Another damn housing bubble

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mikegg

Golden Member
Jan 30, 2010
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Housing inventories are at a historic low in many major markets and across the U.S. In some areas, inventory fell by as much as 30-50% compared to the same month last year. Housing prices in San Francisco has risen by about ~20% since last year. Prices in nearly all markets are rising and rising quickly. Why is this happening? Our economy hasn't 20% better. Our wages haven't gone up by 20%. We have gone from a buyer's market to a seller's market overnight.

Our government is at work with policies that are causing prices to go up and inventory to go down. This is artificial of course and cannot be sustained. Once mortgage rates go back up, we'll see housing prices drop by as much as 15-20%.

Media outlets are calling this a "housing recovery". It's not a damn recovery. It's artificially inflated prices. It's just another bubble.

Read this story:

http://seekingalpha.com/article/1020051-another-real-estate-bubble
 
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Siddhartha

Siddhartha

Lifer
Oct 17, 1999
12,505
3
81
Where are housing prices now compared to where they were in 2006, just before the bubble bursted, particularly in Florida and Nevada?
 
D

dmcowen674

No Lifer
Oct 13, 1999
54,889
47
91
www.alienbabeltech.com
senttoschool said:
Quick Google search for Chicago:
http://www.businessinsider.com/cond...vidence-of-a-ripping-housing-recovery-2012-11


Gary Lucido, a Chicago-based broker who writes the blog "Getting Real" about the city's real estate scene, has a new chart showing inventories of 2-3 bedroom condos in the Windy City are at lows not seen in at least six years.

​
Click to expand...

​

Absolute bullshit.

A simple drive around town will show you how much bullshit that is.

Nothing but empty houses, for sale signs everywhere.
 
J

jackschmittusa

Diamond Member
Apr 16, 2003
5,972
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There are still millions of houses in some stage of foreclosure. How does that factor into your calculations?
 
M

mikegg

Golden Member
Jan 30, 2010
1,975
577
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jackschmittusa said:
There are still millions of houses in some stage of foreclosure. How does that factor into your calculations?
Click to expand...

Those are called "shadow inventory". The banks don't have incentives to release them so people are living there in their distressed homes for free.

I gave a Google news link to searching for "housing inventory" and nearly every single local newspaper is talking about how low the inventory is for that area. I don't do the calculations.
 
Pr0d1gy

Pr0d1gy

Diamond Member
Jan 30, 2005
7,774
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76
You need to go back to school. I understand that these fake articles get posted on the interwebs in order to try and push popular opinion but when you post them and everyone calls you on your bullshit it might be a good idea to just leave it alone. I know 2 people who have bought houses in the last 18 months, TWO....out of hundreds.

404 error housing bubble not found
 
nextJin

nextJin

Golden Member
Apr 16, 2009
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If anything housing prices are still too high, if you look at price increases since the 60's till now the prices rose much more than just the sharp fall off they took in '08.
 
Pr0d1gy

Pr0d1gy

Diamond Member
Jan 30, 2005
7,774
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nextJin said:
If anything housing prices are still too high, if you look at price increases since the 60's till now the prices rose much more than just the sharp fall off they took in '08.
Click to expand...

Exactly, they have been kept artificially propped up by the rich buying up real estate in order to protect their existing investments. It is not too hard to figure out, but now they need to start another positive disinformation campaign in order to goad people into buying now so that their friends in the House can allow the fiscal cliff, enabling another land grab like we saw in 2008.

This stuff is so obvious. OP is a shill.
 
openwheel

openwheel

Platinum Member
Apr 30, 2012
2,044
17
81
OP is partially correct. The showdow housing inventory is to blame. Prices have risen too fast lately, and the supply is too low while demand is high.

Historic low rates, people are taking advantage of it.
 
G

Greenman

Lifer
Oct 15, 1999
22,188
6,417
136
Pr0d1gy said:
You need to go back to school. I understand that these fake articles get posted on the interwebs in order to try and push popular opinion but when you post them and everyone calls you on your bullshit it might be a good idea to just leave it alone. I know 2 people who have bought houses in the last 18 months, TWO....out of hundreds.

404 error housing bubble not found
Click to expand...

And I know a real estate agent that just had the best month of his career, who's anecdotal evidence is better?
 
G

Greenman

Lifer
Oct 15, 1999
22,188
6,417
136
nextJin said:
If anything housing prices are still too high, if you look at price increases since the 60's till now the prices rose much more than just the sharp fall off they took in '08.
Click to expand...

Housing prices can't fall much lower. Around here, houses are selling for less than production cost. I'm a general contractor and I can't build a house as cheap as I can buy one.
 
PricklyPete

PricklyPete

Lifer
Sep 17, 2002
14,582
162
106
Greenman said:
Housing prices can't fall much lower. Around here, houses are selling for less than production cost. I'm a general contractor and I can't build a house as cheap as I can buy one.
Click to expand...

And where is "here"?

Denver prices are rising.
 
IronWing

IronWing

No Lifer
Jul 20, 2001
72,683
33,554
136
I'm still waiting for the land value bubble to pop in my area. While housing crashed back to earth, land values have not, even though not much is selling. I guess the cost of sitting on vacant land is low enough that sellers can afford to sit on it and hope to get their ridiculous asking prices.
 
PingSpike

PingSpike

Lifer
Feb 25, 2004
21,758
602
126
I think Greenman's point is part of it too. Around here houses seem to cost a fortune to build, even dumpy old ones. But whenever I looked into the cost of buying land and building a basic house the numbers seemed to quickly make buying existing stock seem much more reasonable. I think labor and material prices may have inflated a lot more than people think, not to mentioned regulations have likely increased the cost of building a new home as well. I know new homes around here have ridiculous septic requirements but there are surely other improvements that are required of new construction.

Land costs a fortune around here, but like IronWing said the tax on it is pretty close to nothing so its pretty easy to sit on it and wait for better days.

That's not to say that shadow inventory isn't at play as well.

I do think some people are expecting more of a crapout in prices than will ever really occur though. People say that it has to drop to affordable levels...well, houses haven't been at "affordable" levels in my state for at least a decade and the prices hold steady. It seems if you constrain supply enough prices can hold at pretty high levels without regard to quality or wages. Lots of things "should" cost less based on the wages of the average person historically but they don't.
 
Slew Foot

Slew Foot

Lifer
Sep 22, 2005
12,379
96
86
Prices have jumped in the CA Bay Area. Lots of high paying jobs, no redneck bible thumpers, great weather and scenery. Everyone wants to live here, flyover country can suck it.
 
M

mikegg

Golden Member
Jan 30, 2010
1,975
577
136
Pr0d1gy said:
Exactly, they have been kept artificially propped up by the rich buying up real estate in order to protect their existing investments. It is not too hard to figure out, but now they need to start another positive disinformation campaign in order to goad people into buying now so that their friends in the House can allow the fiscal cliff, enabling another land grab like we saw in 2008.

This stuff is so obvious. OP is a shill.
Click to expand...
I don't attack you personally so I don't expect that from you.

The current situation is much more complicated than just the rich buying real-estate. We don't know exactly how many houses are in the process of foreclosure. Millions of distressed home owners have simply stopped paying their mortgage and living for free. Banks have no incentive to go through the foreclosure process if prices are so low. There's a chance that once prices keep increasing, we'll see a flood of foreclosures from the 2008 bubble released onto the market - causing another significant price drop.
 
Saint Nick

Saint Nick

Lifer
Jan 21, 2005
17,722
6
81
senttoschool said:
I don't attack you personally so I don't expect that from you.

The current situation is much more complicated than just the rich buying real-estate. We don't know exactly how many houses are in the process of foreclosure. Millions of distressed home owners have simply stopped paying their mortgage and living for free. Banks have no incentive to go through the foreclosure process if prices are so low. There's a chance that once prices keep increasing, we'll see a flood of foreclosures from the 2008 bubble released onto the market - causing another significant price drop.
Click to expand...
Yeah, I have been watching the housing markets over the past three years as I have been very interested in buying. Lately the prices have been going up on crap hole houses. I'm not sure what's going on. But even around the midwest, a lot of my middle class friends still can't buy a home.
 
M

mshan

Diamond Member
Nov 16, 2004
7,868
0
71
I think one needs to understand that the worst excesses of housing bubble (speculative overbuild and out of control bidding wars) may have been more of a regional, rather than uniformly national, phenomenon.

I think I remember hearing on tv way back that something like 50% of U. S. housing market (total valuation?) equated to about four states (California, Nevada, Arizona, Florida?), which is where prices really got out of control, and housing was overbuilt.

Many other parts of country may have gotten a bit frothy in terms of price, but probably not wildly out of control build on spec housing that there wasn't natural population growth to absorb.

Rust Belt states were in secular decline even without housing bubble, it just made things worse for them.

I think government changed regulations so investors could buy up large chunks of short sale / foreclosure homes in e. g. Phoenix suburbs, they got them apparently at 40% below replacement cost, put a bit of money in to refurb them, then rent them out for nice investment for those professional investors. Atlanta is another area like that, though not sure if investors have swooped in there yet.

San Francisco Bay Area may be like Manhattan in that it is supply constrained because no new land to build on, so it is always expensive. But if mortgage rates are at historic lows and premium for jumbo loans has closed (http://www.kcmblog.com/2011/03/14/if-prices-are-falling-why-are-the-rich-buying/), they may be relative bargain for those who can truly afford to own those homes.

Just as these broad housing market indexes may have been skewed downward a few years ago (only thing that sold was absurdly lowly priced short sale or foreclosure), now mix may be skewed upwards because it is really just healthy sales that are moving robustly now.

If you can get a competitive mortgage, probably need to re-focus on local (local economy and prospects for local job growth), rather than such global macro factors that everyone feared over last few years.
 
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Ryan

Ryan

Lifer
Oct 31, 2000
27,519
2
81
Things are rebounding in my neighborhood - no more foreclosures, and construction has started on the last few empty lots available.
 
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