Tag: housing bubble

Living by Joe WilcoxSep 17, 20205:13 pm

San Diego’s Record House Prices Baffle Me

In a pandemic-stricken economy of soaring unemployment and where small businesses fall like dominos—and more risk toppling because of California Governor Gavin “Gruesome” Newsom’s restrictive lockdown orders—you might expect the housing market to reflect real-world woes. Oddly, though, the median sale price of homes in metro San Diego is a record high of $665,000, according to data collected by Redfin. That’s a 13-percent year-over-year increase, as of Sept. 6, 2020. County-wide, according to the California Association of Realtors, median home price is $732,560, and that’s up 13 percent from August 2019.

My neighborhood, University Heights, reflects the trend—with emphasis. Searching Trulia and Zillow, the bargain-basement-priced listing is a single-bedroom, one-bath, 576-square-foot condominium in a three-story complex looking into an open courtyard. You can live there for $299,900, or $521 per square foot. If that’s too small, how about a cozy two-bed, two-bath, 726-square-foot condo for $415,000; $572 per square foot? Both places are indistinguishable from any apartment for rent; maybe not as good-looking.

Living by Joe WilcoxJul 18, 201712:27 pm

Don’t Believe Housing Market Lies

I once again see disturbing trends rearing their ugly heads in the U.S. housing market. Twelve years ago, I warned about the housing bubble long before it burst—then living in the Washington, D.C.-metro area. Now my vantage point is San Diego, where home prices soar and sales (finally) start to stagnate.

Justification, set against measurable trends, often is a fantastic measure that something is amiss.

Metaphor: In film “The Big Short“, set during last decade, a Florida real estate agent drives around a group of Wall Street investors trying to discern whether or not there is a housing bubble. As they pass property after property for sale, she explains: “The market is in an itsy-bitsy little gully right now”. Eh, yeah. That gully later became a giant sinkhole. This morning, I received a newsletter from a local realtor that claims: “Pending home sales were sluggish in April as low supply reared its head”. Crazy thing, I see plenty of inventory for sale—and for increasingly longer times today than four or five months ago. The newsletter’s assertion rings like a justification worth concern.

Responsibility by Joe WilcoxFeb 2, 20154:48 pm

Perpetual Prosperity Psychology and the Housing Bubble

Something about the housing bubble narrative bugs me: Conspiracy. Evil bankers conspired to bilk Americans by financing home loans to people who could never pay, to then repackage bad mortgages as good investment products. While I lauded Matt Taibbi news analyses in 2010 and 2013 for exposing financial institution malfeasance, the blame game always seemed to ignore one other party’s culpability: Borrowers.

New research paper “Changes in Buyer Composition and the Expansion of Credit During the Boom” is a fascinating post-bubble autopsy. Its conclusions, if they survive the test, rewrite the bubble narrative, which revision makes more sense to me.

Money by Joe WilcoxNov 17, 20107:45 pm

Banks Play the Foreclosure Blame Game

Big business plays the kind of blame game that makes four year-olds crying “He made me do it!” seemingly mature. So, I’m not surprised that yesterday before the US Senate Committee on Banking, House & Urban Affairs, Bank of America’s Barbara Desoer blamed investors for the financial institution’s inability to modify more mortgages. It’s not her fault!—she claims. She makes a strange distinction between investors and shareholders, in the process casting blame as misdirection from a much larger problem: Banks and other lenders mishandling mortgage/foreclosure paperwork.

Society by Joe WilcoxOct 30, 20106:35 pm

Foreclosure Fallout will Last 9 Years

The Wall Street Journal‘s number of the week is startling. “107: How many months it would take to sell banks’ current and shadow inventory of foreclosed homes.” If Journal reporter Mark Whitehouse is right, banks will need 9 years to clear their foreclosure inventory. But I wonder. Could it be longer?

Living by Joe WilcoxOct 17, 20107:49 pm

Should Barack Obama Bail Out Americans?

My answer is yes. Artificially created debt is cholesterol clogging the arteries of consumer spending. The economy that created the debt is gone. Only by surgically removing debt can Americans freely spend, thus pumping fresh blood to the heart of the U.S. economy. But, hey, I’m no economist, although in 2005 I rightly predicted the housing bubble’s collapse and much of the aftermath. Surely such insight is worth something.

People by Joe WilcoxFeb 22, 20107:33 pm

What Worthless Means in Housing Dollars

Their home, meanwhile, which was originally valued at $585,000, had depreciated severely in three scant years. It was now essentially worthless at $270,000. Attorney Wajahat Ali This is the dramatic and sad kind of situation […]

Money by Joe WilcoxJul 12, 200911:30 pm

Reich’s Right: No Economic Recovery in Sight

U Cal Berkley prof Robert Reich astutely and concisely sums up the prospects for economic revival in commentary “When Will the Recovery Begin? Never.” I saw it today at Salon, but Robert posted to his blog on July 9.

Other economic observers who talk about a recovery underway go oddly together with reality. There is no recovery now, and there isn’t going to be one in the foreseeable future.

Society by Joe WilcoxMar 16, 20089:37 am

Let the Bears Eat Bear Stearns

I agree with Gretchen Morgenson, writing for the New York Times. The Fed shouldn’t bail out Bear Stearns. The fed crossed a line by keeping afloat a major architect of the housing debacle.

I wrote my first blog post about the housing bubble in August 2005, a year after deciding not to buy a home in the Washington, DC suburb of Bowie. It was already clear to me in summer 2004 that something akin to a repeat of the dot-com bubble was taking place in the housing market.

Had we bought in 2004, we would likely hold a mortgage that exceeds the house’s reduced value. We could never have moved to San Diego.

Living by Joe WilcoxAug 25, 20063:44 pm

Housing Bubble Myths Pop

For more than a year I’ve warned that the housing market would retreat with wicked vengeance, with reverberations moving through the US economy as it did earlier in other countries. Today’s Fortune story “Getting real about the real estate bubble” rips apart some of the myths sustaining the bubble.

Shawn Tully whacks the hell out of four bubble myths: “As long as job growth is strong, prices can’t go down”; “the builders learned their lesson in the last downturn. They won’t swamp the market with new houses when the market turns”; “low interest rates will keep values rising, or at the very least, put a floor under prices”; “restriction on development in the suburbs ensure low supply, and guarantee rising prices”.

Living by Joe WilcoxJul 15, 20066:31 pm

I’d Like to Be Wrong About This

I am back on my “collapsing housing market” bandwagon. Today’s New York Times story “Keep Eyes Fixed on Your Variable-Rate Mortgage” tells of the coming doom—people unable to pay for their homes because of risky variable-rate or interest-only loans.

The story, by Damon Darlin, reveals that nationwide, interest-only loans accounted for 26.7 percent of mortgages last year. In Washington: 40 percent!

Money by Joe WilcoxJul 6, 200611:50 pm

When the Boom Busts

I have repeatedly blogged about the impending housing market crisis. While not as apocalyptic as my stated position, SmartMoney story “Home Crunch” warns of problems on the coasts, where inflated home prices and risky mortgages will pinch many home owners.

In my neighborhood, signs of a sales slowdown are everywhere. Two houses around the corner have been on the market for months. A year ago, they would have sold within a week. Some houses are selling, but the turnover clearly is slowing down.