We are early in the economic expansion

At least by this indicator:

https://finance.yahoo.com/news/residential-housing-can-tell-economys-going-not-think-155604353.html

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Always being the worry wart that I am, I also follow the “if the herd is doing it, maybe watch out” theory… when I see stories like this, that everyone and their mother is house flipping it kind of worries me…

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I thought CA RE was a bubble when I moved there in 2004. That bubble kept going for 4 more years before popping. Buyers are way more qualified this time. Investors with massive amounts of cash are starting to make up a larger and larger percent of owners. That’s way more stable than people with liar loans that can’t even afford their interest-only ARM. I think the risk now is political in terms of rent control or laws that’d punish landlords.

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No doubt, everything I have tracked (except for that pathetic one in the outer Mission with the many decrements in listing price) has gone into contract. It is simply amazing how many people are buying, and at these prices. Let’s be honest, a million bucks is still a million bucks (yes, not all cash upfront for sure but still)…

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In booming bullish economy money makes money spirally. For example, overall my stock investment (no RSU, ESPP…etc, but just buy and hold/sell) YTD returned more than 15% so far in just 4.5 months !

Stocks are going up as Gross Margin and Net Margin are growing.

This is not only for me, but for many of my friends at office, everyone earned more than 10% by now. I talked to few of them today on my return to home. One person scared by this big ROI for him, he just asked me whether he can sell everything now and pay off his mortgage completely. Then, he asked me which one (rental or primary) is better to pay off as he has both fixed 30 year at 3.625% !

I started accounting from 12/27/2016 onwards and aimed to reach 10%, but it is going beyond expected level. My accounts are very small, but there are multi-millions on stocks. Similarly, local businesses are growing crazily.

That is why FED is applying rate hike !

No way are we early in the expansion. Rents are down, VC funding is down, BART ridership is down, interest rates are on an upward trend. This expansion is fizzling out, albeit slowly.

All your data is BA. There’s a whole country out there that would beg to differ. Lots of positive economic data latetly.

My guess. Next recession in 2018 or 2019. Bay area will get hit hard (similar to 2001). The rest of the US will be impacted but not as bad.

We are at the late stage of economic expansion. If I guess right, this will unlikely withstand more than 2 years.

The economy is growing uncontrolled booming level. This is the main reason FED is hiking rate as they clearly see growth!

I really feel that Trump is unlikely come back again 2nd term if the economy explodes by the end of his first term !

Love to hear your detailed reasoning.

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GDP growth is still less than 3%. That’s hardly booming.

and how many trillion dollars of QE for that low GDP? no more QE now too

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I have no crystal ball but we are currently in one of the longest economic expansions in US history. Longest was 120 months. We are at ~107 months of economic expansion. Low interest rates created tech bubble 2.0. VC money was free flowing to startups in the Bay until 2015 and is now gradually declining. The decline will accelerate as interest rates rise. Large companies could get money cheap due to the low interest rates. They used this to buy startups for economically unjustifiable sums of money. Other tech centers (Seattle, Austin, Denver) will get hit but since middle America hasn’t benefited much from this boom, they likely won’t suffer as much from the bust.

Agreed. If Trump does make it through all of his current scandals, he will not survive a recession, which is highly likely. He will push for a war or infrastructure spending as a fiscal stimulus to delay recession.

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I posted this September last year. Bull markets don’t die of old age:

Australia still hasn’t had a recession yet, closing in on 26 years of expansion. The stock market feels to me it’s climbing wall after wall of worries. Granted it’s only the stock market not the underlying economy, but that still means something.

I think the massive liquidity central banks have been injecting into the world is finally kicking in. Wage is finally rising, and we have been hearing stories of labor shortage. The latest one came from reports in construction worker shortage.

The biggest worry to me is still Trump. The guy is a moron. The risk that he may do something massively stupid and harmful is significant. Witness the latest Comey scandal. But economy is doing well in spite of the political risks. To me that feels the economy’s very strong.

Calculated Risk has been saying we are having a demographic tailwind right now. Number of prime working age adults is increasing again, after decades. The future is still bright. Too bad we have to deal with a clown in the White House.

VC funding is rounding error in terms of total US economy. It’s about 0.5%.

Rents are falling as more people opt for longer commutes driving up rents further out.

Why is the BART ridership down? Is SF employment already in trouble?

How do people trust BART now with such news?

http://www.sfgate.com/crime/article/BART-takeover-robbery-50-to-60-teens-swarm-11094745.php

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Caltrain ridership also dropped. And Bart ridership drop happened way before the mass robbery. I think it’s very important economic data for SF employment. Bart/Caltrain ridership drop happened when SF rent started decline.

So we can use Bart ridership as a proxy of SF rent.

Startup bleeding and Twitter layoff might be the reason for Bart ridership decline.

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Drop is not due to lay off or mass population movement out of bay area as we still see lot of traffic congestion here.

They are bound to drop as a result of Lyft, Uber, Waze, Scoop carpool driving. Many goes to car pool using these apps and earning money. Last year and this year, ride share programs increased in bay area and they try to use car pool to avoid traffic.Ride sharing people pick up at home and drop off at office. I am seeing almost an year that my colleagues are coming with ride sharing, esp at peak traffic locations. Ride sharing almost tripled in last two years.