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Bay area housing market

kevin 714 said:
While home prices nationally have not yet returned to their peak of the last housing boom, some local markets have surpassed it. Now, some claim the housing market is in a bubble far worse than the devastating one in 2006. The argument: Housing is far less affordable today than it was back then, and the home price gains are driven not by healthy, end-user demand but by a lack of construction, artificially low interest rates, and institutional and foreign all-cash buyers.

https://www.yahoo.com/homes/news/housing-today-bubble-larger-2006-165800248.html
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I just don't see the logic behind the claim that it is worse than 2006. The lack of garbage loans alone makes it not so. Investors have actual skin in the game here.

I've always looked at real estate valuation as a simple function of ROI - with value appreciation secondary to cash flow (i.e., rental income).

While values soared in the last bubble, rents did not. Right now, rents are tracking RE values - making it still possible in some areas to be cash positive, or at least very close to neutral.
 
Holeshot said:
Affordable housing left CA years ago when the building code became pretty expensive as did electrical poles and water meters. Combine that with absolutely zero approvals for affordable housing projects (read; manufactured/ trailer parks) and viola! renters galore.

Local supervisors don't care about the poor. In fact, let's all say it together: Fuck the Poor! Local supervisors wants pretty little communities. Pretty costs money. Nuff said.



I'm fairly certain we're seeing the result of the increase of M1/ inflation hitting the housing market, combined with low volume of product on the market. People wish things would collapse 80%. They won't. They won't even fall 15% in a free fall, is my best guess. We won't have a free fall. The economy is actually hitting on all cylinders currently. I don't see any real downward pressure yet...unless I watch Fox news.
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Agreed. The tax base for local government is sales tax, property tax, and housing transfer taxes. Plus some cities like Lafayette have school taxes on new permits ( I worked on one nice but hardly world class house that had a $35k school tax for the permit). Basically homeowner pay government expenses, and that mean the municipalities may bemoan high housing prices, but the pols are laughing like mofos.

My house is now just 10% below its all time high value. I'm boggled, though inflation plays a part in that. I can't believe the rent prices in Oakland, nor the home prices. People are paying $500k for a little 1,000 square foot bungalow in a mediocre neighborhood.

As to rents, lol, I can currently rent my house out for an amount that would pay off the original purchase price in 3.5 years.
 
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Once the Biggest Buyer, China Starts Dumping U.S. Government Debt

Central banks around the world are selling U.S. government bonds at the fastest pace on record, the most dramatic shift in the $12.8 trillion Treasury market since the financial crisis. ...

China isn’t alone. Russia’s holdings of all U.S. Treasury debt fell by $32.8 billion in the year ended in July, according to the latest data available from the U.S. Treasury. Taiwan’s holdings dropped by $6.8 billion. Norway, a developed nation hit by the oil-price decline, reduced its Treasury holdings by $18.3 billion.

Some other central banks increased holdings. India increased its Treasury debt holdings to $116.3 billion at the end of July 2015 from $79.7 billion a year ago. The Federal Reserve held $2.45 trillion of Treasury debt at the end of September and isn’t expected to sell U.S. debt soon.
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MI-CM113_CBANK_16U_20151006170009.jpg
 
kevin 714 said:
While home prices nationally have not yet returned to their peak of the last housing boom, some local markets have surpassed it. Now, some claim the housing market is in a bubble far worse than the devastating one in 2006. The argument: Housing is far less affordable today than it was back then, and the home price gains are driven not by healthy, end-user demand but by a lack of construction, artificially low interest rates, and institutional and foreign all-cash buyers.

https://www.yahoo.com/homes/news/housing-today-bubble-larger-2006-165800248.html
Click to expand...

I don't get it...that's a price floor, not a bubble. When assets are backed by other hard assets, that's a price floor. A bubble is when artificial value exists (debt) based on borrowed/ leveraged principles. We're not seeing that, this time.

If rates creep up, things will slow...but that will only entrench the renters to be forever; renters. The large reason for the increased prices is lack of product and massive amounts of cash floating around. M1. Inflation.
 
Seriously.

Supply and Demand explains a lot. There is low supply and high demand. That is not a bubble. And all of those who AREN'T rich are going to be even MORE interested in paying it off should the market go down.
 
HappyHighwayman said:
Seriously.

Supply and Demand explains a lot. There is low supply and high demand. That is not a bubble. And all of those who AREN'T rich are going to be even MORE interested in paying it off should the market go down.
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Or they may just walk away from their underwater mortgages like they did during the last recession.
 
Blankpage said:
Or they may just walk away from their underwater mortgages like they did during the last recession.
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The difference is now that their interest rates are likely low or reasonable, they had to put down 20% vs. nothing etc...

So...maybe yes, but likely no.
 
If all my friends who have purchased houses in the Bay Area sold right now they'd make between 50-100% profit before closing costs and commissions.
 
HappyHighwayman said:
If all my friends who have purchased houses in the Bay Area sold right now they'd make between 50-100% profit before closing costs and commissions.
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Didn't you say that at the beginning of this thread ? Yep
BTW I don't think it's true for many areas
For you, sure.
 
HappyHighwayman said:
If all my friends who have purchased houses in the Bay Area sold right now they'd make between 50-100% profit before closing costs and commissions.
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Yes. But you're leaving out the pet where they have to find a new place to live :laughing

And some of those "profits" are taxable if not reinvested into a new home
 
If you buy in a good area - i.e.good schools, there is no such thing as a bubble in the BA. Moving average is always upward slope.

Bad area - anything can happen.
 
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