February 17th, 2018

The future of California will be with rentals:  California’s homeownership rate will remain stagnant for the next decade.

While indicators of the economy seem to be doing well, the homeownership rate in California is telling a different story.  The unemployment rate looks healthy, the stock market is still very high even with the recent correction, and people seem to be spending beyond their means once again with credit card debt solidly above $1 trillion.  Euphoria is oozing out of Taco Tuesday baby boomer beer guts and the saliva is dripping when they pull up their Zestimates on Zillow.  Yet somehow, the homeownership rate remains stagnant.  Millennials are living at home in record numbers especially in California.  The recovery started in 2009 almost a decade ago yet people aren’t out buying homes in droves (yet inventory is pathetically low).  The future of California will be with rentals.

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January 27th, 2018

The evaporation of housing inventory:  What a continued drought in housing inventory will mean for the real estate market.

The housing market continues to operate in a very lean environment.  Home builders are building but are focusing their efforts on multi-family units to cater to a growing renting population.  Builders are also shy about placing big bets given the recent memory of the previous housing bubble.  Places where they can build freely like Arizona, Nevada, and Florida are known to pop as quickly as they go up in value.  And in areas like California, where NIMBYism rules the day, people are now convinced that prices will never go down so the ratio of bulls to bears is extremely high.  The sentiment seems to be that there could be no wrong in purchasing real estate even if it means leveraging up into a crap shack.  Yet what is very telling is that inventory is still very low after many years.

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January 8th, 2018

Roommate Nation:  30 percent of working adults are now living with a roommate.

With the rent being too damn high, many Americans are now opting to live with a roommate (or two or three in the case of San Francisco and Los Angeles).  We now have a record number of adult Americans living with roommates.  This coincides with a stagnant growth in the homeownership rate especially in crap shack intensive areas like SoCal.  The market continues to be constrained by low supply and Taco Tuesday baby boomers living in properties that they would not be able to purchase today at current price levels.  Many older home owners bought during an era where one income (even one blue collar income) was enough to purchase a home.  That is no longer the case in many metro areas where dual income professionals and all cash buyers are the dominant buying force.  So how many adult Americans are now living with roommates?

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January 3rd, 2018

Canada went full USA with their housing bubble:  Their bubble is just starting to burst with home values dropping for the first time since Q1 2009.

The Canadian housing market is entering into a “housing correction” courtesy of the mega debt our neighbors to the north have taken on.  The bubble grew and grew and like most real estate bubbles, they can go on for years beyond what most would expect.  Canada’s housing market is deep in a bubble.  You have households deeply in debt and many taking on wild loans secured to the value of their real estate.  It has been a few months but key markets are now seeing noticeable changes.  The online news feed no longer reads like a cryptocurrency surge where everyone has to get in before missing the party.  Canadians went full USA in their housing bubble.  Should you expect a different outcome?

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