patrick.net

Go Fraser! I agree.

just any guy says

The hard push to get back to where we were in 2006 has been on for about seven years. In the past few months, housing has been on its fastest tear in the US with the number of new permits being issued for construction in 2017 particularly leaping up like a spring lamb, and that’s with prices that are now generally higher than they were at their peak in 2006. We are showing all the same evidence of an irrational market that we showed going into the Great Recession:

In 2006 we had a surplus of homes. Now we have a shortage. Prices will go up until the shortage dissipates.

When prices start to plateau or drop, there won't be a shortage of homes for very long

Is this good time to buy the house in the bay area? I do not see any signs of correction unless stock market correct or startup bubble burst.

Strategist says

In 2006 we had a surplus of homes. Now we have a shortage. Prices will go up until the shortage dissipates.

I don't think we have a shortage of homes. I believe that's somewhat of a false narrative. A surplus of homes existed when the Great Recession kicked in, but housing inventory is at normal levels from a historical perspective, at least based on the graphs that I see.

Housing is a symptom, not a root cause. The last Economic crash was global, and started in China or Japan, not here. An economy afloat on inflation is a good starting point if you want to know what's coming, not attempting to connect housing trends across continents.

just any guy says

Strategist says

In 2006 we had a surplus of homes. Now we have a shortage. Prices will go up until the shortage dissipates.

I don't think we have a shortage of homes. I believe that's somewhat of a false narrative. A surplus of homes existed when the Great Recession kicked in, but housing inventory is at normal levels from a historical perspective, at least based on the graphs that I see.

Home buyers flock to Los Angeles open house
2 Hours Ago
The spring housing rush has officially begun out in the west, amid a time where housing supply is not meeting its demand. CNBC's Diana Olick reports.
http://www.cnbc.com/real-estate/
http://video.cnbc.com/gallery/?video=3000596667

If house prices and rents are both rising, that's a pretty good indication that there is a shortage.

just any guy says

I don't think we have a shortage of homes. I believe that's somewhat of a false narrative. A surplus of homes existed when the Great Recession kicked in, but housing inventory is at normal levels from a historical perspective, at least based on the graphs that I see.

If you are looking at the months of inventory, this number is meaningless because it is compared to sales numbers which are low.
The population of the US has increased by 40 millions since 2000. We just didn't add much housing at all.

What you need to look at is the inventory level / population. And you can bet it's damn low.

Low inventory -> high prices -> low sales.
(low inventory)/(low sales) = normal months of inventory.

Ok got it. So it really comes down to the fact that a job-loss recession is the only thing that would cause a potential crash in housing.

Ironman says

There's PLENTY of houses, just lack of people who can afford them

Obviously people can afford them or they wouldn't sell.

Tix2fun says

Is this good time to buy the house in the bay area? I do not see any signs of correction unless stock market correct or startup bubble burst.

Personally, I think houses in the SF Bay Area are overpriced beyond the point of absurdity. It's impossible to justify buying them on the basis of rents or local incomes.

They are running mostly on tech stock prices, and most of that is Apple, Google, and Facebook.

If those 3 stocks get hit, watch out.

joeyjojojunior says

Obviously people can afford them or they wouldn't sell.

But it seems like if inventory is low and prices are high, sales should be low as well. Otherwise, people wouldn't keep turning over homes at the same topped out price because they'd be under water. In order for sales to keep happening, prices have to keep moving upward in order for the pyramid scheme to continue.

Where's Logan? I need for him to barf up some charts.

Ironman says

Why do you think inventory for sale is down almost 20% this year ?? Did the state destroy 20% of the available houses?

Is this a trick question? Obviously because there are more buyers than sellers.

joeyjojojunior says

Obviously because there are more buyers than sellers.

obviously this is not obvious

FP says

joeyjojojunior says

Obviously because there are more buyers than sellers.

obviously this is not obvious

How about.....Not building enough homes to keep up with a rising population has created a shortage. So sellers won't sell unless they are assured of getting another home they want.
Homes that do come on the market get snapped up quickly. Try competing with 65 offers.

Strategist says

Homes that do come on the market get snapped up quickly.

This is a well-established trick of perception. And they got you too!

The idea is to make the market look super-hot by deliberately underpricing inventory so that there are many naive bids.

If they actually asked the price they hope to get, then there would be only 1 or 2 bids. But they ask far under what they would accept in order to deceive the public into thinking they have a chance, and therefore over-bidding to support the perception of a hot market.

This is why I have this proposal on my list in the header:

https://patrick.net/1303455/2017-02-28-require-a-publicly-advertised-price-for-a-house-to-be-a-legally-binding-offer-to-sell-at-that-price

rando says

Strategist says

Homes that do come on the market get snapped up quickly.

This is a well-established trick of perception. And they got you too!

The idea is to make the market look super-hot by deliberately underpricing inventory so that there are many naive bids.

If they actually asked the price they hope to get, then there would be only 1 or 2 bids. But they ask far under what they would accept in order to deceive the public into thinking they have a chance, and therefore over-bidding to support the perception of a hot market.

This is why I have this proposal on my list in the header:

I agree with you. It's a trick that generates a lot of interest and offers. They keep doing it, so it must be working.
Nevertheless, we still have a shortage of homes, because building new homes has not kept up with population growth. Until they build enough homes to catch up with the pent-up demand, home prices and rents can only go up.

Ironman says

Strategist says

So sellers won't sell unless they are assured of getting another home they want CAN AFFORD.

There, fixed it.

Ha ha. OK.
If they are considering moving up, they must think they can afford it.
If they are considering downsizing, they know they can afford it.

Ironman says

Apparently it is a trick question for you. Hint: the number buyers has nothing to do with the drop of available homes for sale. You can have a pool of 5 potential buyers or 5000 potential buyers, that has NO effect on if someone else puts their house on the market for sale.

Obviously. But it has EVERYTHING to do with your original question. There are absolutely more buyers than sellers if the inventory is decreasing.

Quigley says

There are oceans of privately held money out there, held by wealthy with a mind to wield a housing monopoly. It's a "no lose" situation when you own all available housing and buy whatever is reasonably priced to prevent prices from dropping. Prices stay high, you charge insane rents, and your investment only grows as prices inevitably rise.

So then why not try Georgism as the answer?

If the rich own everything, they should also pay all the taxes.

rando says

So then why not try Georgism as the answer?

If the rich own everything, they should also pay all the taxes.

you answered your question why not - because it is not in the interest of the rich

But we have democracy, at least in theory.

And that is the one thing the rich really fear. We could actually implement Georgism if enough people agreed to do it.

You may say that democracy is dead, but the election of Trump proves that democracy can still function even when the globalist oligarchy and their lapdog media outlets are implacably opposed.

Quigley says

held by wealthy with a mind to wield a housing monopoly

Yeah, that is all the wealthy think about - how to buy all the houses in the world. Whenever a house gets on the market, the "wealthy" snap it up! All these ordinary-looking folks you see around your neighborhood - just decoys of the wealthy so that you don't realize what is going on.

rando says

And that is the one thing the rich really fear. We could actually implement Georgism if enough people agreed to do it.

The rich know how to manipulate the plebs. They have had centuries to perfect the craft. Trump is one of them. The only way for the poor to gain anything substantial is by way of revolution, or the imminent danger of it (as it was after the great depression).

Sure, Trump is one of them in that he himself is rich and manipulative.

But it worked! He broke the stranglehold of the Business Party, as Noam Chomsky refers to the combined Democrat+Republican monolith. Trump is definitely not part of that monolith. He is something new, finally.

He escaped the dictates of our social betters telling us what we were and were not allowed to vote for. And he did it with the brilliant judo move of using the media's outrage to spread his message for free.

This gives me hope that something similar might be possible for Georgism.

The rich will not suffer under Trump. If he were engendering them in any meaningful way, they wouldn't have allowed him to be elected.

Did they allow him to be elected?

Looked to me like everyone and everything with money was trying to stop Trump at all costs.

Not everyone with money. They could have done more to stop him.

rando says

But we have democracy, at least in theory.

And that is the one thing the rich really fear. We could actually implement Georgism if enough people agreed to do it.

You may say that democracy is dead, but the election of Trump proves that democracy can still function even when the globalist oligarchy and their lapdog media outlets are implacably opposed.

I'd like to see a state try it. In fact it should be a state rather than federal issue.

Patrick, the thinking to use TAX(police force) to go against a selected group of people or their property is dangerous. If you use that on the selected rich, it could be used on any selected group of people. To fix the situation is straight forward. ECB, BOJ, PBOC, FED just let the rate be decided by market and stop QE.
The difference between the unworthy rich (there are worthy ones such as Bill Gates or Steve Jobs) and the poor is the unworthy rich knows how to use debt, AKA other people's money to compete while the poor only uses debt for consumption. Once the money becomes sound, and debt becomes scarce, the edge of the unworthy rich is gone, and the wealth transfer from the poor will be some what stopped.

last time wasn't "global" ?

"Once again, the number of potential buyers has NOTHING to do with inventory and if a current owner is going to put their house on the market"

You're wrong, but that wasn't the original question. Let me try to explain it again for you. If there were 10K homes on the market in January 2016 and now there are 8K homes on the market in Jan 2017, then there were more buyers than sellers in 2016.

Could be because some sellers changed their mind and took their home off the market. Could be because lots of people moved into that particular area. Could be because of 1st time home buyers. I don't know why there were more buyers than sellers, just that there were.

rando says

So then why not try Georgism as the answer?

If the rich own everything, they should also pay all the taxes.

Like the French 'wealth tax' (up to 1.50%) or you plan to tax land (not stocks, etc)

rando says

https://patrick.net/1303455/2017-02-28-require-a-publicly-advertised-price-for-a-house-to-be-a-legally-binding-offer-to-sell-at-that-price

No need to get all communist-like laws. You have the right to bid up for something if you really like it. Just make public offering price and selling price.

Patrick, the thinking to use TAX(police force) to go against a selected group of people or their property is dangerous.

--------------

So then why is The Income Tax not dangerous? It's only paid by the suckers that do all the work that allows everyone else their quality of life.

Why not tax Land instead of Labor? As a Free Market Capitalist, it makes perfect sense. We have plenty of land, and it won't become dangerously less desirable by having it bear the burden of a tax

"Holy crap, you just don't get it."

Holy crap is correct. I'm not sure how much more I can dumb this down for you. I could try to find a crayon font--would that help you read it easier?

"All that means that there are 2K less houses on the market.... PERIOD... "

And why don't you take a second and think about how that might happen.

errc says

Why not tax Land instead of Labor? As a Free Market Capitalist, it makes perfect sense. We have plenty of land, and it won't become dangerously less desirable by having it bear the burden of a tax

Yes, that's the beauty of Georgism.

This time? It was already global last time.

rando says

Tix2fun says

Is this good time to buy the house in the bay area? I do not see any signs of correction unless stock market correct or startup bubble burst.

Personally, I think houses in the SF Bay Area are overpriced beyond the point of absurdity. It's impossible to justify buying them on the basis of rents or local incomes.

They are running mostly on tech stock prices, and most of that is Apple, Google, and Facebook.

If those 3 stocks get hit, watch out.

Reminds me of Y2K, knew this family whose almost entire income was from stocks. They lived sort of expecting things to stay that way, and as we all know history it didn't work out well.

30-50% market correction in about 2 years. Let's see what happens after that.