Housing Bubble vs Historical Price Increases (insurance, percentage, real estate, foreclosure)
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I browse several real estate articles on a daily basis and quickly review the comments. It seems there's a consistent theme of "doom and gloom" for housing as the prices continue to increase. Many people feel we're on the verge of another bubble and the crash will be worse than the last one.
What I'm failing to see is how any of the previous "historical highs" in home prices were different. If you look at housing trends, prices continued to go up (save for the typical dip and the occasional crash like 2008). Wouldn't the logic that prices couldn't be sustained be the same as before? Wages continued to increase to accommodate such increases and I would think this time period would be no different.
the doom and gloom group are mostly the people who can't afford it, so they are already depressed by their general lack of money/financial success, it carries over to things like their perspective on the economy/housing prices
not any different than asking someone going through withdraw if a sunny day is nice or not. Their perspective is already tinted
yes, there will be another crash/dip/whatever, that is normal economic cycle, not seeing the doom and gloom part
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The "last one" was not the result of a housing bubble. It was the result of corrupted credit markets.
There's always a "reason", if not a "corrupt" market, it could be war breaking out, new technology, a change in government. "reasons" don't matter in the long run, prices get inflated due to demand, and pop with the the money stops flowing
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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I see the current price increases as different than before. There was a lot of people coming here to the Seattle area, mostly from California in the late 1980s, and that started price increases but also new development. For people like us (we came in 1993) the lure was better schools, cooler weather, and family having already moved here. Now Seattle, Portland, and the San Francisco Bay area are getting immigrants not only from other states, but from other countries, and they are coming to accept good, high paying jobs, mostly in tech. Our eastside city has increased by 20,000 people since we moved here, and currently there are about 300 new single family residences under construction, at $900,000-1.5 million. Many are sold before completion. Many of the new people coming here are not that crazy about the weather, but are coming here for jobs that didn't exist before when we had only Boeing and Microsoft. Now Amazon, Starbucks, Costco, Alaska Airlines, Expedia and others are bringing in more and more employees. That will drive up prices and make it harder for people without the high incomes to live here as long as these companies thrive.
Housing traditionally appreciated annually between 1% -4% for 100 of years until 2001. Since our economy has been dead since 2001 and all manufacturing jobs have been shipped overseas (entire factories dismantled in America so that Capitalists don't have to pay higher wages to Americans) the only thing left was to blow up bubbles and create Las Vegas Casino Game out of the housing market. At least you can still keep to employ mortgage brokers, insurance companies, shady realtors, home builders and that entire criminal enterprise.
What many people don't understand is that housing market actually never crashed in 2008, it simply just deflated back to normal, to price levels where Americans could again afford to buy a house in their own country.
Then, in order to protect the Rich and Wall Street Crooks the Fed decided to double our National Debt, to steal future earnings, to steal money from our kids future and PUMP or reflate housing prices again. We should keep in mind that home ownership rate in America is at decade low. So common sense would tell us that if homeownership rate is at multi decade low levels how can we call this a housing recovery since 2011? It is NOT recovery, it is a SCAM designed by the FED. What we have since 2011 is PRICE recovery ONLY and not a REAL housing recovery (remember homeownership rate is at multi decade low). How can you have a real housing recovery with homeownership rate at multi decade low.
The Fed lowered rates to zero and gave green light to speculators to speculate in real estate again, invited Wall Street Hedge Funds to purchase entire neighborhoods in some speculative markets like Phoenix and Las Vegas where everyone is involved in flipping real estate and housing speculations. In those desert cities you have homes build 8 years ago and already bought/sold 10 times. No one is buying a house there to live, but to make money and speculate. Like I said, it's a Casino Game now.
So yes, we are in Housing Bubble 2.0 now and real estate is once again overpriced in some areas by 70%. As soon as you allow interest rates to go back up housing prices are going to deflate and return back to normal, to those price levels where Americans can afford again to buy them.
Overpriced housing prices and overpriced rents are killing our consumer based economy as well, because now we have families spending up to 60% of their income alone in rent and overpriced mortgages, leaving nothing else left to support our consumer based economy.
So called housing recovery is a scam. There is no real housing recovery, just another bubble created by the Fed.
There's always a "reason", if not a "corrupt" market, it could be war breaking out, new technology, a change in government. "reasons" don't matter in the long run, prices get inflated due to demand, and pop with the the money stops flowing
The subject was "the last one", complete with an allegation of a "housing bubble" that never happened. Housing markets reacted just as they should have to significant declines in mortgage interest rates between 2000 and 2003 and then again to steadily increasing rates between 2004 and 2006. Sadly, by 2006, greedy Wall Streeters had dumped more bad paper into secondary credit markets than what those systems could tolerate. The resulting credit freeze was then allowed to bleed out into the broader economy where it fueled asset market collapses and a self-reinforcing downward spiral, the likes of which had not been seen before. Simply put, there is no parallel between those times and these.
This time, we will deal with the greed of thinking the country can live on zero interest for ever. It can not. At some point, borrowings have to be paid back. That will bring a downturn to the economy. Only time will tell if it will be worse than the last one.
I browse several real estate articles on a daily basis and quickly review the comments. It seems there's a consistent theme of "doom and gloom" for housing as the prices continue to increase. Many people feel we're on the verge of another bubble and the crash will be worse than the last one.
What I'm failing to see is how any of the previous "historical highs" in home prices were different. If you look at housing trends, prices continued to go up (save for the typical dip and the occasional crash like 2008). Wouldn't the logic that prices couldn't be sustained be the same as before? Wages continued to increase to accommodate such increases and I would think this time period would be no different.
Thoughts anyone?
Housing price increases are nowhere near the previous giant bubble. As the economy improves, we could see a small bubble, as has happened before, or perhaps just a gradual increase until the next recession, but there aren't really any signs of a super bubble like 2005.
Housing price increases are nowhere near the previous giant bubble.
Everything is location specific. Go to Zillow and punch in foreclosures and some areas will have a few and others will have hundreds. The removal of the bank requirement of marking assets to market allowed many banks to carry property they normally wouldn't. This artificially supported housing prices for a time, but I would submit that the housing market is not healthy when looking at rent carry factors and land/structure costs. Some areas are way overpriced and some under priced. Taxes play a huge part also.
The subject was "the last one", complete with an allegation of a "housing bubble" that never happened.
My area did have a bubble. I work in a real estate office, and we have a lot of clients from California, and were told repeatedly about how there were classes being taught in California about how to sell your house there and buy 3, 4 or even more rentals here in Boise, drive up the price by sucking up all the inventory, and then when the price is very high, sell all your properties for a profit. To me, that is the very definition of a bubble, that is priming itself to burst. Homes were not owned by homeowners, or even by landlords, but rather by investors, who were just biding their time, watching the price and waiting to sell. They might put a tenant in in the meantime, but their goal was the sale, not the ongoing rental income.
Completely different today, at least in my area. Homes are being purchased by homeowners for the most part (I'm definitely not seeing homeownership at an all time low, and have trouble accepting that fact, but I remind myself those numbers are national averages), and those that aren't are being bought by long term landlords, rather than simply investors (see above paragraph for the difference).
Plus, remember that despite the headlines, we aren't talking about huge percentage changes. It isn't like we dropped from 90% homeownership to 20%. We dropped from a max of around 69% to a current of around 63%. Granted, going by the numbers, that is a large number of households, but it isn't as bad as the media makes it sound.
Also, many of those 6% are not homeowners BY CHOICE. How many times have you heard it since the crash? "I'm never going to buy a home again". I don't know about you, but if I had a dollar for every time, I could probably use it to pay my mortgage this month.
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