patrick.net

one society forgets, this happened 12 years ago!

Patrick says

Literally, in much of California.

When does it crash again Patrick ? And by how much ?

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

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theoakman says

one society forgets, this happened 12 years ago!

Work from Home (WFH) making people to increase the existing bubble. Anyone buying now at best will have home values below their purchase price for at least 5 years from now.

theoakman says

one society forgets, this happened 12 years ago!

12 years is nothing to us, old farts, but it's literally half of a lifetime for some fresh college grad.

EBGuy says

All new high in August.

I didn’t think the housing market would go above 235-240 on the HPI before we top out. Wow! It’s dejavu.

Eman says

I didn’t think the housing market would go above 235-240 on the HPI before we top out. Wow! It’s dejavu.

Yeah, I'm a bit in shock as well. Always appreciate your field reports. VC's continue to air drop money into the Bay Area at a clip of $50-$60 billion per year. Until that abates, there's plenty of dollars flowing into the housing market.
There's been $37.5 billion invested in later stage deals in the first three quarters, already topping last year's $32.8 billion and within reach of the $50.9 billion from 2018. But there's only been about $1.4 billion in seed and angel funding here through Q3, compared to full year totals of $2.3 billion in 2019 and $2.1 billion in 2018. Early venture rounds in the region finished Q3 with $8.3 billion raised, compared to $15.3 for all of last year and $14.5 billion in 2018.

Eman says

EBGuy says

All new high in August.

I didn’t think the housing market would go above 235-240 on the HPI before we top out. Wow! It’s dejavu.

Hi Eman, I was wondering if you wouldn't mind sharing your opinion on a housing issue I'm trying to figure out. I live in Pacific Grove, CA., currently taking care of my mom with Alzheimer's. We have a house here, and I'm trying to figure out whether to rent it out or sell. We're getting mom into assisted living in AZ (near my brother), and I'll be moving in with my girlfriend in Tracy, so we have the opportunity pick a new path with the Pacific Grove house.

Our SFH (3 bedroom, 2 bath, completely remodeled) has appreciated from $965,000 to $1,250,000 since 2017 when we purchased it. In the event that we sell it, I'm learning swing trading so I hope to be proficient enough to grow the equity that could be extracted from the house (about $600,000). I'm hoping to be able to do this no matter which direction the stock market goes in the future. If for some reason I can't reach a proficient level within a year or so, my backup would be to purchase a rental or two in any part of the country where it could produce a better monthly cash flow. Housing market is on fire here currently, with people flocking here from the Bay Area, so perhaps it could be a very good time to cash out.

The other option is to try to hold onto the house and rent it, which is basically a break-even cash flow situation unless rents really start to go up. So we'd be relying on future appreciation and an eventual sale, possibly in just a few years, depending on whether my mom's condition gets a lot worse (it's early stage and she's been stable.)

All that background to ask, do you foresee a major housing correction on the horizon, particularly in a place like Pacific Grove that's somewhat insulated? I'm driving myself crazy trying to figure out which would be the dominant factor, a potential economic downturn that could hit housing prices, vs. inflation which could cause them to skyrocket. Of course, everyone has their opinion, but it would be really nice to hear what you think about it as a skilled real estate investor. I'm very grateful in advance if you might be willing to share your thoughts.

@EMan ^^

Housing in the Bay Area is absolutely out of control. Would hate to be on the buy side today

If prices around here are up, it's all profits from the Wuhan Virus making a billion people into captive customers of big tech.

Perhaps the biggest scam in history.

Patrick says

If prices around here are up, it's all profits from the Wuhan Virus making a billion people into captive customers of big tech.

Perhaps the biggest scam in history.

They aren't, certainly not in SF which is approaching $700/sqft and falling, down from $1100/sqft. Some are leaving CA and the rest is bidding on the surroundings which have historic low inventory due to Covid. And of these 10 shacks per small town 5 are overpriced shit shacks which don't sell for months until severely reduced, and the other 5 are well kept or nicely remodeled and priced to sell, so they usually fetch multiple offers and sell a few percent above the ask or at the ask. I wouldn't call this a hot market, rather a highly selective market unless you own in SF, then you're screwed. I've seen multiple properties bought for 2MM+ 2 years ago cut to 1.2MM-1.4MM.

But if you own well kept SFH prime property in the burbs and are willing to sell you can make some decent bucks now, some small towns are achieving parity or overtaking falling SF in terms of $ / sqft.

It’s the Bay Area burbs that are rocketing upward.

What's worse is the majority of these shacks have significant moisture, dry rot and woodeating and other pest infestations, I'm surprised about the lack of quality construction and upkeep. Outside of SF the climate is pretty dry yet there is moisture in the crawl spaces seeping into the houses (which often aren't that old), and even leaking roofs. So yeah, if you have decent standards and don't want to piss money away on expensive repairs while risking buying the top then your choices are somewhat limited at the moment.

Brendan22 says

Eman says

EBGuy says

All new high in August.

I didn’t think the housing market would go above 235-240 on the HPI before we top out. Wow! It’s dejavu.

Hi Eman, I was wondering if you wouldn't mind sharing your opinion on a housing issue I'm trying to figure out. I live in Pacific Grove, CA., currently taking care of my mom with Alzheimer's. We have a house here, and I'm trying to figure out whether to rent it out or sell. We're getting mom into assisted living in AZ (near my brother), and I'll be moving in with my girlfriend in Tracy, so we have the opportunity pick a new path with the Pacific Grove house.

Our SFH (3 bedroom, 2 bath, completely remodeled) has appreciated from $965,000 to $1,250,000 since 2017 when we...

@EMan I thought I’d bump this up again to see if you’re around and willing to weigh in. Thanks!

In the NY metro we're seeing prices rise as people bail on NYC. Why deal with the traffic and small apartments when you can live in the country and work from home? Also nightlife in NYC is dead (thanks Covid) but from what I hear comming back slowly.

So yeah, I've seen crazy appreciation since I bought in 2012. Here's my one piece of advice. Stay within your means. I know one guy who stretched himself thin to buy shortly after I did, almost lost everything, and now he's back to renting a small apartment in the hood.

If you don't catch this wave there will always be the next one. Hosing bubbles come and go, every seven years or so.

GreaterNYCDude says

Hosing bubbles come and go, every seven years or so.

The housing bubble popped in 2007/2008. Prices declined since 2005 (peak).

Look at any housing price graph.....housing has been on the uptrend since then. I highly question your rule of thumb ("every 7 years or so"). For house prices to tank you need a severe change such as a steep incline in mortgage rates or high unemployment (high paying jobs). We are headed to an environment like Europe> the price of a house essentially doesnt matter anymore....its the monthly payment that matters. In Germany they have mortgage rates of 1-2%. Think about it another way.....can the US economy even handle it if the FED raises the Fed's funds rate significantly? How do you think the real rulers of the US like higher rates (fortune 500 companies)?

Don't think it's a good time and suicidal in the most liberal states.