A period of increasing home prices covered the underlying dangers, but once defaults began to rise … Companies & Markets jdog: I think your data on Phoenix is outdated. I didn’t see the article, but if it’s in SF, it would have said “San Francisco.”. (I believe that is no longer true.) I am thinking more in terms of disasters brought on by prolonged greed and manipulation and the fact that in nature “things” seems to seek to balance out somehow. Transportation It would be interesting to know what market rates would be. High prices equal big bank profits, huge property tax bills, nosebleed rents for those who can’t buy, all the goodies government wants. San Diego Housing Market on Track to Beat Last Year’s Success. Several reasons for buying now… First one is interest rates. Have a 3000 sq ft place in Meridian 5bd 3 ba. San Diego House Prices Will Rise Slightly. yes, greed and lust for power will tend to produce that effect. Next, let’s look at the monthly construction starts we’ve seen (refer to 1:04 in the video above). Great show! I have never seen a guy buy a really nice home for himself. SocaUim – Many of my assets are land based, like you I own residential lots (and also farm land). If it can’t be financed, it’s probably reasonably priced, although with downsides. With nominal long term gdp growth growing at 3% and stock market being at all time high valuations, there just can’t be much left in the bubble. It too is seeing this housing insanity, and after having already quietly mothballed its corporate bond-buying program, its repos, and its dollar liquidity swaps, it would be an unsurprising next step. My god. That expired years ago, so they’ll have to pass it again…in about two years, I assume. You could get a much larger place not that far away at a similar price point so I don’t understand. are now happy as a lark, and to heck with the rest of the people that are getting crushed. Covid 19 hasn’t gone away, vaccine is still far away. Housing has become a global asset class, with unlimited demand from global investors. Some months there isn’t too much food in the fridge. It took only a few months for inventory to go from “shortage” to historic “glut.” This can happen fast. San Diego State University, Finance Department, Fowler College of Business, 5500 Campanile Drive, San Diego, CA, 92182. email@example.com, firstname.lastname@example.org. Trin/RightNY-can’t speak for NY, but as an aged Californian (whose family’s been here since 1910) , it seems to me it’s a case of the grandchildren are only heading back to the places that their grand/great-grandparents left to make a better life here back in the day. But new businesses with planned wages have been getting scarcer since 2007. At that point, the game falls apart. the Internet increases globalization. Yes, from what I’ve seen, banks will lend based on total monthly housing cost (principal+interest+tax+insurance+hoa fee) is no more than about 38% of household income, assuming they have no other debt like student loan debt, credit card debt, etc. This much needed cleansing / reversion to mean equilibrium is long long long overdue. Our local economy is doing quite well except for hospitality. Decline in Market Value (Prop 8) Background and Overview Gold & Silver Since we got rid of the mark to market rules, there won’t be any foreclosures or very little. We were looking at a 2,000 SF 1920s home in So Carolina – looked good in a small town – asking price $135,000 or $150,000. Either get a spot in Elon’s rocket or migrate to New Zealand. My portfolio of small old single family homes on big lots near the LA and OC beaches are soaring in value by more than 10% per year. Now that we’re a few months into the new year, how has San Diego’s economy fared in 2020? This could then pop the bubbles. The unintended consequences of their policy is that they are rewarding drunken speculation and punishing the person and company that employees a sound balance sheet able to withstand hard times. Stimulus Payments. So far this is all credit driven. Non union wages is why mgmt. Anyone other housing and/or land asset owners concerned about like-kind-exchange being eliminated in 2021 or 2022? What is unsettling and likely is that something comes on so fast we don’t see it and things head south much more rapidly than we can react to. To protect my real estate from unfavorable economic scenarios, I keep a sizeable amount of cash investments. As these home prices surge, the market will inevitably run out of buyers willing and able to buy, even at record low interest rates, especially in an economy like this. it is never different, the laws of mathematics cannot be denied. or better yet put it on the wife and watch what happens next…. Here’s the problem with buying an overpriced house. The cost of living used to be low here. Garden is done for the season though. January 2020 San Diego Housing Market Update - Duration: 4:05. you also, have to assume you won’t be asked to take a paycut/hours reduction that puts you in a tight spot. Taxes, fees, and higher salaries required to attract talent. What they really have done is created a confidence game. There was sense to it, but I also had to look back on my own house buying adventure and, even though everything went perfectly right for me, it was very much an opposite experience. I am sure there are exceptions, but I haven’t seen any. Good luck to you, you’ll need it. They print (create) money, and then they loan the printed (created) money. I’ve been comparing numbers in 2 northern California counties. The EU has kept rates low this way for years and Japan for decades. One of the few remaining major automotive distributors with a presence in CA is making noises about moving out of CA. Just sayin’. In America anything is possible. It’s an age thing as well. Sadly the government has little interest in correcting the matter– existing homeowners/voters feel wealthier by the day. Just follow the money. We may be in the middle of a so called Austrian School type crack up boom. Queensland is now experiencing a property boom as people from both NSW and Victoria are buying up there – sometimes sight unseen too. Got financing to build a house, but acted as the general contractor themselves. Lender-Mediated Sales in San Diego’s Housing Market If we look at July 2020, closed lender-mediated sales rose 0.4% to 243 with a median sales price of $617,000. Most people don’t follow the finance world and base their spending on their current income. Brick & Mortar Meltdown They don’t care if the market loses monetary value. Yup. “Capitalism without bankruptcy is like Christianity without hell.”. I am one of these buyers in this hot market, as are my two siblings. That Canada even has this problem despite being significantly more devoid of people suggests to me this has to do with technology, the available jobs, and increasing urbanization as a result. Unless you are in a really slow market, no one even considers an offer ‘subject to sale’ Even back then, they were only accepted as a way to stimulate a normal offer. it kept the politics off the airwaves for much of the trip, and i owe him a debt of gratitude for that alone. By means of non existent interest rates they have fostered a speculative if not downright reckless mindset…will end in tears or worse. Crisis situation allows unusual measures for the States. Immediately after that period, employment and incomes have corrected once more and are actually outpacing housing costs. 2) Few options : It’s easy to buy, but it’s harder to sell? With the entire country recognizing that Covid is at best a 2 yr issue (2020-2022) people are intellectually coming to the realization that their home is going to be the primary source of entertainment for the foreseeable future. Maybe Prozac in the water will help????? Have an emergency fund I know the world is not and can never be fair, but at some point the risk takers have to show losses. New construction everywhere. stocks? And it’s still not profitable after five years. Another one to look at is John K Galbraith. As most markets, including real estate (yes, so cal jimbo even real estate !) Ask for a price reduction their tax lowering cash discount on all services performed by individuals like mechanics, plumbers, etc. None, on the surface, but I wonder how much Chinese money is now being invested in acquiring REITs. Fantastic article, as was the earlier article today. Note how the glut has blown all seasonality out of the water (chart via Redfin): These gyrations in the housing market are occurring as, at the lower end, homeowners are steeped in turmoil, with nearly 7% of all mortgages in forbearance, according to the Mortgage Bankers Association, and with delinquency rates of FHA-insured mortgages, which cater to the lower end of the market, skyrocketing to a record 17.4% in August, and with 23 million people still claiming state or federal unemployment insurance. I believe most of the bad news is being suppressed until after the election, but the situation is more dire than people realize. Nothing causes amnesia faster than a bubble, except for borrowing money…. The Fed prints by purchasing securities which provides liquidity and stimulus to the market. I like the saying that bubble’s are caused when your neighbor who is obviously not as smart as you is living the dream with the big house, new car and bragging about his investments. Cars, Trucks & Crashes The usual cost to launder money is about 30% from what I have read. In Ventura County, sales fell 49.4%, while the median price fell 1.7% to $580,000. Rent levy contains all your above list of expenses, it is just hidden in the one word. First, let’s look at the Case-Shiller Home Price Index (refer to 0:32 in the video above for a visual representation), which illustrates home pricing trends over time. The most desirable housing for the 1%, is also scarce, property which provides isolation, security, as well as availability to nearby hubs, cities. @RightNYer A friend of mine bought a really nice home for himself 25 years ago (waaaaay too big two-story) in order to attract the right female. And about the misnamed “Nobel” prize for economic dogma: In his speech at the 1974 Nobel Prize banquet, Friedrich Hayek stated that had he been consulted on the establishment of a Nobel Prize in economics, he would “have decidedly advised against it” primarily because, “The Nobel Prize confers on an individual an authority which in economics no man ought to possess… This does not matter in the natural sciences. I do have some equity exposure (value cos with strong balance sheets and cash flow), but keep tight sell stops. We can help you. Dave has gotten wealthy teaching the following: 1. That men do not learn very much from the lessons of history is the most important of all the lessons of history.” – Aldous Huxley. Its a difficult time unless you own a fund manager. Same as it ever was, just much quicker and steeper. The Yom Kippur war and the OPEC oil embargo dealt the overdrawn U.S. an economic body-blow with steadily increasing military commitments and rising energy expenses. In 18-20 months, I believe gold will be $3,300 with a Dow of 14,000 for a ratio of approx. It’s amazing how fast things are forgotten. Today they are 3,700 or about 2.7 months supply coming into our busy season. If at some point the Fed tries to lower long rates by QE and in response the rates actually RISE, this could change the paradigm completely. Where are the foreclosures and evictions? “They print (create) money, and then they loan the printed (created) money.”. You would have done better in the stock market. Bart-human technology, eventually and always, generates a ‘Tower of Babel’ moment? Why not white and Asian kids? I have to ask why the FED continues MBS purchases ($2T and growing) when the market is surging? Off McMillian sure is wild who was your agent if you don’t mind me asking? Wolf gets in some zingers at times too…the humor keeps me semi-sane, HA…, Charlie Sheen for Pres?—–>”Make winning great again!”. At this point the US dropped the gold standard. The Fed was created under the guise of preventing any more recessions like the one that happened in 1908. Good school district is a must. There have been certain indications, such as, changes to the federal interest rate or trade disputes that would lead to a slowing economy. It would apply to literally everyone, except, executives. Possibly the equivalent of a flu shot that helps bolster the system to fight the flu. This already took place. There are no dollars sitting around in huge piles overseas that they’re going to deploy in the US. The Assessor’s Office constantly monitors real estate market conditions and lowers assessed values on a mass basis. I was down in North Carolina looking at mobile homes. Investors buy homes and turned them into assets in their portfolio. If you have any questions about the housing market or real estate in general, don’t hesitate to reach out to us. 5. Big difference. We live in a cheap area of a flyover state that never really booms and never really busts. Paper money is not a requirement to live (or is it? Only thing that will stop it is higher rates. dave ramsey’s advice is for people in untenable amounts of debt. Should you own such a desirable property, you have to consider your home value as an offer you the owner cannot refuse. This 2nd coming wave of the virus is already worse in some places than the initial wave. Take the elevator to the street level at the BART Embarcadero next time when you are in the City. However, I think a blue wave would be more inflationary than a red wave. I guess summer is over in the north. What I mean is, formerly “big” markets in terms of pricing power (like SF, NY etc.) 5) They will pay two mortgages, double the maintenance, RE taxes & insurance on both, with extra cushion from the bank, to cover monthly expenses until they sell, settle down and to spend on whatever they want, because of the banks largesse. The “owner” had very recently moved into the state. That said, if I lose like-kind-exchange, my business of moving and aquiring more land assets is finished growing, as I do not have the cash reserves to pay up to 40% fed taxes, and state taxes as high as 11%, on any future land I exchange between business entities. Mumbai Fire Brigade, India. It does seem that these demand drivers have run out of steam however and I strongly believe that a NYC or SF condo available at 20%+ discount to 2019 with lower interest rates will start to draw a lot of bids very soon. Sounds maybe like we could get a “trickle down” effect from the insane SF, LA and NY markets to rest of country? I invite everybody to consider the following simple fraction: Median House Price in USA / Median Cost of a Gallon of Gas. It’s a simple thing and yet the city can’t get it right. there is a water shortage in the near future, and even the radioactive rattlesnakes have guns. Experts have pointed out a number of reasons as to why they are forecasting a drop in California home prices. What could be bought for $350K three years ago is now in the mid $500’s. Shacks stay shacks and the kids move on. This is why the Fed is discussing ‘Yield Curve Control’. The Once-Hot San Diego Housing Market Has Cooled. The median price of existing homes in September jumped 14.8% year-over-year to $311,800. No debt is best, but sort of OK if folks have manageable debt levels. They still have their place in San Francisco, or wherever, and will eventually put it on the market, but meanwhile they plowed a few million bucks into a house in Carmel and moved. Unfortunately, this means that all it takes is something to shake that confidence, and the markets all plummet, as people start selling far in excess of there being buyers willing to buy anything. His comment was he has a tenant that is not paying, but the value of that rental, which is a SFR in South Redondo Beach is going up so fast, he is not that worried about any of it. Minneapolis Fire Department, US. It is just a matter of time before that becomes evident…. Once people realize they do not have to be in debt and they can pay off their forbearance – they will flood the market with supply at the tune of 7%-10%, “But this craziness in the housing market is not sustainable.”. In many parts of the country most homes are selling within a couple days of being listed and usually with a bidding war involved. “Most are 1st or 2nd generation eastern europeans. Wonder if someone said that right before the tulip bubble popped? more hospitalizations and incrementally more deaths. I cannot believe that we are on a permanently high plateau as then Fed chair Fisher proclaimed in Sept. of 1929!!!! And when you said ‘radioactive rattlesnakes with guns’ then I knew you’re just being funny! People are massively striking out on their own.