December 5th, 2017

GOP tax plan will be a bad hombre for the California housing market:  National Association of Realtors warns that prices can fall by 8 to 12 percent if tax plan is approved.

It seems like a lot of people are tripping over themselves regarding the GOP tax plan.  For California, the housing cheerleaders always trumpeted the massive amount of tax deductions you got when buying a ridiculous crap shack.  I always found this to be absurd.  You usually got “free market” thinkers on the economy but then suddenly, wanted massive government support when they bought their expensive home.  In the Bay Area a crap shack will cost you $1.5 million if you even want to have a parking spot within walkable distance.  So it is no surprise that the GOP tax plan doesn’t give two seconds of thought as to what is good for California.  And good just means on what side of the dinner table you are sitting at.  Frankly, the rest of the country subsidizes the crazy housing market in California and other expensive states so it never made sense to have a mortgage interest deduction of up to $1,000,000 when the typical house in the U.S. costs $200,000.  In regards to housing, the GOP tax plan will not help California housing values.

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November 16th, 2017

San Francisco housing market near bubble risk according to UBS report.  Majority of Bay Area renters plan to leave.

The San Francisco housing market is the most overvalued market in the United States.  People over inflate the market because tech is sexy and cool and many are chasing the next Google, Amazon, or Facebook.  Everyone wants to strike it rich with as little work as possible.  And what better way to do that than in real estate?  In San Francisco the typical crap shack will cost you $1.2 to $1.5 million.  The response from many housing cheerleaders is the typical logic you see in manias – hey, someone paid for it!  You also get similar stories from the tulip bubble, dotcom bubble, and other bubbles where the justification for higher prices is simply that some other sucker paid for it at that level.  And there is now signs that we may be in a rental bubble in the Bay Area.  83 percent of renters surveyed in the Bay Area said they plan on leaving.  Tie that in with the UBS Global Real Estate Index showing that San Francisco is dangerously close to bubble territory and you have indicators that something is rotten in SF.

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October 31st, 2017

Smallest home in Los Angeles:  264 square foot studio selling for $550,000 highlights collective insanity.

People have once again lost their collective marbles when it comes to real estate.  There is now a massive trend with momentum for non-stop housing appreciation.  In other words, our housing bubble sins are now fully washed away making way for more aggressive risk taking.  I’ve been traveling and seeing real estate from many different locations and thanks to ubiquitous sites like Zillow, virtually every large metro area is seeing massive housing appreciation detached from income growth and people are tracking real estate down like starving hyenas after an injured wildebeest.  We are now in a market where potential buyers are in a panic to buy for no other reason beyond they feel they will miss the boat yet again.  Today we highlight what is probably the smallest home we have ever featured on the site.

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October 14th, 2017

The land of the permanent renter:  More single family homes are now rentals with households moving less.

There has been a massive trend towards renting.  The vast majority of household growth since the housing bubble imploded has been with rental households.  I know this is hard to believe for Taco Tuesday baby boomers but this is simply the new reality.  And all of those investors that bought up single family homes for rentals are living it up.  There are now a few major changes impacting the housing market – many more single family homes are rentals and many more renters are staying put.  In other words, many are not looking to buy and builders realize this.  There is now a large category of permanent renters since many people live and work in more expensive metro markets.  Short of forking out an insane amount of money to live in say San Francisco, people are opting to rent.  The proof is in the numbers.

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