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Housing Bubble 2020


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2020 Jul 7, 2:34pm   1,454 views  16 comments

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1   GlocknLoad   2020 Jul 7, 2:59pm  

What are you trying to say? We're in a bubble right now? If so, how? No inventory.
2   AD   2020 Jul 7, 4:11pm  

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GlocknLoad says
What are you trying to say? We're in a bubble right now? If so, how? No inventory.


A bubble means that the asset is overvalued. That is current price greatly exceeds its intrinsic value. For housing, generally that is tied to income where the median value of housing usually trades at 3 to 5 times the median annual household income. Locales like Silicon Valley are outliers because salaries / income / compensation is not representative for the average American household.

https://www.longtermtrends.net/home-price-median-annual-income-ratio/

Read Patrick K's book The Housing Trap.

Also this may help you to decide to rent or buy: https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

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3   GlocknLoad   2020 Jul 7, 4:37pm  

ad says
$
GlocknLoad says
What are you trying to say? We're in a bubble right now? If so, how? No inventory.


A bubble means that the asset is overvalued. That is current price greatly exceeds its intrinsic value. For housing, generally that is tied to income where the median value of housing usually trades at 3 to 5 times the median annual household income. Locales like Silicon Valley are outliers because salaries / income / compensation is not representative for the average American household.

https://www.longtermtrends.net/home-price-median-annual-income-ratio/

Read Patrick K's book The Housing Trap.

Also this may help you to decide to rent or buy:

I think the economy is splitting in two. Average income will not be buying houses, they will be bought by the above average. Are homes being bought with incomes that are too low?

Has the NINJA NINA made an appearance yet?
4   MAGA   2020 Jul 7, 4:43pm  

TrumpingTits says
"Shit! It's like somebody hit a piñata filled with white people who suck at golf..."



I'm white and I do suck at golf. ⛳
5   AD   2020 Jul 7, 5:01pm  

GlocknLoad says
I think the economy is splitting in two. Average income will not be buying houses, they will be bought by the above average. Are homes being bought with incomes that are too low?


A MAJORITY of the economy is WORKING CLASS STIFFS making $10 to $15 an hour. They are renting and a lot of them share a house to rent. I see that in the Florida panhandle with 3 young workers each making $500 a week renting a 3 bedroom/2.5 bath/2 car garage townhome for $1600 a month.

And almost all of the working class stiffs are not buying stocks (with exceptions as far as some trading on Robinhood).

Some investor buys in cash the townhome for $210,000, with monthly expenses of $270 for HOA fee, $150 property tax, $100 insurance, and $150 upkeep and property manager fee. They make about $930 a month, or $11,160 a year on $210,000 + $5000 closing fees (total $215,000). The ROI is 5.19% annually. Add in the reliable 2.5% annual appreciation of real estate, and they make 7.69% annually.
6   just_passing_through   2020 Jul 7, 8:30pm  

Yeah, I think in Vancouver they had to pay a 1-Million dollar fee/tax to use Chinese money to buy real estate? Something like that. Works for fucking me. Too many American's can't afford to own their own damn SFH!
7   RC2006   2020 Jul 7, 9:13pm  

Homes are over priced but this time rents are also double what they were fir last crash so how will that effect things? Could covid cause a long term rent crash?
8   Patrick   2020 Jul 7, 9:54pm  

Rents have fallen quite a bit in the Bay Area, seems to be more than 10% in most places.

As rents fall, the correct price of housing falls in sync, assuming interest rates stay the same.
9   Dholliday126   2020 Jul 7, 11:11pm  

It's all about inventory boys, just watch that.
10   SunnyvaleCA   2020 Jul 7, 11:22pm  

I'm thinking that the cower-in-place situation has taught workers and companies that a remote workforce can be effective and save lots of money, too. Maybe that will put a limit on just how ridiculously overpriced the Bay Area can become.
11   SunnyvaleCA   2020 Jul 8, 2:31am  

Newbie123 says
two professionals to make 150k each isn’t a problem in the Bay Area. 300k household income makes the 1.2M dollar condo not look so bad anymore

That's definitely one type of buyer in silicon valley now. However, I'm not sure their lifestyle will match the one they envisioned...

$300k is only $200k after taxes. Still a huge income by any reasonable standard, That $1.2MM condo is probably a 50 minute commute to work for each. So your 40-60 hour work week just became 50 to 70 hour work week. Let's try to find a place close to work...

Here is a nice 20-year-old condo close to The Spaceship and Infinite Loop: https://www.zillow.com/homedetails/20385-Via-Portofino-Cupertino-CA-95014/19618169_zpid/ ... It's $2.2 million. Oh, sorry, the Realtors™ call that a "semi-detached luxury home." After the $200k (10%) downpayment, it's going to be more than $100k/year for 30 years based on a 3.25% 30 year mortgage. Don't forget the $25k/year taxes and $5/k year HOA. Figure paying $25k/year on that college debt (for 2 people). You'll also be socking away $25k/year to the 401k. Congratulations.... a dual-income super-earner couple is now down to $25k/year for all of life's necessities other than housing. Oops!

Eventually, this couple will figure out they spent the best 30 years of your adult life on the treadmill. How about taking a pair of $80k to $128/year jobs where they would have $50k/year after taxes and housing?
12   Booger   2020 Jul 8, 4:13am  

SunnyvaleCA says
$300k is only $200k after taxes.


I'm pretty sure that it's less than $200K after taxes, especially in CA.
13   GNL   2020 Jul 8, 5:12am  

Dholliday126 says
It's all about inventory boys, just watch that.

And I predict inventory will be low forever. Agenda 21
14   B.A.C.A.H.   2020 Jul 8, 6:34am  

Newbie123 says
You can’t have a crash without inventory skyrocketing. And there is no inventory. There is demand however and historic low rates.


Yep. Heard that a lot in the Bay Area in 1989.
15   B.A.C.A.H.   2020 Jul 8, 6:42am  

SunnyvaleCA says

Eventually, this couple will figure out they spent the best 30 years of your adult life on the treadmill.


This is why most of my homies left the area over the decades. They don't share those values.

Replaced mainly by foreigners for whom these are are the Wide Open Spaces, at Bargain Prices, and Hipsters from other parts of the US who covet being on the treadmill above all else.
16   RC2006   2020 Aug 10, 9:06pm  

Selling my house in L.A. taking my 200k equity to ID. Wife doesn't want to rent because of kids and everything so I have to move into another house there instead of waiting till next year hoping for bubble..

In the last bubble was it just as bad everywhere? ID seems to have a lot of people dumping equity there from CA.

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