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Re: Sizing the Housing Bubble
Old 07-14-2006, 04:56 PM   #121
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Re: Sizing the Housing Bubble

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Jarhead, who, as of now has officially resigned from the ReWahoo employment "watch".

(Can't take the stress anymore).
Too much like w*rk, was it?


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Re: Sizing the Housing Bubble
Old 07-14-2006, 05:05 PM   #122
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Re: Sizing the Housing Bubble

No new starts in my neighborhood in months. Two builders right up the street from me bought large tracts. One built out about 75% of his when a second one started. The second one built about 25% of his. They were pouring a couple of new slabs a week up until about 9-10 weeks ago. Nothing since. The second builders homes are looking a little lonely sitting there by themselves in a field. The builder hit the field with Roundup in early may to get ready to break ground...weeds grew back in already waist high.
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Re: Sizing the Housing Bubble
Old 07-14-2006, 09:30 PM   #123
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Re: Sizing the Housing Bubble

I think part of the reason they still show price increases is cause it works as an avg or median. If you look at places that are waterfront its 400k for a one bedroom. A small one bedroom at that.
So the fact that my neighbors house hasnt sold hasnt played a part in the numbers.
I for one dont expect prices to drop that much for the average home. I dont think everyone will be as eager to pay for the bells and whistles. Suddenly the granite counters wont be worth the extra payment.
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Re: Sizing the Housing Bubble
Old 07-16-2006, 11:02 AM   #124
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Re: Sizing the Housing Bubble

For what it's worth, according to zillion.com, the house I sold in NYC has gone up about 1% per month since April. I think zillion has it wrong.
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Re: Sizing the Housing Bubble
Old 07-16-2006, 11:08 AM   #125
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Re: Sizing the Housing Bubble

Housing in NYC is surprisingly still strong. Listings are up, but no one is selling except at high prices. Unless people have to sell quickly, they are still getting their price. All new construction is at tippy top dollar - 1500 a sq ft at minimum.
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Re: Sizing the Housing Bubble
Old 07-16-2006, 11:26 AM   #126
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Re: Sizing the Housing Bubble

Quote:
Originally Posted by NYC Guy
Housing in NYC is surprisingly still strong. Listings are up, but no one is selling except at high prices. Unless people have to sell quickly, they are still getting their price. All new construction is at tippy top dollar - 1500 a sq ft at minimum.
That's not what many people on this Forum want to hear here. Many are 'not so secretly' hoping for a huge correction in housing prices. I live in L.A. and in my area houses are still selling at top dollar. Yes, they are taking a bit longer to sell, but to the chagrin of many here, there is no panic. Maybe in places like Michigan or Ohio it will happen, but I doubt New York or LA will see much of a dip.
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Re: Sizing the Housing Bubble
Old 07-16-2006, 12:16 PM   #127
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Re: Sizing the Housing Bubble

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Originally Posted by Alex
That's not what many people on this Forum want to hear here. Many are 'not so secretly' hoping for a huge correction in housing prices.* I live in L.A. and in my area houses are still selling at top dollar. Yes, they are taking a bit longer to sell, but to the chagrin of many here, there is no panic.* Maybe in places like Michigan or Ohio it will happen, but I doubt New York or LA will see much of a dip.*
I have to admit that I do get a perverse pleasure from watching train wrecks happen in slow motion. Basically, I see this as a contest between economics and emotion. Economics always wins in the long-term.

You may have noticed that the California Association of Realtors stopped posting their monthly affordability index at the end of 2005. That's because it essentially went to zero.

It's an economic fact that people in a region with a median income of, say, $60,000 can't afford houses with a median price of, say, $600,000. So, what happens when prices get that high? You exhaust the pool of new buyers. You get some overhang from upgrade buyers who are essentially exchanging their inflated equity for somebody else's inflated equity, but eventually that game of musical chairs stops.

To me, the question isn't how this will end, it's how fast and how hard.
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Re: Sizing the Housing Bubble
Old 07-16-2006, 12:21 PM   #128
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Re: Sizing the Housing Bubble

Its really a conundrum isnt it? All the people moving to my area are all "coming up from the bay area" or, up until a year or two ago, left the sacramento area for cheaper real estate up here and bit off a longer commute.

The frickin bay area must be empty by now...and who can afford THEIR old houses when the affordable ones up here are in the mid 400's to mid 500's?!?

Must be some exotic loan instruments and a HIGH speed train wreck about to happen...
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Re: Sizing the Housing Bubble
Old 07-16-2006, 01:15 PM   #129
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Re: Sizing the Housing Bubble

I'm involved in the planning/rezoning/approval stages of new residential construction for a number of developers in NC (a non-bubble area). We've seen a noticeable uptick in new developments. Especially near the coast. Those new neighborhoods will have finished houses within a year most likely. I don't think any of those developers are sensing a slowdown in the local markets. It's pretty much "get it done as fast as you can" at this point. Of course, like rewahoo, houses around here frequently sell for $140,000. The median sale price is a lot higher though. Tons of folks from up north and out west putting their equity to work here due to their jobs relocating here, or snapping up a vacation home on the coast.
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Re: Sizing the Housing Bubble
Old 07-16-2006, 01:27 PM   #130
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Re: Sizing the Housing Bubble

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Originally Posted by justin
Tons of folks from up north and out west putting their equity to work here due to their jobs relocating here, or snapping up a vacation home on the coast.
Or speculating.

Places like North Carolina and Georgia seem reasonably valued to me. I've only been to each area once, but they looked pretty, the weather was nice (when I was there), and they have good job centers.

Texas is another story. I personally know investors who have moved their investment dollars from areas like Riverside, CA to Texas. The prices in Texas sure are cheap, but they seem about right given the property taxes, unlimited land availability, weather, and past overbuilding.
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Re: Sizing the Housing Bubble
Old 07-16-2006, 01:37 PM   #131
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Re: Sizing the Housing Bubble

A different kind of housing bubble may be created with gasoline prices going up: Homes that are closer to jobs will go up in value; homes further away will go down in value.

A colleague told me she was spending $300 a month on gas. I said, "Wow, if you lived where I do, you could spend $25 a month on gas and use the $275 savings for part of your mortgage payment."
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Re: Sizing the Housing Bubble
Old 07-16-2006, 01:49 PM   #132
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Re: Sizing the Housing Bubble

SF Bay Area RE prices are outrageous but I have always been surprised at how resilient they are. They do of course have corrections but in the past the drop has been less than what I have expected. Examples are the dot.com bust and the early nineties down turn. In the former Silicon Valley lost somelike 150,000 jobs (although I suspect that most of them were renters) and RE dipped slightly and then shot straight up when interest rates went down. I think that is it is because prices have been so high for so long that there are a lot of people that want to move up to a larger house or a better school district. Remember we have a lot of families with incomes of $200k/year plus living in 1200 sq ft houses and it's not because they are trying to save money for RE. The creates a huge latent demand. When they see a dip they take the opportunity to move up and that moderates the price drops.

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Re: Sizing the Housing Bubble
Old 07-16-2006, 02:02 PM   #133
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Re: Sizing the Housing Bubble

Quote:
Originally Posted by LOL!
A different kind of housing bubble may be created with gasoline prices going up: Homes that are closer to jobs will go up in value; homes further away will go down in value.
Interesting point -- I could easily see that happening in Tampa. Or else, the downtown businesses move to the burbs.
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Re: Sizing the Housing Bubble
Old 07-16-2006, 02:07 PM   #134
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Re: Sizing the Housing Bubble

Quote:
Originally Posted by mb
SF Bay Area RE prices are outrageous but I have always been surprised at how resilient they are. They do of course have corrections but in the past the drop has been less than what I have expected. Examples are the dot.com bust and the early nineties down turn. In the former Silicon Valley lost somelike 150,000 jobs (although I suspect that most of them were renters) and RE dipped slightly and then shot straight up when interest rates went down. I think that is it is because prices have been so high for so long that there are a lot of people that want to move up to a larger house or a better school district. Remember we have a lot of families with incomes of $200k/year plus living in 1200 sq ft houses and it's not because they are trying to save money for RE. The creates a huge latent demand. When they see a dip they take the opportunity to move up and that moderates the price drops.

MB
I concur, mb. The prices here are still outrageous in the bay area BUT the houses are staying on the market longer. Prices will soften with inventory not moving as quickly as in the heydey 2-4 years ago

You are also correct about the folks making $200+ living in tiny quarters. We belong to that category and are waiting patiently on sidelines with our cash
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Re: Sizing the Housing Bubble
Old 07-16-2006, 02:08 PM   #135
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Re: Sizing the Housing Bubble

Quote:
Originally Posted by mb
SF Bay Area RE prices are outrageous but I have always been surprised at how resilient they are. They do of course have corrections but in the past the drop has been less than what I have expected. Examples are the dot.com bust and the early nineties down turn. In the former Silicon Valley lost somelike 150,000 jobs (although I suspect that most of them were renters) and RE dipped slightly and then shot straight up when interest rates went down. I think that is it is because prices have been so high for so long that there are a lot of people that want to move up to a larger house or a better school district. Remember we have a lot of families with incomes of $200k/year plus living in 1200 sq ft houses and it's not because they are trying to save money for RE. The creates a huge latent demand. When they see a dip they take the opportunity to move up and that moderates the price drops.

MB
I've been amazed at how well home prices have held up in the Bay Area as well. *

In the Spring of 05 I had my house on the market here in SD and had a very good non-contingent offer after 21 days for the price I wanted. *I thought the market was at a peak (and I may have been right) and planned to sit it out and rent. *I just couldn't go through with it since I enjoy the neighborhood so much.

I don't know what will happen. *I went through a period of thinking we'd absolutely be looking at a 20-40% drop, but now I'm not so sure. *I wonder if the San Diego market will hold up much as the Bay Area market has.

Interesting tidbit in the paper this week: *The median price for all homes (new, resale, condos) in SD County decreased around 1% in June 06 vs June 05.... the first year-over-year home value drop in ten years. *
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Re: Sizing the Housing Bubble
Old 07-16-2006, 02:27 PM   #136
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Re: Sizing the Housing Bubble

When it comes to predicting, you have to be a little bit humble, a trait that few of the bubble advocates on this forum seem to possess. I don't have a crystal ball and I certainly don't know anyone else who does. But I do know that "Economics" is not an exact science! So when Wab says
Quote:
Basically, I see this as a contest between economics and emotion. Economics always wins in the long-term.
I have to wonder what exactly he means? Remember, ALL real estate is LOCAL. There is no national real estate market. People want and need to live where there are jobs and recreation. Good weather helps too. Generally, two conditions are necessary for price softness in a given area: an oversupply of homes available for sale, and adverse economic conditions generally a weak local job market. Sometimes these conditions occur against a backdrop of overall economic weakness, recession or high interest rates. I don't see either of these happening in Los Angeles and while the Fed is raising short term rates, long-term rates have not been rising.

Obviously, there are no easy answers here, but I think the economic concept of "Strong hands" vs "Weak hands" applies - those residential real estate homeowners who live in their homes are the strong hands - investors and speculators are the weak hands. Real Estate Bubbles have very little effect on financially sound home owners. You have to live somewhere. If you don't panic and sell during a local market downturn you will not be affected.




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Re: Sizing the Housing Bubble
Old 07-16-2006, 02:50 PM   #137
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Re: Sizing the Housing Bubble

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Originally Posted by Alex
I have to wonder what exactly he means?
Well, I told you exactly what I meant. Regional incomes are the limiting factor in regional housing prices. The ratio of home prices to income is at a historic high on a *national* basis. True, it's even crazier in some regions than it is nationally. LA, where you think things are different, is one of the most out of whack markets in the nation by any metric.

Some areas, like SF and Manhattan have persistently high prices due to some unique circumstances, but even those markets are well above their historical craziness.
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Re: Sizing the Housing Bubble
Old 07-16-2006, 02:55 PM   #138
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Re: Sizing the Housing Bubble

Quote:
Originally Posted by wab
The prices in Texas sure are cheap, but they seem about right given the property taxes, unlimited land availability, weather, and past overbuilding.
Are you saying the weather here in Texas isn't as nice as it is other places? Are you taking into account the documented fact that yesterday's high temperatures in South Texas were 20 degrees cooler than they were 1,400 miles north of here?

San Antonio, TX - 97
Pierre, SD - 117
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Re: Sizing the Housing Bubble
Old 07-16-2006, 03:05 PM   #139
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Re: Sizing the Housing Bubble

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San Antonio, TX -* *97
Pierre, SD -* * * * * 117
Give it another page or two and it will get even hotter in this thread!*

It's been my observation that people I know can get defensive about their real estate decisions to a greater extent than about other investment decisions. I wonder if it's the (usually high) share of their portfolio that is at stake that does it? Or is it that people get emotionally attached to their houses while stocks and bonds feel more ephemeral*
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Re: Sizing the Housing Bubble
Old 07-16-2006, 03:20 PM   #140
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Re: Sizing the Housing Bubble

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Give it another page or two and it will get even hotter in this thread!

It's been my observation that people I know can get defensive about their real estate decisions to a greater extent than about other investment decisions.
Maybe so, but I have no such delusions. Anyone who wants to live in my particular part of the world needs to be on some of those medications being discused in another thread. Not a good place to live, work or retire. Go buy yourself one of those bargains in the Carolinas or Georgia.


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