patrick.net

Clearly house prices have turned the corner, now the 'momentum traders' will be tits deep into RE for years.

Even Ivy Zelman and Calculated risk called a bottom last year.

http://www.calculatedriskblog.com/2013/03/zelman-nirvana-for-housing.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29

If I was still renting waiting for prices to go lower I might consider buying, relocation, or suicide. (or all three in that order! ha!)

The Professor says

I speculate that the hedge funds may be trading their paper for real assets in anticipation that their paper may be worth less in the future.

errc says

Real. Estate. Is. Local

Two good points, no Real Estate stampede in Dallas, still bargains in Las Vegas even with the investor flips.

But, here in Southern California it's a virtual wildfire, both a Tarzana short sale and a Calabasas one bedroom with one parking space, poof ! Gone in no more than 48 hours.

mike2 says

he made a hell of a lot of money the last 3-5 years while others called him stupid, arrogant etc. Bottom line to this point he has been right and his investments have soared.

How do you think people renting and investing in the stock market have done in the same time?

edvard2 says

But if you live in California like I do ( Which I see you do) then you're also well aware of what happens when bubbles get out of control: It wrecks the economy and that in turn is bad for stability and bad for owners and renters alike.

yep.. Adams Smiths magical hand of capitalism can bitch slap you ! ouch!

I don't get your list. Aren't 2 and 4 related, or the same? And whatever the reason 2 and 4 happen, then 1, 5, and 6 are a result? 3 might be related if the jobs are construction jobs, for example, but I agree that is generally a positive sign in the economy. Especially since unemployment has been so high in recent years.

I do see some of what you're seeing in that some people will argue there is a personally-tied aspect to the dynamics of society. That personal connection doesn't allow an objective view. Of course, just comprehension comes into play and it is a challenge for anyone to comprehend all of the factors leading to some of the real estate data.

Ahh, yes, I've seen you write that mix part of the situation elsewhere. I forget. I've read numbers on foreclosures and sometimes take the absolute numbers as a big percentage even when I haven't looked up the mix. Thanks.

Also get your number 6 for Phoenix. That's never worked-out in San Francisco. I could make it work out by moving, but I've never gotten the advantage of the freedom of owning a house when it means I have to move to a different area with few of the things I like about the area where I live.

robertoaribas says

've already written all the math you need, to see the next crash coming, my website, September archive, and get out right before the wave breaks...

lets have another Katrina and the Waves hit New Orleans...lets see how many will die this time.

Yes we are all going to be walking on sunshine...
https://www.youtube.com/watch?v=iPUmE-tne5U

LOL! of all things.. we should be looking at preventing bubbles ! and frankly with all the Govt regulations which wont prevent bubbles it still hasnt sunk into the recent govt or the public what Robert Shiller has been saying for a long time... appreciation occurs barely at rate of inflation. Your betting like as if you were in a Casino.. this is not a betting game we can afford.

chanakya4773 says

You cannot prevent bubbles...period !

Yes you are right... you cannot prevent stupidity in the market... period!

Its a shame you were not able to witness the many people I have met in CA from 2000-2005 who utter refuse to consider that home prices in CA.. even in very popular regions of San Diego and LA went down back in the early 90s. Im pretty sure many have met similar bubble heads.

robertoaribas says

There are two possibilities:

its odd that corporate/partnerships/small business entities that buy/sell/rent properties and do avoid highly priced property (bubbles)... after all, key actions they keep in mind are...

act prudently and knowledgeable... ignore emotions (so called multiple bids)... allow enough time to pass, not rush the transaction ...make sure the transaction is transparent (facts) are all known..... are very informed or seek outside independent professional advisors ... act in their self interest... value is unaffected by financing ... where the agreement is legally documented and contract is understood.

definition of Market Value as in relates to Real Estate :

"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."

Think back.. did we see highly inflated Commercial property during the RE bubble ?

What exactly did these people who bought/sold/rent avoided high prices...

Clearly some can avoid bubble prices and being a "bubble head".
There is something to learn from these folks....

robertoaribas says

#3. cannibal anarchy.

you mean ... go medieval on the Realtors ass !

chanakya4773 says

bubbles are a result of human irrationality which cannot be fixed.

where was this RE mania back in the 70s, 80s and 90s...people never behaved this way over real estate...

So roberto,

1.Are price to rent ratios the only thing to consider when considering real estate as an investment?

2. What is your opinion on condos?

robertoaribas says

So, the correct answer, to "is california housing in a bubble?" is who F*ing cares? buy if price/rent is even close to sensible, keep your eyes open, and get out with your profits before the next crash. It really won't be too hard to do!

My house is what I live in and I don't have any intention of "getting out with my profits". That's what my investments are for. I believe you might have missed my previous point. Housing bubbles- at least once they are established- ALWAYS end badly and in turn cause a lot of damage to the overall economy. So if that be the case, it effects everybody. Sure- there's nothing wrong with a healthy housing market. But a housing bubble is just as bad as a housing slump. And that goes for both renters and owners.

No matter what you say I am not moving to Phoenix.

LA isn't bad though, cost of buying is slightly higher in our area than renting, but it's a very small margin. Just avoid the "fortress" areas which operate outside any reasonable norm. I've plugged in numbers into Patricks calculator, renting is cheaper, but not by much.

Yeah, not that I know you, but Phoenix would probably work even less for me than you.

I have had and continue to have a wonderful life here in Los Angeles.

Roberto, how is it that property taxes are so cheap in phoenix?

Here in PA, at least in my locale, they tend to be 5x more. Next door in new jersey, they are often at least ten times more then what you seem to pay in phoenix,,,,

That in itself makes landlording seem much more profitable.

In my town, I can buy a 3/1+ row home 1200sq ft for 39.9k (in some sort of distress), they tend to rent for around 800. But property taxes can easily surpass 2400 annually on a place like that

FortWayne says

LA isn't bad though, cost of buying is slightly higher in our area than renting, but it's a very small margin. Just avoid the "fortress" areas which operate outside any reasonable norm. I've plugged in numbers into Patricks calculator, renting is cheaper, but not by much.

Me too. The margin is around 35% in the areas of LA I would even consider living in. At that rate, renting and buying are basically the same depending on your assumption of future house price inflation verses rent increases. Since it's break even in my situation, I'm choosing freedom over RE slavery. I have other places to get ROI instead of using Los Angeles RE as a casino bet.

RentingForHalfTheCost says

One thing I learned in life, is delivery is much more important than right verses wrong. I think most of that knowledge came from my very patient wife. ;) I can get to that engineer definite answer, but that skill does nothing in a human exchange if it is colored with emotion. If you goal is to persuade people, then being right is a very small part of your solution.

That is an seriously well informed perspective. I live in SFBA. I am friends with many married couples in which the male in the relationship is an engineer. I see many relationships that could benefit from having some appreciation of this.

roberto,

What do you think about articles like this?

http://www.commondreams.org/view/2013/03/14-6?source=Patrick.net

Would you file this under conspiracy theories?

bg says

What do you think about articles like this?

"in Phoenix, where readings commonly exceed 100°F for more than 100 days a year" - No wonder Roberto is such a miserable c*nt.

bg says

roberto,

What do you think about articles like this?

http://www.commondreams.org/view/2013/03/14-6?source=Patrick.net

Would you file this under conspiracy theories?

Its BS.
Climate change is fiction and so is that article. Peak oil is gonna happen so horribly slow no one will notice or care, probably.

The Professor says

I think that was the day I was passing through on the way to Florida. The weather report called for 115 F. It was 95 F at 6am.

If your gonna have solar panels... that would be the first place to go! A/C is gotta be cheap.

robertoaribas says

AND, if the dip writing this lives in LA, or SFBA, both areas due to be devastated by earthquakes at some point, and possibly affected by rising sea waters, and in LA, the same persistent water issues as Phoenix... well pot, meet kettle!

you mean lowering sea waters.. since they pretty much found whale bones near the mountains among other sea creatures and plants.

thomaswong.1986 says

robertoaribas says

AND, if the dip writing this lives in LA, or SFBA, both areas due to be devastated by earthquakes at some point, and possibly affected by rising sea waters, and in LA, the same persistent water issues as Phoenix... well pot, meet kettle!

you mean lowering sea waters.. since they pretty much found whale bones near the mountains among other sea creatures and plants.

Eh? I take it that was a joke. At least I hope it was a joke. You wonder sometimes.

Bigsby says

Eh? I take it that was a joke. At least I hope it was a joke. You wonder sometimes.

whale bones in the Santa Cruz mountains... vast inland seas near Bakersfield...

yep... all true ! Climate change 10 million years ago, humans not included.

http://www.science20.com/news_articles/ancient_climate_change_and_californias_coast_sierra_nevada_mountains

thomaswong.1986 says

Bigsby says

Eh? I take it that was a joke. At least I hope it was a joke. You wonder sometimes.

whale bones in the Santa Cruz mountains... vast inland seas near Bakersfield...

yep... all true ! Climate change 10 million years ago, humans not included.

http://www.science20.com/news_articles/ancient_climate_change_and_californias_coast_sierra_nevada_mountains

Good grief. I wasn't arguing that there weren't fossils there. I was pointing out that it has got FA to do with the current situation of the polar ice caps melting. You do get that, don't you? That because they found fossils where an inland sea once was 15m years ago isn't an indication that the oceans are currently receding. That was my point.