Housing Bubble

[RLflutie7]

When you're in the fastest growing state in the USA, yeah, they do.  Supply & Demand.  More people moving to Nevada, homes will cost more until enough are built or people go back to where they came from...or they all gamble away their $ and get foreclosed on.

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Vegas might be the exception along with Florida, Phoenix, and/or the Sunbelt as a whole because like you said supply and demand. More people are moving there and transfering home equity to the sunbelt. That would drive up prices for sure.

 

But Clark County Nevada has been growing like that for ten years +. And the biggest home building companies have been throwing up houses like crazy, chewing up the desert.

 

The spike in price, historically speaking, can't be justified regardless of population growth.

[Gavin in Va Beach]

When you're in the fastest growing state in the USA, yeah, they do.  Supply & Demand.  More people moving to Nevada, homes will cost more until enough are built or people go back to where they came from...or they all gamble away their $ and get foreclosed on.

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The interest only mortgages and other creative ways to get people to buy houses they couldn't really afford hyper-inflated the housing market much, much more than it would have gone up ordinarily. Those plans might work for those who want to flip houses in a hot market, but for people who just wanted the normal mortgages it stands to reason that they are feeling screwed that they can no longer afford a decent house.

[finknottle]

There are other things to consider. Thoughts?

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Rather than just doling out winners and losers, a collapse in the housing market effects the overall economy in a way that might not be obvious. When prices fall sharply, people are not able to downsize their housing (banks won't let you sell unless you can recover the outstanding balance), and have difficulty obtaining a second mortgage. This forces those who are financially distressed to reduce their discretionary spending in favor of their mortgage. If widespread enough, this can slow-down the economy and nudge it towards a recession.

[Acantha]

I have a realtor friend who works in and around the Charlotte area. She says they are expecting around 70,000 foreclosures next year, mostly due to interest only loans and the like. (I didn't ask specifics, but I was assuming she meant NC, not just her area)

 

I am moving to Hawaii at the end of the year, and was planning on buying my first home. The more I think about it, the more I think I may wait another couple/few years. Maybe even take advantage of the foreclosures if it looks like that's how things are going.

[Chef Jim]

I'm sorry I didn't explain myself well enough. I wrote the message at 1:30 a.m so I must have been tired.

 

Back around 1999 I predicted, like many others, that the stock market would crash because internet stocks were BS. I used to watch CNBC all day back then and the total BS that was coming out of that channel was unbelievable.

 

And I knew it was BS at the time, yet most people, especially educated folks, seemed to go along with it. "It" being a ponzi scheme stock market. Accounting fraud etc etc.

 

Many people here said I was an idiot and a "Negative Nancy" because, according to them, the economy was "the strongest that it's ever been".

 

But over the course of time, I was right. The dot.com meltdown happened and the Enron and MCI worldcoms took many people to task.

 

I don't want that to happen in the housing market but I think it will. I don't think there's going to be a "soft landing" here. It won't hurt me directly, but it will in the long run. These prices hurt the family man and/or family structure and put them at risk. I don't have a family so it won't hurt me. All I'm saying is let's get it over with.

 

Basically I'm tired of the BS and this situation is going to be so painful for the average guy. Yea, you have winners and losers but the losers far outweigh the number of winners.

 

Back in 2001 I saw brand new homes in Las Vegas (by Sam Boyd Stadium) being sold for $70K. Now those same homes are about $300K. It's BS. Salaries in that area haven't gone up that much. And home prices don't go up 4 times in 5 years.

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So real estate sucks and the stock market sucks. You must have one very lumpy matress.

[Pine Barrens Mafia]

I still don't get the original post's title "I hope the market crashes".  What benefit does RL get if the market crashes?  Is he just a miserable guy who wants to see people suffer, mad at the people who have cashed in on the high prices, or hoping to pick something up cheap-which won't be any easier than now if higher interest rates cause lower prices?  What is his point?

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I have an interest. I'm waiting until interest rates spike and all those people who over-bought with interest-only loans are desperate to bail. Good deals.

[finknottle]

I have an interest. I'm waiting until interest rates spike and all those people who over-bought with interest-only loans are desperate to bail. Good deals.

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I agree in principal. The annoying thing is that many of those who would otherwise sell at a loss cannot because the banks will not let them unless they can cover the mortgage. So it's a foreclose-or-nothing situation. This is part of the reason you almost never see steep declines in house values. A slump is reflected less in prices than in the time-on-market.

[RLflutie7]

I agree in principal. The annoying thing is that many of those who would otherwise sell at a loss cannot because the banks will not let them unless they can cover the mortgage.  So it's a foreclose-or-nothing situation.  This is part of the reason you almost never see steep declines in house values.  A slump is reflected less in prices than in the time-on-market.

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I always wondered why people would go into forclosure.

 

Why do banks to that?

 

I can see back in the day people would just file bankruptcy if the debt wasn't secured. But now people couldn't walk away from the remaining debt in a bankruptcy.

 

And what about those people that want to buy your house before foreclosure? What's in it for them? And do banks hate the practice?

[X. Benedict]

You're talking about New Orleans, which makes me wonder: when you refer to 30 pounds of chocolate are you referring to candy or a local two-year-old?

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Depends on which mayor you're talking to.

[Alaska Darin]

And what about those people that want to buy your house before foreclosure? What's in it for them? And do banks hate the practice?

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Generally what's in it for them is your equity (if you don't have any equity, for the most part they won't touch it). Banks hate it because they'd like that equity for themselves.

[IDBillzFan]

We happened to walk by a bank-owned house for sale near downtown Brea, which is a very nice community in Orange County. It was billed as a cul de sac home, but in reality it was on a street that dead ends to dirt and a metal blockade about 30 yards from (and in total view of) the main, heavy-traffic road, Imperial Highway.

 

Two bedroom, 1 bath with a total of 812 sq.ft.

 

Price: Half a million.

 

And they'll get it, too, which is unfortunate because after reading this thread I realized that the main reason RLFlutie can't wait for everyone to suffer from a burst housing bubble is so he can tell everyone he was right.

[RLflutie7]

We happened to walk by a bank-owned house for sale near downtown Brea, which is a very nice community in Orange County. It was billed as a cul de sac home, but in reality it was on a street that dead ends to dirt and a metal blockade about 30 yards from (and in total view of) the main, heavy-traffic road, Imperial Highway.

 

Two bedroom, 1 bath with a total of 812 sq.ft.

 

Price: Half a million.

 

And they'll get it, too, which is unfortunate because after reading this thread I realized that the main reason RLFlutie can't wait for everyone to suffer from a burst housing bubble is so he can tell everyone he was right.

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Not true at all LABillzFan. Telling people I was right doesn't serve a purpose bacause it's all over the internet. So it's not my idea. I'm just repeating what I heard on TV and read on the internet.

 

Most of these housing bubble blogs were started by young people. Maybe because they don't want to bail out a bunch of rich a-holes who want to retire on their real estate because they lived beyond their means and didn't save money for retirement.

 

I'm sure you've heard of that LA.

 

People in LA selling their 1.5 million dollar home and moving to a cheaper area and instant retirement. By the way, where are LA people getting the money to buy. The demographic changes should have changed all that. How are mexicans getting the money?

[IDBillzFan]

How are mexicans getting the money?

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How do you THINK the Mexicans are getting their money? Plus, they pool it together, which is where the reality of multiple Mexican families in a single home comes from. At least they're finally paying some assemblance of taxes.

 

Also, banks will lend money to anyone at this point, and therein lies the larger problem. We actually have an ad running on the lone radio station I listen to here and the opening line, literally, is "Does your credit suck? If so, don't worry. We can help you get a mortgage or cash out on your house."

 

Not sure how this plays into the original concept of the thread, but it answers your question, nonetheless.

[Marshmallow]

What makes housing affordable for tenants in NYC is rent control & rent stabilization.  There are many people paying well under market rents because of these 2 forms of "afordable housing"  measures.  There are actual death watch people who are out there hunting down apartments of the recently departed because the rents on some of these units are low & can't be raised too much.  Housing in NYC is much more affordable for some people than it is in the suburbs.  As long as one is a renter instead of an owner, housing in Manhattan can in fact be very affordable.

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Getting one of those apartments is almost impossible. I've been here almost 7 years and I have yet to meet someone who lives in a rent-stabilized apartment. You're comparing a very, very small minority in the city to all of the suburbs.

 

The rest of us pay in the range of $3000 a month for a decent 1 bedroom, $4000 a month for a 2 bedroom (which is probably just a 1 bedroom converted into a two bedroom. Who's paying rent like that in the suburbs?

[ATBNG]

Getting one of those apartments is almost impossible. I've been here almost 7 years and I have yet to meet someone who lives in a rent-stabilized apartment. You're comparing a very, very small minority in the city to all of the suburbs.

 

The rest of us pay in the range of $3000 a month for a decent 1 bedroom, $4000 a month for a 2 bedroom (which is probably just a 1 bedroom converted into a two bedroom. Who's paying rent like that in the suburbs?

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Exactly. Rent control raises rents for everyone that doesn't get hooked into a rent control unit. Manhattan is a perfect example of that. Can't imagine there are many places in the US (maybe Honolulu?) that have higher rents than Manhattan.

[RLflutie7]

Exactly. Rent control raises rents for everyone that doesn't get hooked into a rent control unit. Manhattan is a perfect example of that. Can't imagine there are many places in the US (maybe Honolulu?) that have higher rents than Manhattan.

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Then why would anyone want to live in Manhattan. I don't want to sound mean, but it's something I never understood. It seems to me that so many people would never be able to afford to live there regardless of income increases.

 

And it's also why I like Phoenix Arizona so well. But high price housing is taking over Phoenix and I don't live there anymore. Phoenix to me had all the stuff you would like about a big city but with the small town charm.

[Bill from NYC]

Then why would anyone want to live in Manhattan. I don't want to sound mean, but it's something I never understood.

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I don't know.....tens of thousands of hot women, the best food in the world, no need to own a car, night life, something to do 24 hours a day, lots of jobs, great medical care, great colleges, etc.

 

If you have cash and enjoy city life, Manhattan is the place to be, especially if you are young. My daughter now lives there. Do you think she is complaining?

[Pine Barrens Mafia]

no need to own a car

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This is huge, just huge. Cars are ridiculous in how much money they waste over their lifetime via insurance, depreciation, fuel, maintenance and repair.

[GG]

I don't know.....tens of thousands of hot women, the best food in the world, no need to own a car, night life, something to do 24 hours a day, lots of jobs, great medical care, great colleges, etc.

 

If you have cash and enjoy city life, Manhattan is the place to be, especially if you are young. My daughter now lives there. Do you think she is complaining?

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And this is the real answer. It's a friggin tiny island that attracts a lot of people who would rather die than live anywhere else. Hell, they get hives if they realize they're on a bridge or tunnel heading out.

 

Still, if I was a youngen, I'd probably cast my lot to Brooklyn.

[Bill from NYC]

And this is the real answer.  It's a friggin tiny island that attracts a lot of people who would rather die than live anywhere else.  Hell, they get hives if they realize they're on a bridge or tunnel heading out. 

 

Still, if I was a youngen, I'd probably cast my lot to Brooklyn.

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Where, Williamsburgh? Much of Brooklyn (although it too is improving) is still a horror show. Manhattan gets better as we speak (if you are young and have education/cash).

 

I will always prefer the borough of Queens to Brooklyn.