Home Buying in Petaluma>Question Details

Anna Cota, Home Buyer in Petaluma, CA

So when do people predict this up and coming bubble will pop? I believe what is happening is a bubble...

Asked by Anna Cota, Petaluma, CA Fri May 17, 2013

After researching and educating myself it is clear to me the current real estate madness and overvaluing of properties is unsustainable and a bubble just forming.

Any guesses from the peanut gallery when it will pop? And if you think it won't I have a house from 2005 to sell ya!

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Here's some facts you may not have included in your calculations:

1. Fannie & Freddie themselves have 4,000,000 VACANT FORECLOSURES on their books. And that doesn't count the millions of vacant homes currently held by the banks. In March 2013, a news reporter mentions 1,000 vacant bank owned homes in Vallejo: http://bit.ly/188dSvg [article link]

Every area I've been able to quantify [adding up foreclosures from foreclosureradar, and subtracting reo sales on the MLSs] ends up showing approx 30%-50% worth of the area's annual home sales are vacant unlisted foreclosures. 30%-50% of an area's annual housing market is quite enough to manipulate any market any way these banksters choose and it's impossible (as of yet) to accurately predict how and when but we can rest assured it's coming some way some time some how. By the way, they have obviously decided to not list REOs as they are still foreclosing, but not listing.

2. In March 2013, fully 1/3 of all homes sold in the US were purchased with ALL CASH. This is a tremendous influx of cash - from US families and investors, foreign investors, hedge funds and sovereign funds. CASH is notoriously flaky. Since most of these purchases are NOT FOR OWNER OCCUPIED HOMES, then CASH can decide not to buy on a moment's notice. CASH is currently buying because real estate seems like a better opportunity than other options like saving. IF/WHEN that situation changes, for example CASH decides that gold/silver is a lucrative investment again, then "overnight" cash will withdraw from real estate. Losing 1/3 of buyers in any market would, at least temporarily, implode that market.

3. Many new rules/laws are being pushed at the Federal level to 1) remove the federal mortgage tax write-off, 2) impose a "sales tax" on higher priced homes for health care revenues, 3) increase down payment requirements, 4) toughen up lending standards... Each and every one of these type of changes will dampen buyer/ownership enthusiasm or eliminate buyers that won't qualify.

4. Virtually all the homes with loans generated between 2000-2009 are still so far underwater, they would have to sell short even now and for years in the future. Actually, it is highly doubtful prices will rise enough to allow any of these homes to sell "whole" - for a price that actually pays off in full what is owed. So home sale inventory will remain in short supply until the banks/GSEs decide to list vacant foreclosures.

CURRENT RESULTS OF THE ABOVE FACTS: Sales in Sonoma county are 25% less to date this year than 2012, while home price median has jumped $100,000. As prices climb and loans now require proof of ability to repay (unlike the fraudulent toxic loans that fueled the last pricing bubble), homes will sell, but fewer of them. This trend is very likely to continue until something breaks - banks list reos or cash decides not to buy...

FYI: Looming housing meltdown: http://bit.ly/15Wp9kQ

I keep my followers up to date on these issues with my daily livestream, which you are welcome to follow: new.livestream.com/accounts/2292674.

Thanks, cj cjholmes@cjholmes.com
Web Reference: http://www.hofj.org
1 vote Thank Flag Link Sat May 18, 2013
wow thank you so much! you are awesome, such great info!
Flag Wed Jul 10, 2013
For a counter-view to the housing meltdown linked above:
http://dealbook.nytimes.com/2013/01/09/new-target-in-finger-pointing-over-housing-bubble/
Flag Sat May 18, 2013
The Bay Area has always been a desirable area and now that banks have caught on that they can make more money by releasing them slowly, and doing more re-fis and short sales, I think this "bubble" will continue in this area until contractors start building more and inventory is higher than it is now. If you have something to sell, now might be a good time! If you would like an estimate of your home's current value, feel free to contact me for a free consultation. Best,
Terry Bell, Realtor
Sonoma County Real Estate
Creative Property Services
707-292-5712
TerryinSR@aol.com
1 vote Thank Flag Link Tue May 21, 2013
If we could predict, we would all be retired from investing!!
1 vote Thank Flag Link Sat May 18, 2013
Following the US and world economy as well as major world events may give you a "leg up" on being able to appreciate the short time future. Beyond that, you are on your own with the other "Dooms Day" followers.

Have you created your bunker and made arrangements for your survival?
1 vote Thank Flag Link Sat May 18, 2013
Predictions are very difficult; especially about the future.
1 vote Thank Flag Link Sat May 18, 2013
I believe it will flatten soon since there are basically no agressive stated income loans and almost everyone has to qualify with their documented incomes and that will be the limiting factor....unlike the last bubble. I don't think it will go up much more and then flatten for a while...but not pop
1 vote Thank Flag Link Fri May 17, 2013
Thanks Sheryl. 20% down stated income with a 700 fico score is not what I would call agressive. No down or little down payment stated income loans were what caused the housing bubble in 2000-2007
Flag Sat Aug 31, 2013
It's not a bubble. It will stabilize but no dramatic drop. We are working towards a normal market.
I have done research as well. If you were confident in your predictions you would not be asking us when it will pop.
1 vote Thank Flag Link Fri May 17, 2013
Hi April,
Too many buyers chasing too few listings isn't fun for buyers, but sellers have been stressed ever since just about the time you got your house in 2005. It's about time the market has some good news about increasing values. I'd say it's a combination of pent up demand, great interest rates, and the drying up of the REO/foreclosure inventory that are all contributing to what you call an unsustainable market and I call an overdue correction.

Only time will tell which of us is right. I've never been scared of making predictions, though, as the link below will show. That's a call of the housing bottom in early 2009. (I actually think that was the start of a very minor additional downward correction that felt like bumping along the bottom. I think we're in for a sustained recovery that will only slow down when rates begin to rise and enough sideline dwelling sellers jump on the bandwagon to help ease the shortage of inventory.
1 vote Thank Flag Link Fri May 17, 2013
Thanks!
Flag Fri May 17, 2013
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