The gross national bezzle has never been larger than in the past decade.”. I saw this back in mid 2000’s in Alexandria, VA. (born/raised in San Diego where my family had been since 1910. First Korea. In Ventura County, sales fell 49.4%, while the median price fell 1.7% to $580,000. Asia was still basically undeveloped from that perspective. The median price of existing homes in September jumped 14.8% year-over-year to $311,800. A horrible time to be a first time buyer. They can move to another area of the country and increase their bottom line. For some laughs, google my comments on this site from March and April. That hasn’t been the case and it would appear my buying power is getting less as assets (property, shares) go up an up. Further, we didn’t have the medical advances today that lead to having a large group of expensive senior citizens (not making a value judgment here, just stating the facts). The snowbirds have arrived early in Naples, FL and they are bringing their cash to buy homes. Exactly RighNYer, these clowns recreate that which they are escaping from…perfect definition of insanity…do the same thing but expect a different result. I invite everybody to consider the following simple fraction: Median House Price in USA / Median Cost of a Gallon of Gas. The markets make sense. Quaint concept, huh? Between 2006 and 2010, in addition to the housing correction, there was also a minor correction for incomes. The latest report is mainly based on preliminary data for the quarter ended in July 2020. New construction everywhere. Very easy not to get sucked in. Thank you for making this point. Continuing on, we’ll look at payroll employment (refer to 2:27 in the video above). They paid cash at 36 years old. You want governments telling people how long they can work and you want this cap to only apply to a specific “class” of people? And suddenly that “housing shortage” has turned into a glut. If the houses, of the same design, on either side of you have dropped in market value by 50%, it would be hard for them to deny it. “The forecast for 2020 is quite robust in terms of property values.”. I believe the following from my interpretation of these messy facts and circumstances in no particular order: Cuz they want to get TF out of California. People have short memories when it comes to markets. 6) Money is not important as blood and the RE agents and banks know it. The often repeated. There are two values for any asset, intrinsic, and perceived. Reducing rents and throwing in big incentives to lease vacant units is not panic. 6. From first hand experience… the real estate market has pretty much gone berserk. Schedule E deductions baby!!! The Once-Hot San Diego Housing Market Has Cooled. A stock market pop is going to make things appear more normal. I’m still crossing all my fingers, toes, and anything & everything else so that I can be a homeowner this time next year . The definition of hyperinflation is inflation at 50% or above per month. But in California anyway, one can petition the county assessor to lower your value and taxes if and when property values drop. Foreigners at this point could probably buy the entire USA a few times over, and they will, if there will be any doubt about the purchasing value of the dollar. dave ramsey’s advice is for people in untenable amounts of debt. Phoenix area is now over 5 million people. The high-end housing market is drawing in those that are generally smarter with their money. I’m sure there are many other examples. I was able to retire at 57 due to having a home free and clear and cash in the bank from doing this. 1) Let’s get out here, now, before we die. It’s a “your job is here” situation and they can either go or resign. “Foreigners at this point could probably buy the entire USA a few times over, and they will,…”. Whether it is calculated or an unthinking zombified phenomenon, it has the same effect. Every house I bought (3) had a mortgage and expense payment less than current rent in the neighbourhood. These are all the places that were “under contract” from action that took place in the various phases of the lockdown here, but couldn’t be completed as most, if not all real estate activity was shut down for the past three months. It would likely mean the end of the small guys in real estate. On top of that, we’ve also got strong employment and incomes here in San Diego. (sarc). Energy Unfortunately, this means that all it takes is something to shake that confidence, and the markets all plummet, as people start selling far in excess of there being buyers willing to buy anything. Problem with water? Between 2006 and 2010, in addition to the housing correction, there was also a minor correction for incomes. Median home price $825,000. The Fed doesn’t set interest rates. Listings were up 10% year over year for September @ 7,771 new ones. More clear picture will emerge during the 2nd or 3rd qtr of next year. Imagine we have another recession, poof, another $50,000 for anyone buying a larger, newer, more energy efficient home. I won’t be buying a house any time soon, and I’m more into gold miners than high flying stocks, but my short positions have become the minor hedge instead of the main trade. 2. Credit Bubble In the end, we’ve trended toward a market with a scarcity of properties, which causes prices to increase. Did the Fed “prevent” those crashes? Much of what was done in the name of relief was just can kicking in hope of a quick recovery which is now clearly not reality. Well, within 2 days I got notices from Zillow that all my houses went pending– likely being sold. Trin/RightNY-can’t speak for NY, but as an aged Californian (whose family’s been here since 1910) , it seems to me it’s a case of the grandchildren are only heading back to the places that their grand/great-grandparents left to make a better life here back in the day. But much of that is stuffed under mattresses, used in dollarized or semi-dollarized economies, or in black economies. Today they are 3,700 or about 2.7 months supply coming into our busy season. Varies from about 2 to 9 depending on city you are in. “Pay cash for a USED vehicle.” Because inflation is my base case, I spend most time worrying about how to protect my cash investments from inflation. This … That’s the other part of the “K-shaped” recovery. The roads are full of RVs. I happen to appreciate the dark/ironic/sarcastic humor. The severe hangovers and indigestion is on the way. They have seen this movie before, and know how it ends. I like the saying that bubble’s are caused when your neighbor who is obviously not as smart as you is living the dream with the big house, new car and bragging about his investments. If you look a trailing 10 year peak returns the pattern is up double digits followed by a ten year period around around zero or slightly negative. Why Foreclosures Won’t Crush the Housing Market in San Diego County Next Year Posted by Steven Rotsart on Wednesday, August 12, 2020 at 9:47 AM By Steven Rotsart / August 12, 2020 Comment With the strength of the current housing market growing every day and more Americans returning to work, a faster-than-expected recovery in the housing sector is already well underway. This scarcity of single-family homes doesn’t bode well for many of the people who are looking to purchase as opposed to rent—supply won’t be able to keep up with demand. So please do your own research. So you expect bankrupt local governments to cut their income stream? Real problem might be taxes however. The Internet accelerated globalization. The problem with the cheapo version of house building is many never finish. We haven’t built enough housing for our growing population. Just sayin’. MonkeyBiz – LOL! BTW, the ultra-low rates are an artifact of an over-indebted economy. Why would a bank foreclose on someone and recognize a loss rather than keep the asset at a value of their choosing in their books and access free money from the Fed for the underlaying inflated asset value? This country has never been more prosperous. This is why the Fed is discussing ‘Yield Curve Control’. Any variance from this is bullshit, you can be sure that somebody is going to take a loss somewhere. Then the IRS will 1099 on the forgiven debt? I guess summer is over in the north. There was sense to it, but I also had to look back on my own house buying adventure and, even though everything went perfectly right for me, it was very much an opposite experience. Californias economy grew 4.7% in the 12 months ended in February compared to the national rate of 2.8%. I am one of these buyers in this hot market, as are my two siblings. Before the fires, there was huge demand in the Wine Country (and there may still be). I must say, Wolf, I read your article with a grain of salt. Since we got rid of the mark to market rules, there won’t be any foreclosures or very little. Consequently, the poor got poorer. I have just one rhetorical question… how much of this money is from Chinese investors? Where are the foreclosures and evictions? -events (severely limited) 67% of CEO’s are saying they are going to be shedding both office space and employees next year. Only reporting on Charleston problems came via “60 minutes” early last decade. This is 28% higher than 2019 and the most in nearly two decades. There’s always a bust after the boom. Investors buy homes and turned them into assets in their portfolio. My theory is that it’s because their ideology relies on false assumptions about the world and about human nature. may we all find a better day. If it can’t be financed, it’s probably reasonably priced, although with downsides. (Hopefully they purchased conditionally on the sale of the old house). Everyone’s already forgotten the dot com bust of 2000 and the GFC of 2008 (housing bubble 1.0). Counter cyclical. In America anything is possible. Old testament economists preached that price discovery was the holy grail. The remote wfh would change landscape drastically when all is said and done. Where I live $200k is not affordable for most wage earners. Of course the prices continue to hold fast and even rise by the week. Immediately after that period, employment and incomes have corrected once more and are actually outpacing housing costs. Like 100K or more. Should you own such a desirable property, you have to consider your home value as an offer you the owner cannot refuse. What is the logic ?? (I believe that is no longer true.) A dollar will probably buy less food and electricity in 10 years is all I know. Ya they are laundering but the plan doesn’t add up- they’re leaving too much cash on the table. If at some point the Fed tries to lower long rates by QE and in response the rates actually RISE, this could change the paradigm completely. Expect to see starting Feb or Mar large corporate M&A. We may be in the middle of a so called Austrian School type crack up boom. What do you mean by panic? “Oh, give me a home where the beefalo roam, and the cantaloupes grow in dry clay. The lead time for a mobile home is now 9 months to a year! I’ve read that few people do that these days. Now that we’re a few months into the new year, how has San Diego’s economy fared in 2020? Oh no… Not again. During the last housing bust, this happened also very fast. You can donate. Although San Diego’s economy is fine, it could heat up in 2020, beginning a long stretch of fast rising housing prices. Now that these are allowed, the sales process will be completed and the property reported as ‘sold’. To get back to trend would mean 66% drop. I just hope I’m wrong. Wolf, you have a very powerful name indeed.. Everybody is now shouting that government deficits don’t matter… Perfect setup for a black swan event? Numerous businesses are relocating from California to Arizona. On top of that, we’ve also got strong employment and incomes here in San Diego. And he pointed out what everyone has already been pointing out, that “part of what is fueling this boom is that the economy has just split into two, and rich people are able to access capital almost for free, so, of course, they’re going to use that money to buy homes.”, But “there’s just another group of Americans who are still struggling, who can’t access the credit because we’ve raised credit standards, and you have high unemployment. When I was in San Diego my water bills were $100 /200 a month without sewer charge! Most only had 10yr mortgages, and had paid for homes and a cabin in the mountains before their kids got out of grade school. The exact number is difficult to calculate because of tax issues. It will be a rocket ship. San Diego Housing Market on Track to Beat Last Year’s Success. Maybe not NYC, San Fran, and Seattle, but definitely out here. No! This lifetime native agrees with you-IF the virus is controlled, and IF the economic Depression isn’t devasting and most importantly; So maybe book valuations are terminally gamed, but delinquency stats can be used to infer a lot. Enormous pent up demand from 4-5 months of extremely low activity Senior executives with extensive lobbying budgets are no longer at the beck and call of contentious consumers and have hollowed out their smaller competitors. San Diego State University, Finance Department, Fowler College of Business, 5500 Campanile Drive, San Diego, CA, 92182., Otherwise they will be pressured to build a good deal of government housing, which will be much more expensive. That interest rates will go deeply negative and prices will go stratospheric. Even in high priced Seattle where rents are down double digits, prices are soaring double digits and despite so many stories of folks taking advantage of WFH and moving inventory is at an all time low (and that’s sayings something considering 2015-2017). I imagine their assessment to be a lot different than yours. The 2020 figure is 4.5 percent lower compared with the pace of 397,960 homes sold in 2019. “I’m pleased to see someone is paying attention to deflationary forces — most of the time it’s the tiresome of the squawk of the inflationistas, all evidence to the contrary notwithstanding.”. If you have any questions about the housing market or real estate in general, don’t hesitate to reach out to us. it kept the politics off the airwaves for much of the trip, and i owe him a debt of gratitude for that alone. Gershom, keep in mind that during many serious downturns in markets, Fed was there pumping all they way…. If you take it back to 5-7% rates the affordability for most drops off a cliff. 5G ain’t about faster video on an iPhone but a blistering improvement in business process and driving costs down even further. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence. Watch next year, the housing will do opposite.. the collapse is coming. I’m just going to sit back and watch who can run for the “exit” quicker than the others when it hits the fan. But they’re losing $1200/month in revenue aren’t they? The declining value of the US dollar will only help the housing market, not to mention the trillions escaping the Fed manipulated US treasury market in search of alpha. A slowdown may have already started. With all these businesses down and people out of work, surprisingly the residential housing market is up here, not a lot of offerings but the asking cost per sqft is actually up. Hopefully SoCaljimbo will need to brush up on his short sale skills. In most places if you’re making $50k to $70k you’re doing pretty well relative to others.