02-04-2013 03:50 PM - edited 02-04-2013 03:52 PM
I think we're going to have a housing bubble in the bay area as long as the stock market remains flat- by that I mean S&P returning less than 5% over a multi year period. Real estate is the beset investment in this climate. And it is so much more highly leveraged than stocks.
02-04-2013 03:52 PM
I don't think Stockman is right because he is saying the hedge funds will sell all their housing when interest rates go up. The hedge funds will keep their investments because if they paid cash the investments are already made and bring in a good return, which will only get better as rents rise. If they mortgaged them the interest rates they pay become even more valuable as rates go up. I don't think this level of appreciation is sustainable. I see a slowdown in the future. Also, in some parts of the country the housing recovery has lagged and they have some catching up to do.
02-04-2013 04:15 PM
No one has mentioned the people who want a roof over their head? The Bay Area population is growing housing not so much. Demand and Supply is our #1 factor here in the Bay Area now that funny loan games are not allowed anymore. Buyers since 08 are people who buy with much more staying power than anytime we have seen in the past. This means less turn over due to forced sale - and given rents go up with population - even if these home owners need to move out of the area for work they have a very very good reason to simply rent the home vs sell it.
I really could care less about the rest of the country's housing prediction given unless there is a full stop to building new homes in the rest of the country - the predictions mean nothing. LOL
02-04-2013 04:16 PM
Where will new housing be built in large numbers IN THE BAY AREA in the next 20yrs?
#1 Former Alameda Air base - this will be the single largest new home development the Bay Area has seen since Foster City
02-04-2013 04:30 PM
norcal, wasn't Alameda already built out (at least in part) during the last property bubble? I was under the impression some of those new Alameda developments went bust... a lot of new houses you could pick up for cheap in 2009 along with Vallejo
02-04-2013 04:54 PM
Trust me, bubble is only a myth under these conditions we are living now. But, let them all the H1B visas go back home, then we are going to be talking about it.
Call me ignorant, but a community, town or a city can't be built only over the basis that all the habitants have to me smart or king of the jungle. There has to be a balance, otherwise one part, the big part that's pushing this market, those buyers coming from nowhere that may be those Engineers from Google or whatnot's may lose their jobs one day, and having no place to put their talents to work, well, guess it; they will go to where there's a greener pasture. Selling will be their first priority unless rental is still hot so they can leave it to a management company.
Don't forget, the economy ties the existence of one group to another one, this feeds another one, and this one feeds or services another one. Like evolution, one dies, another follows, another adapts from carnivore to herbivore, etc.
02-04-2013 06:28 PM
Michelle - the former Air Base hasn't been touched and is spec'ed out for a major development when the economics ie home prices show that its highly profitable for said investors and builder to do so. AS I said the largest development in the Bay Area regarding units built.
02-04-2013 07:10 PM
I think the salient point of the article -- which caught my eye and which applies at least as much (if not moreso) here as it does anywhere else -- is the point that the low inventory is pretty much artificial, fueled by the one-two punch of rates and desperate investors.
He's pointing out that such a system is not a sustainable economy.
If it were "Googlers" or other mythical residential buyers snatching up the houses, that would be one thing. But it's not. They may be out there, and looking, and hoping... but it's investors who are the ones doing the actual buying.