patrick.net

Let's put things in perspective.

At the top of the market, the median price was $665k at 7% interest rate. At the bottom of the market, the median price was at $375k at 4.75%. Now we're at $510k at 3.5%.

Had you bought at the bottom of the market and put 20% down, your $75k deposit would have given you $135k in equity gain. If you refinance now, you can pull out all your down payment and more, and transfer all the risk onto the lender.

Real estate is about control and leverage. How can you control the most properties using OPM.

E-man says

Real estate is about control and leverage.

Oh gimme a break you jackanape...BA RRE is OTT and you damn well know it.

Not that I personally care...

curious2 says

In a separate story, the same paper reported that's more than 10x the median income.

sounds like 2003 rather than 2013... sounds to familar.

JodyChunder says

E-man says

Real estate is about control and leverage.

Oh gimme a break you jackanape...BA RRE is OTT and you damn well know it.

Not that I personally care...

I have no clue what you're talking about uncle Jody.

E-man says

At the top of the market, the median price was $665k at 7% interest rate. At the bottom of the market, the median price was at $375k at 4.75%. Now we're at $510k at 3.5%

prebubble it was $200-250K. with Ubber rich Marin being $375K. or about $100-115 per sq ft. Go figure!

thomaswong.1986 says

curious2 says

In a separate story, the same paper reported that's more than 10x the median income.

sounds like 2003 rather than 2013... sounds to familar.

That means we have 3 more up years?

E-man says

That means we have 3 more up years?

who wants to play Russian roulette ?

thomaswong.1986 says

E-man says

At the top of the market, the median price was $665k at 7% interest rate. At the bottom of the market, the median price was at $375k at 4.75%. Now we're at $510k at 3.5%

prebubble it was $200-250K. with Ubber rich Marin being $375K. or about $100-115 per sq ft. Go figure!

I've been in the housing market since 1996 so I know what you're saying. Back in 2010, you argued that we would drop back to the (green) inflation line from your FHFA graph. I told you that it will not happen in your lifetime, and I still believe that is the case.

thomaswong.1986 says

E-man says

That means we have 3 more up years?

who wants to play Russian roulette ?

I don't know. I'm just asking. At this pace of appreciation, I'm selling half of my holding next summer. I'd rather be 1 year early than 1 year late.

E-man says

I've been in the housing market since 1996 so I know what you're saying. Back in 2010, you argued that we would drop back to the (green) inflation line from your FHFA graph. I told you that it will not happen in your lifetime, and I still believe that is the case.

Time will tell... but balance comes back to the market.. one way or another.

E-man says

thomaswong.1986 says

E-man says

That means we have 3 more up years?

who wants to play Russian roulette ?

I don't know. I'm just asking. At this pace of appreciation, I'm selling half of my holding next summer. I'd rather be 1 year early than 1 year late.

it seems be it Japans RE bubble or our own 1990/2006, anything remotely tied to RE speculation at the end becomes suicidal. we are way to weak to be exposed to another economic downturn and recession.

thomaswong.1986 says

E-man says

thomaswong.1986 says

E-man says

That means we have 3 more up years?

who wants to play Russian roulette ?

I don't know. I'm just asking. At this pace of appreciation, I'm selling half of my holding next summer. I'd rather be 1 year early than 1 year late.

it seems be it Japans RE bubble or our own 1990/2006, anything remotely tied to RE speculation at the end becomes suicidal. we are way to weak to be exposed to another economic downturn and recession.

That's why the Fed will not allow it to happen. Looking at the recent reported CPI, it seems like another QE is on the wing now. QEternity baby.

E-man says

Had you bought at the bottom of the market and put 20% down, your $75k deposit would have given you $135k in equity gain. If you refinance now, you can pull out all your down payment and more, and transfer all the risk onto the lender.

You are assuming that it is an equivalent house selling at the higher price. Where is the evidence that this is the case? I do not think Case-Shiller agrees with your numbers.

One should never forget that the median price is affected by the monthly product mix (less or more valuable houses) and is not an accurate indicator of absolute price levels. Certainly a lot of people made that very same mistake during the 2002-2008 bubble. The RE industry was notorious for abusing the median to incite panic buying.

E-man says

I have no clue what you're talking about uncle Jody.

Anyone with military experience tends to use acronyms. In this case:
BA RRE = Bay Area Residential Real Estate
OTT = Over the top
TTFN :)

E-man says

At the top of the market, the median price was $665k at 7% interest rate. At the bottom of the market, the median price was at $375k at 4.75%. Now we're at $510k at 3.5%.

Had you bought at the bottom of the market and put 20% down, your $75k deposit would have given you $135k in equity gain. If you refinance now, you can pull out all your down payment and more, and transfer all the risk onto the lender.

Real estate is about control and leverage. How can you control the most properties using OPM.

If I could time the market, I'd be retired by now.

thomaswong.1986 says

I told you that it will not happen in your lifetime, and I still believe
that is the case.

Time will tell... but balance comes back to the market.. one way or
another.

May I ask, how much "time" before you are able to "tell"?

I cant help but notice from your old FHFA graph that some parts of the SFBA started diverging from the trendline in 1987, and have not reverted to the trendline since.

Thats 26 years for anyone scoring along at home... Is that not enough time to tell?

Even worse, say SF does revert to the trendline, but does so, NOT by crashing, but stagnating (to perhaps slightly climbing) for another 30-50 years - when the trendline is well above 2013 prices.

For the person who simply wants to buy in the near future, and get on with life - would you advocate that they wait for another 30-50 years to see if SF intersects the trendline before they buy?

What do yous make of this article?

Can anyone explain this comment?

The correlation between metro-level price over- or-undervaluation in 2006 Q1 and the subsequent metro-level peak-to-trough price decline was -0.83.

http://trends.truliablog.com/2013/05/trulia-bubble-watch/

E-man says

That's why the Fed will not allow it to happen. Looking at the recent reported CPI, it seems like another QE is on the wing now. QEternity baby.

I think interest rates will creep up, and the Fed will be happy with that.

The problem we have, and had, and now Japan has, is that cheap, easy, low risk money goes into easy returns, speculation, and market manipulation rather than production.

Until capital purchases are put into use, or in the case of housing until those houses are sold, or rented, which they are, then you have no velocity of the money. Without velocity there aren't enough jobs.

I think the Fed will push up rates, ever so slightly, so that manufacturing will stop fooling around and start production lines moving.

David Losh says

cheap, easy, low risk money goes into easy returns, speculation, and market manipulation rather than production.

Indeed it does, which is why SF Bay Area's dot-con economy has pushed the ratio of median housing sale price to median income above 10. Bubbles Ben has showered so much free $$$ onto the financial sector that it's blowing bubbles all over the place here and in NYC - everything from housing to high end art. The question is, when the recipients of that $ are also in charge of creating it, why would they stop? It seems likely to continue until it can't anymore, which is why I worry about the Weimar example.