Housing bubble part 2 (for sale, HOA, condos)

[GoldenZephyr]

This is true, the market is very unusual right now with higher numbers of investors than in the past. We are friends with someone who is assistant controller for a company in Malibu that has over $600 million in funding from the Alaska Permanent fund and they are gobbling up huge numbers of homes and turning around and renting them. Most of their buys are all cash and they have over 9000 SFR's under management.

As another poster put it, its hard to generate yield on money these days so the investment market is hotter than ever before.

Some neighborhoods are going to be transformed with all the rentals that are being created. Families may want to consider other environs if they want lower cost of living/quality of life. There are good places in this country outside of CA that you can raise a family without being a perpetual debt slave.

This is definitely a new bubble, the question is how long can it last, I say as long as interest rates remain low, prices will climb, when (if) rates really begin to climb, then prices will moderate and fall. Two reasons, interest rates are making homes cheaper, even as they rise in price, two, if better yield is to be had, investment money will move on to other options. Right now, unfortunately RE is one of the best places to park money. Which is sad, because when Realtors and sellers get arrogant and smug, everyone loses. A flat to neutral market (<2% appreciation) is the healthiest option for everyone in the long run and I say that as a homeowner. Rapid Real Estate "appreciation" is nothing more than inflation. Everyone pays more and "owners" think they are rich because they have "appreciation" then go even more into debt and the cycle repeats.

[goozer]

It is hard to reconcile the indicators that a new housing bubble is forming (and it does feel that way) with other reports about a massive "shadow inventory" of "pre-foreclosure" houses that the banks are withholding from the market. We hear a lot about there being no inventory in Orange county, but what about all the houses with homeowners who are no longer paying their mortgage but the banks have not instituted foreclosure proceedings to kick them out. Is this just the banks trying to maximize their profit by waiting to "sell" when the prices rise? Whatever it is, as a buyer looking forward to the spring buying season it is incredibly frustrating. I do NOT want to join bidding wars with a dozen other buyers where I have to send family pictures, etc, to beg the seller to allow my the privilege of buying their house. Ridiculous...

[CAVA1990]

I've never understood bidding wars. If you price your home correctly in the first place and adjust to changes in market conditions you shouldn't have those. I'm guessing people get talked into pricing low by realtors who want to make a quick sale. Wonder how many bidding wars there ever are on realtor owned homes. I'll bet a lot fewer.

[Blue Skies]

In the Santa Barbara News Press real estate section today, the paper 'interviewed' the managers/owners of several local real estate firms.
ALL of them said prices will rise in 2013. The range varied from 6% to 20%.

Saw a condo in Goleta, CA this week come on the market for $198,000 (it was a short sale, they owe more than $350,000). The listing agent said she had 22 offers and it sold 'substantially' over asking price. One of our tenants offered $240,000 and she did not get it.

I remember in 2006 seeing homes in my neighborhood sell for what I considered outrageous prices. Those same homes in 2011 were $250,000 less than 5 years before.

[Ultrarunner]

Originally Posted by CAVA1990

I've never understood bidding wars. If you price your home correctly in the first place and adjust to changes in market conditions you shouldn't have those. I'm guessing people get talked into pricing low by Realtors who want to make a quick sale. Wonder how many bidding wars there ever are on realtor owned homes. I'll bet a lot fewer.

It is a marketing strategy to get buyers in and thinking I could afford this.

At least this is what the listing broker told me on the house next to me... I was surprised at the low list price... it was like a highway in front of my home on a blind street... cars and Realtors all day long.

What I found questionable is all those that made offers following all the rules... pre-qualified, verifications of funds, etc... where then invited to submit their highest and best offers... the home sold for 51% over list price within two weeks.

Guess everyone wanted to be my neighbor

[CAVA1990]

Originally Posted by Ultrarunner

It is a marketing strategy to get buyers in and thinking I could afford this.

At least this is what the listing broker told me on the house next to me... I was surprised at the low list price... it was like a highway in front of my home on a blind street... cars and Realtors all day long.

Perhaps a marketing strategy for that realtor to interface with additional buyers who might go for another one of her/his listings?

[Ultrarunner]

Originally Posted by CAVA1990

Perhaps a marketing strategy for that realtor to interface with additional buyers who might go for another one of her/his listings?

Certainly could be a factor... although inventory here is quite low.

The nearby community typically has 120 to 140 listings... right now there are 27

The holidays are traditionally slow for Real Estate.

I'm really curious how things will pan out this Spring and Summer.

On the other hand... a home that is priced too high will stagnate on the market becoming stale.

[DocGoldstein]

I haven't been to the court house steps in nearly a year.

The amount of "speculators" who are buying homes at RETAIL bids at auction was already reaching fever pitch back in April of 2012. I can't imagine what's happening now. I'm glad I bought most of my homes in 2011.

Artificially low inventory, hedge fund investors, FHA'ers, and a small percentage of foreign buyers. I believe traditional purchases are around 14%. If those are not the ingredients for a bubble, and crash, then I don't know what is.

[CAVA1990]

Well we're still pretty early in the cycle so there's probably time to get in and get out to make a few bucks.

[ducviloxi]

The majority of demand is by investors today (domestic and foreign) looking for get higher yields on their money. This doesn't mean that housing intrinsically has a higher value all of a sudden. Investors make and HAVE made poor decisions in the past and get burned. If they bid up housing prices by 30% and then it doesn't pan out we will have a huge bust again which will leave all the investors scrambling...this has happened before YET greed turns everyone blind.

I don't classify investors buying the majority of homes as a "recovery" like the media portrays it to be, I classify as a gambling show which can crash and burn anytime.