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Super Contributor
donjumpsuit
Posts: 245
Registered: ‎08-07-2012

Fitch warns home prices overvalued

Fitch group, founded in 1913, and dedicated to "Providing the value beyond the Ratings" has declared that NATIONWIDE homes are overvalued.  No bay area specific commentary.

 

http://www.housingwire.com/news/2013/01/04/fitch-warns-home-prices-overvalued

 

My opinion isn't worth salt, especially in here, but at least there are highly credible sources that agree.

 

 

Gold Super Contributor
norcalnative
Posts: 3,277
Registered: ‎05-04-2009

Re: Fitch warns home prices overvalued

If you consider the massive number of huge tract homes built in fairly remote locations outside of city centers - I would argue that he is correct given the trend right now is for people to be moving closer to major employer options not farther away with reduce number of potential employers.

 

However as we all know places like the Bay Area is a special market within its self with Many of the top paying large employers in the US - which case any National data dump study will more or less have zero to do with very specific markets like the Bay Area - NY etc.

Gold Regular Contributor
sheriff
Posts: 2,291
Registered: ‎06-01-2012
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Re: Fitch warns home prices overvalued

[ Edited ]

A year ago I would have argued with you over that point, but housing prices have gone up enough that buying may not be significantly cheaper than renting anymore, at least in the low end of the housing market.  But I still think prices are going to go up in the next few years because of low inventory, high demand, an improving economy and low mortgage rates.

Silver Contributor
bld999
Posts: 473
Registered: ‎04-15-2011
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Re: Fitch warns home prices overvalued

Fitch's contention would make sense if the "housing market" was a derivative security consisting of all houses in the US.

 

Real estate is local for buyers and sellers of physical product.

Super Contributor
donjumpsuit
Posts: 245
Registered: ‎08-07-2012
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Re: Fitch warns home prices overvalued

[ Edited ]

So you are suggesting that something can't be overpriced if it's a locally traded commodity?

 

Meaning in no uncertain terms that nothing can be over priced (or under for that matter) if there are those willing to aquire it at any cost?

 

I might agree with your post, except for the fact that those who buy and sell are disconnected from the money to do so.

 

So your argument might be relative to the price of a bushel of corn grown in that field over there, but certainly isn't relevant when the buyer isn't responsible for the money right now, but over the next 30 years.

 

And especailly when 25% of the buyers are shorts, those who purchase for the purpose to flip and sell at a higher price in 3 months or less.

 

Silver Contributor
bld999
Posts: 473
Registered: ‎04-15-2011

Re: Fitch warns home prices overvalued


donjumpsuit wrote:

So you are suggesting that something can't be overpriced if it's a locally traded commodity?

 

Meaning in no uncertain terms that nothing can be over priced (or under for that matter) if there are those willing to aquire it at any cost?

 

I might agree with your post, except for the fact that those who buy and sell are disconnected from the money to do so.

 

So your argument might be relative to the price of a bushel of corn grown in that field over there, but certainly isn't relevant when the buyer isn't responsible for the money right now, but over the next 30 years.

 

And especailly when 25% of the buyers are shorts, those who purchase for the purpose to flip and sell at a higher price in 3 months or less.

 


Since local markets are likely underpriced in some areas, fairly priced in some , and overpriced in others, talking about "national' prices is not very useful. You can't pick up the average house and transport it to someplace else to sell it like a bushel of corn. Houses are not commodities.

 

If you were going to buy a house, you might determine if it was priced correctly by sampling comps, which would be likely within a mile or less of the subject, hence the "local" characteristic of r.e. markets.

Silver Contributor
kinectimal
Posts: 442
Registered: ‎12-18-2011
0

Re: Fitch warns home prices overvalued

[ Edited ]

Im predicting the strong path for the bay area.  The red line shows prices right now are the lowest the are going to get.

 But if you look at that graph either way prices will be higher by 2016.  You need to decide if its worth the gamble to try to time the market perfectly.

Silver Trusted Contributor
SamShuehRealtor
Posts: 902
Registered: ‎10-27-2008
0

Re: Fitch warns home prices overvalued

[ Edited ]

Many selective regions in the US will be exampted from this model.  In CA 10% of buyers are investors from the Pacific Rim. In the eyes of the investors from Bombay, Hong Kong, any coastal cities in China, and Seoul, the homes are very affordable and prices are stable.

 

In Palo Alto, CA the homes in 98 sold for $495/sf, an outrageous price and many suggested homes could not sell at this price. Today, it is ~$1012 sf per square ft and moving up still.

Platinum Regular Contributor
tjh
Posts: 4,806
Registered: ‎01-09-2010
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Re: Fitch warns home prices overvalued


donjumpsuit wrote:

So you are suggesting that something can't be overpriced if it's a locally traded commodity?

 

Meaning in no uncertain terms that nothing can be over priced (or under for that matter) if there are those willing to aquire it at any cost?

 


 


Las Vegas vs Palo Alto. 

 

Same commodity, different markets and trends.  Over time, these markets will both change. 

 

If the San Andreas heaves significantly tomorrow, these markets may even flip ends.  :smileyvery-happy:

 

Demand and supply.