patrick.net

2015 will be more like 2014 (as predicted), 2013 (as predicted) and 2012.

FortWayne says

And it won't be long before this shatters, people can cannibalize their savings for so long. Once that runs out, I see instability coming. If one can't collect payment/rent, one can't stay in business very long.

There's more rent money than ever. Rents are going up. Unless you mean to tell me another recession is coming in 2015 which based on where it stands now, little chance.

SFace says

FortWayne says

And it won't be long before this shatters, people can cannibalize their savings for so long. Once that runs out, I see instability coming. If one can't collect payment/rent, one can't stay in business very long.

There's more rent money than ever. Rents are going up. Unless you mean to tell me another recession is coming in 2015 which based on where it stands now, little chance.

A recession coming in 2015? It's already here

Diva24 says

SFace says

FortWayne says

And it won't be long before this shatters, people can cannibalize their savings for so long. Once that runs out, I see instability coming. If one can't collect payment/rent, one can't stay in business very long.

There's more rent money than ever. Rents are going up. Unless you mean to tell me another recession is coming in 2015 which based on where it stands now, little chance.

A recession coming in 2015? It's already here

288K jobs added in June?

House price will never go down and America will never stop from becoming a slum!

FortWayne says

Last time I saw situation like that unfold and had the same gut feeling, it was about a year and a half before the crash. Hence why I see late 2015 burst in RE stocks.

No it wasn't. You clearly had that "gut feeling" 2.5 years ago (at the very bottom of the market I might add) when you told everyone in CA to wait:

/?p=1210756

In fact, going back to your earliest existence on this site (4 years ago, when you were Chris LA), you were very consistently in the bear camp, coming up with reason after reason why people shouldn't buy.

Granted, you toned it down in the last year or so - talking mostly about homosexuals & Obama & Liberals - but there was never any time where anyone would have gotten more than the momentary the sense from you that it maybe, just maybe, might be an OK time to buy.

As such, you really should think twice about trusting "your gut" when you tell people to buy or not. In any event, please be a little more accurate about your housing track record which since your time here (4+ years) has been pretty abysmal.

CDon says

No it wasn't. You clearly had that "gut feeling" 2.5 years ago (at the very bottom of the market I might add) when you told everyone in CA to wait:

I got that one wrong, but the 06 crash I had right. In 05 I thought it was just stupid market, and it was. It's why I looked on internet and found patrick.net, because I had a gut feeling something was very wrong with just about everything.

FortWayne says

CDon says

No it wasn't. You clearly had that "gut feeling" 2.5 years ago (at the very bottom of the market I might add) when you told everyone in CA to wait:

I got that one wrong, but the 06 crash I had right. In 05 I thought it was just stupid market, and it was. It's why I looked on internet and found patrick.net, because I had a gut feeling something was very wrong with just about everything.

Thats fine, but again, your gut told you something was wrong in 05,06,07,08,09,10,11,12,13 & now 14. Thats a decade, and for more than half of it your "gut" was wrong. Thus, if your gut is so so often wrong, why are you now relying on it once again?

My guess (or in this case MY gut) tells me that you have thought everything was wrong for quite some time now. Based on how often you write about politics, and how everything is going to shit, it appears to me that it clouds your judgment about housing & the like (notice how you cant help yourself but get a jab in about "illegals" above). My guess is the tee vee tells you how horrible XY&Z are, and you see it and get all emotive and project that all matters USA related (housing included) are going right down the crapper.

If so, the last decade should have taught you, your feelings & emotions on social/political issues, have very little to do with housing prices. You would thus assume that at some point you would take a step back and say "gee just because I think everything is going to crap, does not mean that home prices are going to tank". And if you havent had that thought before, perhaps you should start thinking that way now.

A lot of what yuo need to know about the rental market is supplied by industry leaders like Avalon Bay. They are in the business of renting and amazing accurate on the supply/deman rents.

Here is the latest info from July 24th confernence call.

http://seekingalpha.com/article/2341065-avalonbay-communities-avb-ceo-timothy-naughton-on-q2-2014-results-earnings-call-transcript?page=4&p=qanda&l=last

with respect to rent hikes yoy.

"We also know where the renewals went out for August and September, which is in the 6.5% to 7% range, which is between 50 to 100 basis points higher than where they went out for June and July. So we have pretty good visibility on where those are trending based on sort of historical capture rates. "

So rents are absolutely not slowing down. It's still accelerating in the 6.5% to 7% range. There is no chance in this green earth rent will crash in 2015.

Call it Crazy says

CDon says

You would thus assume that at some point you would take a step back and say "gee just because I think everything is going to crap, does not mean that home prices are going to tank". And if you havent had that thought before, perhaps you should start thinking that way now.

What are you, his mother?? Really?? I can't believe I just read a post like that...

Are you STILL trying to blame others for the mistake your sister made with her house? At what point will SHE take personally responsibility for her decisions and at what point will YOU stop blaming an anonymous message board that she read?

It's getting REALLY old with your "blame" posts!!

What can I say... guilty as charged (except I prefer to think of myself less as his mother and more of the "accountability police").

Main problem you and I have is the purpose of this website. See, unlike, politics or sports where one is used to a bunch of ignoramuses spouting off on whatever they feel like (and whether they know something about the subject or not), housing is a special category.

To wit, housing is one of the few areas where the decision is massively important to our lives (perhaps the biggest purchase we will ever make), and yet, there is little to nowhere to go and learn about it, other than highly partisan sites like the NAR.

Accordingly, people like my Sis (and likely thousands of other "lurkers" like her) went here because there was nowhere else to get an education and "learn". She used to tell us about this great site where people were sooooo knowledgeable about housing. See they didn't say ("I think this", or "it could be that") - everything was couched in axiomatic terms as if the rules of housing were as clear as the laws of physics ("when interest rates rise, housing prices will fall accordingly" or "if rents are higher than prices, then there is no bottom").

Well the problem is the vast majority of commenters treated it like a politics or sports site where there truly are no right answers and it doesn't matter what they said, or how they said it because there was no accountability for anything.

And it is this point precisely that I feel most strongly about what is wrong with this site. There are many many things I may "feel" about this or that. Yet, unless there is a good chance I actually know what I am talking about, I usually do my best to couch the language or perhaps, just perhaps, shut up all together.

Thus to me, it is of great benefit to look back at what I said in the past, because it keeps me in check to make sure I either know what I am talking about, shut up, or admit when I am wrong. To you, this is apparently very irksome and I really don't know exactly why. In any event, it is what it is my friend, and there is no chance it is going to change any time soon.

CDon says

Thats fine, but again, your gut told you something was wrong in 05,06,07,08,09,10,11,12,13 & now 14. Thats a decade, and for more than half of it your "gut" was wrong. Thus, if your gut is so so often wrong, why are you now relying on it once again?

I was right most of these years early on when it was still crashing. I did not see the government coming in full force to subsidize the "price recovery" in later years (2011+). I really did not see that coming, I know I was wrong at that point.

And this time I'm just recommending to not invest into RE stocks because I am not seeing clear profit margin anymore in the industry, I have a feeling it is at a point one will only invest to take a loss and write off a year later.

Housing market is still a casino, courtesy of wall street.

FortWayne says

I was right most of these years early on when it was still crashing. I did not see the government coming in full force to subsidize the "price recovery" in later years (2011+). I really did not see that coming, I know I was wrong at that point.

OK, but if knew you were wrong about that in 2011, why in 2012 did you post this missive:

/?p=1210756

You can see why this doesn't make sense don't you? I mean, in 2012, it was obvious that (to the extent it ever has) the govt thumb on the scale continued, so as such why did you then think it was poised for some sort of wait-worthy drop?

FortWayne says

And this time I'm just recommending to not invest into RE stocks because I am not seeing clear profit margin anymore in the industry, I have a feeling it is at a point one will only invest to take a loss and write off a year later.

I get that. As an investment, housing isn't very attractive right now - I can respect your viewpoint there.

Now as to the people who someday just want to buy a house and get on with life, what do you recommend? I ask because when you say things like:

"My prediction folks is that prices will come down in late 2015 or otherwise crash. I'm talking about rents and houses alike."

Its pretty reasonable to assume that (in your judgment) no one should purchase a house now (even if its "just a place to live and not an investment")- correct?

I mean, no one in their right mind would buy a house for 500K if they were told they could get it a year later for say 400K correct? Isnt this the essence of what you are saying here?

FortWayne says

It's why I looked on internet and found patrick.net, because I had a gut feeling something was very wrong with just about everything.

And there you have it: why PatNet gets over-run by trolls. When Forthood gets frightened because he sees black people on TV, and gay couples getting married, he flees reality and pours his bitter bile into the intertubes via PatNet.

He doesn't have any evidence for his "gut feeling," in fact he doesn't really believe in evidence based decision-making. He goes to his church and hears about Apocalypse and Armageddon, and prays and chants his putrid bigotry, and if anything ever goes wrong anywhere, he takes it as validation.

SFace says

So rents are absolutely not slowing down. It's still accelerating in the 6.5% to 7% range. There is no chance in this green earth rent will crash in 2015.

You didn't keep reading:

Michael J. Salinsky - RBC Capital Markets, LLC, Research Division: What were renewals that were actually signed during the quarter?

Sean J. Breslin - Executive Vice President of Investments & Asset Management:
Mike, it's Sean. In terms of the rent change during the quarter, 3.6% was the blended. It's 4.8% on renewals and 2.2% on move-ins, if that was the highlight you're looking for.

Timothy J. Naughton - Chairman, Chief Executive Officer, President and Member of Investment & Finance Committee: Mike, if I can just add something to what Sean was saying. I mean, what Sean said was accurate with 2.2% on move-ins for the quarter. But the one chart that showed same-unit rent numbers going up through the course of the year, that is almost all coming from increases in new move-in rents, which I think is important when you're talking about health of markets. In fact, June and July are more in the 2.8% to -- and 3.3% range, so well above what the average was in Q2 and well above the 1% to 1.5% range that we saw at the beginning of the year. Renewals have actually been relatively flat -- healthy, but flat during the course of the year.

Other than that, no surprise that June and July are higher than beginning of the year. The few weeks around July 4th are when a huge number of people move.

CDon says

I get that. As an investment, housing isn't very attractive right now - I can respect your viewpoint there.

Now as to the people who someday just want to buy a house and get on with life, what do you recommend? I ask because when you say things like:

"My prediction folks is that prices will come down in late 2015 or otherwise crash. I'm talking about rents and houses alike."

Its pretty reasonable to assume that (in your judgment) no one should purchase a house now (even if its "just a place to live and not an investment")- correct?

No, I think we have a misunderstanding. Because I never recommend timing the market. I'm just advising to avoid stocks that rely on growth in RE profit margins.

If you can swing a house and be comfortable without selling your first born to the bank, that's what the calculator on patrick.net is for. I'd advise to have a safety net too. Renting is to save money, some people save a lot doing so. It's what we did, we saved for many years renting before we bought with cash. Not a penny paid in interest to the banking cartel.

I have a friend who lives in a rent controlled apartment, pays ~$800/month. That's less than most peoples property taxes these days. Financially it makes no sense for him to buy, so he isn't moving. But can't say it makes his wife happy.

Today's data up 15.6% this is a good thing and existing home inventory present good value compared to new homes.

Watch out for this trend because new home sales wasn't supposed to be this soft because it's main drivers are upper middle class and the rich. It's not that cash driven compared to EHS

FortWayne says

No, I think we have a misunderstanding. Because I never recommend timing the market. I'm just advising to avoid stocks that rely on growth in RE profit margins.

That's fine. Just understand it sounds quite a bit different than your opening statement:

"My prediction folks is that prices will come down in late 2015 or otherwise crash. I'm talking about rents and houses alike."

FortWayne says

If you can swing a house and be comfortable without selling your first born to the bank, that's what the calculator on patrick.net is for. I'd advise to have a safety net too.

OK, but that's a different issue isn't it. Per my hypo above, say I could easily swing the 500K house with the safety net and all the trimmings. Yet, why would I pay 500K now if I could wait a year for your "crash" and buy for 400K?

Or are you now saying that home prices and rents wont "crash" and its just stocks only?

sbh says

Bellingham Bill says

Problem is a people only get the government they deserve, if they're lucky!

Capitalism isn't any better: you get what you pay for, if you're lucky.

That's not Capitalism, by definition

Bellingham Bill says

just a 'race to the bottom', yes.

There is no bottom, not since 1930s. America figured out a way to fix the economy so it never again fails.

Step 1: Lull everyone to sleep with income equality from 1940 to 1960s.
Step 2: While everyone is in a sleepy stupor, start transfering wealth back to the top.
Step 3: When people start waking up to reality, let them dabble in stock market (1990s), real estate (2000s), facebook (2010s), and pretend that they are getting wealthy on quick trades of stocks that produce absolutely nothing. The dumb ones play on facebook all day, the others trade its stock. Neither party is creating value...just being lulled...back...to...sleep.......

CDon says

OK, but that's a different issue isn't it. Per my hypo above, say I could easily swing the 500K house with the safety net and all the trimmings. Yet, why would I pay 500K now if I could wait a year for your "crash" and buy for 400K?

Or are you now saying that home prices and rents wont "crash" and its just stocks only?

Best advice I ever got when it comes to stocks is "never try to time the market". That advice applies to everything. Unless you know something we all don't, don't time it. Just do what makes financial sense to you.

I think prices in our area will be retreating, I've seen a house for over a year now on the market that peaked at asking price of 700k, now is 580 and is not selling. At low to mid 500's it'll probably finally sell. So market definitely overheated for a while. And rents are next, because a families out here can't swing 3k a month.

I see a price correction coming and some already in place, and hence am advising against investing into RE stocks. I'm in no way advising for or against buying a house for your family. I don't know your finances or your neighborhood. I only see what happens out here.

Probably to Fort Wayne's horror, I am his neighbor.

I am not comfortable purchasing now in this area.

Kudos for posting your viewpoint.

Forbes magazine has been predicting about '2015' for years now.

Yes, I missed the boat in 2011.

FortWayne says

Best advice I ever got when it comes to stocks is "never try to time the market".

Yet, just a few hours before, you said:

FortWayne says

My prediction folks is that prices will come down in late 2015 or otherwise crash. I'm talking about rents and houses alike.

...

My recommendation is to stay away from RE stocks and temporarily move into safer alternatives.

Temporarily, as in after late 2015 right? How is this anything other than trying to time the market?

CDon says

Temporarily, as in after late 2015 right? How is this anything other than trying to time the market?

That's not the same thing.

New Renter says

That's the least of what you (generic you) get when you start jacking rents beyond affordability.

To be fair, rent is driven by the market. A responsible market participant *SHOULD* raise rent if conditions allow.

Market conditions can change though.

Peter P says

A responsible market participant *SHOULD* raise rent if conditions allow.

Well that depends too. If market conditions allow packing 50 questionable people into hot bunking in a 2000 sqft 4/2 is that really a good idea? If the renters blow up the place with a meth lab will insurance cover it? The deposit certainly wont!

New Renter says

Well that depends too. If market conditions allow packing 50 questionable people into hot bunking in a 2000 sqft 4/2 is that really a good idea?

I'm sure some zoning code has been violated.

Meth lab? Or are they just Baking Bread?

New Renter says

4) 3 cars on a 2 car lawn

hahah, a 2 car lawn...nice...

New Renter says

2) An abundance of converted garages - again, no thought to aesthetics.

I have these in my neighborhood with the door still on (but fused shut?)!!!

Peter P says

New Renter says

That's the least of what you (generic you) get when you start jacking rents beyond affordability.

To be fair, rent is driven by the market.

But to also be fair, one could argue that rent is driven by the real estate market. One cannot charge significantly more or less than local housing without creating significant distortions on either side that are not corrected. The reason rent is higher today than in 1980 is not because of inflation on the sticker price of a house (that price is WAY beyond inflation). It is because of inflation on the monthly payment on a mortgage, which is similar today on a relatively much more expensive piece of property since interest rates are so damn low. Throw in some investors, rich fuckers from Google, and some Chindians, and you have some local markets even more inflated than the US as a whole.

Rent is not driven by what someone will pay for rent. There is simply not enough supply for that, at least not in locally expensive areas. Rent is helping significantly by what idiots will pay for mortgages (or promise to pay...

JH says

But to also be fair, one could argue that rent is driven by the real estate market.

In the Bay Area it is more driven by a sudden surge in demand caused by the new tech bubble.

Unlike the last housing bubble, higher rent is feeding back into the housing prices. It is a rather complex reflexive relationship.

Peter P says

JH says

But to also be fair, one could argue that rent is driven by the real estate market.

In the Bay Area it is more driven by a sudden surge in demand caused by the new tech bubble.

Unlike the last housing bubble, higher rent is feeding back into the housing prices. It is a rather complex reflexive relationship.

And when tech crashes? What then?

Or do you believe "tech" can never crash?

New Renter says

Or do you believe "tech" can never crash?

Of course the tech bubble will burst. :-)

It is a Silly Valley after all.

Peter P says

In the Bay Area it is more driven by a sudden surge in demand caused by the new tech bubble.

Unlike the last housing bubble, higher rent is feeding back into the housing prices. It is a rather complex reflexive relationship.

This is true for cities one luxury bus ride from Google, Apple, etc. But it is not the driving force behind the boom farther away like San Jose. Many Bay Area prices, like those in SJ, are exactly the same as SoCal. There is no tech bubble down here. Outside of the fortress, I think my argument still holds

FortWayne says

CDon says

Temporarily, as in after late 2015 right? How is this anything other than trying to time the market?

That's not the same thing.

Care to elaborate? On the one hand you say "never try to time the market" yet on the other you say - stay away from real estate stocks until late 2015 when they likely crash.

Seems to me this is the epitome of trying to time the market. If not, please elaborate. What in your mind would be an example of trying to time the market?

New Renter says

1) Garage mushrooms- my term for slap dash second stories added above garages that were clearly done on the cheap (and who knows about permits)

2) An abundance of converted garages - again, no thought to aesthetics.

3) 4 cars on a 2 car driveway

4) 3 cars on a 2 car lawn

5) cars parked bumper to bumper on both sides of the street as far as the eye can see.

You should report that to the city, specifically county assessor. If my neighbors started doing that, I'd report them instantly. I don't want to live in a place next door to someone running a slum.

Permits for construction are public record, so if it's done without permits just report them to the county assessor office. They'll come, inspect, and fine them. Not to mention update their property taxes to appropriate amount if it passes. If it doesn't pass inspection, it'll be torn down. County assessor doesn't mess around with this stuff, they fine and fine heavily.

Too many cars in the driveway? Well, there are rules to how many tenants a house can have. If they have more, report them to the county as well. Sheriff will take care of that problem really fast. There are very strict rules, residential communities are not allowed to have tenants in garages.

I'll probably make a separate thread later about dealing with slum lords in the neighborhood.

CDon says

Seems to me this is the epitome of trying to time the market.

"Timing the market" is a term. Just google it or wikipedia it. Playing Cinderella is trying to time the market.

FortWayne says

CDon says

Seems to me this is the epitome of trying to time the market.

"Timing the market" is a term. Just google it or wikipedia it. Playing Cinderella is trying to time the market.

I think I understand precisely what the term means. I am asking you how on the one hand you can say "never try to time the market" yet on the other you say - stay away from real estate stocks until late 2015 when they likely crash?

In sum, I am asking you (not wikipedia, not google, but you) if this is not an example of "timing the market" please explain to me what is?

CDon says

I am asking you how on the one hand you can say "never try to time the market" yet on the other you say - stay away from real estate stocks until late 2015 when they likely crash?

Timing the market depends on how much you are putting in and when you plan to pull out.

If you are investing $1k in stocks every couple months to build a retirement, then who cares where the market is. If you are trying to get rich quick by day trading, timing is everything.

On the other hand, if you are dropping $500k - $1M on a house, timing is EVERYTHING. Lots of fools took out ARMs in 2006 and lost $100,000s in a matter of months. If you take out a loan for $1M to invest in stocks, you sure as hell better time that baby right!!!! It's all about how much you are putting in and whether you can afford a short term loss.

@fortwayne

No one can enter your house without a warrant , even the country inspectors/accessors and to get a warrant you need a credible evidence that some criminal activity is behind the closed doors . 4th amendment

FortWayne says

When it costs $3,000 for a family to rent, something has to give. Very few folks out here make that kind of money to pay, hence it won't last.

something is wrong with this statement.
Rents only go up "because" people are able to afford it. how can rents even go high if people cannot afford it ?
you have your cause and effect reversed.
its simple demand and supply. why don't you rephrase it as : rents are high and people " i know" are not able to afford it.there are others who can afford it.

Rents only go down when the source of income goes down for people who are able to currently afford it.

instead of worrying about why the rents are so high...you should look at how people are able to afford it. you can get to the right answer that way.

FortWayne says

there are rules to how many tenants a house can have

Blame the Commies and Libbbz!