Unsustainable housing prices

www.cnbc.com...

For those of us that are old enough, something feels oddly familiar about this market. Something very 2005ish- 2008 about this market.
Record high prices, houses selling before they are hitting the market, lack of inventory. I got burned very bad in the last market, and I'm glad it happened because I forever learned my lesson.

For young people that have not purchased a house yet, I have some advice for you. Don't buy a house right now. Rent as cheaply as you can, live with your parents if you can (but please don't take advantage of them and pay your fair share and help out OK)
and hoard your money. When the market crashes (and it will) you will be in a supreme position to buy.

I live in an area that isn't affected by housing bubbles so much, and it is even getting crazy here. People are practically begging on Facebook looking for houses that haven't hit the MLS yet. The inventory is so low because there are no reasonable houses for people to move up or down into. There is a gridlock going on here. Builders are asking outrageous prices per sq foot, if they are even available to build!

I wish I listened to older people when I was younger, it isn't that they more intelligent, it is just that they have lived through some of life's cyclical happenings and can pretty much predict how things are going to go down. Let's just say, housing (outside of very hot areas like California) can't stay up forever, and wages are nowhere near catching up, and then add all the baby boomers that will be downsizing (or trying to) or even moving out of the country and we are sure in for something, maybe even worse than the last recession.

oh a deflationary period is in the works

major market corrections coming, only buy physical assets that produce a value such as real estate with rental cost in low income housing areas, things you can see taste or touch.

these are the only real investments everything else is doomed for failure

wait till more states cut pensions, big changes once these local municipalities cut all their pensions they already can't afford

Whats that you say?

Fresh out of College and you can't afford 800k for a 2 bedroom town home?


*gagging sounds*

a reply to: Lysergic

big corrections coming, the boomers can't see it because they still think it's the 90's they have no idea how much the world has changed for people entering the market, the veil in front of them is about to be ripped off when those pensions go by by

a reply to: JAGStorm

I"m selling right now...

Jaden...

p.s. In Southern California. We've got maybe 3-4 more months of gains before another collapse or at the least down turn, IMO.

originally posted by: Lysergic
Whats that you say?

Fresh out of College and you can't afford 800k for a 2 bedroom town home?


*gagging sounds*

Well,
I'm ten years into my career with a college degree, taking home 3-4x what most people my age in this area are taking home, and *I* couldn't buy an 800k house if I wanted to.

Sold my house last year- OP isn't wrong, there has to be a correction soon.

a reply to: toysforadults

They didn't even try to correct the BS that brought on the crash of O8. The next crash is going to hurt much worse.

I rode the mkt up, but I bailed when Trump was elected. Trickle down has never worked for the American working man.

It's just a way for the rich to tell you it's raining when they pisson your shoes.

a reply to: JAGStorm

You a Yank? Well what is going on there is going on here in the UK. Totally insane prices basically kept that way by TPTB through zero interest rates. Money is cheap, when rates rise and at some point they will maybe then a re set will happen. But who knows? It's all guess work.

Here in the UK well especially England we have a population growing like crazy, they are the official figures too, there are millions more illegals too, the population is growing at a mental rate so more demand. In addition to which loads of people now have their own dwelling, loads of people don't marry or try it and find out they are better with their own space, thus meaning more demand for one person residences.

Britain is running out of land, at least elsewhere there are lots of land, here it is in short supply and the whole of England is joining up to make one great megalopolis.

The whole thing is a scam, all those dirty buggers are in on it and are up to their knecks in it. Even the estate agents, they are all in it to pump up the prices.

a reply to: ufoorbhunter

Yes I'm a Yank, and yes it is getting crazy here. The other thing that is inflating prices is that building materials are being sold to China, which raises our prices, and it's still going up. Concrete prices are just insane now!

It's good to share knowledge with the young like this. When I was in my tweenties, you could buy a nice house for thirty grand, that house right now would run probably a hundred fifty grand or more here. A good fixer upper could be bought for three grand back then, a young guy could easily buy one, fix it up, and live in it for many years. That was when a decent job paid two fifty an hour, or four hundred a month. You could float a five year loan and get an extra three extra grand to fix things up and make a nice home from it. I know people who did that and they still live there forty years later, bringing up their families. That is what guys did before they got married, made a nest for their family.

Those houses they got for six grand were remodeled throughout the years, they may have dumped another twenty grand into them over the next forty years but the houses are easily worth eighty grand now, fruit for their work. Also, they are all paid for. The problem is that their kids often do not want the house, they sell it off to blow the money on paying someone to remodel their home or to buy a new car or sometimes to go on a cruise or go to some foreign country.

They really have brainwashed people, that is how the rich remain rich and the middle class never gets ahead.

This is a great time to buy a house by taking advantage of the low interest rates.
Where people screw up is buying a more expensive house than they should.

a reply to: JAGStorm

If you Americans think you've got it bad, you should check out the housing prices in Australia... Its ridiculous.

I just recently brought my first home in the outer Eastern suburbs of Melbourne, for 400 grand! Yeah, its only a 5 year old apartment. But its like 39kms from the city centre... Housing prices here are seriously totally outer control.

It's all well and good for the oldies though... My Dad brought his current property in the early 90's for like 130 grand, its a highly desirable area (just 24 kms from the city centre) and the land on its own is worth over a million now.

Its just crazy.

originally posted by: JAGStorm
a reply to: ufoorbhunter

Yes I'm a Yank, and yes it is getting crazy here. The other thing that is inflating prices is that building materials are being sold to China, which raises our prices, and it's still going up. Concrete prices are just insane now!

That's an interesting angle. I did not realise materials were going up loads. So what can we do if things are going up? Wages here in the uK are stagnant and if anything are lower than twenty years ago for many. if you are lucky enough to get a job.

You gave excellent advice btw Staying with your parents to save up is a must really. Save everything you can, geez I even put a box around the door handle of my old car which you had to put a quid in it before entering in an effort to save for a mortgage. I do consider the mortgage as an actual noose around ones kneck. But maybe it's the only way in this society / system to get on the ladder.

Going back to a nomadic lifestyle would be a wonderful way to live, indeed a dream really. But I'm a sod for home comforts, you need em. I love to clean my bum in the shower once I have a dump, call it obsessive but I like to be clean, nomadic lifestyle probably not make such things possible so you need a home, then comes the loan and debts.

I do pity the young, when you get older you see how people have strived for a pile of bricks and mortar and have paid SO MANY times the actual vale materially of what they have got themselves into twenty five years of debt for. Crazy really but that's what the system throws at them....................... The dream

a reply to: JAGStorm


Jag- In 1994, I purchased a 1292 sq. ft. home in Cotati, Ca. (Sonoma County 'Wine Country') I paid $168,999. Fortunately My Wife and I were able to pay off the note and $30k that My folks borrowed Us to make the purchase.

In October of 2003, while going through physical therapy for My neck/back, I was also diagnosed w/Cancer and after testing over a couple of months I was told that I had approximately 18 months 'to LIVE'.

By June of 2004, I was told that I was to be 'medically retired' from a police job in the SF Bay Area. Not wanting to die as both My parents were still counted amongst the living, We decided to sell the house.

The house SOLD the very first day it was offered for $445k and I've been a "Cash Player" ever since. I first bought a Country Club house, remember at this time I was 'still dying'.. I've since sold that house and bought a waterfront house because I can't play golf any longer so now I fish.

Remember, I've been on "borrowed time" for almost 15 years now... And in fact, I'm in better shape physically minus the broken back/neck. The "cancer" which was atop My lungs?? The copious amounts of Cannabis must've cleaned it out??

Stay Hydrated....


P.S. The "American Dream" isn't dead, You just now have to travel to Central or South America to achieve it...

Interest rates are still extremely low, until the Fed raises the rates you will not see the top of the housing market.

a reply to: Masterjaden

If you are in California you are already in a housing recession

originally posted by: AugustusMasonicus

Interest rates are still extremely low, until the Fed raises the rates you will not see the top of the housing market.

They cant raise rates because millenials arent buying into yhe market so Freddie or Sallie I forget which has to keep their first time options ans the new that turns student loan debt into mortgage debt

Buy commodities inflation wpnt be slpwing down for a while and with the uncertainty in the European markets isnt helping

originally posted by: toysforadults
They cant raise rates because millenials arent buying into yhe market...

People aren't fulling committing to real estate as an investment because of the low rates, the money is going elsewhere. With the exception of some notable market where cost of living is driving up real estate for living purposes the rest of the country is not investing in the sector.

Housing starts are not anywhere near where they were:

a reply to: Subaeruginosa

Same the world over ? i have talked to a few of your country men who were traveling the world on the profits of their homes and the year in question to look for is 2001 ? all the world over the house prices rocket and people think they are loaded and go on a massive spending spree .

What they fail to see is CUE BONO - the bankers , young ones now need five times the money to buy a home for the family 5x more work got to love that or when a workmate utters the statement that his home is earning more per week than he is you just know that things are screwed up

We own a house that just went on the market in a city , small town, That like you said everybody wants to live in. Homes selling with multiple offers.

The house has issues. built in 1900. Long story but was rented to a guy for like 15 years. He destroyed it. We put maybe 10-15k into recently and put it on the market for 149K. we owe 73k. Over 2000 sq feet. 5 bedrooms 2.5 baths. View of the river.

Had hordes of people look at it but no buyers yet. Now, if I had put 50k into it, hired a pro, I could have probably sold it for over 200k. But I was thinking profit margin, and getting a young family into a big house fairly cheap. That hasn't worked out.

I bought my house in the country with 4.5 acres for 29k cash... needed some work.