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I gotta tell ya, this whole thing has me just baffled. I get that low interest rates heated up the market and fueled all kinds of speculation and started a cycle that feeds on itself. But Sacramento? There are nice areas around here, but I don't really see the appeal in living by Arco Arena; but you should see how much they have built out that way. Stockton and Modesto? Not too attractive and high crime. Davis, Vacaville, Fairfield, Dixon??? The only thing to recommend most of those areas is that commuters are a little bit closer to the BA. This area doesn't have the glamour (for want of a better word) associated with it that the BA and LA have. I'm stumped. :|
Peter P
2005 Aug 1, 5:13pm
SactoQt, people are often confused about the reason of a price run-up. The convenient answer is that "we are running out of land everywhere". As a result, buyers do not care about location anymore. They just want to get into something "before it is too late". They first buy and then find reasons/excuses to support their irrational behavior.
SactoQt, people are often confused about the reason of a price run-up. The convenient answer is that “we are running out of land everywhereâ€. As a result, buyers do not care about location anymore. They just want to get into something “before it is too lateâ€. They first buy and then find reasons/excuses to support their irrational behavior.
That's a hard argument out here. Land as far as the eye can see in most directions... really.
I get your point though. Fear is a big player in this market, but it's still probably a bit player compared to greed.
Peter P
2005 Aug 1, 5:38pm
I believe foreign central bankers just reduce buying speed but not “selling†so as to avoid shooting their own feet.
Possibly true. It is quite scary that once their pace of buying even slows the yield on 10YR climbs steadily.
Peter P
2005 Aug 2, 3:16am
Also, I have lately felt reduced to making bad jokes, not unlike you!
I have the same feeling. Having little to say... I am glad to see that other participants (SactoQt, HARM, ...) are contributing so much though.
It depresses me a little bit to keep making this point over and over again, because if I AM correct, many of the people I have come to know and like here will be effected negatively.
Jack, we are here trying to speculate. The truth will prevail, whether we are right or wrong. Do not feel bad. :)
Waiting may help in some areas, but I would feel irresponsible telling people to wait if they are considering a good bay area location, with interest rates this low.
I think waiting may or may not help. I will try to tell people my belief and the underlying logic. But as always, it is not investment advice.
Peter P
2005 Aug 2, 3:22am
One thing though is that the Bay Area tends to inflate prices in all areas which are within driving distance to the Bay Area.
Face Reality, I do not think Sacramento is within commuting distance of the Bay Area though. (It is a road trip for us.)
Peter P
2005 Aug 2, 4:21am
I agree that it’s not within commuting distance, although I once knew someone who commuted a few times a week from Sacramento to the Bay Area. He wasn’t able to keep doing it for very long.
Sacramento is possibly great for telecommuters though. Traveling once a week to attend meeting is not so bad.
Re: commuting from Sacramento
I don't get it but a lot of people are commuting daily to the BA. That's why I think a minor BA price correction will affect this area, who wouldn't want to move closer to the BA if they could?
Peter P
2005 Aug 2, 6:55am
I remember that a decade ago many immigrants in Canada "commute" to Asia by plane. Many marriages ended in failure. People occasionally do things that are incredibly stupid.
Peter P
2005 Aug 2, 10:39am
Apparently, people live just to live in houses... purpose of life...
How about bombing housing developments in the name of environmentalism? Or spiking tress? Or burning down research facilities? Any time any ism is taken to an extreme, it just gets stupid IMO.
Jack
If extreme doesn't hurt anyone I can live with it. When it gets violent or destructive, then I take issue.
Edward,
Thanks for the post --good story. Unfortunately, I think most of the board has moved on (I came across your post by accident myself while researching). Maybe you can include this in a short bio of yourself in the new "On a Personal Note" thread.
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The Baby Boomers' impact on the housing bubble has frequently come up in many past threads, for a variety of reasons.
Some of the housing bulls have argued that high Boomer participation in the current market is evidence that there is no bubble (demand from the demographic "lump in the snake" reaching its peak) and that boomer wealth will keep housing prices sky-high. The NAR, for example, often points out that the national ownership rate is 70%, and that previous generations have historically hit their peak ownership rate (approx. 80%) somewhere between ages 60-74 (tinyurl.com/7unas). The oldest boomers are now a year away from 60, while the youngest boomers are only 41 --a long way from that "peak" homeownership range. Of course what they don't mention is that the 70% figure is an average ownership rate for all age groups. If you average lower-ownership young people with higher-ownership old people, you'll always get a rate well below the peak.
Housing bulls have long pointed out that, while boomers are indeed numerous, their high participation in the current market does not prove there's no bubble. If boomers are purchasing as speculators/flippers and not as primary owners (who live in the properties they buy), then what generation they belong to is largely irrelevant. Speculation is still what's causing the demand --not the fundamental need to have a place to live in. The fact that national housing production now exceeds population growth by 300,000 units per year (tinyurl.com/ahqpu) strongly supports this argument. In fact if boomer speculators/flippers all rush for the exits at the same time, their large numbers can work strongly against housing. Their collective selling could even trigger a panic and severely depress the market.
Then there have also been lively discussions about the nation's abysmal savings rate (near 0%), historically high debt-load (both housing and non-housing) and the huge projected liabilites our government has to retirees in the form of Medicare and Social Security. What will happen in coming years when boomers begin to retire en masse and there aren't enough new workers paying into the system to support them all? Will boomers simply demand that the government raise taxes on everyone else to sustain the system? Or, will they be forced to work longer or take a massive cut in lifestyle (or both)? Boomers have shown a disturbingly high willingness to transfer costs onto future generations (witness National Debt, Prop. 13, etc.) and a general unwillingness to sacrifice or defer immediate gratification for themselves (see virtually any post by Surfer-X). How do you think these future liabilities will play out?
HARM
#housing