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Regular Contributor
RWW
Posts: 63
Registered: ‎03-14-2012
0

And more bubble behavior...

According to the bubble cheerleaders folks are "car camping" to get condos in SJ.  So let's see.....let's go over the signs:

 

1. Love letters - check

2. Shacks being sold for > 1M - check

3. >10 offers per home after initial weekend showing & WELL over list price - Check

4. Car camping - Check

 

Gold Regular Contributor
sheriff
Posts: 2,270
Registered: ‎06-01-2012
0

Re: And more bubble behavior...

Super Contributor
rhr75
Posts: 226
Registered: ‎02-15-2010
0

Re: And more bubble behavior...

[ Edited ]

The TH we bought in mid 2010 briefly dipped in value through '11 and early '12, but I saw two recent closes of identical units in the complex at 5%+ over what I paid.  So, definitely think the condo/TH market is improving.  We probably would list it for sale if we could net 15-20% over what we paid, so hopefully in 3 to 5 years.  No rush as our renter is paying the mortage, HOA, insurance and still netting us a tidy profit.  Actually, they're getting a great deal as they're on year 2 of the lease and we didn't raise the rent; on the market today we could probably get $200+ more a month.

Contributor
Leon00
Posts: 42
Registered: ‎07-11-2012

Re: And more bubble behavior...

Buble or not, in BA the price shall rise for at least another year, more likely for 2-3 years.

Super Contributor
BayAreaLifer
Posts: 269
Registered: ‎08-24-2011

Re: And more bubble behavior...

It's worth remembering that all bubbles involve a bull market, but not all bull markets involve a bubble.

 

At least this time around the prices are making sense compared to rents and other metrics that were out of whack during the last bubble.  Or maybe I just had too much kool aid.

Gold Super Contributor
Jil
Posts: 3,073
Registered: ‎10-24-2011

Re: And more bubble behavior...

[ Edited ]

Whatever it may be, this is for new homeowners who has ARM, save yourself with 30 year fixed low interest deals - even if you pay cost or points. This will save lot of trouble or interest payment when you interest rate is skyrocket later.

 

Think long term, if you do not know when you will sell, and move from ARM to 30 year fixed.

 

Do you own research/analysis for Mortgage Interest Deduction (primary home) or P/L (Investment).

 

Good Luck.

 

 

Silver Contributor
malkito
Posts: 502
Registered: ‎04-07-2010

Re: And more bubble behavior...

Do we have people taking out mortgages they can't afford?

Do we have people buying with the expectation that they can flip it in 6 months for a huge profit?

 

You need the first one if you want it to get ugly when the music stops.  You need the second so it gets ugly for lot of people at the same time and really dings prices.  Unfortunately you have neither.  There are people paying some eye popping premiums to own a home *now* but I'm not sure they have any expectation that they are even going to get that money back - they're just tired of constantly being outbid and willing to pay to make the problem go away.

 

To compare this to the 2004-2007 run we're in 2004 except the underwriting is better and more people are paying cash.  

 

Though there may be a bubble in the future, we're not even in the ballpark now.

 

 

Regular Contributor
RWW
Posts: 63
Registered: ‎03-14-2012

Re: And more bubble behavior...


malkito wrote:

Do we have people taking out mortgages they can't afford?

Do we have people buying with the expectation that they can flip it in 6 months for a huge profit?

 

You need the first one if you want it to get ugly when the music stops.  You need the second so it gets ugly for lot of people at the same time and really dings prices.  Unfortunately you have neither.  There are people paying some eye popping premiums to own a home *now* but I'm not sure they have any expectation that they are even going to get that money back - they're just tired of constantly being outbid and willing to pay to make the problem go away.

 

To compare this to the 2004-2007 run we're in 2004 except the underwriting is better and more people are paying cash.  

 

Though there may be a bubble in the future, we're not even in the ballpark now.

 

 


TLDR translation: "This time it's different."....dude pass the koolaid...mmmm cherry!

Silver Contributor
malkito
Posts: 502
Registered: ‎04-07-2010
0

Re: And more bubble behavior...


RWW wrote:

TLDR translation: "This time it's different."....dude pass the koolaid...mmmm cherry!


It's not different this time - it was different last time.  They handed out multiple mortgages to people who clearly couldn't afford them.  All you needed was a 5% drop and that party was over in a big way.  As someone noted above rent/buy was all out of whack last time as well.  That's why the good areas lost 20-25% (and the bad areas 50%) last time.

 

This time is just like all the other times except for last time.  No one is going to lose huge chunks vs appraised price (though some may lose the premiums they are paying to win these bidding wars if they don't stick around for a while.)  You've got no sloppy lending and you've got no flippers which means you don't have the postiive feedback loop that builds up the bubble (or the conditions which can lead to the eventual bust you seem to be hopelessly rooting for.)

 

I'm sorry you feel entitled to more home ownership than you can afford.   I myself feel entitled to a Ferrari but despite frequenting Ferrari forums and posting weak arguments as to why they are overvalued, I still haven't been given the opporunity to buy one at the low price I feel I'm entitled to.

Super Contributor
BayAreaLifer
Posts: 269
Registered: ‎08-24-2011

Re: And more bubble behavior...


RWW wrote:

malkito wrote:

Do we have people taking out mortgages they can't afford?

Do we have people buying with the expectation that they can flip it in 6 months for a huge profit?

 

You need the first one if you want it to get ugly when the music stops.  You need the second so it gets ugly for lot of people at the same time and really dings prices.  Unfortunately you have neither.  There are people paying some eye popping premiums to own a home *now* but I'm not sure they have any expectation that they are even going to get that money back - they're just tired of constantly being outbid and willing to pay to make the problem go away.

 

To compare this to the 2004-2007 run we're in 2004 except the underwriting is better and more people are paying cash.  

 

Though there may be a bubble in the future, we're not even in the ballpark now.

 

 


TLDR translation: "This time it's different."....dude pass the koolaid...mmmm cherry!


Like I said, a bull market does not always mean a bubble.  I think the fundamentals are better this time around but I don't disagree that the hysteria/begging to buy houses is getting back to the old days.