Friday, August 14, 2015

What Does Your Dream Home Look Like?

How big is your American Dream?  Mine is pretty modest.  I'm a SoCal lifer who lived pillar to post for a few of my teenage years.  I've got a significant other and a couple of family members to share a space with.  A 4/3 with 2500 sqft like the one above is right in my wheel house.  I've always liked the scenic views of Mt Baldy offered by Upland and Rancho Cucamonga.  The home above is listed for $655,000. Meets all my needs, yet I wouldn't dream of buying at that price.  Zillow had this home at $462,000 during the 2011 trough. And Zillow tends to skew on the high side.  What in the hell happened in the last for years to legitimately ad $200k to the value of this house?  Sure you can point to dollar devaluation, but with no inflation in WAGES there is nothing to justify this increase.  Rents and higher RE prices have a destructive symbiotic relationship that along with food and energy inflation is destroying consumer purchasing power.


The bubble can expand no further.  The FED will try to front run the mayhem with rate increases.  Some will foolishly blame the coming hikes for the correction when in fact not being caught at the zero bound when the SHTF is the only way the FED can maintain the illusion of control.

How far away has the FED's easy money policies taken you from affording your dream home?  A return to 2011/2012 prices is a minimum for me.  Share some Redfin links in the comments.  We can all share our dreams of a better RE future...

4 comments:

  1. Been watching flips come up in Long Beach and I agree you'd have to be insane to buy right now. This flip for 200k in 9 months is a perfect example:

    https://www.redfin.com/CA/Long-Beach/3810-Albury-Ave-90808/home/7561835

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    1. The johnny-come-lately specuvestors are going to be hurting. Downward price action is coming. To many external forces to stop it. Besides, lowering fixed housing costs is about the easiest way to stimulate consumer spending at this point. Housing costs are funneling money away from retail and everything else. That's' why the economy is grinding to a halt. The FED sacrificed all of us the past few years just to make the banks RE portfolios whole and to maintain oligarch wealth.

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  2. Prices are about 20% or more over what I want to pay...which is 2011 or so...and even then, I thought prices were going to come down more. Almost decided to seriously consider something this summer...but I just couldn't do it. We're in a good spot renting, and a good place financially. I have very little to gain buying right now, and very little to lose by waiting a few more years to see what's going to happen.

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    1. As you've probably seen in my Dr HB posts late 2011 early 2012 is my benchmark for prices. That was the point where all the housing tax credits had expired and QE3 hadn't been ramped up. Once the correction takes hold I'll feel comfortable when the monthly nut reaches 2011 parity. Right now 20% down doesn't get you close to rental parity on a decent house in any LA suburb on in to the IE. Putting 20% down and still paying hundreds of dollaers over rent parity is insane. At least during Bubble 1.0 the Neg Am loans got you below rental parity. This is going to crack up spectacularly as soon as we get the official "we're in a recession" from .gov. More QE won't help. The dead cat bounce is over.

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