Housing market too hot sellers afraid to sell (San Jose, Sunnyvale: 2015, foreclosure)

[marcopolo666]

Renting it out is the right solution - then you won't have to deal with all the traffic, noise, drunks, and fights on game days (not to mention not being able to find parking).

[bentobox34]

Originally Posted by jbunniii

Seems to me that's one less seller AND one less buyer, assuming they were looking to move to another Bay Area house. So it should be market-neutral.

Well let's think through this with a simplified example. Suppose there are 10 people who want to move into an area and 5 people who want to sell their houses and move out. There are also 10 other people who already live in the area and want to sell and buy something else in the area. Total houses on the market = 15, total potential buyers = 20.

Now suppose the 10 potential sellers/buyers all take their houses off the market and stay put for a while. Total houses on the market = 5, total potential buyers = 10.

Seems like the market tightened considerably for those looking to move into the area.

[otterprods]

People willing to wage a bidding war against other potential buyers only have themselves to blame for paying way too much for their homes. If they whine about how far they're underwater the next time the market plummets they'll get no sympathy from me. Not that that it would give them much solace anyways.

[fashionguy]

Hmm if you can give them an option to get a home without waging a bidding war I am sure they'll gladly accept it.

Most people buy a home because their situation calls for it, not because the price or competition is low. Plus rent is going through the roof as well and competing for a rented place isn't that different nowadays. Bidding wars are driven by the market.

It is true that people shouldn't expect their houses will surely appreciate in value, but I also don't see anything wrong with waging a bidding war, as there is no way around it. Plus people whine all the time. If they buy a TV and two months later a new model comes out and the price drops, they whine about it as well. It is just human nature and there is nothing wrong with it.

Originally Posted by otterprods

People willing to wage a bidding war against other potential buyers only have themselves to blame for paying way too much for their homes. If they whine about how far they're underwater the next time the market plummets they'll get no sympathy from me. Not that that it would give them much solace anyways.

[otterprods]

Originally Posted by fashionguy

Hmm if you can give them an option to get a home without waging a bidding war I am sure they'll gladly accept it. Most people buy a home because their situation calls for it, not because the price or competition is low. Plus rent is going through the roof as well and competing for a rented place isn't that different nowadays. Bidding wars are driven by the market.

There are other options. I lived there for over ten years without ever buying one of those ridiculously overpriced homes and we had plenty of space for a family, etc. But these folks think owning their own housey is the epitome of whatever, and they're willing to pay exorbitant amounts for it. That's fine, if they have the money, but they shouldn't complain when they go underwater or lose it altogether because they willingly overpaid by hundreds of thousands of dollars just because that price was "driven by the market".

[justinbro2002]

I waited on the sideline in the early 2000's to 2005 while my friends and coworkers went out and bought houses for 600k++ then when the S#!7 it the fan my friends saw their values drop to the as low as 250k. I bought in 2011 for 300k a house that was valued at 600k right before the market tanked. My house is worth about 480k now but I have no plans to sell I am just enjoying my payment that is 70% of going rents. I have friends that waited to buy because they thought the market was gonna fall more and now they can't buy because they get outbid or homes are just too expensive now.

[teoreticar]

Originally Posted by otterprods

People willing to wage a bidding war against other potential buyers only have themselves to blame for paying way too much for their homes. If they whine about how far they're underwater the next time the market plummets they'll get no sympathy from me. Not that that it would give them much solace anyways.

Most of buyers are all cash now.

[wsugrad03]

Honestly, the only reason to sell a home in the SV area is if you're moving away from the area and don't want to hassle with renting it out. A home is an investment you live in around here. People here don't seem to "move up" as they do in other areas, because the costs of moving up stick with you with the way property taxes are levied and rise from the sale price of the house. Not to mention, most people can't afford to buy a "move up" home in this area. This rewards long term home ownership, which restricts housing supply.

I'm one of those potential buyers that just moved here, and I'm not touching real estate until a little bit of sanity is restored. There's only bad times to buy and REALLY bad times to buy in SV. I think now is one of those really bad times to buy...especially in the established, desirable locations. Go to Zillow and look at the home values for the zip codes in Saratoga, Los Gatos, Mountain View, and the other usual suspects. They're far above their 2007 peak values. This cannot be sustained once the Feds are out of QE and interest rates are up to 5.3%. For here, that's an extra $500+/mo added to the mortgage. How many people are getting a 10% raise next year to absorb that? Then there's the risk of the stock market bubble crashing once the cheap money isn't cheap anymore. The feds have been proping up the stock market and the housing market with low rates. It's unlikely the bull will continue on its own. Since most people buying are using cashed out stock options and RSU's, a major correction in the stock market will dilute this money. Without the money, there's nothing to prop up current home values, because home buyers can't support it even with anemic supply.

So I'll take a pass and play the waiting game with many other buyers. Now is not the right time to buy in the general case (exceptions always apply of course).

[otterprods]

Originally Posted by justinbro2002

I waited on the sideline in the early 2000's to 2005 while my friends and coworkers went out and bought houses for 600k++ then when the S#!7 it the fan my friends saw their values drop to the as low as 250k. I bought in 2011 for 300k a house that was valued at 600k right before the market tanked. My house is worth about 480k now but I have no plans to sell I am just enjoying my payment that is 70% of going rents. I have friends that waited to buy because they thought the market was gonna fall more and now they can't buy because they get outbid or homes are just too expensive now.

Originally Posted by wsugrad03

Honestly, the only reason to sell a home in the SV area is if you're moving away from the area and don't want to hassle with renting it out. A home is an investment you live in around here. People here don't seem to "move up" as they do in other areas, because the costs of moving up stick with you with the way property taxes are levied and rise from the sale price of the house. Not to mention, most people can't afford to buy a "move up" home in this area. This rewards long term home ownership, which restricts housing supply. I'm one of those potential buyers that just moved here, and I'm not touching real estate until a little bit of sanity is restored. There's only bad times to buy and REALLY bad times to buy in SV. I think now is one of those really bad times to buy...especially in the established, desirable locations. Go to Zillow and look at the home values for the zip codes in Saratoga, Los Gatos, Mountain View, and the other usual suspects. They're far above their 2007 peak values. This cannot be sustained once the Feds are out of QE and interest rates are up to 5.3%. For here, that's an extra $500+/mo added to the mortgage. How many people are getting a 10% raise next year to absorb that? Then there's the risk of the stock market bubble crashing once the cheap money isn't cheap anymore. The feds have been proping up the stock market and the housing market with low rates. It's unlikely the bull will continue on its own. Since most people buying are using cashed out stock options and RSU's, a major correction in the stock market will dilute this money. Without the money, there's nothing to prop up current home values, because home buyers can't support it even with anemic supply. So I'll take a pass and play the waiting game with many other buyers. Now is not the right time to buy in the general case (exceptions always apply of course).

These are the thoughts that I agree with most. I remember having a discussion with some know-it-all at work where I was trying to explain that buying an old run down home for $700k is dumb because it will not rise sustainably over the next decade or two… certainly not to 2 or 3 times that value like the baby boomers who bought int he 70s or 80s have seen. He was certain I was wrong but he was just going on past performance which will probably never be repeated. I think it's wise to play the waiting game if you can and buy when it really makes sense for you and not because you're afraid you're going to 'lose out' on something if you don't act now.

[jbunniii]

Originally Posted by teoreticar

Most of buyers are all cash now.

"Most" would at least imply that it's the majority, but the number appears to be more like 25%, e.g.:

All-Cash Buyers Scoop Up Bay Area Real Estate | KQED News Fix

"Here’s some quantifiable proof of how the Bay Area housing market is squeezing out the little guy: The percentage of homes going to all-cash buyers soared from 14 percent to 27 percent over the course of last year."

So about 3/4ths of the buyers are still using mortgages. Hopefully not the adjustable rate, interest only shenanigans that prevailed during the previous boom.