Next housing dip?

[phantompilot]

Originally Posted by Perma Bear

They were 10k in the 50s when they were built, they were very affordable.

When in the 50s? Which area/houses are you talking about now? You have to understand things are a lot different 70+ years later. For one thing, a 50s house is tiny. Under 1000 square feet, only two bedrooms, just one bathroom - a one car garage. So if you're going to compare the 50s to today, you would need to use equivalent housing stock.

10K in 1959 for instance, would be 85K today, but 10K in 1950 would be 100K today. You might have been able to buy a median house for 10K in CA....but perhaps not in the Bay Area though because the 10K median price is a statewide price.

Point is, as I said, even if monetary inflation were the ONLY factor in the price curve, which it is NOT, that doesn't take into account the massive amounts of "sunk cost" that would also raise the "cost basis" for a property. Taxes, maintenance, fees, and improvements, all represent costs that the market has priced in (not all of it "recoverable" so to speak, but the idea that purchase price alone should somehow forever dictate the cost of a home is nonsense...that's all I'm trying to explain to you).

And remember that in the 1950s incomes were much lower, so the relative "affordability" gap isn't as great as you clearly think.

Do you have any idea what the average income was back in 1950, for instance? According to the BLS, median family income in 1950 was a mere $3216. So that would be 32% of a 10K house.

Fast forward to today: median family income is $56,516 (2016) and the median home price (nationally) was $215K, so about 26% of the median home price. Not really all that much different given the difference in two income families.

But, what has happened in the Bay Area is that home prices have skewed further above the national median than HHI has. But that is due to scarcity due mostly to unsustainable demand caused primarily by mass immigration. Meaning that poor public policy that has created an artificial source of demand has had the predictable effect. Meanwhile, there is no equivalent public policy power that can magically just create the same increase in supply. Because SUPPLY is a physical quantity, and demand is something that can be created administratively - its just paperwork.

If you back out the excessive demand due to over-population due to immigration, prices would "normalize", and be more proportional to the national affordability index.

For one illustration of this, just think of the impact that 3M people have on the demand side. That's just from administratively failing to enforce federal laws. That's somewhere close to 1M additional housing units.

[Ultrarunner]

Originally Posted by Independentthinking

I remember a couple of people that reacted the same way and said everyone was telling them how dumb they were in 2010 when the valuation of their home had hit its lowest mark. Ironically, the people that were mocking them are the same people now that are whining about high prices and angrily insisting we'll have a crash (actually they are more like hoping and praying but really can't explain why that should happen). And as you've said numerous times, were so busy being critical of others that they didn't realize what was likely a once-in-a-lifetime opportunity for them.

This is what I have noticed... those that were smug then are the loudest now.

Real Estate is always ups and downs... if we could only predict the future.

A wise and successful investor once told me that with Real Estate being able to wait it out is crucial... he had some not so good investments that completely turned around... sometimes it took decades.

[phantompilot]

Housing here is in a bubble. Sorry that doesn't jibe with your obsession with optimism (baseless optimism, I might add).

The tech industry's excess profits feed the bubble, when those go away, so does the bubble.
3M invaders feeds the bubble. When they leave, so does the bubble.
Mass immigration (that nobody asked for) feeds the bubble, so when that ends, so does the bubble.
Cheap money feeds the bubble, when that changes, so does the bubble.

Do you see the common theme to the things that inflate the bubble? They're 100% artificial based on policies that can literally change overnight.

[Count David]

Really guys? Really?.....................

Really?

You take a perfectly good housing thread and turn it into POC?

Let's not do this again. PLEASE.