Housing bubble 2.0 bust not if but when

[HyperionGap]

Originally Posted by k374

so what if it's 10 years ago, or 100 years ago... the incomes have not increased, infact they have decreased in real terms. Home prices are driven by incomes. What else do you think creates affordability?

Well, you’re wrong. Also, it’s hilarious that you want to talk about “real terms” all of a sudden. First you disregard using CPI to compare home prices from 2005 to 2015, yet when it comes to wages you’re all about “real terms.” What a joke.

Regardless, here’s a graph I made with data from CS Fullerton center for Demographic Research, June 2015
http://www.fullerton.edu/cdr/ocff.pdf



Based on this data income seems to be increasing ~$1,500 / yr (approximately 2.5% annually).

Originally Posted by k374

There is a lot less proper lending today and 50% of the market is all cash speculation, are you naive enough to think this type of demand is going to last? Eventually investor demand wanes and there is nothing else to replace it. Interest rates are key, if interest rates go up then yields begin increasing in other asset classes besides real estates, investors pull out of this asset class and go after something else leaving a trail of mayhem in the real estate sector.

There’s less “proper” lending today than there was in 2005? Are you completely delusional? When exactly do you think the subprime “lending” crisis was bubbling over?

Originally Posted by k374

People who think real estate is so valued because there is something inherently great about it are nothing but fools.... it looks great now because that is the money making vehicle. In 5 years it will be something else. If you read many papers from various economists they will tell you that real estate has actually delivered lackluster returns historically compared to other areas... by it's very nature holding real estate can be very expensive, maintenance, property taxes, vacancies, delinquent tenants etc. So many investors have become landlords and i'm highly skeptical their "models" will even pan out going forward. These are the same speculators that had all these "models" that were supposed to work during the last bubble but crashed and burned instead.

I don’t care whether you think their models are going to work. Here’s the truth, SoCal real estate prices in the premium areas are not ever going back to what they were like in 1995 barring a complete global catastrophe. You can moan and groan all you want, but those days are over. I recommend you start looking at the reality of a global market.

[Cardiff Kook]

Don't waste your breath Hyperion...guys like k374 are just wishful thinking and will spew any straw man argument that fits their agenda

[LuvSouthOC]

I don't think California prices are massively inflated especially when compared to prime locations in the U.S. much less Canada or London , but they are getting a bit bubbly in certain areas. If there were a huge market correction in the Dow and Nasdaq (and almost certainly globally), I can then see the market deflating. But I think the delfation would happen slowly at that point since there are not nearly as many bad loans out there. The Fed would likely move back to a zero interest rate anyway so as to stimulate the market. And there you are. Essentially, it is obvious that the government wants the market reinflated for the benefit of banks and those who purchased at peak.

[HyperionGap]

Originally Posted by Cardiff Kook

Don't waste your breath Hyperion...guys like k374 are just wishful thinking and will spew any straw man argument that fits their agenda

I'm always happy to show people why they're wrong.

[k374]

Originally Posted by HyperionGap

Well, you’re wrong. Also, it’s hilarious that you want to talk about “real terms” all of a sudden. First you disregard using CPI to compare home prices from 2005 to 2015, yet when it comes to wages you’re all about “real terms.” What a joke.

hardly a joke... income needs to be talked about in real terms as that is what affects affordability. Infact, if commodity inflation is high then the average person is not able to save as much towards a downpayment let alone afford the high cost of home ownership...they are more likely to rent. Your mathematical analysis makes no sense whatsoever, you are extrapolating inflation to justify the rise in home prices. Unless there is *income inflation* home prices have no support at all except temporary demand from speculators such as what is happening now.

Income is the main driver and you fail to understand this. Home ownership is a luxury, the higher the costs of living the less organic demand there is going to be and the harder it is for ordinary people to buy homes.

When I say "proper" lending, I do not mean it to include creative lending during the subprime crisis which was phony. I mean properly qualified people who can afford and sustain a home long term.

I disagree with you regarding SoCal, yes, it will not go back to 1995 but that does not mean it's not inflated to a significant degree. A lot of factors are influencing prices right now including rampant speculation, that is not going to last long term.

I'm not saying it will crash tomorrow, but whenever factors change - such as the low interest rate environment and the bursting of bubbles in the technology sector it will have a significant impact on the real estate market.

Originally Posted by HyperionGap

I'm always happy to show people why they're wrong.

People like you who claimed that it will never go down were a dime a dozen during the last bubble, right before the entire market crashed 30%. Actually it is quite ironic that people making claims such as these that it will never go down are hallmarks of bubbles.

[LuvSouthOC]

K374, since you say it is so overpriced in OC, just how overpriced do you contend it is it exactly? Please explain how you arrived at that conclusion.

[HyperionGap]

Originally Posted by k374

hardly a joke... income needs to be talked about in real terms as that is what affects affordability. Infact, if commodity inflation is high then the average person is not able to save as much towards a downpayment let alone afford the high cost of home ownership...they are more likely to rent. Your mathematical analysis makes no sense whatsoever, you are extrapolating inflation to justify the rise in home prices. Unless there is *income inflation* home prices have no support at all except temporary demand from speculators such as what is happening now.

Income is the main driver and you fail to understand this. Home ownership is a luxury, the higher the costs of living the less organic demand there is going to be and the harder it is for ordinary people to buy homes.

When I say "proper" lending, I do not mean it to include creative lending during the subprime crisis which was phony. I mean properly qualified people who can afford and sustain a home long term.

I disagree with you regarding SoCal, yes, it will not go back to 1995 but that does not mean it's not inflated to a significant degree. A lot of factors are influencing prices right now including rampant speculation, that is not going to last long term.

I'm not saying it will crash tomorrow, but whenever factors change - such as the low interest rate environment and the bursting of bubbles in the technology sector it will have a significant impact on the real estate market.



People like you who claimed that it will never go down were a dime a dozen during the last bubble, right before the entire market crashed 30%. Actually it is quite ironic that people making claims such as these that it will never go down are hallmarks of bubbles.

You're wrong again, guy. Maybe you should read what I wrote. I never said "it will never go down."

But if all you're going to do is make up what you want to hear then go for it.

I actually make good money working in real estate investment so I don't really care what some rando dude that just makes up stuff thinks.

[k374]

Originally Posted by HyperionGap

I actually make good money working in real estate investment

well, was wondering why you are getting so worked up about whether it will go up or down... now we know.

[HyperionGap]

Originally Posted by k374

well, was wondering why you are getting so worked up about whether it will go up or down... now we know.

Yeah it's because when I see people talking about something as if they have a clue is quite amusing to me so I like to show just how wrong they are.

I'm sorry you can't afford to buy a house here in socal, I'm sure there's some nice place you can afford in Nebraska though. Maybe you should look around there where you don't have to deal with any "investors" causing any bubbles.