June 10th, 2017

Land of the grown adults living at home: 5 reasons why California will continue to have millions of Millennials living at home.

California has millions of young adults living at home with parents because they are unable to venture out into an expensive rental or a dilapidated crap shack costing close to $1 million.  It is interesting to see many articles written by baby boomers sporting beer guts and how Millennials are “destroying” many industries like chain restaurants (i.e., TGIFs, Buffalo Wild Wings, etc) or retail stores (i.e., Sears, K-Mart, etc), or are simply not buying homes.  Of course Millennials have different habits.  And getting stuck with an absurd 30-year mortgage on a dump is not a big aspiration for many.  They are more into health and wellness, life experiences, and many are delaying marriage.  So why do they need a home?  The data is backing all of this up of course contrary to the house humpers that continue to sing the praises of $1 million crap shacks.  California is in a major rental revolution.  And Millennials will continue to live at home in mass for a few reasons.

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June 1st, 2017

Who needs a loan to buy a home? Loan originations are down to a three year low.

The housing market is running on opioid induced euphoria and the tentacles of mania are deep into every large metro area.  You would think given all this unchecked optimism that mortgage originations would be near a record level since you would assume people are out buying in mass.  Yet that is not the case.  What is happening is people are fighting over the scraps with low inventory and are bidding prices up on crap shacks to ridiculous levels.  And there is data to back this up which is important because people are living in an alternative reality.  Loan origination volume hit a three year low this year.  What?  How is that possible when all the cheerleaders are out in the streets preaching the good gospel of buying real estate?  Well the reality is that a good portion of the market is still driven by investors.

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May 24th, 2017

Wild examples of the mania in real estate: $200,000 for permits? Crap shacks galore? The mania is reaching a fever pitch.

The housing market is deep into mania.  You can see it in the eyes of the house lusting buyers and the overweight Taco Tuesday baby boomers drooling at their mouth trying to justify why their World War II built crap shack is worth $1 million.  The market has gotten unhinged and in this environment you keep hearing things like “crazy” and “insane” and “what the hell is going on?” over and over.  That sure inspires confidence and stability!  Yet people want to commit to a 30-year fixed mortgage on a dump.  In a time when flexibility is key and being nimble in your mind is paramount, you have old thinking boomers trying to infect people with this old paradigm of how business is done.  And the telling thing is what is happening right now is not any different from what happened in the last crisis.  Mortgage debt is down because a large part of recent buying has come from investors!  Of course mortgage debt in aggregate is down when many investors pay in cash – that is why the homeownership rate is also down.  Duh!  But overall household debt is up thanks to people loading up on student loans, auto debt, and credit card debt.  Yet this is somehow better?  Just look at some of the wild examples in the real estate market.

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May 17th, 2017

The housing bubble must go on: 5,497,000 properties are still underwater. Number of equity rich properties grows as well.

The lap dogs of the housing industry are getting louder and louder as each day goes by.  There is now a wide consensus that housing values only go up and the mania is losing all perspective.  Crap shacks are still selling as beer belly cubicle slaves buy into the cult-like mentality and go against their common financial sense.  “Well this area might gentrify soon and it might be the next Santa Monica!”  The notion that by you buying a crap shack you are living the dream is somewhat hilarious.  No, you are not living in Bel Air just because you “own” real estate.  There is so much “all hat and no cattle” in Southern California that it is hard to believe.  Yet this housing mania is nationwide.  So it is hard to fathom that you have over 5,497,000+ that are underwater right now with a good number seriously underwater.  And this is in a hyper-crazy market.  You also have a large number of equity rich owners but they need to sell to uncork that wealth.

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