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You forgot the real 2008 problem. Overpriced housing with overstretched borrowers. Many markets are/have returned to that with creative financing creeping back.. When, not if but when, the economy goes south there will be a crash. Bonus points, the deficit will soar to 2t or higher. Good to have the party of fiscal responsibility in charge.
Given that there is no subprime lending crisis like there was over a decade ago, any housing correction would come elsewhere.
What are the possible triggers:
Interest rate hikes - heard of plans to raise rate 4 times in 2018
New tax plan - in Jan and Feb I’ve seen absolutely no slowdown or concern with reduction in tax benefits
Recession or stock market correction
War
Natural Disaster - massive earthquake would certainly shake things up in the Bay Area (no pun)
You forgot the real 2008 problem. Overpriced housing with overstretched borrowers. Many markets are/have returned to that with creative financing creeping back
Yikes, sorry, very passionate on this issue. So, what is different now? Instead of resetting time bomb rates, we have the opposite problem of wages not sustaining high prices. We had the same phenomenon this time, like last time, where using median sales price as a measure, the decline is not noticed until it is already well under way and volume all of a sudden stops and we go from shortage to glut of homes.
FYI, I'm not a housing bull. I think prices slide sideways for a while. 4ish years is my guess. After that, I think they start to take off once Millennial's grow up and start buying houses.
So Millennial's starting to buy and low interest rates in 2022ish is when I think it starts to take off after a slow period here.
I am noticing banks don't want to hold onto foreclosures, they are going to take what they can get to avoid holding a property at auction, NOT possess and list. They found out, the hard way, that holding a foreclosed property will pretty much double their losses due to vandalism and deterioration.
I look at foreclosures all the time to flip, and maybe half of them are so bad, they should be bulldozed instead of renovated.
Essentially every real estate article in the San Jose Mercury News or SF Chronicle is simply a puff piece written by realtors and spoon-fed to reporters, breathlessly proclaiming that prices will rise ever faster, when in reality, according to the Case-Shiller index, Bay Area prices have risen 2.93% on average for the last 10 years.
Patrick saysEssentially every real estate article in the San Jose Mercury News or SF Chronicle is simply a puff piece written by realtors and spoon-fed to reporters, breathlessly proclaiming that prices will rise ever faster, when in reality, according to the Case-Shiller index, Bay Area prices have risen 2.93% on average for the last 10 years.
Last 10yrs starting at what month? As we know, there was a crash in 2008. The reference point you take here to arrive at 2.93% can have huge impact.
Patrick, one eye opening detail I learned from this site years ago had to do with annual rent:price ratios. In lower class areas like Vallejo or East Oakland, that ratio could be over 10% while in higher class areas like Palo Alto or Burlingame it could be as low as 4%. That means it's typically cheaper to rent in higher class areas like the Peni...
bob2356 saysYou forgot the real 2008 problem. Overpriced housing with overstretched borrowers. Many markets are/have returned to that with creative financing creeping back.. When, not if but when, the economy goes south there will be a crash. Bonus points, the deficit will soar to 2t or higher. Good to have the party of fiscal responsibility in charge.
I thought you hated the tea party. Can't have it both ways.
I've also looked at all my neighbors and many have refied and done cashouts on houses they've been in for decades.
bob2356 saysYou forgot the real 2008 problem. Overpriced housing with overstretched borrowers. Many markets are/have returned to that with creative financing creeping back
That was 2008, this is 2018. Homes are more affordable now, and those 2008 lending conditions do not exist anymore.
Home prices being overpriced or underpriced are in the eyes of the beholder. My eyes say, home prices are underpriced.
But what's interesting is that we've seen plenty of vacant homes in our neighborhood bought with foreign money where the owner is banking on the equity growth. The ones that bought in the last several years are making a killing on their unoccupied homes (at least on paper). It's amazing, truly.
Sniper says
I've also looked at all my neighbors and many have refied and done cashouts on houses they've been in for decades.
How do you find this out? Do you have access to non-public data?
BayArea says
But what's interesting is that we've seen plenty of vacant homes in our neighborhood bought with foreign money where the owner is banking on the equity growth. The ones that bought in the last several years are making a killing on their unoccupied homes (at least on paper). It's amazing, truly.
How did you determine the citizenship of the buyers of "plenty" of houses? That's amazing, truly.
The foreign buyer boogey man keeps popping up time and time again. Yet the percentage of real estate owned by foreigners has remained the same for decades.
I for one am far from a housing bear. I've been buying steadily for 6 years now. But I'm getting out of Vegas for sure, it's getting frothier by the day. Moving into markets that are undervalued and not changing much.
Not going to happen.
Deeds and mortgages are public records available online at the county clerk's office.
Nope. Interest rate hikes have happened lots of times before. Rising rates does not cause a housing correction.
Strategist saysNope. Interest rate hikes have happened lots of times before. Rising rates does not cause a housing correction.
Rising interest rates are looking to be a significant factor in popping the Toronto/Vancouver markets.
How would you determine on a mortgage or deed document if it's FHA or not? Just searched some I know are FHA in my area, there's no indication of down payment or type of loan.
Cool. Then we're all fucked. An entire generation won't be buying houses. I feel bad for older people because then there's not a chance in hell they can sell the complete garbage they built in the 90's, when they were what, 35 years old and so much more advanced then Millennial's who are just now starting to hit 35 on the front end.
The deed shows the purchase price, the filed mortgage shows the financed amount. Doing the quick math, I see they put approx. 3% down.
You will easily get $125 per night per cabin for 15 days a month.
Are you looking around your house or some other area? While the search itself is most certainly simple, you're not aggregating enough data to come out with any true trend searching on a clerks or recorder of deeds site.
Also assuming that data is accurate.
That's just my one small town and does not represent a trend by any means, anywhere else in the country.
Not going to give away my work life here, but haven't seen an FHA loan closed in 3 years on 60 properties roughly.
You're also in NJ which is high property tax and I believe income tax. So why would anyone with a brain sink a huge down payment into a home in that area?
Leverage is king in a high COLA area when you can dump and run if you don't want to pay your mortgage.
We really should not allow foreign money to own American land.
Airlines are in a price war with respect to HI lately as well.
You forgot the real 2008 problem. Overpriced housing with overstretched borrowers. Many markets are/have returned to that with creative financing creeping back.. When, not if but when, the economy goes south there will be a crash. Bonus points, the deficit will soar to 2t or higher. Good to have the party of fiscal responsibility in charge.
Sniper saysI track a bunch of houses sold in my area and look up the mortgages. By far, the majority are all going 3.5% down, FHA loans. Hardly any are putting down any substantial down payments. Plus, these new loans carry PMI for the life of the loan, unless they refi down the road.
These people are underwater the minute they walk into the house. Plus, the appreciation in the area has been marginal at best, so they're not playing the high leverage game to maximize their equity. Prices have moved sideways for many years.
This tells me that people are really stretched financially, and aren't saving money. Any downturn in the housing market, and all these people are screwed and underwater.
I've also looked at all my neighbors and many have refied and done cashouts on houses they've been in for decades. So any downturn and all these people will be underwater on houses they've lived in for a lon...
Fortunately, we are in a situation where we can work almost indefinitely. My wife and I were just talking about that. If someone left us with $4M net worth after taxes today, I don't think very much in our lives would change. Yes, we would be debt free with not a financial worry in the world but we would still work. I would work for sure although possibly incorporate a certain hobby I have into the business. Screw the Cessna. I want a Mooney!
https://www.controller.com/listings/aircraft/for-sale/23975309/1992-mooney-m20j-mse
Hi guys,
Given that there is no subprime lending crisis like there was over a decade ago, any housing correction would come elsewhere.
What are the possible triggers:
Interest rate hikes - heard of plans to raise rate 4 times in 2018
New tax plan - in Jan and Feb I’ve seen absolutely no slowdown or concern with reduction in tax benefits
Recession or stock market correction
War
Natural Disaster - massive earthquake would certainly shake things up in the Bay Area (no pun)
Comments 1 - 40 of 60 Next » Last » Search these comments
Given that there is no subprime lending crisis like there was over a decade ago, any housing correction would come elsewhere.
What are the possible triggers:
Interest rate hikes - heard of plans to raise rate 4 times in 2018
New tax plan - in Jan and Feb I’ve seen absolutely no slowdown or concern with reduction in tax benefits
Recession or stock market correction
War
Natural Disaster - massive earthquake would certainly shake things up in the Bay Area (no pun)