globalists are pushing “emergency legislation” through that will further erode our freedoms.
This is a manufactured crisis, and the elite are not letting this crisis go to waste.
Here’s a few articles from people who got coronavirus and don’t think it’s similar to flu.
Still hearing people say coronavirus is just like the flu? They’re wrong — and here’s why – https://www.marketwatch.com/story/coronavirus-vs-the-flu-its-just-like-other-viruses-and-we-should-go-about-our-normal-business-right-wrong-heres-why-2020-03-09
Coronavirus patient on hellish ordeal: ‘I was screaming for mercy and praying to God’ – https://nypost.com/2020/03/18/coronavirus-patient-on-hellish-ordeal-i-was-screaming-for-mercy-and-praying-to-god/
kent, we can all post articles proving our case.
On the media exaggeration of Covid-19, and how it compares to the far worse Asian Flu of 1957-58 and Hong Kong Flu of 1968-69: https://www.americanthinker.com/articles/2020/03/reducing_covid19_fever_.html
Glad I am of Mexican descent. My family has ten lifetimes supply of frijoles in the pantry & garage.
For all of you who have been mis-using the term “Black Swan”, it is OK to call this crisis that. No one on this site predicted this in 2019 that I am aware of.
No, it is a gray swan. I predicted it.
My father told me of his childhood in the late 1940’s that everyone had to self-quarantine all summer due to the polio epidemic. Restaurants, pools, parks, beaches were all closed and he and my grandparents had to stay home except for grocery shopping. That was only 70 years ago.
We have seen this all before. We just don’t remember it and are much more prone to panic due to our ignorance.
Polio had a much higher mortality rate than Covid-19. If you caught it.
A Black Swan by definition is something completely new and unexpected. ie Alien ships hover over the earth and start destroying cities. Even a larger meteor or asteroid hit would be a dark gray swan because we have seen it before but not in a million years.
Back then most Americans were rural. It was still and agriculture society. Today it’s mostly consumer economy. You close down the consuming and most of the country is out of work. Thanks to the Baby Boomers who were in charge of the corporations shipping all the industry to China from 1990-present, we are really in trouble now. China is making 90% of our medicines and other items that are vital to our national security. This has to change within the next few years, but probably won’t because of agreements and policies put into place by the Baby Boomer generation running the country and big corporations.
This mess is going to get a lot worse before it gets better. This current two week social distancing scheme isn’t to stop the virus, it’s to stop the spread of the virus. They want the peak of the virus outbreak to happen between June-August because they think that’s the best time due to it not being flu season, but the problem they’ll find out is that hot weather makes pneumonia worse.
We’re going to see some crazy things. I predict certain cities on state type martial law where you can’t go outside after 11pm and have to be in until 5am, you’ll have to have special permit to own a firearm, food will be more scarce in some areas due to unrest, hospitals will be choosing who lives and dies due to lack of ventilators and staff, police won’t respond to anything but 911 calls and that’ll be slower than usual.
The government is telling lies about this recession too. It was already predicted that a recession would happen in the second half of 2020 before the coronavirus outbreak. Now they government is claiming that the economy will rebound in the second half of 2020. That’s a big lie. Only way this thing is rebounding is when a vaccine is made that works for most people and that’ll be about 14 months from now, if at all.
And my Mother was moved from the sea coast to an inland town to get away from the 1918 Spanish Flu. (PS It didn’t work!).
Anyway, this is more akin to a Black Swan than any crash due to financial shenanigans.
This site lists their 5 favorite Black Swan events of the last 500 years:
https://curiousmatic.com/top-black-swan-events-recent-history/
I’d say that the oldest one (The Conquistadors showing up in Mexico) was probably the best example of a true Black Swan. The Aztecs had no idea of what had just hit them. Some of the others they listed were failures of technology, like the Titanic or Fukushima, that the engineers said couldn’t happen. This one is a failure of Government (the PRC totally blew it due to the desire to make everything look alright in the short term, and then tried to deflect), and a lack of public knowledge of the limits of modern medicine.
kent: Back then [late 1940s] most Americans were rural.
By the 1920 census, “most Americans” were either urban or suburban. Rural Americans might have been a plurality in 1920, but they were not a majority.
1910 was the last census in which a majority of Americans were rural.
Son Of Landlord the closest comparison we have to this pandemic is the 1918 Spanish Flu. Back then most people weren’t dependent as we are on local restaurants and grocery stores for their food.
Everyone who dies of a viral disease has an individual profile of immunity or non-immunity to that strain. Sort of a pick your poison. (You take strychnine, I’ll take the arsenic.) Here is a blast from the past courtesy of Wikipedia:
“Russian Flu (1977–1978)
In 1977, a strain of H1N1 appeared. It was a “benign” pandemic, primarily affecting people born after 1950, because the older generation had protective immunity resulting from prior experience with H1N1 strains. The 1977 virus was similar to other A/H1N1 viruses that had circulated prior to 1957. The virus was included in the 1978–79 vaccine.”
I lay on the carpet for two days getting up to throw up and drink water (sometimes crawling to the bathroom). I ached all over, and had a fever. That was the only flu I ever contracted (at least that I am aware of).
As I mentioned recently, my Mother was caught in the “Spanish Flu” of 1918. We may find 10 years from now that some other Corona Virus strain will make this look like nothing much just as the 1918 flu makes the pretty bad Russian flu look mild. Fact is we don’t know now exactly how bad it really is or isn’t. Italian data is probably the most trustworthy, so I would go with that.
New York state will have thousands of deaths from Coronavirus within three weeks. This will lead to martial law when people are upset that they don’t have a job, their loved ones or friends have died and the police, firefighters and medical services are in short supply. We are about to witness horrible things that we’ve only been hearing about happening in Northern Italy the last month. It’s starting to happen here and will follow the same numbers as you’ve seen overseas.
The idiots who said this is just like flu are the ones who will probably be asymptomatic and spreading this virus to the elderly and young with underlying conditions. the reason we’ll have martial law. Everyone will have to be punished because of their stupidity. You won’t be able to go on walks unless it’s around the block of your own neighborhood, you will be on 11PM-5AM curfew, you will only be able to shop at the nearest grocery store/pharmacy and police will not respond unless it’s a 911 call and it’ll be slower than usual.
The medical death panels will be deciding who lives and dies based on social importance, age and health factors. Stock Markets will go down at least 70% or more in the next six months. People will do crazy stuff when a grocery store closes due to a virus outbreak in the store or their monthly Gov’t basic income paycheck doesn’t get delivered because of computer error or worse: foreign hackers shut it down.
Also, we are looking at worse than usual natural disaster seasons. Most low level offenders are going to be released from jails and fed prisons. The virus has already shown up in the jail/prison system. These low level offenders will be doing burglary, home invasion and car break ins. Many people will be forced to defend themselves against these people with no response from 911 because the police are overwhelmed with other emergencies.
Kent, a question for you. If you truly believe the doomsday scenario will play out, are you going to profit from it? Not only shorting the market, but buying ultra short leveraged plays. One can profit in any market, you just have to stomach the roller coaster ride.
I see nothing ethical about this. You need to look out after yourself and family number one and do what it takes.
Lord B I already have profited from it before it even started. I did that through being prepared. While everyone was rushing the stores to buy supplies I already had supplies, I didn’t buy gold as conservative/libertarians suggested the last 10 years, I did keep my cash on hand and watch it go up in value, I didn’t buy a home, get married to some gold digger, have kids and I did pay off most of my debts.
The jump of 2000 points on the DOW today was nothing more than short sellers. You know they just pump it up so they can dump it in the near future. Even if Trump was able to open up the economy today it wouldn’t change this recession and high unemployment problem anytime soon. He’s giving false hope to razzle and dazzle the public while the sharks are watching and waiting to strike. I profited off this by being made aware a long time ago about conmen and this phony economy created by the Baby Boomers over the last 30 years.
Remember it was just six months ago we were talking about war with China? After the pandemic the media lets us know that China controls 80% of our penicillin and most of other medications vital to the survival of our nation. Obviously this is saber rattling has been nothing more than billionaires on both sides lining their pockets with Gov’t. The same billionaires who probably own most of the media. They tell you how it’s so bad for them to pay taxes and complain about anyone getting food stamps or other help from the Gov’t. They’re the biggest welfare recipients of all and they got rich off it. It’s more like they’re the ones getting the lobster while on welfare, not the poor in this country.
With hotel occupancy rates now at 15%, how long can AirBnB landlords, and those who rely on renting out spaces to pay their mortgage, hold onto their houses that are cash flow negative before dumping them into the market?
State unemployment websites are crashing. Layoffs have started.
Well not in Sacramento! According to local agents aka realtards, homes are receiving multiple offers 10k over asking prices due to low interest rates and low inventory! So this corona joke won’t do much.
The all bubble of all time is pricked by this virus.
Anyone putting out justifications that the prices won’t cater are living in the lala land and are themselves deeply invested in real estate,
Only time would tell but looks like Jim’s prediction is finally coming to be true!
The argument that AirBnB landlords will go belly up. I don’t think so. If vacation travel grinds to a halt, they’ll shift to longer term renters, i.e.- traveling nurses, and others who need a furnished unit for 3 mos. or so. If by that time the pandemonium hasn’t subsided, they can always shift into a furnished yearly rental. One just needs enough backup bucks to take them thru a vacancy transition. But the vacancy will not last long term. The supply and demand fundamentals are still there. You just won’t make as big an income until the vacation rental demand returns. A building can be adapted to many uses, but the land and structure itself has basic value.
With the large amount of layoffs that are happening (crashing some state unemployment insurance websites) who are these renters going to be and at what price? If you have rents coming down across the board because of decreased demand (layoffs) and increased supply (AirBnB), wouldn’t that then place additional pressure on people who are currently renting leveraged houses to long term renters?
Rents aren’t sticky and will drop within a matter of months as desperate landlords try to attract new tenants to bring in any kind of income on a depreciating asset that has a not insignificant monthly cost to maintain. A monthly mortgage on a new purchase was already much higher than rental parity in most areas of southern California. The spike in unemployment and new rentals becoming available because AirBnB is no longer economically viable will exacerbate the issue. Most people can’t afford to have their houses sitting empty, or generating large negative cash flows, for the 1 to 2 years it’s going to take to sort out this mess.
I wouldn’t be very confident that AirBnB people are going to be able to easily make up their cash flow simply by switching their properties to long term tenants.
Just by reading that comment I can clearly see you have made up your mind about Real Estate and are probably waiting for the ‘collapse’. You might get disappointed.. again.
Where’s Mr. landlord? He always disappears when the economy crashes.
Probably busy stressing out because his tenants wont be able to afford rent lol.
Landlord’s very predictable. Stock market goes down he is gone – “vacationâ€. As soon as we recover and hit an all time high he returns and tells us we should have bought the bottom. Good weather poster.
Btw, are you guys averaging into the stock market or too early? I admit I bought a little bit and plan on avg down. Zoom, Microsoft, Starbucks, apple, illumina, Thermo Fisher, Walmart etc. I want to add amazon, google, Tesla as we keep going down.
It’s impossible to say how long this will take so i plan to only buy a little bit each time.
I did max out my 401 to take full advantage of those discounts.
Cheers millennial
What was the saying? He who panic first, panic best? What happened when there is only one EXIT door?
Inventory still low ✔ï¸
Cost of building materials still high ✔ï¸
Construction labor wages growing by the day ✔ï¸
I understand a very few amount of people will lose their homes from this pandemic but that would hardly tick the market down. Most people that are jobless right now are in the service sector making close to minimum wage who more than likely rent. The market is hungry for inventory and they’re sure as hell not building enough. Basic economics.
I agree.
Real Estate is special, detached from broader economy. It can never go down!
I like the sarcasm but that’s not what I meant. Explain to me how real estate will go down in this particular situation under these particular circumstances. Inventory is low and a few more million homes on the market is not gonna tick the market lower than 15%. Some will lose their homes although the government is stepping in to offset these losses by deferring mortgage payments so don’t bet on too many. There’s not a huge supply of new houses that were built via speculation like the last housing boom of the early 2000s either. But most people that wanted to list will simply hold off. No one’s going to force them to list. Not everyone is going to be unemployed and most who will be are renting anyways. Suppose there’s X amount of money ready spend on housing but only Y amount of houses for sale. If X ticks down 10% and Y ticks up 5% percent then you get a 15% drop at best. And nobody HAS TO SELL. This isn’t 2008 where you’ll get a massive wave of homes hitting the market at one time while massive unemployment hits. People have 2008 etched into their minds as if that’s going to happen any day now but it won’t because the CURRENT economic climate is a world apart from the previous one.
New Age: There are more than a few people who think that this debacle will dwarf the “great recession” by orders of magnitude. While service-sector folks lost their jobs immediately due to recent events (restaurant workers, for instance), people who work in higher-wage capacities even remotely related to the service sector may not be far behind depending on how long this lasts. I appreciate your optimism. but I think you’re being way too eagerly optimistic. As always, time will tell, but I think there is every bit the possibility that recent events might cause an economic disaster worse than 2008. Just because it didn’t happen immediately doesn’t mean it isn’t coming.
We are potentially looking at a 20% unemployment rate in this country(Per Treasury Secretary Mnuchin). People are going to be sellers when they can no longer make their mortgage payment. The government will try to help but will only slow down the problem. Wall Street already doesn’t want to buy the toxic MBS garbage the banks have been creating so the Fed had to come to the rescue the last two weeks.
Unprofitable speculative companies which rely on VC funding are finished if this lasts for months. I expect San Francisco to get absolutely jack hammered.
You’ll get you 40% discount when rates shoot up to 10%+. If the market dips below 20% at current rates and you plan to finance, take it and run. Don’t get me wrong, I hope you’re right! I’d love a 2008 style collapse in the RE market but I fear that hyperinflation is around the corner.
This time is different!
I haven’t posted here for a while, maybe for over a year. But something happened in my family in the last few days that made me want to look up this site.
Before I tell you what happened, I read the comments and, as usual, found Flyover to have the most prescient (Prescient definition, having prescience, or knowledge of things or events before they exist or happen; having foresight):
“The virus is real but it serves as cover for a very sinister plan. What you mentioned is just the tip of the iceberg.
“All these engineered crisis are made for stealing more wealth and freedom from people. With 9/11 it was the Patriot Act. This one is to eliminate cash, bring one currency, with one central bank and a de facto global governance with the purpose the enslave the whole humanity.”
Of course, then we have our usual ostrich, this one being EscapeFromLA:
“Please don’t post your nut-job conspiracy theories here. Keep them on the Reddit Bitcoin forums. This forum is for RE discussions. Thank you.”
Flyover, don’t apologize for your comments. Along those lines, may I add that this is an excuse for mandatory vaccines designed to de-populate. Much more to be said about that, but that’s for another blog.
OK, so what happened? My longtime sweetie (29+ years) has 3 daughters and one son. The middle daughter is a vaccine researcher (loves vaccines; we do not agree whatsoever) and is married to a Google engineer who makes big money and has a multi-million $$ trust fund. They live in Danville, CA. They’re in a big house, but have just had their second child and need more space (oh, the rich!). So for the last few months, they’ve been bidding on houses in the $1.8-$1.95 million dollar range. Their last bid was for $25K over asking, which of course they didn’t get. In fact, they were the lowest of 5 bidders. The old (and I believe still continuing) rule of thumb is to add $10K over asking x the # of bidders. So if you have 5 bidders total, you offer $50K over asking. This is for my range, which is under $1 million, so they may have to use a greater # than the $10K number). So this weekend, they were about to put an offer on a house listed at $1.95 million. The house already had 5 offers on it by Sunday, and the sellers were waiting for her sixth offer. Her and her husband were getting desperate. On my end, with the pandemic response already obvious (i.e., global shutdown of the entire economy, which is a catastrophe I never imagined), I’m wondering how this house got 5 offers. But Monday rolls around, and they’re wondering what to offer to get that house. Their realtor calls up, and announces that ALL 5 OFFERS HAVE SUDDENLY BEEN WITHDRAWN. Which to me was remarkable, since I figured there had to be at least one or two idiots that didn’t see the writing on the wall. But all 5 must have gotten some seriously good advice. So this daughter and her husband are still wondering how much to offer. What I’m seeing is that this is not the only multi-million dollar mansion that is going to go without offers, and that they should lean back and wait for this situation to play out, as they’re obviously now in the catbird seat. The economy is in an undisputed freefall because the entire world is being shut down from making a living for an indefinite period of time. Of course, their dad (my companion) thinks I’m full of you-know-what, and never thinks of giving them my opinion. Which, by the way, is dead-on. So this morning, he gets a call, and they have decided not to make an offer. So they still have some brain cells left.
Anyway, this is a real life occurrence, with no speculation, in one of the wealthiest communities in the United States. To the real estate cheerleaders, we have a long way to go to the bottom. If you still think you can make money in real estate right now, you need to have your head examined. The lucky are losing only a few hours of work a week, and the rest are losing their entire livelihoods. Companies are going out of business as I type this. Homelessness is about to explode. Your best bet right now is to find a place where you can be safe, grow your own food, and otherwise become self-sufficient. Not a time to buy a multi-million dollar mansion, or even to pay last month’s price on a regularly priced middle class home. Just my opinion.
On the flip side, many homes that are have been for sale will get taken off the market until the dust settles. If there was ever a time to hunker down, this is it. Low inventory should be the norm for the near future.
Related to Housing, I agree with the Lord.
Who would buy or sell a house under a quarantine situation?
You can’t specifically blame Republicans or Democrats for a lethal virus. However, if you want to believe Trump that this is all a Democrat hoax, have at it! It’s been good knowing you and all of your elderly loved ones. Darwinism lives strong in the Republican genes.
It is not a true market until everyone is free again to look, inspect and buy a home.
I live in the high desert region and when housing crashes hit we get hit first and usually recover last. I don’t know what this will lead to, but we have an acceleration of housing coming on the market at this moment. We have several reducing by over 10 thousand also. So maybe it will pull out, but this how the last crash began. Ok but even if it does crash I doubt it will be as bad as last time. The only way I see a change is serious easing but so many people just got laid off, it’s going to be touch and go.
I think this time Jim Taylor has nailed it
Looks like ramen noodles for all those realtors and their “NOW IS THE BEST TIME TO BUY”!
You forgot to add that after this, the Democrats will likely win by a landslide due to all of the homelessness and hopelessness that the Republicans created.
I never vote Republican because they always crash the economy. Hoover, Bush and now Trump.
I don’t know why people keep voting for Republicans that cause all that you and Flyover describe above.
Let’s just bring back an honest President like Obama who grew the economy in an honest way and refused to shamelessly blame everyone else for their failures.
See it All Before Bob: You’re joking right? First of all, republicans and democrats all play for the same team- the ultra wealthy. Don’t fool yourself into thinking anything else.
Second, Obama grew the economy naturally? I’m honestly incredulous that anyone could possibly think this. He gave banks and other corporate giants the largest bailouts in the history of the country (to my knowledge), and what did they do with this money (and other cheap money offered to them)? They used it to buy back stock to artificially inflate their share price to benefit investors, laid off substantial portions of their workforce, and didn’t save a dime for a rainy day. Now many of those same companies are begging for more bailouts because of their poor choices since 2009. For better or for worse, those companies should by and large be allowed to fail. That way, better leadership can rebuild on their ruins and maybe run halfway legitimate companies. In the interim, the government can bail out the people directly, not large corporations which will squander whatever is given to them.
Trump never said the virus was a hoax. Trump said the media’s hysteria-inducing coverage of the government response is the hoax, not the virus itself. Democrat governors like Gavin Newsom will be held responsible for shutting down the economies of their states which will destroy small businesses throwing millions out of work and into poverty. The poster known as “Seen it all before, Bob” is delusional and appears to be suffering from terminal Trump Derangement Syndrome which is much lethal than the Wuhan Chinese virus.
As a libertarian this is the biggest bag of BS I’ve ever read. Your comment is so blatantly laughable I’m struggling to even write a coherent response to your blathering nonsense.
– Bush was a Rhino. I dislike him as well. However, if you watch how he campaigned back in 1999 it was as a small gov boy and no nation building. Why America votes for political families displays a grand idiocracy.
– Obama is honest? You lost all credibility through your frosted blue lenses. Did you forget he was from Chicago? Come on man, rub some brain cells together. He lied as much or more so than slick Willy, who didn’t have sexual relations with that woman. We didn’t build that business ourselves? He’s worried about the middle class? Pfft, then why did he crush the dollar and inflate the asset class? He is such a condescending asshole who has never even worked in the real world. He couldn’t even repeal the Patriot Act. He can fundamentally kiss my white ass.
– Trump has done some good, a lot of bloviating, some bad. The bar is soooo god damn low for a president these days that when they do ANYTHING good I’m grateful. I don’t like this guy at all, but at least he moved the needle a millimeter, which is more than the above two could ever dream of.
Wake me when anyone in power actually cuts costs from the baseline. Then we can talk. Until then they are all driving the country into the ground. But by all means as Americans lets keep electing the same government growing a-holes. How about we try the opposite and see what happens?
Incognito calling Bush a “RINO” is projection on your part. It’s libertarians who joined the Republican party and started claiming they’re the true conservatives. That’s a lie because libertarians aren’t truly conservative. Most libertarians are simply anarchist hipsters. They don’t want to pay taxes, they don’t want to be apart of society, they do just want to play with their guns a lot and hate on others. Regan was a libertarian who infiltrated the republican party. Trump is a libertarian who infiltrated the republican party. It’s libertarians such as yourself who are “RINOs” All your libertarian talk show heros such as Rush Limbaugh, Mark Levin, Bill Cunningham and others are all “RINOs” I’ve listened to them and they’re the biggest bunch of phony patriots in this nation. None of them ever served in the military, most of the are washed up lawyers, none of them want to pay taxes, they complain about people getting food stamps while they’re millionaires, they judge disabled people based on outward appearances and they do a lot of other immoral and unpatriotic things. They’re all for the military and police, until someone in the military or law enforcement says something they deem “liberal.” Libertarians are the ones who came up with the stupid phrase “RINO” because their party can’t make it government because most people aren’t that unpatriotic, immoral and psychopathic.
I remember in 2014 the day before the congressional election Mark Levin was saying we have to vote Republican to get Harry Reid out of the Senate Majority leader position. The next day after the Republicans win Mark Levin goes on a rant how the Republicans are worse than the Democrats. Libertarians are nuts and the real “RINOs”.
Hold on… this political discussion is getting out of control. Particularly about Libertarianism. Here is Wikipedia’s list of prominent American Libertarians:
https://en.wikipedia.org/wiki/List_of_libertarians_in_the_United_States
I don’t see Limbaugh or Levin but I do see Rand Paul, Harry Browne, Penn & Teller and Marilyn Chambers.
Kent – you are cut from the same cloth as Bob. You go on the extreme witch hunt and turn blind to everything because your personal bias is overwhelming. Then you mock it because you’re too damn dense to understand.
Yes there are some strange libertarians that are “out there”, but I could say that of any faction…the religious zealots on the right, or the ironic Antifa fascists. The true libertarians just want liberty. It’s in the bloody name for christ sake Kent. We want people to be free to live their life and be happy. Get gov the F out of the way. Why does this sound so bad to you? We understand a certain amount of taxes are required for certain services, but the Federal level is totally out of control. The constitution serves a purpose by which most of our US citizens including you forget. I’ll give you just a few examples of Gov doing stuff NOT in the constitution – The Federal Reserve. Why does Freddy and Frannie Exist? Social Security. I could go on and on and on. As for what Gov should be doing — protecting property rights, national defense, and enforcing contracts. Gov has a role to play and I’ll point back at the constitution for that role. Libertarians are not anarchists. Flyover is a Libertarian. Do you think he / she is an uneducated gun toting, Rush listening, washed up lawyer, RHINO? For the record I LOATHE attorneys. They ruin everything. It’s why we have stupid warning labels and a cottage industry of divorce where only attorneys are the winners. I’d love for small mom and pop shop owners or engineers to run for office. We need less bloodsucking attorneys, community organizers, or other douchebags in office.
If you shrink the size and scope of the Federal government, people could keep a lot more of their hard earned money. Taxes should run through the local levels so people have more control and thus they can also vote with their feet. They are quite limited by that now b/c they cannot escape the albatross that is the fed Gov. Allowing people to keep their money, save, and work towards buying a house if they so choose would be a rewarding experience. Right now they are beat down by the devaluing of the dollar, which makes poor people more poor and the rich richer. You can thank all presidents back to Nixon for screwing it all up.
I don’t even own any guns, so there goes your talking point again. I also live in Commiefornia. I think Levin and Rush are frauds and have never listened to them. I don’t know anything about Cunningham. Again, a true libertarian just wants to be free with limited Gov. We’ve gone the opposite of this for as long as I’ve been alive and look where we are trending. Are you happy? Do you like the progression of the USA? I sure as hell don’t. We’ve taken something great and ruined it little by little. The root cause of this is the Fed Reserve b/c it allows this growth to become an unruled blob that just consumes. It is and will destroy us. I just hope the shit hits the fan after I’m dead in another 40 or so years.
And finally, I am a small business owner and employ 9 people. I take it up the ass up, down, left, right, and sideways by Gov. Try running your own small business in California and let me know how you feel after 5 years instead of bitching about Libertarians from your ivory tower of misinformation. If we actually followed some libertarian values we might actually make real progress in this country and bring back some semblance of personal responsibility. Not to mention happier, productive citizens.
Incognito it doesn’t sound good to me because it doesn’t result in Liberty, it results in us loosing our freedom. The founding fathers said the constitution was written for a moral and religious people. All the libertarians I see are immoral and most likely agnostic. These hipsters hate at least 95% of the government, which is immoral and irreligious.
It’s these libertarian types right now I see all over the media and internet saying that the coronavirus is just like flu while proceeding to tell us to stop over hyping coronvirus. Flu kills .01% and coronavirus at least 3.4%, making coronavirus at least 340 times more deadly than flu. They are projecting because it is them who are over hyping flu and they all do if for nefarious purposes.
Which brings me to point out why they are phony patriots. They are purposely endangering their own country with their behavior. Asymptomatic carriers of the coronavirus can easily spread the virus to others, getting them killed. You can claim to love your country, but if you’re killing your fellow citizens by being purposely negligent, you’re not a lover of your country or fellow humans in the least.
Kent – It doesn’t result in more liberty??? I’m almost at a loss for words, almost.
You do realize as a country we just flip flop between Dem and Repub presidents under the precedence that maybe the next guy in the other party won’t F it up as much as the last guy. We as a voting republic are seriously becoming dumb and that is scary to me.
To your point, it’s just wrong. 1) We’ve never had a true modern libertarian president. I’m only old enough to remember the first Bush disaster when he told us all to read his lips. But every president we’ve had, both left and right, have taken our rights away slowly. It’s a death by 1000 cuts. 2) The Patriot Act. It was supposed to be temporary. Both left and right haven’t gotten rid of it. 3) The federal reserve keeps us on hamster wheel while rich bankers meet in ivory halls acting like they have our best interest at heart. Right…4) The amount of regulations on Fed level and especially on California level are insane. If you have certain trees on your property you can’t even cut them down 5) Imminent domain the gov can and has taken people’s proper away just because they can. I don’t call that liberty. 6) We throw people in jail for doing drugs vs treating the illness. 7) We are forced to buy health insurance and the gov is now between us (the patient) and the doctor. 8) In California I have to put a fire detector in every room and hallway. I live in a 1400sqft condo. I have 3 detectors per building code that are literally 4 ft away from each other. 9) The next thing that is coming is forcing us to not be able to drive. All cars will have to be driverless because one death on a freeway is too many. One of the most American things is to get in a car and just drive and that will be stripped away from us.
So tell me again how are liberties are doing great under the D’s and R’s? I’m only suggesting we try something new for a change, because what we’ve done for my 40 years on the planet has a clear and obvious trend line. We’re more poor today that we’ve ever been each year and we have less freedoms. History always repeats itself and someday America is going to turn socialist which just blows my mind. Then that will blow up likely after I’m dead and there will be another revolution. To see where you are going, you must study the past. Big gov is an evil. Always has been and always will be.
Incognito, I have no respect for the Paul family because look how dumb they are –
RAND PAUL TESTS POSITIVE FOR CORONAVIRUS DAYS AFTER HIS FATHER DISMISSED PANIC OVER THE DISEASE AS A HOAX
https://www.newsweek.com/rand-pauls-father-wrote-coronavirus-hoax-article-days-before-son-tested-positive-covid-19-1493662
Not to mention Rand Paul was mouthing off to his neighbor and got beat up. This is probably the attention a lot of libertarians/conservative chicken hawks need. https://www.nbcnews.com/politics/politics-news/prosecutors-reveal-why-rand-paul-was-attacked-neighbor-n839366
I really don’t need to say anymore. The voters do.
Republicans crash the economy.
Hoover was thrown out by the voters for FDR for 16 years.
Bush was thrown out by voters for Obama for 8 years
Trump will be thrown out by voters for Biden for 8 years.
We have seen it all before. History repeats itself.
Bob: Bush was thrown out by voters for Obama for 8 years
No, Bush was term-limited out.
But Carter was thrown out, largely because of his economic “malaise.” (Malaise became a popular buzz word at the time, to describe his failed economy.)
Republicans Eisenhower, Nixon, Reagan, and Bush 2 were all enthusiastically re-elected.
KABC-AM is just now reporting a second Corona death in Los Angeles County. Two deaths so far in a county of over 10 million people.
And for this we shut down the economy and possibly spark, not a recession, but a depression?
It’s not so much about the deaths, it’s about the potential to clog our health system. If we take Italy for example, our ERs could easily be overwhelmed.
Like most things from hurricanes to earthquakes, we really aren’t as prepared as we should be. Each time something like this or those, we get slightly better at it, but in time it fades.
You’re not wrong in thinking the panic is overblown it certainly is. But concern for the potential harm in a calm rational way is needed.
Italy has a large population of old people and the vast majority of people that died had already health issues. Have you met Italiens or been there? They don’t hand shake, they kiss. They meet, say ciao and kiss 3 times, small talk, say ciao again and kiss another three times. Most people don’t work there. They walk through the town, small talk and kiss. Also, Not much works in Italy. When I was in Rome it was a 50:50 chance if the ATM worked. Back then, not all places accepted credit cards. I am not surprised that the virus is hitting hard in Italy. Don’t get me wrong. I love Italy. One of my favorite girlfriends was from Italy and I have great vacation memories. Ciao, millennial
Overpriced hipster neighborhoods like Silver Lake will take a bit longer to fall than depressing suburban areas like West Hills. The collapse is coming for multiple reasons. Reason 1 is lack of replacement population. As the ancient people who inhabit Tarzana and Encino die off there will be no one to replace them. Investors may attempt to buy their large lots and subdivide them into useless properties with horribly designed Alternative Dwelling Units but the bottom will continue to fall as these neighborhoods become overrun with subprime tenants living in garages. Secondly we are looking at an unemployment rate that will jump to near 40 percent. Chinese investors have been taken off line perhaps permanently. We are looking at minimum a 16 year turn around before housing prices can jump to normal levels with inflation. We are looking at depressed values, think houses in Van Nuys and Reseda going for 190,000 and houses in Silver Lake going for 450,000. Beverly Hills, Malibu, and Bel Air may maintain some extraordinary value. You’ve been warned.
There will be plenty of “replacement” folks due to the fact that California and LA are open border sanctuary cities controlled by Democrats. Additionally there has been very little new housing being built due to outrageously high building fees, high building costs, and restrictive zoning. Don’t expect housing costs in the LA area to crash to 2008 levels or below due to this Chinese corona virus.
Sometimes, homes do well in a recession. Sometimes they do not. Last recession, they did terrible. Don’t count on the same pattern.
There is a great deal of denial of the present situation .We are presently in a recession if not the beginning of a deflationary depression “.Mike Shedlock has been tracking government data on employment. You can read his entire take at the link, but extrapolating the loss of jobs would mean an unemployment rate of close to 12% and a U-6 rate of 39%. Even if he is wrong by half, which I don’t think he is, that unemployment number ALREADY is staggering. We are literally down well over 10 million jobs and going to 20 million.”https://moneymaven.io/mishtalk/economics/9-of-the-us-has-been-laid-off-due-to-the-coronavirus-CPaSG8EFsUKYf3bCoxe-IA
This will cause a major disruption in the housing market prices will go down and will go down hard ,I have been through 1/2 dozen recessions and a cannot remember on e that has not caused a down turn in housing . it is happening and will get worse .
World wide debt is at the highhest level at any time in history the stock market did not stumble but crashed along with all other assets gold , bitcoinetc. housing is next.
The problem again is far too much manipulation in the markets with crony capitalism disorting free markets stock buy backs have created a super speculative stock market that was doomed to failure when the 1st major down turn occurs no cash on hand to deal with the problem low interest rates the same this will end badly.
Quite blaming the boomers blame the greedy CEO s and top execs paying themselves huge compensation 200x the average employee wages and and huge stock options than kiting the stock with buybacks with no thought of having cash on hand for emergencies or problems what a total disaster.
This will be 5-6 yr reset and housing will see a reset as well!!The definition of insanity to paraphrase doing the same thing over and over and expecting a different result the same replay of the beginning of 2000 and the fed, the government ,private industry and ourselves individuals doing the same thing as we did in 2007 on and 3 of the worst presidents in history to make it worse!!
Home values did not drop in the 2000 recession. There are others. You should use google because you are wrong in you claim.
I agree
This is the launch of the greatest depression.
Overpriced hipster neighborhoods like Silver Lake will take a bit longer to fall than depressing suburban areas like West Hills. The collapse is coming for multiple reasons. Reason 1 is lack of replacement population. As the ancient people who inhabit Tarzana and Encino die off there will be no one to replace them. Investors may attempt to buy their large lots and subdivide them into useless properties with horribly designed Alternative Dwelling Units but the bottom will continue to fall as these neighborhoods become overrun with subprime tenants living in garages. Secondly we are looking at an unemployment rate that will jump to near 40 percent. Chinese investors have been taken off line perhaps permanently. We are looking at minimum a 16 year turn around before housing prices can jump to normal levels with inflation. We are looking at depressed values, think houses in Van Nuys and Reseda going for 190,000 and houses in Silver Lake going for 450,000. Beverly Hills, Malibu, and Bel Air may maintain some extraordinary value. You’ve been warned.
When will the Sacramento housing market tank and inventory to rise? I am not seeing the corona virus affect housing sales in the Sacramento market at all. Realtards are selling homes and pocketing fat $$$ and offers on properties due to low inventory and low interest rates.
In order to protect renters, homeowners and commercial tenants during the corona virus pandemic, Democrat Gov. Gavin Newsom issued an executive order this week that authorizes local governments to halt evictions and slow foreclosures in the midst of the corona virus outbreak. It will be in effect until May 31 unless conditions change. The decision by Newsom follows Los Angeles, San Diego, San Francisco counties, and other jurisdictions enacting strict measures to prevent the continued spread of the virus.
Not a good time to be a landlord in California?
SO now we know where Mr. Landlord went. He is selling hot dogs outside to make up for the loss income. At least he has good company with SoCalJim
Do you really think homeowners won’t get any breaks or protections? I’ve heard of 3 and 6 month mortgage holiday proposals. All this talk of no evictions if you are a renter is just keeping the peasants calm. The last thing the PTB want is rioting in the streets. As long as there is food to be had, power and water are on, gasoline cheap and plentiful and .gov checks in the mailbox…everything will be fine.
Unemployment is already at 10% unofficially, give this stay-at-home another few weeks, it might be 20%. any longer 30% unemployed and Mad Max becomes real.
My friend and both his room mates in LA, (all in the food business) all lost their jobs last week.
Say adios to cafe workers, Uber drivers, event planners, hotels/motels, barbers, baristas, cooks, waiters.
And suddenly Republicans are begging for Socialist policy (bailing them out).
Tell your boy friend and his room mates in LA who lost their jobs last week to blame Democrat Gov. Gavin Newsom for shutting down the state’s economy when there are less than 2,000 cases of corona virus out of a population of 40 million. After he shut down California’s economy, he went begging for billion dollar federal bailout. It’s ridiculous.
https://sanfrancisco.cbslocal.com/2020/03/19/coronavirus-california-newsom-1-billion-federal-funding/
Hi Tony
There are plenty of other countries with less population and less deaths than California. Why did they shut down?
Besides if Trump had a real nationwide policy, the states could align with each other on what do to. Instead trump’s attitude is ‘you’re on your F-n own’.
QE Abyss,
Have you ever heard of state rights? Those are political powers held for the state governments rather than the federal government according to the United States Constitution, reflecting especially the enumerated powers of Congress and the Tenth Amendment. The enumerated powers that are listed in the Constitution include exclusive federal powers, as well as concurrent powers that are shared with the states, and all of those powers are contrasted with the reserved powers—also called states’ rights—that only the states possess.
There is nothing in the Constitution that allows the President to shut down the entire economy of the U.S. due to a public health issue that might occur in a state, city or local jurisdiction. It is the responsibility of elected officials in each state, city and local government to address such issues.
It’s interesting to note that the most of the states and cities where government officials have completely shut down their economies are controlled by open border Democrats who have deemed their jurisdictions to be sanctuary havens for undocumented illegal aliens in violation of Federal immigration laws? It’s ironic that some of these elected officials claim that they have the ability enact sanctuary policies for their jurisdictions based on state rights?
@ Tony
your points noted. More states now are enacting stay at home or essential business only. Of course this needs to happen in the most populous cities, however, it will be interesting to see a tally of Dem vs Repub states that are doing this. More Dems tend to live in big cities, right? (SF, LA, N, Chicago).
I walked an open house in my complex last Sunday just to see it so I could measure my own property value. I live in a nice condo (3bdr + 2ba + 2 car garage) in San Diego central which is one community in a 5 community sub division. People were in and out of there just like a normal Sunday open house despite the virus. It went pending two days ago and I’m really anxious to see the selling price and if the deal actually makes it to the finish line. Who is out buying right now? The risk is much greater here in my opinion. I’m seeing tons of people getting laid off, although the employers are claiming it’s temporary and will hire back when normalcy returns. This is now tricking into my business and we haven’t even seen the pinnacle of this virus yet. The crash is always 10x faster than the recovery, so even if we get to May and some semblance of normalcy returns, the damage to the economy will take months to recover. Then what happens next winter when this virus could make a comeback. Imagine what would happen if this becomes an annual thing.
Stick a fork in it, it’s done! The Orange County Register in California. “The California Association of Realtors told its members Friday to stop all face-to-face sales activities including showings, listing appointments, open houses and property inspections due to coronavirus concerns. This order is another blow to the suddenly troubled housing market. The buying pace that recovered in 2019’s second half looks to be short-lived. Massive layoffs are projected for many industries following numerous virus-related limitations. The bleak employment picture likely will cut the number of qualified house hunters and scare off potential buyers.â€
This order is another blow …
Is it an “order”?
I thought the CAR is an industry trade group, i.e., a lobby. I wasn’t aware that they could “order” their member realtors to do anything, but merely issue guidelines and suggestions.
Mortgage Interest rates for Homes are actually going to rise my friends. Interest rates Swaps Risk Premiums are going up and the Banks Refinancing costs are going up and therefore mortgage rates will go up. This on top of the unemployment and recession and job losses will definitely have a negative impact on the overpriced housing markets around the country.
I am in SoCal and own small properties.
I don’t think the real estate in soCal would ever go down.
People need place to live and there is shortage of homes.
The mortgage rates are historically low and people are dying to come to so cal to live here.
This time is indeed different since I own properties now.
Mortgage rates are falling. The Fed is buying securities again.
Last June we sold our house in SF Bay Area. The house was in a very nice neighborhood, excellent schools low crime etc and was in very good shape. Our neighbors were looking forward to a bidding war. We were less optimistic. Investors were finally beginning to call the bluff of profitless unicorns. Market reaction to Uber, Lyft IPOs were underwhelming. But even we were shocked when we received just ONE bid. From what I suspect an overseas Chinese investor who promptly placed the house on rent. Of course the bid was 20% above ask but only because the house was priced below going rate by the same amount (to encourage bidding war according to my agent) In other words the house went for exactly what I predicted it would. House prices went up a little in Nov/Dec because Fed of repo bonanza. IMHO 2017 was the peak and housing has been treading water ever since. I think China put a lid on capital flight in 2017. So that could be the reason. My prediction is the housing will not tank but slowly deflate.
Wheres all the douchebags that been talking shit all these years to Millennial?!?!?!
Why? Nobody predicted this virus or the resulting business closures, so nobody can take credit for its economic impact.
What do you mean? Nobody predicted a virus pandemic and its resulting impact on the RE market, so nobody can take credit for it.
Haven’t seen 75% off sales yet either. Why should anyone here be kissing up to Millenial?
NOBODY with a good job (middle class) picks up and moves to CA, ONLY Illegals, Low Income and Low Education people move there. How are they going to support the cost of living, housing, economy ???? Let us know how that works out for yah CA, good luck.
Only illegals, low lifes moving here?
Are they the ones buying million dollar homes in mediocre parts of LA? no.
My friend, a broker in West LA for 20 yrs, said the people that are buying homes here in LA (before covid) were across a wide spectrum
– highly educated foreigners (engineers, scientists)
– wealthy people who lived their whole life in flyover country and want to retire in LA
– multi gen families
– some move-up buyers
I’m baffled as to how a ‘postponement’ of 1 month is actually a help for an owner fearing foreclosure. Detroit ignored owners petitioning to pay up past due as to foreclose on homes.
Is this ‘epidemic’ created purposefully to force homes into foreclosure? ‘Reverse mortgages’ weren’t getting there so more crisis was needed?
Federal government should DEVALUE HOMES TO 1970 LEVELS to allow the middle class to exist as an entity. Everything else is tinkering.
I remember my Dad being a proponent of no greater income disparity than 10 to 1.
When housing prices and rents go up 10% per year for 10 years,
and wages only go up 2-3% per year for 10 years, the economy will self-destruct.
It took one virus this time and deregulation of banks last time but something will always cause it.
I don’t know why people think this is any different than last time?
History repeats itself.
Just took out $25k cash via a refinance before Coronavirus hit. Opening up a $100k HELOC now. One huge benefit of a house… I’ll make a killing as my home price drops by investing the cash at the bottom of the stock market. This of all things… will be easy to find a bottom with. Once a vaccine comes out … the bottom is already in!
“Republicans crash the economy.”
@Seen it all before Bob
So, the virus coming to US, is the republican’s fault? Trump trying to stop all flights from China and all liberal MSM and Democrats screaming “racyeeeest” was Trump’s fault!!!!…. Now I get it – you suffer from TDS.
If White House orders lockdown and crashes the economy, it is the republican’s fault; if they don’t and the casualties increase exponentially, it is still republican’s fault.
Can you enlighten us exactly how would the democrats would have handle this????!!!….
In a pandemic like this, you must react quickly. Trump did not.
There will be 30,000 dead by the end of next week before Trump recommends a nationwide quarantine. All dead because of Republican inaction.
Math says this is a certainty at this point. Unless a miracle cure is found.
If Trump would have acted like the South Korean government, it would have been under control about now.
It will be hard for Trump to get re-elected even if a miracle cure is discovered in the next month and only 100K die.
I am hoping for the miracle cure but with a death toll that is doubling every 2-3 days and an incubation to resolution time of about 24 days, we started the quarantine too late.
I hope the math is wrong, but all of the models say we are 1-2 months from burning this out at this point. That is after Trump orders a nationwide quarantine and gets the Republican states in line.
The new federal law will allow mortgage payments to be deferred for 6 months, with potential to extend for another 6 months. The government will also be loaning money to mortgage servicers to make up for the losses. The deferment should protect millions of people from losing their homes. I think prices will still take a hit, but it won’t be dramatic since the market moves so slow. By the time prices respond, the crisis will be over. I don’t remember reading about any benefits for renters other than an eviction holiday, but I believe landlords also will qualify for mortgage deferment if their tenants can’t pay.
Dream on. Hahahahaha
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