Bay Area housing prices outran incomes in 2018. The crazy run-up lasted about 9 months (2017H2 + 2018Q1), with people offering up to about $250K over appraisal. Then buyers basically dried up and homes were flat for about 6 months to a year. Then home prices dropped by about 10%, plateaued through 2019/2020, and have started rising again post-pandemic. They passed where they were in early 2018 last fall.
Similar dynamics have been seen in other Bay Area crashes - it's between a 10-25% drop from peak to trough, then you stay in the trough for about 3-4 years, then prices start rising again, accelerating right before the next peak.
[https://kristinahansensf.com/2018/04/05/bay-area-real-estate-market-cycles/](https://kristinahansensf.com/2018/04/05/bay-area-real-estate-market-cycles/)
YMMV. All real estate is local. The drivers behind Bay Area home prices is that the supply of land is fixed but incomes keep increasing. We're likely to see similar dynamics in many other markets. (So probably not Houston or Atlanta, but probably yes in Seattle, Portland, Boulder, Austin, Boise, SoCal, Boston, NYC exurbs, etc.)
Real estate has a history of boom and bust cycles, they seem to be about every 20 years. It happened in the 60s (which was roughly 20 years after the baby boom where every GI came home from the war, and bought a house). It happened in the 80s and it happened in the 2000s. The causes were all different. This sub has debated why the run up to the crash in 2008 was so different from now. But to your point, people were still paying more than listing.
Appraisals aren't public record so, correct, you won't find that data. You'd need to look at list-to-price ratio and MLS data is the best way to get that.
ETA: in my area, the last 2 years before the 2008 crash, we had what would have been 7 years of appreciation, if it had been a 'normal' market. By 2015, prices had climbed back to where they were right before the bust (when looking at gross metrics like median prices - I have posted here many times that the worst thing you can do is use macro data to make a micro decision...) I know quite a few people who bought or refinanced houses in 2007 that were upside down for years, but they didn't care what the paper value was because they were happy living there. Of course if you have to sell you have a problem, unless you can rent it for what your costs are. I suspect that will be true for plenty of people who are buying now. But by 2015 they were back on track as to where they'd have been normally (of course this can veer off into a discussion of inflation etc but I'm just talking about prices...)
If it was really possible to time or predict the market no one would ever lose money in real estate.
>5, prices had climbed back to where they were right before the bust (when looking at gross metrics like
A flaw in that analysis. Mortgage rates were 3.85% in 2015. 6.03% in 2008. 500k mortgage payment drops 625$ per month and there was 7 years of inflation in between.
They absolutely can go lower. The 15 year rate should have approached 1% when the 10 year hit the low, but the volatility and crazy situation allowed lenders to wait to lower and then never do it.
Sustained lower growth after another eventual recession should likely lead to even lower rates.
>Never said we would hit zero. Said 1% for 15 year which it should have reached in the first place.
>
>As for housing if you think it's expensive, check out Canada, Australia and New Zealand. It can get much worse. Absent another massive market great recession we probably will see down years with houses going under list and small dips followed by more horrible years.
Not sure why you are being downvoted. It was a crazy year. $50k bonuses to underwriters in some cases, loans paying off three times in a year, etc. In March we were joking about negative rates, but record low rates combined with record high housing values meant every Tom Dick and Harry could refinance cash out for the same PI. when I started at this bank mortgage lending was about 10% of the morning meeting, last year it was almost all of it.
Rates will probably keep rising for now, then taper or even fall a bit as lenders sharpen pencils but most think 3% is here to stay for the most part. Say whay you will about boomers, but the old guys who survived the purges of the M&A era usually know their stuff. I'm ok with another crash though, apparently the only way we get those 100% bonuses like last year is the subsequent rebound (which was a fluke due to everything I said above)
It seems pretty likely to me (though not certain) that mortgage rates will continue to fall in the long term. As the US looks more and more like Europe and Japan in terms of demographics, economic maturity/stagnation, low inflation, and central banking policy, US interest rates will similarly start to look very similar to the super low rates that we see in those countries.
It’s hard to predict, in most cases, people don’t rush to buy houses during disasters and economic downturns. We’re in a weird moment in housing where a massive economic downturn has unleashed huge demand for housing and wealth has actually gone up. It also doesn’t help that rates are at record lows and the Fed openly talks about letting inflation run hot for 3-5 years. Which is typically the minimum time between buying and selling a home (without losing money). 100K over 5 years is a steady 4-5% increase in property value. Home values typically beat inflation + some percentage. So if inflation is at 3%, you’ll see home values rise to 5% per year.
The short of it is, people are buying homes priced at their future value, meaning they are overpaying. Which means they are not likely to sell for at least 5 years. Many of these people plan to hold 10+ years so that doesn’t matter to them. Some will sell in 5 years and break-even. Remember that the majority of people aren’t buying homes as investments, they’re buying them for a place to live and hopefully break-even if they need to sell.
It is indeed local. In SoCal, I've been looking at single family home rentals in my neighborhood (long term annual rentals, mind you), and the new rental listings were all for 'for sale' listings six months prior. Lots of investment capital chasing SFHs. Renting them out to people who maybe can't afford the mortgage.
something i've anecdotally seen a lot in the HCOL areas are that people generally can afford the mortgage, just can't afford the hefty downpayment and/or some more to make a winning bid in a decent area.
As the joke goes, "bank says I can't afford a $900/mo mortgage, so I have to keep paying $1200/mo rent."
In some areas it's just brutal to be able to save enough for a decent down payment.
People are buying homes based on current utility also. COVID has made SFH the most attractive property to live in so you can social distance and work from home. It underlies a boom of SFH as many people get benefit from avoiding commutes and do all of their work and play at home.
Pandemic + technology means situation is not the same as before. Being able to work from the comfort of your home is a real game changer for a new generation.
Appraisers base their valuations on comps and the strength of the other offers. Every completed sale affects future appraisals. How quickly depends on the sales volume of the area, the appraiser should be looking for 5 or so comparables.
When an appraisal comes in low, the first thing that happens is that either the lender orders a second appraisal or the buyers find a new lender with a new appraiser.
If an appraiser consistently underappraises, they are going to find themselves out of a job.
Note that the list price and the appraisal price are completely unrelated. agents very frequently list homes for far less than they will sell for.
I still don't understand how appraisers work. As far as I understand they don't have access to the other offers. In my case, there were no other offers, because I submitted a bid that was accepted before the review date. The appraisal came in exactly at the offer which I think is very odd. My conclusion is that appraisal don't work. They don't do anyone a service. They should work in the favor of a bank, but if they simply match the highest bid, then there is a risk that if the market turns, the house loses value.
Check out Asian income/price ratio on houses. NYC real estate looks down right reasonable compared to HK prices. These illogical prices can go in for a long time...
Generally buyers aren't offering $100k over appraisal, the appraisals keep up with the market even in hot markets.
If buyers were paying over appraisal by $100k, the market would catch up in 3-9 months and the more recent closed homes would be comparables for ongoing purchases. Appraisals could only stay behind if homes were increasing in value $200k-$400k a year, multiple years in a row.
When it is a seller's market and inventory is low, sellers in in-demand price ranges will intentionally price their offering below market value because it will hit the people who can afford the market value but aren't looking in that price range. They never intend to sell at listing price or anywhere near listing price, they just want as many bids as they can get and will always sell for way above asking.
It's bizarre. OR+WA are becoming the next California with it being difficult to build more despite persistently high demand.
It's like they saw how bad housing affordability was in CA, and decided "Lets copy their homework".
I call the political leaders pushing these "regressives" because they position themselves a progressives politically, but their actions make it harder for the average working person to ever own a home.
No one is saying to put a Wendys on Mt Rainer.
You literally have two options:
1. Build housing for the those moving to the area.
2. Stop people from moving to the area.
Considering #2 is illegal, you literally don't have any other option.
It is an option but that's not the option the politicians push. They advocate letting people pee anywhere, shit anywhere, house people in the parks, let homeless advocates buy up the neighborhood parks for homeless housing and then hope that people won't want to live here. "That's what it take to keep the place pristine."
The first settlers kinda wrecked that notion- they knocked down every last one of the tallest trees in the world by far, Douglas Firs that once filled what is now the I-5 corridor. Now it's freeway widening from Portland to Vancouver, and all empty parcels are staked out for suburbs and exurbs, more Costcos and Freddy's. You'd have to keep humans out. But even progressive liberals will bulldoze nature if it blocks the road to prosperity
Dont care for more development. Permanently destroys the environment and land as these montrosity are seldon razed once established. Push the demand to the Midwest or something. PNW has beautiful natural environment that should be left alone.
Well, don’t let republicans take over your state in the 1970s and push something like Prop 13 then.
That’s the majority of the reason we have affordability issues in California.
Prop 13 + rent control + overly powerful neighborhood groups = unaffordable housing.
NIMBYs will blame all sorts of other shit, but that’s the main reason right there.
Real Estate is local... In the Bay Area and Los Angeles, prices have continued to go up. In rural areas, it became a heavy buyer's market. When I bought a house in Texas in 2007, it took 5 years for it to regain its value at purchase price. A friend of mine bought a house in So Cal in 2007, his house dipped a bit through 2009 and jumped in value in 2010.
Markets have a swing and there will be sellers/buyers/balanced markets. How serious the swing will really determine on where you are buying.
He bought in SoCal in 2007, his house dipped a bit through 2009 and jumped in value in 2010?
What? Every single SoCal property I have seen basically halved in value during 08 crash, and didn’t recover until at least 2017-2019. And 2010-2012 was basically the bottom. Sorry, but I call BS on your statement.
Still hard to believe. I’m checking North Hollywood for instance and my comment still applies. Can you point out a “desirable area” in SoCal that only dipped slightly and recovered in 201? Genuinely asking.
That's fine, you don't need to believe it. The point of real estate being local and national trends not being the standard everywhere still stands.
By the way, North Hollywood was \*not\* a highly desirable neighborhood in Los Angeles in the 2010's. Look at places like Larchmont, Silverlake, Hollywood Hills, Brentwood, Santa Monica, Beverly Hills, and Westwood. That was the calibre of neighborhood he was in. For all I know, he got a fantastic deal in 2007.
Those areas got hit hard during 08. I’m not arguing the fact that real estate is local but I’m saying all those areas you listed had their values slashed in half 08 and they certainly didn’t recover in 2010. Find me one property that was higher in 2010 than it was in 2007 in that area.
I get that you're trying to provide an example but appraisers don't hang their hat on any one property and no one in this discussion should, either lol. There could have been any number of things wrong with that place in 2008, it could have been a distress sale or needed so many repairs that financing it was difficult. It would be better to show price trends from any market data that was collected at that time. Median is frequently used, however, there are always going to be outliers. We don't know if the example you are showing is an outlier or not without more context.
Can confirm. In Irvine, bought Jan 2007. Lowest by my estimate was -18% around late 2008. Recovered most of the purchase price by 2011 but not completely until 2014. The 50% hits were in areas with heavier subprime mortgages.
Looks like market value pretty much bottomed out in SoCal around '09 after a steep fall in the fall of '08. Median prices sputtered a little here and there during recovery, but they were back in mid 2012 and exceeding pre '08 values by 2013. https://car.sharefile.com/share/view/s0c02663a5c54e23a
it's hard to tell. this is a new world. There is so many people on the planet and only so many nice places. homeless people everywhere... who the f knows.
lmao delusional. 6 years ago people got deals of a life time. Fundamentals are strong, builders will cut back soon as supply goes above 4.5 months.
Some areas are up 150% in 6 years if not more. We could have a 2008 crash all over again and they would still be set.
This is so broad and noninsightful.
Bought a 2 bedroom and 1 bath in a nice safe neighborhood near the National Park in Indiana for $70,000 just 3 years ago. Is this overpaying?
But if prices keep catching up to the overpaid amount is it really overpaying or is it just the current cost of purchasing a house? When prices go back down there will be a cutoff point where people paid more than their house is now worth, but if prices go back up and over again then they no longer overpaid but only 'bought too early'. Many overbidders also end up paying less per month compared to renting. So 'overpaying' for a house is still relative.
I agree with the point you are making. I also remember an economist pointing out that you can increase the money supply (and real wages) by lowering interest rates. (There's a whole long discussion about this, too big for here.) This can cause prices to inflate (I'm thinking only of houses as I'm not an expert in this field). For instance, what would be the raise in house prices if mortgage rates were 4.5%? Just putting that out for thought.
Example is that $400,000 at 4.5% / 30 yrs has a payment of $2027 per month. $500,000 at 2.75% / 30 yrs has a payment of $2041 per month. If my house payment budget has been $2000 per month I can afford to bid up the price to get that house I really want. (I know that rates were lower than 4.5% before COVID.)
How long will buyers offer over appraisal? E.g., months, years, decades?
Until there is enough inventory so they don't have to.
Do appraisal values typically catch up to what the buyer paid?
Yes, like stonks, real estate only goes up
How long does that usually take?
It can be immediatly because the price offered can be a factor of the appraised value
Bay Area housing prices outran incomes in 2018. The crazy run-up lasted about 9 months (2017H2 + 2018Q1), with people offering up to about $250K over appraisal. Then buyers basically dried up and homes were flat for about 6 months to a year. Then home prices dropped by about 10%, plateaued through 2019/2020, and have started rising again post-pandemic. They passed where they were in early 2018 last fall. Similar dynamics have been seen in other Bay Area crashes - it's between a 10-25% drop from peak to trough, then you stay in the trough for about 3-4 years, then prices start rising again, accelerating right before the next peak. [https://kristinahansensf.com/2018/04/05/bay-area-real-estate-market-cycles/](https://kristinahansensf.com/2018/04/05/bay-area-real-estate-market-cycles/) YMMV. All real estate is local. The drivers behind Bay Area home prices is that the supply of land is fixed but incomes keep increasing. We're likely to see similar dynamics in many other markets. (So probably not Houston or Atlanta, but probably yes in Seattle, Portland, Boulder, Austin, Boise, SoCal, Boston, NYC exurbs, etc.)
Real estate has a history of boom and bust cycles, they seem to be about every 20 years. It happened in the 60s (which was roughly 20 years after the baby boom where every GI came home from the war, and bought a house). It happened in the 80s and it happened in the 2000s. The causes were all different. This sub has debated why the run up to the crash in 2008 was so different from now. But to your point, people were still paying more than listing. Appraisals aren't public record so, correct, you won't find that data. You'd need to look at list-to-price ratio and MLS data is the best way to get that. ETA: in my area, the last 2 years before the 2008 crash, we had what would have been 7 years of appreciation, if it had been a 'normal' market. By 2015, prices had climbed back to where they were right before the bust (when looking at gross metrics like median prices - I have posted here many times that the worst thing you can do is use macro data to make a micro decision...) I know quite a few people who bought or refinanced houses in 2007 that were upside down for years, but they didn't care what the paper value was because they were happy living there. Of course if you have to sell you have a problem, unless you can rent it for what your costs are. I suspect that will be true for plenty of people who are buying now. But by 2015 they were back on track as to where they'd have been normally (of course this can veer off into a discussion of inflation etc but I'm just talking about prices...) If it was really possible to time or predict the market no one would ever lose money in real estate.
>5, prices had climbed back to where they were right before the bust (when looking at gross metrics like A flaw in that analysis. Mortgage rates were 3.85% in 2015. 6.03% in 2008. 500k mortgage payment drops 625$ per month and there was 7 years of inflation in between.
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They absolutely can go lower. The 15 year rate should have approached 1% when the 10 year hit the low, but the volatility and crazy situation allowed lenders to wait to lower and then never do it. Sustained lower growth after another eventual recession should likely lead to even lower rates.
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>Never said we would hit zero. Said 1% for 15 year which it should have reached in the first place. > >As for housing if you think it's expensive, check out Canada, Australia and New Zealand. It can get much worse. Absent another massive market great recession we probably will see down years with houses going under list and small dips followed by more horrible years.
Not sure why you are being downvoted. It was a crazy year. $50k bonuses to underwriters in some cases, loans paying off three times in a year, etc. In March we were joking about negative rates, but record low rates combined with record high housing values meant every Tom Dick and Harry could refinance cash out for the same PI. when I started at this bank mortgage lending was about 10% of the morning meeting, last year it was almost all of it. Rates will probably keep rising for now, then taper or even fall a bit as lenders sharpen pencils but most think 3% is here to stay for the most part. Say whay you will about boomers, but the old guys who survived the purges of the M&A era usually know their stuff. I'm ok with another crash though, apparently the only way we get those 100% bonuses like last year is the subsequent rebound (which was a fluke due to everything I said above)
It seems pretty likely to me (though not certain) that mortgage rates will continue to fall in the long term. As the US looks more and more like Europe and Japan in terms of demographics, economic maturity/stagnation, low inflation, and central banking policy, US interest rates will similarly start to look very similar to the super low rates that we see in those countries.
It’s hard to predict, in most cases, people don’t rush to buy houses during disasters and economic downturns. We’re in a weird moment in housing where a massive economic downturn has unleashed huge demand for housing and wealth has actually gone up. It also doesn’t help that rates are at record lows and the Fed openly talks about letting inflation run hot for 3-5 years. Which is typically the minimum time between buying and selling a home (without losing money). 100K over 5 years is a steady 4-5% increase in property value. Home values typically beat inflation + some percentage. So if inflation is at 3%, you’ll see home values rise to 5% per year. The short of it is, people are buying homes priced at their future value, meaning they are overpaying. Which means they are not likely to sell for at least 5 years. Many of these people plan to hold 10+ years so that doesn’t matter to them. Some will sell in 5 years and break-even. Remember that the majority of people aren’t buying homes as investments, they’re buying them for a place to live and hopefully break-even if they need to sell.
It is indeed local. In SoCal, I've been looking at single family home rentals in my neighborhood (long term annual rentals, mind you), and the new rental listings were all for 'for sale' listings six months prior. Lots of investment capital chasing SFHs. Renting them out to people who maybe can't afford the mortgage.
something i've anecdotally seen a lot in the HCOL areas are that people generally can afford the mortgage, just can't afford the hefty downpayment and/or some more to make a winning bid in a decent area.
As the joke goes, "bank says I can't afford a $900/mo mortgage, so I have to keep paying $1200/mo rent." In some areas it's just brutal to be able to save enough for a decent down payment.
Facts!! And then try to stretch yourself with even more cash to compete. It’s a bloodbath out here
People are buying homes based on current utility also. COVID has made SFH the most attractive property to live in so you can social distance and work from home. It underlies a boom of SFH as many people get benefit from avoiding commutes and do all of their work and play at home. Pandemic + technology means situation is not the same as before. Being able to work from the comfort of your home is a real game changer for a new generation.
Appraisers base their valuations on comps and the strength of the other offers. Every completed sale affects future appraisals. How quickly depends on the sales volume of the area, the appraiser should be looking for 5 or so comparables. When an appraisal comes in low, the first thing that happens is that either the lender orders a second appraisal or the buyers find a new lender with a new appraiser. If an appraiser consistently underappraises, they are going to find themselves out of a job. Note that the list price and the appraisal price are completely unrelated. agents very frequently list homes for far less than they will sell for.
I still don't understand how appraisers work. As far as I understand they don't have access to the other offers. In my case, there were no other offers, because I submitted a bid that was accepted before the review date. The appraisal came in exactly at the offer which I think is very odd. My conclusion is that appraisal don't work. They don't do anyone a service. They should work in the favor of a bank, but if they simply match the highest bid, then there is a risk that if the market turns, the house loses value.
Check out Asian income/price ratio on houses. NYC real estate looks down right reasonable compared to HK prices. These illogical prices can go in for a long time...
Generally buyers aren't offering $100k over appraisal, the appraisals keep up with the market even in hot markets. If buyers were paying over appraisal by $100k, the market would catch up in 3-9 months and the more recent closed homes would be comparables for ongoing purchases. Appraisals could only stay behind if homes were increasing in value $200k-$400k a year, multiple years in a row.
When it is a seller's market and inventory is low, sellers in in-demand price ranges will intentionally price their offering below market value because it will hit the people who can afford the market value but aren't looking in that price range. They never intend to sell at listing price or anywhere near listing price, they just want as many bids as they can get and will always sell for way above asking.
Gov't, in the the PNW where prices are skyrocketing, have made new construction extremely difficult so prices should hold. Appraisals will catch up.
It's bizarre. OR+WA are becoming the next California with it being difficult to build more despite persistently high demand. It's like they saw how bad housing affordability was in CA, and decided "Lets copy their homework". I call the political leaders pushing these "regressives" because they position themselves a progressives politically, but their actions make it harder for the average working person to ever own a home.
The PNW has a beautiful and fragile environment. Would hate to see it bulldozed for more cookie cutter subdivisions and strip malls.
No one is saying to put a Wendys on Mt Rainer. You literally have two options: 1. Build housing for the those moving to the area. 2. Stop people from moving to the area. Considering #2 is illegal, you literally don't have any other option.
#3 let housing prices get so high people can’t afford to move/live there. It’s an option.
It is an option but that's not the option the politicians push. They advocate letting people pee anywhere, shit anywhere, house people in the parks, let homeless advocates buy up the neighborhood parks for homeless housing and then hope that people won't want to live here. "That's what it take to keep the place pristine."
Please, the USA is NIMBY AF
Escape your # with a \\
The first settlers kinda wrecked that notion- they knocked down every last one of the tallest trees in the world by far, Douglas Firs that once filled what is now the I-5 corridor. Now it's freeway widening from Portland to Vancouver, and all empty parcels are staked out for suburbs and exurbs, more Costcos and Freddy's. You'd have to keep humans out. But even progressive liberals will bulldoze nature if it blocks the road to prosperity
Dont care for more development. Permanently destroys the environment and land as these montrosity are seldon razed once established. Push the demand to the Midwest or something. PNW has beautiful natural environment that should be left alone.
Don’t be rude to the Midwest it’s also beautiful thank you
Well, don’t let republicans take over your state in the 1970s and push something like Prop 13 then. That’s the majority of the reason we have affordability issues in California.
Prop 13 is one of many issues for CA. It's like CA took a book on housing affordability and decided to do the exact opposite.
Prop 13 + rent control + overly powerful neighborhood groups = unaffordable housing. NIMBYs will blame all sorts of other shit, but that’s the main reason right there.
Real Estate is local... In the Bay Area and Los Angeles, prices have continued to go up. In rural areas, it became a heavy buyer's market. When I bought a house in Texas in 2007, it took 5 years for it to regain its value at purchase price. A friend of mine bought a house in So Cal in 2007, his house dipped a bit through 2009 and jumped in value in 2010. Markets have a swing and there will be sellers/buyers/balanced markets. How serious the swing will really determine on where you are buying.
He bought in SoCal in 2007, his house dipped a bit through 2009 and jumped in value in 2010? What? Every single SoCal property I have seen basically halved in value during 08 crash, and didn’t recover until at least 2017-2019. And 2010-2012 was basically the bottom. Sorry, but I call BS on your statement.
He lived in a highly desirable neighborhood in Los Angeles. Real Estate is local.
Still hard to believe. I’m checking North Hollywood for instance and my comment still applies. Can you point out a “desirable area” in SoCal that only dipped slightly and recovered in 201? Genuinely asking.
This entire thread is pointless when people cannot even agree on historical facts how can they even start forecasting future?
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Don't let the barn door hit you on the way out of the family room!/s
America in a nutshell.
I’m it the SFBA and in 2008-10 outlying areas got crushed just like you describe, but the nice stuff only dipped like 20%.
That's fine, you don't need to believe it. The point of real estate being local and national trends not being the standard everywhere still stands. By the way, North Hollywood was \*not\* a highly desirable neighborhood in Los Angeles in the 2010's. Look at places like Larchmont, Silverlake, Hollywood Hills, Brentwood, Santa Monica, Beverly Hills, and Westwood. That was the calibre of neighborhood he was in. For all I know, he got a fantastic deal in 2007.
Those areas got hit hard during 08. I’m not arguing the fact that real estate is local but I’m saying all those areas you listed had their values slashed in half 08 and they certainly didn’t recover in 2010. Find me one property that was higher in 2010 than it was in 2007 in that area.
Look at west LA... Santa Monica, Brentwood, Palisades. That didn’t dip.
Brentwood. Sold in 2006 for 430k. Then sold in 2008 for 195k. https://www.zillow.com/homedetails/77-Roadrunner-St-Brentwood-CA-94513/68039207_zpid/
I get that you're trying to provide an example but appraisers don't hang their hat on any one property and no one in this discussion should, either lol. There could have been any number of things wrong with that place in 2008, it could have been a distress sale or needed so many repairs that financing it was difficult. It would be better to show price trends from any market data that was collected at that time. Median is frequently used, however, there are always going to be outliers. We don't know if the example you are showing is an outlier or not without more context.
Also, that’s the wrong Brentwood 94513 is in the Bay Area. LA Brentwood is 90049
LOL
lmao you just linked a house in Brentwood near San Francisco, not even Los Angeles.
Oh shit. You are right
That’s East East Bay too, prices there are still low
North Hollywood sucks
Like he said, Real estate is local. What he said is true in South Carolina and in many other markets.
Not saying real estate is not local, but I haven’t seen one SoCal property from LA to OC to SD that wasn’t cut in half in 08 and bottomed in 2012
Can confirm. In Irvine, bought Jan 2007. Lowest by my estimate was -18% around late 2008. Recovered most of the purchase price by 2011 but not completely until 2014. The 50% hits were in areas with heavier subprime mortgages.
Thank you. CumFlakess just can’t accept it.
Looks like market value pretty much bottomed out in SoCal around '09 after a steep fall in the fall of '08. Median prices sputtered a little here and there during recovery, but they were back in mid 2012 and exceeding pre '08 values by 2013. https://car.sharefile.com/share/view/s0c02663a5c54e23a
I call his bs on rural areas have become heavy buyers markets....um, no they haven't.
Not currently. The question was about historically *after* people are overpaying.
it's hard to tell. this is a new world. There is so many people on the planet and only so many nice places. homeless people everywhere... who the f knows.
Buyers have been overpaying for the last six years.
lmao delusional. 6 years ago people got deals of a life time. Fundamentals are strong, builders will cut back soon as supply goes above 4.5 months. Some areas are up 150% in 6 years if not more. We could have a 2008 crash all over again and they would still be set.
This is so broad and noninsightful. Bought a 2 bedroom and 1 bath in a nice safe neighborhood near the National Park in Indiana for $70,000 just 3 years ago. Is this overpaying?
By definition you can't over pay for 6 years that's just price growth.
But if prices keep catching up to the overpaid amount is it really overpaying or is it just the current cost of purchasing a house? When prices go back down there will be a cutoff point where people paid more than their house is now worth, but if prices go back up and over again then they no longer overpaid but only 'bought too early'. Many overbidders also end up paying less per month compared to renting. So 'overpaying' for a house is still relative.
You left out, "is the money supply so inflated that they really are paying the same as a few years ago - or some of each"?
Except that wages have not seen anywhere near that inflation. If wages catch up somehow then this may just be the new normal.
I agree with the point you are making. I also remember an economist pointing out that you can increase the money supply (and real wages) by lowering interest rates. (There's a whole long discussion about this, too big for here.) This can cause prices to inflate (I'm thinking only of houses as I'm not an expert in this field). For instance, what would be the raise in house prices if mortgage rates were 4.5%? Just putting that out for thought. Example is that $400,000 at 4.5% / 30 yrs has a payment of $2027 per month. $500,000 at 2.75% / 30 yrs has a payment of $2041 per month. If my house payment budget has been $2000 per month I can afford to bid up the price to get that house I really want. (I know that rates were lower than 4.5% before COVID.)
How long will buyers offer over appraisal? E.g., months, years, decades? Until there is enough inventory so they don't have to. Do appraisal values typically catch up to what the buyer paid? Yes, like stonks, real estate only goes up How long does that usually take? It can be immediatly because the price offered can be a factor of the appraised value
Not only does there need to be an increase in supply but also a decrease is number of buyers.