I'm starting to get that "2006" feeling again

[HighRoller]

Looking at the house prices in Havasu and the boat prices in general, the current housing/economy situation on the West Coast reminds me very much of 2005-2006.

And we all know what started to happen in 2007!

For some reason, my intuition keeps telling me the bubble is going to pop again within two years. Crazy, I know, but the truth is that what goes up...can't keep going up. The markets in bubble areas seem to be hotter now than they were then. I think I read that Southern Cal homes have appreciated 60% in the last 5 years.

Anyways, I know there are a lot of peeps in here a lot smarter than I am with some "inside dope" on the economic indicators in California. We live elsewhere, but will be looking for an opportunity to buy in Havasu after a "downturn". Am I imagining things? Or are the numbers right now starting to look like 12 years ago?

Discuss...

 

[JD D05]

Sold my house and I am renting for the first time in my life. In the meantime my down payment is earning crazy interest. Going to wait it out for a couple and see what happens.

 

[NicPaus]

Some areas here in SoCal are over the price of boom butbin general not close yet. The houses I sold in boom at 759k are not worth over 700k yet but climbing fast.

 

[4Waters]

Oh I think you're right the bubble is about to pop. Hope I'm in a good position to make a little money when it does pop by buying low. When the last bubble popped I had just lost my job and there was no jobs to be had so I made nothing.

 

[HighRoller]

Sold my house and I am renting for the first time in my life. In the meantime my down payment is earning crazy interest. Going to wait it out for a couple and see what happens.

Smart Man. People are probably looking at you like you're crazy right now. In 3-5 years they'll look at you like you're Friggin' Nostradamus!

 

[JD D05]

Smart Man. People are probably looking at you like you're crazy right now. In 3-5 years they'll look at you like you're Friggin' Nostradamus!

I hope...it really isn't a big deal for us. We have a little kid that is pretty hard on this rental etc. We got a 4k square foot place for 2K a month.

 

[shintoooo]

Here we go again.

 

[Boat 405]

Sold my house and I am renting for the first time in my life. In the meantime my down payment is earning crazy interest. Going to wait it out for a couple and see what happens.

 

[Boat 405]

It’s coming. Just a matter of when.

 

[wsuwrhr]

It’s coming. Just a matter of when.

Its always coming, its always a matter of when.

 

[Done-it-again]

I believe it’s a little different this go around. People are needing to be qualified for houses this time and not like before on stated income. I do believe houses will drop in so cal 15% or so, but 2nd homes in vaca destination will drop 30%+ when it goes. For SoCal there is a lot of overseas money coming in that are buying making the market what it is.

Havasu is just nuts at this time and don’t think it can sustain. If it’s not your permanent Rez or you have giraffe money, it’s a bad time to buy. But that just me.

Mother in law is in the escrow business that are officers and not owners that are making 200k +. So keep buying they are pretty happy. But they also knows what happens when it stops.

 

[GRADS]

We could use a little mini recession right now.

I'm prepared this time though if a big one hits. In 2007 I got caught with my pants down, dick hanging out and it got chopped off.

 

[shintoooo]

In 2007 I got caught with my pants down, dick hanging out and it got chopped off.

That explains a lot

 

[HighRoller]

I believe it’s a little different this go around. People are needing to be qualified for houses this time and not like before on stated income. I do believe houses will drop in so cal 15% or so, but 2nd homes in vaca destination will drop 30%+ when it goes. For SoCal there is a lot of overseas money coming in that are buying making the market what it is.

Havasu is just nuts at this time and don’t think it can sustain. If it’s not your permanent Rez or you have giraffe money, it’s a bad time to buy. But that just me.

Mother in law is in the escrow business that are officers and not owners that are making 200k +. So keep buying they are pretty happy. But they also knows what happens when it stops.

I remember from 2006-2010 the home prices in Havasu must have dropped 60% or more and the market was flooded with inventory. Not that I want to see anyone suffer, but we are positioning ourselves to buy in that type of environment. Same thing with boats!

 

[707dog]

We could use a little mini recession right now.

I'm prepared this time though if a big one hits. In 2007 I got caught with my pants down, dick hanging out and it got chopped off.

gotta stop trying to keep up with the joneses...well in your case the jenner half of the joneses

 

[707dog]

I remember from 2006-2010 the home prices in Havasu must have dropped 60% or more and the market was flooded with inventory. Not that I want to see anyone suffer, but we are positioning ourselves to buy in that type of environment. Same thing with boats!

i did the same thing bought/used and flipped 5 boats in under a year and a few every year until the market cleaned it self up. plan to do the same thing with classic cars if/when the turd pops this time. very fortunate to have a recession proof income.

 

[LargeOrangeFont]

Why does everyone think 06 was some financial barrier that can’t be crossed?

Employment is at its lowest in 70 years.. you’ll have some warning before the next recession. I don’t think we will see indicators of recession brewing for another year to 18 months unless something major happens.

 

[Carrera205]

SoCal is so overcrowded it's not even funny. The traffic is insane compared to 10 years ago. I think a lot of people can buy houses but there simply aren't any to buy eveyone is holding them and rent is redicous. A guy I work with is selling his house in rancho right now for 600k and he's put in multiple offers on houses in the 650-700k and he said the Homes are getting 5
Or more offers the first day. Not only all that but it seems like builders are opting out of affordable houses and building high rise "Luxury condos" on the parcels that they could put maybe 6 houses. They build 15 condos instead and still want 400k or more for them. No yard or anything.

 

[Tank]

Historically...Since the 70's - Every 10 years(ish) it pops. Varies on how bad but it's guaranteed about every 10 years or so.

 

[LargeOrangeFont]

SoCal is so overcrowded it's not even funny. The traffic is insane compared to 10 years ago. I think a lot of people can buy houses but there simply aren't any to buy eveyone is holding them and rent is redicous. A guy I work with is selling his house in rancho right now for 600k and he's put in multiple offers on houses in the 650-700k and he said the Homes are getting 5
Or more offers the first day. Not only all that but it seems like builders are opting out of affordable houses and building high rise "Luxury condos" on the parcels that they could put maybe 6 houses. They build 15 condos instead and still want 400k or more for them. No yard or anything.

There is no money in small single family homes in So Cal. The supply of those was already built in the 50s-80s. Condos or McMansions will be new construction from here on out.

 

[Paul65k]

Quite a bit of mis-information here but the sentiment is real for sure.....what everyone is forgetting is that if you lock in an interest rate today for 30 years and prices do adjust even 15%.....30% is unrealistic, you will still be miles ahead of waiting for the price adjustment and getting in at interest rates that are 25% higher (most likely) than they are today (do the math on compound interest).

We have become so conditioned by these historically low interest rates fueled by the Fed's quantitative easing that many are missing the fact that interest rates are one of the biggest factors making this current environment so desirable. Interest rates will go up and the market will slow but there is no "Catastrophic event" on the horizon like the crazy lending practices that took place through the late 90's and into the 2000's and building costs are certainly not going down anytime soon.

People will need a place to live and even though Havasu is a vacation destination the number of folks moving here to get the heck out of CA when they retire is a big part of what's fueling our growth and I for one don't see this changing.

Now before you "nay-sayers" jump in with "Of course you'll say that you sell RE in Havasu, I say deal with the reality of interest rates, the fact that people need a place to live and people ARE leaving CA..............but market dynamics and not "Feelings" should be the basis for decision making.......but maybe that's just me

BTW......Havasu is just now getting back to pre-crash prices, even though many other areas are ahead of that.

PS.......any Inmates that own homes in Havasu or Parker that think the end is near should be calling me or Stacy as soon as you can because the last 3 homes we listed here all sold for full price or close to it in a week or less and we'd be happy to help you out

 

[LargeOrangeFont]

Quite a bit of mis-information here but the sentiment is real for sure.....what everyone is forgetting is that if you lock in an interest rate today for 30 years and prices do adjust even 15%.....30% is unrealistic, you will still be miles ahead of waiting for the price adjustment and getting in at interest rates that are 25% higher (most likely) than they are today (do the math on compound interest).

We have become so conditioned by these historically low interest rates fueled by the Fed's quantitative easing that many are missing the fact that interest rates are one of the biggest factors making this current environment so desirable. Interest rates will go up and the market will slow but there is no "Catastrophic event" on the horizon like the crazy lending practices that took place through the late 90's and into the 2000's and building costs are certainly not going down anytime soon.

People will need a place to live and even though Havasu is a vacation destination the number of folks moving here to get the heck out of CA when they retire is a big part of what's fueling our growth and I for one don't see this changing.

Now before you "nay-sayers" jump in with "Of course you'll say that you sell RE in Havasu, I say deal with the reality of interest rates, the fact that people need a place to live and people ARE leaving CA..............but market dynamics and not "Feelings" should be the basis for decision making.......but maybe that's just me

PS.......any Inmates that own homes in Havasu or Parker that think the end is near should be calling me or Stacy as soon as you can because the last 3 homes we listed here all sold for full price or close to it in a week or less and we'd be happy to help you out

Spot on as usual.

 

[rvrrun]

We could use a little mini recession right now.

I'm prepared this time though if a big one hits. In 2007 I got caught with my pants down, dick hanging out and it got chopped off.

That certainly explains a lot.

 

[Carrera205]

There is no money in small single family homes in So Cal. The supply of those was already built in the 50s-80s. Condos or McMansions will be new construction from here on out.

That's what is boils down too is the greed. Sucks because I own a nice family home in the high desert but it's turning into a crime ridden shit hole now and instead I'm in Orange County which is great except a house that's comapreable if I can even find one is half a million dollars or more.

 

[RCDave]

Some thoughts to ponder.

The govt unemployment figures are totally bogus.

Govt reported inflation figures are a joke.

With massive budget deficits, which are set to increase substantially, this will get worse.

Rates are headed up to try and stave off inflation. But just interest on the debt is massive and will get worse once the economy turns.

Stock market is overheated. Just look at the average p/e ratio of about 25x. Not many companies can justify their stock values....

Asset bubbles exist in the stock market, real estate market, and toys. Just look at the price of boats....

Good time to be conservative

 

[LargeOrangeFont]

That's what is boils down too is the greed. Sucks because I own a nice family home in the high desert but it's turning into a crime ridden shit hole now and instead I'm in Orange County which is great except a house that's comapreable if I can even find one is half a million dollars or more.

Welcome to California, where you always get less for more.

 

[Kailuaboy89]

yes, I am in agreement, it is coming, and it is going to blow, and go figure I am self employed again, and work is slowing down to a crawl and people are hanging on to their dollars....it is what it is, and its coming....the boat may be for sale here real quick, and I may be at the mercy of an employer again making crap wages with crap benefits..

 

[Bpracing1127]

As much as I want a crash to happen, I don’t see a change any time soon. We are at record low inventory in so cal and even havasu. That is the main driver for the prices. Right now I see it climbing 3-5% for the next 3 years at least. Nothing is indicating the market will drop. The precursors are there and they aren’t at the same time.

 

[steak&lobster]

Looking at the house prices in Havasu and the boat prices in general, the current housing/economy situation on the West Coast reminds me very much of 2005-2006.

And we all know what started to happen in 2007!

For some reason, my intuition keeps telling me the bubble is going to pop again within two years. Crazy, I know, but the truth is that what goes up...can't keep going up. The markets in bubble areas seem to be hotter now than they were then. I think I read that Southern Cal homes have appreciated 60% in the last 5 years.

Anyways, I know there are a lot of peeps in here a lot smarter than I am with some "inside dope" on the economic indicators in California. We live elsewhere, but will be looking for an opportunity to buy in Havasu after a "downturn". Am I imagining things? Or are the numbers right now starting to look like 12 years ago?

Discuss...

NOPE, don't agree

 

[Mandelon]

The precursor is the rise in the number of people who are behind on their home payments. There is none of that yet. Notices of Default are very very low. Jobless claims are very low, unemployment is the lowest in 45 years or something noteworthy.

Yes prices are rising, but so are incomes. So is personal wealth. We are getting closer to a pullback but it is nowhere near here yet. The Obama recovery was the slowest of any post recession recoveries... there's tons of pent up demand. Fuel prices are reasonable unless you are stuck here in California where the taxes are stupid high. The freeways are packed with folks going to work every damn day.

A war between Israel and Iran may be in the offing. North Korea could do something stupid. But barring anything crazy like that we are in for at least a few more years of good times. Even if Trump gets impeached, Pence will be there to take over and continue pro-business policies.

When someday the bill comes due for all the borrowing the government is doing.... that's gonna suck. But that is still a couple decades away.

The big issues for debt are student loan debt, and retail stores. There are many tens of billions coming due that aren't going to be there. Pensions will be a huge issue for states, counties, and municipalities. When basic services get cut so the retired librarians can get their $250,000 pensions every year for the rest of their lives... that's gonna really affect their day to day operations.

Live it up for now. But 10 years from now make sure everything is paid off!

 

[Tank]

Where do I get my interest only ARM loan?! Daddy needs a yacht, a Ferrari and a new Cigarette. Let's do this.

 

[hallett21]

When everyone's calling the bubble we're not at the bubble.


Sent from my iPhone using Tapatalk

 

[MSum661]

When everyone's calling the bubble we're not at the bubble.


Sent from my iPhone using Tapatalk

When everyone's Yellin.......Start Sellin,
When Everyone's Cryin...........Start Buyin.

 

[530RL]

I'm suing the manufacturer of my crystal ball for a defect......

But what I do know is that in all the businesses we are invested in, there is no labor. None. Zip. And we can not raise prices as much as material costs and labor costs are rising.

You can't sustainably grow an economy without additional labor or increases in productivity. Productivity increases have been stuck at just above 1% for the last ten years. The demographics in existence in America today tend towards a declining pool of labor as baby boomers leave the workforce.

https://www.bls.gov/opub/btn/volume...tivity-slowdown-since-the-great-recession.htm

There may be people who are unemployed, but my experience is that it is because those who are unemployed do not have skills that match what is needed.

https://globalriskinsights.com/2017/09/labor-shortage-united-states-dire-issue/

Putting all that aside, it is important to remember that half the growth in the S&P 500 in 2017 came from only ten of the 500 stocks.

So I have no idea what is going to happen, but I am much more risk averse today, than I was in 2010.

 

[530RL]

When everyone's calling the bubble we're not at the bubble.


Sent from my iPhone using Tapatalk

It is important to look at what people are doing, as opposed to what people are saying.

And there is very little fear right now based upon the economic decisions and risk taking present today.

 

[COCA COLA COWBOY]

I love these threads!

It all comes down to affordability (Affordability Index). That is the only economic indicator that has been consistent with gauging when a market will decline. It varies on area and I would be more than happy to tell you at what index your area historically declined. At the point where homes become unaffordable, the market shifts and declines...usually down dramatically. Like the stock market, it goes up consistently slow and drops much quicker.

It will NOT be like 2007 as consumers had to prove income to purchase. When it does decline, it will be stagnant like the 80's and 90's. Most people will hold on to their homes, but job loss, divorce, death, relocation will force some to sell and create the new comparable sales for your area. The new comp's will determine value, what consumers are willing to pay, etc.

Interest rate is a factor, but I sold homes when interest rates were double digits at the same velocity as now. Again, the affordability dictates price.

What scares me is the human factor. Before 2008/9, homeowners did absolutely everything they could to save their homes. We are now a vast population who has lost homes via short sale, foreclosure, deed in lieu, etc. We have attorneys that will keep you in your home for $1,000/month and keep the banks from taking your home. Will the new homeowner just let their homes go if they get a 5, 10, 15, or 30% drop in value? I'm wondering.

As for the areas that have gone above and beyond the 2007 value numbers and those areas that have not. Metro areas in Socal have all gone above previous peak values. In San Diego, I am currently seeing 5-10% and that very well may be 10-15% in the next couple months. Areas that were over built due to speculation have not reached past numbers. I believe this is because we saw consumers buying multiple houses for speculation purposes in outlying areas because those areas were very affordable. Victorville/Hesperia, Hemet, La Quinta/Indio/Coachella are all areas which have yet to hit past numbers....why, nobody F'n wants to live in those shit holes!

To be blunt, I think we have a couple more years before it hits. If Trump continues to make people get jobs, it could be longer. If he ships people back their countries, it could be longer...too many factors.

The biggest question is how much more room do we have to climb that ladder? I have clients holding onto their portfolio of real estate, and I have some that have sold out. I'm keeping an eye on Blackstone. A few years ago they were buying homes throughout Socal and other areas. I actually was in on a few of those purchases so keep an eye on when they liquidate. At the time of purchase, the managers said the model showed a hold of 8 years. Maybe these hedge funds have more knowledge than all of us on the future, but I am told by my banking buddies that they aren't that smart.

Things that may affect us....AirBnB and VRBO, I've had so many people buy homes just for long term rentals. Del Mar outlawed it in their city, if others do the same that could cause drops.

 

[JM21]

I hope...it really isn't a big deal for us. We have a little kid that is pretty hard on this rental etc. We got a 4k square foot place for 2K a month.

Where?

I’d like to meet your landlord and tell him he is leaving a ton of cash on the table. That is a steal...unless you live in Iowa or something.


Sent from my iPhone using Tapatalk

 

[JM21]

Quite a bit of mis-information here but the sentiment is real for sure.....what everyone is forgetting is that if you lock in an interest rate today for 30 years and prices do adjust even 15%.....30% is unrealistic, you will still be miles ahead of waiting for the price adjustment and getting in at interest rates that are 25% higher (most likely) than they are today (do the math on compound interest).

We have become so conditioned by these historically low interest rates fueled by the Fed's quantitative easing that many are missing the fact that interest rates are one of the biggest factors making this current environment so desirable. Interest rates will go up and the market will slow but there is no "Catastrophic event" on the horizon like the crazy lending practices that took place through the late 90's and into the 2000's and building costs are certainly not going down anytime soon.

People will need a place to live and even though Havasu is a vacation destination the number of folks moving here to get the heck out of CA when they retire is a big part of what's fueling our growth and I for one don't see this changing.

Now before you "nay-sayers" jump in with "Of course you'll say that you sell RE in Havasu, I say deal with the reality of interest rates, the fact that people need a place to live and people ARE leaving CA..............but market dynamics and not "Feelings" should be the basis for decision making.......but maybe that's just me

BTW......Havasu is just now getting back to pre-crash prices, even though many other areas are ahead of that.

PS.......any Inmates that own homes in Havasu or Parker that think the end is near should be calling me or Stacy as soon as you can because the last 3 homes we listed here all sold for full price or close to it in a week or less and we'd be happy to help you out

Spot on as usual Paul! Same in So-cal.


Sent from my iPhone using Tapatalk

 

[OldSchoolBoats]

Another Real Estate related thread........oh joy.

Weather needs to warm up soon........

Sent from my Pixel using Tapatalk

 

[JM21]

I love these threads!

It all comes down to affordability (Affordability Index). That is the only economic indicator that has been consistent with gauging when a market will decline. It varies on area and I would be more than happy to tell you at what index your area historically declined. At the point where homes become unaffordable, the market shifts and declines...usually down dramatically. Like the stock market, it goes up consistently slow and drops much quicker.

It will NOT be like 2007 as consumers had to prove income to purchase. When it does decline, it will be stagnant like the 80's and 90's. Most people will hold on to their homes, but job loss, divorce, death, relocation will force some to sell and create the new comparable sales for your area. The new comp's will determine value, what consumers are willing to pay, etc.

Interest rate is a factor, but I sold homes when interest rates were double digits at the same velocity as now. Again, the affordability dictates price.

What scares me is the human factor. Before 2008/9, homeowners did absolutely everything they could to save their homes. We are now a vast population who has lost homes via short sale, foreclosure, deed in lieu, etc. We have attorneys that will keep you in your home for $1,000/month and keep the banks from taking your home. Will the new homeowner just let their homes go if they get a 5, 10, 15, or 30% drop in value? I'm wondering.

As for the areas that have gone above and beyond the 2007 value numbers and those areas that have not. Metro areas in Socal have all gone above previous peak values. In San Diego, I am currently seeing 5-10% and that very well may be 10-15% in the next couple months. Areas that were over built due to speculation have not reached past numbers. I believe this is because we saw consumers buying multiple houses for speculation purposes in outlying areas because those areas were very affordable. Victorville/Hesperia, Hemet, La Quinta/Indio/Coachella are all areas which have yet to hit past numbers....why, nobody F'n wants to live in those shit holes!

To be blunt, I think we have a couple more years before it hits. If Trump continues to make people get jobs, it could be longer. If he ships people back their countries, it could be longer...too many factors.

The biggest question is how much more room do we have to climb that ladder? I have clients holding onto their portfolio of real estate, and I have some that have sold out. I'm keeping an eye on Blackstone. A few years ago they were buying homes throughout Socal and other areas. I actually was in on a few of those purchases so keep an eye on when they liquidate. At the time of purchase, the managers said the model showed a hold of 8 years. Maybe these hedge funds have more knowledge than all of us on the future, but I am told by my banking buddies that they aren't that smart.

Things that may affect us....AirBnB and VRBO, I've had so many people buy homes just for long term rentals. Del Mar outlawed it in their city, if others do the same that could cause drops.

Carlsbad also mandated 30day minimum rentals. Changed my coastal business in that town big time.


Sent from my iPhone using Tapatalk

 

[JM21]

Another saying I love comes to mind on this thread....

Don’t wait to buy real estate, buy real estate and wait.


Sent from my iPhone using Tapatalk

 

[brgrcru]

its going to pop again , that's for sure.
it always has.
some say 18 months to 3 years.
some say no way ,
some say absolutely.
same thing was said before the crash of 2007/08 and all other crashes.
people are using there homes again as ATM's.

Americans don't save. the more they make, the more they spend.....
people making 50k a year are living like they make 250k a year.
people making 250 k a year are spending like they make 850k a year.

 

[COCA COLA COWBOY]

Carlsbad also mandated 30day minimum rentals. Changed my coastal business in that town big time.


Sent from my iPhone using Tapatalk

I'm waiting to see what happens with the hostile takeover of Qualcomm. We could see a huge change in the I-15 corridor. Scripps, 4S, RB, Sorrento are populated with all.those engineers. If they were to leave, San Diego may become interesting.

 

[Advantage 1]

I won't be descriptive as @GRADS but we are much more prepared now too

 

[Rvrluvr]

Where?

I’d like to meet your landlord and tell him he is leaving a ton of cash on the table.


Sent from my iPhone using Tapatalk

That would be the DICK move of the year

 

[JM21]

its going to pop again , that's for sure.
it always has.
some say 18 months to 3 years.
some say no way ,
some say absolutely.
same thing was said before the crash of 2007/08 and all other crashes.
people are using there homes again as ATM's.

Americans don't save. the more they make, the more they spend.....
people making 50k a year are living like they make 250k a year.
people making 250 k a year are spending like they make 850k a year.

I don’t see the re-fi’s going to the bullshit spending like before...I see people doing the re-fi to get a better loan product, get out of the vicious PMI, or better rates.


Sent from my iPhone using Tapatalk

 

[LargeOrangeFont]

Where are the guys that said 18 months ago we’d be in financial ruins by now?

I would like to hear their take on everything.

 

[LargeOrangeFont]

I don’t see the re-fi’s going to the bullshit spending like before...I see people doing the re-fi to get a better loan product, get out of the vicious PMI, or better rates.


Sent from my iPhone using Tapatalk

Amazing what happens when you only give loans to those that are well qualified for them.

 

[COCA COLA COWBOY]

Amazing what happens when you only give loans to those that are well qualified for them.

We are getting some more creative loans right now. My consumers don't use them, but I heard they are getting used a lot in the inland empire. Stated income loans that only require 1 months bank statement as proof.

 

[LargeOrangeFont]

I’m sure they are getting loans, but not to the degree they were before. IE prices will drop the sharpest in a downturn.