When would be next housing Bottom?

[Liar Loan]

I also thought early last year was the highest peak that the price would come down from then. I think the sales have definitely slowed down, but the price seems to be acting different than how I expected. I thought the price would come down far worse by now, but it?s actually slightly up, but at the same time that?s normal because homes are supposed to gain 3% increase every year by default. Anything below 3% increase should actually be counted as a decrease. The slow sales should result in lower prices so it might take some time as meccos has said. I think the lower interest rates are kind of holding things from falling apart. We?ll see how it goes.

So back on topic.

@Mety:

How long is that price lag going to take? Everyone said volume has been down since last March, it's been over a year... and while a Jan-June measurement shows a 14% drop in volume, the latest monthly volume is going back up.

If July/August shows a rise of over 3% in prices... do we still call it a slowdown? And to be clear, it is a slowdown in regards to prices not continuing to rise at the pace it has been, but in regards to buyers having to wait for some significant discount in pricing, it was more of a flatline.

If rents are much cheaper than monthly ownership, then it absolutely makes sense to rent if prices have flat-lined. In reality, prices are down 2%+ YoY, and that number will continue to get worse.  So does it make sense to leverage your money at 4% for a -2% loss?  No way!!  That leveraged amount means you lost 10% of your down payment.

 

[usctrojancpa]

I also thought early last year was the highest peak that the price would come down from then. I think the sales have definitely slowed down, but the price seems to be acting different than how I expected. I thought the price would come down far worse by now, but it?s actually slightly up, but at the same time that?s normal because homes are supposed to gain 3% increase every year by default. Anything below 3% increase should actually be counted as a decrease. The slow sales should result in lower prices so it might take some time as meccos has said. I think the lower interest rates are kind of holding things from falling apart. We?ll see how it goes.

So back on topic.

@Mety:

How long is that price lag going to take? Everyone said volume has been down since last March, it's been over a year... and while a Jan-June measurement shows a 14% drop in volume, the latest monthly volume is going back up.

If July/August shows a rise of over 3% in prices... do we still call it a slowdown? And to be clear, it is a slowdown in regards to prices not continuing to rise at the pace it has been, but in regards to buyers having to wait for some significant discount in pricing, it was more of a flatline.

If rents are much cheaper than monthly ownership, then it absolutely makes sense to rent if prices have flat-lined. In reality, prices are down 2%+ YoY, and that number will continue to get worse.  So does it make sense to leverage your money at 4% for a -2% loss?  No way!!  That leveraged amount means you lost 10% of your down payment.

This is true, but you are talking about possible paper loses.  Purchasing a primary residence for the longer term tends to be much more than a mathematical investment return project for just about every buyer.  The reality is if someone who buys a good property in the Irvine/Tustin Ranch and lives in the home for 7-10 years while most certainly be able to sell their home for more than what they bought it for mainly because the inventory of new homes (today's shadow inventory) will shrink close to zero in that time (you might have some Great Park homes out there).

 

[irvinehomeowner]

If rents are much cheaper than monthly ownership, then it absolutely makes sense to rent if prices have flat-lined. In reality, prices are down 2%+ YoY, and that number will continue to get worse.  So does it make sense to leverage your money at 4% for a -2% loss?  No way!!  That leveraged amount means you lost 10% of your down payment.

I think kenkoko did the math for his cousin last year, and back then (and maybe now), it's probably cheaper to rent than buy, I don't know for sure.

But... in addition to what USC said, buying a home you plan to live in is usually more than just an expense comparison between renting and purchasing. As we've seen from several posters here on TI, they would much rather buy and even pay a higher monthly than renting because of the other benefits of ownership.

And a wise man once said this:

A house is quite possibly the best investment there is, assuming you can buy in a high demand, growing area like SoCal.  It's inflation protected, pays a huge dividend by providing a place to live, and the tax benefits are insanely good.

On top of that you can be completely uneducated about investing and still benefit from this great investment.  Stocks and rentals take a certain amount of education and financial savvy that not everybody is cut out for.  The benefits and risks of owning a primary residence can be understood by just about anybody.

So while I'm not recommending people buy now or to buy just to buy, depending on your situation, owning a home, even if it cost more than renting, could be beneficial whether prices are dropping or rising.

I'll use my own stupidity to illustrate this, we bought in 2005/06 near the height of the bubble, I guess you could even call us a knife catcher. We sold a few years later (for about 4.5% less than what we bought it for) but had we stayed for just a few more years, we could have sold for 10-20% more than our purchase price. And, had we decided to purchase instead of renting a few years (we did the same expense math and it was cheaper to rent), that property would also have risen in value.

Sure, that's anecdotal and there are probably people who experienced the opposite but that's why I say you should be okay to buy if you can stay in your home for a longer period of time.

If I polled the members here, I wonder if the numbers would favor buying over renting regardless of expense comparison and trying to time rising/dropping prices.

 

[paperboyNC]

Renting has a lot of downsides:
- Can't customize the home / yard as much as you'd like
- At the landlord's mercy for home repairs and certain appliance repairs
- Rent might increase dramatically at the end of your lease
- Owner might decline to renew lease (owner moves in, sells property, etc.)

If you end up having to move every year, moving costs negate a lot of the savings.

I'm still tempted to sell my home and rent just because the higher end homes rent for half the monthly cost of buying.

 

[eyephone]

Renting has a lot of downsides:
- Can't customize the home / yard as much as you'd like
- At the landlord's mercy for home repairs and certain appliance repairs
- Rent might increase dramatically at the end of your lease
- Owner might decline to renew lease (owner moves in, sells property, etc.)

If you end up having to move every year, moving costs negate a lot of the savings.

I'm still tempted to sell my home and rent just because the higher end homes rent for half the monthly cost of buying.

Maybe you should sell it for ?Max RoI?

 

[meccos12]

I find it hilarious that IHO was asking for more recent OC register data thinking he was going to see price increases and instead sees even greater price drops.  You truly thought new numbers were going to show higher prices and help your argument huh?  Now we are seeing double digit price drops in Irvine, with one zip code at nearly 18% YoY price decline. 

You like trulia?  The median price drop in all of Irvine is about 7% according to Trulia. https://www.trulia.com/real_estate/Irvine-California/market-trends/

You have inflation working in your favor for higher prices, you ultra low interest rates working in your favor for higher prices, yet we still see YoY price drops. 

So we have a 7% price drop (median for all Irvine), record low rates, hundreds of additional homes to choose from.  This seems like a much better position for buyers compared to one year ago.  You should apologize to Eyephone for all the crap you gave him for recommending people wait.  It seems like he was spot on.  Anyone who took Eyephone's advice can now purchase 20% more home and have many more to choose from compared to one year ago. 

 

[usctrojancpa]

I find it hilarious that IHO was asking for more recent OC register data thinking he was going to see price increases and instead sees even greater price drops.  You truly thought new numbers were going to show higher prices and help your argument huh?  Now we are seeing double digit price drops in Irvine, with one zip code at nearly 18% YoY price decline. 

You like trulia?  The median price drop in all of Irvine is about 7% according to Trulia. https://www.trulia.com/real_estate/Irvine-California/market-trends/

You have inflation working in your favor for higher prices, you ultra low interest rates working in your favor for higher prices, yet we still see YoY price drops. 

So we have a 7% price drop (median for all Irvine), record low rates, hundreds of additional homes to choose from.  This seems like a much better position for buyers compared to one year ago.  You should apologize to Eyephone for all the crap you gave him for recommending people wait.  It seems like he was spot on.  Anyone who took Eyephone's advice can now purchase 20% more home and have many more to choose from compared to one year ago. 

Not sure where Trulia, Zillow, Redfin or other real estate websites get their data but here is the data from CRMLS...

Median Price per SF perspective for Irvine
$476/sf (July 2019) vs. $489/sf (July 2018) or a 2.7% YOY price decline
$466/sf (March 2019) vs. $496/sf (May 2019) or a 6.0% peak to trough price decline but a 2.1% increase of the bottom to July 2019

Average per SF perspective for Irvine
$489/sf (July 2019) vs. $496/sf (July 2018) or a 1.4% YOY price decline
$481/sf (Jan 2019) vs. $507/sf (May 2019) or a 5.1% peak to trough price decline but a 1.7% increase of the bottom to July 2019

The data points to May 2018 being the most recent peak and the bottom happened in Jan-March with a price drop of 5-6% and then prices rebounded by about 2% from Jan-March to July.  My theory is that the lower interest rates spurred more lower demand which used the per SF levels to increase (I experienced a handful of multiple offer situations on both the buy and sell side for homes under $800k). 

 

[irvinehomeowner]

@meccos:  Your math is getting worse.

 

[eyephone]

I find it hilarious that IHO was asking for more recent OC register data thinking he was going to see price increases and instead sees even greater price drops.  You truly thought new numbers were going to show higher prices and help your argument huh?  Now we are seeing double digit price drops in Irvine, with one zip code at nearly 18% YoY price decline. 

You like trulia?  The median price drop in all of Irvine is about 7% according to Trulia. https://www.trulia.com/real_estate/Irvine-California/market-trends/

You have inflation working in your favor for higher prices, you ultra low interest rates working in your favor for higher prices, yet we still see YoY price drops. 

So we have a 7% price drop (median for all Irvine), record low rates, hundreds of additional homes to choose from.  This seems like a much better position for buyers compared to one year ago.  You should apologize to Eyephone for all the crap you gave him for recommending people wait.  It seems like he was spot on.  Anyone who took Eyephone's advice can now purchase 20% more home and have many more to choose from compared to one year ago.

Well said

 

[irvinehomeowner]

Median Price per SF perspective for Irvine
$476/sf (July 2019) vs. $489/sf (July 2018) or a 2.7% YOY price decline

Average per SF perspective for Irvine
$489/sf (July 2019) vs. $496/sf (July 2018) or a 1.4% YOY price decline

2.7% and 1.4%... doesn't seem like very much of a price "slowdown" considering the slowdown in volume.

The peak-to-trough high of 6% doesn't even come close to the 15% delta I mentioned in seasonal drops from previous years.

Several members (and articles) have said that price drops in Irvine will be smaller than the '08 one because of the stability of owners (no ninja financers like over 10 years ago). This along with many non-fundamental factors are things that longtime TI members are familiar with that newer members may not be aware of despite what the data seems to be pointing to.

And as Mety pointed out, anything below a 3% increase is noteworthy but I just don't agree that "anyone can now purchase 20% more home" than one year ago. As I've said multiple times, if it was a 15-20% price drop, you might consider waiting, but less than 10%, depending on your situation, it may not have been worth trying to time that ambiguous bottom to save a 2-7%.

So, getting back to the topic... are we will waiting for the next housing bottom? Graph data shows downward trends so maybe December is still the magical month.

 

[momopi]

https://www.redfin.com/CA/Irvine/28-Sonata-St-92618/home/5918453

This guy bought for $610K in May and wants to flip for $680K in June?  @_@;;

 

[meccos12]

@meccos:  Your math is getting worse.

LOL.  You still dont know why I called you a simpleton huh?  Hint:  has to do with YOUR math. 

 

[Mety]

https://www.redfin.com/CA/Irvine/28-Sonata-St-92618/home/5918453

This guy bought for $610K in May and wants to flip for $680K in June?  @_@;;

That's about the right % where the seller would not lose the money. Maybe could even benefit a little more if the realtor commission is low like Redfin. Maybe they're relocating or don't like the house or something.

I remember our parents once bought a condo and never lived there leaving vacant for a year because they realized they like the home they were living better after closing with that condo .  Luckily they sold the place with a slight increase the following year and got even with all those lost money and tax.

 

[momopi]

https://www.redfin.com/CA/Irvine/28-Sonata-St-92618/home/5918453

This guy bought for $610K in May and wants to flip for $680K in June?  @_@;;

That's about the right % where the seller would not lose the money. Maybe could even benefit a little more if the realtor commission is low like Redfin. Maybe they're relocating or don't like the house or something.

I remember our parents once bought a condo and never lived there leaving vacant for a year because they realized they like the home they were living better after closing with that condo .  Luckily they sold the place with a slight increase the following year and got even with all those lost money and tax.

Assuming 5% seller commission, on $680K that's $34,000, about half of the potential gains if he actually gets the asking price.  But I just can't see the home being sold for $680K.

 

[irvinehomeowner]

@meccos:  Your math is getting worse.

LOL.  You still dont know why I called you a simpleton huh?  Hint:  has to do with YOUR math.

Sure. Show me then.

People who resort to name calling usually do so because they can?t back up their posts.

You tend to use the extreme numbers rather than averages that reflect the actual reality.

Rather than factoring multiple things and not just the data seems more like a simpleton approach to me.

 

[meccos12]

@meccos:  Your math is getting worse.

LOL.  You still dont know why I called you a simpleton huh?  Hint:  has to do with YOUR math.

Sure. Show me then.

People who resort to name calling usually do so because they can?t back up their posts.

You tend to use the extreme numbers rather than averages that reflect the actual reality.

Rather than factoring multiple things and not just the data seems more like a simpleton approach to me.

Me calling you a simpleton has nothing to do with the numbers I use (although the number I used was literally the median price drop taken from trulia), but rather your inability to do simple analysis to back your points.  Rather than trying to obscure your shortcoming with inaccurate claims about me, perhaps you should review your own statements first.

 

[irvinehomeowner]

@meccos:  Your math is getting worse.

LOL.  You still dont know why I called you a simpleton huh?  Hint:  has to do with YOUR math.

Sure. Show me then.

People who resort to name calling usually do so because they can?t back up their posts.

You tend to use the extreme numbers rather than averages that reflect the actual reality.

Rather than factoring multiple things and not just the data seems more like a simpleton approach to me.

Me calling you a simpleton has nothing to do with the numbers I use (although the number I used was literally the median price drop taken from trulia), but rather your inability to do simple analysis to back your points.  Rather than trying to obscure your shortcoming with inaccurate claims about me, perhaps you should review your own statements first.

Yawn.

 

[eyephone]

@meccos:  Your math is getting worse.

LOL.  You still dont know why I called you a simpleton huh?  Hint:  has to do with YOUR math.

Sure. Show me then.

People who resort to name calling usually do so because they can?t back up their posts.

You tend to use the extreme numbers rather than averages that reflect the actual reality.

Rather than factoring multiple things and not just the data seems more like a simpleton approach to me.

Me calling you a simpleton has nothing to do with the numbers I use (although the number I used was literally the median price drop taken from trulia), but rather your inability to do simple analysis to back your points.  Rather than trying to obscure your shortcoming with inaccurate claims about me, perhaps you should review your own statements first.

I agree his counter arguments are not that strong. It?s like trolling at it?s best.

 

[irvinehomeowner]

I agree his counter arguments are not that strong. It?s like trolling at it?s best.

You still haven't given your explanation why if volume slowed so much, prices are still high.

Someone says lag... but volume has reportedly slowed since March 2018... that's some lag.

What do you think?

 

[eyephone]

I agree his counter arguments are not that strong. It?s like trolling at it?s best.

You still haven't given your explanation why if volume slowed so much, prices are still high.

Someone says lag... but volume has reportedly slowed since March 2018... that's some lag.

What do you think?

Fox Business News Article: Southern California home sales see record drop in prices, Hamptons not far behind

According to recent research from data analytics company CoreLogic, about 20,790 new homes and condos were sold during the month of June in San Diego, Los Angeles, Ventura, San Bernardino and Orange counties. That is a decline of 6.9 percent from the month prior and a drop of 8.8 percent from the same period last year.

New home sales in the Southern California counties notched their weakest June since 2014.

?Despite ? a healthy economic backdrop, the market was sluggish, suggesting many would-be buyers remained priced out or concerned about buying near a possible price peak,? Andrew LePage, a CoreLogic analyst, said in a statement.

New York and California are two states where experts have said residents are looking to leave as their tax obligations mount. New Yorkers have favored the sunnier climate in Florida, while Californians have headed to Texas and Nevada.
https://www.foxbusiness.com/economy/southern-california-home-sales-drop


My comment: As I stated before the Salt cap. Thearticle mentioned people are concerned buying during a possible price peak, according to CoreLogic analyst.