My opinion is that Bay Area housing price is in the process of peaking. Many high end locations have already peaked, low end locations are also in the very last phase of appreciation.
If you bought a rental house or condo at the bottom, enjoyed a more or less double of the price. You are getting good rent and cash flow if you did not cash out to maximum. Your rent is really good compare with the original purchase price. But rental yield is low compare with the current price.
Housing price could just plateau or decline slightly. I do not foresee a dramatic price decline. I think price decline will be less than 15% for most locations, main reason is the superb quality of the current property owners.
So what are you going to do in 2017 and a few years after? Sell or hold?
For sure, I am not selling. I have even taken cash out refinance and keeping the money ready, waiting for opportunity. If prices come down 15%, sure many will buy, forum members, that includes me !
If I remember correctly, when we signed on here, our Fearless Leader @manch required that we swore to never ever selling any of our Bay Area real estate holdings…
I know this home, bought 246k, is rented for $4000. It is not worth selling! It is almost like cutting the Goose That Lays the Golden Eggs !! It has nice cap rate and exceptional appreciation that defeats even S&P500 !
The forum was there with RedFin at that time around 2005 period. Nanomug, Elt1, tomhVallejo (tjh) and Buyinghouse are the long members of that old redfin forum.
Just tried to find that redfin forum and couldn’t - looks like it was shutdown . Do you remember by any chance if they were super bullish or super bearish at that time?
Also in that particular example above - yes it is not worth it to sell, no doubt. did you want to tell us that if someone will buy a house now it will be much more expensive in 20 years!? I think everyone knows that.
In 2006 it was too late…I stopped buying in 2002…But I had lent moeny on hard money loans out in 2004-2006 and was spanked badly…I had no idea the market would drop up to 80%…most of my loans were wiped out
I had seen year 2000 dot.com, laid off, faced worst period of bay area. During 2007-8, I knew this country recovers, for sure, bought homes in 2008, 2011 and 2015, but never expected this much bullish run ! This has crossed year 2006 peak level.
I was convinced we had a bubble starting in 2003. Turns out I was waaaay too early. If I had bought back then I would still have come out OK. Actually even at the top of the bubble say 2007, if you took out a couple NINJA loans with 0% down payment and bought in Palo Alto or Cupertino, you would be filthy rich today.
The moral of the story to me is buy quality locations. It doesn’t matter when you buy. When bubble was at its craziest, price is high, but on the flip side money is easy to get.
yes it is not worth it to sell, no doubt.: To prove this, I showed the example.
However, the owner lived there as primary many years until 2005-6 the peak period (appx 880k) of real estate. The owner did not take 500k capital gain tax break, but left the home as rental. This was remarkable decision to leave 100k tax especially at the peak period and turning into rental. How much foresight he/she had when turning into rental. The home is simply doubled now.
Whenever you sell, you lose 6%. So your house needs to decline by more than 6% before it makes sense to sell. Given that most of us can’t time the market well, I would say HOLD unless you have reasons that SV would be detroited by possible trade wars with China/ unfavorable immigration policies, supplanted by Seattle or rapid advancement of technology such as VR (virtual office hence no need to be physically in SV) and self-driving cars (reduce number of car parks, and garages hence more space for building residential houses).
. Do you remember by any chance if they were super bullish or super bearish at that time?
