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curious2
2012 Oct 17, 12:19am
Is it just the stress of how screwed up our economy and sick our culture has become?
It might result from fear of Bubbles Ben. Since he stated publicly that instead of stabilizing the currency the Fed will promote inflation and try to reflate the housing bubble, people may understandably worry that their savings will be destroyed and they need to buy the federally favored asset class ASAP.
Meanwhile the banks continue to withhold inventory. For the past several months, the inventory of SFR REOs in Oakland has been around 1,100 to 1,200, and only about THREE PERCENT of those are active listings. The banks are withholding NINETY SEVEN percent of these houses to prop up prices. (Data is from searches at RealtyTrac and Redfin, so I don't know how accurate it is.)
Total SFR inventory in Oakland remains over 50 percent below what it was last year. Too bad most sheeple don't realize this is completely manufactured scarcity rather than a 'free market'.
I've never seen or heard a single mention of this in the media, who appear to be de facto shills for the RE industry.
'Twisted cultural phenomenon?' Yeah, I'd say so!
PockyClipsNow
2012 Oct 17, 3:14am
Its pretty simple. Banks/wallstreet control the country so they do what benefits them the most. Also majority of people are home owners - so they are also onboard with 'make house price always go up'.
There appears to be few lobbyists from the 'renters lobby'.
Basically renters are in two classes: S-8 or rent control (welfare) and market price renters - only the welfare class is organized politically.
And the looks on people's faces at the open houses...just crazed and desperate.
Of course, brainwashed clearly to me. Reminds me of some of the images of Jim Jones' Peoples Temple members in Jonestown, Guyana during the tainted Kool-Aid shots.
Total SFR inventory in Oakland remains over 50 percent below what it was last year. Too bad most sheeple don't realize this is completely manufactured scarcity rather than a 'free market'.
In Oakland of all places! It will be free theatre watching this one unfold. Those inventory numbers just didn't disappear into thin air. I just question do they honestly think or believe there are enough people to fall for such things in such areas? Please, the lunacy of it all is hysterical to me.
Is it just the stress of how screwed up our economy and sick our culture has become?
It might result from fear of Bubbles Ben. Since he stated publicly that instead of stabilizing the currency the Fed will promote inflation and try to reflate the housing bubble, people may understandably worry that their savings will be destroyed and they need to buy the federally favored asset class ASAP.
TRY = a small word, big meaning.
Regarding the rest, oh yeah now they what? Give 'em the fear of inflation causing a loss of their savings? ROFL (that's a new spin) so buying into that all too infamous Federally favoured asset class "ASAP" is a really swift and BRILLIANT thing to do! Jeez.
Its simple. Money got cheap again, which means purchasing power went up quickly. More purchasing power means more sales. More sales means less inventory. Less inventory means more demand. More demand means more competition. More competition means more people bidding on the same homes which usually causes some stress.
bmwman91
2012 Oct 17, 4:11am
Yeah, I think that those of us that sat on the sidelines up until this year did miss the bottom of the last boom/bust cycle. We seem to be entering another "boom" cycle, and it will probably be some number of years before the next "bust".
Hang on to your hats, kids. The ride will probably be wild again, but I would not count on it being like the last one. This time, we have desperate baby boomers chasing yields to fund their retirements, and rental-RE is the only place that makes sense on paper. Banks are basically government entities now, and they know that they can control prices via inventory manipulation probably indefinitely (at least as long as our Federal government still exists, it seems). A lot of people were waiting on the sidelines and saving money with which to buy, and they are now in bidding wars over the remaining table scraps. In the SFBA, NIMBYism prevents new construction, and anything new sells for seemingly outrageous prices right now.
Welcome to the next up-cycle, folks. Thanks to the super low inventory of things for sale, rents are going to rise faster than wages since people that can afford to buy have nothing to buy, so the rental market will soak up that extra money simply because it can. If you thought that the last decade proved the SFBA to be egregiously expensive to live in, you are in for a rude surprise now. We will all get fucked in the ass for the next 3-5 years, buying or renting here. I do not like it, but that seems to be the writing on the wall as far as I can tell.
Obviously, it is not sustainable, but since when has that ever affected short-term macroeconomic behavior? The possible outcomes that I see are:
- Enough people leave that the silicon valley ends up like the north east US. Only wealthy retirees and those with large incomes from elsewhere remain, along with throngs of the poor and uneducated that feed on the CA entitlement system. Think SoCal, but more extreme.
- The state government gets desperate enough for income that it neuters the unions, cuts all sorts of entitlements and raises the shit out of property taxes after killing prop 13 (haha yeah, keep dreaming).
- Banks are somehow made to liquidate their foreclosure holdings to private buyers, at market rates (again, yeah right).
- The SFBA basically becomes a multi-generational slum. Prices go up for years and then stay up as they hit the absolute limit of what people can bear and everyone is living with parents and grandparents. Nobody has any money left to feed local economies and we are left with a big tech-sector sweat-shop.
My bets are on the first and last possibilities, with a higher likelihood on the last one (slums). I see no paths where the middle class wins. What happens here is probably a leading indicator of what will happen in the rest of the US as well.
REpro
2012 Oct 17, 4:11am
Builders are rushing to fill-up this low inventory Super Hole.
Let’s overbuild this country to the new higher level. Who cares what will happen next.
Goran_K
2012 Oct 17, 4:24am
I think people will simply leave (and over 4,000,000 have left in the past decade).
I'm smart enough to know that living in a bankrupt state with a bunch of people living to the limit of their incomes just to survive isn't going to be a great situation for any of us.
I have been mulling leaving California more than ever before, selling off all my business interest in SoCal/NorCal, and moving to somewhere that isn't embattled with public welfare programs like CalPERs, Prop 13, sending illegal aliens to college, etc.
It's not that I can't handle the cost of living, I could buy a crap shack for cash right now, but the real question is and always has been, is it worth it to me just to stay in California? Should my money be used to subsidize public welfare programs for non-citizens? Should I overpay for a house because West LA is hip?
I'm not so sure these days.
Yeah, I think that those of us that sat on the sidelines up until this year did miss the bottom of the last boom/bust cycle. We seem to be entering another "boom" cycle, and it will probably be some number of years before the next "bust".
I sat on the sidelines probably longer than anyone here. There is a lot of debate about what's happening now. But from personal experience I think the reasons are simple. I already mentioned it above.
There were indeed a LOT of us who sat around for years and years, waiting for the bottom. we saved and saved. One day after seeing what interests rates were, I did the math and suddenly it was ( in my east bay area) cheaper to buy than rent on average. I'm not some mathematical wizz so I imagine a lot of others realized that as well. Sure- I have no doubt these low rates were intentional market manipulations to get people to buy houses. Well it worked. Now add in the factor that there were a lot of people- like us- who saved a lot of cash. Now add in that money suddenly got cheap and there you go- lots of qualified buyers sitting on cash who waited for 5-10 years for a chance and so there they go.
Has the bottom been reached? I don't know. The market is weird. Anyone denying there's lots of inventory needs to actually look. We and most of the people we know who were/are looking did and there is only about 40% of what there was last year. Whether the inventory will improve is anyone else's guess. Its a sort of crappy situation out there for buyers. Hopefully the situation will get better.
lostand confused
2012 Oct 17, 4:34am
Yeah, feel the same way about the frenzy going on now. But maybe my time in the midwest, I can't justify anything over 380k -maybe 400k all inclusive for a nice house, small garden in a decent neighbourhood/decent school district.
Probably be a pipe dream at this point-though it was not in 2000 or before-when the economy was much better. But I will continue to rent and wait it out. If I misss an opportunity-so be it. At least I wont be saddled with a ton of debt.
REpro
2012 Oct 17, 4:41am
Most of cash buyers are investors. They don’t take advantage of low interest rate; it’s meaningless, whether it’s 2% or 10%.
Yeah, feel the same way about the frenzy going on now
Is this happening in the Midwest too? I had for some reason thought this was yet one more kwazy Bay Area thing.
Most of cash buyers are investors. They don’t take advantage of low interest rate; it’s meaningless, whether it’s 2% or 10%.
Not where we were looking. There is very little inventory in more prime areas but those prices are too high for cash investors.
bmwman91
2012 Oct 17, 4:49am
The market is weird.
Agreed. I don't think that anyone can really draw upon past economic trends or "cycles" because we are in uncharted territory right now. Never before have we had a government-banking system like this, interest rates this low or a central bank buying 11 digits' worth of MBSs each month. Hell, MBSs didn't even exist until relatively recently, and we are in a new era where everyone "figures out" what to do with the toxic things!
So, nobody can credibly say that they know what is coming AND when. Economic fundamentals are exactly that, and they do still apply in the long run. At this point, RE seems to be inextricably intertwined with the federal government, directly and indirectly, and I get the feeling that what happens with RE will be going hand-in-hand with what happens to the rest of the country. The fiscal insanity that our government seems to be embracing more and more tightly will lead to no good, and the longer they hold on the more it will hurt when it all lets go. This is related to the fact that there just is not enough productive work that needs doing in the US to pay for everyone to have the quality of life that we all enjoy, and this unsustainable system will come to a halt at some point.
So, I am not sure if there will be another "good time" to buy. If housing crashes again, it seems possible that it will be crashing along with the entire nation, at which point buying a house won't really be a priority for anyone.
Did it ever occur to anyone that a number of so-called all cash deals may be NOTHING more than one owner corporation transferring property to another?
WAKE THE FUCK UP YOU STUPID PEOPLE.
lostand confused
2012 Oct 17, 5:17am
Yeah, feel the same way about the frenzy going on now
Is this happening in the Midwest too? I had for some reason thought this was yet one more kwazy Bay Area thing.
Not in the mid-west. My colleague just bought a nice home-older one- for 125k. Between him and his wife, they make 100k a year. Pretty nice home-decent school district-not the greatest ranking, but safe. Not very close to town, but decent, safe, nice area.
Bay area and L.A seem to be in some sort of frenzy-though you never know if they are dying throes. I just can't justify these prices. it is one thing if you know you will have a job for the next three decades-but these days you don't know if you will have a job for the next year or so. Since I did not own a home, this allowed me to travel to the job in different states and even country.
A reasonable loan balance is ok, but not these giant amounts-just not for me. If it is upto 400k, I can put a giant chunk as down payment and then I have a small inheritance-but looking to buy farmland with that and lease it out first-though that seems to be in its own bubble.
But back on topic, nah the mid-west seems ok-though it seems to have stopped cratering. Just no frenzy like this.
Total SFR inventory in Oakland remains over 50 percent below what it was last year. Too bad most sheeple don't realize this is completely manufactured scarcity rather than a 'free market'.
In Oakland of all places! It will be free theatre watching this one unfold. Those inventory numbers just didn't disappear into thin air. I just question do they honestly think or believe there are enough people to fall for such things in such areas? Please, the lunacy of it all is hysterical to me.
You need to spend about $500k (maybe high $400s) to get into a decent neighborhood above highway 580 in Oakland, and that'll probably only get you a 2 BR house. Flippers are back, buying houses for $200k and selling them in the high $400s after a quick rehab.
Flippers are back, buying houses for $200k and selling them in the high $400s after a quick rehab.
Oh not surprise stupid is big today. So do the television shows follow? Jeez, this is just a sad commentary on the American mentality to me.
Went to a couple open houses in West Contra Costa County this past two weekends, talk about a feeding frenzy! I just don't understand what is going on psychologically with people. Even the RE agent was confused, but said that it's insanity out there again. At least in the immediate Bay Area, all the way up through Sonoma and Napa counties, we are back to 10-20 offers, more than half cash, but also teems of desperate buyers fighting to pay more and more money.
And the looks on people's faces at the open houses...just crazed and desperate.
At this point we have some sort of twisted cultural phenomenon going on. Is it just the stress of how screwed up our economy and sick our culture has become? I liken it to the same bizarre behavior that causes people to wait in line overnight to buy icrap. We are doomed.
#bubbles