The real estate market in our neighboring Orange County has performed much like San Diego’s. Here, Jon outlines the 12 differences between the bubble days of 2007, and now:
http://www.ocregister.com/2017/08/06/orange-countys-housing-bubble-10-years-later/
These stats show how the game has changed forever – there is no down side if banks are so reluctant to foreclose:
10. Distressed property: Too much debt and too many layoffs pushed many homeowners to the financial brink. Owners rushed to sell as bankers hit the market with their repossessed properties. In June 2007, 13 percent of homes sales were either short sales — banks agreeing to take less than owed — or sales of foreclosed properties. That distressed share of selling would become roughly half of the market during the next five years. But by June 2017, that share settled back to just 7 percent. Fortunately, it’s only a history lesson today. The supply of foreclosures to buy has shrunk from 463 in late June a decade ago to only 27 as this year’s summer began.
11: Warning signs: Nothing screams “danger” more than owners skipping house payments. Ponder what lenders were doing in June 2007 vs. this past June. Default notices, a first step in foreclosure: 1,144 then, 310 today. Auction notices, the official threat to sell: 598 then, 213 today. Actual foreclosures: 281 then (and 1,084 in June 2008) vs. 21 today.
For the bubble to ‘pop’, and prices decline, we would need more than a trickle of distressed sellers who need to sell at whatever price the market would bear. A rash of boomer liquidations might happen, but with reverse mortgages being available, they have other options too.
All ahead full!
Home prices have reached what looks like a permanently high plateau.
Since as far as I can figure, we live in a growth economy model, and all the major dudes on the planet use our currency as their method of international exchange. China, the Soviets, India, and others will have their new trading currency online by the end of this year. Apparently the first time since WWII that major nations can trade amongst themselves without our petrodollars, but that’s months from now. Why worry about stuff that hasn’t happened? Besides, things are different, this time.
So we have our government’s addiction to third world fertility that’s proving profitable for real estate interests, since importing over a million people a year, along with their presumed 2.8 kids, and nobody paying much attention, means we can’t keep up with housing demand. We could eliminate immigration today, but the reverb will go on for at least a generation, as immigrant folk’s kids have kids.
Conclusion: Property owners, don’t listen to the market pundits clucking. The longer you hold, the more you’ll make. Even if our monetary system collapses, as long as contract law holds, you’re ahead of most people. You own something tangible that everyone needs. They’ll pay you in money. They’ll pay you in gold. They’ll pay you with beads and shark’s teeth.
If you have a big backyard, contribute to your local councilman’s favorite charity to enable local legislation to allow you to build a teeny home, tell ’em it’s for grandma to shame the complainers, and keep on ownin’.