Everyone is predicting a housing crash but prices are not falling (0.5% does not count). RE prices seem sticky and no one is willing to sell at a lower price than their neighbor last year. They will sit on it for years, or will they give up?
Why sell when they probably have 3% mortgage or lower just to pay a 5%+ mortgage rate? Rents are up too, and theyâd have to pay to live somewhere after selling.
Looks like people are finding it hard to accept that home prices crashed. Prices have come down drastically even in Cupertino. Buyers are idiots to pay anything more than pre-Covid prices. Take a look at this:
https://www.redfin.com/CA/Cupertino/859-Candlewood-Dr-95014/home/1124531
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Transaction not closed.
Real estate prices are are stickyâŚitâs going to take a while.
CalculatedRisk did a study and found that peak to trough real declines in RE have historically taken an average of ~3.5 yrs.
In comparison, peak to trough declines in equities (in a bear market) have on average taken a comparatively short ~10 months.
Well there are too many idiots in Bay Area apparently. And in the long run these idiots apparently have become RE rich while sane people kept waiting for correction.
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I am one of those. Bought at the 2007 peak. CAGR is a paltry 5%. Bought another near the bottom in 2011, CAGR is over 10%. Avg of two is within the historical 6-8% CAGR of SB. Both are less than what I got in Austin, 13-28% CAGR.
Just to be clear, I own homes in the Bay Area and this is not a case of sour grapes. I am also not saying people will have to wait till home prices become same as Texas prices. I am just pointing to what is already happening - a major price correction. Not a hypothetical scenario anymore. It will be well known in couple of months. Just warning people not to get screwed meanwhile.
The so called experts claim that Austin the biggest bubble in US and due for massive correction. Reventure Consulting has Auston in the spotlight.
I have not seen a consistent pattern of MAJOR price correction in Bay Area. A one off data does not count, I can find such data in any market. Prices have fallen by 2-3% at best. With the amount of dry powder waiting at the sidelines I doubt prices will ever drop by double digit.
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Many YouTube influencers who live in CA are claiming that Austin is in a bubble. Enough said.
You clearly have not been in the South Bay market as a buyer in the last 2 months. Most of the homes arenât even getting a single offer.
There is no more dry powder. Nasdaq took care of that. People have been getting qualified for loans using unvested RSUs. They are also not so sure of holding on to their jobs forever.
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Many markets have similar frozen behavior waiting to break out or break down. I guess depends on what Fed do next. I have dry powder waiting, not doing anything yet, waiting to see what happen after Fed Sep mtg. I think that meeting is pivotal. Btw, I think Europe and China are in recession, which ironically is good for USA, calm down inflation without needing Fed to hike rate too high. That is, we might not have a recession or just a mild recession.
âIn June 2022, Santa Clara County home prices were up 6.0% compared to last year, selling for a median price of $1.5M. On average, homes in Santa Clara County sell after 12 days on the market compared to 10 days last year. There were 1,347 homes sold in June this year, down from 2,010 last year.â
Yeah, itâs totally crashing. Prices are only up 6% vs. last year, and DOM is up to 12 days. 12 days is the sign of the apocalypse. Homes arenât even getting a single offer yet they are some how selling. WeirdâŚ
Everything you are saying is logical but I have not seen a MAJOR price correction in Bay Area. I have been tracking South Bay and East Bay and both are holding up well. Inventory is growing but prices are fairly stable. There are some price cuts but not much. I think median sale price may drop by 5-10% at most before either sellers will simply go into hibernation, Fed will give up, or investors will jump back on Titanic.
Everyone is always waiting for the next or the next to next Fed meeting, its hilarious. Its like Tesla FSD, always coming next year.
With everyone waiting, and waiting, prices will remain frozen and not drop much.
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This waiting is fun. There are so much cash waiting on the sidelines, any signs of Fed halting rate hikes or halting QT or economy is not going into a severe recession (I think stock market is pricing in a severe recession, valuation compression + earning recession), prices would rocket.
I respect your financial knowledge in general and read most of your posts. You know better than me that June sales donât account for whatâs been happening in the last 8 weeks. I am actively helping two friends shop for a home in the South Bay. I have never seen a market turn around so quickly. Call any realtor friend who will not BS you and you will know.