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Are We In a Housing Bubble? (And Will It Burst?!)

DerekJohnsonDerekJohnson Administrator, Swaye's Wigwam Posts: 62,388 Founders Club
edited May 2022 in Tug Tavern
https://www.youtube.com/watch?v=r8B-Com5Z2k
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  • YellowSnowYellowSnow Moderator, Swaye's Wigwam Posts: 34,948 Founders Club
    Who's the hot blonde?
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  • YellowSnowYellowSnow Moderator, Swaye's Wigwam Posts: 34,948 Founders Club
    Stream of Uhauls leaving California @Doogles
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  • DooglesDoogles Member, Swaye's Wigwam Posts: 12,545 Founders Club
    YellowSnow said:

    Stream of Uhauls leaving California @Doogles

    My problem is Sacramento is one of the places the "California Cash Buyers" are flocking towards.
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  • creepycougcreepycoug Member Posts: 22,959
    I'm a simple, low IQ Hispanic man with communist tendencies ( @SFGbob ), so I look for the simple answer first: what could happen to cause prices to go down?

    Whether it's a bubble - the definition of which eludes me (see comment re low IQ) - is not the key question. The key question is what are the key drivers for home demand? One of the key drivers is availability of financing (available credit); and a sibling of that driver is the cost of credit.

    I see nothing that tells me credit is going to tighten; that's usually driven by a high default rate. Maybe.

    But the cost of credit ... that's the discussion. As I've said elsewhere, Americans buy things on the basis of affordable monthly payments. They're not old school like @RaceBannon and think about, you know, paying the fucking thing off. Just so long as the monthly doesn't interfere with life too much, Americans are in! When you really think about it, it's not an entirely irrational m/o.

    Anyway, any serious uptick in the mortgage rates are what will fundamentally affect demand for housing and what people are willing to pay.

    Not sure I'd bet the farm on Dave's simple "it's not going to go down during the next ten years." We live in economically uncertain times.
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  • creepycougcreepycoug Member Posts: 22,959
    Doogles said:

    YellowSnow said:

    Stream of Uhauls leaving California @Doogles

    My problem is Sacramento is one of the places the "California Cash Buyers" are flocking towards.
    No kidding? What's the reason for Sac town?
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  • creepycougcreepycoug Member Posts: 22,959
    Doog_de_Jour said:

    I’m so fucking tired of hearing about housing bubbles. Articles like this keep appearing in the Seattle Times every week:

    https://www.seattletimes.com/business/real-estate/seattle-extends-a-streak-home-prices-again-rise-faster-than-almost-any-other-major-city/

    And this shit is happening all over the world.

    https://www.biznews.com/premium/2021/03/29/house-prices-2

    I thought for years that the market would crash, or at least cool down, here in Seattle but I’ve been wrong every goddamn time.

    @creepycoug is right, long as there’s cheap credit nothing is changing. And the powers that be know if they raise interest rates it might derail the recovery from COVID / cause this house of cards to come crashing down.

    Nothing is going to change.

    I guess we're all plaigairism @HoustonHusky 's shit at this point.
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  • Doog_de_JourDoog_de_Jour Member Posts: 7,958 Standard Supporter
    edited April 2021
    It’s appalling. I understand that an affordable Seattle is never coming back. It’s SanFran North...we’ve known this for awhile now. But when we’re talking about housing in more remote areas of the Midwest and they’re experience this trend, it’s not a simple supply and demand issue.
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  • HoustonHuskyHoustonHusky Member Posts: 5,963
    edited April 2021
    creepycoug said:

    I'm a simple, low IQ Hispanic man with communist tendencies ( @SFGbob ), so I look for the simple answer first: what could happen to cause prices to go down?

    Whether it's a bubble - the definition of which eludes me (see comment re low IQ) - is not the key question. The key question is what are the key drivers for home demand? One of the key drivers is availability of financing (available credit); and a sibling of that driver is the cost of credit.

    I see nothing that tells me credit is going to tighten; that's usually driven by a high default rate. Maybe.

    But the cost of credit ... that's the discussion. As I've said elsewhere, Americans buy things on the basis of affordable monthly payments. They're not old school like @RaceBannon and think about, you know, paying the fucking thing off. Just so long as the monthly doesn't interfere with life too much, Americans are in! When you really think about it, it's not an entirely irrational m/o.

    Anyway, any serious uptick in the mortgage rates are what will fundamentally affect demand for housing and what people are willing to pay.

    Not sure I'd bet the farm on Dave's simple "it's not going to go down during the next ten years." We live in economically uncertain times.

    Appreciate the shout-out. The main thing I see crashing the party is when the Fed loses control of interest rates...ie they try to hold them down but are printing so much money that everyone realizes the Fed are a bunch of buffoons and ignores them.

    I do think it is coming, but I don’t think we are anywhere near that point yet. The govt and economy can’t afford higher interest rates, and there are many more tricks the Fed can use to prop up this house of cards. There may be some bumps, but the money supply is only going one direction right now and that is up. Looking at the Central Bank balance sheets we are just at the inflection point of an exponential curve.

    Funny side story...was in Oklahoma City this week for work. Talking to a guy up there and he was talking about house prices up there being $250/sqft in the nice areas and $150/sqft in the burbs. I was stunned...even more so when I looked at Zillow and he was lowballing reality there.


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  • PurpleThrobberPurpleThrobber Member Posts: 43,544 Standard Supporter
    HoustonHusky said:

    creepycoug said:

    I'm a simple, low IQ Hispanic man with communist tendencies ( @SFGbob ), so I look for the simple answer first: what could happen to cause prices to go down?

    Whether it's a bubble - the definition of which eludes me (see comment re low IQ) - is not the key question. The key question is what are the key drivers for home demand? One of the key drivers is availability of financing (available credit); and a sibling of that driver is the cost of credit.

    I see nothing that tells me credit is going to tighten; that's usually driven by a high default rate. Maybe.

    But the cost of credit ... that's the discussion. As I've said elsewhere, Americans buy things on the basis of affordable monthly payments. They're not old school like @RaceBannon and think about, you know, paying the fucking thing off. Just so long as the monthly doesn't interfere with life too much, Americans are in! When you really think about it, it's not an entirely irrational m/o.

    Anyway, any serious uptick in the mortgage rates are what will fundamentally affect demand for housing and what people are willing to pay.

    Not sure I'd bet the farm on Dave's simple "it's not going to go down during the next ten years." We live in economically uncertain times.

    Appreciate the shout-out. The main thing I see crashing the party is when the Fed loses control of interest rates...ie they try to hold them down but are printing so much money that everyone realizes the Fed are a bunch of buffoons and ignores them.

    I do think it is coming, but I don’t think we are anywhere near that point yet. The govt and economy can’t afford higher interest rates, and there are many more tricks the Fed can use to prop up this house of cards. There may be some bumps, but the money supply is only going one direction right now and that is up. Looking at the Central Bank balance sheets we are just at the inflection point of an exponential curve.

    Funny side story...was in Oklahoma City this week for work. Talking to a guy up there and he was talking about house prices up there being $250/sqft in the nice areas and $150/sqft in the burbs. I was stunned...even more so when I looked at Zillow and he was lowballing reality there.


    The Throbber needs about 18 to 24 months of reasonable interest rates. Then fuck you, fuck me, fuck everybody. I'm rich, bitch!!!

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  • godawgstgodawgst Member, Swaye's Wigwam Posts: 2,450 Founders Club
    Seeing pronounced slow down in building in SW Washington as shortage of materials, and lumber/osb prices have basically increased the material costs by 75% since last year and 50% since December.

    Customer who makes/rents tiny homes (400-600 sq feet) has seen the cost of material package go from 40k-65k last 12 months.

    Old projects are being finished, and ones that have signed existing contracts are being started, but anything past that is sketchy or being tabled to see what happens.

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  • Fishpo31Fishpo31 Member Posts: 2,381
    Doogles said:

    creepycoug said:

    Doogles said:

    YellowSnow said:

    Stream of Uhauls leaving California @Doogles

    My problem is Sacramento is one of the places the "California Cash Buyers" are flocking towards.
    No kidding? What's the reason for Sac town?
    The simplest answer is Bay Area run off. I will sound like a homer here, but Sacramento is a pretty quality central location. It should be the Nashville of the west coast, party city on the river, but we know who runs this state and we'll just keep that in the tug.

    I live 1.5 hours from Tahoe (world Class)
    1.5 hours from Oakland/SF (world Class)
    50 minutes to Napa (world Class)
    3.5 hours from El Cap and Yosemite (world Class)
    Hell, I could have lunch with @BearsWiin in Santa Cruz in 2.5 hours and throw him into Big Sur by 3.

    You get the point, the city of Sac itself is small potatoes, but a stones throw away from destinations people visit from all over the world.

    Getting the Golden 1 center and the kings to stay was huge, more buildings are going up. Billboards are visible on the freeway which is weird to see. It's embraced bullshit hipster culture but with that comes fancy bars and restaurants. We're still a cowtown, but It's growing fast and bigly.

    As a kid, Several of my friends parents were SF commuters (100k in sac or 200k in SF?, makes the 5am drive to beat the traffic worth it). Work from home has greatly increased the desirability of the area. You cannot buy a house in El Dorado Hills without a bay area cash offer 50k over asking. The nicer homes are 100-200k over asking with 20ish bids. It's insanity.


    Some one can crunch the actual numbers of it all, but i've lived here pretty much all my life and it's just what i'm hearing/experiencing.

    The remodeling company I work for is 17-22 weeks out on installation. We can't keep up.
    My wife's sister and bro-in-law got into El Dorado Hills years ago, moved to Tahoe, then OC, and rented out their house in EDH. After they retired, they moved back to the family home, planning on staying there, but saw the cash being thrown around, put their shit in storage, and got a condo in the Bay Area to be closer to grandkids. It wasn't their plan, but they re-directed when they saw the market...
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  • HoustonHuskyHoustonHusky Member Posts: 5,963
    godawgst said:

    Seeing pronounced slow down in building in SW Washington as shortage of materials, and lumber/osb prices have basically increased the material costs by 75% since last year and 50% since December.

    Customer who makes/rents tiny homes (400-600 sq feet) has seen the cost of material package go from 40k-65k last 12 months.

    Old projects are being finished, and ones that have signed existing contracts are being started, but anything past that is sketchy or being tabled to see what happens.

    Not sure what you are talking about...the gobernment told me there is no inflation...
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  • greenbloodgreenblood Member Posts: 14,309
    edited April 2021
    HoustonHusky said:

    creepycoug said:

    I'm a simple, low IQ Hispanic man with communist tendencies ( @SFGbob ), so I look for the simple answer first: what could happen to cause prices to go down?

    Whether it's a bubble - the definition of which eludes me (see comment re low IQ) - is not the key question. The key question is what are the key drivers for home demand? One of the key drivers is availability of financing (available credit); and a sibling of that driver is the cost of credit.

    I see nothing that tells me credit is going to tighten; that's usually driven by a high default rate. Maybe.

    But the cost of credit ... that's the discussion. As I've said elsewhere, Americans buy things on the basis of affordable monthly payments. They're not old school like @RaceBannon and think about, you know, paying the fucking thing off. Just so long as the monthly doesn't interfere with life too much, Americans are in! When you really think about it, it's not an entirely irrational m/o.

    Anyway, any serious uptick in the mortgage rates are what will fundamentally affect demand for housing and what people are willing to pay.

    Not sure I'd bet the farm on Dave's simple "it's not going to go down during the next ten years." We live in economically uncertain times.

    Appreciate the shout-out. The main thing I see crashing the party is when the Fed loses control of interest rates...ie they try to hold them down but are printing so much money that everyone realizes the Fed are a bunch of buffoons and ignores them.

    I do think it is coming, but I don’t think we are anywhere near that point yet. The govt and economy can’t afford higher interest rates, and there are many more tricks the Fed can use to prop up this house of cards. There may be some bumps, but the money supply is only going one direction right now and that is up. Looking at the Central Bank balance sheets we are just at the inflection point of an exponential curve.

    Funny side story...was in Oklahoma City this week for work. Talking to a guy up there and he was talking about house prices up there being $250/sqft in the nice areas and $150/sqft in the burbs. I was stunned...even more so when I looked at Zillow and he was lowballing reality there.


    I used to think this would happen, but the more I think about it now, there’s no way in hell the fed will allow interest rates to run up. Higher interests rates mean higher interest payments in our national debt. Considering how much this country has been borrowing, not a chance. I can see a full point, maybe 2. But that’s it.
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  • godawgstgodawgst Member, Swaye's Wigwam Posts: 2,450 Founders Club
    HoustonHusky said:

    godawgst said:

    Seeing pronounced slow down in building in SW Washington as shortage of materials, and lumber/osb prices have basically increased the material costs by 75% since last year and 50% since December.

    Customer who makes/rents tiny homes (400-600 sq feet) has seen the cost of material package go from 40k-65k last 12 months.

    Old projects are being finished, and ones that have signed existing contracts are being started, but anything past that is sketchy or being tabled to see what happens.

    Not sure what you are talking about...the gobernment told me there is no inflation...
    There isn't if your the fed and you back out anything that has inflation in it and use items like typewriters and horse and buggy past/current/future costs to determine the inflation.

    That and they can't tell us the truth about inflation unless they want an instant market driven recession along with a dollar that would be in a 40k foot free fall.
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  • HoustonHuskyHoustonHusky Member Posts: 5,963
    edited April 2021
    greenblood said:

    HoustonHusky said:

    creepycoug said:

    I'm a simple, low IQ Hispanic man with communist tendencies ( @SFGbob ), so I look for the simple answer first: what could happen to cause prices to go down?

    Whether it's a bubble - the definition of which eludes me (see comment re low IQ) - is not the key question. The key question is what are the key drivers for home demand? One of the key drivers is availability of financing (available credit); and a sibling of that driver is the cost of credit.

    I see nothing that tells me credit is going to tighten; that's usually driven by a high default rate. Maybe.

    But the cost of credit ... that's the discussion. As I've said elsewhere, Americans buy things on the basis of affordable monthly payments. They're not old school like @RaceBannon and think about, you know, paying the fucking thing off. Just so long as the monthly doesn't interfere with life too much, Americans are in! When you really think about it, it's not an entirely irrational m/o.

    Anyway, any serious uptick in the mortgage rates are what will fundamentally affect demand for housing and what people are willing to pay.

    Not sure I'd bet the farm on Dave's simple "it's not going to go down during the next ten years." We live in economically uncertain times.

    Appreciate the shout-out. The main thing I see crashing the party is when the Fed loses control of interest rates...ie they try to hold them down but are printing so much money that everyone realizes the Fed are a bunch of buffoons and ignores them.

    I do think it is coming, but I don’t think we are anywhere near that point yet. The govt and economy can’t afford higher interest rates, and there are many more tricks the Fed can use to prop up this house of cards. There may be some bumps, but the money supply is only going one direction right now and that is up. Looking at the Central Bank balance sheets we are just at the inflection point of an exponential curve.

    Funny side story...was in Oklahoma City this week for work. Talking to a guy up there and he was talking about house prices up there being $250/sqft in the nice areas and $150/sqft in the burbs. I was stunned...even more so when I looked at Zillow and he was lowballing reality there.


    I used to think this would happen, but the more I think about it now, there’s no way in hell the fed will allow interest rates to run up. Higher interests rates mean higher interest payments in our national debt. Considering how much this country has been borrowing, not a chance. I can see a full point, maybe 2. But that’s it.
    I agree with you...I just think the magnitude of it will get to a point where they lose control...not talking the next few months...I’m talking a few years out. The fact the Fed increased their balance sheet from 2010-2018 was insane, but it’s nothing compared to the amount of monetizing currently happening and planned for the next few years. It’s insane...they are printing something like $120 billion a month right now and they can’t keep up, and that’s with a good chunk of the country out of these crazy lockdowns and such. On top of that baseline insanity Biden’s handlers have a good chunk of his stimulus still to spend, and now a $3 trillion infrastructure bill to boot. The govt and economy can’t afford higher interest rates, but there is a point at which if they don’t stop the spending they won’t have any say in the matter.
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  • YellowSnowYellowSnow Moderator, Swaye's Wigwam Posts: 34,948 Founders Club
    Baseman said:

    Unlike 2007-2008 there is a shortage of inventory — a dramatic shortage. Gone are the no money
    down/no doc loans that allowed anyone, including illegals to buy homes — and lots of homes.

    In the Big Short a stripper owned 5 homes with the idea she could refinance and everything would be ducky.

    Fast forward there is a shit load of $ floating around with the younger set who can’t afford to buy but the demand is still strong.

    Anedoctal stories of Ma and Pa cashing out are lower than Ma and Pa looking at their equity and realizing there are no affordable alternatives. Sure, some will cash out and move to Boise but the majority are sitting tight.

    A senior bank exec told me recently the delinquency rate on single family is as low as it’s ever been for their portfolio.

    Low delinquencies, historically low inventory coupled with high demand and rising commodity prices all point to a stable market with possibly more upside

    My parents were looking at finding a smaller, lower maintenance home, but every thing is so expensive they decided to stay put. Just in the process of finalizing a reverse mortgage to have access to some of the equity if its ever needed.
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  • doogiedoogie Member Posts: 15,072
    Reverse mortgages are a scourge on society
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