Local housing bubbles building?

[donheff]

DC's home sales are experiencing a big boom. Houses in my neighborhood sell in a week with bidding wars above asking price. This article about the DC Housing authority flipping vacant row-houses caught my eye. Mind you, I like that they are making money and getting vacant housing stock back into the market. But isn't this about like 2005 when every Tom, Dick, and Harry thought they could be rehab entrepreneurs? Anyone else seeing signs of irrational exuberance in the housing market?

 

[HFWR]

An acquaintance who recently became an agent posted something on Facebook recently, to the effect of "if you can fog a mirror, we can get you in a house"...

Deja vu all over again...

 

[Senator]

An acquaintance who recently became an agent posted something on Facebook recently, to the effect of "if you can fog a mirror, we can get you in a house"...

Deja vu all over again...

It is definitely not that easy, although it is easier than a couple of years ago.

Housing prices are going to head down, with the deflation that is rampant. Housing prices, as well as rents, are a function of wages. Average wages are headed down. And tax collections will even be worse...

As each crop of workers retires, the next generation's wages are even lower. Whether it is due to wage competition, outsourced labor, or just demographics, it doesn't matter.

There may be a few local housing bubbles, but it will be short lived, unless wages, go up. Or housing expenses go down.

Do not look for 20%+ RE gains anytime soon.

 

[timo2]

I live in the Denver metro, and our prices have gone up quite a bit to maybe bubble territory. My neighborhood prices have increased 30% in two years. But now people are pushing the asking prices even higher, and they stopped selling quickly, and some have sat for a while, which makes me think that this is not a bubble. Wouldn't overpriced homes sell quickly in a bubble environment?

 

[hnzw_rui]

There may be a few local housing bubbles, but it will be short lived, unless wages, go up. Or housing expenses go down.

Do not look for 20%+ RE gains anytime soon.

I sure do hope so. Our area has already experienced a bubble with properties going for almost double their 2010-2012 prices so we are, again, unfortunately priced out of the market.

 

[MichaelB]

Some local areas may be seeing symptoms of a housing bubble, but across the US I don't think so. Calculated Risk blog does excellent analysis of housing, here are a couple of entries for the latest data on sales of new (here) and existing (here) housing. Basically, existing housing is being at about the same rate as 2002 / 2004, and new housing is still below the 90's. Volume is not that high, and prices have increased more due to the absence of inventory.

 

[Brat]

There was no construction after the housing bubble burst in Portland Metro. With the Silicon Valley housing prices bordering on the insane technology firms are establishing offices here. Home and rental prices are skyrocketing because there is little availability. That said, I see a lot of residential construction so at least at the top end there will be some inventory. As the higher priced properties sell there may be some availability in the mid-market.

 

[W2R]

Honestly I don't know about housing trends in general, but I know about them in my neighborhood. There is definitely a local bubble in my neighborhood. This is for a reason I can't disclose due to privacy concerns, oh well. Anyway, most people seem to feel my neighborhood instantly has become more desirable than it was a few months ago.

I had no idea any of this would be happening, and bought my Dream House at a pre-bubble price just a week or two or three before the announcement that caused prices to soar. I am happy about the changes in my neighborhood that make it an even better place to live. Still, I guess it really doesn't matter whether or not my house is worth more, since I am not selling.

In fact, I suppose it could raise tax assessments in the neighborhood eventually.

 

[Walt34]

Even out here in WV the rising prices of DC housing is good news, of course whether they stay that way is a question mark. When we were looking (we moved from the DC area) we were astonished at the difference in prices for a house and that we could buy a nicer home than we ever dreamed we'd be living in, and write a check for it. Basically we paid a bit less for this house than we sold the old one for, and that one was paid off.

I am very surprised at the number of people who commute to the DC area from here - about 80 miles and on a good day an hour and a half drive. That's an awful way to live, I think, but I guess many people value the larger house over a condo or something.

 

[Brat]

I don't get the large house vs commute time, personally.

 

[Bamaman]

It's a shame that U.S. Government workers cannot afford to live where they work in Washington, DC.

I would assume that those paying the big money for all those little houses work for government subcontractors.

I'm just thankful that our housing market is as inexpensive as any in the U.S. and that our property taxes are about a fourth that of our surrounding states. We can actually afford to live in very large homes that'd be unaffordable elsewhere.

 

[hnzw_rui]

I don't get the large house vs commute time, personally.

It's not just the large houses. Even small houses downtown or surrounding areas can be unaffordable.

Close to Los Angeles, a dinky 1000 sq ft 1B/1B SFH in a relatively safe neighborhood could cost around $500K. You could get something bigger in the $350K range if you're okay with higher crime rate. I believe DC is even more expensive than LA.

 

[bld999]

Seattle prices in hot neighborhoods matched the 2007 high sometime last year. A further ~7% advance has happened in 2015, mostly due to in migration in general and significant job creation by the juggernaut Amazon. Other tech companies are adding to the pressure, and inventory is laughable.
I am buckling my seatbelt and adding an old motocross helmet just in case.

It's thrilling if you already have a perch, dismal if you don't. The city has implemented a requirement that developers on some projects assign some units to rent at below market rates, so there is no longer a choice to make for developers, they produce some LI housing if they build, and as their net gets squeezed accordingly, their rents on market rate will have to compensate as long as the market will stand it.

High tides and green grass? Maybe for a while in case of property holders.

 

[W2R]

I am very surprised at the number of people who commute to the DC area from here - about 80 miles and on a good day an hour and a half drive. That's an awful way to live, I think, but I guess many people value the larger house over a condo or something.

Many, many people who worked at my agency HQ in the DC area commuted to W. Virginia. I knew and worked closely with a lot of people who made that commute. I asked some of them directly if they were crazy or what? It was indeed a horrendous commute, so most shared a ride with co-workers and only had to drive once or twice a week. They would sleep in the vehicle during that long commute, on days when they did not have to drive. Others telecommuted.

They claimed that even a condo in the DC area was frightfully expensive and not a great lifestyle. Also some were thinking of retiring in the next five years or so, and were buying with that in mind. Others wanted their kids to grow up in W. Virginia instead of D.C. for whatever reasons. I wonder if taxes might be lower in W. Virginia than in DC, also.

 

[FIREd]

There is no doubt that the real estate market is on fire in San Francisco, but I really don't know enough about it to gauge whether it is in bubble territory or not. Personally, I find the market way overpriced for what you get, but maybe it's just me. I am happy with renting, and my own cost analysis says it is the better option for the time being. On the other hand, I am trying to sell a house in northern Alabama, and that market is certainly not in a bubble. That house is on track to be my worst investment ever even after providing me with nearly 10 years of rent-free living.

 

[Walt34]

It's a shame that U.S. Government workers cannot afford to live where they work in Washington, DC.

A main issue is that practically all of the land that can be built on has been built on. There just isn't much left, and those are zoned for farming or "open areas" or parks, things like that. The few farms left get a tax break, which is necessary or they'd have to sell to developers. That's part of the reason the traffic is so bad. Another is that there simply isn't room to widen many roads without taking out hundreds of homes or businesses because those roads were laid out in the 1940's, '50's, and '60's. So what used to be an easy 20-minute drive from where I grew up to the community college is now about an hour, most of that just sitting still. It used to be a nice place to live. Not any more.

A fond dream of mine is that when the various state and county legislators who allowed all that overdevelopment to happen pass on, the devil makes them sit in traffic for eternity. With full bladders.

 

[rodi]

San Diego is pretty frothy... but even after the crash, the prices were still higher than you'd expect if you were coming from another part of the country.

Since I'm not planning to move- I don't care about market value that much. I have prop 13 locked in property tax rates, so it won't impact my expenses there, either.

I do follow rental prices, though... since we have a rental granny flat that provides income.

 

[ownyourfuture]

An acquaintance who recently became an agent posted something on Facebook recently, to the effect of "if you can fog a mirror, we can get you in a house"...

Deja vu all over again...

Funny and scary

 

[W2R]

New Orleans metro forecast to be America's 6th hottest housing market in 2016

I guess we really ARE in a rising bubble here in New Orleans!

The New Orleans metropolitan area is forecast to be the sixth-hottest housing market in the nation in 2016 with higher prices and more sales [...] Following recent trends, growth is expected to be centered largely in the city's historic and lakefront neighborhoods and in parts of Metairie.

New Orleans metro forecast to be America's 6th hottest housing market in 2016 | NOLA.com

One of the specific zip codes mentioned is mine, which I believe to be the hottest one in Metairie right now. Although I have no intention of ever selling my dream house, it's nice to see the prices skyrocket like this.

 

[WestLake]

I'm in Central Dallas and I lived the boom/bust of the 1980s. It's booming big time again, but it's different. I don't think it will bust with 10,000 moving here every week...or some such figure.. Most older neighborhoods near downtown have skyrocketed and most have tear-down and rebuilds happening. I live in East Dallas, where we have good schools, and things have basically tripled since 2000 (rents included). I have about a dozen rentals and I'll probably be selling most of them to builders. There are some major things happening in those neighborhoods in the next two years which should push prices even higher. Do I dare wait for that, or sell next spring?

 

[bld999]

I'm in Central Dallas and I lived the boom/bust of the 1980s. It's booming big time again, but it's different. I don't think it will bust with 10,000 moving here every week...or some such figure.. Most older neighborhoods near downtown have skyrocketed and most have tear-down and rebuilds happening. I live in East Dallas, where we have good schools, and things have basically tripled since 2000 (rents included). I have about a dozen rentals and I'll probably be selling most of them to builders. There are some major things happening in those neighborhoods in the next two years which should push prices even higher. Do I dare wait for that, or sell next spring?

Yes, what to do with those excursions of temperament?
Sometimes a cranky tenant causes me to vow 2 more years and out, then I recover and say five, next week something else. Right now doing nothing looks very intelligent, and I've always been good at it.

Big increases of local value can give you the vapors.