Friday, May 10, 2013

Can You Feel The Top?

Bidding wars, quick flips, magazine covers, Wall Street, cocktail party topics, TV shows and "Flipping Los Angeles"  seminars. When everybody knows, the music will stop soon. Smart investors are all ready bailing out and price resistance is beginning to show. It will be interesting to see what the market looks like after summer when the typical selling season is over. You can almost sense that our most recent bubble has just about run it's course. Not much upside as prices peak and the quick buck is gone.  Then what? Who is going to fill that void, taking into consideration the housing fundamentals are terrible. We have an unsustainable bubble that is ready to pop. Only this time, banks have a free ride, so prices can stagnate for the next 10 years. Unfortunately, energy, food and other household items continue to inflate and eat into housing budgets.  Without liar and sub prime loans, the entry level buyers are almost non-existent.

So where do we go from here, now that homes have been re-inflated close to peak prices? With the cost of buying, selling, maintenance, taxes and insurance, renting and investing the excess housing dollars is a viable option. Throw in the need to be mobile for work prospects and many are now choosing apartments over buying a house .

Very interesting reading on "Why America Fell So Far..... So Fast." by Washington's Blog. History repeats, nothing really new.

7 comments:

Matthew said...

I think we hit the top in July. I think from here till July we start losing steam and I think around July we start seeing this dead cat bounce finally fall apart. I think the next leg down is much more eye opening for the average American and very sobering.

Latesummer2009s@gmail.com said...

That is very possible, we will have to wait and see. In 2007, everything just dropped off a cliff in August. It was quite dramatic. What's scary this time is it seems to be pure speculation with Wall Street(again) and institutional investors. Very few little guys in the picture. I would be liquidating property right now as fast as possible.

Anonymous said...

SM said...

"Can you feel the top?"

Just because prices are rising, how can you conclude that you can feel the "top"?

Anonymous said...

buying for people with at least 20%down is cheaper than renting after tax deductions when you compare apples to apples even in the high priced westside. plus, the buyers are strong buyers, not subprime buyers. i hate when you compare renting an apt to buying a house. Those two arent the same in terms of size, space, etc. i am not sure about other parts of the country but on the westside, there is always new money coming into town or two well paid professionals with income of 300-400k and other 300k in the bank) who are ready to put down roots. it is a supply and demand issue for the current market prices rises. look at the current sales for SFR on the more desirable parts of westide. They are all jumbo loans, and it is not easy to get a jumbo loan these days. one yr cash reserves, strong income, impound acct, no gifts, etc... ask anyone who is serious about buying, and they will tell you the same. It is always easier to talk when you are sitting on the sidelines.

Anonymous said...

Agree, the top is in. The right time to dump property was last month, when the rates were 1% lower. inventory is already climbing in my area. Thus won't be pretty.

Latesummer2009s@gmail.com said...

Yes, you can sense it. Perception is changing again. Any bull market is all about confidence. And the big fish have already lost it.

Bruce said...

It feels like we've reached a height and a fall is very likely. Young, first time buyers are not interested in buying and likely don't have the down payment anyway. The same people are buying today as were buying the last bubble. It may well not have a pretty end. water damage Temecula CA