The Buying Frenzy Is Over
Readers suggested a topic on the housing bubble. “Is the current housing market another bubble or a long term trend? My Uncle was an engineer in ‘Silicon Valley’ before there was any silicon in the valley. When he died in 1986, his house sold in 1 week for $375,000. I remember everyone in my family saying the price was insanity. 1,780 SF. $210/SF. Everyone is still saying the same thing today: Insanity at $2,000,000. $1,123/SF.”
“Here is reality: The rate of appreciation over the last 30 years has been about 6%. This SF peninsula market may be in a bubble today, but it is more likely just a long term trend. Wages in Silicon Valley for engineers of his caliber have easily grown faster than 6%/year.”
A reply, “Same bubble, wrong question.”
One said, “The definition of insanity is repeating the same sh*t and expecting different results. Now stop beating a dead horse. If you have not been able to understand this housing bubble you never will.”
And finally, “I can’t afford a luxury car. The question is; should I buy one or rent it?”
The Desert Sun in California. “Foreclosure activity rose in March as a small backlog of distressed properties flowed into the market, a new housing report shows. There are fewer short sales because more homeowners have equity in their houses as values rise, said Michael Ricks, an REO director for Windermere in Palm Springs. The remaining foreclosures involve investor-owned properties more often than individual homeowners, Ricks said. ‘We’re not really seeing people do short sales,’ Ricks said. ‘Short sales have almost stopped. They’re either frustrated or they’re now equity sellers.’”
“Roughly 18 percent of homeowners in Riverside County are seriously underwater, meaning they owe at least 25 more than the estimated value of their home, according to RealtyTrac. Bret Cohn, a senior loan officer with Stearns Lending in Palm Desert, said the buying frenzy is over. Values are going up, and there are fewer opportunities to clip cheap, distressed properties. The few that lagged behind are now going through the foreclosure process, he said.”
“‘Either some people got involved in loan modifications and those have run their course, or they just realized now, this isn’t working,’ Cohn said.”
