California still in a housing bubble (July, 2010)

[soccerballtux]

The mortgage interest deduction is not getting phased out, not now nor anytime in the indefinite future.

Don't quote me and then post stupid. The reason I believe the housing market is set to take another tumble is because the waves of the subprime implosion are now spreading into prime loans.

OptionARMs are the bigger reason IMHO.

 

[Vic]

OptionARMs are the bigger reason IMHO.

Nope, the current wave of defaults is in fixed rate mortgages.

Neg-ams are coming later, as most of them made at the height of the boom don't start adjusting until next year.

 

[piasabird]

Until the Feds raise the interest rates to a rational amount to at least match inflation which could be said to be at a marginal 3.75%, then you will not see Housing Bottoming out. Another thing holding housing back is the Govt offereing a $8,000 cash back on purchasing a first house. Wish I had this option when I purchase my house. I had to borrow money from my father. He kicked in 10,000 for the down payment. I advise you to take advantage of this if you can. It is doubtful that it will be extended again.

 

[quikah]

Its not necessarily an average home, its a nicer place in a gated country club. But still, the stats for the zip code are there. My wife works in Los Gatos, the same house over there would be over 2 million. My brother in law bought a $1.4 million house in Los Altos a few months ago, 2400 sqft and needed about 50K in repairs.

What zip code? Seriously, I cannot think of any part of San Jose with an average $1.5M price. $1.4M for 2400 sqft in Los Altos is pretty cheap.

 

[LegendKiller]

Blaming the tax deduction for the bubble is asinine. The two are uncorrelated, as seen from the aforementioned cases. Financial leverage, both by borrowers and lenders are 100% to blame.

 

[kranky]

The home price insanity had to come to an end somehow, and we're far from seeing the bottom yet IMO. Until prices come down to a reasonable multiple of disposable income, they have to get driven down further. The bubble was fueled by unreasonable amounts of credit, and in some places the prices haven't come down nearly enough yet.

Everything comes down to that simple concept. Home prices must be aligned with incomes in order to have stability. With the tulipmania era over with, even a 4% 50-year mortgage can't make a $1 million home affordable to someone with a $100,000 income.

 

[soccerballtux]

Nope, the current wave of defaults is in fixed rate mortgages.

Neg-ams are coming later, as most of them made at the height of the boom don't start adjusting until next year.

right. The future. Set to take another tumble-- and it's going to be from OA's. IMO.

 

[piasabird]

People keep buying larger and larger houses. The US Government could step in and declare that dictates Maximum values per square foot and set a ceiling on the price of a house using some formula based on building supplies used. Of course if they did that the cost of living would go down and they would have to pay you less.

 

[Exterous]

People keep buying larger and larger houses. The US Government could step in and declare that dictates Maximum values per square foot and set a ceiling on the price of a house using some formula based on building supplies used. Of course if they did that the cost of living would go down and they would have to pay you less.

That is a horrible idea. Instead of fixing the underlying causes of the housing bubble(s) we will just let the government regulate more areas. If they had at least a decent track record of being able to adequatley regulate anything maybe but with their current track record - no way

 

[woolfe9999]

The fact that prices on high end homes have not eroded much in the Bay Area is misleading. Houses for affluent people rarely going down in a recession, even with a housing bubble bursting. Because wealthy people tend to weather recessions well, some even doing very well. It's the middle and lower middle class who fare poorly, and hence middle to low priced homes have gone down quite a bit here. Actually, high end houses went down more in the last recession because that was the dot.com and tech bust and many silicon valley millionaries lost their fortune in that one. This time around, million dollar+ houses have only gone down about 10-15%, whereas mid 6 figure houses about 25%, and low-mid six figure houses as much as 50%.

That said, I do hope there is further decline as I'm in the market to buy one within the next year and so far we've never been able to afford one because of the ridiculous prices and us not willing to overextend ourselves with excessive loans.

- wolf

 

[JockoJohnson]

The fact that prices on high end homes have not eroded much in the Bay Area is misleading. Houses for affluent people rarely going down in a recession, even with a housing bubble bursting. Because wealthy people tend to weather recessions well, some even doing very well. It's the middle and lower middle class who fare poorly, and hence middle to low priced homes have gone down quite a bit here. Actually, high end houses went down more in the last recession because that was the dot.com and tech bust and many silicon valley millionaries lost their fortune in that one. This time around, million dollar+ houses have only gone down about 10-15%, whereas mid 6 figure houses about 25%, and low-mid six figure houses as much as 50%.

That said, I do hope there is further decline as I'm in the market to buy one within the next year and so far we've never been able to afford one because of the ridiculous prices and us not willing to overextend ourselves with excessive loans.

- wolf

Good for you. I am in the same position and refuse to pay the assinine prices that some of these morons want. They are still overpriced and they have been for years. I will admit that I don't feel one bit bad for the jackasses that overpaid for their homes and are now getting kicked out of them. Serves the stupid fuckers right.

 

[Jaskalas]

I will admit that I don't feel one bit bad for the jackasses that overpaid for their homes and are now getting kicked out of them. Serves the stupid fuckers right.

In a ecomonic crisis like this, the homes should default to the residents living inside them. Screw the banks, save the average person.

 

[woolfe9999]

Good for you. I am in the same position and refuse to pay the assinine prices that some of these morons want. They are still overpriced and they have been for years. I will admit that I don't feel one bit bad for the jackasses that overpaid for their homes and are now getting kicked out of them. Serves the stupid fuckers right.

Yeah the prices have never seemed particularly justified to me. So far as I can tell, it's down to four factors. 1) Temperate weather which means lots of people want to live here (demand). 2) lots of weath, particularly from Silicon Valley (demand). 3) anti-growth policies pushed by local environmentalists which seriously curtail new home construction (supply). 4. Proposition 13, which causes people to never want to sell their homes, and if they ever do, it's to their children, or passing by inheritance. (supply). So basically the situation has been FUBARED by both liberals and conservatives, with a dash of good weather and affluence thrown in to muck it up even more.

Still, I agree with you. I have no sympathy for people who buy beyond their means. My wife and I have no intention of buying a house if we can't afford the mortgage payments, with a cushion built in. Which means that a combined income which could buy us a manshion in most areas of the country won't buy us a simple, middle class home here.

- wolf

 

[JockoJohnson]

Yeah the prices have never seemed particularly justified to me. So far as I can tell, it's down to four factors. 1) Temperate weather which means lots of people want to live here (demand). 2) lots of weath, particularly from Silicon Valley (demand). 3) anti-growth policies pushed by local environmentalists which seriously curtail new home construction (supply). 4. Proposition 13, which causes people to never want to sell their homes, and if they ever do, it's to their children, or passing by inheritance. (supply). So basically the situation has been FUBARED by both liberals and conservatives, with a dash of good weather and affluence thrown in to muck it up even more.

Still, I agree with you. I have no sympathy for people who buy beyond their means. My wife and I have no intention of buying a house if we can't afford the mortgage payments, with a cushion built in. Which means that a combined income which could buy us a manshion in most areas of the country won't buy us a simple, middle class home here.

- wolf

You definitely have it a bit tougher in an area where demand is high. I am looking in the suburbs of Philadelphia area. I know that people are not clammoring to live here as much as in Silicon Valley.

My wife and I made sure to get into a smaller home that we can afford during the bubble. I do feel for those that were living within their means but fell upon tough times, though. They probably planned just like any rational person would but this economy is hitting most people hard. As for the ones that are living beyond their means...