US home prices surge. Will it hold on

By Tim Aurora   Follow   Tue, 26 Mar 2013, 2:58am PDT   11,479 views   117 comments   Watch (0)   Share   Quote   Permalink  

http://news.yahoo.com/us-home-prices-rise-8-130850000.html

US house prices jumped at the highest clip since 2006. So here we are . Let us debate if the prices increase is valid or just another bubble.

Here are the reasons why the prices may go ups

- Unemployment is down. Stock market is at record high ( though not inflation adjusted). Banking crisis is 5 years old
- Builders did not build enough houses in last 5 years.
- Prices are still low compared to the mean
- Lot of pent up demand. Basement kids are coming out
- Inventory is down as currently underwater folks cannot sell anymore
- Jingling mail homeowners are weeded out. Underwater folks who wanted to foreclose are done doing so
- Shadow inventory not high in desirable areas
- Population still increasing and they are not building land anymore.
- US house prices are the lowest in the world ( Ok not the lowest but compared to income vs affordability US cities like Atlanta and Dallas may be in the top 1%)

Why they will not go up
- Unemployment still high
- Investors may cash out bringing recently sold properties back to the market.
- As houses come out from underwater those homeowners will now be able to sell those home
- Shadow inventory still high at some places.
- Baby boomers ready to retire
- Renting culture is in vogue. These folks usually rent apartments and not houses.
- Europe still looking dicey

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iwog   befriend (49)   ignore (12)   Sun, 31 Mar 2013, 12:26am PDT   Share   Quote   Like (2)   Dislike     Comment 78

thomaswong.1986 says

It is the "Republican free market insanity" as Iwog calls it that created California being in the Global top GDP... 2nd to Texas... heck 50 years ago we were exactly like Texas.

You mean 50 years ago when the top tax rate was 80%? When banks had severe restrictions on interstate commerce? When we had the fairness doctrine in media and corporations could only own a single station or newspaper in any market? When anyone who charged interest over 10% was put in jail?

I find that Republicans are extremely ignorant when it comes to economics, but perhaps this comes from a near total ignorance of history. Seems likely.

upisdown   befriend (0)   ignore (1)   Sun, 31 Mar 2013, 2:28am PDT   Share   Quote   Like   Dislike     Comment 79

Philistine says

Did you read the rest of his post where he said this already?

You mean like these quotes from the exact same post?????

The Professor says

The argument that investers buy homes that nobody loves and then fixes them up
so that renters will have a place to live is getting old too.

And,,,,,

The Professor says

I blame investers and their ilk who are trying to make a fortune without
producing anything real. I also blame the system that makes it profitable to be
a rentier. There are way too many people not producing anything but making
fortunes manipulating markets.

Was that the points that were covered?

Philistine says

I would have had no problem buying a $300k gut-and-rehab 3 years ago, and living
the nightmare that is Remodeling a House and Corralling the Contractors (see:
'The Money Pit').

Well, here in the Midwest there's a few less zeros on that amount. And, us useless "rentier" investors have taken properties that were previously priced too high to renovate, and now due to low prices it allows some long overdue upgrades and changes. About 75% of the properties that we've bought over the last 5 years didn't even have insulation in the exterior walls. Plaster along with Celotex, and under-built roofs(1X6 ridgepole), galv pipes and even some tube wiring. The inflated market kept properties like that artificially high, which was mainly for tax reasons, and now that they're out on the open market they can be bought and updated because the price is in line with reality and makes it possible.

Yea, us useless "rentier" investors have bought and imporoved properties to where they are far better than when the properties were new, and now the rental income is justified(no rent subsidies or section 8 which was the norm prior), along with the higher(and realistic)assessment. The local public school that is in high demand has no problems due to us "rentier" investors concentrating within the parameters of that school district, compared to budget problems before.

The Professor   befriend (4)   ignore (3)   Sun, 31 Mar 2013, 2:44am PDT   Share   Quote   Like   Dislike     Comment 80

upisdown says

us useless "rentier" investors have taken properties that were previously priced too high to renovate,

...
The inflated market kept properties like that artificially high,

...
and now the rental income is justified

Who inflated the market?

My argument was that the rentier blew up the market to unaffordable levels in an effort to profit. Now they want to get more rent than they "invested". The average person wants to own a home. The investers have made this unfeasable.

If you want to justify gouging the renter for "double the PITI" because you have "bought and imporoved properties to where they are far better than when the properties were new", I don't buy it.

The Professor   befriend (4)   ignore (3)   Sun, 31 Mar 2013, 2:47am PDT   Share   Quote   Like   Dislike     Comment 81

upisdown says

The local public school that is in high demand has no problems due to us "rentier" investors concentrating within the parameters of that school district, compared to budget problems before.

But if the school district says you're cool, who am I to argue? Do you volunteer at the homeless shelter and rescue orphaned squirrels too?

upisdown   befriend (0)   ignore (1)   Sun, 31 Mar 2013, 3:08am PDT   Share   Quote   Like   Dislike (1)     Comment 82

The Professor says

Who inflated the market?


My argument was that the rentier blew up the market to unaffordable levels in
an effort to profit. Now they want to get more rent than they "invested". The
average person wants to own a home. The investers have made this unfeasable.


If you want to justify gouging the renter for "double the PITI" because you
have "bought and imporoved properties to where they are far better than when the
properties were new", I don't buy it.

Investors weren't even in the market here then. Irrational buyers and the "exuberance" that went along with it, coupled with banks and their BS lending convinced people to buy, refinance, or whatever because prices that went up in a very short time, would somehow continue. In less than 4 years, a couple bought a small(2br, 1 bath)bungalow having cashed out a couple of times, then tried to sell for $102,00, only to walk away and we picked it up for $31,000.

How do you somehow know "what the average person" wants? And, just how have investors not made that possible, or that they(investors) may even encourage/enable that the "average person" to buy a house, whereas they couldn't through a conventional loan/bank?

upisdown   befriend (0)   ignore (1)   Sun, 31 Mar 2013, 3:11am PDT   Share   Quote   Like (1)   Dislike     Comment 83

The Professor says

If you want to justify gouging the renter for "double the PITI" because you have
"bought and imporoved properties to where they are far better than when the
properties were new",

The Professor says

I don't buy it.

I don't care. Jealous?

upisdown   befriend (0)   ignore (1)   Sun, 31 Mar 2013, 3:40am PDT   Share   Quote   Like (1)   Dislike     Comment 84

robertoaribas says

You know, you could just grow up and quit bitching... the market is what it
is...

His position in life is his fault, not someone else's.

Bubbabeefcake   befriend (9)   ignore (4)   Sun, 31 Mar 2013, 3:49am PDT   Share   Quote   Like (1)   Dislike     Comment 85

curious2 says

Watch Consuelo Mack interviewing Robert Shiller. In such uncertain times, the most informed and thoughtful people can sound the least certain.

Thanks C2 , that was very thoughtful of you to post a comment of uncertainty and impending reversion

The Professor   befriend (4)   ignore (3)   Sun, 31 Mar 2013, 11:01am PDT   Share   Quote   Like (1)   Dislike     Comment 86

Patnet posts have given me insight into how "investors" think. They imagine themselves the genius who swoops down on a great deal, sweats equity into it, flips or rents, and makes a fortune, or at least enough money to eventually retire to a nice little tropical beach.

The real owners would not waste their time bragging about their economic prowess on the Internet.

upisdown says

Irrational buyers and the "exuberance" that went along with it, coupled with banks and their BS lending convinced people to buy, refinance, or whatever because prices that went up in a very short time, would somehow continue.

yep

thomaswong.1986   befriend (0)   ignore (6)   Sun, 31 Mar 2013, 11:51am PDT   Share   Quote   Like (1)   Dislike (1)     Comment 87

iwog says

I find that Republicans are extremely ignorant when it comes to economics, but perhaps this comes from a near total ignorance of history..

only ignorance from you, our high interest rates and tax rates, were paying to rebuild
the world economies and keep inflation in check . after they were all destroyed during WWII.... ring a fucking bell ?

the constriction over business came from FDR idiotic policies...

and as for FDR and SEC act of 33/34 ... what good did it do to prevent the public from
speculating into the stock market, ignoring all past best practices and acting with
'irrational exuberance' on future profitability. Clearly, the New Deal failed in the new century as it has failed today.

thomaswong.1986   befriend (0)   ignore (6)   Sun, 31 Mar 2013, 11:58am PDT   Share   Quote   Like (1)   Dislike (1)     Comment 88

robertoaribas says

housing prices have momentum, once they start going, they tend to keep going. they could for a year or even more

as Shiller has stated well.. much of the country has corrected except for LA and SFBA.

the term Permabear doesnt apply here. The correction back to the mean has validated Shillers statements he made since 2005.. its only time for LA and SFBA to make there final correction, after all.. we started our bubble back in 1998, for all the wrong reasons. The hype is thick in SFBA !

Tim Aurora   befriend (0)   ignore (1)   Sun, 31 Mar 2013, 12:09pm PDT   Share   Quote   Like   Dislike (1)     Comment 89

US house price gain is accelerating

http://www.usnews.com/news/blogs/home-front/2013/03/26/report-home-price-gains-accelerating

yup1   befriend (0)   ignore (2)   Sun, 31 Mar 2013, 12:31pm PDT   Share   Quote   Like (1)   Dislike     Comment 90

robertoaribas says

housing prices have momentum, once they start going, they tend to keep going.
they could for a year or even more

I am in the Sacramento area and home prices have been going up for 6 months or so. Yesterday, for the first time in 6 months, Zillow shows my home value decreasing. Not good when the spring buying season is just beginning. I am also noticing more price drops than price increases, this despite having a low inventory compared to the last several years. It will be interesting to see just where prices end up this summer. Only time will tell.................

thomaswong.1986   befriend (0)   ignore (6)   Sun, 31 Mar 2013, 12:36pm PDT   Share   Quote   Like (1)   Dislike     Comment 91

yup1 says

Yesterday, for the first time in 6 months, Zillow shows my home value decreasing. Not good when the spring buying season is just beginning. I

you want the moon and sky and the buyer can only give you sand...
whats the point of selling a home when too expensive for buyers.

yup1   befriend (0)   ignore (2)   Sun, 31 Mar 2013, 12:47pm PDT   Share   Quote   Like (1)   Dislike     Comment 92

thomaswong.1986 says

you want the moon and sky and the buyer can only give you sand...
whats
the point of selling a home when too expensive for buyers.

No I was just commenting on the market price and I was suprised to see a drop with all the hopium out there of ever rising prices again.

thomaswong.1986   befriend (0)   ignore (6)   Sun, 31 Mar 2013, 12:50pm PDT   Share   Quote   Like (1)   Dislike     Comment 93

yup1 says

No I was just commenting on the market price and I was suprised to see a drop with all the hopium out there of ever rising prices again.

well that may well be the volatility Robert Shiller was talking about some time ago. we may see equal drops and once again equal increases equal drops repeating .. all going side ways.. somewhere sanity has to kick in hopefully.

yup1   befriend (0)   ignore (2)   Sun, 31 Mar 2013, 12:55pm PDT   Share   Quote   Like (2)   Dislike     Comment 94

thomaswong.1986 says

well that may well be the volatility Robert Shiller was talking about some
time ago. we may see equal drops and once again equal increases equal drops
repeating .. all going side ways.. somewhere sanity has to kick in
hopefully.

Sanity would be good. Unfortunately in markets where investors have been the "market", if the price heads south I believe it has the potential to get really ugly again. Investors are fucking vultures and would love to pick through the dead bodies. Wouldn't it be sad for Roberto if Phoenix re-crashed boofuckinghoo!

yup1   befriend (0)   ignore (2)   Sun, 31 Mar 2013, 1:09pm PDT   Share   Quote   Like (2)   Dislike     Comment 95

robertoaribas says

patnet reminds me that loser a-holes, when proven wrong, will take a personal
attack as their last pathetic line on those who did well...

All you do is personal attacks!

yup1   befriend (0)   ignore (2)   Sun, 31 Mar 2013, 1:20pm PDT   Share   Quote   Like (1)   Dislike     Comment 96

robertoaribas says

not really, I'd pick up some more bargains...

You are all in so what are you going to use to pick up bargains? Oh you will magically liquidate that easy to move housing if the market slumps. You are small two bit player in a much larger market with much bigger players who might just eat you as a small snack. You caught a falling knife /golfclap. You are now holding the knife, if it falls again you are fucked. You are leveraged to 1 million bucks, no LLC nothing. Good luck surviving a fall should it happen. Hell you are fucked if the student loan bubble bursts I am sure most of your rentals are to students living off uncle sam handing their borrowed federal dollars to you as rent.

yup1   befriend (0)   ignore (2)   Sun, 31 Mar 2013, 2:03pm PDT   Share   Quote   Like (1)   Dislike     Comment 97

Roberto non of that changes the fact that if the Phoenix market starts to turn and burn you are fucked.

yup1   befriend (0)   ignore (2)   Sun, 31 Mar 2013, 2:13pm PDT   Share   Quote   Like (1)   Dislike     Comment 98

robertoaribas says

hmmm, so, my home at 1405 E atlanta, 85042, bought for $46K, seems to be
worth about $120K now, and climbing... inventory around it is dropping to zero,
foreclosures ending... maybe I'll sell it when it get to $140K, suck on
that!

If you really believe all that why are you not still buying up inventory?

The Professor   befriend (4)   ignore (3)   Sun, 31 Mar 2013, 2:20pm PDT   Share   Quote   Like (3)   Dislike     Comment 99

robertoaribas says

patnet reminds me that loser a-holes, when proven wrong, will take a personal attack as their last pathetic line on those who did well...

yep

yup1   befriend (0)   ignore (2)   Sun, 31 Mar 2013, 2:52pm PDT   Share   Quote   Like (1)   Dislike     Comment 100

robertoaribas says

how so? i'm collecting well over twice in rent compared to my expenses...

How come that number keeps going up? A couple weeks ago you said you had 6K/month in passive income, now 15k in income and it is well over twice the rent to expenses. So over twice would be at minimum 7.5k in passive income. We all know how much you like to brag, why didn't you brag about 7.5k in passive income it is far more impressive? Oh the tales we weave.........

yup1   befriend (0)   ignore (2)   Sun, 31 Mar 2013, 3:31pm PDT   Share   Quote   Like (1)   Dislike     Comment 101

You can't even keep up on your own shit that you post. Earlier today you said you collect $14,500 in rent. You must have rented out one of your slums for that extra $500 just this afternoon.

You also said "Also, I have six mortgages, and 15 properties... so 9 are debt free."

But you said this too "Even with 30% down, tremendous cash flow, 8 paid off properties, and a salary of $100K, plus ulta high credit scores, I got denied multiple times."

So is it 8 or 9?

But you also said "single family homes:

60K rented 825, worth 100K today
76k rented 950, worth 120K today
80K rented 1100, worth 140K today
85k rented 1150, worth 150K today
142K rented 1500 worth 225K today
140k rented 1500 worth 150k today
47k rented 950 worth 120k today
87K rented 1100 worth 150k today

condos
26K rented 825 worth 70K today
31.5K rented 775 worth 70K today
42K rented 875 worth 100k today
42K rented 775 worth 80K today.

Home that I know live in 230K worth 330K today, would rent for $1900+"

That equals 13? I mean your bragging aren't you, you would think you would not fuck up your bragging and deflate the numbers......

Fuck Roberto that is 1.1 million in purchased property you have said you have 1 million in loans what gives? Also that appears to be 12,325 in income not 14,500 and not 15,000. Unless of course you are counting the 1900 in rent that you dont get on your house?

And that is all from March 26 to NOW. 5 fucking days and you have posted that you own 8 and 9 with no mortgage and 13 and 15 properties, rental income of 12,325, 14500, and 15000?

For being a math professor, err Juco math tutor, your math sure sucks, or your story sure doesn't add up, which is it?

thomaswong.1986   befriend (0)   ignore (6)   Sun, 31 Mar 2013, 5:30pm PDT   Share   Quote   Like (1)   Dislike (1)     Comment 102

yup1 says

Sanity would be good. Unfortunately in markets where investors have been the "market", if the price heads south I believe it has the potential to get really ugly again. Investors are fucking vultures and would love to pick through the dead bodies. Wouldn't it be sad for Roberto if Phoenix re-crashed boofuckinghoo!

lower housing costs for Silicon Valley would attract jobs/employment. which we have
seen as Phoenix Az, and Omaha Nebraska will benefit from SV jobs. so price crash
does benefit lower cost areas. Once gone, difficult as hell getting it back.

The Professor   befriend (4)   ignore (3)   Mon, 1 Apr 2013, 2:20am PDT   Share   Quote   Like (1)   Dislike     Comment 103

robertoaribas says

do your own math; additionally, I STILL get: spring break, 1 month at christmas, and nearly 2 months off in the summer. Enjoy your job at the power company, skippy.

But are you happy?

David9   befriend (4)   ignore (0)   Mon, 1 Apr 2013, 2:48am PDT   Share   Quote   Like (1)   Dislike     Comment 104

For whoever wants to know, from this mornings listings of articles from here, I got this quote from a Mortgage Banker in San Francisco who describes a house via the article as an undiversified bond investment.

"My humble advice to prospective homeowners is to buy a house you will not need to sell. Buy and hold your Bond (I mean home) to maturity. Locking in once and a lifetime interest rate will have the most benefits if you’re not forced to sell your house to future buyers that may face interest rates twice as high as today."

What is this telling me?

1.) I see why Realtors are inclined to lie.
2.) This person implies prices could fluctuate with an interest rate increase.
3.) True, not much is likely to change tomorrow.
4.) I'm to just suck it up and be happy with my low interest rate and shut up.

Also, the personal factors that weigh on my viewpoints are:

1.) I did make out favorably from Housing Bubble 1.0, but that was after being upside down for 10 years.
2.) If I search for Real Estate in other parts of the Country, many times I instantly find properties at a price, location, and features I would be inclined to purchase.
3.) My current employment limits my geographical range of properties to purchase in California.

Tim Aurora   befriend (0)   ignore (1)   Mon, 1 Apr 2013, 3:29am PDT   Share   Quote   Like   Dislike (1)     Comment 105

thomaswong.1986 says

lower housing costs for Silicon Valley would attract jobs/employment. which we have

seen as Phoenix Az, and Omaha Nebraska will benefit from SV jobs. so price crash

does benefit lower cost areas. Once gone, difficult as hell getting it back.

I think you are barking at the wrong tree. As a percentage of incme US housing cost is probably the lowest in the world. If you are looking at any cul