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Used house prices rising too fast


By tovarichpeter   Follow   Tue, 22 Jan 2013, 1:31am PST   1,742 views   33 comments
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http://www.cnbc.com/id/100397644

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Call it Crazy   Tue, 22 Jan 2013, 1:34am PST   Share   Quote   Permalink   Like (1)   Dislike (1)     Comment 1

....."Healthy housing market gains are historically driven by increasing employment and income, not by lack of supply; the latter leads to price bubbles. First-time home buyers, who generally account for 40 percent of the home-buying market or higher are still under-represented at just 30 percent, according to the Realtors. This is due to tighter credit conditions in the mortgage market and now decreasing affordability."

....."December's disappointing drop in home sales, month-to-month is a clear warning for the housing recovery going forward. Rising home prices are not the sole measure of a healthy market. Supply and demand need to fall closer in line, and a robust economic recovery should be driving both home sales and prices."

Peter P   Tue, 22 Jan 2013, 1:36am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 2

It is a boom bust cycle. A classic example of reflexivity.

Call it Crazy   Tue, 22 Jan 2013, 1:39am PST   Share   Quote   Permalink   Like (2)   Dislike (1)     Comment 3

Must.reinflate.the.bubble.at.all.costs.

David9   Tue, 22 Jan 2013, 1:50am PST   Share   Quote   Permalink   Like   Dislike     Comment 4

Peter P says

A classic example of reflexivity.

I learned a new word, thanks.

As I mentioned once before, the cash investor house flippers are out in full force here in Southern California, all the way to Fontana!

Locally, in the San Fernando Valley and Los Angeles the same, flip, flip, flip, and people are buying. Go figure.

PockyClipsNow   Tue, 22 Jan 2013, 2:29am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 5

David9 says

Peter P says

A classic example of reflexivity.

I learned a new word, thanks.

As I mentioned once before, the cash investor house flippers are out in full force here in Southern California, all the way to Fontana!

Locally, in the San Fernando Valley and Los Angeles the same, flip, flip, flip, and people are buying. Go figure.

Yep its as designed. In investing it sometimes seems like there is no free will , rhe feds push a button, rates go down again, flippers and landlords buy and first time buyers get scared and buy if they can outbid the others. Its planned central economy forevermore.

Philistine   Tue, 22 Jan 2013, 2:36am PST   Share   Quote   Permalink   Like   Dislike     Comment 6

David9 says

Locally, in the San Fernando Valley and Los Angeles the same, flip, flip, flip, and people are buying. Go figure.

We're done with it. The last three houses we looked at were flips. In various states of good, bad, worse "improvement". They all had recorded sales within the last 9 months, and now relisted for 30-40% higher.

That is all the LA market (south of valley, north of I-10) seems to be right now--or total dumps in need of a gut and remodel. No in between.

David9   Tue, 22 Jan 2013, 2:49am PST   Share   Quote   Permalink   Like   Dislike     Comment 7

Philistine says

We're done with it.

Same here in all respects. I have looked at 3 properties in the last two weeks. The only reason to buy would be to bet the price will go up, which it very well may! Doesn't fit my life right now. How many properties could 'really' have sold if 1.) they were bought for cash at the court house steps 2.) Someone did buy for less in the last two years and is flipping now ??

edvard2   Tue, 22 Jan 2013, 3:12am PST   Share   Quote   Permalink   Like   Dislike     Comment 8

I was on a plane a few weeks ago and the people behind me were real estate investors coming from LA to the Bay Area to look at "Investment" properties. Somehow people seem to have totally forgot the mess we're still getting our of and how it was driven by way too many people viewing houses as mere investments and not simply as a place to live.

I remember when we were looking this spring: As soon as I walked into a house that obviously had big box home improvement store furnishings, cabinets, and so on, I walked out. Most had clearly been bought, slapped back together, and put back on the market. Honestly it would have been better if some of these had simply been left alone and re-sold instead.

APOCALYPSEFUCKisShostikovitch   Tue, 22 Jan 2013, 3:19am PST   Share   Quote   Permalink   Like (4)   Dislike     Comment 9

A house is not worth living in unless it has been flipped 100x before you moved in and therefore you can be safe in the knowledge there will always be another asshole who will take it off your hands for 100x what it is actually worth.

David9   Tue, 22 Jan 2013, 3:26am PST   Share   Quote   Permalink   Like   Dislike     Comment 10

edvard2 says

coming from LA to the Bay Area to look at "Investment" properties.

Not one of the properties I saw, but one advertised as a 'standard investment flip', The owner on Property Shark was from New Jersey !

edvard2   Tue, 22 Jan 2013, 3:42am PST   Share   Quote   Permalink   Like   Dislike     Comment 11

When we bought things were pretty bad and there wasn't a whole lot for sale then. That was in the summer. I don't really pay a huge amount of attention but it seems like there's even less for sale around here now. Makes me curious if the Spring will be better.

David9   Tue, 22 Jan 2013, 4:37am PST   Share   Quote   Permalink   Like   Dislike     Comment 12

Not singing the praises of Texas, but the State did avoid the first housing bubble and no evidence of the second housing bubble most are seeing here in CA:

"In 1998, following the Savings & Loan debacle, Texas enacted a law­—under none other than George Dubya Bush—limiting mortgage borrowing to 80 percent of the appraised value of a home. My awesome powers of deduction tell me this means that you can’t buy a house in Texas without putting 20 percent down. This shielded the Lone Star State somewhat from a housing bubble."

And

"But a major difference between Texas and other states during the boom was that Texas required any homeowner seeking to refinance a mortgage or take out a home equity loan to have at least 20 percent equity after taking out the new loan. Moreover, no one could refinance a home mortgage more often than once a year."

I am very happy the California budget is balanced now (So I hear) But is it in the best interest of Californians to have investors flying in from as far away as New Jersey ?

CMY   Tue, 22 Jan 2013, 4:39am PST   Share   Quote   Permalink   Like   Dislike     Comment 13

Philistine says

We're done with it. The last three houses we looked at were flips. In various states of good, bad, worse "improvement". They all had recorded sales within the last 9 months, and now relisted for 30-40% higher.

A friend of mine has been going through the same thing. He's frustrated because these flippers aren't doing their own pre-sale inspections, and he's finding a lot of them have some time-related issues that aren't visible to the naked eye.

He tries to get them down on price, they refuse, and the cycle starts anew. I suggested finding a neighborhood he likes, researching every home on a particular street and sending out letters in the hopes that a well sorted and upgraded place may turn up on his radar, pre listing contract.

It's just a nasty time to be looking for a sub 700k home in SoCal.

lostand confused   Tue, 22 Jan 2013, 4:44am PST   Share   Quote   Permalink   Like   Dislike     Comment 14

David9 says

Not singing the praises of Texas, but the State did avoid the first housing
bubble and no evidence of the second housing bubble most are seeing here in CA:

Funny isn't it-regualtions saved the Texans!!! I will be moving back finally next month-just in time for a massive bubble . I mentioned before, my colleague here in the mid-west just bought a 50k house(it is a foreclosure) and it is an individual house that rents for 900 bucks a month. About 5-10k of maintainance needed-but otherwise good to go.

Of course today morning was in the negative F with a minus 15-25 wind chill in some places. Minneapolis has a -5F as the high temperature of the day-and Lord only knows what the wind chill is. That I won't miss!!

David9   Tue, 22 Jan 2013, 4:58am PST   Share   Quote   Permalink   Like   Dislike     Comment 15

robertoaribas says

never needed 20% down to buy in Texas

Um, I think you do need 20% down, according to ehow:

http://www.ehow.com/list_6793167_texas-mortgage-laws.html

And my first paragraph was from this article:

http://reason.com/blog/2011/08/15/dont-mess-with-the-texas-housi

Possibly changed in 2012? (Wouldn't be bad for me he he)

David9   Tue, 22 Jan 2013, 5:02am PST   Share   Quote   Permalink   Like   Dislike     Comment 16

lostand confused says

Funny isn't it-regualtions saved the Texans!!! I will be moving back finally
next month-just in time for a massive bubble .

Well, welcome back to California ! New bubble n All. Yes, here in El Ay, we have had some of those awesome California sunny, bright, mid 70's days, just perfect, it is.

Gragorin   Tue, 22 Jan 2013, 5:29am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 17

This reminds me of a shithole I saw in San Jose this weekend. It was posted for $360k for a 3/2 at about 1300 square feet. However, after you get there they tell you it has $80k I liens, has. 1% short sale fee attached, and oh yeah.. The current residents are chain smoking hoarders and the house needs about $50 in repairs. I even heard the realtor say that the bank, a German one, was expecting offers in the low $400's at least. I just couldn't believe it.

David9   Tue, 22 Jan 2013, 5:52am PST   Share   Quote   Permalink   Like   Dislike     Comment 18

Gragorin says

the bank, a German one

Gragorin says

I just couldn't believe it.

Yeah, it's hard to accept the banks are running the show, in all regards as stated by PockyClipsNow below:

PockyClipsNow says

Its planned central economy forevermore.

Heck, I was looking at lower end properties than you were.
For 159.9k, a one bedroom one bath, 660 square feet, apartment conversion with wall air. Dirty, Dirty, Dirty, every cabinet, every closet, the shower door was broken, the balcony was literally turning into pebbles, and nothing was upgraded. It did have a peek a boo mountain view as it was on the 3rd floor which is why I wanted to see it. It sold right after the weekend, guess someone else didn't mind the thought of 30 years of payments plus money up front to make it nice.

David9   Tue, 22 Jan 2013, 6:20am PST   Share   Quote   Permalink   Like   Dislike     Comment 19

robertoaribas says

call a mortgage lender in texas.

I'll ask some people I know in Texas who help me with my property there.. tbc

David9   Tue, 22 Jan 2013, 6:48am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 20

robertoaribas says

maybe the new york times might reference things a bit better?

Yes, you're right ! Learned something else today. There is *Much* Sh*t on the internet.

Those two articles I posted contain incorrect information as I have found since that there are downpayments lower than 20% in Texas as well as down payment assistance programs.

errc   Tue, 22 Jan 2013, 7:44am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 21

Texas house prices remain more sensible because they don't suffer from the kind of nimbya ism that the left coast goof balls do, so they build to meet demand. Their more sane property taxes in place of stupid state income taxes allow for a healthier economy, and their education system is leap years ahead, so their people aren't so easily duped by whatever the next gold rush flim flam is

lostand confused   Tue, 22 Jan 2013, 9:02am PST   Share   Quote   Permalink   Like   Dislike     Comment 22

errc says

Texas house prices remain more sensible because they don't suffer from the kind of nimbya ism that the left coast goof balls do, so they build to meet demand. Their more sane property taxes in place of stupid state income taxes allow for a healthier economy, and their education system is leap years ahead, so their people aren't so easily duped by whatever the next gold rush flim flam is

Were you being sarcastic?

HEY YOU   Tue, 22 Jan 2013, 11:22am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 23

"Used house",that's great.

This house was owned by a little old lady who took excellent care of it.
It's just like a new one. You couldn't find a better deal. lmao

errc   Tue, 22 Jan 2013, 11:31am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 24

HEY YOU says

"Used house",that's great.

This house was owned by a little old lady who took excellent care of it.

It's just like a new one. You couldn't find a better deal. lmao

Or how about used house price appreciation. Try explaining that to someone that has been brainwashed to buy into the idea that a house increases in value over time, even as it decays away over time. In the year 2113, this shitbox will be worth a bajillion dollars

errc   Tue, 22 Jan 2013, 11:49am PST   Share   Quote   Permalink   Like   Dislike     Comment 25

robertoaribas says

errc says

Or how about used house price appreciation.

really? My home that I'm sitting in right now, was built in 1968. It sold then for under $30K.

Today, it is worth over $300K and climbing...

your tinfoil hats are on too tight!

You misunderstood my post. I was quoting hey you making a joke about used house as if a used car salesman were hocking it.

I know prices always go up,,,,I said good luck explaining why to somebody. Most things depreciate due to time decay, and houses are no different, but where real estate differs, is you get the land rights under the house as well, and governments that run perpetual growth ponzi pyramids are reliant on land values increasing into perpetuity as they are basal to the value of the currency

mell   Tue, 22 Jan 2013, 12:11pm PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 26

robertoaribas says

Fair enough. However, in my world travels I had some severe shocks: homes similar to my home in nice parts of Bangkok, or Manila are much more valuable than they are here... Despite in the case of the philippines, a nearly 15 fold difference in average wages to US.

IF the US population keeps growing, and urban areas keep growing, there comes a point where a home with a yard becomes extremely valuable. they can build condos and apartments upwards forever, but there is truly only so much land in close in a major city.

even a 2 or 3% population growth over the years makes a huge change.

I think this has less to do with populations growth or land shortage (there is plenty of land in the US) but also with the attitude towards houseownership which has been and still is the 'American Dream' (also thanks to mucho lobbying). There are countries with much denser population for example in Europe where house prices are mostly flat over time and stay affordable - likely because houseownership is not that valued, not peddled by a lobby (agents make far less) and because the people may have less appetite for risk.

bob2356   Wed, 23 Jan 2013, 12:59am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 27

robertoaribas says

really? My home that I'm sitting in right now, was built in 1968. It sold then for under $30K.

In 1968 the price of gas was 20 cents a gallon and you could buy a brand new mustang for $2500.

bob2356   Wed, 23 Jan 2013, 1:14am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 28

robertoaribas says

However, in my world travels I had some severe shocks: homes similar to my home in nice parts of Bangkok, or Manila are much more valuable than they are here.

I was willing to believe you were a real estate investor until this post. There is no way to compare Bangkok and Manilla to Phoenix. They are both major port cities and capital cities. Both cities are their respective countries center for commerce, industry, government, education, tourism, culture, and transportation. Both are to some degree land locked. Phoenix is endless suburban sprawl in the middle of nowhere with limitless desert for expansion in every direction. SF or NY would be a valid comparison but Phoenix, no way.

lancedalton   Sat, 2 Feb 2013, 2:08am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 29

Where are all the foreclosed homes??? Why are the lenders NOT releasing these into the market??? Because they are manipulating the current housing market. Get ready for a flood of REOs to hit the market. If you are a buyer, sit on the side lines, this market value increase is FABRICATED. Prices rising too fast, low inventory, high unemployment....all these are not the recipe for a healthy market. The banks are manipulating this market. A healthy market has a healthy inventory level. Investors are taking their cash from a bank that pays them nothing and then they move it into housing where rents fetch a better return. We need the banks to come clean and report on the backlog of REOs they are holding. Oh my neighbor has not paid his house payment or prop taxes for 18 months. He is just waiting for the sheriff to ring the door bell. BofA hasnt even forclosed yet, he simply is getting free rent which sould cost him 5,500 per month in Encinitas calif. The upper end market is soon to take a big dive out here.

The Professor   Sat, 2 Feb 2013, 2:40am PST   Share   Quote   Permalink   Like   Dislike     Comment 30

lancedalton says

Oh my neighbor has not paid his house payment or prop taxes for 18 months. He is just waiting for the sheriff to ring the door bell. BofA hasnt even forclosed yet,

More anecdotal evidence of shadow inventory that is yet to see the light of day.

Why would a sane person continue to pay when their house is only worth a fraction of their loan?

New Renter   Sat, 2 Feb 2013, 6:14am PST   Share   Quote   Permalink   Like   Dislike     Comment 31

The Professor says

lancedalton says

Oh my neighbor has not paid his house payment or prop taxes for 18 months. He is just waiting for the sheriff to ring the door bell. BofA hasnt even forclosed yet,

More anecdotal evidence of shadow inventory that is yet to see the light of day.

Why would a sane person continue to pay when their house is only worth a fraction of their loan?

Because of the greater fool of course!

inflection point   Sat, 2 Feb 2013, 9:56am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 32

Robertoribas,

You are mistaken. Your house has not appreciated. Rather the dollar buys less today. Send your thank you to Ben Bernanke and the Fed.

The Professor   Sun, 3 Feb 2013, 12:56am PST   Share   Quote   Permalink   Like   Dislike     Comment 33

robertoaribas says

inflection point says

Robertoribas,

You are mistaken. Your house has not appreciated. Rather the dollar buys less today. Send your thank you to Ben Bernanke and the Fed.

good thing I spent all my cash on houses then... instead of leaving it in the bank!

Now you're talking.

Cash is worth less than it was because there is more of it. I think the little mini bubble in housing we're experiencing is because those with money (more money) know that they had better trade their paper in for something real before their paper is worth less.

Gold, silver, property, anything will be worth more than paper when they print more and people lose faith. Property will probably be the best investment as you can't sleep on or collect rent from precious metal.

In addition what are the people that save metal going to buy when paper becomes worthless? Property.

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