Comments on: Ode to the Housing Market: Learning to Love the Housing Bubble. http://www.doctorhousingbubble.com/ode-to-the-housing-market-learning-to-love-the-housing-bubble/ How I Learned to Love Southern California and Forget the Housing Bubble Wed, 19 Nov 2008 23:49:39 +0000 http://wordpress.org/?v=2.2.2 By: Exit http://www.doctorhousingbubble.com/ode-to-the-housing-market-learning-to-love-the-housing-bubble/#comment-9305 Exit Sun, 09 Mar 2008 17:24:41 +0000 http://www.doctorhousingbubble.com/ode-to-the-housing-market-learning-to-love-the-housing-bubble/#comment-9305 @Scott Unfortunately part of your argument is specious. There are significant tax consequences for 'trading in' an existing property, for those 18 million residents who have lived here since 1969. Only a fraction of those residents (1) owned then, (2) kept, (3) didn't over-encumber. Those who meet the criteria can take a one time Prop 60/90 exemption, however not all counties subscribe, further limiting those who might want to move and keep their tax basis. In turn this limits demand for the remainder properties on the market. The heirs looking to buy only will obtain funds in the event they encumber or sell the (grand)parents house, which incurs sales costs, stepped up basis and resultant cap gains or inheritance tax issues, and of course new loan qualification requirements. If there is more than 1 heir, the 'housing riches' get diluted upon inheritance. And the point you make - 'they would be downsizing' - argues against them moving - so again, a component of demand is removed from the market. So, the large and increasing housing supply cannot rely on being relieved by increased demand from long time owners, even those who own free and clear, until such time that a basket of factors balances the costs of sale with the value of acquisition. @Scott

Unfortunately part of your argument is specious.

There are significant tax consequences for ‘trading in’ an existing property, for those 18 million residents who have lived here since 1969.

Only a fraction of those residents (1) owned then, (2) kept, (3) didn’t over-encumber. Those who meet the criteria can take a one time Prop 60/90 exemption, however not all counties subscribe, further limiting those who might want to move and keep their tax basis. In turn this limits demand for the remainder properties on the market.

The heirs looking to buy only will obtain funds in the event they encumber or sell the (grand)parents house, which incurs sales costs, stepped up basis and resultant cap gains or inheritance tax issues, and of course new loan qualification requirements. If there is more than 1 heir, the ‘housing riches’ get diluted upon inheritance.

And the point you make - ‘they would be downsizing’ - argues against them moving - so again, a component of demand is removed from the market.

So, the large and increasing housing supply cannot rely on being relieved by increased demand from long time owners, even those who own free and clear, until such time that a basket of factors balances the costs of sale with the value of acquisition.

]]> By: Tom in Rancho http://www.doctorhousingbubble.com/ode-to-the-housing-market-learning-to-love-the-housing-bubble/#comment-9270 Tom in Rancho Sun, 09 Mar 2008 00:41:05 +0000 http://www.doctorhousingbubble.com/ode-to-the-housing-market-learning-to-love-the-housing-bubble/#comment-9270 You have the same questions I have Gael! I am stunned by people and their spending habits. I have been here for almost 3 years now, Moved here 2005 at the top of the housing insanity. Realtards and new home sales people told me this"if you don't buy now you will be priced out of the market". That statement deserves a moran award! Priced out of the market, what exactly did they mean by that? Well, they have their answer now! It's interesting listening to people at New Home models when they talk to the sale people. They just don't get it. A lot of people have no clue there is a housing crash! I always said upfront to the sales people in their face that I cannot afford those prices. I always got that same look from them, kind of a empty look. I got judged by them at that moment. I was not worth anything in their minds! I still love to argue with them. Anyway, how much are people making. Dying to find out! You have the same questions I have Gael! I am stunned by people and their spending habits. I have been here for almost 3 years now, Moved here 2005 at the top of the housing insanity. Realtards and new home sales people told me this”if you don’t buy now you will be priced out of the market”. That statement deserves a moran award! Priced out of the market, what exactly did they mean by that?
Well, they have their answer now! It’s interesting listening to people at New Home models when they talk to the sale people. They just don’t get it. A lot of people have no clue there is a housing crash! I always said upfront to the sales people in their face that I cannot afford those prices. I always got that same look from them, kind of a empty look. I got judged by them at that moment. I was not worth anything in their minds! I still love to argue with them. Anyway, how much are people making. Dying to find out!

]]> By: Scott http://www.doctorhousingbubble.com/ode-to-the-housing-market-learning-to-love-the-housing-bubble/#comment-9269 Scott Sun, 09 Mar 2008 00:36:31 +0000 http://www.doctorhousingbubble.com/ode-to-the-housing-market-learning-to-love-the-housing-bubble/#comment-9269 Not everyone in California is house poor and that has driven a lot of the housing inflation. I 'Zillowed' the house I lived in with my parents in San Francisco. They paid $68,000 for it in 1969. Zillow values it at almost $3.5 million today. OK they finished off the basement but a 50 fold price increase in 39 years is rather excessive even for California. By way of comparison had a Ford Mustang gone up at the same rate as San Francisco real estate a basic model would set you back over $200,000! A modest Eichler starter home in San Rafael or Palo Alto that sold new for $30,000 are million dollar homes today. That gives the 18 million people who lived in California in 1970 and had already bought a house a rather different economic perspective than the 18 million who arrived since. They rode the long housing boom up and they or their heirs have no problem buying a million dollar home. In fact for many that would be 'downsizing'. Not everyone in California is house poor and that has driven a lot of the housing inflation. I ‘Zillowed’ the house I lived in with my parents in San Francisco. They paid $68,000 for it in 1969. Zillow values it at almost $3.5 million today. OK they finished off the basement but a 50 fold price increase in 39 years is rather excessive even for California. By way of comparison had a Ford Mustang gone up at the same rate as San Francisco real estate a basic model would set you back over $200,000! A modest Eichler starter home in San Rafael or Palo Alto that sold new for $30,000 are million dollar homes today. That gives the 18 million people who lived in California in 1970 and had already bought a house a rather different economic perspective than the 18 million who arrived since. They rode the long housing boom up and they or their heirs have no problem buying a million dollar home. In fact for many that would be ‘downsizing’.

]]> By: Chris http://www.doctorhousingbubble.com/ode-to-the-housing-market-learning-to-love-the-housing-bubble/#comment-9266 Chris Sat, 08 Mar 2008 20:21:12 +0000 http://www.doctorhousingbubble.com/ode-to-the-housing-market-learning-to-love-the-housing-bubble/#comment-9266 I read this post regularly and find it very valuable. It provides much needed information in a comprehensive way that is not covered by the main stream media. This particular post however highlights one aspect of this blog that I am the least comfortable with. That is a tendency for self indulging, self righteous "I told you so" and an underlying critical / negative mindset that does not add to the debate. Yes the average group think is immature and self destructive, how many times do we need to say it. There is a saying I like that goes "we are not changed by what we turn from but what we turn to". Blessings and keep up the good work. I read this post regularly and find it very valuable. It provides much needed information in a comprehensive way that is not covered by the main stream
media. This particular post however highlights one aspect of this blog that I am the least comfortable with. That is a tendency for self indulging, self righteous “I told you so” and an underlying critical / negative mindset that does not add to the debate. Yes the average group think is immature and self destructive, how many times do we need to say it. There is a saying I like that goes “we are not changed by what we turn from but what we turn to”. Blessings and keep up the good work.

]]> By: gael http://www.doctorhousingbubble.com/ode-to-the-housing-market-learning-to-love-the-housing-bubble/#comment-9263 gael Sat, 08 Mar 2008 19:29:29 +0000 http://www.doctorhousingbubble.com/ode-to-the-housing-market-learning-to-love-the-housing-bubble/#comment-9263 Wow....Tom. It's nice to know there are other couples in the same situation as my husband and I find ourselves. Only we live in Los Angeles. Around 1999 we looked at houses in our neighborhood, little 2 or 3 bedrooms build in 1930. Those homes were going for between 270,000-350,000 then. Now those same homes ask for 1.4 million. We definitely cannot afford those prices. Are that many people making that much money? Wow….Tom. It’s nice to know there are other couples in the same situation as my husband and I find ourselves. Only we live in Los Angeles. Around 1999 we looked at houses in our neighborhood, little 2 or 3 bedrooms build in 1930. Those homes were going for between 270,000-350,000 then. Now those same homes ask for 1.4 million. We definitely cannot afford those prices. Are that many people making that much money?

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