patrick.net

I'll take#4

http://www.zerohedge.com/news/2013-07-15/goldman-joins-jpm-cutting-q2-gdp-1-stall-speed-funny-chart-becomes-funnier

As a homeowner I'm actually glad to see interest rates rise and cool the market some. The market in the last year has been unsustainable. Unsustainable markets lead to economic recessions. A moderation would greatly help in a longer term period of stability not just for owners, but renters and future buyers and sellers too.

MissedTheBoat21 says

Every action has an equal and opposite reaction.

That's true in physics, not necessarily in economics.

meetyaks says

Is it wise to fight against the FED?

Is it wise to believe the FED will always push in the same direction?

"The median price of single-family, re-sale home in Santa Clara County reached $830,000 in May—up $30,000 from April, according to Hansen’s research. That is a mere $38,500 below the all-time market high of $868,500, reached in October 2007." - Does anyone else see something wrong with that?

CameronCrazy says

"The median price of single-family, re-sale home in Santa Clara County reached $830,000 in May—up $30,000 from April, according to Hansen’s research. That is a mere $38,500 below the all-time market high of $868,500, reached in October 2007." - Does anyone else see something wrong with that?

The mortgage rates are still WAY below what was available at those highs.

CameronCrazy says

"The median price of single-family, re-sale home in Santa Clara County reached $830,000 in May—up $30,000 from April, according to Hansen’s research. That is a mere $38,500 below the all-time market high of $868,500, reached in October 2007." - Does anyone else see something wrong with that?

So we are about 5% off of the peak price. At the bottom of the market in early 2009, the median price for SFH in Santa Clara County was $450k. Apparently someone missed the boat, but the best is yet to come. Yes, you read that right. We have more room to go from here. What you or I want, wish or hope is irrelevant. The market will do whatever it does. It's not prudent to fight the market.

CameronCrazy says

"The median price of single-family, re-sale home in Santa Clara County reached $830,000 in May—up $30,000 from April, according to Hansen’s research. That is a mere $38,500 below the all-time market high of $868,500, reached in October 2007." - Does anyone else see something wrong with that?

People are over looking that interest rates are roughly 50% lower, so that 830K house runs a mortgage of closer to a 600K house back in 2007.

pkennedy says

People are over looking that interest rates are roughly 50% lower, so that 830K house runs a mortgage of closer to a 600K house back in 2007.

For now at least. Tomorrow?

New Renter says

pkennedy says

People are over looking that interest rates are roughly 50% lower, so that 830K house runs a mortgage of closer to a 600K house back in 2007.

For now at least. Tomorrow?

They will pay even more for tomorrow. If you didn't buy during this downturn, you only missed the 1st part of the run up. The best part of home price appreciation is yet to come. Hang on tight. Don't complain later and say I didn't give you the warning.

E-man says

New Renter says

pkennedy says

People are over looking that interest rates are roughly 50% lower, so that 830K house runs a mortgage of closer to a 600K house back in 2007.

For now at least. Tomorrow?

They will pay even more for tomorrow. If you didn't buy during this downturn, you only missed the 1st part of the run up. The best part of home price appreciation is yet to come. Hang on tight. Don't complain later and say I didn't give you the warning.

I'm a believer.

CameronCrazy says

That is a mere $38,500 below the all-time market high of $868,500, reached in October 2007." - Does anyone else see something wrong with that?

If we were to believe the RE shills, realtors and journalists.. there are many people in SFBA who earned an extra $40-50,000 over last year... SFBA is just like SoCal.. no substance!

thomaswong.1986 says

If we were to believe the RE shills, realtors and journalists.. there are many people in SFBA who earned an extra $40-50,000 over last year... SFBA is just like SoCal.. no substance!

Well, here's the wage growth:

San Francisco-Oakland-Mateo, Calif.
> 1-yr. wage growth: 24.7%
> Average weekly wage: $1,706
> Dec. 2011 unemployment: 7.2%
> Dec. 2012 unemployment: 6.1%
> 1-yr. employment change: +4.1%

http://finance.yahoo.com/news/american-cities-where-wages-are-soaring-172506054.html?page=2

The article implies that San Francisco's wage growth is an outlier due to specific reasons:

"In some of the cities where wages increased the most, growth appears to be the result of a single large business moving to the area. The obvious example of this is the San Francisco metropolitan area, where the one-year wage growth was more than double that of any other metro in the country.

The reason behind that growth is likely the social media company, Facebook Inc. (FB), which moved its headquarters from Palo Alto to Menlo Park at the end of 2011. Menlo park is in San Mateo County, which is in the San Francisco metro area. While other counties in the San Francisco area all grew less than 10%, in San Mateo, the average weekly wage grew more than 100%."

tatupu70 says

Average weekly wage: $1,706

I don't see how you can buy a $1 million house with $1700 a week.

xenogear3 says

tatupu70 says

Average weekly wage: $1,706

I don't see how you can buy a $1 million house with $1700 a week.

You can't.

But the kid of a Princeling in some foreign place, fresh out of his/her US grad school program, can just pay cash.

tatupu70 says

thomaswong.1986 says

If we were to believe the RE shills, realtors and journalists.. there are many people in SFBA who earned an extra $40-50,000 over last year... SFBA is just like SoCal.. no substance!

Well, here's the wage growth:

San Francisco-Oakland-Mateo, Calif.
> 1-yr. wage growth: 24.7%
> Average weekly wage: $1,706
> Dec. 2011 unemployment: 7.2%
> Dec. 2012 unemployment: 6.1%
> 1-yr. employment change: +4.1%

http://finance.yahoo.com/news/american-cities-where-wages-are-soaring-172506054.html?page=2

what percent of those rising Bay Area wages are directly or indirectly tied to rising housing prices? what is it ? 50% 75% 80% 100% ? What percent of Detroit's top line in 2005-2007 came from HELOCs and all that housing mania wealth effect ? what was it ? 50% 75% 80% 100% ? I'm sure the wages in and around Detroit suffered a bit when they got their answer.. SF Bay Area wage/income prognosticators will as well..

House prices can only double from here though open houses seem to be popping up at every corner here in the sunset!

FunnyBayAreaBuyer says

The reason behind that growth is likely the social media company, Facebook Inc.
(FB),

good one, but I don't think so..

xenogear3 says

tatupu70 says

Average weekly wage: $1,706

I don't see how you can buy a $1 million house with $1700 a week.

IPO.

People seem to use "overall" employment numbers when looking at the high end houses in the bay area. If you make 50K/year in the bay area, you're renting with someone else, not buying. And if you do look at buying it will be the outskirts of tracy in a condo or gilroy.

Those 1M houses go to the people making 200-300K and they get that from dual income couples. And there are a lot of them.

Wage increases below 50K are bleak, 50-100K are doing ok, wage increase over 100K are great! People are paying up for those employees.

50K of housing, costs around 3K extra per year in mortgage payments. If you're making 150K and only got a 5% raise last year, you can afford to offer up that extra 50K for a house, or 100K...

xenogear3 says

I don't see how you can buy a $1 million house with $1700 a week.

I agree. And I don't think the median household is buying a $1MM house either.

tatupu70 says

xenogear3 says

I don't see how you can buy a $1 million house with $1700 a week.

I agree. And I don't think the median household is buying a $1MM house either.

Trulia shows meidan home-price for SJ as 600K and SJ has been reported as having the highest median income in the nation, 77K plus.

If you are single income, and can put 200K down, with no outstanding debt, that gets you close. If you are home buying, you are likely doing better than 77K, may be dual income, and probably have 200K or more to throw down.

Rew says

Trulia shows meidan home-price for SJ as 600K and SJ has been reported as having the highest median income in the nation, 77K plus.

I think we need to be careful--the median household isn't really buying the median home. There are 35% of the people renting, mostly in apartments.

The bay area is cranking out the overpriced house slaves. get large wage and feel rich - overpay for POS house - lose job in the next recession - lose house.
Rinse and repeat.

Moderate Infidel says

- overpay for POS house - lose job in the next recession - lose house.

Rinse and repeat.

I think you're referring to those who OVERBORROWED. There's lotsa wealthy immigrant elites who paid cash or made very large down payments. They may have overpaid but they did not OVERBORROW. Their "cost" is only their property tax, and besides they can always get more cash from "back home".

B.A.C.A.H. says

I think you're referring to those who OVERBORROWED. There's lotsa wealthy immigrant elites who paid cash or made very large down payments. They may have overpaid but they did not OVERBORROW. Their "cost" is only their property tax, and besides they can always get more cash from "back home".

Those people are a tiny portion of the average housebuying fool.

tatupu70 says

Rew says

Trulia shows meidan home-price for SJ as 600K and SJ has been reported as having the highest median income in the nation, 77K plus.

I think we need to be careful--the median household isn't really buying the median home. There are 35% of the people renting, mostly in apartments.

So 65% have a house ... ok.

What is the median household income buying then? Or are you saying they are all renting? Is that likely, even with your 35% are renting number?

I agree, it isn't straight median income that is purchasing homes, it is those making over that ... but it looks comfortably within their reach.

I thought the Japanese bought everything in the US in the late 70's/early 80's?

Moderate Infidel says

I thought the Japanese bought everything in the US in the late 70's/early 80's?

I didn't say that. Their rich didn't send a tsunami of their kids here for grad school + H1. That's the difference.

Moderate Infidel says

Those people are a tiny portion of the average housebuying fool.

Agreed.

But in The Fortress, they are the average buyer.

Rew says

What is the median household income buying then?

I don't know, but it's almost certainly higher than the quoted median income. So, to really look at income/house price, you need to understand that using median income is not really accurate. Especially as disparity grows.

Rew says

o 65% have a house ... ok.

What is the median household income buying then? Or are you saying they are all renting? Is that likely, even with your 35% are renting number?

I agree, it isn't straight median income that is purchasing homes, it is those making over that ... but it looks comfortably within their reach.

65% are home owners.

More than half of existing homeowners may not be able to afford to buying their own home today! Their payments and tax bills are much lower because they bought the house a long time ago (either low monthly payment to begin with or refied to low payment) or have have paid off already or inherited the house.

Reality says

More than half of existing homeowners may not be able to afford to buying their own home today! Their payments and tax bills are much lower because they bought the house a long time ago (either low monthly payment to begin with or refied to low payment) or have have paid off already or inherited the house.

That's true for my family and for everyone on my culdesac. Silly-Con Valley is only for the rich to buy into nowadays. God bless'em paying those super high assessments to subsidize local government for the rest of us.

Reality says

More than half of existing homeowners may not be able to afford to buying their own home today! Their payments and tax bills are much lower because they bought the house a long time ago (either low monthly payment to begin with or refied to low payment) or have have paid off already or inherited the house.

This is a huge point. Many people bought when SJ wasn't a big deal, or when their neighbourhoods were like living in Gilroy or Tracy, but today they're front and center.

The people buying now, have the high levels of income necessary to buy there. The 77K average income is pretty high, but if you remove the 35% who are renting, I bet that shoots up. If you remove the people who have lived there 20+ years, the income probably shoots up even further.

B.A.C.A.H. says

Those people are a tiny portion of the average housebuying fool.

Agreed.

But in The Fortress, they are the average buyer.

I live in the Fortress, and while most of my neighbors are immigrants, they came through the "traditional" path; come as a student, work in high tech, save money, then buy a house. Just because someone speaks a foreign language or is named Wong doesn't mean they have access to unlimited commie dragon gold. There's many wealthy immigrants, but most made their money here.

Yes, there are more Asian buyers with foreign-earned cash nowadays than 10 years ago, but it's not the majority.

SiO2 says

I live in the Fortress, and while most of my neighbors are immigrants, they
came through the "traditional" path; come as a student, work in high tech, save
money, then buy a house. Just because someone speaks a foreign language or is
named Wong doesn't mean they have access to unlimited commie dragon gold.
There's many wealthy immigrants, but most made their money here.

Yes, there are more Asian buyers with foreign-earned cash nowadays than 10
years ago, but it's not the majority.

This demographic is also very diligent and skilled in saving money. They don't blow all their cash at the mall every weekend to stimulate the economy aka transfer their money to the 1%.

pkennedy says

Reality says

More than half of existing homeowners may not be able to afford to buying their own home today! Their payments and tax bills are much lower because they bought the house a long time ago (either low monthly payment to begin with or refied to low payment) or have have paid off already or inherited the house.

This is a huge point. Many people bought when SJ wasn't a big deal, or when their neighbourhoods were like living in Gilroy or Tracy, but today they're front and center.

The people buying now, have the high levels of income necessary to buy there. The 77K average income is pretty high, but if you remove the 35% who are renting, I bet that shoots up. If you remove the people who have lived there 20+ years, the income probably shoots up even further.

So, short summation, we are saying lots of people own their homes, they are worth a lot more than they were in the past, they make a lot of money, and can afford to buy/sell in the South Bay.

To original post : Must be #5 then!? Unless economic total disaster or Tech suddenly collapses and is replaced by ... ? ... sounds like a good bet.

# 5 Drink the Cool-Aid!

dublin hillz says

SiO2 says

I live in the Fortress, and while most of my neighbors are immigrants, they

came through the "traditional" path; come as a student, work in high tech, save

money, then buy a house. Just because someone speaks a foreign language or is

named Wong doesn't mean they have access to unlimited commie dragon gold.

There's many wealthy immigrants, but most made their money here.

Yes, there are more Asian buyers with foreign-earned cash nowadays than 10

years ago, but it's not the majority.

This demographic is also very diligent and skilled in saving money. They don't blow all their cash at the mall every weekend to stimulate the economy aka transfer their money to the 1%.

No, they transfer it to the 0.1% who run the banks.