Any chance real estate market will crash? (San Francisco, Cupertino: middle-class, 2013)

[wsugrad03]

Originally Posted by jk88cal

Not suggesting anyone to go crazy and buy the 1st house they see in any market. But many buyers waiting in the sidelines are also hurting themselves. Folks have unrealistic expectation that in a downturn, they will get a steal of the lifetime. Exactly as the title of this thread: looking RE market crash. In a downturn, there are more selection and competition is less; no argument there. But in best neighborhoods, you would be surprised how little you save by waiting and how much you can lose out.

We lurk on redfin and zillow a lot and see the same trends with the prestigious areas. They're all several hundreds of thousands of dollars over peak value. It's not that I'm scared of being underwater in the short term. I only buy as an investment I can live in or potentially rent out. If I can actually buy something where I want to live, I would do it. After All, at my income, it's better to own than rent if you can actually buy something. We have a lot of cash saved up. It's just not enough to compete in this kind of housing market. Competing with 20% down in the hot areas is just not happening right now. It'll be bid up so quickly that you'll need PMI just to process your loan. Plus the places we can afford are either insanely overpriced condos or complete tear downs at land value.

We're not compromising on location, so the best option for us is to continue to rent and just wait for the froth to die off. Cheap money and startups burning through cash like water isn't going to last forever. This is another bubble. It's another cycle. Hopefully I'll have better odds on the downturn.

[nagleepark]

Over several decades, I saw my hometown turn from a middle class suburb to a wealthy suburb. At one time, dual income families (both engineers) were the norm and, now, investment bankers, professional athletes, television personalities and millionaire businessmen are the norm. My speculation is that the Silicon Valley is going through the same process: dual professional income families will be progressively pushed into dense housing (e.g. SFHs with 4 floors) or out into the East Bay. The bubble may eventually burst but prices for one- and two-floor single family homes in the South Bay will still be out of reach for even dual professional incomes.

[otterprods]

Yes there is a chance.

[mysticaltyger]

Originally Posted by nagleepark

Over several decades, I saw my hometown turn from a middle class suburb to a wealthy suburb. At one time, dual income families (both engineers) were the norm and, now, investment bankers, professional athletes, television personalities and millionaire businessmen are the norm. My speculation is that the Silicon Valley is going through the same process: dual professional income families will be progressively pushed into dense housing (e.g. SFHs with 4 floors) or out into the East Bay. The bubble may eventually burst but prices for one- and two-floor single family homes in the South Bay will still be out of reach for even dual professional incomes.

Yep, I see the same thing happening. And what will happen to the rest of us who aren't high income professionals? That's where it gets really ugly.

[mysticaltyger]

Originally Posted by nagleepark

You know what's really interesting?

The screwup from my high school got kicked out multiple times and is now a famous actor (but still kind of screwup). Every single person on this board has probably seen at least of one of his movies and he's in several blockbusters. He's a great actor, in my opinion, so I don't begrudge him and hope that he overcomes his problems.

One of the 4.0 GPA students from my high school got a PhD from MIT, achieved minor fame for an open source project and now works as an anonymous grunt at Google. I'm sure that he does OK but, in almost any category, the actor has got him beat.

Um, yeah. Exactly. Your anecdote is supported by more detailed research that says the Ivy League schools are overrated. Like I said, the skill set required for doing well in school is often different from the skill set required in the world of commerce.

[mysticaltyger]

Originally Posted by HockeyMac18

Why did this thread turn into a discussion about private schools?

Because so much about home buying for upper middle class folks is about buying in the "right" school district so their kids can go to the "right" college. It's a never ending treadmill.

[nagleepark]

Originally Posted by mysticaltyger

Yep, I see the same thing happening. And what will happen to the rest of us who aren't high income professionals? That's where it gets really ugly.

In my hometown, engineers just faded away. When house hunting and even with two incomes, they just said, "Oh, that town is too expensive" and they went house hunting elsewhere. A few older retired engineers remain, sort of grandfathered into their properties. It's more like a slow leak, more engineers selling out than buying in over a long period of time.

[Fiona8484]

You can save and buy in the "good" area and this can happen:
Petition · Sunnyvale School Board: Stop study on cumberland redistricting plan · Change.org

Residents are claiming this:
"The redistricting will result in lower property values in our neighborhood. It is projected to drop the house values between 13-18% based on home sales data for last 2 years. When we bought houses here, the price we paid reflected the assumption that the houses would be included in Cumberland’s district."

I don't know if the 13-18% is an exaggeration or not, but I wouldn't want to be in this situation after paying $1 million+ for a fixer upper.

[LexusNexus]

The market will crash if we get a Republican president in 2016. It might take about a year for the stench to negatively impact the country, and our nation begins to again bleed to death under a Republican administration. Until then, I predict continued upswings in the real estate market and high tech optimism and innovation to continue to flourish.

[jbunniii]

Originally Posted by LexusNexus

The market will crash if we get a Republican president in 2016. It might take about a year for the stench to negatively impact the country, and our nation begins to again bleed to death under a Republican administration. Until then, I predict continued upswings in the real estate market and high tech optimism and innovation to continue to flourish.

I don't believe there is any connection between the president and the real estate market, but just to play your game: didn't the previous real estate and stock market booms coincide with the Bush administration, and didn't they both crash just before the 2008 election when it became clear that Obama was going to be elected?