The Housing Bubble

VA to Bakersfield — out of the frying pan and into the fire!

Does your associate intend to buy in Bakersfield now, while waiting for ‘fair value’. If so, I suggest disassociation.

This financial genuis cashed out of Bakersfield and took his profits to Lynchberg and bought the biggest house he could “afford”. He found out the job his wife was taking was not all it was cracked up to be so they have come back to Ca without their home proceeds and their tails between their legs.

I’ve been tracking the inventory daily on NVFH.com, and there’s been about another 2000 added since the beginning of the month, and it seems to be accelerating. Any guesses for where we’ll be by June? Do I hear 800%? 1000%?

They have to make people think that homeownership is the way to wealth. How else to make someone buy that overpriced condo. If you really think about it, this ponzo scheme has been going on for way to long. The underlying fundamentals of the US economy does not favor home appreciation. Americans are tapped out and you will see a slow gradual slide on the way down. I sure hope David Bach can keep selling books when everyone finds out his logic is wrong. It’s good logic, but just deeply flawed. He looks at to small of a window when predicting that housing prices always go up.

I think Baby Boomers retiring will have the exact opposite affect. As they retire, you will see them spending less and less and looking at ways for their money to stretch. Toss in our SS and Medicare problems and you have a recipe for disaster.

Sorry David Bach, but I’ll pass on your advice. I sold and locked in my gains and I will buy when prices are more reasonable (When they over correct and all the books tell everyone how bad of an investment housing is).

I read that garbage article, too. Note that he has a business arrangement with Wells Fargo. His main assertion that owning a home is a way to “get rich” is a gross exaggeration. My parents have been homeowners for 45 years and they’re not rich.

His buy/rent analysis is a complete sham — renting for $1500 vs. buying for $200,000. OK, all you’re proving is that it makes sense to buy in a non bubble market. How about renting for $1500 vs. buying for $450K? Or, in my case, rent for $2300 vs. buying for the going rate of $675K? He also says that property prices have not gone down since the 50s. But have prices ever gone up as much as they have in the past few years? I’ll bet Japan never experienced a YOY real estate downturn until they got one that lasted for 15 years straight.

The market has gone up so much, the “buy now or get priced out forever” mentality is very ingrained in the area. My guess is the people who lost out on 10 bidding wars over the last year or two, are bidding on houses and surprised to find they have no competition and are happy to close. If you listen to the mass media, the RE in the area will never go down… lots of gov’t and IT jobs, limited undeveloped land, etc.

By the time the mass media reports the declining sales/prices in the area, it will be too late to bail out for people on the fringe.

Having spent the last month or so trying (and failing) to find a condo we like at a price we felt we could afford - and then giving up - I would say that realtors either feel unsure of how to deal with the current market (”I just don’t know what’s going to happen”) or they still want to try to make buyers think that we’re in last spring’s market (”This property will sell fast, so you’d better have your agent call tonight!”). So they’re not really encouraging lowball bids. And, as also mentioned, there’s a lot of nonsense about how prices will never go down here, buy now or be priced out, etc. We noticed that a number of sellers were in definite denial about the direction of the market, too, keeping their properties on the market for months without either lowering their prices or improving the units so that they’d look like something you want to spend $300,000 to buy. And those properties still sit, and sit, and sit… We will just sit in our $1100/month apartment for a while longer, thank you very much.

DCCondoWatcher - You see a ‘respectable decrease’ in inventory? The official number is UP something like 158% year-over-year in DC proper. Sales are down 27%. Where are you seeing the “decrease?” Sure as hell not in my neighborhood?!?!

Inventory way up, but tough to say if price is declining yet. New sellers still seem to want to make more than the last listing, e.g., Witchduck lake detached condo going for $150k a couple of years ago, listed for $270k last summer, same model just listed on rein.com for $325k.

I should have been more specific. I am tracking DC inventory in 5 zip codes in NW DC, and since the beginning of January. From 01/01/06 as the reference, I saw inventory rise 10% until the last week or so of Janauary, and since that time, the inventory is now back to within 1-2% of 01/01/06 levels. YOY, of course, there’s no doubt. I’m trying to point out increased buying activity IN THE LAST FEW WEEKS. What does this mean - inventory and sales figures need to be watched carefully to see if a trend is developing.

Bob, everybody also knows you can twist statistics to demonstrate anything you’d like….

I “feel” we’re in for a rout. In fact, I’ve an acquaintance who’s been in the hardware/home improvement business, at the retail level, for 30 years in the District. He’s said he saw the top, last year, when out-of-town contractors were piling into his store, and loading up on materials, without even asking how much things cost. He says that is what happened at the top of the last two cycles he’s seen, 70’s and 80’s both. He’s cutting back on credit extended to contractors now, even longstanding customers.

Prices in DC proper are just way too out of whack relative to rents and incomes to support a “permanently high plateau,” in my humble opinion.