Honest "housing bubble" discussion. No hate, just the facts and fundamentals! (San Francisco: crime rates, mortgage)

[69Charger]

Can we have a discussion on the current housing situation? It's a sensitive subject and a lot of people get quite "feverish" on the subject, but if we want fever we can go to various bull and bear websites. Let's have a local discussion, based on what we see, and discuss our fundamental theories.

I really don't know what to make of the market, because I see such strong theories from both sides. To me, it's a bit frothy, but that froth may be justifiable with the right circumstances. So the question, do the froth justifying circumstances really exist, or are they manipulated by the Fed, Gov, etc?

I see obvious demand, after all it's California.
I see a land shortage, unless it's the eastern IE or the High Desert.
I see a lot of money in coastal areas.
I see people from around the world buying desirable homes.
I see a lot of low paying warehouse jobs in the IE.
I see record low interest rates, that the Gov will have trouble raising.
Yet without raising them, we risk asset bubbles...
I see home prices above per capita income "guidelines".
I see people with good jobs in LA/OC, commuting into the IE boosting prices there.

So is it safe to say, as long as we maintain status quo, things are going to remain as they are? Will it take another 2007 to bust things? Should we "not fight the Fed" like they say?

Or should a person just worry about paying off their mortgage, live life, and ignore everything else?

[nightlysparrow]

Mortgages currently require more stringent financial qualifications, so the marginal income people aren't getting them, a major fail factor in 2007. Wouldn't hold your breath for prices to fall.

[Parker501]

I've been expecting prices to level off for awhile now and it hasn't happened.
I think interest rates are the driving factor and if they raise them the market will come down. I have a feeling that is not going to be happening anytime soon. I'm actually expecting the FED to drop rates again.

There appears to be weakness showing up in some markets like Manhattan and San Francisco - at the high end anyways.

Who knows what will happen. As for me, I refuse to pay the current prices. I have no interest in being trapped in a 30 year mortgage at these prices. If the prices continue to rise substantially I probably will just not buy and I may turn into another California stereotype and just end up moving somewhere more affordable.

[J.Thomas]

As long as interest rates remain low houses will continue to be investment vehicles like stocks, bonds..etc.

No wonder home ownership is at record lows.

[YoungTraveler2011]

looks like prices continue to go up.













and that's a wonderful thing

[Texamichiforniasota]

Originally Posted by nightlysparrow

Mortgages currently require more stringent financial qualifications, so the marginal income people aren't getting them, a major fail factor in 2007. Wouldn't hold your breath for prices to fall.

Yeah, I think at some point gains will slow down, but I don't think there will be a big drop, at least for safe areas with short commutes to job centers. There is too high of demand with a small supply of houses, and land in the Basin and nearby Valleys is built out. The IE and high desert are always going to be the most tenuous since the commutes are terrible. The variables that no one can really predict right now is crime rates, riots and natural disasters. The first two were big factor that led to the decline in urban areas from the 60's through the 90's. A significant increase in crime could drop prices. A big enough natural disaster can take decades to recover from.

[JustMike77]

Lately I've been saying that it feels a lot like 2005 to me, but what do I know? What I think I DO know is that normal working people cannot afford much more in terms of housing costs. I mean, $ 1.3 MILLION for a 1,200 sq ft house in Culver City ? C'mon. I agree that the landscape is not the same as the last crash in terms of lending standards, etc, but something has to give at some point. But, again, what do I know? I'm just happy that my house has been paid off for years and I'm happy here, so I get to make popcorn and watch what happens.

[J.Thomas]

Originally Posted by JustMike77

Lately I've been saying that it feels a lot like 2005 to me, but what do I know? What I think I DO know is that normal working people cannot afford much more in terms of housing costs. I mean, $ 1.3 MILLION for a 1,200 sq ft house in Culver City ? C'mon. I agree that the landscape is not the same as the last crash in terms of lending standards, etc, but something has to give at some point. But, again, what do I know? I'm just happy that my house has been paid off for years and I'm happy here, so I get to make popcorn and watch what happens.

I agree.

There is some sort of topping formation in house prices.

Some markets may go up some may remain flat and some may go down a bit.

I don't think things can get any more expensive then this.

What's next? Median price of 5 million in SF or 3 million in LA

[Big-Bucks]

We have not reached bubble territory. There might be a plateau but no crash any time soon. LA has one of the lowest vacancy rates in the country. It's taking a long time for hotels to get built to put a dent in the Air BnB host profits. Also a spike in interest rates is more like what might trigger a significant drop in housing prices. This is nowhere in sight.

[CA4Now]

Originally Posted by J.Thomas

I don't think things can get any more expensive then this.

What's next? Median price of 5 million in SF or 3 million in LA

True. It doesn't seem as if it's possible for housing prices to keep rising.

"One cause of the affordability crisis is that the state isn’t building enough housing at any price. Construction in the state isn’t keeping up with population growth, so housing costs rise across the board. That trend creates further ripples, driving up costs of goods, services and employment. A dollar buys less in California than in almost any other state, and housing costs are a major reason."

California desperately needs affordable housing — but also a new blueprint for building it - LA Times