It's A Terrible Time To Buy An Expensive House
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Re: It's A Terrible Time To Buy An Expensive House
#2Unless it's in NYC and you got the rates right when they were at the bottom.
Article is very useful, but it's one of those that gives 'here are x reasons'. Yes, but come up with determining how to make a decision instead
Re: It's A Terrible Time To Buy An Expensive House
#3Unless it's in NYC and you got the rates right when they were at the bottom. Article is very useful, but it's one of those that gives 'here are x reasons'. Yes, but come up with determining how to make a decision instead
Did you read the article? It actually has some nice rules of thumb on how to compare the price of a house to the rent.
Re: It's A Terrible Time To Buy An Expensive House
#4He kinda ignored supply and demand.
Re: It's A Terrible Time To Buy An Expensive House
#5He kinda ignored supply and demand.
Point 6 in the article is about supply and demand.
Re: It's A Terrible Time To Buy An Expensive House
#6The part about high price/low interest rate vs the opposite was really helpful. I am trying to figure out how to think about this so it's well-timed. Thanks.
Re: It's A Terrible Time To Buy An Expensive House
#7It's worth noting that patrick was among the few active bloggers that noticed the housing bubble early. Ben at the thehousingbubbleblog, calculatedrisk were two others. Folks that were paying attention and shorted the banks made some money.
But of course: this time is different, broken clock, and , etc etc.
Re: It's A Terrible Time To Buy An Expensive House
#8In many places, homes available to rent are not and will never be comparable in quality to homes available to purchase.
Re: It's A Terrible Time To Buy An Expensive House
#9In many places, homes available to rent are not and will never be comparable in quality to homes available to purchase.
Plus renting is basically flushing your money away each money opposed to building equity in something over time.
Re: It's A Terrible Time To Buy An Expensive House
#10Some very solid points about the market in general, but I wonder how several of these points (particularly the points about oversupply, baby boomers, etc.) apply to places like SF or Manhattan.
SF, in particular, seems to be extremely young (though that could be observational bias on my part), well-monied, in sharp undersupply of housing, with rent matching or in some cases exceeding the cost of a mortgage.
Historically, it's been a boom-and-bust sort of town as far as housing prices are concerned. And there are always places like the East Bay and the Peninsula to capture some of the demand. But it's not as if the Peninsula is cheap these days, so Oakland seems the more likely candidate to take on the burden (which then raises a thorny question of where all the low-income Oaklanders go when the gentrification accelerates).
But it's conceivable that SF basically becomes the Mahattan of the Bay Area, a playground for the rich, while everyone else gets pushed into the outlying boroughs and beyond. In such a scenario, where money is little object to the buyers determined to own in SF, what happens to pricing?
I don't know anyone who owns a home in SF right now who doesn't think the current prices are insane. (Anecdote: one friend just bought a condo in a new building, and three months later, the closing price for a lesser unit in the same building was $200k higher than what he'd paid for his). But are they actually going south anytime soon? Also: while mortgages and interest rates are great indicators for the housing market in general, SF seems to have an unusually large supply of cash buyers.
In conclusion: I'm not disagreeing with the article, nor am I bullish on the local housing market. I don't fully understand why it's behaving the way it is, and that's never a great sign. But superficially, it seems to be the sort of "microclimate" that doesn't track the aggregate US market very closely. How many of these enclaves of wealth does the US have, or will it have, that seem to have a low to zero beta w/r/t the overall market? And if it's a significant amount, when will speaking in aggregate terms start to lose a bit of meaning?
On a related note, I'd love to see a comparison of urban vs. rural vs. suburban areas across the US. I suspect that concentrated urban centers are obeying very different laws of physics, so to speak, than suburbs and semi-rurals with their huge tracts of overbuilt housing inventory. Example: I used to live in LA, and when the press spoke about how hard-hit LA was during the housing crash, they painted with a pretty big and sloppy brush. The surrounding areas (Inland Empire, etc.) got the plague, but housing in LA proper barely registered a slight cough.