There’s also been some layoffs at tech companies of late… Could be fewer paper millionaires around to push up prices. The second-hand market for luxury cars could be pretty good when these people can’t afford their mortgages all of a sudden.
More likely, as @Shuck said, this is probably just the market stabilizing at around 1 million for a single-family home in the Bay Area. However, there’s literally thousands of condo units being built here in Oakland, so when those hit the market there could be a slump on the high-end. I’m doubtful that it will bring things back to ‘normal’ for the working class though…
I don’t see it imploding in the same way it did in 2008. Subprime mortgages have come back under new names but they’re not the metastasising cancer in the market they were a decade ago. A correction to what prices were 3-4 years ago is as bad as I see it getting, which will deal a hard hit to speculators (and those who make their living enabling them) but will otherwise leave most people who live in their homes unscathed.
Depends where you want to live. Anyone who thinks that this downturn will make the housing in desirable global cities more affordable to middle- and working-class people is setting himself up for disappointment.
You’re correct in general, but while speculators will get pounded worst by this correction or downturn they weren’t there in enough numbers to cause it this time.
You’re going about it the way I wish most people would. Don’t freak out even if the value of the house goes down a little in the short-term – at this point it’ll be more the bank’s property than yours anyhow.
Congratulations! Always a wonderful thing to hear a person say.
If someone wants an investment there are ones with better ROIs than your primary residence. For the majority of people a house is where you live your life, and if it’s creating a burden on your life it’s time for a change.
That said, a lot of Boomers who were planning on shedding that burden and downsizing as they enter retirement will also be affected by a downturn even if it isn’t a ruinous one. They might end up staying in that expensive-to-maintain and mostly underutilised McMansion a few years longer than they thought.
Absolutely. The cost of living in Austin is low compared to most tech hubs in the US. Even Dallas and Houston have a (slightly) higher cost of living than Austin.
The problem is that it takes obscene amounts of money just to buy one modest house now. All those engineers who came into Apple and Google making $100K starting pay have quickly gone from being able to afford a house of their choice, to that being the minimum income required to buy any house, to now being “low income” for housing purposes. Corporate entities may be buying multiple houses, but I’m not sure a lot of people are (and the corporate entities would have to be fairly large to afford it). The people I know who own multiple properties bought them in the '80s or earlier.
The number of rentals in my lower-income neighborhood seems to have decreased - increasingly it’s owner-occupied houses, with the owners more likely to be renting out rooms/outbuildings/driveways (for campers) to afford the mortgages.
Agreed on the CA market. My understanding is that people who really do make tons of money are willing to pay through the nose for anything, which is driving up the price on everything else. I figure that will drive out lots of sellers who jack their prices but don’t get the Golden Ticket of a stupidly-wealthy clientele…
That is the way to go at it, people in the last decade were buying short term assuming it would go up forever. That said, you have to look at more than mortgage to compare to renting, especially if you’re buying a place with high taxes after a turnover (perhaps I’m misunderstanding CA prop 13 taxes).
It’s funny, I own rental property, and the deductibility of nearly anything makes the numbers work better than homeowning. It would take nerve, but making a pact with someone else to rent each other’s homes seems like it would have a great upside. All your taxes, interest payments, home improvements and maintenance would be either deductible or depreciable. The only thing I can’t deduct is loan capital payments and summonses.
San Jose and environs never really got cheap, even in the 2008-9 downturn. Sure, prices went down, but they were still stratospheric by national standards.
Yeah, exactly. After the downturn, some people were talking about how housing prices would level out - but they went right back up, and then got even worse.
A year and a half ago, two houses on my street sold for WAY over the asking price. So my landlord declined to renew my lease that year. But, there’s apparently a huge tax burden in my county if you turn around and immediately sell a home that’s been used as a rental property, so it’s been sitting vacant and untouched all that time.
Last week I noticed they’ve replaced the roof, and my old neighbor says they’ve been hauling carpet out. I’m gonna laugh if they complete all these expensive renovations and then the market tanks on them.
Kind of… as some one whose family was pushed out of S. Austin I’m not so sure. Same with the east. It’s affordable compared to what you might pay for San Francisco but probably not affordable for what most people make here save for people who come in for… high paid tech jobs. The far north of the city however, is pretty damned affordable still. You don’t get that cheap but trendy new condo look… but… eh… did you want it? That being said you also don’t get… much consideration for bikes, pedestrians, anything really. So it’s kind of a this or that situation.
It’s the same here in Denver - it’s mostly owner-occupants. It’s the renters from out-of-state that like to turn their housing into drug factories and markets.
Yep! I bought this $#!thole with the original plan of bringing it * just * up to code and selling it to move up and out, but then the bubble burst. Boo-hoo, I had to live in house so small, my winter heating bill is in the high…double-digits. Now, it’s worth 2 & 1/2 times more than it was right before the last crash, and I’ve been upgrading way past * just * up to code. The market price is just an academic argument until I actually sell, which, now that I have good windows and a tiled bathroom, might be never.
The neighborhood is improving as the worst residents inherit their parents’ house they never moved out of and sell for it for quick weed money.
Cory posts this article about once every nine months. Housing prices aren’t going to retreat in any major way without regulation or a major economic restructuring. Property in desirable urban areas will always be scarce and until the economy can provide more attractive opportunities for an insane amount of liquid private capital, or we take that capital away from private owners, prices will not “implode.”
I don’t see it happening much here cause of the zoning not allowing for apartments or even duplexes in much of the area.
Doubly so for living next to the new end of the light rail line. While I am happy I can sell for a good profit when it comes time I feel sad that all the people who really need the public transport can’t afford to live next to it.
