Triple digit increases in real estate inventory: Las Vegas inventory up 106 percent year-over-year.
The housing market is in a state of adjustment. Inventory is up dramatically in many places. In the last housing correction, Las Vegas was a leading indicator for California and we are now seeing some dramatic increases in inventory in the area. Las Vegas inventory is now up 106 percent year-over-year. In Seattle, inventory is up 168 percent year-over-year. For anyone looking to buy, the market has dramatically shifted. There is no urgency anymore and the tides have turned as affordability has collapsed. In California, many counties are now renting majority areas and the government is looking to cater to the majority of voters. Last time inventory rose this sharply price adjustments followed. What is in store for the housing market in 2019?
Las Vegas a canary in the real estate mine?
Markets across the U.S. are seeing a sharp rise in inventory. One key area:
“(Calculated Risk) Active inventory (single-family and condos) is up sharply from a year ago, from a total of 4,352 in January 2018 to 8,957 in January 2019. Note: Total inventory was up 106% year-over-year. This is a significant increase in inventory, although months-of-supply is still somewhat low.â€
First, the Las Vegas market has been on an incredible uptrend like many markets:
Prices have more than doubled since 2012. This market has been incredibly hot. However, the Las Vegas market is highly dependent on the overall economy doing well. The nature of Las Vegas employment is highly linked to people feeling wealthier to spend on vacations and entertainment. This is a cycle that was seen in the last housing bubble as well. Speculation has been happening for a couple of years now but to a lesser degree from the last housing bubble.
Looking at things as they stand today, why would you expect any sort of correction? The only thing we are seeing is that inventory is rising sharply but prices are still holding steady. However, having inventory rising by 106 percent year-over-year is definitely going to add more supply to the market which means buyers will have more options.
As mentioned before, a good portion of the employment in Las Vegas hinges on people spending freely:
Leisure and hospitality alone is 30 percent of the employment market. The Las Vegas market reacts quickly to changes in the overall economy faster than other areas because it is a barometer on people’s non-essential spending. Obviously someone is going to cut back on taking the family to Las Vegas first before cutting back on other essentials in the home. And since this market is heavily tied to California, it also signals what is happening in the adjoining area.
Sales volume is tapering off a bit in California while inventory is up:
It will be interesting to see if there is any significant bounce in the housing market in spring as winter is usually a seasonally slower period as the chart above highlights. The large rise in inventory in Las Vegas is very telling and signals that a slowdown is here. The only question that remains is if this rise in inventory will translate into price corrections.      Â
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265 Responses to “Triple digit increases in real estate inventory: Las Vegas inventory up 106 percent year-over-year.”
Doctor,
Thank you for posting the full inventory charts for California…. it’s ridiculous when people just site year over year without the context of how low inventory has been.
Same goes for Las Vegas, inventory went to record lows. As your Calculated Risk quote cites, months of supply are still somewhat low in Las Vegas.
The interesting thing about Las Vegas it that it was always recession proof until the housing bubble. Before 2008 Las Vegas sustained very well in all previous recessions. People still had their vices and it’s an easy trip. People may down scale to a Las Vegas vacation during a recession.
I expect similar for Las Vegas in the next recession… Las Vegas will be less impacted than other areas, the economy will take a hit but it won’t be that big of a deal.
The Las Vegas mass shooting tragedy is a good recent example… the next week it was back to business. Tourism is at record highs in Las Vegas.
The only problem with Vegas and other towns in the desert is water. I suspect water is going to be a long term concern for any cities to thrive for the next decade and beyond.
https://www.express.co.uk/news/world/1005117/Las-Vegas-latest-news-drought-warning-colorado-river-nevada-news
Vegas did better in previous recessions because it was seen as a bargain town and a way for people to be able to vacation during the bad times still because it offered tremendous value. That simply isn’t the case anymore since it’s been overrun with corporate nickel and diming (resort fees, parking fees, lower gambling odds, etc.). Vegas is going to be screwed big time (at least The Strip) when the next recession hits as they have totally pivoted to the type of consumer they cater to.
turs12,
You could be right about that. Las Vegas is still a bargain town but it is definitely not what it used to be. Nothing is.
Inventory here in Orange County is also up substantially since last year. This fact coupled with higher interest rates will definitely slow down price growth.
True, inventory is up, but it is not high. True, it will slow down price growth. I expect slow price growth, with the exception of lower priced well located properties … those should do very well with big price jumps. But, I expect the higher priced stuff to see slow price growth. Possible that higher priced stuff in inland locations that compete with new homes will actually fall a little in price. Higher priced stuff in coastal locations will likely see slow price growth. But low to moderate price homes in any location should be fairly hot. This is a good scenario for the first time buyer … possible their first purchase may gain a little ground on higher priced properties.
But, lower end properties in high priced zip codes do seem to be doing well … possible tax law changes pushed wealthy buyers down market.
Inventory is up and sales are down. At what point will you cheerleaders admit that the market has turned and is headed south?
https://www.ocregister.com/2019/01/30/southern-california-home-sales-drop-20-percent-amid-housing-market-shift/
RE was in a bubble world wide not just in SoCal and Las Vegas. With interest rate increasing and QT on autopilot, liquidity started to be mopped out. The effect of that is felt everywhere world wide:
https://sports.yahoo.com/vancouver-home-prices-fall-floor-194259360.html
https://www.seattletimes.com/business/real-estate/seattle-area-home-prices-drop-to-lowest-point-in-two-years-down-116000-since-last-spring/
https://www.businesstimes.com.sg/real-estate/home-prices-in-londons-most-desired-districts-at-6-year-low
I think these examples are enough without going to Australia where prices are in free fall.
The QE pumped too much liquidity in RE world wide. The QT will drain it. Yes, prices will hold somehow as long as unemployment stays low, but unemployment will be eventually affected by QT and RE. When and how much I can not tell because I don’t have a crystal ball. Not even the FED can answer these questions without waiting and watch.
The 30-year mortgage is about 4.4% and the peeps can’t handle it with affordability as it is. Something’s got to give.
The Fed has said they are open to a hike or rate cut depending on how the economy does. That’s a big change from the set schedule of interest rate hikes. so there’s that.
Lower housing costs in the Western States (where CA is the 800 lb gorilla) would make it less likely that the Fed would raise rates, since the inflation rates in the other 3 sectors of the country are already at or below 2%/yr.
I’m looking for a dip to high 3’s myself to refinance. I don’t mind price drops as well, I would buy a nicer home in a nicer location.
As far as limiting the amount of interest you pay it’s almost never worth it to refinance your house. If you do refinance the only real way to win is to lower the term length. Half of all interest paid on your 30 year mortgage is in the first 10 years.
My general rule was to refinance once the rates dropped at least 1%. Move to a 15 year loan if the payments were almost the same or less than the prior loan.
Moving from a 30 year loan to another 30 year loan at less interest generally meant the payments were less (That may be OK if your spouse stopped working or you took a job with less pay), but in the long run, it took longer to pay off the loan and you likely paid more in interest over the life of the total home loans.
I refinanced from 8% down to 3.25% in 3 refis. 30 year to 15 year. Refinancing saved money and made sense in this case.
When you have at least 20 shows on cable about flipping homes you know the bubble is about to burst
Maybe prices will come down because of higher supply and also because people will see prices coming down and want to sell at the top. This will cause more supply and even lower prices, hopefully. Great for buyers like us!
I think there is no reason why prices should come down just because people can’t afford it. Since when does anything in this world care about the little people affording anything?!
This is taking to long TANK!!!! already……
As long as the gov keeps inflating the dollar there’s gonna be no tank, what’s the real rate of inflation?
It depends on which inflation index you are talking about. If we measure the inflation the way we did in the 80s, it would be really high. The way the government calculates today, it is low. They try to cap the the cost of living adjustments for entitlements.
The vast majority of potential home buyers do NOT have an unlimited time horizon. I don’t think this will ever change. People will buy because life happens not because numbers on a spreadsheet line up. This is why we will continue to have booms and busts in CA from here on out.
wasting time reading about things is keeping you from improving your income and obtaining those things. What have you done today to improve yourself towards your goals?
I’ve stopped reading Millie’s posts. Does that qualify?
Jed, I understand. Instead of reading, maybe you like to listen to the inventory articles/data. Here Logan Motashami on the outlook for 2019 on recent Bloomberg interview. Sounds like he Expects YoY declines in housing prices for coastal areas.
https://assets.bwbx.io/av/users/iqjWHBFdfxIU/vXrxle2ok.U4/v4.mp3
Interest rates will not go up because the federal budget can not handle it. Central banks will continue to print money to kick the can down the road. Keep on partying like there is no tomorrow.
It is true that interest might not increase. However, that does not mean that QT will stop. If QT continues at current rates, that is a moping of about 600 Billions/year. That is a lot of money to mop from the economy. The effect will be sizable and something will snap; then they will call it a black swan.
Of course, the FED might crash the whole bubble and then start to inflate again with another round of QE. Actually, one of the FED top guys this past week said that FED might start to use QE/QT as a normal tool the way they used interest rates so far. We surely live in a bizarro world of market manipulations. With these manipulations nobody can plan anything with the exceptions of those connected at the very top (with inside information). They will get rich beyond imagination and the rest poor. However, this is not capitalism; this is typical of a communist market with the FED playing the role of the Central Committee.
A smaller government would never have been able to do this level of manipulation, definitely not before 1913.
I compare government intervention with a pilot flying a plane.
One you are in the air, someone has to guide the plane to a level flight. If you rely on capitalist random winds, the plane will likely crash. Or at a minimum soar to unstable heights never before see only to plummet 10,000 feet when an errant black swan flies into the windshield.
Someone who actually knows how to fly with an unbiased point of view should be the pilot. That may be the problem today.
Seen it all before,
If you want to use that example, based on historical data, I would compare the “pilot” with an Al Queda terrorist who will smash the whole plane into Pentagon. If you don’t like that comparison, then I would compare it with a pilot who gets a billion in the bank for every 10,000 ft drop or raise in elevation. I would never vest so much power in either of them. Power corrupts and absolute power corrupts absolutely.
It is true you can get random winds in a capitalist system, but overall the system is stable and self regulating. We don’t have a capitalist system in reality, only on paper. A capitalist system implies free markets, which we don’t have. With the FED inserted heavily into the system, what we witness is a crony system for the oligarchs who are connected to the FED. It is a rigged system to the max. The 2008 exposed this system in all its glory. The owners of the FED were deemed to big to fail, although they became so big not by wits but because they own the FED and implicitly have the politicians in their pockets. I see that as a feature of socialism/communism/fascism (big government and massive amount of power concentrated in few hands) not capitalist system.
None of us like what we see; we are on the same page on that. However, we look at the same thing from different angles.
Interest rates may oscillate to find some parity with growth and sustainability? Who knows. However, the FED probably likes large bell shape curbs to create crashes and signal to the tribes the gig is up.
Mortgage rates have fallen. 30 year Treasury bonds under three percent.
Most expensive residential sale in U.S. history — $238 million for a New York City penthouse: https://www.nytimes.com/2019/01/24/nyregion/238-million-penthouse-sale.html?module=inline
Blert said that record-breaking, big spending by the super-rich indicates an impending financial collapse. He said the late 1920s saw similar unprecedented spending by the super-rich.
What ever became of Blert?
I miss Blert. Not the best writer but he was very perceptive. He always had good insight!…
And he was Always wrong, despite his flowery language.
According to him we should have crashed and burned 8 years ago.
Same with Mr. Slumlord. Life ain’t going quite the way he so arrogantly predicted.
Jed, you are wrong on these two bloggers. Bret was always doom and gloom like you say. However, Mr. Landlord was always bullish, exactly 180 degrees from Bret. Mr. Landlord is the eternal optimist and he always saw everything bliss. However, there was something you could learn from both of them. The reality was always somewhere in the middle between the two extremes, at least for the average guy like me. Personally, I enjoyed both of them even if I disagreed with them sometimes. After all everyone is entitled to his own opinion.
I am patiently waiting for Sacramento housing inventory to go up and prices to drop 30-50%. Now sure if that will ever happen or when. Would love to see the same for all of California real estate.
Same here, patience is key and will be rewarded (market crashes occur every decade).
I am ready to buy (sitting on cash) and now that inventory is skyrocketing YoY you have the opportunity to check out open houses each week to identify the right neighborhood, floorplan etc. it’s also a great way to “shop for the right realtorâ€. I had contact with many, many realtor and test them (knowledge, strategy etc) I have only found about 3 out of 50 that qualify to be my guy/gal.
In terms of discounts, i am buying when we see a 50-70% crash. Price cuts are the only way for seller to unload:
https://wolfstreet.com/2019/02/11/liquidity-in-new-york-citys-housing-market-dries-up/
Millennial, 3 out of 50 good realtors is a very good percentage (6%) for SoCal (very liberal). In midwest (a more conservative area), you might be able to find a larger percentage (like 20%) because there are more honest people.
Unlike you, I never bashed ALL realtors. They have a very large percentage of dishonest and uneducated, or not so smart ones in their group. They bring down the reputation for all of them. However, once in a while, you find a diamond – nice character, honesty, hard work, knowledge, experience, reliable in communication and brains. If you find all of them in one person, they are a goldmine. If you will be a good communicator to tell them what you want, they can help you all your life to become rich. Oh! I like also the one who are brokers and owners because they have a lot of flexibility in what they can do. Also, if they are too poor or full of debt, they tend to do dishonest things to stay in business and they are not going to look for you. Now, you can see why it is so hard to find very good agents; not impossible though. Most of the good ones I found, I can count them on the fingers of my hand. They were rich but they had a passion for what they did.
My advise: don’t dismiss ALL because 90% are they way you describe them. You need a good one, trust me. Over decades, they helped me a lot.
Thank you Flyover!
“My advise: don’t dismiss ALL because 90% are they way you describe them. You need a good one, trust me. Over decades, they helped me a lot.â€
Appreciate the advice. I agree.
It’s true, I was bashing all of them for a looong time as it was freakin hard work to identify a good one out of that huge pool of bad ones.
Patriot, it is now certain that home prices in California are dropping and will continue to drop for many years. The only mystery is whether the drop will be 20, 30 or 40%. The bottom is at least 2 1/2 years away. Already, I see price declines of 4-5% in Orange Co. by the smart investors who sell before the greedy competitors realize that they will never sell at their high asking prices. The smart money is selling right now slightly before the asking prices of their competitors.
Re: Patriot , Re: the 30% price drop. Sacramento has been mentioned as one of the most favored retirement places due to the low home prices. I you drive just 20 miles away from the State Capitol Bldg. , the ex-farmlands are now awash in new housing construction.
At this moment , just 15 miles from 12th & J , 1600 sq ft homes, single story ( for us oldsters with bad knees ) can be had from 350-425 thousand. Heck , I own five of them and they provide me a nice bump in my retirement. The main problem is people of today are living paycheck to paycheck because they love to keep and sometimes get ahead of the Jones. They just can’t save any money for a down payment, and they rely upon the Gov’t programs for down payment assistance , but they don’t have any problem’s paying the $ 1600 per month rent. But then again , they have a ski boat and two new cars , and I don’t , I guess it is just priorities.
Inventory going up from record lows is hardly an indicator of an upcoming collapse. Introducing more volume to an already hungry market just means that multiple homes compete for the same buyer and over-bidding comes to an end. Big deal.
Interest rates are low, unemployment is low, dual income household spiking, millennial and Gen Z potential buyers are ever-increasing, corporate profits are at all time highs, dollar is strong and loan delinquencies are low. IF the market goes into a recession, it will take quite a bit of major events occurring at the same time to throw it off it’s rails. And even then, housing prices won’t come close to the 2009-2012 depressed housing market. Inflation is much higher than what’s reported. If housing prices were adjusted for REAL inflation you’d see that prices are actually within a normal range. I can’t believe how quickly people forgot just how ridiculous the 2006 housing boom was with prices due to lax regulations. That’s a real bubble. A real estate market backed by real wealth is not my definition of a bubble. Go out and buy some property and take advantage of the many options it now presents compared to the years prior.
You must be a realtor because telling someone to buy in this market is the worst advice I’ve heard. Careless and downright ridiculous. Two people I know have sold their homes this month and both took the offers 20k under asking price(best offers). The ship is sinking.
Cute. I love hearing predictions of the future by looking in the rear view mirror.
Those who cannot remember the past are condemned to repeat it. To covet truth is a very distinguished passion. –George Santayana
I am not realtor, I actually have a great disdain for them. I am, however, a realist. I used to be just like you guys preaching about the “bubble market” since 2013 but then I realized I was just introducing my own emotion-based wishful thinking into my investment strategy so I started thinking about actual factors that drive the market up and down.
Basically you’re saying you bought a house and are now trying to justify your purchase. We get it.
Nope. I did, however, buy a 5 unit complex for $270K with severely low rental income and over a two year period built the rental income to $4500/month and just closed escrow on it for almost double what I paid. You can either sit on the sidelines and pray 2008 happens all over again or learn to play the game and win at it.
Congrats! You brought at peak bubble price! What timing? You’ve got to roll with it right!
If I bought it $275K and sold it for $495K then was it really peak bubble? I’m guessing you think that the profit isn’t “real” money either? And yes I reinvested it back into real estate to avoid capital gains on a nice house with a pool and a beautiful view listed at $480K offer accepted at…drumroll…$375K. Bought some land using the rest of money. Going to sit on that one for a looong time. This is the discount market everyone on this blog is looking for. It’s not the best market but little windows of opportunities like this small hiccup in can bring in some serious asset acquisition. You can hold me to it!! Our forecasts are all documented on here right?!? How many of you bubblers made a dime in RE over the last 5 years? Anyone??
Bubbler Mentality
A house for $400K today: HELL NAW TOO EXPENSIVE!!
A house for $650K in 2039 after reaching a $1.3M peak: OMG 50% OFF!!
The data shows Gen Z and Millennials are saddled with debt and little to no savings with no hope of propping up houses on the back end when current owners downsize. At some point, something has to change — renters for life, property collapse, or a spike in wages. I’d pick a property collapse over the others.
This statement from the Good Dr is interesting.
“Looking at things as they stand today, why would you expect any sort of correction? The only thing we are seeing is that inventory is rising sharply but prices are still holding steady. However, having inventory rising by 106 percent year-over-year is definitely going to add more supply to the market which means buyers will have more options. ”
More supply typically would mean a drop in sales prices. I think there has been some drop sales prices in some areas. I haven’t seen hard numbers for S. CA.
I don’t think a drop in asking vs selling means much (ie the greedy person who lists a house for $3M and only sells for $1M (66% drop Millennial!) doesn’t mean much when they bought the house a year before for 700K.
Now that the stock market is roaring back to within 10% of new highs again, the people who held on to their stocks now have more money for a down payment. Will house demand soar again to meet the new supply in Spring? Or, will the stock market drop 18% again leaving buyers without a paddle?
There shouldn’t be another rate hike before Spring and mortgage rates have been falling. We can’t blame that.
If I was over weighted in stocks and saw my net worth plummet 18% in 2018 but is now back up again, I might consider diversifying into a rental house purchase if the rental parity made sense.
This is like a slow motion roller coaster ride.
Having some experience with controls engineering, did you know a jetliner with a skilled pilot+computers can fly for awhile without one wing? As long as the air is smooth and their is some uplift all is good. Given a sudden downdraft, or a black swan taking out the pilot or remaining wing, a crash is likely.
I think the stock market and housing market is in this position. As long as the economy remains good, and there aren’t any unforeseen black swans, or any intentional disturbances (ie war). The plane can keep flying.
Where is the black swan? Who is the most likely to create a disturbance? These are the real questions.
I don’t foresee an imminent crash yet. However, probability says we will have one at some point. I predict it will be a big one. Hold on to your parachute (enough cash) and hope it gets you to the ground (bottom).
“If I was over weighted in stocks and saw my net worth plummet 18% in 2018 but is now back up again, I might consider diversifying into a rental house purchase if the rental parity made sense.”
THats the problem! It doesnt make sense!!! House on sale for 1.3 millions in Silicon Valley and the next house they are trying to rent for 3.1K per month. No way this math works…maybe if Chinese Money Launders speculating in the market but they are long gone…
I agree that at first glance, it is hard to achieve rental parity in the first year.
Even the curmudgeonly Mr Landlord admitted that it may take 7-10 years to achieve rental parity.
However,, with tax rules, it is a great long term investment. It is a business so you can write off repairs and improvements, all taxes and payments, and depreciate the house over 27 years. You will likely be putting money into the rental the first few years and taking a passive loss, but history shows, eventually, you will be making a profit. When it is paid off, it is a good retirement revenue income source.
curmudgeonly????
Dude I’m, barely 40 years old!! 🙂
Oops, I didn’t know you were back. That’ll teach me.
Looking forward to your wise advice.
The cheerleaders have all of the same excuses that they had prior to the last crash. “This time is different.” I guess some people just never learn.
What is your definition of a ‘cheerleader’. Most of the so-called cheerleaders were saying that 2011, 2012, 2013, 2014, 2015, 2016, were good times to buy a home. I was one of them. and they were good times to buy. Does that make someone a cheerleader? I would not say that now because I know the market moves in cycles and next few years wont be good times to buy.
Cheerleaders are those who make the argument that “real estate always goes up” and “you can’t predict the market so anytime is a good time to buy and hold real estate.” Also those in here who despite the mountain of evidence that the market has peaked and is headed south, continue to argue that it will go up from here.
The ONLY reason it was “a good time to buy” from 2011 to 2016 is because the Fed was pumping the bubble up artificially. People who bought then (myself included) got lucky. I cashed out after two years and am waiting on the sidelines for the crash. Yes, I sold too soon, but I did not want to continue gambling that the Fed would keep things propped up like this. It’s ending soon, and it WILL crash, as it always does.
The Fed sure was pumping a decade ago, but that doesn’t take away from the fact that buying in 2010-2012 was an absolute gift. 2010 was almost a decade ago, these buyers have so much equity it will make your head spin. Even the people who bought back in 2015/2016 are sitting pretty now. Buy what you can afford and plan on owning for the longterm. Timing markets rarely if ever works.
Prices are going back to at least 2010 levels, most likely 2000 levels. So that “equity” only exists if they sell.
“Prices are heading back to 2000s levels.” Highly doubtful. And even if they did, most normal people would have zero chance at buying. The ultra wealthy would buy everything and the working stiffs would just be lifelong renters. Be careful what you wish for.
The crash is imminent…
http://fortune.com/2019/02/12/americans-late-on-car-payments/
lol, it’s different this time, Yah, when people are kicked outta their homes, they wont have cars to sleep in. Inventory is climbing rapidly, incomes can’t keep up, we should see a nice 10-15% drop in prices, no crash, but a slide backwards.
The car dealers were giving loans to everybody and their mother when rates were low. Now they are going to pay the price for extending credit to people who can’t even afford to pay attention.
Crash? not so fast. I spoke to a friend here in LA who is a broker and he said that despite the glum predictions, YOY home prices in LA did rise. He said the problem was that last Fall, sellers were coming up with ridiculous high prices for their homes due to the ‘blind sellers market’. These sellers have realized that they need to lower their prices to realistic figures and many of these massive price reductions were over-priced to begin with NOT softening of the market. He said a properly priced home is still getting 5+ offers, many over asking and many all-cash.
Notice YOY for LA was +4%
https://www.trulia.com/real_estate/Los_Angeles-California/market-trends/
QE – Your broker friend is only telling you the half truth. I’m not denying it, certain markets saw a slight rise in prices. But you have to look at the obvious rise inventories along with what the majority of the houses actually sold for.
My area OC (Huntington Beach and Newport) saw a serious inventory uptick with majority of the houses being sold below asking.
You could argue that’s because the houses are million++ that’s why they are sitting. But inland OC same situations.
Big increase in Newport Inventory? FALSE.
Sorry, there’s no huge inventory increase in HB. I see the same homes sitting with small discounts because they were priced too high to begin with…
Let’s be real and quit the crap. The stock market is roaring again, unemployment is at or near all time lows, majority of people are going to pay less taxes this year, inflation is a non-issue, mortgage and long term rates have gone down recently, the fed has turned dovish on future interest rate hikes….I can go on and on. The crash is not here and is still a ways off. Yes inventory has increased, but mostly in the higher end homes 1 million+. The inventory of starter homes is still non-existent. There are still plenty of buyers out there, but some can’t afford to buy where they want and/or are sitting on the fence waiting for a reduction. Meanwhile rents are still high.
One thing that may start tipping the scales is the SALT deduction cap. I don’t think many CA property owners realize how this is going to effect their tax returns this year. Once the dust settles after April we may say inventory increase as some people unload their properties due to the tax burden, but again this will only have a real affect on people paying property taxes on homes assessed over a million+ or those owning 2nd homes and/or vacation homes.
but again this will only have a real affect on people paying property taxes on homes assessed over a million+ or those owning 2nd homes and/or vacation homes WHO BOUGHT RECENTLY.
Don’t forget to add that bit.
The SALT caps will NOT affect homeowners who bought long ago, and thus pay little property tax due to Prop 13. Indeed, these homeowners will be less likely to sell, which will further limit inventory.
Well said WheelinDealin. Despite all the doom and gloom we hear, the economy is firing on all cylinders. Low unemployment, high stock market, low interest rates, low inventory (relative to historic norms), record high rent. We’ll see what the new tax law changes do to high income areas. Just like all previous times, it takes YEARS to find a bottom in the RE market. I know guys like Millie have no problem staying put in their cheap apartments for another 5 years, I would bet money most potential buyers don’t have that luxury.
For those wishing for a massive housing crash, your also wishing for a failing economy. You can’t have one without the other. We won’t have anything remotely resembling the last crash without a landslide of foreclosures. Currently we have the lowest foreclosure rate in almost 20 years.
https://www.forbes.com/sites/alyyale/2019/01/09/foreclosures-underwater-mortgages-fall-to-lowest-rate-in-years/#dd9b46e11e98
Of course I am wishing for a falling economy!!!!! Why wouldn’t I? A crash in stocks and RE would be the best thing that could happen to us! Buy low sell high?! Never heard of it?
The stock market is roaring again. People with short memories have already forgotten the 18% loss in their net worth in 2018. Or, they remember and think about diversifying into real estate.
IMHO, a primary home is taken care with Federal taxes thanks to the reduction in in the tax brackets. A second home can easily become an AirBnB where the remaining stockholders can throw their immense gains for a nice vacation. Now with a rental, there are no restrictions on deducting taxes paid. The sky is the limit since the place is a rental. Do you think Trump would have neglected himself with the new tax law? Business is good. A rental is a business and should be able to deduct everything.
It is still the Roaring 20’s. Until it is not.
Exactly Bob. There is zero change to deductions for rental properties. Insurance, taxes, mortgage interest, etc. It’s all tax deductible. In fact the new tax laws have made owning rental property even more desirable while reducing the tax benefits of a primary residence. Isn’t Trump one of the biggest landlords in NY City? Go figure.
The lead story in the OC Register Real Estate section this week is that profits from selling houses is up for 2018 in California. The 5 top markets for sale profits are all in California, with 4 markets in the greater Bay area in #1-4, and LA/OC at #5. The average profit for our market was $227000. Nationally this was the biggest year for profits since 2006. Mr Lansner’s article quotes the source of his data (Attom Data Solutions) as saying that they are not expecting as big a gain in profits for houses sold this year with uncertainty and potential trouble in the future.
Note, they aren’t talking crash, just a topping of profit increases. So waiting to sell if you are planning to sell anyway is not a good idea., but not a panic sale time if you want to stay put.
The spring housing market is looking decent. Not great, but decent. However, low end well located homes are doing great. Expensive inland homes are struggling. Everything else is somewhere in between.
If the stock market stays up, the housing market will get hot again … but, that is if the stock market stays up. If the stock market shakes again, housing will slow. We will see.
Rates are down
Inventory is up
Sellers no longer in full control as before
Ask vs offer prices really depends on many factors: realistic seller, location, turnkey or dated, etc….
1 property may still get 3-5 offers as soon as it hits the market while another property may just sit for 3-5 months with no offers
Lending:
Conventional underwriting is tightening up.
Had 1 yesterday:
20% down
600k loan
Primary residence
Plenty in reserves
640 credit score
The desktop underwriter (computer algorithm I’ve alluded to before) kept declining. It just didn’t like the credit profile. Buyer still moving forward but had to go FHA.
Many FHA lenders have tightened up as well. More overlays which are lender instituted layered risk safeguards.
On the other side of the spectrum there has been a loosening up of Non-QM guidelines. So far nothing crazy, but, I’m keeping my eye on that sector.
All in all, no crash, but certainly some softening that’s for sure.
That 640 score won’t cut it. Both my Wife’s score and my score are over 800. Mine is 40 points higher than hers, maybe because we get the scores from two different credit card companies. If I were in charge of underwriting the nation’s loans, I wouldn’t make a home loan in CA to anyone under 700. Too risky. Of course I’m not in charge and I’m not currently looking for loans to take out or make.
Over-priced or a tank?
Consider this Santa Monica townhouse: https://www.zillow.com/homedetails/954-14th-St-UNIT-5-Santa-Monica-CA-90403/55325162_zpid/
Jan 2013 ….. sold for $1,200,000.
May 2018 ….. listed for $1,995,000.
Feb 2019 ….. sold for $1,595,000.
Seller was hoping to gain nearly $800k. Instead he settled for a $400k gain. So, is this a HARD TANK, or merely a delusional seller who was hit with reality?
It’s impossible to know what happened in any one transaction. The owners could have had a personal crisis and needed to sell ASAP. Divorce, death in the family, etc. Or the owner got a job out of state and his new employer covered r/e costs which allowed him to sell for less. I had a job offer once where my employer would have paid for all my closing costs including r/e fees. 7% closing costs on a $1.5m sale is $100K. I can see selling low to sell fast knowing there is $100K pocketed. Or he’s a regular reader here who figured, take $400K and get out while the getting is good.
No matter what, the dude (dudette?) made $400K tax free by doing nothing other than living in luxury home close to the beach. Meanwhile, Millie and every other perma bear, lived in an apartment that entire time and made $0.
So tell me again how real estate is for suckers……
$400k tax free? I don’t think so.
California taxes capital gains the same as regular income. $400k puts the seller in the highest state tax bracket, which I think is 11%.
And if the seller is single, he only gets a $250k deduction on his federal capital gains tax.
California does tax capital gains the same as regular income but they do not tax the proceeds from a sale of your primary residence. So there is no California tax due on sale.
Son of Landlord,
The $400K is absolutely tax free. You must have never made that kind of money before.
Come on man, you’re nitpicking. It’s $400K tax free at the federal level. I keep forgetting some of you pay state income tax 🙂
And so what, now the argument against r/e investing is that you’ll make more money than the tax free threshold? LOL. That’s a nice problem to have.
We don’t know the circumstances for the sale.
If it was a married couple selling, they win 400K tax-free due to the 500K tax exemption for selling a house.
If the owner died, in May 2018, the heirs may be able to win 400K+ tax free (Inheritance tax starts at 12M) AND write off the 400K “loss” they had to suffer when they sold the house in Feb 2019. Inheritance tax laws are crazy. The house’s stepped up value is determined when the owner dies. The heirs get to use this as the new basis for the house. ie if the owner purchased the house for 1.2M, but when they died, it was appraised at 2M, if the heirs sell at 1.6M, then they have a 400K tax loss. They will not likely pay Federal taxes for many years with this carry-over 400K loss. I suspect Trump uses this so it must be good (for him). That is the game. Can’t complain. Trump uses it and people voted for him.
Mr Landlord has a point. A renter has lost all of their rent but the homeowners or heirs have walked away with at least 400K tax free after 5 years.
Well according to the Bureau of Labor Statistics they lost $111,683.17 to inflation.
So 395,000-111,683.17=283,316.83 Then you have the massive transaction costs (1595000*0.08=127600) so 283,000-127600=155400. When you throw in the opportunity costs of equity investments or highly cash flow positive real estate this albatross of a house in Santa Monica will end up as negative yielding.
All the statistics point to Feb. 2019 in the real estate market being the equivalent of July/August 2006. Just one example is what Joe R. said:
“The average profit for our market was $227000. Nationally this was the biggest year for profits since 2006.”
If the pattern holds, large price drops are close at hand, but not yet happening.
The rapid real estate market crash will not become obvious until the Fed. first drops interest rates, but that is probably a year away. Until then, the crash will be hidden in the delayed statistics and the fact that there are so few low priced homes to sell. If only $1,000,000 homes are for sale, prices will appear to be going up even if those homes are actually dropping in price.
Inventory seems to be piling up. I run the exact same query on Realtor.com periodically to how many listings there are: 3 bedroom SFR within 5 miles of Placentia. Around Thanksgiving, there were about 700 homes listed. As of right now, 831.
Any advice on housing situation in Redding, CA would be appreciated. As crazy as it may seem, with all the terrible fires, I may consider a job in the area. Looking to drop $250K on down payment on a house in the low $400k range. What areas should I avoid concerning the recent fires? What are areas in good high schools at that price range?
In the growing markets such as San Antonio and Phoenix, there is a glut in higher end homes. However starter homes are at about a 45 day supply. It is going to take builders another 3-5 years to meet that demand. Inventory may be up, but not the type that people want, so they are staying in apartments or not moving out of mom and dads house until starter homes become more affordable. It’s going to be a while.
The crash always starts at the top. The $2 million homes don’t sell and end up listing and selling for $1.5 million. Well the homes that were $1.5 million aren’t as nice so they have to lower their prices to $1 million. And on down the crash.
Anyone who thinks that the starter home market isn’t connected to the luxury home market hasn’t been paying attention.
The trend you describe provides an arbitrage opportunity for the move-up sellers to take advantage of the house they buy being discounted, before having to discount the house they are selling. I think this is further magnified as home as there are more buyer competition at the lower end of the market. I think prices are stickier at the lower end of the market.
Josh is correct, JD not so much. Think of the market as quintiles – if the top is doing price cuts, the next quintile is likely not moving at all. Perhaps the next lower/middle quintile is still moving but most likely you’d have to go to the bottom quintiles to see things still hot. No one in those lower quintiles will have enough profit to move up to the upper quintile and get those price cuts, unless they bought a bunch of low end houses to flip and in that case they probably already have a home in the upper quintile or are saavy enough to avoid it – you’re talking about the first year in a multi year decline of 5-10% declines, every year for 4-5 years. Buying a house, even with a price cut, in the first year of a multiyear decline is a disaster – it just makes no sense.
The Fed is trapped by its own earlier policies — the low interest rates spiked stocks and RE and now the Fed has to slavishly do anything to prevent asset deflation. Since all asset classes are artificially inflated, I think they are just trapped. I suspect the Fed will keep the money pumping until the entire system collapses as a result of lack of consumer demand/ability. It’s a horrible bind: the more money the Fed pumps into the system, the worse inequality gets, and the fewer consumers there are. I guess when the debt slaves collapse, we might see a universal minimum income, if only to protect asset prices?
Down $200k in 10 months, and it’s just begining House Bubble 2.0
Address: 24386 Vista Point Ln, Dana Point CA 92629
For Sale: $849,000
3 bds • 3 ba • 1,689 sqft
View this home on Zillow:
https://www.zillow.com/homedetails/24386-Vista-Point-Ln-Dana-Point-CA-92629/25656229_zpid/
After careful valuation I would place the price point at 420k.
Price cuts on a wishing price???? That’s what you are calling a decline?
That house will sell for more than twice it last sold for in 2002.
Just because someone over priced it by $200K doesn’t mean anything.
After $200K in price cuts it’s finally at the market rate. The owner is going to walk away with about $600K in cold hard cash.
“The owner is going to walk away with about $600K in cold hard cash.”
This is what the perma bears/renters will never understand. Or refuse to understand. Buy real estate, hold it long term and you will walk away with a ton of money. Short term anything can happen. You can lose money. But hold a property for 10+ years it is virtually imposible to not make money.
Even if there is 0 appreciation, simply paying off the mortgage month after month, year after year will build significant wealth, that renting makes impossible to do for a middle class person. Add in a few % points yearly appreciation and it’s hundreds of thousands of dollars for basically doing nothing.
Mr. Landlord: Buy real estate, hold it long term and you will walk away with a ton of money. Short term anything can happen. You can lose money. But hold a property for 10+ years it is virtually imposible to not make money.
By “make money” do you mean stay ahead of inflation?
This Woodland Hills house failed to keep up with inflation: https://www.redfin.com/CA/Woodland-Hills/4742-Westchester-Dr-91364/home/4230839
2005: Sold for $1,710,000
2018: Offered for $2,199,000
2019: Reduced to $2,149,000
According to the Inflation Calculator, $1,710,000 in 2005 dollars is about $2,230,000 in 2019 dollars. And some say the feds are underestimating inflation.
Either way, this house LOST value during the 14 years since its last purchase. Not to mention the holding costs (which include HOA fees, currently at $540 a month).
This is a response to Mr L. I know of a man who bought a lot of RE at tax sales and other auctions. His house in a beautiful wealthy area ~ten miles from Downtown LA he bought at auction for $40000 cash in the late 50s. He bought beach property in Ventura Co. and a boatload of crummy rentals in the deserts of North LA Co. The rentals were a cash cow, but the appreciation over time wasn’t all that much adjusted for inflation. The homestead property made his heirs a lot of money, even after a reverse mortgage. Location, location location!
My Wife’s relatives bought a farmhouse in the Dakotas for $500 back in the late ’80s as a place to hold a big family reunion. It probably isn’t worth anything more today as it isn’t near the oil patch. A lot of farms there were consolidated so there were a lot of surplus farm houses out there. A lot of rural property hasn’t appreciated at all, and probably has gone down in value in inflation adjusted dollars. Property in Detroit crashed and in a lot of areas is basically either in ruins, or is occupied by urban homesteaders who are holding out by banding together and running out the criminals (like the Wild West).
Mr landlord is back (aka slumlord from Spokane-istan)! We missed you!
When your amazon stocks hit 2k you were bragging like there is no tomorrow. Then it crashed and on the way down we only saw one more post from a “mrâ€. Were you too embarrassed with putting your full†mr landlord†on it? We believe you lost your shirt and would only come back here if amazon recovers. So what’s your story? Are you going to tell us you sold at 2k went on a big vacation and bought back in at 1.3k?
By the way I like to profit 600k on housing as well. First I got to buy in at 2002 price levels. 2012 would be acceptable as well. Remember, buy low and sell high. Not buy high and wait 90 years to make your money back.
Mille, my good friend. Why the hate?
I sold AMZN long ago. I also don’t believe I was bragging about owning it. I was saying $2K AMZN is a reason why Seattle housing is where it is. See also FAANG stocks and SF Bay real estate.
And you realize AMZN is up 7% YOY yes? So I’m really not sure what your point is. You keep talking about crash this and crash that, yet price keep going up up up.
How’s that 75% off sale going so far by the way?
Son,
You’re looking at things in a vacuum and as perma bears always do, forget about leverage. Let’s say the buyer put 20% down – $340K – in 2005. And say he got a 5.5% mortgage for the rest, which was the going rate back then. In 2019 the balance on that mortgage is about $950K.
And let’s say he sells for $2.1M which will be $2M after selling fees/taxes. Pay off the mortgage and he walks away with over $1M cash. Tax free.
What would have been the alternatives? In 2005 Dow jones was at 10,500 on average. So he could have invested that $340K in stocks and that $340K would be worth about $850-900K today, assuming dividends were reinvested.
Net return is $660K on $340K invested, tax free. And remember, this was done with zero effort. All the homeowner did was live in a house for 14 and earned $660,000. Maybe for you that’s a poor ROI. For me, I’ll take it all day every day and twice on Sundays.
And yes I ignored property tax and maintenance but I also ignored the fact that stock capital gains are taxed while r/e is tax free up to $500K profit and mortgage interest is tax deductible. So that balances things out.
And realistically the owner would have refinanced into a much cheaper mortgage of 3-4% in 2009-2010 which would have added $100K or so extra in profit.
You can spin all you want, but reality is long term r/e is about as solid an investment you can find.
Don’t kid yourself with “down 200K over the last 10 months.” The house was listed 10 months ago at a WTF price, there was no way it was going to sell there. Several price cuts later to get it back to reality where it has a chance of selling (zillow’s estimate is 868K). They should have listed it for 10M and your headline would have been down 9M in the past 10 months.
Nothing to see here folks. Move on.
The Snowflake Bear doesnt agree, lmao, it is what it is and thats that kids, get over it. Market is sliding, this house is a perfect example (sorry it offends you, this isnt a safe space), and the slide is just begining :)))))
I looked at your link and also noticed the house sold for $400K in 2002.
A sale of $800K+ is a good ROI.
When I opened the Zillow map, there are nearly 1000 houses in that area for sale. Most asking nearly or over a million. Most of them were purchased in the early 2000’s for 200K-400K. The red dots are so dense that it looks like 1-2 houses for sale on every street in Dana Point. There are also many blue foreclosure dots.
I think people are playing “Who Wants To Be A Millionaire?” and are trying to cash out and get out of Dodge. They likely are not forced to sell but hey, if they can be a millionaire, why not try?
Did Dana Point raise taxes on homeowners to fund that new Harbor Improvement Project? If I am a long-term homeowner and my payments are $1K per month and now Dana Point wants to make them $2K/month to fund the harbor? If I was on SS, I’d take the Million and run.
Nobody is going to take 450K for their house they bought in 2002 for 400K. Their payments are likely low and they will rent it out. The few who took advantage of refi’s to buy yachts, might do a short sale and the banks will sit on them until they foreclose. Then the banks will sit on them until the prices come roaring back in 5 years when the new Harbor is done.
Regarding the Dana Point listing, it’s all about the school. Although the high school ranks high, the elementary school is dragging down the property value.
Because i’m in a good mood, i will provide data, enjoy.
January numbers are out on Redfin if you want to check your local market, CA ain’t pretty. We’re now seeing YoY change in Months of Supply in some places higher than the data goes back. LA Metro is matching 2012 with 4.4 months of supply.
https://www.redfin.com/blog/data-center
Has Millie bought his dream home at 75% off yet? LOL
Probably not since Jan 19 prices nationally were up 3% vs Jan 18.
Welcome Back, Mr Landlord.
Your input has been missed.
Our Millennial has been waiting for the “End-of-the-world-as-we know-it” crash later this year.
It may happen due to outrageously inflated asset values..
However, when it happens, Our Jobless Millennial will buy a home only if he is brave and has lots of cash.
Seen it all before in 2009.
Hi bob, I would disagree a bit with your statement. Long term I am a real estate bull. I am not a perma bear by any means. I do believe in market cycles and in bubbles. It’s easy to see that this is the biggest (global) asset bubble ever created. The world isn’t ending when bubbles deflate. It’s normal. It’s healthy. A 50% discount in house values is normal when the housing market crashes. It happens during each crash. If someone could tell me why buying a highly overpriced home makes any sense, I would listen to it. So far I have only heard cheap sales pitches by the RE cheerleaders and no valid reasons why buying sky high makes sense.
So tell me mr landlord and bob: why should I buy now at highly inflated values and not wait for a discount? Name one reason?
Don’t worry. Millie’s wife loves dodging bullets and burglars and won’t mind waiting it out in the ghetto for another five or ten years.
Millennial,
I am a bear and a bull at the same time like you. But not an extremist.
I think housing is overinflated and would not buy now.
However, if prices drop 20-25%, I will be tempted to buy.
60-75% drop is 3 sigma and only seen twice in the last 100 years. Most of the drops in the last 70 years were about 10% or less. A 20-25% drop would catch my interest.
I also expect the stock market to correct again this year about 20% (just like last year). My lumpy mattress stuffed with 50’s is getting uncomfortable. I’d likely jump on that drop before housing.
In other words, you are correct, buy low and sell high. However, don’t be unrealistically greedy or you may have to wait another 90 years for your dream to come true.
Buying a house for the long term is a great investment. Buying a house at 20% off is even better. Buying a house at 70% off is as likely as winning the lottery. The big payout happened in 2009/10 when I already had a house and had young kids and less cash to buy another. I don’t expect that kind of payout to happen again for another 90 years. Who knows, through the miracle of modern medicine, we may both be there to capture it.
I’d also like to add:
1) My daughter bought a house in 2015. I looked at the Zillow sales history for the last 20 years before that. The house was selling for 15% more than the new selling price in 2002 BUT sold for 15% less than the selling price in 2006. IMHO, it was a fair price. I also looked at house selling prices on Zillow in the same neighborhood for similar houses.
2) The Bears seem to be jumping for joy when asking price reductions are happening now. When a house lists for 1M is reduced to 900K, that may indicate a change is happening, However, when Zillow shows it sold for 700K in 2017, I stuff my money back into my mattress and wait for something real to happen. I would not buy.
Also, look at the last peak in 2006.
I don’t trust Zestimates but I mostly trust prior sales. Some playing with selling prices can happen also, but looking at other similar houses in the neighborhood can uncover these.
A good deal is when the house is offered at 20% below the 2016/17 selling price of the house and the neighborhood data correlates with this. It is all one-stop shopping on Zillow.
I haven’t seen any of these yet and with the stock market roaring back, I don’t know if I will.
You also have to be careful. A seller will not likely sell at a lowball (or fair) offer below their current mortgage. They will likely be insulted and your real estate agent will fire you.
“You also have to be careful. A seller will not likely sell at a lowball (or fair) offer below their current mortgage. They will likely be insulted and your real estate agent will fire you.”
Then you need to find a better r/e agent who isn’t a complete imbecile. Over the past 10 years I can’t count the number of offers I’ve made that have been rejected and the buyers “insulted”. However over the same 10 years my r/e agent has made more than $100K in commissions from all the houses I’ve bought and sold with him. Plus I’ve referred several people to him as well who have bought and sold houses.
Any r/e agent who fires a client for being a prudent investor won’t last long in the business.
As for their current mortgage? Again who cares. This is one the fallacies of sellers. Not just houses but cars as well. Oh I can’t sell below $X because I owe $X on the asset. And my reply is I don’t care if you took out a stupid loan, your asset is worth $Y. Here is my offer. If you want to sell, that’s what you’ll take. If you don’t want to sell, that’s fine as well. But I won’t overpay for an asset because you made a stupid decision on your loan. And eventually the repo man or foreclosure agent will make that decision for you.
Mr Landlord,
If you offer lower than what they owe, it may be fair, but you turn the sale into an emotion for the seller.
You don’t want to do that.
If I was your realtor, and you continued to insist on lowball offers and continue to be rejected, I’d fire you. And blackball you with all of my RE friends.
Nobody serious want to waste their time with an idiot.
Bob,
That doesn’t work the way you explain it. I bough and sold hundreds of properties. First, to make sure we are talking about the same thing we have to define the words. “Low Ball offer” it means different things to different people and it is highly subjective to the property, time and market. It depends if the offer is made to a physical person or a judicial person (Bank, REO). If the property is priced 10% above the market and I offer 20% below listed price, is that a low ball offer? After all it is only 10% below market.
Second, if the market is dead and I offer cash, no contingencies, to a bank (foreclosed property) 50% below listed price, is that a low ball offer? I actually did that and the bank, after 4 months of negotiations, took the offer. With banks there are no emotions and they make whatever decision is in their best interest at a time. They were happy to get the liquidity and I was happy to get the place – win win! Actually the RE agent encouraged me to do that. I was younger and more shy at that time feeling embarrassed to do that. The agent actually did the papers back and forth countless time. She was one of the best agents I found (all qualities in one person). She was multimillionaire for a reason! She got lots of business from me after that and if I do again business in that market I would use her in a heart beat.
GET OUT NOW WHILE YOU STILL CAN. CA IS DOOMED!
I saw some crazy bearded guy on the street corner shouting the same thing. It must be true.
BTW, your CAPS LOCK seems to be stuck.
I am seeing quite a few properties go pending, some at high prices. In my opinion, the economy is doing well and people are buying homes. Nothing to see here … as long as the stock market and economy do well, prices should continue to grind higher slowly.
@jt,
Oh really? That’s interesting. In which state are you located? Here in California, houses sit and sit and sit. You see price reduction after price reduction. Then you see they try an auction or to rent it out. After 6-10 month they give up and move back in.
I am getting bombarded daily with price reduction for my searches I set up on Redfin and Zillow. No wonder each realtor to send you listing and to ignore Zillow and Redfin. They think they can somehow prevent the true state of the market. What most realtors don’t realize is that everybody has access to the same market data within a few clicks (sellers, agents, brokers and buyers).
Another thing I noticed (again I can only speak for California) is that foot traffic has dramatically slowed down at open houses. It’s in line to what the experts and the data says: buyers demand is in the toilet, inventory is skyrocketing, sales are plunging.
Education isnt free, but a beating in the real estate market is, DROP THE MIC
Davis, CA Housing Prices Crater 16% YOY As Sacramento Brokers Joke “All These Sellers Are Losing Their Shirtâ€
https://www.movoto.com/davis-ca/market-trends/
Naples, FL Housing Prices Crater 13% YOY As Florida Mortgage Debacle Expands
https://www.zillow.com/naples-fl-34109/home-values/
Salem, OR Housing Prices Crater 27% YOY As Portland Housing Market Staggers
https://www.movoto.com/salem-or/market-trends/
Culver City, CA Housing Prices Crater 18% YOY As Los Angeles Area Layoffs Push Record High Joblessness Higher
https://www.movoto.com/culver-city-ca/market-trends/
Santa Barbara, CA Housing Prices Crater 13% YOY As Housing Prices Plummet Statewide
https://www.zillow.com/santa-barbara-ca/home-values/
Denver, CO Housing Prices Crater 10% YOY As Major Cities Experience Double Digit Declines
https://www.movoto.com/denver-co/market-trends/
Westport, CT Housing Prices Crater 15% YOY As NY/NJ/CT Housing Market Staggers
https://www.movoto.com/westport-ct/market-trends/
Bend, OR Housing Prices Crater 13% YOY As Seattle/Portland Housing Collapse Expands
https://www.movoto.com/bend-or/market-trends/
Provo UT Housing Prices Crater 16% YOY As Double Digit Price Declines Ravage Salt Lake City
https://www.movoto.com/provo-ut/market-trends/
Potomac MD Housing Prices Crater 9% YOY As Washington DC Housing Market Implodes
https://www.movoto.com/potomac-md/market-trends/
Flower Mound, TX Housing Prices Crater 7% YOY As Dallas/Fort Worth Mortgage Defaults Jump
https://www.movoto.com/flower-mound-tx/market-trends/
Thanks a lot Jim! It’s great to see there are still realists on this blog who look at data. Has anybody noticed that RE cheerleaders don’t provide any reference to data, stats, charts? All they do is tell us the same thing over and over. “Buy now, buy now, buy now! The economy is great, buy now! “ I doubt most of them understand cycles and every time you mention cycles they call you a commie, socialist or perma bear. It’s quite funny and entertaining. One of the reasons I like this blog so much.
Misleading headlines (fake news):
Santa Barbara – Flat
Culver City – UP 8%
Santa Barbara, CA Housing Prices Crater 13% YOY As Housing Prices Plummet Statewide, but the data in the link states July 18 high of $790/ft2 and January 19 at $767/ft2, a 3% drop from summer highs. January 18 was $764/ft2 – Increase of $3/ft2. flat at best, not 13% CRATER.
Culver City, CA Housing Prices Crater 18% YOY As Los Angeles Area Layoffs Push Record High Joblessness Higher
but the data in the link states price/ft2 ‘today’ is $742 and 1 year ago it was $683. The reason for the drop in media price is because the size of the homes sold were smaller. Based on price/ft2 Culver city is UP 8% YoY price/ft2.
So now cratering is defined down to as low as 7%YOY?
As hard as Democrats and the MSM have tried, they can’t kill the Trump economic boom. Unemployment is at 4%, hundreds of thousands of jobs are created every month. Good solid paying jobs, not the McFlipper p/t “jobs” of the Obama years. Interest rates for mortgages are back to 4% and Dow Jones is above 26K. And gas is $2 a gallon in most of the country.
With this economy, a crash in real estate is pure fantasy. There’s a better chance I meet the real Santa Claus than a national real estate crash happening in 2019.
Having said all that, the country is also populated by tens of millions of imbeciles. And these imbeciles vote. Which means in 2020 they may elect a super imbecile like Bernie or Kamala who will blow up the economy. In which case, Millie may get his wish and buy r/e at 75% off.
That is if he still has a job and not just public assistance. Owning rentals might not be so great under a Bernie run government. And undeveloped land could be taken from you at minimal recompense for environmental protection. Better hope goofy Uncle Joe is the Dem’s choice.
How’s RE investment in Venezuela doing? These clowns like Bernie are defending Maduro against Trump. Venezuela with free healthcare but no MRIs or electrocardiograms and a measles epidemic. World’s best country at weight loss, too.
Things are not as rosy as Mr Landlord has described for everyone.
Otherwise, why has Ocasio-Cortez been elected? Why have an extremely liberal set of Democrats taken over the House.
Propaganda is one thing. Reality is completely different.
If everything was rosy, then this would not happen.
Related to housing, Housing in the US has become more unaffordable under Trump for the average wage earner. A correction is needed to save Trump in 2020 or his base will vote socialist.
Things are not as rosy as Mr Landlord has described for everyone.
Otherwise, why has Ocasio-Cortez been elected? Why have an extremely liberal set of Democrats taken over the House.
Propaganda is one thing. Reality is completely different.
If everything was rosy, then this would not happen.
Related to housing, Housing in the US has become more unaffordable under Trump for the average wage earner. A correction is needed to save Trump in 2020 or his base will vote socialist.
You are right, haven’t bought yet. I like to buy at 50-70% discounts when it’s comes to housing. Inventory is going up, sales are plunging. I think within the next two years you can buy at 2011 levels. And if not, the way to property is renting low and saving big. As we know: why buy high when you can wait a few years (or decades) and save half the cost?
Great report. Listen to it. Much more pain ahead for RE cheerleaders
https://wolfstreet.com/2019/02/24/the-wolf-street-report-who-wins-in-a-housing-bust/
Real estate sales are collapsing everywhere. Almost every day we see the proof. How can you argue the market is still doing fine?
https://www.zerohedge.com/news/2019-02-17/december-home-sales-collapse-sacramento-county
ZeroHedge has predicted 187 of the last 2 recessions. LOL
By the way did you actually read the article or just the headline? Talk about burying the lede.
“According to new data from CoreLogic, the year-over-year increase in the median sales price for all homes in the county was 4.4%, one of the slowest months in 2018. Of the 57 neighborhoods with at least ten homes sold in December, 41 experienced a slight bump higher in the median sales price compared to December 2017.”
So 70% of neighborhoods had price increases, and overall prices increased by 4.4% YOY. And yet this is proof of the great housing crash????? Whatever you say.
Nope, nothing to see here, “Home Sales Collapse In Sacramento Countyâ€
https://www.zerohedge.com/news/2019-02-17/december-home-sales-collapse-sacramento-county
The crash is upon us in DC!! And by that I mean, there is no crash to speak of whatsoever.
Poor Millie.
“Elsewhere in Northern Virginia, the median price of what sold in Fairfax County in January was $486,000 — up 3 percent from a year ago, with inventory down 15 percent. Loudoun County’s median selling price last month was $486,250 — up 8 percent, with inventory down 19 percent. Prince William County had a median selling price of $365,000 — up 6 percent, with inventory down 10 percent.Across the river in Maryland, the median selling price in Montgomery County in January was $400,000 — down 2 percent from a year ago. Prince George’s County had a median selling price of $285,000, up 6 percent. In the District, prices jumped 7 percent from the median selling price a year ago, to $533,000.”
The DC area is a nice cherry pick for location data. The DC area real estate doesn’t drop until the US government reduces it’s budget or companies reduce their lobbying budgets. It in no way correlates to the southern California market.
It’s all interconnected. If DC crashes, LA crashes and vice versa. They’re not immune to each other.
Oc county Inventory is increasing YoY. Buyers demand is muted. There will be a flood of houses coming on the market once we hit a recession. Can’t wait! The spring season will be a disappointment for perma bulls just like last year. This is like 2006/2007.
The OC Register’s RE columnist Lansner is writing this week about how housing construction is down 10% in SoCal for last year.The biggest drop is in expensive OC. Lansner is attributing a big part of the OC drop to the decline of Chinese buyers. They may have been 80% of the Irvine market for new homes. And Inland Empire new home sellers are ponying up big incentives to buyers (like $10,000 in closing costs). A shift to lower end building in 2019 may reverse this trend according to the people who are tracking sales. That and write-offs and incentives for the more expensive excess inventory. A “reality check” is what one expert is calling it.
I could go on busting you up all night, US Home Price Growth Weakest Since 2012
https://www.zerohedge.com/news/2019-02-26/us-home-price-growth-weakest-2012
https://www.advisorperspectives.com/dshort/updates/2019/02/26/s-p-case-shiller-home-price-index-annual-gains-fall
home prices will be YoY negative…soon. Hold the powder dry
February consumer confidence index came out at 131.4 today. That is the highest level since July 2017.
You know what consumers do when they are confident? Buy stuff. Including housing..
To put that number in perspective, between 2009 and 2015 it was under 100 and barely budged above 100 in 2016. We had an 8 year recession under Obama and we’re only 2 years into the Trump recovery. We have many years to go to make up for Obama’s destruction.
Stop watching CNBC and MSNBC Millie, you’re losing money every day.
Landlord, I am not watching these channels and I am not losing money. I am saving every two weeks a lot of money by renting a dirt cheap apartment. All these savings go into cash. I don’t buy stocks at these levels and def not real estate. Once we get a nice crash I start buying 🙂
“We had an 8 year recession under Obama and we’re only 2 years into the Trump recovery.” Was the Great Recession (December 2007-June 2009), and the melt down (September 12, 2008) fake news? If you’re rewriting history, support it with facts.
Mr. Landlord, July 2017 was just before the last recession started! A very high consumer confidence reading isn’t predicting good times; it is predicting bad times just around the corner. It is saying that consumers are so optimistic that they have already spent every last penny they have to spend. They have NO BUYING POWER LEFT to buy anything!
“Mr. Landlord, July 2017 was just before the last recession started!”
Are you saying we’ve been in a recession since July 2017? OK that’s an interesting spin on things. I’m curious to know more.
I thought this is an informative article:
https://www.marketwatch.com/story/why-bubble-era-home-mortgages-are-a-disaster-waiting-to-happen-2019-02-25
“Keep this in mind: The non-agency mortgage delinquency fiasco will not go away just because Wall Street and the pundits act as if it has. I am confident that this entire charade will start to unravel within six- to 12 months. It is wise to prepare now.”
Yikes
Price declines across the board. Downturn is here
https://wolfstreet.com/2019/02/26/the-most-splendid-housing-bubble-in-america-deflate-february-2018/
Even if a correction occurs, I don’t see Millie and his cohorts benefiting. When prices drop 5%, Millie will wait for 10% to buy. When they drop 10%, he’ll wait for 20%. Prices drop 20% he’ll wait for 30%. And so on. Other than buying for $0, he will never buy in because he will be sure more price drops are on the horizon. And when prices start rising again, he’ll think it’s a temporary blip and if he just waits it out for another 3 years, prices will fall once again.
It’s what we all saw happen 2009-2011. Perma bears could have bought homes that sold for $700K in 2006 for $500K in 2010. But they were convinced the mythical “true” price was $250K. So they waited, and waited, and they’re still waiting. Today that same home is $1M. Some day it may correct to $800K. But it won’t matter. They will be convinced it’s only worth $500K and will miss out once again, only to see the home go to $1.5M 10 years later.
Rinse and repeat for the rest of their lives paying someone like me a rent check every month waiting for that 75% off sale that never comes.
Nope, but 20% off is gauranteed, any fool can see that. If it walks like a Realturd and talks like a Realturd, it must be a REALTURD.
Jim,
So now w’re in the “if you disagree with me online you must be a troll (realtor) phase of the program. You forgot to call me racist, lol. It’s the lamest, weakest method of debate there is. If you disagree with me, fine. I welcome debate. But let’s debate facts and ideas and leave the childish name calling out of it. Mmmkay?
And for the record, I am not now nor have I ever been a realtor.
Millie has posted over the past years that he will share the moment he signs the papers to buy his first home……..He posts similar phrases over and over (“no crash, no purchaseâ€)…….Even I remember that and I don’t even spend that much time here……..Obviously, the market is turning…….We might see him buy within the next few years……I am also looking to add to my portfolio……..USUALLY……A good time to buy is right after the economy collapses. I am with the millster on that one…..
“There’s a sucker born every minuteâ€
Don’t be one.
I had doubts about this but it seems you are right. He is just a dumb mofo. Even if he got his 50% crash he is craving, he would wait for 10% more and miss out or simply be unemployed lol. The rest of us have equity or at the very least a locked in pmt. To me equity means nothing unless I cash out or borrow but its still nice I can sell and profit 180k in less than 2 years if I really had to sell. At the very least my kids have a 5 bedroom house to run around in.
Ha, and when stocks correct lower, you’re GONE Just like the past six months. You only comment here when we’re not in correction territory. And you’ll be gone again when home prices decline and stocks tank. So go ahead and school everyone but we all know your a fair weather commenter, and will disappear shortly when Trump finally crashes all the markets.
Jed, I know you don’t like my posts and views. Have to hand it to you though. 5 stars on your reply to landlord. Couldn’t have said it better!
Lefties like Jed would rather have people suffer economically than Trump get credit.
SAD
I know a few Tech co-workers who didn’t buy in 2010-12 when prices were 50% off in many areas because they didn’t have a job to qualify and didn’t have cash (They lost 50% in the Stock Market at the same time) so they missed out. There is a book on this
“Nomadland” describing people like this who lost everything in the Great Recession and are now living in vans.
The people who bought (a few teachers with job security and some Tech workers who held their jobs) and the people who did not walk away from their houses because they had cash savings to ride it out, are doing very well now.
“Widespread fear is your friend… personal fear is your enemy.” – Warren Buffet.
There were also a lot of people at that time who had personal fear that housing would continue to plummet and they might lose their jobs. Losing their jobs was a real fear and some of the lucky few, bought, kept their jobs, and are now doing very well. Some bought, lost their jobs, had cash to ride it out, and still did very well.
There is always a reason not to buy. Usually, they are short-term fears and not enough cash to survive.
My philosophy has been: When the markets crash, don’t sell, make sure you have cash to at least ride it out. When the deals become insanely good, more cash is better to jump in when the buying is good. The Investors Business Daily had advice in the early 90’s also. “Buy on the upslope” You may miss out on the bottom, but if you wait a year after the crash (ie 2012/2013) when people start buying again and it is not a local minimum, you can’t go wrong.
My Daughter bought a townhouse half way to the bottom of the last RE crash. She and her Husband then waited until early 2013 and bought a big house at the end of a cul de sac on 1/4 acre, then sold her old place as prices rose another $50K. Zillow says her place is worth about $210K more now and Realtor.com says about $250K so maybe it’s worth $175K more conservatively? Even at the conservative estimate, they are at >50% equity. A big yard, a pool and a bedroom for each kid. They couldn’t be happier with their RE deal. You don’t have to nail the bottom or sell at the top to get a good life.
Good advise Bob! I want to add another one – as much as you can, try to have multiple unrelated streams of income which can not go to zero. Yes, in a crash, income goes down. However, you still have income when most lose it all. Then, you feel like a kid in a candy store. That is the reason I said many times before “as much as you can, try to have your own business”. When you are very young you need both, money and experience. Then, it is understandable to have a job. Later, it is better to go on your own using both, the experience and the money you saved.
Like I said it before, finance management is like football. You can not eliminate risk. All you can do is to manage risk. If you are too fearful, you have a strong defense but you never score. If you are to greedy, you take too much risk; you score but you do not have a good defense. In both cases you lose. Being moderate in everything and taking calculated risks is the key for LONG term success. That word “Long” is key.
Bob,
Even during the worst of the Obama years, 2009-2011 unemployment barely got above 10%. The vast majority of people had jobs. The economy wasn’t great but it wasn’t 1933 either. A lot of people missed an opportunity of a lifetime to buy real estate dirt cheap. Stocks too. And they missed out not because they didn’t have the means, but because they listened to perma bears. And they listened to the MSM which exists to do only 1 thing: scare people. The MSM was non-stop scare tactics how this is the worst economy in 20, 30, 50 years blah blah blah.
As a general rule of thumb: whatever CNBC says to do….do the opposite and you’ll do well in life.
My advice now is:
1) For a primary house:
a) Have enough cash
b) Buy now in an area you can afford with enough cash reserves to last 1-2 years of
payments
c) If you don’t have that, keep saving until:
i) You have enough cash
ii) A 15% or more drop in housing is stable or slightly rising for at least 6 months.
2) For an investment house
a) Buy when prices drop enough for rental parity
b) when house prices are stable or slightly rising for at least 6 months
c) Better yet, Buy a primary house with a detached rental unit so you can keep an eye
on renters and be there to fix things. You will have to fix things.
3) For stocks: The stock market is crazy volatile now.
a) Have cash to buy when a drop occurs for 1-2 days of more than 15% (The
last week of 2018). Research the company for any scandals and profit. Look at
prior stock prices (ie XOM, a major oil company dropped to 2010 prices on
Christmas Eve. (Just nuts))
b) Watch the value and:
i) Either hold for the long term (XOM pays 4% dividends)
ii) If the price bounces back to a 20% gain, sell and take your profits before the
next correction (ie crash).
“Bulls make money, bears make money, pigs get slaughtered” Don’t be greedy.
Nice advise i’ve seen so far BOB.
Jimyou always tank hard!!!!
There’s so much money to be made right now in stocks I almost want to put my RE investments to the side to focus on that. I’m up 70% since Christmas Eve. While everyone was panicking, I was gobbling up discounted stocks. It pays to be greedy sometimes! And now that RE is on a slight downward trend, I’m going to position myself for the discounts to come there too. If this summer is as bad as the last summer then the next Christmas Eve is going to be even better than the last.
I am millenial too and I waited the last couple years and save up while our job is stable.
We saved close to 450K but have no interest in buying in the current situation. Our rent has been really great to allow for saving. If the market has 20-30% drop, we will buy it.
I am millennial too and I waited the last couple years and save up while our job is stable.
We saved close to 450K but have no interest in buying in the current situation. Our rent has been really great to allow for saving. If the market has 20-30% drop, we will buy it.
If there is no drop in the next 2-3 years, we can wait. It’s a 15-30 years mortgage. No need to rush into a huge financial commitment like a lot of my friends do. I have no idea what would they do if one of the spouse lose their job due to layoff or life happens (cancer, disability, accident, etc). Paying $4000 in mortgage alone with bills for 30 years is crazy!
I am millennial too and I waited the last couple years and save up while our job is stable.
We saved close to 450K but have no interest in buying in the current situation. Our rent has been really great to allow for saving. If the market has 20-30% drop, we will buy it.
If there is no drop in the next 2-3 years, we can wait. It’s a 15-30 years mortgage. No need to rush into a huge financial commitment like a lot of my friends do. I have no idea what would they do if one of the spouse lose their job due to layoff or life happens (cancer, disability, accident, etc). Paying $4000 in mortgage alone with bills for 30 years is crazy!
So what seems to be the problem. You are a Millennial and saved almost 500K, do that for a few more years and you’ll buy your house with cash and then add a few rentals after that. You are in the 0.1% of Millennials. Congratulations!
I feel blessed in many ways but the problem is the housing real estate is over price now. I rather wait for 2-3 years and buy when everyone is selling. As long as my rent is affordable, I’m not in a rush to buy. I will definitely think about buying investment property too.
The Fed has so far dumped another $58 billion in assets from its balance sheet in February, the largest asset dump so far, and that, in a short month. This shows that for now the Fed has no intention of reversing QT, despite all the talk in the mainstream of the Fed going “dovish”.
At this level we are talking about 700 billion mopped from the system liquidity by the end of this year, on top of the hundreds of billions mopped last year. The impact will be greater than the interest increases.
Now I am waiting to see what snaps first – what is the weakest link in this debt chain. The corporate America already lost the appetite for new debt. No more debt means no more money expansion. With the massive QT in place we see massive money contraction. How can the interest on the massive debt binge in the last years be paid back? The interest is never created – that is the wealth transfer mechanism. Soon will see whose wealth is transferred.
How bad is Trump’s economy? GDP growth in 2018 was 2.9%, the best in 13 years.
Someone impeach this monster already!!!!
We need to get back to the good old days of Obama when GDP was growing at 1-2%
The TRump economy doesn’t help with the housing bubble. Used to be a Republican but voting for AOC/Bernie people next time. We need radical change in order to avoid this funny money debt driven fake economy.
You are ignorant of history. The “Green New Deal” will do just what the original New Deal did. A early rush of money into the economy (inflation) that boosted Roosevelt’s popularity for the 1936 election followed by a massive crash in 1937. It went on with the dust bowl etc until WWII broke out in Europe. GND = massive unemployment in the states that voted for Trump (Texas, West Virginia, Kentucky, North Dakota. etc) and a lot of outsourcing to China (where do you think solar panels come from?). A hundred TRILLION dollar debt for the thing and we’ll still have weird weather because that is what weather does. Look at weather history. One big Indonesian island explodes and you get two years of Winter!
It’s all a sugar high. A Temporary sugar high! Remove all protective regulations and offer a menial tax cut, which is already wearing down. And just like the wind you’ll be GONE AGAIN when things turn sour. Sad…..
Temporary? I suppose. Some day the imbecile American voter will elect a Democrat again, so yeah the economy will crash again some day. But for the next 6 years….full steam ahead to prosperity.
Ask and you shall receive.. https://www.cnbc.com/2019/03/01/atlanta-feds-closely-watched-gdp-tracker-shows-next-to-no-growth-for-first-quarter.html
PS before you call me a Trump hater I voted for and will vote for him again.
Real home/lot of genius: https://www.redfin.com/CA/Venice/760-Indiana-Ave-90291/home/6741907
Oakwood pentagon. Yuck.
I’ve noticed something recently in the MSM.
For years and years we were told millenials didn’t want to buy real estate. Cuz like hey man, r/e is like so boomer. Us hip cool young millenials would rather rent so we have more mobility to move to a new hip city at the drop of a hat.
And now all of a sudden I’m seeing more and more articles along the lines of “look at us poor milenials, we want to buy a house but it’s too expensive.”
And it validates what I have been thinking/saying all along. All the nonsense about milenials being different was just that. Nonsense. Milenials are like ever other generation. They rent in their 20s, buy in their 30s. Difference is, unlike every other generation, this entitled/spoiled brat of a generation wants me – the tax payer – to buy their house for them. Hence the rise of Bernie, Alexandria whatherface with the big teeth, Kamala and the rest of the socialists promising utopia for the avocado toast crowd.
Here’s some free advice: Ditch the $1200 iphone and daily $18 toast sandwiches and $15 craft beers. Start saving, and one day, not too long in the future, you too will be able to buy a house and become an adult.
I agree with you Mr Landlord.
Even Our Millennial wants to buy.
Too bad Trump’s policies have been driving up the RE bubble faster than wages.
I suspect Trump supporters will vote for Bernie next time. Trump has failed his base.
Republicans are just a disaster all around. They drove the economy on to the rocks to cause the Great Depression with Hoover and then caused the “Asleep at the wheel” Bush to drive the economy onto the rocks for the Great Recession. Thank goodness Obama was elected to save us all.
It puzzles me why people would vote Republican ever again. Trump is still driving up the Bubbles (and the deficits?) and history will repeat itself. Ocasio-Cortez and a very liberal Democrat Majority has been voted into the House. This is just the beginning of the end for Republican failed policies (again).
Bob,
Hip cool $17 avocado toast sandwich eating milenials who are too broke to buy a house aren’t Trump’s base. They voted for Bernie last time. They are lazy POSs that want the govt to take care of them. They’re also kinda dumb to believe that communism, which has failed 100% of the time, will work THIS time. LOL
As for your MSNBC screed against El Jeffe Donald…..I can’t even debate nonsense like that. Trump’s has given us the best economy in at least 2 generations. And you’re complaining. It’s bewildering. It really is. Only explanation I have is your hatred of Trump trumps your economic happiness. Which in a weird way I get.
As for ACO…she is going to get Trump re-elected. Best thing that could have happened to him.My favorite part of her plan is when we get rid of all planes and I take the choo choo train to Hawaii. That’s gonna be one hell of a cool bridge. LOL
You are right. The Millennials voted for Bernie.
I’m talking about the 99.5% of Trump voters who thought Trump would lower their rents and make homes more affordable. They also were promised by Trump a cheaper Health Insurance policy. Apparently, Trump lied since none of this happened.
Sure, there are the 0.5% greedy Trump voters who jacked up rents for these poor Trump supporters and gave them a $7.25/hour job while getting a Yuuge tax cut. The 99.5% see this and will vote socialist the next time. They’ve already started with the House. Republican policies are causing this revolt. Nobody to blame but themselves.
You are right. The Millennials voted for Bernie.
I’m talking about the 99.5% of Trump voters who thought Trump would lower their rents and make homes more affordable. They also were promised by Trump a cheaper Health Insurance policy. Apparently, Trump lied since none of this happened.
Sure, there are the 0.5% greedy Trump voters who jacked up rents for these poor Trump supporters and gave them a $7.25/hour job while getting a Yuuge tax cut. The 99.5% see this and will vote socialist the next time. They’ve already started with the House. Republican policies are causing this revolt. Nobody to blame but themselves.
Dont forget the ban on eating meat – thats another winning horse the left is going with.
I would take every fool that votes for that idiocy and put them on their beloved trains but they wouldnt like the final destination.
No Bob. You and the whole left never got it why Trump was elected, or you refuse to listen. Unlike Bernie voters, the Trump voters don’t vote based on who gives me more freebies. It is exactly the opposite. Most did not like Trump as a person. In a strange way, they liked him for not being PC – he gave a voice to people sick and tire of the PC from the left. They voted for him as a Molotov cocktail in the globalist/communist machine of the Democrats. It was exactly the opposite of what you say. Trump was a rejection of the communist policies of the left. With all the failings Trump has as a man, you have to give him credit for being very perceptive to the people needs. The Democrats are dull like a rock in that respect. As an example, take the current issue with illegal immigration. The Democrats think that the middle class likes to get more competition on their wages in a race to the bottom. They believe that the middle class likes the heavy traffic on the freeways and increase in rents because of millions additional people. They believe that the middle class likes the additional cost they have to pay in health care to accommodate the additional millions at the emergency rooms. They believe that the middle class likes to pay more in all sorts of taxes to pay for the food stamps, schools and welfare for these people. The cost of the massive illegal immigration encouraged by the democrats is supported by the middle class not by the billionaires behind their compound walls; it benefits the richest of the richest ONLY.
The Trump voters did not vote for him for health care; they voted for him to scrape the Obamacare. Due to all the Democrats and RINOs in Congress, he could not do that. However he managed to eliminate the penalty. That will precipitate the demise of Obamacare and eliminate most of the young healthy contributors in the system. Due to that, Obamacare will fall by itself.
Due to the heavy brainwashing of the youth in our education system, you might be right that the millennials will vote a communist like Bernie or AOC, but that does not have anything to do with Trump policies; it has to do with the education system being dominated by liberal socialists. Life will teach these young people some hard lessons the same way the youth in Venezuela was taught in real life what socialism is. I just hope that as they grow, their infantile way of thinking make room to some critical thinking. I hope the schools teach them critical thinking and they will display mature thinking as they get older. Otherwise we are doomed.
Flyover,
I feel like I must comment on this.
Trump got elected because:
1) He promised jobs which he did continue the job growth from Obama. However most of the of the jobs do not pay the rent. Rent is increasing much faster than wages. Trump followers are now waking up and will pick Bernie next time because he promised a minimal wage that will pay the rent. Trump has raised his rent for his tenants during the first 2 years of office. He is winning. His tenants are losing and will now vote for Bernie.
2) Trump promised to throw out ObamaCare because it is too expensive. He promised to replace it with a more affordable system. Well??? His voters have realized they’ve been conned. They will now vote for Bernie.
3) Trump created a Bogeyman that illegal aliens are taking your jobs. He is partly true, illegal aliens are driving down wages. However, Trump hires illegal aliens to clean his properties. Hmmm…. Illegal alien deportation is down since Obama. What does that tell you? People see this and will vote for Bernie next time.
4.) Trump promised MAGA. By driving up the US debt higher than ever before?
Trump is a good con man and the only thing he has accomplished so far besides empty promises is more jobs. These were created by giving corporations more tax cuts. That is good but the majority of these tax cuts go to stock buybacks which help shareholders. Not worker wages.
The conditions are similar to when Batista and Tsar Nicholas were thrown out for Communism. The workers revolted. Because of the policies I mentioned above, this will happen again. At Best, we will elect a Democratic Socialist like FDR or Bernie for many years.
” Ditch the $1200 iphone and daily $18 toast sandwiches and $15 craft beers. Start saving, and one day, not too long in the future, you too will be able to buy a house and become an adult.”
I’m a Millenial and I don’t own a $1200 iPhone, eat avocado toast, or drink beer. Even if I do, that’s not going to save 20% down payment either. I have 500k loan but have no interested in overpaying in this market
” Ditch the $1200 iphone and daily $18 toast sandwiches and $15 craft beers. Start saving, and one day, not too long in the future, you too will be able to buy a house and become an adult.”
I’m a Millenial and I don’t own a $1200 iPhone, eat avocado toast, or drink beer. Even if I do, that’s not going to save 20% down payment either. I have 500k loan but have no interested in overpaying in this market
Same boat here! No way I buy in this laughable RE market.
I do love avocado toast though. Avocados cost about 59 cents a piece, toast, salt is affordable too. A good self made avocado toast is healthy and saves money too!
Housing bubble is popping!!!! Buy after the crash!!! Huuuuuuge discounts!!!!
HA HA HA!! This is priceless. 63% of Millies have the sadz after buying a home. Why? Cuz uhm like uhm you know uhm it’s like uhm hard to like uhm take care of uhm like a home and uhm like you know? CNBC has all the fun details.
“The top reason millennials have regrets: Underestimating the hidden costs associated with buying and owning a home, including the ongoing responsibilities of maintaining it, is the No. 1 millennial homeowner frustration. It’s a common mistake, experts say, and it can be a costly one.”
So are Millies really this dumb? I mean do they really not know that there is maintenance on a house? Jezuz!! Did these special snowflakes never see their parents fixing a leaky faucet or cleaning gutters or anything like that growing up? Then again maybe they didn’t. When you spend every waking minute of your life on on social media, I guess you miss out on a lot of the world around you. I’d love to be there when one of the snowflakes finds out about paying property taxes for the first time. Hilarity ensues!!
Here the article
https://www.google.com/amp/s/www.cnbc.com/amp/2019/02/28/63-percent-of-millennial-homebuyers-have-regrets-heres-why.html
I have referenced these costs many times in rental parity calculation. I would argue that most House buyers have buyers remorse. Simply because RE is heavily overpriced. Wait until these buyers experience a crash and being underwater by 200, 300, 400k. That’s when the SHTF.
This article is symptomatic of a bubble peak. The last suckers get in, realize they made a mistake by buying sky high and blame costs of owning. Why even buy? Renting is like 1/4 of the cost. Live in the same house and let the landlord worry about the market downturn, maintenance, upkeep and liabilities.
The recommendation would be to not purchase during a bubble peak. If you buy low chances are you don’t regret it.
Hi Millie. 😉
If almost 2/3 of millennial buyers regret their purchase……..Why the heck would I buy then??? I admit I live with my parents. Gotta love the savings on rent and full fridge lol I consider buying when we get another 08!!! Lol
Honestly, I don’t mind paying more taxes. Teachers and school need it! As a teacher you won’t afford housing in LA. If we don’t deflate the housing bubble than at least pay more taxes so teachers can buy a home.
https://www.latimes.com/local/education/la-me-edu-lausd-parcel-tax-20190228-story.html
Maybe if those administrators stop having meetings in Orlando or other resorts and keep them in a building in LA, they will have more money for paying the teachers. It is not lack of funds but corruption and mismanagement of funds.
If the teachers unions would stop using those dues to elect stupid liberal politicians in Sacramento who spend billions on trains from Nowhere to Nowhere, maybe some money could be used for actual teacher salary increases. Think about how much the teachers salary can be increased with those billions wasted for the politicians buddies!!!
If those liberal politicians endorsed by the teachers union would stop with the nonsense of sanctuary state and cities, billions would be saved from providing free food, free school, free housing, free medical to millions of those illegals. Think about the increase in teachers pay with those billions saved and that on smaller classrooms!
Instead of thinking how much more the politicians should steal from producers, maybe you should elect responsible politicians who know how to administer the taxpayers funds. Otherwise, all the taxpayers will leave the state and you will be the one providing all those freebies for the poor from you stagnant meager pay. As a teacher, you should try some critical thinking and learn to connect the dots. Repeating the same stupid voting expecting different result is the definition of insanity.
Also, teach your students the disadvantages of electing socialists – general poverty where everyone is EQUALY poor. I am talking from experience. I lived under full blow socialism. When you’ll get there, you’ll not even be able to rent a studio, forget about eating – the shelves will be completely empty.
The consumer confidence index hit 131.4 in Feb., 2019, its highest reading since July 2007–just as the crash in stocks and real estate began.
A very high consumer confidence reading isn’t predicting good times; it is predicting bad times just around the corner. It is saying that consumers are so optimistic that they have already spent every last penny they have to spend. They have NO CONSUMER BUYING POWER LEFT to buy anything!
People will make due with whatever they can buy. You can’t expect homes to be sold every given day at an expected sales level. It also does not necessarily signal a change in the mood of potential buyers. Give it time.
That is the most ridiculous thing I’ve read in a long time. What it actually means is consumers are optimistic about their finances. Which means they will continue to buy things like houses, cars, vacations, etc.
Which means the crash all you perma bears are breathlessly waiting for is not happening. Now you may get your wish if Kamala or Bernie or Inslee wins in 2020. They will cause a nuclear detonation to happen in the economy. But it still won’t helo you since you will be unemployed and on welfare, hence no money to buy. It will help me since I will buy houses for pennies on the dollar and rent them to you. Or more accurately rent them to the govt with you as their tenant.
Hmmm….second look at socialism? LOL Look at all leftist regimes, the upper middle classes do very well. It’s the middle and working classes that get destroyed. Maybe I shouldn’t be so against that type of regime after all.
Very true. People are overstretched. Student debt and highly inflated housing costs are killing them. Wages have not kept up. No wonder they have buyer remorse after the first few bills fly into the newly purchased crapshack
Mr. Landlord, my date of “July 2017” in my last email was a typo; I meant to July 2007. I think the next recession is more than a year away and that the stock market averages will hit new highs in a few months. The powers that be (TPTB) have much more overpriced stock to sell to mutual funds, individuals and pension funds. They are in the process of transferring risky assets like stocks, overpriced real estate and risky home loans to others. Only then will TPTB pop the bubbles.
OK July 2007 makes more sense. I thought either you or I were hallucinating with a 2017 recession.
But come on dude, not this powers that be stuff again. Every day there are trillions of dollars traded on indexes around the world. These trillions of dollars are traded on behalf of tens if not hundreds of millions of investors. Do you really believe that there is a small group of people somewhere in a room controlling all that? It’s silly.
Oh great, Mr, Landlord is back from the abyss!! Now the whole forum will be dominated by “LOL” and “socialist” and “MAGA” comments ad nauseam with his diarrhea keyboard. Like a parrot, all Mr, Landlord can do is spout political rhetoric and hump the bubble from his zero lot line home somewhere along I-90 (maybe he has stretched into upscale Spokane Valley or even made it across stateline into Post Falls?) in grey high-crime Spokane. I’m from Spokane originally, it is quite the Glory Hole. Welcome back Mr, Landlord and thanks for doing God’s work and making the rest of us conservatives look like clowns. You are like the Ocasio Cortez of the right on this board. Congrats, you’re winning bro!!!
My goodness someone is snippy these days. Have you tried a low car diet? I hear that does wonders for mood swings.
Don’t call him Mr. Landlord. Call him Mr. Temporary. Cause as soon as we start to tank he’ll be Gone Again, just like he was last time. Fair-weather commentator. LOL. SAD.
Good point, he dipped for a while during the flash crash before the Plunge Protection Team rescued the stock market. He will do the same as this RE market continues to tank. His over leveraged Spokane valley duplex (big time landlord) will be upside down so fast, then he won’t be humping the bubble on here 24/7 and peddling NAR propaganda like a PEZ dispenser.
Plunge Protection Team. LOL
Do they fly in on black helicopters?
I thought you were a bit more rational than to believe in boogeymen like the PPT.
SAD!
An elderly, well to do packrat died and left a house built in 1922. A real estate agent found a copy of a bank statement which revealed that his lifestyle was a choice, not necessity. The 9900 sq ft lot and high quality of the original construction has produced a bidding war despite the fact that they had to haul away 11 dumpsters full of junk, trash and the results of rat infestation. At $599000 asking price, it is the bargain of the neighborhood. Restoration experts say it could take as much as $275000 to restore this Craftsman bungalow with 1190 sq ft. Since it is in a historical preservation zone, a total tear down probably wouldn’t fly. In that area, adding a granny flat of up to 640 sq ft is OK. The article states that the house is now in escrow. A 1906 hip-roof Classic revival cottage sold in the neighborhood for $900000 in a week on the market about one year ago.
https://www.realliving.com/homes-for-sale/262-S-Shaffer-Street-Orange-CA-92866-268311658
I read about this “Hoarder” fixer house.
In my humble opinion, it is all about location, status, and ego.
I can buy a damaged original piece of art for 600K and have it restored for another 300K making my purchase 900K. I would extremely enjoy it hanging in my living room but my enjoyment would also be the ego factor, the status, and the knowledge that I have the original. I could have bought a print for a fraction of the cost if I just wanted to enjoy the art.
IMHO, this house is similar. I could buy a small house in this neighborhood for 600K and spend time and 300K to fix it, and brag to my friends where I live. Or, I could buy the same house 30 miles away for a fraction of the cost and just enjoy it.
This house, like fine art, is prone to bubbles and the whims of the economy.
It must be my sane conservative side, but I think it is still overpriced.
On the other hand, if I had billions, to spend, what is a million? You only live once.
“It must be my sane conservative side,”…
Bob, I did not know you have a conservative side. I always thought you are a liberal. Any way, I like that you put “conservative” and “sane” in the same sentence. Should I conclude that liberals are “insane”?!….:-))))
I hope that you will use more and more your conservative side when you vote, especially getting older 🙂
Note that his property taxes last year were $705! House has been in the family at least 2 generations. he new owner may get a historic preservation tax break, especially because of the major amount of renovation is needed. See the Mills Act information:
http://ohp.parks.ca.gov/?page_id=21412
Orange is a Mills Act participant.
Housing Bubble 2.0 POPs
Next housing crash will be epic. If you decide to buy now you might as well give away all your cash to a NAR charity.
https://www.zerohedge.com/news/2019-03-04/it-begins-chinas-largest-properties-developer-will-sell-all-homes-10-discount
China real estate market collapsing
Every week for the past 25 years there’s been an article proclaiming the collapse of China’s economy. Much like how every day for the past 3 years there’s been a “Trump Is Finished” article in the MSM.
Hope springs eternal I guess…..
And rents are falling again
https://www.housingwire.com/articles/48324-rent-posts-largest-quarterly-decline-in-30-years-as-more-renters-become-buyers
Why buy if rents are falling?
Did you not read the headline. It asserts that rents are falling as more renters are becoming buyers. I guess these buyers aren’t listening to you.
And rents are definitely not falling in any decent parts of coastal Ca.
Interesting because here in the City rents have risen to a new high which is around 9% greater than last year. I don’t see rents coming down in the Bay Area at all. In fact I’ve seen them going up over the past year as I’ve been watching craigslist every few months to gauge how much we could rent our house if we wanted to move. In my rudimentary study I remember assuming $2800 or so last year and now I’m assuming around $3000.
With the earlier rumors that the tax laws will put more money in the pockets of renters I think the rise in rents makes complete sense. Renters thought they would get ahead with the new tax codes but landlords saw the ability to raise their rents effectively nullifying the generous standard deduction.
https://www.sfgate.com/cnet/article/San-Francisco-s-outrageous-rent-hits-a-new-peak-13653500.php
Why buy when rents are cheap?
Because housing prices also fall with rent. If you buy when housing prices are cheaper, you will never be a renter whiner screaming rents are too high. That is because eventually (10+ years) your fixed rate mortgage will only be a fraction of the current rent prices.
If you plan to move before 10 years, just rent. It is the obvious better choice.
This observation is based on historic fact.
Did you even read the article before posting the link and comment?
“Rent posts largest quarterly decline in 30 years as more renters become buyers”
“Now, rent is still up year-over-year though, as the fourth quarter of 2017 saw rent hit a level of $910. So rent is still up by $37 from last year during the same time period.”
“Despite those declines (and one slight increase), rents are still up nationwide year over year.”
“The largest year-over-year increase came in the West, where rents increased by $129 from $1,210 to $1,339.”
Nobody ever actually reads article content here, they just post the headline. There was something posted about Sacramento a while back where the headline said something like “SACRAMENTO HOUSING IS CRASHING!!!!!”. Then you read the article and prices increased by 5% in Sacramento year over year. The “crash” was in one neighborhood where only 4 houses were sold in the month vs 5 houses sold last year and that was interpreted as a collapse in sales. It’s like dude, bro, take at least a skim of the article before making a complete fool of yourself. Oh and learn to ignore everything you read at ZeroHedge. Treat ZH as entertainment and nothing more. The comments section is the best. But for the love of Allah, don’t make financial decisions based on what you read there.
Oh good now you gonna have people stampede one another for houses. What happen to the 50 – 70 % drop? Not!!!
Agreed. Rents are a bargain compared to buying. Houses are overpriced by 50-70%. But rents depend on income. Incomes for most Americans are stagnant so it’s no surprise that rents are stagnant or fall with all that new housing supply coming to the market. New homes sales data looks terrible. Increasing supply, declining sales and way overpriced. Expect this trend to continue. It comes down to: why buy and overpay massively if you can live in a dirt cheap apartment and save a lot of money? Just buy when prices decline by 50-70%, no?
why buy and overpay massively if you can live in a dirt cheap apartment and save a lot of money?
Do you, or your wife, ever plan to have kids? Do you plan to raise them in a “dirt cheap apartment” in a poor neighborhood?
When happens when you, or your wife, want kids, and yet, still no housing crash in sight?
come on now….who wants to have kids during the worst housing crisis in the history of this earth?? Having kids and buying at the peak is financial suicide. Probably the dumbest thing one (or two) could do.
Its pretty simple:
Epic Crash>Buy 50-70% off a nice big beautiful house in a fantastic school district>start thinking of having kids
No crash>no purchase.
Nothing goes up forever…just ask the 7Mio that foreclosed last time. As we all know every ten years (avg) the market in California crashes.
SOL, I have told Millie this many times. Life happens and people buy a house, waiting for the spreadsheet numbers to line up could be a long, long, long wait. Living in a cheap apartment in a sketchy part of town waiting for the big crash is not something the vast majority will do.
We’re in March and the spring selling season is revving up. No tank in sight!
The beautiful thing about the rents is the better and more affluent the neighborhood the cheaper the rent is when compared to cost of ownership. People renting out 1.5 million dollar homes for only 3-4k. It’s just so cheap. Their cap rates are less than 1% well below inflation.
Haven’t you heard? Alexandra (The Great) Ocasio-Cortez has issued an order to her millenial brothers and sister, to stop having kids, in order to save the earth.
I’m 100% with her on this. The fewer AOC followers reproduce the better we’ll all be.
Blankmind, “life can happen†in a house that you rent. Renting is much, much cheaper than buying overpriced crapshacks. No reason to buy sky high when you want to have kids. It’s just silly to throw your money out the window. When starting a family it’s not responsible to overpay 200-450k for overpriced houses. Just wait and buy low.
Ruh Roh Perma Bears!! This is the news out of Seattle today.
“Pending sales, when compared to January 2018, pending sales rose by 15 percent in January 2019, according to a recent analysis by real estate app and brokerage Redfin. This is the highest increase in the number of year-over-year pending sales in the city at one time since the end of 2016.”
There is a Millie somewhere in Bellevue right now thinking pffft this is just a blip. I’m not buying. I’m waiting until I can buy a condo on the 28th floor with a view of Mt Rainier for $150K. And this is why the perma bears never cash in. Seattle had a bit of a price drop over the past 6 months. Excellent opportunity to buy. But nope. The perma bear is not satisfied with a mere 5-10% discount. The perma bear’s motto is 75% OR GO HOME.
For Mr. NorCalFella: Seattle equity locusts are my bread and butter. On two fronts. First as Seattle gets more and more expensive, people cash out and move here, driving up our real estate. Seattle has become like San Francisco in many ways. It’s a city for young single people. Anyone who wants a family either can’t afford Seattle or just doesn’t want to deal with the bums and general insanity that Seattle has become. So they can move out to Kirkland or Bellevue and pay $1.4M for a 40 year old 1700 sq ft house. Or they can move to Spokane/Coeur Dalene and pay $400K for a new 2500 sq ft house. Take someone who bought a house in 2010 for $500K in Seattle. They sell it for $1.2M and have $800-900K cash (the increase in price and paying off the mortgage over the years). They come here, buy that $400K cash outbidding everyone else since, in their mind $400K is a bargain, even if the house is only worth $375K. Second, many of them move here but want to rent first before buying. Demand for rentals increases, rent prices increase, which increases the value of rental properties. Circle of real estate life. It’s a beautiful thing.
You probably won’t see this data posted by our RE shills.
One thing they dislike the most is data showing increasing inventory, declining sales and declining prices.
https://wolfstreet.com/2019/03/05/sharply-lower-prices-help-sell-new-houses-but-its-not-enough/
Real home of genius winner: https://www.redfin.com/CA/Santa-Monica/1124-Broadway-90401/home/6774278
I know people will say land value, but the lot is only 2100sqft!
Real home of genius winner: https://www.redfin.com/CA/Santa-Monica/1124-Broadway-90401/home/6774278
I know people will say land value, but the lot is only 2100sqft.
That house has weird, roller coaster pricing.
December ….. listed at nearly $2 million.
January ….. relisted at $1.8 million.
March ….. listing restored to $2 million.
The listing also says it’s on a MIXED USE! lot. Yes, the listing uses ALL CAPS. So I guess one selling point is that you can tear down and build a commercial property there. Which is true. I live in SM and know that street. It’s mostly apartments, condos, commercial and industrial buildings.
Single family homes have been squeezed out of that street. That house was built in 1909 — 110 years ago. A quieter, simpler era.
Seems a bit overpriced. I would consider making an offer for 175k.
Oh good, now we gonna have a stampede of buyers knocking one another over for the houses. What happen to price gonna drop 50 percent or 70 percents? NOT!!!
@ Jason,
This area of Broadway in SM is turning into a hot development corridor. You have $3000/month STUDIOS in apartment bldgs 2 blocks west at 9th and B’way. It shouldn’t be a SFR build here…all commercial or multi family. This truly is location location location for a developer. Lot value only!
@greengroovy
Is that home on Broadway in Santa Monica? That area is really starting to pop. Thanks
Where is epic crash?
“Expert†promised a hard tank
Yawn, don’t fight the fed
Ooops!!
Seattle median price jumped by $45,000 in February. No that is not a typo. Forty five thousand jump in one month. But muh jousing crash. Lol.
I just checked redfin data center and Seattle median is showing an increase of only 4k (January 2018 515k-January 2019 519k). It is showing a large decline from the high reached in May of 2018 586k (12% decline).
Where are you getting your data?
Same place that Trump gets his data. He pulls it out of his a$$.
It’s King County, not Seattle proper. King County is Seattle, Redmond (Microsoft HQ), Bellevue, Issaquah (Costco HQ), etc. It’s like LA County vs LA city.
“Year-over-year prices in February in King County saw an increase from $649,950 to $655,000, a 0.78 percent bump. That was also up significantly from January’s $610,000 median price for residential homes. This all happened in the wake of the snowiest February the Seattle area has ever seen. Showing activity dropped 41 percent during the week of the heaviest snowstorms.”
https://preview.tinyurl.com/y6m9cfmr
I just check redfin data center for King County. There is a decrease of 2k from January 2018 (577k) to January 2019 (575k). There is a 13% drop in home prices from the peak in May of 2018 (656k) to January 2019 (575k).
Redfin data? Is that like ZeroHedge data?
Their data is obtained from the MLS and in some cases from surveys of real estate agents.
https://www.redfin.com/blog/data-center
They release data on real estate much sooner than the the Census Bureau or HUD (which still constantly adjusts data). The Census Bureau just released December on March 5 so there is a significant lag.
“Housing starts jumped 18.6 percent to a seasonally adjusted annual rate of 1.230 million units in January, the Commerce Department said on Friday. Data for December was revised down to show starts declining to a rate of 1.037 million units instead of the previously reported pace of 1.078 million units.”
Granted I’m not a financial wizard like Mille, but 18.6 increase is a lot, I think?
So we have Seattle median up $45K in Jan, and national housing starts up 18.6% in Jan.
Conclusion: HOUSING CRASH!!!!!!! LOL
I think even Millie is starting to get it. Housing cooled off a little in the fall and early winter. Since the start of the new year it is back to a bull market in a bigly yuugely way. Y’all missed out again.
@Landlord – yep, house prices will just keep going up until everyone is priced out forever. If you didn’t buy in the last crash, you’re screwed for the rest of your life. It’ll never happen again.
Throbert,
We had a mini correction this fall. Both in stocks and real estate. Smart investors bought by the fistful. That’s the problem with perma bears like you. You never take advantage of opportunities.
Crack house or Mansion ?
Here is what $700K buys you right now in LA, LA, LAnd.
https://la.curbed.com/2019/3/7/18254871/los-angeles-homes-for-sale-west-hollywood-highland-park
BTW YOY rents in LA went UP 7%
https://www.rentcafe.com/average-rent-market-trends/us/ca/los-angeles/
Uh Ohhhh….Looks like real estate within major tech regions is about to get another lift due to upcoming IPO’s. No crash imminent at this time folks…carry on
https://www.sfgate.com/lifestyle/articleComments/Thousands-of-New-Millionaires-Are-About-to-Eat-13673223.php
Nah Bruh. Ain’t you heard? Stocks are about to tank hard, like 80%. I read that at ZeroHedge and ZH is never wrong about this stuff.
And I recall Millie insisting that nobody in Silicon Valley gets rich from stock options. That’s a myth. He knows since he works in tech and stuff.
Lol, the only analysis in that article is the claim of a realturd. Not since the .com crash have so many losers rushed to market. Lyft and Uber have run out of private investors willing to give them billions that go down the black hole so they are hoping the public is still stuck on stupid. They still bleed billions and have no road to profitability. Not only that the employees can’t sell for at least six months so they better hope the fed keeps interest rates repressed for a while, which becoming harder and harder. If their IPOs go like the Snap IPO then I would not count on a bump. And once the IPOs of all the money losing unicorns are finished, nothing left to hype this market past early 2020. It will just make the crash that much worse. Finally, if you look at studies of the Facebook and Twitter IPOs, we just didn’t see the bump that the realturds are now accepting as gospel for the new unicorns.
This is the size of money supply contraction in the economy, and it continues unabated till something major breaks:
https://wolfstreet.com/2019/03/07/feds-qe-unwind-reaches-501-billion-balance-sheet-falls-below-4-trillion-autopilot-still-engaged/
I’m wondering what will be the impact of this on RE prices. I guess it depends for how long it continues.
I think the thing folks miss about the current real estate prices is that, while the last boom was fueled by leverage, this boom is part of an oligarchic consolidation of ownership in America. Cheap money naturally consolidates and we’ve seen an amazing consolidation of wealth in stock and real estate. These prices will only go down significantly if one of two things happen (1) the elite lose control of the central banks and interest rates go up again, or (2) consumer credit runs out. I don’t think either will happen. The first would require political action. The second won’t happen because, with infinite deficit spending, there will always be ways to keep consumer spending going (student loan forgiveness, etc). So, I’ll say it — this time is different with real estate prices because we are now an oligarchical society in which capital is cycled through consumers but, by design, never stays with them. This isn’t traditional capitalism but, rather, Central Bank funded corporate totalitarianism, and dollar-devaluation (higher asset prices) is part of the strategy. So, i think you folks waiting for a big real estate bust are in for a very, very long wait. I’d love to be wrong about this but this has been going on for a very long time.
I think the thing folks miss about the current real estate prices is that, while the last boom was fueled by leverage, this boom is part of an oligarchic consolidation of ownership in America. Cheap money naturally consolidates and we’ve seen an amazing consolidation of wealth in stock and real estate. These prices will only go down significantly if one of two things happen (1) the elite lose control of the central banks and interest rates go up again, or (2) consumer credit runs out. I don’t think either will happen. The first would require people to take political action. The second won’t happen because, with infinite deficit spending, there will always be ways to keep consumer spending going (student loan forgiveness, etc). So, I’ll say it — this time is different with real estate prices because we are now an oligarchical society in which capital is cycled through consumers but, by design, never stays with any of them. This isn’t traditional capitalism but, rather, Central Bank funded corporate totalitarianism and dollar-devaluation (higher asset prices) is part of the strategy. So, i think you folks waiting for a big real estate bust are in for a very, very long wait.
Nice explanation. It could be different this time, ie: the crash cycle is extended. Here is a recap of Bruce Norris recent presentation – that the market is not doomed anytime soon. Bruce is baffled how affordability is still in the 20% + range in California.
https://www.youtube.com/watch?v=zCmh–_L2kI
I watched half way….had to stop because my belly was aching. Haven’t laughed that hard in a while. “It’s seasonal or the party might be overâ€
But what if someone who believes in “Modern Monetary Theory” is elected in 2020?
The house organ of the “oligarchy” had this to say about that:
https://www.washingtonpost.com/opinions/the-lefts-embrace-of-modern-monetary-theory-is-a-recipe-for-disaster/2019/03/04/6ad88eec-3ea4-11e9-9361-301ffb5bd5e6_story.html?utm_term=.de97c9592883
Of course we all know that MMT is not modern at all, dating back to Roman times. It has been tried many times in the last hundred years, like in the Weimar Republic, Zimbabwe and Venezuela.
NY City suburbs real estate is tanking hard!!!
Oh wait…it’s not.
Ooops.
“The Long Island housing market continued to gain steam last month, as home sales topped numbers from a year ago. Pending home sales in Nassau and Suffolk counties were up 5 percent last month, climbing from 2,177 in Feb. 2018 to 2,285 in Feb. 2019, according to preliminary numbers from an online real estate database. There were 958 Nassau homes contracted for sale last month, up 1 percent from the 949 homes contracted for sale in Feb. 2018. So far this year, pending home sales are up nearly 8 percent for the first two months when compared with the same period last year. Pending sales in January were up 11.3 percent year-over-year.”
Cue perma bear excuses and spin……
Oc county has 44% more homes for sale available compared to the same time as a year ago. Lol….no sellers market anymore. This won’t be a hot spring season :). I expect more price reductions as some sellers MUST move. Potential buyers can hold their horses and wait. Renting is your friend.
https://www.cnbc.com/2019/03/13/california-housing-seen-cooling-further-going-into-2020-ucla-forecast.html
Crash is here and will last 2-3 years
New homes sales continues to decline as expected. Sales prices have been reduced but the reductions can’t recover the huge decline in buyers sentiment. Why buy a Tesla now if you can buy it 6 month from now for a 20% discount? Same goes for housing….why not wait a couple years and buy half off?
https://www.zerohedge.com/news/2019-03-14/new-home-sales-slump-january-despite-drop-prices
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