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Well here in Los Angeles nothing is falling. Last week I was measuring a house for a broker who just wanted to make sure they had the right square footage for the listing. This house was 1,900 sf house with NO remodeling. When I called the broker I asked how he expected to sell this piece of cr@p for the listed price of $ 1,695,000. He replied that he wasn't. He just accepted an offer for $ 1,925,000.
That's Los Angeles right now.
It seems one can only say if something is a bubble is in hindsight. It is exceedingly difficult to ascertain if we are ever in a bubble until after the fact. Sometimes there is no bubble; it is just an escalation in the price of the asset.
when mortgage programs across the board adjust for lower-qualified borrowers because they can't "get" a house...
it can too-risky credit scores
it can be a too-high DTI ratio
it can be $0 down with the above
it can be a negative am loan
THEN, we'll all know it's a bubble.
If the price TODAY is $X, and too many sellers get "greedy" and ask for $X+10%, then yes, we'll see those homes sell for $X or even $X minus.
But the key in the equation is bolded - "too many".
In order for a bubble to exist, you have to be able to fairly reliably and repeatably be able to test for it, and so far he hasn't seen researchers actually do that.
What makes a bubble a bubble – in hindsight, as you note – is that large rise in prices is followed by a large fall, whereupon prices remain depressed for a considerable time. The point is not whether the initial rise was from sound and reasonable fundamentals, or speculative frenzy. Rather, the point is that the rise is swift and is just as swiftly followed by collapse, and after the collapse, instead of a quick rebound we set a lengthy run of depressed prices.
So whereas we may never know a bubble-in-the-making, that does not preclude the identification of a bubble after the fact. Exhibit A is the dot-com collapse, 2000-2003.
Quote:
Originally Posted by RationalExpectations
It gets tied into the Efficient Markets Hypothesis (EMH) which says that information is rapidly diffused in the marketplace so that prices incorporate all publicly available information.
EMH is hard to dispute for highly liquid and board markets, such as the US stock market. It is less compelling for something as localized, sticky and emotion-driven as housing.
Quote:
Originally Posted by tolovefromANFIELD
Again, i ask, what asset kept going up-significantly, into perpetuity?
So long as productivity is rising and the economy overall is growing, and this happens in a system with peculiarities of risk and reward, it is reasonable that most of the gains are being concentrated. Concentration means that in this favored group, the gains are larger, than those overall… faster growth than mere inflation or some diffused sense of prosperity. If you prefer a political spin, for which I don’t necessarily care, but which we might as well pre-empt in the discussion anyway: capital absorbs most of the gains, while labor absorbs less. If you believe this, then it is reasonable to surmise, that asset-prices will continue rising, and will keep rising faster than the “aggregate” economy. Stocks and real-estate will be an ever-larger portion of the economy, favoring persons who own them.
Starting here in Virginia Beach now. No more bidding wars, lots of for sale signs, open houses with no or very low offers. Received hundreds of price reduction alerts on mls. New builds are showing up to 25k price drops.
Starting here in Virginia Beach now. No more bidding wars, lots of for sale signs, open houses with no or very low offers. Received hundreds of price reduction alerts on mls. New builds are showing up to 25k price drops.
This sounds huge. It will start in a few markets and as the news gets out, it will spread like dominoes falling. Watch the panic-selling begin.
If so, I’m surprised to see so many cities/towns that have declined in price over the last 2 years. Some of the prices themselves seem really low too, although I know sometimes city prices can be skewed lower by some of the inner city areas.
In terms of the prior post re: Virginia Beach, I didn’t see Virginia Beach on this list, but did see a few other cities in Hampton Roads.
Starting here in Virginia Beach now. No more bidding wars, lots of for sale signs, open houses with no or very low offers. Received hundreds of price reduction alerts on mls. New builds are showing up to 25k price drops.
Quote:
Originally Posted by FindingHomeATL
This sounds huge. It will start in a few markets and as the news gets out, it will spread like dominoes falling. Watch the panic-selling begin.
He's been calling for a market crash for over a year now, so I'm not sure how much faith I'd put into the accuracy of his statements.
He's been calling for a market crash for over a year now, so I'm not sure how much faith I'd put into the accuracy of his statements.
This is the area I live in, and he's not making this up.
A quick look around zillow confirms. There are tons of places with recent cuts. A lot more inventory and houses are sitting longer too.
I know zestimates are not typically accurate, but in Virginia Beach and the surrounding areas, the zestimate peaked in May and has been falling at a pretty fast rate ever since.
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