Its like when Covid hit and the sheep freaked out about toilet paper and hand sanitizer and no one could find any until the manufacturers started producing more of it. Asia was still basically undeveloped from that perspective. small balances could attract a different rate than large ones. A dollar will probably buy less food and electricity in 10 years is all I know. I cannot believe Wolf let your comment stand. Doublespeak, anyone? It’s about 1.5 X their income. The Bezzle. Headline: “Low interest rates keep Twin Cities home sales rolling along.”, Minneapolis/St. At that point, the game falls apart. It is ashamed what has happened to it, because it is a beautiful state. Save 5%/Yr of Med HH Income toward a 20% down payment on median home price takes over 6 decades (assumes static income & home prices). 2) RE 2020 rotate like casinos roulette. Sooooo, perhaps with unlimited J-Pow free (M)agic (M)oney (T)ree housing gravy, we can hit 3,000 square feet by 2025??? That means the vast majority of people who have houses with mortgages that high, cannot afford them. 5G ain’t about faster video on an iPhone but a blistering improvement in business process and driving costs down even further. So Cal jimbo and others will be busy with short sales. I’ve seen plenty of people with high incomes who still act like fools with their money and are carrying three houses. Brutal. the great RESET will be brought to you by yet another crony financial group, this time the WEF with assistance from the IMF. And suddenly that “housing shortage” has turned into a glut. Party pooper me said, “You do know the framing and finishing lumber is the cheapest portion of your home”? I agree. Oh don’t woory, it’s been extended to Dec. 2021.. so inventory will remain tight for a year. Buying stocks right now feels like buying at a top. they loan it.”. We’ll adjust, eventually. Then by 2H2019, the housing market strengthened due to low rates and a strong stock market. But Repos, Dollar Liquidity Swaps, SPVs Mothballed, US, Global Corporate Giants Not Amused Mexico Finally Forces Them to Pay the Taxes They Owe →, https://assessor.saccounty.net/DeclineInValue/Pages/Review%20Period%20Open.aspx, https://www.niche.com/places-to-live/san-rafael-marin-ca/, “Exodus” in Full Swing: November Rents Swoon in San Francisco, New York, Boston, Los Angeles… But Skyrocket in Other Cities, The State of the American Office: Suddenly Emptying Out Again Under the Second Wave, Vacancy Rate at Iconic Manhattan Tower with 899 Apartments Hits 26%: This Shows How Fast & Massive the Exodus Has Been, The State of American Restaurants, by City: The Catastrophe of the Second Wave, This Spike of New Businesses is a Doozie, on Several Levels. In the end, we’ve trended toward a market with a scarcity of properties, which causes prices to increase. Been on a long term population growth rate trend. Not 15% more dollars traded hands in home sales. Most will be working their finances on the wrong end of this when it develops more. “People bought their new home without first selling their old home.” Yeah, its called over-extension. Last I looked it was about 2% annual population growth. They are not buying homes with inflated prices or Teslas. “Seriously, I can’t see any losers here. There is just so much money out there I don’t know how you get deflation. Listings were up 10% year over year for September @ 7,771 new ones. Did the Fed “prevent” those crashes? 5) Rentals smell bad. If you can’t buy assets with the dollar, it’s useless. :-(. I’m pleased to see someone is paying attention to deflationary forces — most of the time it’s the tiresome of the squawk of the inflationistas, all evidence to the contrary notwithstanding. Off McMillian sure is wild who was your agent if you don’t mind me asking? The remote wfh would change landscape drastically when all is said and done. If the Fed just keeps printing to suppress rates, at some point, they’ll cause massive inflation overnight. Then during the good times you put away for the bad. I invite everybody to consider the following simple fraction: Median House Price in USA / Median Cost of a Gallon of Gas. In order for that to happen, buyers need to be able to service higher and higher loan balances. Crisis situation allows unusual measures for the States. Repriortizing the home in daily life. jdog: I think your data on Phoenix is outdated. A vaccine is NOT possible for a cold virus…only treatment options. 1. The declining value of the US dollar will only help the housing market, not to mention the trillions escaping the Fed manipulated US treasury market in search of alpha. I feel in this Great Bifurcation, there will be permanent winners, and perhaps permanent losers too. The website claimed to be a family run local business. Paper money is not a requirement to live (or is it? Since that time, there have been 19 recessions/depressions, that the Fed has been powerless to stop. Covid won’t last forever. There is no “market” for rates — the Fed sets rates. There’s no reason why we have to tolerate tons of our housing in our largest, most expensive cities being bought up by foreigners who show up to the sale with cash. i would say don’t give them any ideas, but i fear this has been the plan all along. The demand is said to be particularly hot for homes in the $2-million-plus range. Wolf, you have a very powerful name indeed.. “They print (create) money, and then they loan the printed (created) money.”. -fine dining (severely limited) A housing bubble occurs when housing prices are inflated beyond … Men were REAL jerks back then. 3. This going on for very long will dry up down payment liquidity and cause a reverse price imbalance. Sadly the government has little interest in correcting the matter– existing homeowners/voters feel wealthier by the day. “The economy has just split into two, and rich people are able to access capital almost for free.” And probably just pay the interest, no principle, which is zilch. That interest rates will go deeply negative and prices will go stratospheric. 5) They will pay two mortgages, double the maintenance, RE taxes & insurance on both, with extra cushion from the bank, to cover monthly expenses until they sell, settle down and to spend on whatever they want, because of the banks largesse. Okay, maybe that’s three things. Once people realize they do not have to be in debt and they can pay off their forbearance – they will flood the market with supply at the tune of 7%-10%, “But this craziness in the housing market is not sustainable.”. But they’re losing $1200/month in revenue aren’t they? * Both the numerator and denominator will increase at ever-escalating rate Phoenix area in AZ) are booming because everyone (and his nephew) is moving here. https://www.housingwire.com/articles/in-a-bid-for-stability-fhfa-and-fha-extend-forbearance-policies/. If we look deeper into the numbers, this tells a scarier story for San Diego’s housing. Unfortunately all of them ended up leaving their homes and the homes being sold in a fire sale or as a foreclosure. That revenue is going to be smaller than current market rentals, but when packaged together into a giant rent sucking REIT the income does constitute a tax liability, after a walk back in corporate taxes. I agree. Senior executives with extensive lobbying budgets are no longer at the beck and call of contentious consumers and have hollowed out their smaller competitors. So far this is all credit driven. I look forward to hearing from you! Its not going to fade away in the next few months. I like the saying that bubble’s are caused when your neighbor who is obviously not as smart as you is living the dream with the big house, new car and bragging about his investments. Nearby house went to under contract status in 2 days, no way it didn’t get asking price. The extent of virus/lockdown damage is not yet fully known yet. If it had been a bidding war, if somebody with a loan had been ready to push for more had been preferred, I’d never have gotten my little house. So long as banks continue to offer loans to prospective buyers I see no reason why housing prices could not continue to rise indefinitely. This is the start of a frantic hard-asset grab brought on by the ever-increasing-prospect of an imminent monetization of debt leading to hyperinflation. If the feedback remains positive the oscillations become progressively more extreme until the system blows itself apart. La Mesa, CA 91941. There’s still not enough supply in my area and seeing the chart outlining national supply at ~ year 2000 levels makes me think these high prices are here to stay simply for the reason that we’ve added 60mil people yet still have the same number of free units. www.campbellsd.com, The 3 Steps of Our Guaranteed Home Sale Program. But the politicians keep advocating just a little more socialism.” – Milton Friedman. What a wild card this one is???!!! Experts have pointed out a number of reasons as to why they are forecasting a drop in California home prices. (sarc). None of these trends seem to be in danger of changing in the near future, meaning the forecast for 2020 is quite robust in terms of property values (though buyers may face some challenges in their search for homes). But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally.”. -socializing (severely limited) At the rate things are going, in about 12 months, it will be hard to get something below 3M. With WFH many buyers must be thinking this is their last chance in this life before everywhere gets too expensive. 9. COL is about half in Phoenix what it is in San Diego. It is highly unlikely that the majority of them can afford private schools. Jon W-already here. Between 2006 and 2010, in addition to the housing correction, there was also a minor correction for incomes. Wolf gets in some zingers at times too…the humor keeps me semi-sane, HA…, Charlie Sheen for Pres?—–>”Make winning great again!”. They don’t want to become part of the rising 225K statistic. As I mentioned on other thread, I rent identical unit and my rental price is at least $1500 less. “In a bid for stability” .. houses will go up another 20% by then. I think most of the expensive cities are going to suffer. As an aside, our local large campground is bursting at the seams. 2) Few options : Mumbai Fire Brigade, India. Wall St. What will be interesting to see is how many people flee the once darling city and move to regional areas in Victoria or abandon the state all together and move to NSW or Queensland. inventory is low – even here in the Foothills. It is true that states like Utah, Nevada, and Arizona have been recipients of the great California exit for both residents and companies. According to the latest San Diego real estate market update for August 2020, inventory of single-family homes has dropped 51.2%. Where I am at, it’s way cheaper to rent identical place. They don’t care if the market loses monetary value. Yep, American “leadership” has done a helluva of a job over the last 65 years. If you think that is going to happen, you will have to explain why…. His comment was he has a tenant that is not paying, but the value of that rental, which is a SFR in South Redondo Beach is going up so fast, he is not that worried about any of it. The Fed was shedding MBS through February. Moreover, everything eventually seeks to move toward finding an equilibrium. More job losses to middle level folks on the way. Otherwise, San Francisco truly becomes Baghdad by the Bay, with spectacular scenary, nice architecture, cool weather, empty highrises, a dead tax base and nightmarish streets in most of the town. The dystopian future is here. As most markets, including real estate (yes, so cal jimbo even real estate !) Seems like there’s plenty of prop13 noise with a couple of initiatives on the ballot that would remove prop13 tax protection from all commercial properties, which also include residential rentals, not just malls, offices and stores. @RightNYer ” Grapes of Wrath ” migrations. At least in 10 to 15 years we can all say in cult like fashion, “of no fault of our own”….”nobody could have seen this coming”…. San Fran will bounce back very quickly once the virus is brought under control by a vaccine. Sounds like Wake County (Raleigh, NC). Yes, I’ve been saying this for a while now. There is panic in apartment buildings. I also live in Arizona and it’s a whole different world here (btw, long ago i lived in SF for 7 years as a renter, in lower Nob Hill). Californias economy grew 4.7% in the 12 months ended in February compared to the national rate of 2.8%. Of much greater significance and consequence is the substantial transfer of wealth from the nation’s treasury to war profiteers. There will also be a big increase in the number of properties for sale as those that want to sell over the past three months were prevented from doing so. The definition of hyperinflation is inflation at 50% or above per month. Trailer sounds good- oh wait those are financed and therefore insanely expensive right now. If you really want to help home buyers, the central bank should stop messing with interest rates and let price discovery happen. We are experiencing the earliest snowfall ever. So much winning. Making a choice/freedom requires courage to live with the consequences, something neither shoppers nor sheeps have. Ah yes, and then Orange has a housing measure on the ballot & a bunch of Wealthy Homeowner NIMBYs are running a big “no homes! Next Viet Nam. The often repeated. However, I think a blue wave would be more inflationary than a red wave. Coldwell Banker Realty. That’s real life. With the entire country recognizing that Covid is at best a 2 yr issue (2020-2022) people are intellectually coming to the realization that their home is going to be the primary source of entertainment for the foreseeable future. Sports fans, this is what happens when a run-amok government agency like the Fed takes over a previously free and basically efficient market, the mortgage market. Could we go one better? From first hand experience… the real estate market has pretty much gone berserk. If you have separate debts, try to pay off the debt with the highest interest first, even if it’s a small one, then work your way down the line to the next highest interest rate. Interest rates in the USA have been negative for quite some time, check out the Chapwood index for details. We haven’t built enough housing for our growing population. This in turn destabilized the housing market (which over the previous 30 years had been the most stable in American history) and initiated the drive to offshore labor. And unlike 30 years ago the prices in Queensland are no longer cheap either. The housing bust of the mid-2000’s will still be fresh in a vast majority of people’s minds for at least another 20 years. Buy nothing. If you use the most simple analysis of the stock market we are at 3 sigma above regressive trend line. Since we got rid of the mark to market rules, there won’t be any foreclosures or very little. Thanks you Alan Greenspan and Fed spawn. And a stones throw from my office in Orange CA you get this. The Once-Hot San Diego Housing Market Has Cooled. Death rate between 24-44y is slowly increasing also. When you have huge sums, it does not seem that easy to do. “Women and children were chattels until not terribly long ago in historical terms.”. The system will always backstop these assets, what is happening now is “the tell”. I feel like that’s the way real estate usually is lately, though. This may be a tail risk, but the entire bubble of the past decennium is based on the premise that central banks are omnipotent and if it suddenly turns out they are not, this can cause mayhem. Look at the San Francisco inventory chart (active listings). They examine things from the macro national perspective, so things can absolutely diverge from the narrative at the regional/local levels. That’s incredible. SW Montana is under similar pressure. BTW 17% delinquency is even higher than I expected. I followed an add for an online “we buys homes- cash” company. High prices equal big bank profits, huge property tax bills, nosebleed rents for those who can’t buy, all the goodies government wants. Maybe not NYC, San Fran, and Seattle, but definitely out here. Investors buy homes and turned them into assets in their portfolio. Toyota did that when they moved from Torrance, CA (South Bay LA) to Texas (I think Irving). I just don’t know what to do. In Ventura County, sales fell 49.4%, while the median price fell 1.7% to $580,000. I do not hate CA, I lived there over 50 years, until I could no longer stand it. Good luck with that. I didn’t see the article, but if it’s in SF, it would have said “San Francisco.”. China In San Diego County, sales fell 40.7%, while the median price rose 3.5% to $590,000. If the feedback is positive the system begins to oscillate. Just for a reality check. you win! Shacks stay shacks and the kids move on. I have looked at an exchange, but passed because I would lose the prop 13. Maybe people should squat in a tent city on their sidewalks. Maxing out leverage is living dangerous with almost certainty to get wiped out in a recession. We are going to buy a safer place. Larger and larger populations of refugee-like homeless people are demoralising to everyone- not just the homeless. That said, if I lose like-kind-exchange, my business of moving and aquiring more land assets is finished growing, as I do not have the cash reserves to pay up to 40% fed taxes, and state taxes as high as 11%, on any future land I exchange between business entities. If inflation is greater than your ROÍ, it’s negative no matter what the numbers show. 4:05. The politics will reduce CA to the equivalent of a mendicant 3rd world country. While the common refrain is that the $3 trillion the Fed printed ended up in the stock market, most of it is just sitting on the large banks’ balance sheets. The limiting factor is money, which is not in short supply at banks these days. Campbell Team You can donate. I have been holding all my assets other than my house and car for the last four years, 20% in gold and 80% in cash on the basis I was being prudent and would be in an opportunity to gain from other people’s losses. Price distortion by the Fed at least in the asset market has made price discovery a derivative of Fed policy. The City was long described by its “housing shortage” that drove up prices and rents though there has been plenty of housing, but all high-priced, and people couldn’t afford it. Dave has gotten wealthy teaching the following: 1. Mexico does not let non-citizens buy real estate in Baja California (because otherwise, rich Americans would buy it all). The house im renting sold for $300k in august, but my rent is less than the mortgage with 20% down would be. A healthy balance sheet would have more assets than liabilities. Earlier in the investtment, the outperformance was much larger because of leverage. If that trend is indicative of what is coming it will be a death blow for the economy. Did you know Baghdad used to be one of the most advanced cities in the world under the Abbasid dynasty? Nothing wasted on Uber/Lyft, they want to build out commuter jets and helicopters, their takeover of plebian transport, taxis and shuttles is just the cover for this highly profitable venture. keep the tiara on, though. I am smelling a second round of virus interruptions of some kind. Foreigners at this point could probably buy the entire USA a few times over, and they will, if there will be any doubt about the purchasing value of the dollar. “Inventory” just means what people put on the market. But, there are distinct differences that indicate the housing market may follow a much different path. BS. HH? Add “Cool Water” In … If you think about it, it is actually a very strange assumption that central banks can keep rates low by printing money. Timing is nearly impossible, but in general it’s probably a good time to be a seller of assets and wait for better pricing. Connect. If I buy an $800K place, the only way to walk away is buy a $500K place before letting the $800K place go, right? We also have very attractive interest rates, which creates an abnormal demand for housing. Take the elevator to the street level at the BART Embarcadero next time when you are in the City. it is never different, the laws of mathematics cannot be denied. Housing Market Goes Nuts, Everyone Sees it, But it Can’t Last by ... (born/raised in San Diego where my family had been since 1910. The key factors that caused the 2008 housing market crash. The who-is look up for the web site’s host address listed dozens of “local” we-buy-homes-cash websites all across the country, each with a different owner. Something shouldn’t happen then it does and then vv. It is likely to have a tiered interest rate attached to it, i.e. If you have some savings what are you going to do today? Can’t agree, at least for a long time. The danger with what the Fed has done is that the economy no longer works without continued asset appreciation. Debt out the wazoo is old stuff, pretty soon it’s equities out the wazoo. Further QE along with serious fiscal stimulus can drive stock markets even higher. AI is set to start taking away mid-level professional jobs and companies will spend faster on automation. The high-end housing market is drawing in those that are generally smarter with their money. i have a few quibbles with his program, but for the typical math challenged, never had to learn how to balance a physical checkbook type of american, his program is like a remedial home economics class over the radio, but for “adults.” it is needed, especially for those who listen to the radio. While not enabling a down payment by the dispossessed masses, it will act as a guaranteed income stream to the rentiers. The EU has kept rates low this way for years and Japan for decades. Lot’s of good memories. Imagine what will happen to housing prices once the central banks give every human on Earth a CBDC (Central Bank Digital Currency) account. please identify any time in the last several decades when there has been deflation. I don’t believe prices will crash until interest rates rise, or the economy totally tanks. So if even 1% of the population finds suddenly that it wants to move, that’s a big surge against the baseline 5%. It can enable it’s citizens to buy R.E. opened (coinciding w/Nikki Hailey’s assist) Charleston. It is just a matter of time before that becomes evident…. I would say that Californians are the ones driving up home prices here in the greater Phoenix area mostly. You possibly can’t dump millions of foreclosures simultaneously in January, but I don’t think it can last indefinitely. 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