housing crash

Mike,

I totally agree with you on SB.

But LA County is another story, IMO. LA County has a huge population, and while it does have many wealthy people, it has millions of middle class people as well.

I further would say just for many reasons the price rises make sense to some degree due to fundamentals (awesome demand, tiny supply). That said, I think in many parts of California, we are in a bubble.. to some degree.

I'm not saying nobody should buy houses in California. What I am saying is if you do buy a house anywhere in California (and you aren't a real estate professional), you should get a 30-year fixed mortage with 20% down. And if you can't afford that, like the vast majority of people right now, you shouldn't buy a house at this time. Of course people are free to gamble if that's what they want to do, they could get lucky.

-Taric
 
Quote from newbunch:

Why do people buy more than they can afford? And why do these people live in LA?
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th messenger i employ (retired appraiser) owns a TH in solana beach, CA. he told me this morning that a recent fishwrap article pegged the YOY appreciation there at 42%. when the market is going up, mortgage payments are viewed as a forced-savings plan. works real well on the way up, results vary when the market turns.

ive been appraising commercial real estate (MAI) and investing for 20 years. i rolled outta Socal this past summer, except for my residence. ive learned one thing over the years here, always keep one place in Socal so you dont get priced outta the market.

people will stay put until they lose their jobs. unemployment helped spur the past big out-migration 10-14 years ago. until employers relocate to cheaper locales, employees will stay put and suck it up. in some modest areas, people pay over $20,000/year to rent a 2Br apt, which would service a $300,000+ home mortgage in less expensive states, but they'd have to give up work here and move. of course, $300,000 is barely a down payment along the coast. im surprised people have not begun leaving - ive heard stories of people moving to the high desert or imperial county (brawley, calexico, etc) and commuting to L.A.-O.C. and S.D. counties for work. brutal!

was driving along the coast today - BEAUTIFUL SPRING DAY in January - thats why people live in san diego county!
 
Quote from gam1111:

Any body here have any luck trading homebuilder stocks? I think they are very crazy.
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This thread is a continuation of a thread called "Real Estate is dying? Investment-wise what is the next Asset Class Du Jour?" A poster by the name of Oldtrader pointed out that since the start of that thread, housing stocks had soared over 50%. Now you asking these same people whether anyone had luck trading homebuilder stocks? That is the equivalent of asking Bush whether had he any success finding WMD's in Iraq?
 
Here is a clear example of how rising real estate prices will contribute to their own contraction. Note that increased RE costs are passed through either to the consumer in the form of higher prices, or to the seller in the form of lower margins/ profits. In any event, higher RE prices contribute to rising inflation. But it takes time, and with hedonist manipulation of RE costs in our gubmn't numbers, only those who can think for themselves will recognize what is going on:

Food Prices in New York in Biggest Leap in 14 Years
By JENNIFER STEINHAUER [NYT]

Published: January 20, 2005

The Consumer Price Index for the New York region rose 3.8 percent as an overall average in 2004, the federal government said yesterday, as higher food prices and rising fuel costs drove the largest year-to-year increase in the index since 1990.

...

He said rising rent, utility and labor costs, combined with increased competition, are pushing prices upward. "If you look at Northeast supermarkets, nobody is getting rich," Mr. Catsimatidis said. "I would be better off getting rid of all of my stores based on the value of the real estate alone."

http://www.nytimes.com/2005/01/20/Norwegian/20consume.html
 
Quote from BlueHorseshoe:

Here is a clear example of how rising real estate prices will contribute to their own contraction. Note that increased RE costs are passed through either to the consumer in the form of higher prices, or to the seller in the form of lower margins/ profits. In any event, higher RE prices contribute to rising inflation. But it takes time, and with hedonist manipulation of RE costs in our gubmn't numbers, only those who can think for themselves will recognize what is going on:

Food Prices in New York in Biggest Leap in 14 Years
By JENNIFER STEINHAUER [NYT]

Published: January 20, 2005

The Consumer Price Index for the New York region rose 3.8 percent as an overall average in 2004, the federal government said yesterday, as higher food prices and rising fuel costs drove the largest year-to-year increase in the index since 1990.

...

He said rising rent, utility and labor costs, combined with increased competition, are pushing prices upward. "If you look at Northeast supermarkets, nobody is getting rich," Mr. Catsimatidis said. "I would be better off getting rid of all of my stores based on the value of the real estate alone."

http://www.nytimes.com/2005/01/20/Norwegian/20consume.html
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Ya know notice that PPI and CPI both have falling since those bad reports a couple months back due in part to jumps in food prices. And those jumps in food prices were one time events as the hurricane season did damage in FL and CA had some flood weather.
Its clear sailing here on out.
But we'll let people that think for themselvces do just that.
 
Quote from Covertibility:

Ya know notice that PPI and CPI both have falling since those bad reports a couple months back due in part to jumps in food prices. And those jumps in food prices were one time events as the hurricane season did damage in FL and CA had some flood weather.
Its clear sailing here on out.
But we'll let people that think for themselvces do just that.
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That's fine. You bet on the latest blip in PPI and CPI. Best of luck to you.
 
Quote from crackedback:

The benefits of ownership through tax savings just don't work anymore in SoCal. It used to be the payment should be a maximum of about 40-45% above comparable rents. Now I see ratios in the 100-130% range.

The 600K home I just looked at would have a total monthly outlay of with PITI, association, maintanance of about $4800/mo. the only amounts which are deductible are about $4k of that total

I can rent the house next door for $1900-2200/month

Even net of tax, I'm paying an additional $1700/mo. for the right to call someplace home with a bit of downside risk. Not a good investment in my mind.

A friend tried to refi his place this past month only to find out comps are down 8% from the last refi he did 1 year earlier.

Houses are not selling around here like they were just 1 year ago.
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I made the similar calculation and sold my house last May.
That is exactly why you should not be a buyer at this moment unless of course you are under the pressure of a wife with no concept of real estate risk:-)))
 
Quote from traderbal:

I made the similar calculation and sold my house last May.
That is exactly why you should not be a buyer at this moment unless of course you are under the pressure of a wife with no concept of real estate risk:-)))
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alotta people are in s similar boat. i bought a place for $194,000 with 10% down. the START RATE on the ARM was 11.375 with a 5% cap, so it cudda gone to over 16%. in july it sold in one day at full price of $900,000. we owed very little on the property, having owned it for almost 20 years. so we net like $800,000 on a $22,000 (with costs) investment. so, you sit there and ask yourself: "do i wanna risk another cycle." another property, that is now F&C is worth $700,000 was purchased with $2,000 down at a $119,000 price - oh yeah, the seller conceeded 6 points, so im in it net like $113,000.

for the guys like oldtrader, who is a real pro, and the broker from houston, they know their shit and can be taking stuff down. for most however, it would not be unwise to hold off. what we dont here these days is talk of VALUE INVESTING in real estate. BTW, i have seen people recently getting bailed out on 1989 purchase - it took almost 14 years to get even, and yo know they were sweating it. who knows when the market will top - who really cares - a vulture just waits.

im looking for ground leases and to buy discounted notes - im moving away from owning the entire property. real estate is a LONG DURATION ASSET with HIGH transaction costs, so im real careful before i buy something.
 
...if anyone read today's news from DHI (Dr Horton), the largest home builder in the country, you will have read the following:

- Las Vegas market has had many cancellations from orders that were previously taken for newly built communities

- At the same time, the CEO referred to the ompany as the "Walmart of the housing industry"

Reminds me of when I lived in NYC and heard a friend saw a yellow porsche in the city with the license plate "bulrun" - nasdaq was close to 5000.

...matter of time.
 
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