Housing boom or bust?

[Brat]

I have a bad habit of checking out the university feeds on our SAT TV. Yesterday, mid program, I found on UCTV a presentation called something like "California Housing: Boom or Bust". What I saw of it was very intersting, I have set my DVR to record the whole feed later this week.

Interesting discussion on home prices vs income, stock market, and population growth (segmented by income level).

[brewer12345]

I'd be interested in a synopsis of what they had to say. CA RE looks very much like the dot coms right before the implosion.

[wabmester]

I gave this PPT link in another thread:

The Real Story About Today's Real Estate Boom

The main metric NAR seems to use to justify a boom is the ratio of new jobs created to new houses built. * They also look at things like net migration, affordability index (interest rate sensitive), lending trends, etc.

For places like CA, NY, and Boston, they see net migration out of those areas due to poor housing affordibility, and net migration into states like AZ, NV, and FL causing their booms to have a bit more staying power.

The presentation goes into some detail on San Diego's market as an example of one area where the boom is over. * *New houses have caught up with demand, affordability is at an all-time low, and lending practices are nutso.

[cube_rat]

Recently, my well to do 37 year old brother put a bid on a house near Stanford. His bid was 1.6 mil (all cash), the winning bid came in at over 2 mil. That said, I'm seeing inventory moving in certain pockets (obviously NOT in Sharon Heights near Stanford) of the bay area moving at sluggish rates. However, realtors seem to be resistant in reducing prices. Reality will soon set in...

[wabmester]

Quote:

Originally Posted by cube_rat Recently, my well to do 37 year old brother put a bid on a house near Stanford.* His bid was 1.6 mil (all cash), the winning bid came in at over 2 mil.

I bet in Palo Alto, that price gets you a 2000sqft house on a tiny lot. Tell him it's time to take that cash and retire to a Texas ranch.

[cube_rat]

Quote:

Originally Posted by wab I bet in Palo Alto, that price gets you a 2000sqft house on a tiny lot.* *Tell him it's time to take that cash and retire to a Texas ranch.

Actually, it's horty, torty Sharon Heights. Not much difference in terms of the size and type of house. I think my bro wants to pull up stakes and move to Palm Springs. I told him he should read this forum first to mingle with others his age who are just as fortunate.

[REWahoo]

Quote:

Originally Posted by wab Tell him it's time to take that cash and retire to a Texas ranch.

Heck, he can get a beautiful 300 acre horse ranch with 4 houses (main house, guest house, ranch foreman's house, cowboy's bunkhouse) pool, horse barn, etc., and get back $400,000 in change! Click on the "homes" and "horse facilities" links to check it out.

http://www.ranchinvestments.com/Zavala311_HOME.html

Yeah, I know...it's in Texas. :P

[cube_rat]

Quote:

Originally Posted by REWahoo! Yeah, I know...it's in Texas. :P

My mom was born and raised in El Paso. It can't be that bad!

[Maximillion]

Isn't this a segway for Whores and Football Players??

I stayed in Hernando County , Florida, for a month, it looked like every second house was for sale, and those that weren't were disappearing into Sink Holes.

[JPatrick]

CNBC has been running articles about the bath some condo buyers are taking these days.* They are usually the second to try to flip it and are finding they are one flip behind.

[Brat]

Quote:

Originally Posted by cube_rat Recently, my well to do 37 year old brother put a bid on a house near Stanford.* His bid was 1.6 mil (all cash), the winning bid came in at over 2 mil.* ** That said, I'm seeing inventory moving in certain pockets (obviously NOT in Sharon Heights near Stanford) of the bay area moving at sluggish rates.* However, realtors seem to be resistant in reducing prices.* Reality will soon set in...

One of my kids walked away from a house in that area when the bidding hit 2.9M.

Since I just caught a portion of the lecture I will recap this weekend after my DVR catches the whole presentation.* A couple snipets are caught in my brain were people stacking of low income households in rental housing and that the market can't aford to build housing a prices they can aford, and that upper income households have multiple homes.* I don't know if the following was in this lecture or I read it else where:* Many people are treating residential realestate like a growth stock when in fact it is a 'blue chip' whose value is in the 'dividend' of housing, that historically home prices have tracked inflation.

[eridanus]

http://money.cnn.com/2005/09/19/real...rice_declines/

Austin had a 25% drop that took 8 years to recover.
LA had a 20% drop that took 10 years to recover.

[macdaddy]

Two things have changed since the last boom & bust... most importantly, dual income families are becoming the norm. It's already almost wierd for a woman to say she wants to be a SAHM even after her kids go to pre school. I expect we'll see a lot of segmentation of dual income on the coasts (more expensive areas) and families with a stay at home parent will be forced to move to cheaper areas. It was already this way when I was growing up in SoCal in the 80s, where a minority of the moms stayed at home or worked part time. I assume it's even more like that now... which resets the middle class... a police officer and a teacher in their 30s in SD probably take home a combined 150k with overtime... a police officer and a teacher in Boston would hit about 150k too... suddenly the purchasing power of the middle class family unit has doubled, so the housing price plateau may be higher this time. 150k plus a little family help or a little roll-over equity and they are in the ballpark for a 700k-800k "middle class" house. AND these families will probably retire with decent pensions which means that they will feel more comfortable continuing to pay down mortgages in the early years of retirement.

[HFWR]

Quote:

Originally Posted by Maximillion Isn't this a segway for Whores and Football Players??

God Bless Texas...

[nnkrealtor]

Quote:

However, realtors seem to be resistant in reducing prices. Reality will soon set in...

Its not the Realtors that set the prices, its the sellers, and right now some sellers have unrealistic expectations. Sellers set the price not the agent.

But you are right, alot of places are overheated and those people who bought at the top of the peak don't want to admit that if they want to sell soon then they will take a hit.

[HFWR]

Time for a new HGTV series: Repo My House... :P

[lazygood4nothinbum]

Quote:

Originally Posted by REWahoo! Heck, he can get a beautiful 300 acre horse ranch with 4 houses (main house, guest house, ranch foreman's house, cowboy's bunkhouse) pool, horse barn, etc., and get back $400,000 in change! Yeah, I know...it's in Texas. :P

or he can get a townhouse in fort lauderdale. we've slowed from 30+%'s to ~15% increases. houses now take a month or three to sell instead of selling before the sign goes up. many expect condo's to tank by 20% over the next 2 years as new-builds come on-line. single family should keep on rising as there's no land left and 30,000 extra people try to squeeze into our county every year.

affordability is becoming an issue. for the next five years it probably only means bad service in good restaurants. after that it could present real problems but i'll be gone by then. the main problem is that we are hemmed in by developed areas to the north and south of us and by the ocean and the everglades east & west. so it's not like you can drive an hour out of town for reasonable prices, there is no out of town. even our horse farms "out west" go for $350k/acre. they are disappearing now too.

[wabmester]

Lesse. $1.2M would be $12K each for 100 of us on this board. Can you say "Early Retirement Ranch?" Yee hah!

[shiny]

Quote:

Originally Posted by wab Lesse. $1.2M would be $12K each for 100 of us on this board. Can you say "Early Retirement Ranch?" Yee hah!

Like a timeshare or a commune?

[brewer12345]

Quote:

Originally Posted by lazygood4nothinbum or he can get a townhouse in fort lauderdale. we've slowed from 30+%'s to ~15% increases. houses now take a month or three to sell instead of selling before the sign goes up. many expect condo's to tank by 20% over the next 2 years as new-builds come on-line. single family should keep on rising as there's no land left and 30,000 extra people try to squeeze into our county every year. affordability is becoming an issue. for the next five years it probably only means bad service in good restaurants. after that it could present real problems but i'll be gone by then. the main problem is that we are hemmed in by developed areas to the north and south of us and by the ocean and the everglades east & west. so it's not like you can drive an hour out of town for reasonable prices, there is no out of town. even our horse farms "out west" go for $350k/acre. they are disappearing now too.

What is happening to homeowners' insurance rates? I have heard some pretty ugly things going on down there, with more to come. I actually saw a news story indicating that some insurers have asked the state for 90+% rate increases for this year!