Dr. Housing Bubble 06/19/14

The turning of the worm in the housing market – Weakest May sales volume in California since the crash of the housing market. California home ownership rate continues to fall.

If you want to play in the current housing market, you have to contend with the limited amount of inventory and the delusional salivating sellers going for peak prices. It is interesting to hear about recent home buyers e-mailing me about foundation issues, roofing problems, and generally crappy construction issues after they bought their homes. A few waived contingencies just to get their lusting home buying urges out of the way. Now they are left with major repairs and a 30 year mortgage. No one that moves into a home will suddenly find a hidden gem of cash flow. To the contrary, even if you pay off your property you still have taxes, insurance, and maintenance. That is why we see these Friskies eating baby boomers selling their homes with mega-deferred maintenance asking insane prices but with very poor upkeep. You have to sell to unlock that lottery ticket. It is also interesting to hear the Chief Economist of the CAR hint at some California homes being overpriced. Even this tiny realization should tell you something. Remember folks, real estate agents make better money in a market with a large number of sales instead of a market fully stunted by funny accounting and banking chicanery. Yet we are starring at an inflection point here. Housing markets turn slowly. It is abundantly clear that local household incomes are being stretched to the limit and many are now relying on ARMs and other products that simply manipulate the monthly payment.

Use your logic

While home prices race upwards and in some areas we are seeing new peaks being reached, it is very clear that many Californians are being priced out. 2.3 million adults are living at home with older adults because they are too broke to own (many too broke to rent). So investors continue to be a driving force in this market although their appetite is also waning.

http://www.doctorhousingbubble.com/housing-market-turning-california-homeownership-rate-falls-prices-income/