Some of the following may seem crazy. Which of the following do you agree with?
Once all the 60-plus olds get their vaccine, they will start listing their homes for sale and make use of the new prop 19. They are the main source of supply in bay area and they are staying put now.
Companies like Oracle that have plans to move out will start cutting in the valley.
Lot of home owners owning small businesses will face foreclosure after the mortgage forgiveness ends. They will try to cash out all at once after vaccinations.
Once eviction moratorium is lifted, most renters who lost their jobs in the pandemic will start filling for bankruptcy. Rents will plunge and investors will be forced to sell.
Since the buyers didn’t go on vacation during last Christmas, the usual slow down in the sales didn’t happen. Instead the cycle just moved forward this year and so by June there won’t be many buyers left.
Last point is interesting and I can see merit.
In addition to that I also think higher mortgage rates will ensure we don’t see the 10+% price increases YoY.
The housing boom is real real. Demand is growing and supply is restricted. Where are these boomers going to go? Prices are going up nationally. Meanwhile the cost of construction is skyrocketing. I don’t believe your scenario
Every year we have some sellers coming into the market for a variety of reasons. One reason could be to cash out their million-dollar-plus gains and buy in places like Brentwood or Tracy closeby, or even out of state. For the past 12 months, most likely those people would have stayed put due to Covid. Now that supply along with the current year’s supply may hit the market at the same time this summer. I know people who moved out to Brentwood, Phoenix, Salt Lake City, Dallas, etc.
We can keep an eye on the new inventory every week and we would know soon if this is true. I agree with your theory about long-term demand but I feel that the current spike in prices/demand is due to temporary supply constraints. The same scenario is playing out in other parts of the country too. That could explain why prices are going up all over the country at the same time; millennial buyer demand alone cannot explain this.
Supply restraints have built up over 50 years of no growth nimby and environmental restrictions. There is a shortage of 3m housing units in California. A deficit that will never be overcome. Unless we have a pandemic 10x deadlier than covid19
We have always had this shortage. I am looking at what’s behind the sudden low inventory now. New buyers looking for single family homes is only part of the story I feel.
May be another 10% jump if wait until summer. Who knows? But there just aren’t that many good looking properties on the market. Inventory is paper thin.
Nobody is building sfhs in the BA except $4m ones on tear down lots which doesn’t increase inventory at all, just the prices . Builders are building condos and apartments that nobody wants. Kind of like Tesla building small sedans that no one wants.
You want a new house? You have go to Mt House and be #200 on the waiting list.
The other issue is too much money chasing too few properties. Millennials finally buying. That is huge like the boomers in the 70s when prices went up 10-30% a year for a decade
All of them will not hit majority of the landlords. When landlords able to withstand eviction ban, they will stronger without it!
If too much lay off happens or stock market drops more than 20% and newer companies file bankruptcy and mass lay off starts, then only real estate gets affected.
The current 5-10% correction in stocks are very usual and will not deter anything. This is perfect healthy correction happens twice an year.
Now, demand is more. Unless demand is reduced, no way Bay Area goes down.
Entire peninsula is back to fire with multiple ipo millionaires and going crazy. This is not going crazy with shortage, but going crazy with demand side holding multi millionaires cash+options.
Unless stock market corrects 20%-30% nothing to worry about real estate.
I think a 20% stock correction would be great for RE. Look at 1987. Huge crash and then RE boomed for the next 4 years . Same last year. All that money taken out of the market doesn’t evaporate. A lot of people that sell in a crash have profits. I was playing stocks and options in 1987. Got burned. Concentrated solely on RE after that.
The people most likely to move are young renters who are single. It’s easiest for them to move. They’re already moving.
Everyone has been predicting older people selling and moving for YEARS or DECADES. It hasn’t happened. They stay where they are close to their family. They have prop 13 and CA state income tax isn’t that big of deal at lower income levels in retirement.
Eviction moratorium lifting will actually be bullish for RE. Landlords will be able to get rid of deadbeat tenants and get paying ones. Even if rents go down 10-20% that’s much better than collecting no rent at all. If not collecting renting didn’t force selling, then a drop in rent definitely won’t. Also, it’s really only relevant for SFH, condo, and townhome rentals which can actually be sold. The bulk of rentals are apartment complexes. They aren’t going to become part of the for sale inventory for people trying to buy a primary residence.
I’d be interested to see exactly how many home owners are small business owners. Even if half of them put their house on the market, how much inventory would it actually be?
