patrick.net

I'm at work, will reply after.

15-20 years ago, Gen-X were in their late 20's to mid 30's and ready to buy their first homes; Baby-boomers freshly minted by the dot-com boom (those who cashed out before crashing, or simply had high salaries before stock options) were eager to buy vacation homes / 2nd homes.

Today, the usual age group for 1st-home in their late 20's to mid 30's, the Millennials, can't even think of affording their 1st homes while paying mandatory health insurance and college loans. So it's not even a topic.

Besides, while young people who rented houses (like 15-20 years ago) thought about issues like when to buy (i.e. over-priced vs. buy-now-or-priced-out-forever), people who live in their parents' basement don't have to think about renting vs. buying at all.

Housing is 1/6 of USA economy.

https://www.nahb.org/en/research/housing-economics/housings-economic-impact/housings-contribution-to-gross-domestic-product-gdp.aspx

whitewater says

I remeber the fever pitch on Patrick in 2006-2008.

Unless liar loans come back, or any other toxic credit products, as a regular way of purchasing a home, I don't see a huge housing crash. I was one of the biggest bears in housing for many years on PatNet and didn't buy until 2012, so I'm not some housing perma bull.

Inventory is still way too low in places where people want to buy (around 60-70% of historical "norms").

But when I start seeing gardeners owning two homes in Corona California again, then I'll start to believe there is another bubble.

Goran_K says

Unless liar loans come back, or any other toxic credit products, as a regular way of purchasing a home, I don't see a huge housing crash. I was one of the biggest bears in housing for many years on PatNet and didn't buy until 2012, so I'm not some housing perma bull.

One thing to watch is the number of houses sold with 3.5% down FHA loans. These people were underwater the day they moved in. It wouldn't take much of downturn in the market for these people to be in trouble if they need to sell. I watch all the local sales in my area, which is just typical resales, and the majority are buying with very little down. Very few are even putting 10% down. 3% - 5% seems to be the most popular.

If these people run into income or job issues, it can be really easy to just walk away, just like in 2008, since they have no equity in the house. Plus, many have gone back and ATMed their houses before rates creeped up.

Prices in my area have moved sideways for years, and now I'm seeing reductions. It wouldn't take much of a decline in prices to make even the refis to go underwater.

Goran_K says

whitewater says

I remeber the fever pitch on Patrick in 2006-2008.

Unless liar loans come back, or any other toxic credit products, as a regular way of purchasing a home, I don't see a huge housing crash. I was one of the biggest bears in housing for many years on PatNet and didn't buy until 2012, so I'm not some housing perma bull.

Inventory is still way too low in places where people want to buy (around 60-70% of historical "norms").

But when I start seeing gardeners owning two homes in Corona California again, then I'll start to believe there is another bubble.

We're closer than you may think. No crash but def a big slowdown. Only thing prepping it up is prop 13 in CA. If Trump cannot stop rates from rising it will be here very soon. Esp. since most tech options are underwater by now and cannot be exercised.

It's never too late to bang the Real Estate catastrophe drum! The demon Realtors guarantee a massive, periodic cluster fuck, it's what keeps them alive and howling for blood!

MrMagic says

Goran_K says

Unless liar loans come back, or any other toxic credit products, as a regular way of purchasing a home, I don't see a huge housing crash. I was one of the biggest bears in housing for many years on PatNet and didn't buy until 2012, so I'm not some housing perma bull.

One thing to watch is the number of houses sold with 3.5% down FHA loans. These people were underwater the day they moved in. It wouldn't take much of downturn in the market for these people to be in trouble if they need to sell. I watch all the local sales in my area, which is just typical resales, and the majority are buying with very little down. Very few are even putting 10% down. 3% - 5% seems to be the most popular.

If these people run into income or job issues, it can be really easy to just walk away, just like in 2008, since they have no equity in the house. Plus, many have gone back and ATMed their houses...

@patrick these comments go into auto-moderation. Doesn't make sense and should be lifted.

mell says

No crash but def a big slowdown.

I agree with this. I think home prices have hit the upper limits of what people can afford under standard lending guidelines (20% down, etc).

Goran_K says

mell says

No crash but def a big slowdown.

I agree with this. I think home prices have hit the upper limits of what people can afford under standard lending guidelines (20% down, etc).

San Francisco home prices have retreated around 10% from their highs already. We have to wait and see, a lot will depend on the economy but even more on rates.

whitewater says

2. We are too busy making money.
4. We are lethargic because we have seen this before and we don’t care as much. The novelty of calling it when no one else would admit it is gone.

That's me in a nutshell.

Plus, I own my home in central MA, no mortgage. A family lives there now, as I have no need for a 2nd place to live in.

My apartment in Boston, while a rental, gets $1K in reimbursement, from my firm as a Boston 'city side' office, so my $2500 rent is really $1500 which is rather cheap for downtown Boston.

All my travel, livery, & lodging costs are reimbursed for when I'm on the road.

APHAman says

Patrick put him there because of his history.

Actually, it was automatic after a certain number of comments marked personal. But I undid it. MrMagic can comment without any moderation now.

As for the housing bubble, other people in this thread already gave my opinion:

* There is no national housing bubble at the moment.
* Lending standards right now are not nearly as shitty as they were in 2007 or so.
* Interest rates are likely to rise, putting downward pressure on housing.
* California has a severe shortage of urban coastal housing caused by NIMBYs who block new housing by regulation and laws.
* The new tax law limiting the deductibility of gigantic mortgages will put more pressure on housing in the most expensive areas.

So my prediction is slowly declining prices in urban coastal California for many years.

It's true that this is not very exciting, nothing like before.

Rin says

I own my home in central MA, no mortgage. A family lives there now, as I have no need for a 2nd place to live in.

My apartment in Boston, while a rental, gets $1K in reimbursement, from my firm as a Boston 'city side' office, so my $2500 rent is really $1500 which is rather cheap for downtown Boston.

All my travel, livery, & lodging costs are reimbursed for when I'm on the road.

And you get fucked by big titty ho's that look like Hillary Clinton. Don't forget that.

whitewater says

5. It doesn’t exist.

There is no housing bubble. It's just a pause. The biggest price jumps in California homes are yet to come, and they will come in 2019/2020.

So my prediction is slowly declining prices in urban coastal California for many years.

It's true that this is not very exciting, nothing like before.

That would be great for savers. House prices settling to more affordable levels while you build your cash.

Onvacation says

Rin says

All my travel, livery, & lodging costs are reimbursed for when I'm on the road.

And you get fucked by big titty ho's that look like Hillary Clinton. Don't forget that.

No problem with that ...

A young, big breasted bi-sexual Hillary Clinton is my fantasy of banging political women.

Strategist says

There is no housing bubble. It's just a pause. The biggest price jumps in California homes are yet to come, and they will come in 2019/2020.

Is that what ITB and XHB are telling you this year?

I was surprised at how many people of modest means I ran across during the liar's loan years who decided they were going to be real estate moguls and bought multiple speculative properties with no money down. The ones I knew pretty much got wiped out to a man/woman by the downturn.

One lady who had a small unit in a mobile home park wound up with four houses. Two went to foreclosure, two they kept, but they wound up living in the tiny mobile home shack. One at Lake Arrowhead depreciated, but they kept it, then it almost got burned down in those Lake Arrowhead fires, which further depreciated it.

MrMagic says

Strategist says

There is no housing bubble. It's just a pause. The biggest price jumps in California homes are yet to come, and they will come in 2019/2020.

Is that what ITB and XHB are telling you this year?

They're telling me it's the greatest buying opportunity you will ever have.

See comments:

http://www.topix.com/forum/san-mateo/TAT4TH5U0M0SUUCGF/attorney-appeals-downtown-redwood-city-condo-proje

My observation is that housing is in a downturn and may accelerate its plunge, or it may drift along... my prediction is until most boomers are sick and dying from old age at the latest, or a strong economic downturn happens.

In some spots there was a lot of building and easy access to capital caused a bubble in home values; this happened where I am presently.

The place I am in is wonderful and in a great area; the lady I spoke to has the identical floor plan but she bought her place at the peak for $250,000 (c. 2007) She says she'd like to sell it but she is still a bit underwater.

The place I am in however sold for $80,000 c. 2008.

It seems that prices in my location are just almost getting back up to about 2007 prices now.

I think the median home where I am is about 9 times the median income; in Santa Cruz it's probably about 20 times the median income. But, people like Reed Hastings (Netflix CEO) can live in Santa Cruz and commute over the hill to work.

APHAman says

More importantly, in order for a bubble to be a bubble, you need to have an overproduction of the very thing that is being bubbled. That’s what usually pops the bubble, eventual oversaturation. And then there’s an abundance of whatever bubbled left in the wake.

Like inflation? See QE, Venezuela, etc.

My friend paid about 1 million for a 3/1 probably around 1,000 sqft in Point Loma this past year. Yes, Point Loma is a nice area, with million dollar homes, but this wasn't one of them. If there's no bubble, then that house should have sold for WAY less.

To answer the OP, people didn't understand root cause then, only it's affects, and as the affects today are different, they think there is no housing bubble even though we are once again seeing record prices(see above). Nothing goes up forever, it's always unsustainable, and a crash will always follow. Since the re-incarnation of our latest central bank in 1913 we have had an economic crash every 10 years. That's not changing anytime soon. The world has hyper-inflated currency and built up debts at levels never seen before in history. Each crash will be progressively worse until the root cause is dealt with.

Another example, I'm make more money than I did two years ago, with no change in my expenses, but my check isn't going as far(inflation).

The bubble bursting for 2006 was pretty predictable. We had everyone who should not have qualified for the loan got the loan and the loan on equity
to squander. Everyone borrowed and spent and spent without any thought into how to pay back without selling their house. When it came time
to pay back, everyone panicked. Everyone tried to sell their house only to realize that there was no buyer who can afford the price.
The average housing price was more than 10 times the average local annual salary. And the bank was tightening the credit. No one could
buy the house.

This one that seems to be bursting right now looks more like a normal cyclical and mild. The cost of building new houses are going up
because of the tariff. The Chinese Yuan is losing its value, so there are less cash buyers now. As a matter fact, there are more Chinese sellers
who are desperate to sell right now. So it is a good time to wait for the better properties out there. You are an idiot to buy right now. But
idiots make up the majority of our population, and they were the major force of the 2006 bubble. I doubt the learning ability of idiots,
so they already bought the properties in 2018 or will buy properties in 2019 and lose money.

2019 maybe the year that Chinese economy finally tanked. We have been saying this forever, and Chinese government has dodged it for the longest time.
Chinese buyers who bought the properties brought the money they borrowed in China. So I am wondering if they are forced to pay them back. Or
they can just default without any repercussion. In that case, the housing market will experience a mild down turn, and it will stabilize. But you should not
see the bubble again. But I could be wrong.

My friend invited me over shortly after moving in. I ask his wife how it's going with the new house, and she says something like "Fine as long as we both get raises".

Agreed. Just because everyone has debt doesn’t make debt a financially sound decision.

NuttBoxer says

My friend invited me over shortly after moving in. I ask his wife how it's going with the new house, and she says something like "Fine as long as we both get raises".

Perfect example of people buying "payments" instead of buying "houses".

Patrick says

I'm at work, will reply after.

We are selling in Danville and headed to Pennsylvania. I can work from anywhere and my wife with her considerable background in higher education IT can reasonably expect to find an opportunity there. We're fed up with California. The half million we'll make here will set us up quite nicely for retirement.

Inventory is spiking.

https://wolfstreet.com/2018/11/28/supply-of-new-houses-spikes-to-highest-since-housing-bust-1/

Toll Brothers Slumps Most Since May After Home Orders Plunge.

Toll Brothers Inc. reported its first drop in orders since 2014, led by a big falloff in California demand, a sign that high-end property markets are cooling. Shares slumped.

The luxury-home builder’s fiscal fourth-quarter results, announced Tuesday, included a decline in orders of 13 percent from a year earlier. The average estimate from analysts was for an increase of 5 percent.

Toll Brothers is heavily focused in segments and geographies that are cooling -- high-end homes and California, specifically. In California, which is facing an affordability crisis and a decline in foreign demand, orders fell 39 percent.


https://www.bloomberg.com/news/articles/2018-12-04/toll-brothers-home-orders-plunge-led-by-slowdown-in-california

For those guessing the bottom can’t be that far down, please reflect that “The economy is too strong for housing to crash,” is what the bulls were saying in 2007.

When the economy is inflated because of paper wealth, it can crash when the paper wealth evaporates. Anyone buying in the hot areas is buying a life of servitude.

I'm in the NorCal foothills, in a planned, gated, area. Bought my house 4 years ago for almost exactly $200/sq.ft. Last week the house next to mine sold for $315/sq.ft.
Same essential square footage, wildly different layout. I was gobsmacked it sold for full asking price. My guess is that some bay area folks cashed out for a retirement place with amenities. Sheesh. Good for me, I guess, my home value just went up dramatically.

The weather and beaches at my home in Carlsbad, Ca haven't crashed yet. What...me worry? The only thing I see crashing around here are the waves around the surfers. The most undesirable places will be the first crasher's. PS...I was born in the keystoned state. That hole crashed for me loooong ago. Even Iron City beer sucks today. Location, location, location....don't invest in plastics. We just have to stop the left wing nuts from crashing it.

10-20% price cuts in the bay area from peak asking price. Bigger correction coming.

Cash our refi surges.

http://www.mortgagenewsdaily.com/11282018_cash_out_refinancing.asp

I'm looking forward to more unemployed Realtor's.

Seattle real estate drops average of $70k in 3 months.

https://www.seattletimes.com/business/real-estate/seattle-home-prices-drop-by-70000-in-three-months-as-market-cooldown-continues/

Who remembers if Seattle is the canary in the coal mine in housing bubble 1.0? I have a vague recollection it was.

whitewater says

Who remembers if Seattle is the canary in the coal mine in housing bubble 1.0? I have a vague recollection it was.

I thought it was San Diego.

Number of home flips craters.

https://www.marketwatch.com/amp/story/guid/B68CD870-F971-11E8-94F2-A5EC8A1C6583