Written by Jim the Realtor

March 31, 2021

Are we in a bubble?

Who cares about the label.

All that matters is whether the bubble going to burst.

Four reasons why it won’t:

  1. No easy money – buyers have to be solid qualifiers.
  2. Foreclosures are extinct.
  3. Everyone has loads of equity (except 2021 buyers).
  4. No easy place to move to.

For the bubble to burst, we would need an event to drive down prices. Sellers would have to panic and cheap-sell for less to start a downward cycle. Even an earthquake probably wouldn’t be enough.

Link to Wolf Article

 

7 Comments

  1. Brian

    Rising taxes and declining real wages.

    The jobs we’re creating now don’t have the wages or wage growth to support the cost of carry, even with 2 income households.

    Bubble might not pop in 2008 fashion, but if you think there will be a bigger, qualified pool of buyers 5-10-15 years from now you’re on the wrong side of the curve.

  2. Jim the Realtor

    I don’t know about that.

    It was similar 8 years when we looked forward to today.

    San Diego home prices were already de-coupling from wages…..and the NSDCC median sales price was $839,000 in March, 2013!

    It has more than doubled!

    Population growth and generational transfers of money could keep it going.

  3. Eddie89

    A skyrocketing stock market could also keep real estate going. People cashing out their paper gains for real assets, like real estate. You can’t live in your Amazon stock.

    You could also have people cashing out their Bitcoin gains for real assets too.

  4. Josh

    I’ve said it before on this site: San Diego is a worldwide real estate market. As long as Chinese, Saudis, Russians, etcetera have the money, they’ll keep the market afloat. Local wages are not THE key factor in judging SD affordability

  5. Anonymous

    This seems like a product of central banks across the world monetizing debt (the only way we can sustain endless spending) and the related inflation across all asset classes. Equities, housing, bitcoin, lumber, etc. etc. are either in a “bubble” or the dollar is being devalued at a rapid pace.

  6. Brian

    The unbridled enthusiasm is the warning bell for me. Low-interest rates don’t solve the cost of carry.

    An international market that doesn’t have housing the local population can afford looks like DTLA.

    Homeless drug camps next to million-dollar condos. Not good for anyone.

  7. Anonymous

    We are where Vancouver was several years ago. Look it up.

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