Is Economy Doing Well?

[Michael S]

From my experience with trying to get maximum rents, there are several types of tenants who can afford it. One is those who don't want to buy a home with good credit which is not common and will move in few years. Then there are multiple people who can share the rent to keep it affordable. And then there are Section 8 which government subsidizes. Good long term tenants are hard to find and I willing to give them a break to stay.

I'm in that first category. We'll probably buy a house in a couple of years after I save up for a while, but until then we'll rent. I posted an ad on Craigslist looking for a rental that would fit my needs and price range and advertised that I could provide multiple references from previous landlords that I had always paid on time and left the homes in good condition. Got lucky and found a local landlord that offered me lower rent than I was paying for a larger house, plus they covered the water/sewer/garbage (about $75 a month on average). Plus they've been very responsive when issues have come up and haven't balked at replacing things if necessary. So far they've replaced the washer, dryer, and dishwasher - all of which I suspect came with the house when they bought it as a foreclosure 4-5 years before. Much different experience from the absentee owner and management company who I had to sue in small claims court after waiting months for repairs and then months more for reimbursement when I finally paid out of pocket to get it done myself.

I've appraised and surveyed a lot of properties where the long term tenant had below-market rent and the (almost always local) landlord will state that they'd rather keep a good tenant at a lower rent then deal with turnover and vacancy to get a higher rent.

 

[OSU Beavers]

The economy is only buoyed by the nearly free money consumers can now borrow. Hillary's Bilderberg friends are not happy with the lack of interest their wealth is earning while prices continue to rise. The American energy boom was the only thing keeping inflation in check. After the election rates will finally be allowed to rise, while the Left's green policies will destroy any domestic energy advantage we have. Hillary may take the title of "Food Stamp President" away from Obama!

 

[Randolph Kinney]

According to the California Association of Realtors (CAR) and their Housing Affordability Index, only 34% of households can buy at the current interest rate.

Because of these high home costs reports by Beacon Economics show a large exodus of low and middle class residents. In a 7-year span leading up to 2014 around 625,000 residents have left the state. This is despite the California boasting some of the highest wage and job growth rates in the country.

Housing market prices in CA have resulted in homeownership rates to be lower than most states. Two disturbing stats: a year ago California ranked next to last in the nation in homeownership (54%), and those who did own a home spent a quarter of their income on housing costs (the highest in the country).

http://www.housingpredictor.com/2016-california-housing-market/

 

[Randolph Kinney]

When interest rates go back up, there will be a crash in the California housing market.

 

[Terrel L. Shields]

Two disturbing stats: a year ago California ranked next to last in the nation in homeownership (54%), and those who did own a home spent a quarter of their income on housing costs (the highest in the country).

Doesn't this leave a state which is hollowing out the middle? The very poor subsidized by government and the very rich willing to pay more because they make more and more. That seems a recipe for cyclical ups and downs. The next "bust" in RE is likely to be more like the late 90s when the high tech areas crashed and the rest of the nation was saying "WTF?"...

CNBC yesterday discussed the fact that the most rapid increases in home prices (hence most likely to crash) were high tech areas like Silicon Valley, Seattle, and Austin. Being a "black swan" pessimist - what happens if a large quake strikes the West Coast or NWP? A volcano? Tsunami?
http://www.seattletimes.com/seattle...nami-waves-up-to-100-feet-now-seems-possible/
http://www.earthmagazine.org/article/pacific-northwest-earthquake-threat-heightened
http://www.businessinsider.com/americas-most-dangerous-volcanoes-2014-9
It might make residents think twice about "value" in such areas.

 

[Meandering]

Doesn't this leave a state which is hollowing out the middle? The very poor subsidized by government and the very rich willing to pay more because they make more and more. .

Government test market, for "going green"

 

[Randolph Kinney]

The Greater Fool Theory is when the price of a good is not determined by rational economic conditions, but rather by irrational beliefs and expectations of market participants. We have to constantly question ourselves if the valuations are justified or whether it is a case of a buy high, sell higher, otherwise known as the Greater Fool Theory.

Bay Area Real Estate​

 

[Meandering]

That looks like a graph of the 2007 Residential Real Estate Market


Great visualization Randolph.



.

 

[normando]

Doesn't this leave a state which is hollowing out the middle? The very poor subsidized by government and the very rich willing to pay more because they make more and more. That seems a recipe for cyclical ups and downs. The next "bust" in RE is likely to be more like the late 90s when the high tech areas crashed and the rest of the nation was saying "WTF?"...

CNBC yesterday discussed the fact that the most rapid increases in home prices (hence most likely to crash) were high tech areas like Silicon Valley, Seattle, and Austin. Being a "black swan" pessimist - what happens if a large quake strikes the West Coast or NWP? A volcano? Tsunami?
http://www.seattletimes.com/seattle...nami-waves-up-to-100-feet-now-seems-possible/
http://www.earthmagazine.org/article/pacific-northwest-earthquake-threat-heightened
http://www.businessinsider.com/americas-most-dangerous-volcanoes-2014-9
It might make residents think twice about "value" in such areas.

I have lived through the ups and downs of Silicon Valley and housing there NEVER crashed. Even during the recent Great Recession, prices may have gone down a bit but not like 50% experienced in lower income areas. High tech companies come (Tesla, Google, Microsoft, Box, Salesforce, Linkin) and go (Lycos, AltaVista, Netscape, Excite, AOL). Good jobs and good schools attract talented people all over the world. No place like a free market to innovate for Americans and Immigrants. I don't know what CNBC is talking. Just scaring people.

 

[Terrel L. Shields]

prices may have gone down a bit

That's all it takes to put people under and it happened in 1999 with the dotcom bubble. But leading up to that crash people were bidding 20% above asking.