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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Living in a rental will never feel like a real home.
It is not should you buy, it is should you buy NOW. The answer is no.
In the last 10 years how many people who answered yes to this question regretted it?
Same win investing in the stock market NOW.
I say the new tightening of reg z and the other new measures only APPEAR to be 100% for the consumer and that the real deal with the Robo signings test and the extension of consumer rights is to ensure there are no loopholes for the borrower to use to Squirm out of their obligations.
I say that in the near future borrowing money can lead to an actual,physical, poorhouse if you do not pay due to these new “consumer protections”.
Ooh, the poorhouse. There’s a concept it haven’t thought of in many years. Today’s poorhouse however will be much nicer, with iPads, smartphones, netflix, free medical and an inhouse mcdonalds.
When more than half your neighborhood couldn’t afford to buy their own house at current comps, it’s a bubble.
You just can’t get around this. Dysfunctional, structurally broken market.
The simple truth that is intentionally not discussed.
“The simple truth that is intentionally not discussed.”
+1 And “shut down” if the discussion moves in that direction.
“When more than half your neighborhood couldn’t afford to buy their own house at current comps, it’s a bubble.”
And THIS is exactly why Prop 13 is so bubble-inducing.
It allows large numbers of people who otherwise couldn’t afford to live in neighborhoods an ability to stay there…decreasing the number of sellers that would otherwise surface as a market went up (thus taking some froth out of an overheating market).
Don’t be silly…. 49 states aren’t subject to your lame excuse yet are equally overpriced.
“Equally overpriced”?
lol
http://www.kiplinger.com/slideshow/real-estate/T006-S001-most-expensive-u-s-cities-to-live-in/
http://www.nahb.org/reference_list.aspx?sectionID=135
I just posted the Housing Opportunity Index website from Wells Fargo…it shows affordability by MSA for the entire US.
Out of 223 MSAs they rank in the US, and 23 being in CA:
9 are in the bottom 10th percentile of affordability (9 of the least affordable 22 markets in the country are in CA)
4 are between the 10th and 20th percentile
3 are between the 20th and 30th
3 are between the 30th and 40th
3 are between the 40th and 50th
Only 1 is in the affordable half of all MSAs…Madera, CA.
The AVERAGE level of affordability is 170th out of 223 total MSAs.
Even Stockton is ranked at 196th out of 223…
If you think that everywhere else is just as overpriced as CA, I’ve got a bridge to sell you…Prop 13 has a bigtime effect…as does lack of supply.
Equally overpriced irrespective of location.
Actually I think it’s worse than that…the website has a spreadsheet by MSA from most affordable to least affordable (I was looking at the less organized historical spreadsheet, and must have miscounted).
13 of the least affordable 14 markets in the country are in CA. There are the usual suspects (SF/SJ/SD/LA), but also:
Santa Barbara, Oakland, Oxnard, Salinas, Napa, Santa Rosa, San Luis Obispo, Santa Ana/Irvine, Santa Cruz
Only one market in CA is in the top half of affordability (Madera)
Whither the artificial world Fed activism has created?
December 18, 2013 7:02 pm
Reality dawns for artificial world created by Fed activism
By FT Reporters in New York
General Views Of Trading At The NYSE
In the five years since the US Federal Reserve instituted emergency borrowing rates and began buying huge amounts of bonds, Wall Street has boomed, but the broader economy has recovered far more slowly.
…
Wall Street has boomed, but the broader economy has recovered far more slowly.
What broader economic recovery? I don’t see it.
“Wall Street has boomed, but the broader economy has recovered far more slowly.”
The PTB are in TOTAL control of everything- politicians, courts, money, food, shelter, fuel, water, power. In spite of record oil production, and a GLUT on the market, they are able to manipulate prices higher, and maintain them at an artificial level indefinitely. Enjoy, people, you’ve lost your country. When the pain gets too much, you can take it back. Apparently things aren’t uncomfortable enough for you just yet.
Keep paying that interest to banks by using those credit cards, taking out mortgage loans, car loans, payday loans, etc., and keep crowing about your financial acumen along the way. Keep storming those shopping centers, and angling your financed square box on wheels through those Starbucks drive-thrus. Keep turning on Real Housewives, and tuning out reality. Your cluelessness is cute- to those who benefit financially from such despicable ignorance.
I’d love to see a “self proclaimed realtor posting” index for this blog. I know some folks like to accuse people of being realtors, but there are plenty that gladly offer it up.
The index would be for the number of distinct self-proclaimed realtors that post on the blog in any given week.
I remember there being lots of them in the early days, and then near silence during the crash, and now they seem to be creeping back into the mix. It’s an interesting contrarion index…the louder they yell (more frequent they post), the more bubbly the market.
In case you hadn’t noticed, stealtors squeal the loudest after the window closes.
I agree (shocking, I know). Where we’ll disagree is how loud they are right now…which is why I’m interested in the index. They were VERY loud in 2005-2006 (permanently high plateau and all that jazz).
…. as the price declines resume.
You’re just sour grapes because you missed the recovery.
I posted a couple of items earlier in the week about the job market:
1. More people retiring (thus driving lower unemployment even with weak job growth);
2. Fewer people who are not counted as part of the labor market that would rather have a full time job;
3. Higher “quit” rate (people finding better jobs more frequently).
All of this COULD lead to wage inflation, that COULD lead to lower corporate profits, but COULD also lead to higher general inflation in the economy.
Even absent this, interest rates will rise, which will decrease asset/equity values (discounting cash flow streams at higher discount rates leads to lower valuations).
The topic of discussion is something we all think about…Is there a tactical way to navigate this environment from an investment perspective?
I have a number of ideas, but am very open minded to different perspectives:
1. Focus on growth companies (as opposed to value), whose growth with an improving consumer base can outstrip the negatives from higher rates (although you may already be paying too much for the growth…will the growth of the company accelerate with higher wages?);
2. Focus on companies with large amounts of cash producing capital investment, and low marginal cost of product (REITs are the obvious, but they have plenty of interest rate risk). These companies will be affected by rising wages less than labor intensive industries.
3. Perhaps buy the 20-year inverse Treasury ETF to ride higher long rates up?
4. Go to cash?
5. Go to industries that react well to higher commodity prices? (although China’s appetite seems to be cooling…inflation may not equal higher commodity prices at this point)
6. Focus on multi-national companies that can continue to take advantage of the growing middle class in developing economies?
7. Focus on companies who are developing wage destroying technologies…the higher wages go, the more places automation will be cost-effective.
Overall, my sense is that there are very few corners of the equity markets that have remained untouched by the effects of the ZIRP policies of the Fed, so my strong temptation is, after a long positive run, to go to cash for a time.
In the meantime, the deflationary spiral rages on.
One house closed today, the other is $2500 of.consternation from an online buyer who hasn’t seen the property.
Full price, cash deal, no appraisal or inspection has closed.
When the other goes away, please remember me in your cocktail party talk as the guy who got.out.at.The.very.top.of.The market.
No mortgages on either of them….
‘got.out.at.The.very.top.of.The market.’
Uhhh, the top was 8 years ago. If you’re talking about this dead cat bounce, the secondary.top.was.last.summer.
But let me understand. So you sell a house today (presumably you made money, can’t really tell from your post) and you take the time to come on this blog and post a comment about it? If I’d made a bunch of money today, I’d have better things to do.
It’s finally dawned on the underwater specu-debtors that they’ve been had and head-faked with a dead cat bounce.
No specu-debtors and DebtDonkeys….. there is no vindication for you. But there are losses….. Big losses.
“When the other goes away, please remember me in your cocktail party talk as the guy who got.out.at.The.very.top.of.The market.”
There’s nothing memorable about you- other than extremely annoying behavior.
I didn’t make any money today.
I converted. A house to cash. As much cash as can be allowed within the last many years.
I will convert the other to cash, at the maximum available, soon.
No money made, just finally a real.value.( The conversion to cash as proof) realized by a.home. they are not flips, these are my long time homes.
No speculation, no more monthly outlay, just cash.
Moving full time.to the coconino county summer home.
Just.thought you might like to hear from someone who thinks.your.blog.is.a fine.indicator, and acted accordingly.
‘full time.to the coconino county summer home’
Have you been here in winter? I got 7 inches of snow last night. Shoveled for 3 hours this morning. It’s good exercise, but what if I didn’t have the time?
Yes, wintered there last year.
I can do it. We live in the Mojave now. When I gave up my hobby of tarring roofs at noon in the summer, we adapted well. I’ll just have to give up the naked cross country runs due to snow.
Native Arizonans, the spouse has been beating up for a place in the pinons since she was 15.
Prices finally matched my savings/income…so there we are.
Ps
We have a 10,000 gallon water tank. Delivered just like propane. We thought only hillbillies hauled water….