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Buy or not buy?


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2020 Sep 28, 5:24pm   3,113 views  74 comments

by GNL   ➕follow (1)   💰tip   ignore  

This is just crazy. Housing is going gangbusters. Because?

Buy or not buy?

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1   SunnyvaleCA   2020 Sep 28, 5:30pm  

Because (choose one, some, all, or none!):
• interest rates are low
• Realtors™ will tell you there's never a bad time to buy (or sell — just as long as they get their commissions!)
• people are going broke and losing their houses because of cower-in-place
• people are fleeing badly-run / lawless / bankrupt / burning states
• lies from Realtors™; housing is actually pretty dead right now
2   Patrick   2020 Sep 28, 5:36pm  

WineHorror1 says
Housing is going gangbusters.


Says who?
3   clambo   2020 Sep 28, 6:07pm  

Buy if you must where you won’t pay a fortune and they won’t tax you to death.

I doubt my smug friends in Santa Cruz saw their houses go up as fast as my investments have.

Of course, I can move thousands of bucks into my checking account by moving a computer mouse; they can’t.
4   EBGuy   2020 Sep 28, 7:15pm  

Actual Wine Horror (see Glass Fire)
5   Dholliday126   2020 Sep 28, 7:16pm  

Assets, like inflation, are on a linear upslope. If you don't understand that relationship, you're fucked
..or you're a renter.
6   GNL   2020 Sep 28, 7:51pm  

Patrick says
WineHorror1 says
Housing is going gangbusters.


Says who?

https://www.marketwatch.com/story/the-housing-market-is-on-a-sugar-high-home-sales-are-soaring-but-is-it-a-good-time-to-buy-heres-what-the-experts-say-2020-08-21

Also, I own a real estate photography company and an online platform for independent real estate photographers. No, I'm not claiming to be a real estate expert. Many of my clients are telling me this will be a record year for them. Houses selling very quickly with multiple offers.

Real estate is local (duh) and I am located in Northern Virginia.
7   Hircus   2020 Sep 28, 8:23pm  

WineHorror1 says
Also, I own a real estate photography company


A friend here in CA recently sold his home. The lockdown rules I think mandated 3D photo capture for home sale listings - I'm guessing to reduce the need for in-person showings. Anyway, the guy who took the photos for my friend bragged about making like $400-600 a pop for a couple hours time, and was doing a few each day. Sounds like he made a killing this year.
8   Hircus   2020 Sep 28, 8:28pm  

Case shiller looks intact, steady going up
https://www.spglobal.com/spdji/en/indices/indicators/sp-corelogic-case-shiller-20-city-composite-home-price-nsa-index/#overview

I'm kinda surprised - I tend to click around on zillow a lot (various states) and often look at their city/county price history graphs. I would have said from what I've seen, prices are flat. But maybe that's just my small sample size.
9   RC2006   2020 Sep 28, 8:37pm  

In Southern CA and Idaho it's crazy hot. My CA house sold above asking in 48hrs, Idaho houses were selling same day or within 24hrs.
10   GNL   2020 Sep 28, 8:50pm  

Hircus says
WineHorror1 says
Also, I own a real estate photography company


A friend here in CA recently sold his home. The lockdown rules I think mandated 3D photo capture for home sale listings - I'm guessing to reduce the need for in-person showings. Anyway, the guy who took the photos for my friend bragged about making like $400-600 a pop for a couple hours time, and was doing a few each day. Sounds like he made a killing this year.

A mandate? You'd think 3D would be in huge demand. We haven't found that to be the case. Our most popular product is floor plans and photos.

Yes, if a real estate photographer can offer video, photos, floor plans and some type of 3D product AND get enough work, they can easily pull $200k. The trick is getting enough work with as little marketing $$ as possible.
11   clambo   2020 Sep 28, 8:56pm  

I’m a renter and I can afford to live anywhere I wish to.

A guy I know was paying $50,000/year in property tax. His house just burned down.

My financial assets can’t be burned down.

My neighbor pays $17,000/year property tax.

Even people who have money resent being robbed.

What is interesting is a great place to live can be reasonable, IF wages are not very high within commuting distance.
12   Dholliday126   2020 Sep 28, 9:22pm  

Yeah, but C dog, I can counter that with depreciation, mortgage deduction, appreciation, tax mitigation, inflation hedge...
13   BayArea   2020 Sep 28, 9:33pm  

I’ve been house shopping for 4 months now - primarily in the tri valley.

I was a bit gun shy at the start of covid.

Over the past couple of months, housing has been on fire. We haven’t had any of our above asking price offers accepted yet - perfect credit and no shortage of cash to show for.

It’s on 🔥, never would have expected this during a pandemic. But people are moving from the cities and want to be comfortable during work from home in the suburbs.

Apartments and condos are dropping, single family homes with yards are surging.

Nothing worthwhile is making it past the weekend and multiple offers on everything I’ve looked at.
14   GNL   2020 Sep 28, 9:40pm  

I do a bit of work for a broker. He seems like a very sharp guy. He said he made his first million with REOs during the last downturn. He is 100% sure we will have another downturn soon that will be worse than the last one.
15   clambo   2020 Sep 28, 9:40pm  

I believe the migration out of the cities has begun to increase because of the riots, fear of disease, and remote work.

I know several people who are leaving cities and a couple others are talking about it.
16   BayArea   2020 Sep 28, 9:47pm  

WineHorror1 says
I do a bit of work for a broker. He seems like a very sharp guy. He said he made his first million with REOs during the last downturn. He is 100% sure we will have another downturn soon that will be worse than the last one.


Not a chance. No subprime lending crisis, no real estate meltdown.
17   richwicks   2020 Sep 28, 10:24pm  

WineHorror1 says
This is just crazy. Housing is going gangbusters. Because?


Because Fed policy is inflation. This works until the dollar breaks.

BayArea says
Not a chance. No subprime lending crisis, no real estate meltdown.


Everything is subprime! Do you ever expect to pay off your house in your lifetime, or do you expect to make a fortune on its appreciation?

Where I life, EVERYBODY expects to make a fortune on appreciation.

None of you are old enough to have ever talked to anybody that lived through the Depression as an adult. If what I expect is coming is coming, it's just a rhyme of the 1930s. Either way, it's going to be interesting.

We repeat history, the second nobody knows it. My parents see a disaster in the making, but they are 82 and 83. I doubt any of you have ever talked to anybody that was born in 1910. Once society forgets, the same scam is repeated.
18   GNL   2020 Sep 28, 10:26pm  

BayArea says
WineHorror1 says
I do a bit of work for a broker. He seems like a very sharp guy. He said he made his first million with REOs during the last downturn. He is 100% sure we will have another downturn soon that will be worse than the last one.


Not a chance. No subprime lending crisis, no real estate meltdown.

I have to say, I'm rooting for him to be right but I don't see it either. Not unless employment gets worse. Even then, housing isn't being built in sufficient numbers.
19   BayArea   2020 Sep 28, 10:32pm  

There’s too much money on the sidelines, off the sidelines, everywhere. For 20yrs I’ve heard from the perma-bears about how housing is going to crash,

Sure the broken clock has been right once in 20yrs, but housing is not crashing. I’ve seen it do exactly the opposite over and over and over.
20   Ceffer   2020 Sep 28, 11:01pm  

May not crash, but it can sure flatline for very long periods of time. If interest rates bump, it could certainly drop prices.
21   clambo   2020 Sep 28, 11:28pm  

Rishwicks, I am old enough to have talked to people who were born before 1900 and others born in early 1920’s.

For the readers, the stock market in 1929 had loose rules, so did banking.

Margin rates were very high so you could borrow more against your stocks to get more stocks.
This was credit fueled assets therefore.
Banks were allowed to gamble the deposits in stocks also, using margin also.
Today both aren’t allowed, and deposits are insured.

But the depression was the aftermath of the stock market bubble popping; so many banks were wiped out, our economy was slowed down for years.

My grandmother was an entrepreneur and rented land and grew crops, started buying nice things from broke former rich, sold these and when I knew her these were antiques, she had an antique store. She gave work to unemployed men who had been professional and were now just seeking jobs doing anything to get by.

She had the cash to lend my parents when they bought the ocean view lot on Martha’s Vineyard in 1962 for a summer house.

My father was in a more prosperous family than my mother. She picked strawberries in the summer, and was a chambermaid in Nantucket in the summer. I think she had more fun than he anyway.

Both didn’t like to spend money frivolously, restaurants were for special occasions.

My grandmother left all of us grandchildren cash, which was a chunk of change. She was a renter.
I think she just thought a mortgage was a ball and chain.
22   FuckTheMainstreamMedia   2020 Sep 29, 3:54am  

BayArea says
There’s too much money on the sidelines, off the sidelines, everywhere. For 20yrs I’ve heard from the perma-bears about how housing is going to crash,

Sure the broken clock has been right once in 20yrs, but housing is not crashing. I’ve seen it do exactly the opposite over and over and over.


For 20 years?

Housing did crash...horribly so...and lots of people lost out big time if they couldn’t hang on through recovery
23   WookieMan   2020 Sep 29, 5:26am  

WineHorror1 says
I do a bit of work for a broker. He seems like a very sharp guy. He said he made his first million with REOs during the last downturn. He is 100% sure we will have another downturn soon that will be worse than the last one.

Banks won't let it happen. Too much data on how that went down last time for them to just foreclose because people are missing payments. There will be much more forbearance, loan mods and they now know how to handle short sales better. Remember too that most the lost jobs were either secondary income to help support the bread winner and even if it wasn't they were still getting UE benefits that likely earned them more than working. In most places they're back to work as well.

The biggest concern is going to be the municipal cash crunch. Cities and towns are going to have to cut back staff, projects and borrow more at higher interest rates because they're insolvent. Depending on the fiscal year, most budgets were already done before they could see the fallout from Covid. So this downside won't be full felt until next year in most places.

Think of Chicago. 5 Major sports teams, 2 of them being baseball with 0 attendance for an entire season. Amusement tax (for tickets) is something like 9.5%. Concerts over 1k people 9.5%. Then no sales tax from those events. Bars closed and now limited occupancy reopening. Sales taxes are demolished in Chicago and many other cities. Already dealing with a shitty credit rating and basically insolvent pension system for CPS, cops, fire, etc. Losing probably a 1/3 of your tax revenue when you were already fighting an uphill battle ain't gonna end well.

I think we're going to see some major cities need either bailouts or BK like Detroit and completely restructure the mess. Once the numbers come out, I don't see anyone that would want to invest in Chicago debt and they'll need a fuckload of it to keep the sinking ship going a little longer.
24   NewGuy   2020 Sep 29, 6:25am  

WookieMan says
I think we're going to see some major cities need either bailouts or BK like Detroit and completely restructure the mess.


What happens when a city declares bankruptcy? Obviously it means cuts to services and increased taxes. Which causes people to leave. Which causes property values to go down.

I guess banks could just hold the notes all the way down until the houses are worth $500 like Detroit.

PS, I'm not in favor of waiting. If you live in a place where it makes sense to buy and you can afford it then do it. Do a big down payment and pay the thing off. Maybe the value goes down, maybe it goes up. If you like where you live it shouldn't matter.
25   GreaterNYCDude   2020 Sep 29, 6:35am  

Anecdotally people are leaving the city in droves.
Prices in the suburbs are hot. Between COVID and the protests and / or riots, those who have the means to move are starting to. I dont have any hard data unfortunately, it's just an observation.
26   WookieMan   2020 Sep 29, 7:25am  

NewGuy says
What happens when a city declares bankruptcy? Obviously it means cuts to services and increased taxes. Which causes people to leave. Which causes property values to go down.

Depends on the situation. I know other cities do it, but if you're a cop, teacher or fire fighter you have to live in the city limits for Chicago. They start laying off those people that make solid money, then yes, it will get ugly and they'll move out to suburbs where it's cheaper to live.

The easy (not quick) fix here in IL is to pass a constitutional amendment to allow changes to the pension systems. It's been known for at least 2 decades now that government was over promising and not going to be able to deliver on their pension promise. Specifically Chicago. You lose a 1/3rd of your tax revenue on a pension system already in deep shit due to Covid, and the already sinking ship just got its death shot. Not a chance Chicago comes out on the other side of this intact without 10-15% tax increases across the board or they BK. If unions were smart they'd support pension reform now before their members end up with $0.50 on the dollar.
27   Patrick   2020 Sep 29, 8:06am  

BayArea says
Over the past couple of months, housing has been on fire.


Literally, in much of California.
28   NDrLoR   2020 Sep 29, 9:01am  

clambo says
our economy was slowed down for years.
The stock market wouldn't return to equivalent 1929 levels until 1954. So if you had been 40 in 1929 and lost everything, you'd be 65 if you survived the Depression at all. Of course, at 51 the build-up for World War II would have helped you. My parents were born in 1898 and 1902, but were never unemployed during the Depression, my mother being a teacher. They would talk about it from the perspective of a gallon of milk cost five cents in the 30's, which seemed unbelievable in the 50's, and then add but nobody had that nickel. The jazz and short skirts were fun while they lasted, but they really paid for all the fun.
29   B.A.C.A.H.   2020 Sep 29, 1:22pm  

BayArea says
There’s too much money on the sidelines, off the sidelines, everywhere.


I randomly clicked on a zillow in the trivalley you spoke of, a modest 3 BD SFH in Pleasanton. Asking price $1.169 M. Based on the zillow "facts" looks like the junk fee taxes added about $1800/yr on top of the 1% property tax of pre-sale assessment.

So, I suppose the Rich Fat Cat with all the sideline money who will over-bid for this over-priced gem will sign up for about $1100 per month of Property Taxes. God Bless'em, our civil servant unions need those payments to keep feeding the pension and retirement medical beast.

You are so right about all the rich folks with all their extra money on the sidelines, year after year, to "service" our civil service. Over time though it may feel like they're "being serviced", the way a stallion is rented out to service a mare.
30   GlocknLoad   2020 Sep 29, 3:40pm  

Governments are incentivized to do anything they can to boost home prices.
31   Patrick   2020 Sep 29, 5:54pm  

NDrLoR says
My parents were born in 1898 and 1902, but were never unemployed during the Depression, my mother being a teacher. They would talk about it from the perspective of a gallon of milk cost five cents in the 30's


My grandmother used to talk about that, but never seemed to get my point when I talked about how salaries were also proportionately low.

The only question is how many minutes the you have to work for that gallon of milk at the median wage.
32   Patrick   2020 Sep 29, 5:56pm  

GlocknLoad says
Governments are incentivized to do anything they can to boost home prices.


Yes, for two reasons:

1. Bank equity! If the banks don't have that money, then they are in the red and will need to be bailed out or they won't pay back their depositors

2. Politics! People vote against parties that preside over beneficial deflation in housing prices.

Both of those things have the same underlying motive: trapping obedient servants and making them work for you with the threat of armed men kicking them out of "their" house if they don't.

Money is just control over labor, nothing else.
33   B.A.C.A.H.   2020 Sep 29, 7:39pm  

clambo says
I think she just thought a mortgage was a ball and chain.


That's because it is. But theoretically at least, it can be paid off.

Property taxes are a ball and chain that you can never cut free from. And it gets heavier every year.

I just can't wrap my head around someone committing to a large mortgage payment and a huge tax bill at the same time.
34   MisdemeanorRebel   2020 Sep 29, 8:40pm  

Shit I'm drunk as fuck. I'd say I had 5 highballs but they were more like Lowballs, 2/3 Seltzer and 1/3 Bushmills County Antrim.

Any case, Indecisive Slog. Trump had some openings but kept throwing jabs instead of the bolo/hook. Should have been 1619 vs. 1776, CHYNA Trade/Covid Lies, and Hunter.

Trump tried to attack across the whole front but didn't get a decisive breakthrough in any single place.
35   Patrick   2020 Sep 29, 9:26pm  

I thought the "law and order" thing was a pretty solid.
36   just_passing_through   2020 Sep 29, 9:33pm  

He lied about the vaccine too. We don't need no stinking vaccine. I think he basically had to.

True part was the companies saying, "Yeah we're ready", False part was bureaucratic approval.

Or maybe I misheard.
37   just_passing_through   2020 Sep 29, 9:34pm  

B.A.C.A.H. says
I just can't wrap my head around someone committing to a large mortgage payment and a huge tax bill at the same time.


Me either. Me. Either.
38   just_passing_through   2020 Sep 29, 9:41pm  

NDrLoR says
My parents were born in 1898 and 1902, but were never unemployed during the Depression, my mother being a teacher. They would talk about it from the perspective of a gallon of milk cost five cents in the 30's


My paternal grandmother was born in 08, lived until 101 and was sharper than most up until 100.

Lost her job at a bank in San Antonio when the great depression hit. Moved to the Texas gulf coast, met my grandpa, made babies, said, "Nobody really noticed the great depression down there."

Shrimp boats, agriculture. Everyone ate.

Boats are all gone these days. Out competed by Asian farms. Looks pretty desolate in particular after hurricanes over the past 40 years.
39   EBGuy   2020 Sep 30, 6:04pm  

It's always a good time to lock in your Prop 13 tax basis.
40   B.A.C.A.H.   2020 Sep 30, 8:26pm  

There was a someone who identified as a resident of SJ with handle "E-man".

He shared a lot on Partick.net about his prowess as a Bay Area real estate investor and landlord. Seems like recently he fell off the face of the earth, or at least got erased or self erased from this blog.

That's too bad.

It'd be interesting to read what he would chime in on this topic.

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