Californians will the housing bubble burst? Weigh in w/your thoughts...

[bliss_eternal]

What do you think? :hi:

I read an interesting editorial (from a site yorkiemommie told me about), that showed that the number of people taking the realtor exams in CA is way up. The last time it was like this, was just prior to our last housing bubble bursting. Interesting observation.

Anyway, what do you think? :think:

San Diegans, Los Angelenos, San Franciscans and other Bay Area residents--what are your thoughts on this?

(These are probably the most inflated and difficult housing markets to buy into right now, that's why I specifically stated them.)

[wtmusic]

1. Yes

Not a burst really, but an extended period of sagging prices.

[bliss_eternal]

3. So, do you think the market will become more affordable

for the rest of us minions? LOL!

In my area, I've already noticed that homes aren't being 'snatched up' as quickly as even a year ago.

A year ago, before a home even hit the market, there were 10 bids on it. :crazy: Now, I'm seeing open houses go on for weeks. Some homes that had 'for sale' signs have switched to 'for rent' in recent months as well.

Times they are a'changin'...

[wtmusic]

5. It seems like if you can wait

for a year or two you could probably save some money. Just a hunch. I've bought two homes here and have done OK with both of them.

[bliss_eternal]

8. Did you buy during the down times? When the market wasn't

as crazy, price wise?

Glad to hear that someone here was able to get a home and do well! Good for you!
:woohoo:

[wtmusic]

14. At the time they seemed expensive

and you never really know when the "down times" are until afterward ;).

That said, it's general consensus that there isn't a lot of room for prices to move higher, in the short term.

This graph may give you an idea:

http://www.realestateabc.com/graphs/calmedian.htm

I bought in '87 and '94.

[cascadiance]

18. That's kinda what happened in San Jose after dotcom bust...

An extended period of "trickling down". Many people moved out of there then (including me), as it didn't drop enough for us to want to buy into it, but many wouldn't sell for a steep loss either, so it was a "slow drop".

I think there still are some factors that could send it down more quickly though:

1) Bankruptcy bill - If anything makes it so that people face an even greater sense of loss or risk of loss, this will dry up demand more than usual that we would have faced in other times. Before they have some insulation from financial disaster. Now they don't.
2) a significant earthquake or other similarly scoped natural disaster in one of the major metro areas (L.A., San Diego, Bay Area), would probably significantly drop prices in that area quite a bit at least, and might affect the others if the perception is that such earthquakes could affect the other areas in a similar way, adding to the risk perceived in making such an investment.

[Son of California]

2. I don't think the housing bubble will burst

as long as there are all these people moving to California.
Man, I grew up in a small town little more than an hrs drive East of SF, and damn are we crowded right now.

[bliss_eternal]

6. I'm sorry to hear that. It makes it tough for those that

have grown up in areas to continue on in the same area and find affordable homes--that aren't packed in tight, creating over crowded communities.

Edited to correct typo.

[chaumont58]

12. True

People moving in keep the demand higher than it would be otherwise. Low interest rates mean people who wouldn't otherwise qualify can get a large mortgage. Creative financing means low interest rates, more arms. But will there be continued job growth to handle the people moving in? I don't know. I read something on Atrios' blog sometime back about a large number of arms coming due in 2007. There are some reports of the San Diego area market softening. The same perhaps for the Sacramento market.
Whatever, I'm glad I'm on the sidelines.

[the other one]

4. Most new jobs are related to real estate

Not just real estate agent. Construction jobs, naturally, but retail jobs in the Lowes and Home Depots, appliance stores, furniture stores, carpet and flooring stores. How many people bought a new computer to put in that home? And internet access, and cable tv and a couple of phone lines? And how many cars were purchased with money from re-fi's? One could make the argument that a downturn in housing will affect just about every industry.

[bliss_eternal]

7. Good point, it definitely would.

Some realtors and homeowners that have overextended themselves for the 'good investment' of property, could go bust. (hope they don't, though). I recall the housing BUST of the 80's, many people in CA lost their homes...very sad.

Banks would do well, but when don't they? LOL!

[HockeyMom]

9. New York Metro area is right behind California

[Gyre]

10. I think it depends on whether housing cost has outstripped

the ability of enough people to buy in that locale. San Francisco; probably not, Los Angeles; yes, Sacramento; yes. Napa Valley; not, Palo Alto; probably not. Basically, bubbles do exist in the less desiable areas because they can't attract enough big-money earners to buy the inflated houses there. In California it isn't like the entire state's housing market is susceptible. But it is where the prices have risen very fast in the later stage of this latest round of price increases. The markets that are thought to be safe are those that were high to start with.

Gyre

[NV Whino]

11. I'm not sure what constitutes a bust, but

here in the Napa Valley there are more and more homes for sale and on the market for longer periods of time.

The thing that has really interested me, however, as a renter, is how many for rent signs there are. 20 years ago when I moved here you could only find a rental through word of mouth--knowing some one who knew some one. For the last 3 or 4 years more and more rental signs have sprouted.

[bliss_eternal]

13. Wow--sounds like there are a lot of realtors

or at least real estate investors in your area. They buy homes, then put them up for rent. Smart business wise, but not if it is an area where people tend to settle more and not as much interest for rentals. Or at least that's my theory--for whatever that's worth. LOL!

I've noticed similar trends down here. I'm near a beach community. Lot more rentals lately than sales. Or the sales are converting to rentals from lack of interest.

[NV Whino]

20. Part of the rental problem is

the extremely high rents. We poor working slobs can't afford to rent in the area where we work. I call it the Aspen syndrome. I first witnessed it there. All the people who keep the high-priced resort running can't afford to live there. In this case, the economy hits the toilet, visitors (and short term rentals) are off. Investors are left with lots of (empty) expensive rentals because the working folks all rent in an unattractive town 40 miles away where they can afford the rent.

[mitchtv]

15. interesting Paul Krugman op ed on the subject

http://www.nytimes.com/2005/08/08/opinion/08krugman.html?pagewanted=print
In my end one of the fastest growing parts of the state, Coachella Valley things are starting to sit longer. I hope the speculators who drive up the prices lose their shirts.There is loads of new constrution.

[Oerdin]

17. Coachella is in the desert

and as such is a very undesirable area. The desirable areas will have the highest demand and so will do better then the undesirable areas.

[mitchtv]

22. you can buy a new house for 300k out there

Indio 350k
Indian wells 800k
la Quinta 375K
Rancho Mirage 500K
Cathedral City 360K
Palm Springs 475K
Desert Hot Springs 300K
This is what you can expext to pay for a new middle of the road house in the various Valley communitites. As you can see, there is somthing for everyone ,There has been much speculation putting it in the top two places for growth (desert land is cheap). Many are second homes. All of Riverside Co. is "Bubbling over"

[yorkiemommie1]

16. our local realtor

distributes a weekly newsletter, and wrote the the ' market is slowing down as interest rates have crept up... buyers having hard tiem qualifying and the number of homes for sale is slowly increasing... notes that the open house directory in our paper is almost 2 pages up from less than 1 page two months ago.'





when i look around and see DUMPS going for almost 700k i shudder.
the only way my daughter will ever be able to own in this middle class city is if she either marries a millionaire, or inherits our house. which she will, but i don't plan on exiting any time soon!

[bemildred]

19. I would not buy now.

Prediction is a mugs game, but the odds on further large increases seem long. Much depends on locality.

[hecate77]

21. Market will just flatten, but prices will not come down much if at all

The thing is, there are more and more people wanting to live here. I don't expect the prices to keep going up, but I do expect them to flatten, or maybe even drop a little bit. More likely than not, the result will be longer times for homes to sell, and maybe some of the less desirable property will drop a little.

Our home has almost tripled in value since we bought it in 1998. Even if it gave back some of that gain, we would still be sitting on a huge equity stake. I think right now we have almost 75% equity, and we still have 25 years to go on the mortgage!

The real problem will be people who are just buying now and then are forced to sell. Those folks might lose a bit (if only because of realtor fees and such), but those who stay in their homes for even a few years will not be hurt by a slowdown.

We're in the Santa Cruz area, south of San Francisco.