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You know how many times we see this exact thing....written on here?
Truthfully housing is needed in good and bad economies. In 2008 the bubble just popped and houses were losing value. The problem is that all those people who lost houses.....had to go somewhere. So they went and rented. This caused rental prices to literally skyrocket as the supply could not meet demand......and eventually the only relief was someone thought about buying those foreclosed houses and turning them into.........drumroll......rentals...ta da. That investor just got a investment, income, deductions and cashflow all in one fell swoop. (Remember bank rates were dismal on savings etc) I had 100k in a account for a year for a down payment...I got a whole $100 in interest for that year. I know...I was killing it right.
This hedge fund rental buying in NO way equalized the demand to supply ratio because we weren’t building homes in 2008-2015 Why? Because there was no market to build the house to make enough money to cover costs. So as the supply dwindled further and further...all those people got older. They in turn started looking for rentals or housing further adding to the demand excess vs supply shortage.
Even IF housing takes a dump. Hell......let’s say it does. And everything now is worth....let’s go nuts here 50% of their value today. Most buyers are STILL not going to be able to buy. Because they will be priced out not necessarily by the house price but by their possible job loss or inability to secure a loan due to banks not lending, or uncertainty in buying a house. Not to mention that other people who have money are also gonna be looking for a deal.
You need to remember Just because it’s a bad economy it doesn’t mean it’s a bad economy for everyone. Some people thrive in a bad economy.
I was trying to buy a house in 2010 and I was losing it because the hedge funds and cash foreign buyers were killing me. Besides hedge funds have millions and billions so they can swoop in and buy 300-500 houses at one swoop.
I had a neighbor sell her house at 325k. . The buyer stayed in the house for two years. They sold for 585k and went back to their country. She just wanted her daughter to finish college. They literally made aboit 8k a month in income by doing nothing more than buying a house .
We could stop selling to non citizens that would definitely help with some of the price issues. Nobody who doesn't plan on becoming a lifelong tax payer here should benefit from owning property here.
We could stop selling to non citizens that would definitely help with some of the price issues. Nobody who doesn't plan on becoming a lifelong tax payer here should benefit from owning property here.
Good luck with that. America is great because of the talent and money we attract from the entire world. We have the brightest and best thinkers moving here and improving our economy. Elon Musk is an immigrant. One of the Google founders is an immigrant. Albert Einstein was an immigrant.
You want to make America less attractive for these smartest people in the world so they can stay in their home countries and make their countries far more competitive to the US?
That's one way to make sure America is never great again.
Attracting foreign investments, money, and talent is a key factor making America competitive and great. The economy is now global, being isolated from the rest of world is a sure way to cause a rapid decline of the US.
Last edited by AndroidAZ; 08-01-2020 at 03:31 PM..
Well with state employees forced to take a mandatory 9% paycut and high unemployment and tech layoffs, I don't see housing to forever go up. Plus the major hit on landlords with tenants not paying rents will be a hit as well. Those will factor into housing market in some way at least.
Investors tend to be fairly leveraged up. If rents aren't covering mortgages, then investors can't carry that difference for very long and that is what forces prices to drop, that is what happened in the last housing bust. So far rents have held up despite the Covid unemployment rate surge. But unemployment is high enough and there is enough people out there who don't have jobs, where that might not be the case indefinitely.
Now my hunch is that government is going to throw lots of money at this problem because its an election year, but our government is really dysfunctional right now and the Republicans cannot even agree among themselves what they want in terms of stimulus packages so I can't dismiss the very real possibility that no stimulus package gets passed or it gets delayed for a month or two and if that happens I can see rents drop and then I see housing prices starting to fall.
What is weird about right now is that we have an unemployment rate that is as high as you would expect in a major recession, but the housing market is acting like we still have unemployment under 5% Because we keep opening and closing things down for covid its tough to figure out how strong the underlying economy really is. A place like like Leatherby's are they near break even right now or losing money every month and if so how long can they afford to keep doing that? We don't know how many places are going to have to close soon because the owners can't afford to cover any further losses. So I can see the continued deterioration of balance sheets causing the unemployment rate to spike in a nonlinear fashion.
Lastly I do worry about stuff like this. The Russians are planning to roll out a vaccine that appears to not be very well tested. If it kills lots of people, how many people in the US will refuse to take any future vaccine in the US even one that passes actual clinical trials? We can't get people right now to wear masks right now.
I am not saying all of this bad news will come to pass, but I can see some scenarios where things can get much worse and that causes housing prices to drop locally in the near future. The disconnect between housing prices and the unemployment rate makes things a lot more unstable. Does the disconnect get resolved by the unemployment rate falling real quickly as restrictions are lifted or does the disconnect get resolved by housing prices falling or some mixture of the two?
Housing prices are going up in both Sacramento and the SF Bay Area, I can't see how they are going to drop in the near future. I think we underestimate the number of people who have good paying jobs that weren't impacted by the pandemic.
Well with state employees forced to take a mandatory 9% paycut and high unemployment and tech layoffs, I don't see housing to forever go up. Plus the major hit on landlords with tenants not paying rents will be a hit as well. Those will factor into housing market in some way at least.
Mixx, you sound just like my son and it makes me feel so bad for both of you. He's been wanting to buy a house in Contra Costa County since 2015 and he's still renting and waiting for prices to drop. I feel bad for both of you and I can't blame you for thinking the market will drop, it seems like it should; I'm just not sure that it will happen anytime soon.
Like some others, I've been thinking that when the eviction moratorium and the Federal unemployment benefits ended that we might at least see more homes hitting the market here in the area, which should help level out prices or possibly even bring them down a little. Maybe that's flawed logic. I'm not saying there's going to be a huge sell off, but more inventory usually impacts prices, unless of course there are quite a bit more buyers out there than we realize.
Why would houses hit the market because of a moratorium and unemployment benefits ending? Most banks will work with homeowners a lot longer than renters. Most homeowners usually have a good amount of savings to cover their mortgages for months. Homeowner (generally) are more financially stable than most renters.
Quote:
Originally Posted by Rob98LS1
I'm going to respond to this post (in full) once prices drop. You have no information on my education, background, experience, or context. I'd love to see your justification on how housing prices in sacramento will not fall. Please enlighten me.
When you say “fall”... that’s a loaded word. Because if prices fall say1-5% it isn’t gonna do anything or much overall. Banks are going to do the same thing they did last time housing crashed. Constrict supply keep house prices high and sell to hedge funds. They already did a first run in 2010
Quote:
Originally Posted by Robertfchew
We could stop selling to non citizens that would definitely help with some of the price issues. Nobody who doesn't plan on becoming a lifelong tax payer here should benefit from owning property here.
Investors aren’t a bad thing. Investors usually buy houses that need work fix them up and sell or rent them. Were a capitalistic society.
Unfortunately imo not everyone is destined to own a house. And truthfully some people shouldn’t. They are financially better off renting. This way they have set prices things cost. They aren’t gonna get a surprise 5k AC repair it 11k roof redo.
Why would houses hit the market because of a moratorium and unemployment benefits ending? Most banks will work with homeowners a lot longer than renters. Most homeowners usually have a good amount of savings to cover their mortgages for months. Homeowner (generally) are more financially stable than most renters.
When you say “fall”... that’s a loaded word. Because if prices fall say1-5% it isn’t gonna do anything or much overall. Banks are going to do the same thing they did last time housing crashed. Constrict supply keep house prices high and sell to hedge funds. They already did a first run in 2010
Investors aren’t a bad thing. Investors usually buy houses that need work fix them up and sell or rent them. Were a capitalistic society.
Unfortunately imo not everyone is destined to own a house. And truthfully some people shouldn’t. They are financially better off renting. This way they have set prices things cost. They aren’t gonna get a surprise 5k AC repair it 11k roof redo.
I think you're right. I know it's anecdotal but in my neighborhood and among friends and family no one is in danger of losing their home, in fact several of them have refinanced to take advantage of lower interest rates, and a fair number are doing expensive remodels.
The other thing to consider about this area is, we are still cheap compared to the SF bay area and as more people work from home houses here become more and more attractive.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,345 posts, read 8,554,998 times
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Quote:
Originally Posted by Rob98LS1
I'm going to respond to this post (in full) once prices drop. You have no information on my education, background, experience, or context. I'd love to see your justification on how housing prices in sacramento will not fall. Please enlighten me.
We might be waiting a long time to hear your response. It’s easy to say “look I was right” if and when that happens. The last few years people have said prices are going to drop or even plummet. That was before the virus hit.
Since then we’ve seen the virus hit, the market crash and rebound, and interest rates have dropped.
I mentioned I was advised years ago to wait and buy when prices drop as they surely will. Just as you are waiting. Houses went from 250 to 275k and every year they went up despite the naysayers. I finally ignored them and bought at $600k. Two of them as I bought them as rentals.
Yep, those bubble prices will drop types gave poor advice. I paid over double listening to them. A year later I sold at 700k for both. Today they are worth just under 1 million had I held on.
One thing you are not factoring is how low interest rates are. You may never get an opportunity to lock in such cheap money.
Get a loan for 30 years you will pay under 3%. Over the next 30 years a house you buy today will sometime go down, but over the long haul go up. Just like the stock market. In the meantime you will pay less overall than renting.
You can be stubborn and not buy just to try to prove your point, or you can look at the overall picture and maybe buy because the benefits outweigh the risks.
Well at least my stock investments are doing well. Stocks are liquid assets. Real estate is not. I am thankful that I invest.
You still have to live somewhere, right?
Regardless if you invest or not (I do, I have a majority of my money in the market), but I still have a healthy real estate portfolio. One can aid the other.
In 2012 I refinanced one of my properties, under 3% for a 15 year loan. I took that free cash and dumped it into the market, which was also depressed.
During the time since then, the money I put into the market doubled. The house value doubled. All that cost me was a less than 3% mortgage during that time. A double win-win for me.
If you have no real estate, you still have to pay for somewhere to live. Whereas for me, I was able to take the money out of a property and make real estate work double duty for me - cash in stock market, property value doubling. All at a spectacular borrowing cost of less than 3%. I'll take that deal all day long.
Do not mistake that one is better than the other, when both can work in sync together to create even more wealth.
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