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Demand for housing is the same as it always was. People are looking for ways to buy a house. If they can afford the house, without going broke, that is all they care about.
Were you hoping everyone would wise up, and stop buying homes?
If you were, where do you think all those wise people who built the bubble went?
There will be buyers as long as they can afford it. Not whether it's a fantastic value, it's whether they can afford it. For those people, I'm happy they're buying. Even if they aren't getting a great deal, I'm betting it will be better than any other scam they could be putting their retirement money into. At least they'll have something in 30 years. If they keep buying/reselling every 5-7 years, perhaps they won't go far, but it's better than being conned into some once in a lifetime stock. Or panic selling their good stocks when the market tanks.
Patrick
2010 Feb 4, 5:04am
At least they’ll have something in 30 years.
Not a good bet. They may well end up with less than zero, and quite soon.
I'm not saying stocks are good in this environment. I'm spooked about the stock market and totally out of it for now.
People may not wise up, but if lending keeps tightening, that will have the same effect: lower prices
bubblesitter
2010 Feb 4, 5:12am
30 years is anybody's guess but for next 10 years the prices are not increasing unless 1)mortgage rates go down to 2% or 2) there is dramatic increase in salaries. I don't see neither of the 2 happening.
It doesn't matter what the term length is, the end result is they will do better than if they bought stock in any "next best thing!". They only need to do it ONCE in 30 years to wipe out their savings. If they were going to be conned, conning them into an expensive house is better than a stock heading down to 0.
If you would have told me in 1999 that the house I was buying would be worth LESS in 2010 than the price I was paying, I would have probably shooed you all away, too.
But holy shit, you would have been right.
justme
2010 Feb 4, 7:09am
Good grief, Ichiro! And this wasn't even during the 3-5 pm "happy hour for
baby-boomers"?
B.A.C.A.H.
2010 Feb 4, 2:42pm
OK fine, if you can prove that you don't need to borrow the money then maybe "lending is not keep tightening for you", maybe it is a symantic thing, maybe "borrowing keeps tightening" is more apt as deleveraging goes on for as many reasons as there are entities ("non-gov't" entities that is) doing the deleveraging.
Greece is on the edge of default just about the same number of months after Sept 2008 asset price collapse as the Austrian national bank collapsed after the October 1929; If you don't think the default in Greece cannot cause a contagion overseas then you ought to read some financial history. The last thing we need right now is a steep rise in dollar which will likely follow such a contagion, and it will cause more deflation here, including rents. Probably OK for landlords who don't have mortgages on their properties.
The other day I had lunch at Fresh Choice. This is the conversation between a couple of woman I overheard while waiting in line, just about verbatim:
Last weekend we were at a birthday party for the child of one of our friends. This is a couple that has been trying to buy house for the last 2-3 years in SF or nearby. Found out they were in escrow on a $500K house in San Mateo. His wife hadn't even seen the place yet, they were just glad to have their first offer accepted.
Knowing that my wife and I have also been in the market for a house about the same time, they were really trying to convince us that "now is the best time" to buy too. I didn't have the heart to explain why I didn't think it was.
I think I now understand why prices haven't been dropping on the peninsula as much as I had hoped.