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oh boy, here come the homeowners in droves trying to defend the bubble market, completely out of touch with reality... no worries, heard this in 2006 as well. Enjoy the "denial phase" while it lasts.
No denial here either! House here are also selling in less than s week. There’s actually a shortage. We also have s lot of new home communities going up and the lots are selling so fast that the builders can’t build fast enough. Jobs market here (Chicagoland area) also good! I’m Not worried!
Why do you think it’s coming? Because of one article? Of course it will happen again at some point. That’s how real estate works, but it won’t be any time soon.
not quite, that would be wholly inaccurate. Rather most of the responses to this post are laced with emotional attachment to the price level of their homes. By "going south" I posted what the title is implying "housing is souring and it isn't coming back".
Prices of homes do drop, and they do drop drastically. Homeowners claim in an absolute manner that there is "no bubble" yet based on affordability metrics, high leverage and high level of speculation it can be argued otherwise.
The argument that there is no speculation is laughable. SoCal, Vegas and Phoenix have heavy flipping activity. Since 2013 large hedge funds have turned properties into Rental Backed Securities etc. etc. If that is not the quintessence of speculation then I do not know what is.
I have no interest in buying a home personally, I think homes in the large metro areas are overrated and more expensive than people think in terms of interest, taxes, maintenance. In places like Southern California I would bet that 80+% of organic buyers purchasing homes can barely afford them using traditional affordability metrics, I know plenty who are buying with 3-5% down, raiding their 401ks, taking out ARMs now that interest rates have gone up, taking super expensive FHA loans, not having enough of a buffer to even sustain their mortgage and household expenses for more than 3-4 months which is pathetic. A colleague of mine recently bought a $725,000 home in SoCal, guy has no money in retirement, has 3 months of emergency savings - because he put 20% down (all his savings) into this house. People like this are plenty, hanging by a thread, the next recession the wave of foreclosures start with them.
SO.... if you you have no interest in being a homeowner than why do you care anyway?
And just like the last time, it's different this time. It's always different this time
Plenty of people knew we were in a bubble. I use to sit around with my investment group and we all talked about it. It is MUCH different this time. Unless there is some kind of catastrophic event that causes mass layoffs that lead to foreclosures/bankruptcies etc... there is no housing crash.
I also find it funny when people say housing is just not affordable so housing is going to crash, when all these houses are selling. If they are selling, someone can afford them. And they aren't getting liar loans to pay for them.
This feels like a bubble. I'm just not sure of the caliper. The market is stable here in the Midwest, but some of the coastal markets seem "Irrationally Exuberant." Does a $600k small home in CA provide the return-on-investment required to sustain its price? I don't know.
Home values cannot continue to outpace wages indefinitely. That's basic math. One cannot spend 100% of their income on a mortgage. The price gains have to slow/cease eventually. And furthermore, we always have to contend with changing interest rates, recessions, inflation, etc.
In other words, this isn't any different than previous bubbles. It's just an economic cycle.
It is MUCH different this time. Unless there is some kind of catastrophic event that causes mass layoffs that lead to foreclosures/bankruptcies etc... there is no housing crash.
I also find it funny when people say housing is just not affordable so housing is going to crash, when all these houses are selling. If they are selling, someone can afford them. And they aren't getting liar loans to pay for them.
To your first point, google up "the derivatives bubble". I've heard different valuations for this, one of them being that the value of the over the counter derivatives market is $693 trillion.
To your second point, people buy stuff they can't afford all the time. And you can get a visual on this by looking up pre-foreclosure maps for various neighborhoods on Zillow. It's most enlightening. Bear in mind that I've found the hairier maps to be concentrated in newer, trendier neighborhoods. There are solid, more established neighborhoods were there's hardly any pre-foreclosures as well.
But, lose a job, get a divorce, make a bad investment, have a health problem and IT"S GONE!
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,572,211 times
Reputation: 16698
Quote:
Originally Posted by RisingAurvandil
This feels like a bubble. I'm just not sure of the caliper. The market is stable here in the Midwest, but some of the coastal markets seem "Irrationally Exuberant." Does a $600k small home in CA provide the return-on-investment required to sustain its price? I don't know.
Home values cannot continue to outpace wages indefinitely. That's basic math. One cannot spend 100% of their income on a mortgage. The price gains have to slow/cease eventually. And furthermore, we always have to contend with changing interest rates, recessions, inflation, etc.
In other words, this isn't any different than previous bubbles. It's just an economic cycle.
To repeat what has often been said, look at the differences in the mortgage held now vs the bubble that was last experienced.
True on the math part, but the gains may not slow for a long time.
Here on Long Island, there is a major housing shortage. Seller are getting offers above their asking price which is crazy because you can barely find anything under $400K in decent shape. I don’t care either way because I am selling. When houses go up for sale, they are gone so fast that the new family are moved in within two months.
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