Housing Analysis

zubs said:
Isn't this why Silicone Valley Bank, Signature Bank, and First Republic died?
They lent out mortgage money 2 years ago @ 2% and today, Etrade savings account is 3.85%.
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Only a small portion of SVB's loans were mortgages. Most of their portfolio were loans to VC firms and private equity firms.

"In December 31, 2022, 56% of its loan portfolio were loans to venture capital firms and private equity firms, secured by their limited partner commitments and used to make investments in private companies, 14% of its loans were mortgages to high-net-worth individuals, and 24% of its loans were to technology and health care companies, including 9% of all loans which were to early and growth-stage startup companies."
 
usctrojancpa said:
Inventory will remain low until interest rates fall. I have about a half dozen move-up clients who want to upgrade their home but they just can't mentally get there from going from a mortgage rate in the 2s to a mortgage rate in 5s. If inventory levels remain low prices will continue to head higher. As I've stated before many times, pay attention to inventory levels as they'll be your tell on where prices are heading. I'll be posting up market analysis through April in the next few days.
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Low inventory is causing high prices. If interest rates fall, then prices will be higher. Does that mean prices will go up no matter what? What would cause housing prices to decline? I know higher inventory but there will only be higher inventory if interest rates fall.

Side question - when do you believe interest rates will fall?
 
Ochomebuyer said:
Low inventory is causing high prices. If interest rates fall, then prices will be higher. Does that mean prices will go up no matter what? What would cause housing prices to decline? I know higher inventory but there will only be higher inventory if interest rates fall.

Side question - when do you believe interest rates will fall?
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Easy. High unemployment rate + no mortgage forbearance.
 
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sleepy5136 said:
Easy. High unemployment rate + no mortgage forbearance.
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Don’t underestimate the collapse of the AirBnB bubble as a supplier of inventory. I see coastal OC and North SD County getting hit hard. Desert too but that’s already underway with La Quinta banning short term rentals after 2024.
 
OCtoSV said:
Don’t underestimate the collapse of the AirBnB bubble as a supplier of inventory. I see coastal OC and North SD County getting hit hard. Desert too but that’s already underway with La Quinta banning short term rentals after 2024.
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If they can’t Airbnb in north SD couldn’t they rent it out to longer term tenants?
 
OCtoSV said:
For positive cash flow ? Not to mention finding a credit worthy tenant in a retrenching professional job market. North County ain’t Silicon Valley.
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That's going to be a case by case situation. Don't feel like this would be an issue especially if they bought during pandemic or prior to pandemic locking in < 3% interest rate.
 
sgip said:
About the only way to "motivate" the low rate and cash owners into selling is to make the cost of owning rental property so difficult from a tax perspective that there will finally be a rush to the exits. If rental income were taxed at 50% for every $1.0 over PITI, eliminate both the depreciation deduction and 1031 exchange rules, and finally tax any property sales by non-US citizens at a "confiscatory level" will we see any meaningful boost of new inventory.

Of course the likelihood of anything listed above transpiring is slim to none, and slim already left town.
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as long as legislatures own real estate and rentals, don't expect to see laws making them so uncomfortable to own taxwise to increase inventory. Even letting people not pay rent during covid didn't accomplish that.
 
California population projections have been updated to show that the state will only grow by 1.3% total over the next 37 years.

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zovall said:
Wow.. and do you think the gap between the poor and the rich will narrow or widen during this period?
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Housing should be built at a rate faster than population growth, so I say narrow.

EDIT: I also think a shrinking workforce serving an ever-growing elderly population will put upward pressure on wages.
 
Does that estimate of growth use the current historically low immigration rate as a driver?

Do folks think that immigration will open up again?
 

Housing market affordability is worse now than at the height of the housing bubble in 2006​

“The housing market is at a pivotal point as we head into fall. Mortgage rates are now at more than a two-decade high and for some home shoppers, those higher rates are enough to cause them to step back from the market,” wrote Lisa Sturtevant, chief economist at Bright MLS, in a statement to Fortune. “It is likely to be a very slow fall [in the] housing market this year..."

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