patrick.net

It feels to me like Kiesel is right.

I am looking at rent and home prices in the Florida panhandle within 10 miles of the beach. They have gone up about 30% over the last 2 years. They need to go down to spring 2020 levels to make them affordable for the working class. They likely will over correct and drop to 2018 levels.

Stocks are not overvalued much if you compare the PE ratio now to 2000: https://www.multpl.com/s-p-500-pe-ratio?source=patrick.net

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Timing is everything. For my shack, selling in 2006 and buying back in 2012 would have been a bad move... transaction costs, reset Prop 13 taxes, need to rent for 6 years, and the small problem of selling at $900k and buying back at $1MM.

FarmersWon says

On this metric stocks are in huge bubble

Yes, I have followed the Warren Buffet valuation for stocks. Market cap needs to go down more relative to GDP. A lot of the run up is from the significant increase in demand, thanks to monetary and fiscal policies.

The left wing media has been reporting about this. Just look at Tyson Foods stock price and PE ratio.

https://www.theguardian.com/business/2022/apr/27/inflation-corporate-america-increased-prices-profits?source=patrick.net

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FarmersWon says

they will be forced to reduce excessive price increase

I agree. They are pricing beach condos (sleep at 6 to 8 people) at $400 per night (total) here in Panama City Beach. That is what they charged back in 2020 and 2021 with all the unemployment, stimulus, cancel rent, etc. They got to lower that price from $400 to $250 to make it affordable again.

Now all that freebie money is gone and interest rates like the 30 yr mortgage are going up in anticipation of a Fed interest rate hikes.

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I think April/May 2022 could be a peak because it’s just after the last months of pending inventory before the rate explosion.

But I don’t see a decline large enough for it to makes sense to sell/buy and reset a 2012 property tax.

Kiesel is what Italians would refer to as “stupido”

Kiesel is gonna owe a shitload of taxes, worse if he sells a house in California.

Also a guy sells in 2006 and buys in 2012 and is now the authority figure for all future RE moves.

But Zillow is still telling me to expect double digit 1yr forecast % gain. 🧐

to try and play the buy low sell high for your primary home is the worst thing. I know horror stories of people who tried that.
If you do that with investment property, be my guest. With your actually home you live in....unless you hate living there, dont touch it.

Dont be an idiot and try to think YOU know when the market peaks and when the market bottoms. You are an idiot for even trying.

BayArea says

Also a guy sells in 2006 and buys in 2012 and is now the authority figure for all future RE moves.

But Zillow is still telling me to expect double digit 1yr forecast % gain. 🧐

Agreed he is wrong. There will be no decline for obvious reasons, immigrant pressure. The wealthier will seek refuge in good areas and keep bidding them up

Is there any truth to Blackrock overpaying for tons of housing stock across the country?

mell says

BayArea says

Also a guy sells in 2006 and buys in 2012 and is now the authority figure for all future RE moves.

But Zillow is still telling me to expect double digit 1yr forecast % gain. 🧐

Agreed he is wrong. There will be no decline for obvious reasons, immigrant pressure. The wealthier will seek refuge in good areas and keep bidding them up

Agreed, wealthy areas are mostly immune. Everyone knows that you have to price yourself out of the riff raff. That’s expensive and always will be.

So I get that folks view RE as an investment, like a less liquid stock or bond. I am seeing a lot more homes coming on the market, the sellers trying to get an annual 20-25% gain on a home with minimal to no improvements, that was purchased 2-4 years ago. It seems like a magical belief to expect someone to pay you 50% more for the home you bought two years ago, doesn't it, especially when the tide seems to be turning?

Al_Sharpton_for_President says

So I get that folks view RE as an investment, like a less liquid stock or bond. I am seeing a lot more homes coming on the market, the sellers trying to get an annual 20-25% gain on a home with minimal to no improvements, that was purchased 2-4 years ago. It seems like a magical belief to expect someone to pay you 50% more for the home you bought two years ago, doesn't it, especially when the tide seems to be turning?

Here in the tri valley, exactly what you describe is happening in the early part of 2022. We have friends in the area who are walking away with >50% gain on houses they bought 2-3yrs ago.

100% right… not to mention a massive property tax reset.

Yes, the ones that sold in 2022 are moving back to be with family out of state. They are living the CA dream. Come to CA, spend 2-3yrs working an assignment in tech, and take $1,000,000 of equity with you back to your home state (ya, half of that is tax free but still).

They’ll probably go back and tell everyone how easy it was… when in fact they rode the wave of an unprecedented time.

Yes in this case the couples had good jobs and were able to afford 2019 homes.

Also, curious where you are getting the sales figures? Will be very interesting how those numbers look 2-3mo from now.

BayArea says

But Zillow is still telling me to expect double digit 1yr forecast % gain. 🧐

Yeah.

Every ®ealtor always says, all the time, except for some non-Cool-Aid Drinking ones who confide to their closest inner circle, it's always a good time to buy.

I remember "shopping" for a home in my section of SJ in the summer of 2006. I was not interested in buying. I was interested in seeing WTF was going on. Spoke to so many ®ealtors at the "Open Houses". My story was that I wanted to "trade up" by selling our home and buying a larger or newer or otherwise better one in the same area. I told them that I wanted to discreetly sell ours so as not to call attention of the neighbors.

You could see the Greed in Their Eyes, like Daffy Duck in his Greedy Coward cartoon:
( https://www.youtube.com/watch?v=-71uqV0LHag&source=patrick.net ); TWO Listings!

They congratulated me for my savvy idea and told me what a great time it was to buy.

Talking One's Book
1. The act of promoting a stock one owns in order to entice others to buy it. This would in turn benefit one's own investment portfolio. Talking one's book is not a well-regarded strategy.

2. More generally, the act of promoting one's company, product or other good or service.

mell says

Agreed he is wrong. There will be no decline for obvious reasons, immigrant pressure. The wealthier will seek refuge in good areas and keep bidding them up

Yes.

Patrick started his blog in frustration of how "it's different here". It is. Commonplace sensibilities don't apply in the SF Bay Area, which is becoming like a colony of India and Greater China.

About half the world's population lives in those places. The rich in those countries outnumber all of the US + Canada. They all covet a postage-stamp residence in just a few prime zip codes in Vancouver, SF Bay Area, and for the "losers" among them, maybe Seattle and LA.

Al_Sharpton_for_President says

Talking One's Book
1. The act of promoting a stock one owns in order to entice others to buy it. This would in turn benefit one's own investment portfolio. Talking one's book is not a well-regarded strategy.

2. More generally, the act of promoting one's company, product or other good or service.

Agreed. Though it's fine to make recommendations with disclosure, I do that from time to time with small cap biotechs and people on patnet who bought those fared quite well. That being said I see no point in housing predictions since it's a tightly controlled racket, moreso in areas like CA. 2008 was an anomaly were they lost control due to too many banksters cheating. Sure this could happen again, but it's so rare that it's not worth speculating on it, you're more likely to lose your shorts shorting housing than to make any money. The housing market is even more entrenched than the stock market due to its locality, and much easier to control than the stock market. They will not let it fail, so predictions are useless.