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No one was touting a bubble until around 2003, and not in the media at all until around 2005. And even then, the bubble lasted so long that one could have perceived things in a very positive light and not been out of their mind. IMO if you were not an expert in 2003-2005, your really needed to be in a situation where:
1.) Your income was well above average.
2.) You had minimal savings.
3.) You had the foresight to question "what if?" on taking a 5 year adjustable interest only loan(or worse).
4.) You lived in one of the heavy bubble markets.
The above describes me to a T. By 2003 I was seriously looking for a place to buy in Los Angeles in about 10 different communities. And the answer was that these places were going to put me in a situation where I was paying more than half my take home pay into my mortgage, property taxes, etc. So I decided right then and there that a bubble had occured and housing at some point had to level off.
Boy was I wrong. Sort of. Eventually the bubble did pop in spectacular fashion. But it took a heck of a lot longer than I thought.
Now, at least in Los Angeles, I see a new mini bubble. This one is feeding off a few temporary factors:
1.) Certainty of future interest rate increases(pushing people to buy before the rates increase).
2.) Government tax incentives.
3.) Ridiculously low available MLS inventory under $500K.
But you have people just incredibly bullish on this market. Like somehow the above factors will stay in place.
And this time around is different. There are a number of online sites detailing why prices MUST drop. There are clear cut economic factors that in sum total indicate continued weakness or decline in the real estate market. Amoungst them:
1.) High unemployment.
2.) Multiple years of higher than average foreclosure rate.
3.) Certainty of higher interest rates.
4.) Discontinuation of the fed buying mortgages.
5.) Posibility of higher taxes.
6.) Inability of people to "move up".
I see lots of optomistic people...people feeding on the exact same mentality that existed during the previous bubble. People excited about a few months mini bubble price increase. This message is for them.
You can ignore the above(and other factors). You can ignore that 2007 and 2008 were proclaimed by some realtors as "best time to buy evah!" and that most of those buyers are now underwater and likely to stay there, if not default. But its your own fault this time. The information is out there and readily available. Should the market crash again, its on you.
I too held off buying during the bubble ... for me, it wasn't about how much my payment was at the onset (0.5% neg am loan, woohoo! ), but what it would've been ... 143% DTI ratio, anyone?
Quote:
Originally Posted by JohnG72
And this time around is different. There are a number of online sites detailing why prices MUST drop. There are clear cut economic factors that in sum total indicate continued weakness or decline in the real estate market. Amoungst them:
1.) High unemployment.
2.) Multiple years of higher than average foreclosure rate.
3.) Certainty of higher interest rates.
4.) Discontinuation of the fed buying mortgages.
5.) Posibility of higher taxes.
6.) Inability of people to "move up".
I see lots of optomistic people...people feeding on the exact same mentality that existed during the previous bubble. People excited about a few months mini bubble price increase. This message is for them.
You can ignore the above(and other factors). You can ignore that 2007 and 2008 were proclaimed by some realtors as "best time to buy evah!" and that most of those buyers are now underwater and likely to stay there, if not default. But its your own fault this time. The information is out there and readily available. Should the market crash again, its on you.
In regards to the entire market, I still see a decline for the very reasons stated. However, real estate is still very local; some will be remain "overpriced", while other areas will drop to below-rent prices. Desirable area will remain strong ... the Westside is still expensive for the middle class, and I don't see that changing. Portions of the San Gabriel Valley, like Walnut and Diamond Bar, have also remained expensive as immigrants flush with cash have no qualms paying $50k above market for their home. Such keeps the prices propped high, despite what trends would suggest otherwise.
I did buy 8 months ago, and in the meantime, I've seen prices increase in my neighborhood. Will it continue to rise, or drop again? ... I dunno, and it doesn't matter. I'm in it for the long haul - stability for a future family and since my payments are on par with rent, economically it made sense.
No one was touting a bubble until around 2003, and not in the media at all until around 2005. And even then, the bubble lasted so long that one could have perceived things in a very positive light and not been out of their mind. IMO if you were not an expert in 2003-2005, your really needed to be in a situation where:
1.) Your income was well above average.
2.) You had minimal savings.
3.) You had the foresight to question "what if?" on taking a 5 year adjustable interest only loan(or worse).
4.) You lived in one of the heavy bubble markets.
The above describes me to a T. By 2003 I was seriously looking for a place to buy in Los Angeles in about 10 different communities. And the answer was that these places were going to put me in a situation where I was paying more than half my take home pay into my mortgage, property taxes, etc. So I decided right then and there that a bubble had occured and housing at some point had to level off.
Boy was I wrong. Sort of. Eventually the bubble did pop in spectacular fashion. But it took a heck of a lot longer than I thought.
Now, at least in Los Angeles, I see a new mini bubble. This one is feeding off a few temporary factors:
1.) Certainty of future interest rate increases(pushing people to buy before the rates increase).
2.) Government tax incentives.
3.) Ridiculously low available MLS inventory under $500K.
But you have people just incredibly bullish on this market. Like somehow the above factors will stay in place.
And this time around is different. There are a number of online sites detailing why prices MUST drop. There are clear cut economic factors that in sum total indicate continued weakness or decline in the real estate market. Amoungst them:
1.) High unemployment.
2.) Multiple years of higher than average foreclosure rate.
3.) Certainty of higher interest rates.
4.) Discontinuation of the fed buying mortgages.
5.) Posibility of higher taxes.
6.) Inability of people to "move up".
I see lots of optomistic people...people feeding on the exact same mentality that existed during the previous bubble. People excited about a few months mini bubble price increase. This message is for them.
You can ignore the above(and other factors). You can ignore that 2007 and 2008 were proclaimed by some realtors as "best time to buy evah!" and that most of those buyers are now underwater and likely to stay there, if not default. But its your own fault this time. The information is out there and readily available. Should the market crash again, its on you.
You can also add the 2009 / 2010 to the list - I don't ever remember a year when it wasn't a 'great time to buy'
Hopefully common sense and a basic understanding of market forces will prevail this time...as they say, you can lead a horse to water but you can't.....ah, never mind.
That was then this is now - what are the chances of lightning striking twice?
I'd say pretty good given the current economic situation.
I did buy 8 months ago, and in the meantime, I've seen prices increase in my neighborhood. Will it continue to rise, or drop again? ... I dunno, and it doesn't matter. I'm in it for the long haul - stability for a future family and since my payments are on par with rent, economically it made sense.
And chances are, when its time to sell, down the road, you will have managed to live someplace you prefer, rent free, or darn close to it.
And those who preferred to rent and pay someone else's mortgage, will have cancelled checks to show for their time in residence.
That was then this is now - what are the chances of lightning striking twice?
Certain areas of the U.S. have been bubble/bust prone, since forever.
Every bust, some say home values will never ever reach the prior peaks, and yet they eventually do and then some.
Many who lived through the Great Depression, with 25% unemployment rates and 50% of the housing stock in foreclosure, became ownership risk adverse. My parents were two such people. At the end of the day, their day, all they had to show for it, were shoe boxes of rent receipts and cancelled checks.
Yep. Just because one rents doesn't automatically mean they're a "failure" in life, and just because one bought a home doesn't automatically mean that they're financially savvy either.
If one isn't about to stay put for a while, then buying is going to be a liability. Real estate is NOT a liquid asset anymore, unlike a few years ago.
You can also add the 2009 / 2010 to the list - I don't ever remember a year when it wasn't a 'great time to buy'
Hopefully common sense and a basic understanding of market forces will prevail this time...as they say, you can lead a horse to water but you can't.....ah, never mind.
That was then this is now - what are the chances of lightning striking twice?
I'd say pretty good given the current economic situation.
Common sense and a basic understanding of economics, particularly in terms of real estate, mortgages, and personal finance? What's next, you're going to expect us to employ logic and reason?!?
John I'm in the same boat as you - hell, we probably look at the same neighborhoods. And the current pricing is absurd and out of control. I especially love the RAGING holdouts that have had their ****box listed for 300, 400, 500+ days! Some into the 700+ days, LOL.
Hmmmm, could it be that even after hacking 50% off the asking price, YOU ARE STILL OVERPRICED???
Nah...never mind what those braindead zombie sellers are thinking, what are their agents and realtors thinking, dealing with these delusional sellers for over a year and sometimes 2 plus years.
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), but what it would've been ... 143% DTI ratio, anyone? 
