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.

More renters are not moving

Many households used renting as a bridge before venturing out and buying a home.  But more people are renting and staying put:

renters not moving

Across all age groups, people are staying put longer in their rentals.  And this is being pushed by investors renting out single family homes:

single family homes as rentals

Look at the chart above.  This is an anomaly in terms of how many single family homes are out in the market as rentals.  In terms of how many SFRs are rented as a percentage of the entire SFR pool, this is an increase of 50% from the 1980s.

You have many young adults that simply cannot move out on their own even for a rental:

millennials living at home

And if you are looking to buy in today’s house humping market be prepared to pay a premium because inventory is pathetic:

homes for sale

Which leads us to a generational low homeownership rate:

homeownership rate

So what you have is a rental market that now has many more single family homes as rentals and many more renters are viewing these places as permanent versus transitory apartments.  The fact that many more renters are staying put reflects this change.  And why would a landlord argue with this?  It is great to have long-term tenants.  And for many, this meets their needs instead of buying an overpriced crap shack.

Inventory remains pathetically low and younger American adults in large numbers are simply staying put and living at home with mom and dad.  This is not a typical housing recovery.  This is a distorted market and this is the outcome of mapped out bailouts with the banks, hedge funds buying up single family homes, and builders becoming reluctant to build.

People try to paint this recovery as a broad one but what this is highlighting is that this “recovery” is essentially jamming 100 hungry people into a restaurant and saying that the first 20 people that get to the counter will get a cold taco.  Everything is relative and right now, that dump of a home with crappy construction and toxic mold is looking appealing at $1 million.

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368 Responses to “The land of the permanent renter:  More single family homes are now rentals with households moving less.”

  • Housing To Tank Hard Soon!

    • Exactly! Until the crash comes, I encourage everybody to live at home with their parents. I see no reason in moving out….just stay put until the market tanks. Eventually, the houses get handed down to us Millennials anyway….I don’t get all the emotions and drama. The easy fix is living with your folks until we see better times. That’s just what we have to do during rough economic times. Plus you are saving a ton of money!!

      • That is good advice, I lived with my mother in my early to mid 20’s while I started my real estate business. Could never have gotten wealthy through RE investment without doing that. Your friends will laugh at you perhaps but you will get the last laugh 🙂 Cheers.

      • “…Until the crash comes,…”

        I sincerely hope you are right. An acquaintance told me 3 years ago to hang in there because it’s a cycle and prices will correct.

        3 years later, and prices just keep going up.

      • Life is too short to put it on hold for years while living in your parents basement. Let me get this straight … instead of marrying your girl and having a family, you are going to live in your parents basement. What happens if real estate rises for three or more years before it drops? You still lose and you wasted your life.

      • Not much good for those who move cross-country to follow a dream. I’ve been learning improv at the Westside Comedy Theater in Santa Monica, CA, and there are a fair number of those. Life can be quite hard for them. They have my sympathies.

      • “instead of marrying your girl and having a family, you are going to live in your parents basement. What happens if real estate rises for three or more years before it drops? You still lose and you wasted your life.”

        That made me laugh out loud! Not sure where you are from but here in California we dont have basements. I live with my parents and stay in a beautiful big room. If I were to rent this room I would have to pay over 700 dollars at least! That money is better invested or spent instead of wasting it for rent. Not to mention the incredible overpriced mortgages. The only way I move out is when we get a real estate crash.

        Marrying and buying an overpriced house??? lol…go ahead! If you think being a debt slave means living I feel sorry for you!!

      • There are only 2 scenarios possible. Every pension fund on planet Earth is going to implode unless one of two things occur.
        1) Interest rates go up dramatically.
        2) Local taxes that fund pensions go up dramatically.
        One of these is inevitable. Either will crush asset prices.
        This means the only 2 things that can save pension funds will simultaneously crush pension funds when asset prices collapse.
        Good luck Federal Reserve system. You’ll need it.

      • “That made me laugh out loud! ”
        trumpian

        I love the sound of a child’s laughter.

      • 2 things that don’t make sense these da for men: Don’t get married and Don’t buy a house. Mgtow

      • “have to do” should be more like “get to do”. I came from a fucked up family, was forced to move out in my teens, and dont have that luxury. what you “have to do” in my mind is a luxury of what you “get to do” which I cannot do. No house is ever going to be handed to me “when the parents die” either. People like me are seriously fucked. Not too mention the ridiculous student debt aquired just to be able to make a livable wage to afford rent. Its a giant scam. fuck the government. time to go off grid.

      • HUBERT,
        I 100% agree. There are only two solutions here….a violent revolution or voting for the most leftist person we can find. Socialism , communism, whatever….anything is better than what we have now.
        Prop 13 is the biggest scam of all times. You have people living in their million dollar homes and they pay next to nothing in property taxes??? We need to tax the shit out of people who have properties. They should be paying 5% of current market value of the house.

    • Is there nothing but trolls here now?

      ya’ll are easy to spot.

      • @HUBERT

        You are totally right. It seems to me everyone talks about parents are always helping them out as adults, down payment, living back at home for free, free childcare, loans, ect.

        There are a good portion of people who don’t have parents who are able or willing to do any of that. There are even some millennials, that actually have to worry about supporting their parents in retirement.

  • I mentioned this before, but it has to do with the permanent nature of rentals.

    This is happening next door to me. An old shack in my neighbor’s backyard is now being legally converted into a rental unit which will disrupt my life no-end. I hate this new law…

    https://la.curbed.com/2017/1/9/14219298/granny-flats-new-rules-state-back-house-in-law

    • Whereas most new laws represent government meddling and destruction of private property rights, this one appears to actually protect them. Hopefully your neighbor’s renters will be respectful and your life will not be disrupted. Wishing you all a win-win.

    • I’m using Burbank’s ADU code to tear down my existing garage and attach a new garage to the back of my house and build an ADU above the garage. We live on a busy street and I’ve been fighting the city to allow the new garage which will allow us to pull out instead of backing out into the street. We will also be able to have our master bedroom and bath above the garage via the ADU.
      Before Burbank was making us install a Tetris fitting atop the garage to avoid their antimcmansioning planning method. It’s a win, win for us.

    • My brother lives in Westchester (near LMU) and across the street from him is a very large lot, kind of pie shaped, probably 10K sqft lot. he noticed that when the house sold, the buyers demolished it and built a massive 2 story home, even beyond mcmansion size. The buyers are using as a drug rehab facility and apparently got City of LA approval because the City will allow a Rehab facility in some R1 zones if there is limit to the guests for rehab (I think it is 5 residents). The neighbors were up in arms about this and had lots of discussions with the rehab managers. Fortunately the past few years the managers of the facility do run an extremely tight ship and there have been zero problems in the neighborhood.

    • I love this! We need more available rental units, Every Single family home should add a unit for a renter in the backyard or in the house! Tank this market and help millennials out!

    • One problem with these accessory units is parking. There is already limited street parking in many neighborhoods!

  • The going rental prices for an SFR in a decent neighborhood in socal is astounding. Unlike 2006, rents are much higher and the cost of ownership is generally lower (lower rates and decade of inflation). Given these high rent prices, ultra low rates and no inventory, I highly doubt we will see any tanking hard soon.

    • Yeppers. real rates still negative. disgraceful

    • I rent an SFR in El Segundo for 2800/month all in. Market value of the house is ~1.3m which equates to a 6500 mortgage.

      • First-time-buyer

        Nice deltadelta! That’s a steal to rent that place! You would be crazy to stop renting! I keep saying that…. Buying got so overpriced that even the sheeple understand renting saves a ton of money. I am in a similar situation. My rent is soo much cheaper than PITI. I keep hearing from RE Cheerleaders how expensive rent is…muhahaha. That’s their wet dream and the only argument left to buy???! We are due for a recession. We can already see it at my work. YoY sales are softening and everything points to lower demand in 2018. Watch what will happen to rents and house prices during the next crisis hahahaha.

      • Sounds like you are getting quite the deal on rent. Enjoy it while it lasts, you are one of the few lucky ones. I hope you are saving every last dime and put it to use when we have the 50 to 70% crash.

    • “the cost of ownership is generally lower (lower rates and decade of inflation).”

      That would true only if wage growth had greatly outpaced inflation (it has not).

      “Given these high rent prices, ultra low rates and no inventory, I highly doubt we will see any tanking hard soon.”

      The only low inventory lies in affordable properties. Plenty of properties for sale, but little or no qualified buyers.

      • Prince: when you say “Plenty of properties for sale”, what are you basing your assertion on? It was my understanding that the number of listings in the MLS has been on a downward trend across the nation.

      • @Jeff

        Take a look at the monthly supply of homes chart from the St. Louis Fed. The last time it was higher, the downturn of the mid 2000’s was in full blown mode. When supply is limited, sales usually go up due to competition. The RE cheerleaders would like to have you believe the opposite.

        https://fred.stlouisfed.org/series/MSACSR

      • National supply going up is interesting because Calculated Risk publishes local supply for a number of index markets for the previous bubble (like Las Vegas and Sacramento) and for the current one (California coastal metros). They’ve been going down, generally. Are things going south in the rest of the country?

    • “decade of inflation”

      LOL everyone is so full of shit it’s laughable. It’s either you OR the FED…..because the smartest people in the country have been whining and crying that they can’t get to their inflation targets and that’s why they have held rates far too low for far too long.

      I just read an article about how “low inflation” is here to stay.

      so which is it?

      My opinion is RE is the most manipulated industry I have ever seen. The FED is lying about inflation and this going to all end in tears yet again. EVENTUALLY what you earn will be what drives home prices and that means a 80% drop. NOBODY i know can buy a house and can ONLY get one thru inheritance. That is insanity.

    • Plenty of reasonable rentals but you have to sacrifice something. Check the MLS for all of SoCal for your desired rent range. Take Metrolink to work and do your web surfing on the train. Spend your non-commuting time with your family.

  • All well and good, as long as you’re working and bringing in enough to pay an exorbitant rent. Do you just never get to retire? Or do you just expect that you’ll downgrade to a tiny senior studio apartment in your golden years?

    • Move out of that area. There are thousands of cities where retirees can live affordably.

      • Atlanta GA, low cost of living, 4 seasons, lakes, mountains, big city, small towns, close to gulf and east coast, couple of large lakes, growing economy, sports teams, and Atlanta is #1 in the world for film production, movie, tv, commercials, and a world class airport. The down fall, traffic and crime, but thats to be expected.

    • There are quite a few senior apartments going up around me, both 55+ and assisted living. It seems the obvious choice to me – less house to keep up and you get to stay near friends and family. Why move to Arizona or wherever to spend time alone cleaning and mowing?

  • The home ownership rate looks pretty normal and healthy. The author uses the term “generational low homeownership rate”. This is another term for bubble rate. Long term, going back to 1967 and longer, the current rate constitutes reversion to the mean, and is where it should be.

    • Exactly, we are at normal home ownership rates to history. They were only inflated in the bubble.

      Also Los Angeles has always been 60-70% rental units. It is a landlords paradise. Similar to SF renting is by far the majority.

      You only have 30-40% home ownership rates historically in LA and SF. Not a lot of inventory for owning. Plenty to rent.

      • “It is a landlords paradise”

        with 4 families per house. You better keep an eye on that property.

  • The latest drivel to come out of the main stream media … No One Wants Suburban Homes. What a bunch of garbage being written by socialist leaning individuals who think everyone should take up residence in a soviet style building. No thanks.

    https://www.cnbc.com/2017/10/13/boomers-worry-they-cant-sell-those-big-suburban-homes-when-the-time-comes.html

    • The author has a point. I live in a rural part of San Diego county where most homes sit on at least one acre with many being 3+ acres with fruit tree groves. And while everything has gone up in price and the market is hot in this area with people from OC and LA moving in droves, the larger 3,000+ sq ft homes on multiple acres with pools, multiple garages, mancaves, workshops, extensive landscaping, etc. are sitting on the market for much longer and getting considerably less than asking price. I have seen many of these homes get prices slashed multiple times as they sit for months and smaller properties with less maintenance selling within days of hitting the MLS. I think many home buyers today are more practical about what they are buying and don’t want to be tied to a money-pit of a house that must be continuously fed. Prospective buyers now ask about average utility costs and other ongoing expenses. Times have changed.

      • Wheelin Dealin,

        When I first got into real estate a client asked me to appraise a home in Bonsall… but be real careful, we are nervous about stuff that far out!

    • I read that a lot from liberal millennial posters on another real estate forum. “Everyone is moving to the city.” They say it so often that they seem to actually believe it – it’s their diversity lifestyle fantasy. The actual numbers show otherwise. They eventually get married and realize it’s a terrible (and terribly expensive) place to raise a child, and off to the suburbs they go.

    • These articles are written by 24 year olds who think living in 400 sq ft apartment is the epitome of life. These same 24 year olds have been writing about the death of the suburbs for 50 years. But like all 24 year olds eventually they turn 34 and 44 and move to the suburbs.

    • I think the writer of the article has a point, too. YES, many people will always prefer to own their homes, and in nice suburbs. However, they might not want to own a house 2500 sq ft or larger. We forget that, before the 90s, almost no one who didn’t have an income well above average lived in houses with this kind of space.

      During this country’s so-called “golden age” during the Post WW2 era 1945-1975, during what time we were not only more prosperous, but much more fiscally conservative, most middle and even upper-middle class people lived in homes with less than 2000 sq ft. My grandparents were quite successful, but didn’t buy their house until the end of WW2, and that house was a 1,500 sq ft Cape Cod with – HORRORS! -just ONE bathroom. Two baths were considered to be luxury; and 3 or more, positively wanton. Folks then SAVED THEIR MONEY, and the revolving credit machine was only just getting warmed up (though it was luring enough people, especially young people just married, into trouble even then.)

      The oversized “McHouses” and “McMansions” of the 90s and 00s would have been considered ridiculous and over-the-top, and are. People who aren’t rich really can’t afford to live in 3,000 sq ft houses with massive acreage and huge utility and tax costs, and when you grow older and don’t have kids in the house, you really can’t justify stretching to the end of your income and beyond to carry this… and neither can young people starting out with piles of student loans, who will want to save for their own retirement and help their own kids with college. I see a major movement back to more modestly scaled houses, like the rancher my family owned in the 50s.

  • Jed, I’m sorry. That is a horrible law! Two years ago, the house next door to mine was converted to an assisted living facility! No notice, and according to all my talks with the city, they don’t need permission of any kind. Just a business going in next door in your quiet SRF neighborhood! My main issues are the vans that come and go every day to take the residents to daycare, the parking habits of the people who work there, and the fact that the owner doesn’t maintain the exterior of the property. It looks like a crack house! I HATE California, and I am plotting my escape!

    • i have one of those across the street. Very disruptive to the neighborhood. Steady rent for the owners, while the rest of us accommodate the best we can.

    • People love to bitch about HOAs but this kind of stuff is why I like HOAs. Yeah you get the busybodies telling you the grass is 1/16″ too tall. But you also don’t end up with businesses or apartments next door.

    • Then sell Laura, goodbye. There will be others waiting to buy your home. Mine as well move while the market it hot.

    • son of a landlord

      I walked past this mansion in Brentwood. House has a Zillow value of $6,590,000.

      They had a garage, both doors open. Inside I saw car lifts. (Is that what they’re called?) The kind that professional garages have.

      There were small cars — Jaguars or Porches — parked in the driveway, along the street, on the grass. And in the garage.

      Apparently, this Brentwood mansion owner is running a specialty garage out of his home. Is that even legal? Does L.A. zoning permit garages operating in a residential neighborhood?

      There are no signs. Nothing to indicate that this is a commercial automotive repair center. But seeing all those cars, and the heavy industrial car lifts in their garage, it seems to be a high-end, professional operation.

      • Could be a rich collector whose hobby is working on sports cars a la Jay Leno. I used to live across from an old man who collected old cars, especially Studebakers. He had a three car work bay and a pit under an old shingle mill built on a hillside with a lifting device to pull engines. Drive in the car and go down under it or hoist out the engine with pulleys attached to massive cedar beams above.

      • Report him, simple

      • “They had a garage, both doors open. Inside I saw car lifts. (Is that what they’re called?) The kind that professional garages have.”

        They may have the lifts both to fit more cars and be able to work on them – could be a rabid enthusiast with several different projects going. I know a guy who has a 5-car garage and keeps one car on a lift just so he can park something else underneath it.

        Also 911s and Boxsters require a lift for some of their maintenance.

      • Or the owner just has lots of cars. I know one couple that has 5 cars. 4 of them are high end exotic sports cars, plus their daily drivers. So 6 cars in total.

        And since they don’t have room for a 6 car garage, they built a 2 story garage with a lift. It’s pretty cool. But there’s nothing nefarious about it, they just have a lot of cars and not a lot of room on their property.

  • “This is a distorted market and this is the outcome of mapped out bailouts with the banks, hedge funds buying up single family homes, and builders becoming reluctant to build.”

    I think that the third one is a response to the heavy FED manipulations. If prices for SKILLED labor, materials and land go up because of QE, then builders can not make a profit building homes or they will. Some, who bought land years ago still build, but the profit is in the land appreciation not construction. It is easy to cash in on that land appreciation by building because that housing market is juiced by the FED through FANNIE and FREDDIE. For raw land you have less profit because there are not many banks financing for lots and if they do, they ask for high downpayment and offer portfolio loans.

    The builders did not distort the market. The market was distorted by the FED and builders are just price takers.

    So the builders response is indirectly a cause but also an effect of the FED policies. They don’t make the market, they respond to it.

    • I think the market was distorted by an all-too-eager population of home buyers who were lured by no-down-payment, adjustable rate offers, who just had to have 3,500 square foot houses that were priced well beyond what they could afford. They all wanted to live like the Kardashians. It was fueled by the sales pitch delivery device (television). And thanks to Henry Cisneros in Bill Clinton’s administration way back on 1993, the government, in their infinite wisdom, thought that everyone was entitled to own a home. So they coerced the banks into making it very easy for people to qualify without putting any skin in the game. Enter Wall Street and mortgage-backed securities. They were making boatloads of money by packaging and selling these mortgages in the market, and everyone was fat, dumb and happy until the bubble burst. This blog often blames the baby boomers for the mess, but I blame everyone who knew better. And as for the Taco Tuesday Baby Boomers, what else can they do if they want to stay in California? They’re sitting on a gold mine (at least for now), but they can’t afford to buy anything else. I say to anyone who complains about the home prices in California to move to another state. Your life will be much better in many ways. I left California in 1991 and have never regretted it.

      • Good post, Nix. However, the principle cause of the gross deformation in the housing market in the 00s, and the credit markets in general, was interest rate repression, and the willingness of our government to bail out financial companies from the results of their insane risk-taking.

        As it is now, in spades. Only now, the extreme interest rate repression and total lack of price discovery has distorted not only our housing market, but all of our asset markets, and has rendered the earnings AND the savings of our population, almost worthless. The super-low interest rates mean that you can get a “return” on your investment only at extreme risk, not only in today’s hyper-bloated stock market, but in all asset classes. The result is not only more people being pushed into poverty, but enormous mal-investment in anything that looks like it could offer a yield of more than 3%.

      • My guess is that when interest rates rise to a point where a low % return on a rental property is too risky versus putting the same money into a low risk bond returning 5%, a large number of rental properties will be put up for sale.

      • @Laura

        +1

        Exotic lending and easy credit are the underlying factors during the modern era of price inflation. Only the participants are different. Exotic borrowing fever has shifted from specuvestors to organic buyers and now back to specuvestors.

      • “but they can’t afford to buy anything else”

        I don’t know anyone who owns a home that can afford to buy that same home at their current income. Not one single person. One said he could not afford just the taxes if it was assessed at it’s current value.

        This insanity can only end one way. It’s just simple math actually

  • I think it’s time for rent control, if a investor does not live in the house within two years of purchase the purchase is forfeit. Time to end monopoly rent seeking.

    • Rent control creates slums. Look at LA. If you want government controlled housing maybe you should move to another country where people have less freedoms to do what they want with privately owned land.

    • Great. A Government “solution” to a Government caused problem!

    • “I think it’s time for rent control, if a investor does not live in the house within two years of purchase the purchase is forfeit.”

      He wouldn’t be an “investor” then, would he, if he isn’t allowed to invest? Nobody would, in Soviet-style So-Cal.

    • @Eduard:

      Translation: it is time for soviet style communism; here comes Bernie!!!….

      It will end like in all other communist countries – 0.0001% slave masters and everyone else an EQUAL poor slave.

    • New York City has rent control and rents are like $400/mo for a 3 bedroom apartment right? LOL. Rent control is like socialism. It has never worked. It will never work. Yet for some reason some people still want to try it.

      https://www.economist.com/blogs/economist-explains/2015/08/economist-explains-19

      “But economists, on both the left and the right, tend to disagree. As Paul Krugman wrote in the New York Times in 2000, rent control is “among the best-understood issues in all of economics, and—among economists, anyway—one of the least controversial”. Economists reckon a restrictive price ceiling reduces the supply of property to the market. When prices are capped, people have less incentive to fix up and rent out their basement flat, or to build rental property. Slower supply growth exacerbates the price crunch. And those landlords who do rent out their properties might not bother to maintain them, because when supply and turnover in the market are limited by rent caps, landlords have little incentive to compete to attract tenants.”

      • Seen it all before Bob

        Flyover, I have seen where you are coming from and I understand.

        Communism is evil. True. But it has been historically born from a majority of the people who are starving and homeless under extreme brutal dictators. The communists provided hope for a people who had no hope. (Cuba, Russia, China)
        The end result of Communism is oppression.

        Pure Capitalism is also evil. The US had this with sweat shops and manufacturing sites with no safety and extremely poor pay. Pay that was not enough to support rent. ie 60+ % of salaries or Capitalists who had company housing that took all of their employee’s pay. After breadlines, and people starving in the streets, people in the US had a choice and voted for a Socialist President FDR who was far more Socialist than Bernie. The US was a strong Democracy with a strong Constitution that enabled this.

        Another capitalistic Democratic country, Germany, without a strong Constitution voted for Hitler who:

        1) Promised to make Germany great again.
        2) Promised to close the borders and exile any undesirable people.
        3) Promised to to rebuild the military.

        What happened to Germany after that?

        Where are we now? I fear for our great country

        We should have voted for a milder Socialist FDR. ie Bernie.

    • Eddie, Eddie, Eddie. Communism has failed each and every time it has been tried. Literally 100% of the time it has failed. It has never failed just a little. It has always failed spectacularly, leading to misery for hundreds of millions of people. Stop making an imbecile out of yourself.

      • Finally, something we can agree on. I hate communism too. Of all forms. And this is where we diverge vigorously: I reject the centralized planning of the Federal Reserve. So communism works for you as long as it enriches you. You are both a hypocrite and a narcissist. Go away.

    • Yes! We absolutely need rent control! It’s past due! The government should also give out incentives for sfh to add rental units in the backyard, garage or inside the house. You should get a hefty tax cut if sharing your space with other renters. This is will help to increase supply and a greater good for the society! Also we need to change zoning laws and allow to build much more multi-family skyscrapers for low income families. California has gotten out of control with their capitalistic methods with are a cancer to hard working families. We need to reverse course as soon as possible.

      • “…and allow to build much more multi-family skyscrapers for low income families.”

        A spectacularly bad idea which hypocritical liberal big city governments would never allow to happen. “Help the poor, as long as it doesn’t involve getting too close to them.”

      • “California has gotten out of control with their capitalistic methods”

        @ Bernie, there is nothing capitalistic about the housing market in socialist CA. It is a HEAVILY manipulated market by crooks elected by you in Sacramento. All those crooks in Sacramento are communists not capitalists.

        You can not have capitalism without free markets. There is no free market in CA RE. It is by the cronies and for the cronies. You mean Proposition 13 is about free markets? What about mirriad of regulations passed by Sacramento !???…What about Central (Bank) Committee (FED) interventions in the housing market. What about FANNIE and FREDDIE MAC? Are they about free markets?

        Everything you see is socialism at its finest. There is nothing capitalistic about. If you went to college, ask for refund; they failed you.

      • But Prop 13 is a form of rent control, in that as rents can’t go up or only go up so much, so do property taxes.

    • Exactly. That and the fair taxation of land. But that will never happen in a country that worships money and everyone scrambles for the crumbs left over by their capitalist masters.

      • Mark, are you saying that taxes on land in CA need to go up? Santa Clara’s assessment said that my home was worth $120k and the dirt was $520k. How much more should that dirt be valued at? This was a typical mid 50’s 3 bed 2 bath 2 car home.

  • Is the real estate market rigged so that the rich can buy more and more of it at after each real estate crash? Will the powers that be (TPTB) crash the market again or are they satisfied with what they already have acquired? Time will tell, but I am personally betting on TPTB engineering another real estate crash soon.

  • As a landlord, this is music to my ears.

  • How long will it stay like this?

  • The price of homes is determined by demand for housing. For the purpose of home prices, it doesn’t matter if the demand is from renters or buyers. Every home that is rented out, is still owned by someone. Look at NYC, where the rental rate is astronomically high. And still, real estate is out of this world expensive. As long as the demand for housing is there, prices will keep going up.

    So you really have 2 options:

    1. Pay rent for the rest of your life
    2. Collect rent for the rest of your life

    It’s a no brainer.

    • mr landlord, we need the lazy zombies to make our landlording profitable, if there weren’t stoners i would have empty buildings. We also need greedy undisciplined lemming buyers to overlever into real property so that it is later sold at a discount to us. Don’t motivate them bro!!!

  • The homes built in the roaring 20’s the age of excess, are superior to those built during the depression years, the war rationing years, the cheap housing for the vets, post WW2. The houses build during the 20’s have oak wood lath, oak wood floorboards, and crown molding and molding around the doors, not to mention the solid wood doors. Of course, the hard wood floors. The plaster is thick, on the outside you have the redwood planks, overlaid with thick cement. The walls will stop a 9mm.

  • Seen this all before, Bob

    I suspect that renters don’t move because if they are good tenants and pay their rent on time, the landlord is less likely to raise the rent. The renters look out at the other available rentals and decide it is better to stay put. Landlords will typically raise rents to market value after their tenant has moved out and they’ve put in new carpet, paint, etc.

    • Seen this all before, Bob

      If rents start falling, there will likely be a shuffle of renters trying to catch the best deal.

      • Seen this all before, Bob

        And moving a family’s worth of stuff is expensive, time consuming, and a pain in the ***.

    • I had a good tenant and I had no rent increases for the three times the lease came due for renewal. Unfortunately, they got a better job in Montana and are moving this month. The agency I’m using is upping the rent asked for by $225/mo. (That is more than 20%.). It is 25 miles out in the Country from a small Oregon city where rents are jumping. It is probably $500 to $800 less than a house in town.

    • You are correct Bob. If I have a solid tenant, I’ll keep rent as is for as long as the tenant wants to stay.

      As for tenants chasing some mythical lower rent, it would have to be substantially lower. I don’t think many people want to put up with the hassles/cost of moving to save $50/mo on rent. Next to a death in the family, moving is the most stressful event in people’s lives. Not worth a few hundred dollars a year.

    • This was us… we live in an apartment that was supposed to only be a temporary landing place between selling our condo and buying a house. We were too picky in early 2014 when we sold and the market went above what we are willing to spend. So, we are stuck in a fairly crappy LA apartment, but at least our landlord (a guy who inherited the building from his dad) was friendly when we would see him come check on the building once every couple weeks, left us alone, and didn’t raise our rent. Most other tenants in the building were very long term- oldest had been there 25+ years, newest besides us had been there 7 years. All in all, not too bad, at least the neighborhood is nice and safe.

      UNTIL a few months ago nice landlord decided to cash out and retire, and sold the building to a property management company. Within two weeks of the sale closing, everyone got a rent increase letter. Luckily the building is rent controlled, so they could only raise 3%, but one of our neighbors is on disability and I don’t think he will last here more than a couple more years if they raise the rent each year.

      And, they have brought a contractor around a couple of times already and are making noise about temporarily relocating people and renovating the units.

  • Now millennials can buy shares of my investment friends’ stock in the firms owning and renting homes cheaper than buying homes themselves. It’s called capitalism, you dopes

  • Southern CA rents expected to keep rising through 2019 at least 3% per year for next two years. The large millennial generation was singled out in the USC report as one key reason rents will rise over the next two years.”With more millennials entering their late twenties and early thirties, demand for multifamily property should be particularly strong,” the report said.

    It’s a good time to be a landlord.

    http://www.latimes.com/business/la-fi-southern-california-rents-20171011-story.html

  • Several of these charts are exaggerated as differences are only about 5% from traditional trends. The number of homes for sale is the one that is stark, as well as homeownership, which begs the question, was the 90’s – 2000’s an anomaly? However, underlying all this is ‘affordability’ … which is the real problem. California, the liberal ‘republic of’, has one of the largest affordability gaps in the nation. L.A., stands out on-top of the heap! Those established in their homes and jobs may be content, but you are slowly starving your future if people can’t afford to live there. Consider those well paid geeks working in Silicone Valley who have to share a bedroom because rent is so expensive … this can’t be sustainable!

  • Housing is NOT overvalued and it won’t tank. If you want to see something with a high value and low worth, look at bitcoin. There is no comparison how much you could have made in Bitcoin compared to a house.

    But you can’t live in Bitcoin, you can only cash out and buy 100 homes.

    Housing won’t tank until at least another generation or two. People NEED housing now to raise the next generation. There is no other choice, you need to pay up.

    • “Housing won’t tank until at least another generation or two.”

      You’re either a real estate agent or just choosing to ignore the last 50 years of a fluctuating market. Maybe both.

    • “Housing won’t tank until at least another generation or two. People NEED housing now to raise the next generation. There is no other choice, you need to pay up.”

      Sarcasm?

    • I agree with Sean regarding Bitcoin. Actually, my litecoins and ethereum a went up big time as well. Regarding housing….nobody needs to buy a house. It’s a lot of money to maintain and right now it’s totally overpriced. Every ten years or so the market tanks. I just live with my folks until we see a hefty crash. Then I will decide to either move out or stay put. I am saving a ton of money by living with my folks. They like it as well.

  • Why buy an overpriced crap box if i can live for cheap in the same place and have no liabilities/responsibilities in maintaining/fixing stuff? My landlord is giving me a huge gift.
    No problem in sight. If builders, realtards and banksters want me to purchase so they make their commission….lower prices by 50% and I am in. Otherwise…hell no!

    • I don’t think banksters and realtards care about you. You are in your own little bubble and your situation applies to no one but yourself. In forever predicting a 50% drop, you are proving to be just as naive as Jim Taylor.

      • Not sure when the bubble would pop but I can tell you for sure.. People are really really stretched to live in SoCal.
        The high paying jobs are going away.
        it is wishful thinking that people can afford this.
        A big trouble is coming for sure and would be so big that housing bubble bust would look quite small..

        BTW: In the last 60 years, housing has been busted many times before in SoCal to the tune of 50% or more . Every time people thought it’s diff..
        I don’t know this time may indeed be different

      • You must be kidding Jed.
        My situation applies to literally every Millennial in California. Since there is no rental parity its much wiser to rent a cheap apartment from a private landlord or live with your parents. You do that until we get a nice economic collapse which will bring prices down by 50-70%.
        I have not said this forever and i wont. My timeline is between 2-5 years but can be extended if we haven’t seen this crash by then.
        So, Jim Taylor is basically right on the money with his Housing to tank soon. 2-5 years is nothing compared to a lifetime.
        Realtards seem to care a lot….i just need to open my email account and read the stuff they keep sending me….since a few years they are trying to convince me that NOW is the best time to buy….very entertaining. LOL

      • He won’t own until he inherits, and only if he’s lucky enough that both parents don’t have a catastrophic illness. When the market finally adjusts, he’ll still be convinced that it will drop further, and when he finally does start putting in offers, they won’t be accepted because there are 15 other offers and his aren’t high enough. “Why should I offer 5% over? It’s not worth that much!” Ignoring the fact that prices are 30% lower than they were, but forever chasing that magic 50%. He may catch it if he’s okay with a desert condo.

        Or maybe he’ll meet a girl. One who won’t tolerate his obsession with crashes. Ten years after they buy their first house, when he realizes they saved six figures over renting, he’ll be thanking her.

      • “My situation applies to literally every Millennial in California”

        Literally every millennial doesn’t understand what the word literally means.

      • Agreed, nobody in finance or sales cares about you Millennial. I don’t think any realtors are aggressively pursuing your business. The RE market is not orbiting around you, sorry broseph.

        I’m sure the water cooler talk at the local Remax is not, “So guys, any progress with Millennial????? Has he purchased yet??? I’ve been dying to land that whale Millennial so we can do massive amounts of high-end repeat business!!!!!!!”

        Your investment strategy, if you want to call it that, is by your own words on this blog to wait for your parents to die so you can inherit their house–that is a ridiculous investment strategy. It will do absolutely anything to create longterm sustainable wealth for you.

      • Nor Cal Fella,

        “Agreed, nobody in finance or sales cares about you Millennial. I don’t think any realtors are aggressively pursuing your business. The RE market is not orbiting around you, sorry broseph.”

        We have very low sales numbers. Realtors are starving for commission. Same as lenders. I am just like any other potential client. Yes, Realtors do follow up with me on a regular basis. I do enjoy the conversations. Of course, they just go down the list of contacts. I never claimed to be special interest so I am not sure why you are getting so excited.

        “Your investment strategy, if you want to call it that, is by your own words on this blog to wait for your parents to die so you can inherit their house–that is a ridiculous investment strategy. It will do absolutely anything to create longterm sustainable wealth for you.”

        You must have misread my statement/strategy. I repeatedly said, that I am saving and maintaining a debt free life/frugal life in order to be prepared for a RE crash. RE cheerleaders clearly don’t like that. They want you to buy now. They tell you:
        1) you will rent or live with your parents until you die / you will never own
        2) you will never build wealth
        3) you are a loser
        4) this time is different, buy now or be priced out forever

        In regards to #1) and #4) I respond that since my parents own several houses I would simply own at the point of inheritance.

        My point is, you cannot lose by waiting for the next crash. No matter how much creativity and effort RE cheerleaders put into their arguments.
        Another common RE cheerleader strategy is to put words in your mouth or pick only certain statements out of context.
        Surely, this is not just directed at me but the response to a frustration realtors and lenders share lately: Low sales numbers and consequently low commissions…..

    • and imho,,,,,when your parents die you better have that will/trust locked up tight or your fathers illegitimate child will come forward in probate and force the sale of that home your leeching off of, your folks must own google to afford you ,, sickening,, hope your app will teach you to grow food,,, btw if i was your parent and read what you write, you would be on the street in five seconds flat and you would be looking for that rental today! yeah love it up in mommy and daddys place,,, wonder how –unless they do own google—-you are going to attract a mate?/gold-digger,,,our milli started having all the best electronic toys but no savings and no plan to move out after one year,,,it may sound harsh but it is the real world and he is having to figure it out now,,,,also when and if you inherit your parents home,,, You will be unable to maintain it as you have said ,,,, within 5 years the paint is peeling in 10 the roof is leaking , in 15 the dry rot sets in in 20 it is condemned for black mold,,,,, see where this leads? there are no apps to fix these things, they are called maintenance as in “”no liabilities/responsibilities in maintaining/fixing stuff?””” this is a no win for you yeah, see ya dont wanna be near ya,, you will devalue my neighborhood

      • beeman,
        you sound so angry….why? And what app are you talking about? And why would I be unable to maintain inherited RE. You lost me somewhere in your post.
        I am not sure what you are trying to accomplish with your post but I am still not buying an overpriced crapshack. The next crash is around the corner. When that happens i’ll buy….Just have some patience.

    • I’ve been watching this housing bubble happen for my 22 year working life… now 44 years of age.

      I lived in San Diego from 2002 to 2009. During that period of time housing prices tripled… after the “Great Recession” they fell 20 to 30% for a year or two (still more than double from 2002).

      I had the same hope for a blood bath after 2008 but I finally accepted that it wasn’t going to work out for me in California, so I left for greener pastures in 2009. Those pastures aren’t really green for first time buyers anymore now. I guess you could say I panicked first. Bought in 2012 in a prosperous non-bankrupt undisclosed state.

      I realized a couple very general lessons regarding the way things work in this country regarding wanting to own a home in California that I hope you’ll find of some use (just my personal experience and observations as a one-time youngster and lifelong “Cubicle Mule”).

      1) Once you get your “piece of the pie” no one cares about the folks they left behind. It’s true… your perspective changes once you get your piece and you realize nobody really cared whether you got your chance or not. Nobody gives a crap about what you or I want or think is fair.

      2) Every working “Middle Class” Joe thinks the same way you do (and the way I did). When San Diego burned in 2003… everybody ran out and bought in the areas that burned down… then they burned down again in 2007. The same thing will happen in Sonoma. There’s tons of people sitting on the sidelines waiting for their chance to vulch someone else’s misfortune. It’s really the way the world works and that mindset is pretty much pervasive everywhere.

      3) Pursuant to lesson number 2: Things have drastically changed regarding immigration and property purchases since 2008. They’re letting over a million people into the country every year to compete for the same limited number of houses you’re looking for. That’s right… non citizens the world over can buy property in this country…but you can’t do the same! The Main Point of Lesson 3 is this: You won’t be able to compete with our international “friends” and the “whale” insiders waiting for the next downturn… just like you can’t NOW. Big Fish… little Pond… BTW if you’re middle class 100kish…you and I are still the little fish… before or after a correction in Cali.

      4) California is a playground for the Nation’s and Worlds wealthy… they don’t really care if you rent for the rest of your life… or preferably die tomorrow to alleviate traffic… See lesson #1.

      I know the joy of daydreaming of indulging in some Schadenfreude and someday being a “Winner” in Cali… just don’t be surprised if it doesn’t work out that way… you certainly won’t be alone.

      Here’s the problem everybody wants the exact same thing you and I do in California… it’s just not possible.

      My life drastically improved once I realized I was a “Loser” in California and moved on.
      A loser (AKA “Middle Class Tax Donkey”) from Cali is generally a winner anywhere else. By “winning”, I mean being a “loaner” of a house that’s only 27% of your take-home pay in mortgage, insurance and taxes.

      Maybe we’ll get a 2008 Reduxe, maybe not, maybe something worse.

      Just be sure not to be the last one to panic if things don’t go according to plan.

      • CUbicleMule,
        that’s a lot of life lessons.
        Here are my favorite ones.

        The worst mistake one can make is to marry the wrong person.
        The second biggest mistake is to buy an overpriced house during a bubble.
        Trust nobody, do your own homework and research
        Think positive.

        So far I got along just fine following these.
        What I dont get is, why do you think waiting for a crash and buying a house at a deep discount is so hard to achieve? Many people I know have done it that way. Gosh, I could even buy now. But if you save so much money by renting why would you decide to be a debt slave and overpay?
        I’ll never understand that. Nothing keeps going up forever. Every second person on this blog tells you RE is all about timing and cycles. Patience will pay off….just come back in a few years to this blog and I will share my experience/purchase with you.

        One last lesson….people dont give advice that is meant to benefit you. People pretend they give you good advice but somehow it benefits themselves….So, the fact that soo many people try so hard to convince us to buy now tells me its a terrible time to buy. If buying would be making sense nobody would have to convince you and come up with all these reasons.

      • You speak the the troof Cubicle.

        As far as buying after the fires, that was my first thought…wonder if I can get some cheap Sonoma property after the smoke clears out. Nothing wrong with that thinking, by the way. What are we supposed to do, just leave the place empty for the next 100 years? What happened after the SF and Chicago great fires? People rebuilt and a lot of people made fortunes doing so. Again, nothing wrong with that.

      • @CubicleMule

        That’s one of the best posts I have read on this board. One thing that really helps is that your writing is well-organized and clear.

        I totally agree with you on just about everything you have written.

        The only comment I have is that a new situation is developing with increasing homelessness and poverty. CA is indeed a playground for the wealthy but more visibly it is a state of extreme poverty, filth, and destitution.

      • Super post, Mule. And amen! I’m in your age group, and a cubicle mulette! The writing has been on the wall for a long time. And now with the homeless and all their various problems freaking everywhere, I’m just looking for someplace clean. All the “cool” places to go around DTLA are no place I’d take my kids, or leave my car! Even the suburbs have a lot of issues now. Out of state it is!

      • You forgot something.

        5) Coastal Southern California will continue to be oversold to the uninitiated masses by those with vested interests – dream following/disenchantment escaping emigrants stubbornly clinging to post-purchase rationalization, frightened in-place native born residents, and anyone else with enough money directly at stake. They’ll tell you how desirable it is, just as soon as they get a break from the congestion they’re overpaying their government to help make worse. In other words, almost no other place is better at deviously selling a losing proposition as a winning idea.

      • Seen it all before Bob

        It’s hard not to panic, but Warren Buffet has made millions by not panicking when prices crash. Never sell low and buy high. Take a deep breath wait a few months after Jim Taylor is finally correct, and buy all you can afford.

      • Leaving California? No thanks! I love it here. People get too dramatic, too quickly and have this drive-thru mentality….wanting to have everything right now….these people only see three doors:

        Door 1: Buy now
        Door 2: Rent forever
        Door 3: leave the state

        What about the prettiest door,#4? Its called frugal living, saving money and waiting for a beautiful crash!

      • Mr Landlord, how come we were thinking the same thing at the same time in regard to empty land in Sonoma and Napa Valley??!!!!…..tst, tst…these investors have the same mindset!….

      • “The only comment I have is that a new situation is developing with increasing homelessness and poverty. CA is indeed a playground for the wealthy but more visibly it is a state of extreme poverty, filth, and destitution.”

        @oceanbreeze, I was stating here years ago that if you want to see the future of SoCal go to Sao Paulo in Brazil. What you say above is what you see in Brazil – extremely rich and extremely poor; few guys play golf here and drug lords and favela over the fence.

        In the end, the result of central banking will be the same everywhere; the corruption from the top will spread to the masses.

    • @Millenial

      It seems that you have misread what I was trying to communicate.

      My point was this…

      I thought prices would revert to 2002 levels after the 2008 crash… They Didn’t.

      Also, (for @MrLandlord’s benefit)…I wasn’t putting anyone down for vulching others’ misfortune… just pointing out that everyone else is also hoping to do the same thing at the same time. Tons of people just as eager and clever as you and I.

      I wasn’t really giving advice per say, but rather sharing my observations with someone in the same exact position as I was 10 years ago. I truly empathize.

      As you can see from some other replies, most people took my observations as rather refreshing and insightful.

      It all really depends on what kind of income level you have as to whether the coming correction will benefit you. I’m fairly certain it will correct, but I laid out the factors (in my personal observation) for why prices didn’t correct as far as I had anticipated last time… hopefully in an entertaining sort of way.

      Back in 2007, I was running around telling everybody how smart I was for waiting to buy and that I was going to get a house in San Diego for 50% off because it was obviously a bubble… it Never happened.

      They were still amazed that I predicted the downturn though. It just wasn’t big enough for me to capitalize on at my income level.

      For me personally… buying a house for more than $350k for 1,500 to 2,000 square feet just isn’t a good decision… so I left San Diego.

      Anyway, I just wanted you to know that I DO think you’re Right for NOT buying now, but that things might NOT present as big an opportunity as you’re hoping them to.

      I have no vested interest whether you buy now or wait. Just good old fashioned commiseration for having been in a similar situation.

      I told all my older associates in 2007 that they were full of crap too when I told them of my plans to come in and get a 50% off deal… and they said I was nuts. Unfortunately for me, they did turn out to be right in my case.

      BTW I think all of your Life advice tips are Great and I have already followed them ALL!!!

      Except I would like to point out a potential flaw with this one… “Think Positive”.

      Too many inadvertently conflate “thinking positively” with thinking “Magically”. There is a difference. I might change that one to:

      “When things don’t go according to your plans, see your setbacks as a doors to other possibilities”

      Anyway… I hope you get the big opportunity I wasn’t able to secure.

      Ahhhh… to be young again!

      Heehaw!!!
      CubicleMule

  • “… this “recovery” is essentially jamming 100 hungry people into a restaurant and saying that the first 20 people that get to the counter will get a cold taco.”

    … while restaurant owner eats beef in the cabinet with his fellows and deduces that from his taxes as ‘business expense’, of course.

  • I am in the process of suing a landlord in claims court. Maybe its because she thinks she is above the law? Point is that landlords get sued. They can get sued for a ton of money. With all the tenant rights laws it adds up quickly. Land-lording is not for the faint of heart. It’s definitely not for me.

    A lot of people on here talk big about how being a landlord is the end all solution to life. My family is wealthy but the only property in the family is 1 house and 1 lake home (never rented out). RE averages about 6% returns YOY, stock market is 10%. Look at the top richest of the rich. They did not get rich by buying houses and renting them. Even DJT says being a landlord is a waste of time. Work smarter not harder sheeple.

    • “Look at the top richest of the rich. They did not get rich by buying houses and renting them. Even DJT says being a landlord is a waste of time.”

      The point in being a landlord is for steady, passive income, and using other people’s money to finance your retirement. It isn’t a “get rich quick” scheme, although the wealthiest people I know did it via coastal real estate. There’s a lot less risk in (for example) buying a $200k 3/2 in Florida with significant positive cash flow than there is going all in on the stock market right now.

      With that said, it’s always smart to not put all your eggs in one basket.

    • Stock market averages 10%? Not really.More like 6-7% historically and that is assuming all dividends are re-invested and you don’t do stupid shit like panic sell.

      Real estate isn’t for anyone. And nothing in life is guaranteed. But you have to really work hard to lose money long term as a real estate investor.

  • Look, the Fed clearly caused this bullshit. And anyone who happened to already be in possession of assets which benefitted from the Fed’s asinine policy got LUCKY. I wouldn’t be crowing about it like you’re some sort of genius. In fact, all you’re doing is participating in one of the most immoral money grabs in human history. I say that as a capitalist — if the Fed would have let the markets alone, assets would have been liquidated (including yours you smart ass), prices would have cleared, and we would have reverted back to real markets.

    • You can blame the Fed all you want. CA RE on a monthly cost basis was the cheapest in decades back in 2011. People got greedy and wanted another 20% price reduction…we all saw how that worked out.

    • ‘Calling BS” is 100% CORRECT!

      However, as I said to “Millenial”… “Nobody gives a crap what you or I want or think is fair”. I think that what the Doc has been trying to do through this blog is to get people to just walk away from the line of suckers and thus hasten the correction. It’s hard to do and timing the market is a bitch. It will definitely never happen when you want it to.

      The way I look at it… I was born 20 years too late. I can blame whoever I want and envy those born before me, but waiting on a dream dependent on things outside of your control for too long just means you’re wasting your life, not following your dream.

      California didn’t care about me… so I stopped caring about California. Life isn’t fair, but life doesn’t begin or end in a California crap shack.

      The hardest thing in life is to realize the journey IS the destination and that your “turn” isn’t owed to you or may in fact never come. I have certainly appreciated the commiseration this blog has afforded me and seen so much of myself reflected back in all of you. At least those of you priced out… like I was.

      Thanks Doc for your gentle steering these past 10 years… hard to believe I’ve been lurking here that long.

      Remember… “Nobody gives a crap what you or I want or think is fair”. After all… they got there First.

      • Cube,

        I’ve been instilling this into my kids since they were old enough to complain. Life isn’t fair. Life owes you nothing. Depend on nobody but yourself (and family most of the time) to succeed in life.

        There’s nothing in the Bill of Rights about being able to afford a nice 4 bedroom home near the beach in Orange County. Yet somehow a lot of people – I’m looking at you Millennial in particular – seems to think otherwise.

        Not to go too much off on a tangent on the entitlement mentality, but…..I live in a small town/suburb. It’s upper middle class, one of the highest median income zip codes in the state. The kind of place liberals loathe. Single family homes, nice parks, good schools, virtually no crime. This weird place where everyone has a job and nobody lives off the govt. A throwback to yesteryear America. So it must be destroyed!!!

        One day a developer had this wonderful idea to build apartments in our town. The towns-folk went ape-shit over it, and eventually we forced city council to not approve the plan. But the people who were pro-apartments used the argument that it was somehow unfair that only evil rich (mainly white) people could afford to live in our nice town. And it was soooooo unfair that low and middle income people couldn’t enjoy the benefits. And I wanted to b-splap these people every time I head that nonsense. I worked my ass off to be able to live there and you just want to give some Section 8 asshole the same thing I have just because? FUCK THAT.

        Ok rant off…

      • Hey @MrLandLord:

        The town you live in doesn’t happen to be _ _ _ _ _vale, is it?

        I’m not that far from you if that’s the town.

        Sorry for the discretion everyone, but me and MrLandLord sound like kindred spirits and possibly neighbors.

        We’ve had problems with political infiltration and sabotage of our cities by out-of-state progressive transplants who want to bust out our city budgets and turn them into freeloader ghetto havens like they came from.

        Once you allow public transportation (aka buses) into your town… it’s only 20 years to implosion. My city is in 10 years so far.

        You know you’re pretty close when the “people” just start walking directly across the streets in oncoming traffic… and glare at you when you have to slam on the breaks to avoid hitting them at 40 mph.

        A never ending battle to keep what you earned and paid for from being given away to Section 8 parasites.

        It’s not just California… it’s everywhere.

      • Cube,

        Nope, not _____vale. I’m not sure where that is to be honest. But stuff like that is happening everywhere. And I agree 100% on the public transit thing. Another good example: Cobb County, which is suburban Atlanta vehemently fought any expansion of MARTA (their subway system). And of course it was was called racist and anti-progress and the rest. Well, 30 years later, Cobb Co still has no MARTA trains running to and from the downtown ghettos, and by an incredible coincidence has the best schools in the Atlanta metro area. Crazy how that works huh.

        One reason the leftist scum want public transit is to bring Section 8 trash to nice areas. But another is their hard on for trains and buses. After all, Europe has public transportation everywhere. And if Europe does it, it must be good***. What they forget to mention is, everyone in Europe takes the train not by choice but by necessity. It costs 20% VAT on the price of a new car. $40K car = $8K in taxes (before you register it which is also exorbitant). And then gas is $6+ a gallon. So of course very few people drive, nobody but the very rich can afford to. This is the end goal of the leftist scum here. Price cars out of existence and get us all into buses and trains. And once everyone is in buses and trains, the next logical step is to get us all into Soviet style apartment blocks. After all who wants to commute 20 miles to work via bus, when you can take a quick 5 min bus ride from your apartment to your office downtown? Their lust for public transportation has nothing to do with saving the environment or any of their usual bullshit. It’s about control, pure and simple.

        *** DOES NOT apply to abortion laws where every European country has some limit on when a woman can get an abortion. Nor does it apply to corporate tax rates, where every European country has a lower rate than ours.

    • You are exactly right. Most don’t realize how lucky they are. Much easier to think they are brilliant. Not.

    • That is true. I am saying this as someone who benefitted from it. I can’t control the FED. All I hope for is to benefit from their moves.

    • Nothing keeps going up forever….even though every time we are in a bubble they tell you this is different….if you go back on this blog to the last bubble 2005-2007 you see the same posts as nowadays. And if you dig further back in time you will see how people thought during the 80’s that the Japanese will buy America.

      http://articles.latimes.com/1992-02-21/news/mn-2588_1_japanese-real-estate

      http://www.businessinsider.com/japans-eighties-america-buying-spree-2014-9

      The Japanese lost their shirt in the 80’s and in the last bubble we had 7 MIO foreclosures. The only trend i see is that bubbles get bigger and bigger over time. Consequently, the crashes are extremer as well.

      Just wait a few more years and you will see the same headlines. Just switch Japanese with Chinese or domestic investors. Its the same spiel over and over.

      People who lost faith should ask themselves how hard can it be to save money in good times and buy during downturns? Who cares if this takes 5 years, ten years or 15 years?

  • For those who think that putting yourself under a mountain of debt to buy a house in SoCal is the path to riches:

    http://theeconomiccollapseblog.com/archives/how-the-elite-dominate-the-world-part-1-debt-as-a-tool-of-enslavement

  • There is no shortage of units to live in. I’m tired of this false narrative. We don’t have thousands of people becoming homeless each day randomly because their housing was taken away.

    We don’t need hundreds of new units to be built. We already have enough. But the market has been significantly impacted by REITs, foreigners, and extremely low interest rates. Affordable housing gets snatched up by these three groups as much or more so than it does by resident homeowners.

    Mr. Landlord likes to state that the demand is there. But what demand? There’s no demand from homeowners to pay over $1m for crap. However, when you factor in the three groups above, then there is no choice.

    This is an important distinction. There is no shortage of places to live. There’s only a shortage of reasonable places to buy because of outside market interference that’s way beyond the norm.

    • Yeah we desperately need property ownership reform in CA. Only US citizens may buy, you may only own one single family or townhouse, and a high vacancy tax.

      This is all that will work.

    • In addition to the REITS and investors, the lack of inventory is due in part by the inability of current homeowners to move up the property ladder. As their starter home went up in value so did everything else. Combine that with locked in tax rates due to prop 13 and many people are entrenched in their current home unable to afford another unless they move out of state. There is a surge in home equity loans as people remodel and add on to existing homes instead of buying new ones. Back in the day people would have bought and sold multiple homes during their lifetime as their family and lifestyles expanded. Doesn’t seem to be the case anymore.

    • +1

      The inventory for sale is the same or higher than it was prior to the last downturn. If there was a shortage because of demand, why do lending standards continue to fall? The government wants to extend its manipulation of the market in contravention of free market principles required for a vibrant and healthy economy.

    • It comes down to affordability! Two articles in the last week referencing San Francisco. One, said S.F. has the highest wages/salaries in the U.S., yet it is very difficult to live on those wages! A second article created a family of 3, one parent a well paid professional, the other a teacher, with one child. In S.F., again the most expensive place, they would be 10’s of thousands of dollars in the hole after one year given the high cost of living expenses!

      • Teachers in SF are well paid too. I wouldn’t call them professionals, but definitely well paid. Starting salary is $55K and increases each year up to $95K. Add in the best health insurance around, 3 months vacation and they get to retire at 55 with full pension/benefits.

        But somehow we are still under this fake news narrative of the lowly paid teacher just trying to get by. And we need to increase taxes to help them out. And if you disagree you have children and education.

      • hate not have

      • Yet SF has a population that is at an historical high and only increasing, As are NYC and Seattle and a host of other high cost cities that once declined in population and are now recovering.

      • Mr. L.

        Are you saying that a 26 year old teacher making 60k in San Francisco could purchase a home?

        Could a 36 year old teacher making 90k afford to buy a home?

        How would that work? Assuming they share a 2 bedroom apartment with a roommate.

        Lowly Teacher

      • @Lowly Teacher

        I’ve heard this argument from some of my neighbors. Oh, teacher salaries are 60-90k… that’s pretty GOOD. Then I point out that there is no way they can live in our area for that. Then they say, oh they can live somewhere else. Somewhere else meaning neighborhoods where gunfire at night is not uncommon.

      • @ocean breeze

        Imagine if a shrink, an accountant, or an eye doctor assisted 35 clients every hour. Crazy! But teachers must teach 35 youthful individuals at various academic levels, with different needs and circumstances, simultaneously. Maintain order, a positive and cheery disposition, and teach: as in get results that show up on test scores that are made public.

        But as Mr. L. points out, they do not receive professional pay. I wonder why that is. Perhaps it is because people think that a teacher (like in the example above) are some professional’s wife. And they should be grateful to receive a stipend for what is perceived to be glorified babysitting: Math, Reading, Writing, Science, Social Studies, Health, Art, Music, Dance, P.E. Maybe we should frame it as a smart male 32 year old with a Masters in Physics. How can we entice this male scientist to become a teacher? What can we offer him? What would he make elsewhere? You get what you pay for.

        Lowly Teacher

      • son of a landlord

        Lowly Teacher, when I was in grammar school, in the late 1960s to mid 1970s, in a New York City Catholic school, normal class size wasn’t 35. It was over 40. I remember that, because my student number was always in the 40s. My name came toward the end, alphabetically, so my assigned number was toward the end.

        Nevertheless, the nuns did a great job maintaining discipline, while providing a first rate education. Catholic schools always out-performed public schools.

        And yes, we had “diversity.” Lots of Puerto Rican kids who spoke mostly Spanish. Even a kid who spoke mostly Polish. The nuns managed, and very well.

        Of course, back then we had discipline. The nuns could smack students around. And they did so. One teacher liked to pull hair. A male teacher banged a kid’s head against a blackboard a few times for not doing his homework.

        Parents never complained. Teachers were expected to discipline students. Smacking students around was considered a valuable part of our education.

      • SOL,

        I agree. For good performance of schools the discipline is critical. All private schools have strong discipline. I grew up in a communist country and discipline in school was like in the army. The education and performance of schools was excellent for a small fraction of what taxpayers pay for public schools in US. Of course, at home the students received discipline from parents, too. The child services did not take the kids away because parents dared to discipline their children. They were expected to be disciplined.

        Here in the states kids grow without learning to be subject to any authority. Then, suddenly they are expected to be subject to the authority and discipline of employers and government authorities. A large percentage of them can not keep a job for a month. The “correctional” institutions are not going to correct an adult who never was corrected as a child. All the screaming brats you see in the stores, will be later clients of those “correctional” institutions and then they wonder why the US has more population in prison than other countries; it starts with total lack of discipline in school and at home. This is the reality regardless of what those idiot “psychologists” say.

        With the 1-12 education in US the way it is, you can triple the funding and nothing will change. It is not a problem with the funding, but the system. The asian kids perform well in school because in their culture the parents discipline the children.

      • Mr. L.

        We were talking about apples, and you seem to now be talking about oranges.

        We were talking about how much teachers get paid. Whether they should be paid professionally, whether they indeed deserve to be paid professionally, and whether that means being paid enough to purchase a home. You felt that a teacher getting paid 55-95 thousand in San Fransisco over a period of 15 years should be satisfied with their pay. Since this is a real estate site, it’s worth addressing whether this teacher could ever buy a home or whether only bored housewives should go into teaching.

        Your response is to take it a step beyond lowly paid women/nannies/housewives and remember the women who taught you for no pay. Who had literally taken vows of poverty. And who slept in a twin bed owned by the archdiocese. Ahhh the good old days!!! If you didn’t want a pesky husband, you could settle for 60 students and a toothbrush. (And a scratchy habit that blocked your vision like a city horse.)

        Yes that is what professional teachers should aspire to: Owning Nothing.

        My dad showed me his class of 60 kids with his teacher Sister Mary Aloysius. My parents went to 16 years of Catholic school each. My 4 siblings and I attended 12 years of Catholic school each.

        Well, moving on to 2017. Teachers are highly educated professionals. With monumental tasks, responsibilities, and challenges. They are expected to produce outstanding results with young minds as measured on state tests despite layers upon layers of mitigating circumstances. Yes, teachers should receive professional pay. They should afford to be middle class home owners in middle class neighborhoods. Sister Aloysius is not coming back.

        Lowly Teacher.

      • Flyover. Can I just say you “hit the nail on the head”. Don’t know if you use that expression in Amercia. I was working in South East Asia before moving back to the UK. My British teacher friends told me exactly the same thing. The culture of hard work.

        My own opinion and Ive been proven wrong on many things. Is the UK and maybe USA should copy Finland? It has the most succesful education system in the West. Look at how much they spend in education and teacher pay.

      • son of a landlord

        Lowly Teacher, “We were talking about apples, and you seem to now be talking about oranges.”

        No. (For a teacher, your reading comprehension is pretty poor.) I was directly addressing an issue that you raised.

        You said: “Imagine if a shrink, an accountant, or an eye doctor assisted 35 clients every hour. Crazy! But teachers must teach 35 youthful individuals …”

        You were complaining about the “Crazy!” burden of teaching 35 students at once.

        I observed that 35 students are not all that many. Not if you exercise proper discipline.

        The nuns had a much tougher job than you do, and they handled it with great success. (How little they were paid is irrelevant to that success, although admirable for other reasons.)

      • Lowly teacher,

        How much a teacher is paid does not have anything to do with his/her worth. Each real job is worth a lot, because we can not do without it. How much is the job of a garbage collector worth? Or the job of a guy who pumps the septic tanks? We can’t live without them. Although a lowly job, I really appreciate those guys who do that work for me. It is worth a lot to me; still, they are paid what the market bears. It has to do with supply and demand.

        My opinion is that teachers have a very noble profession and if they don’t have calling, don’t do it. I have 2 daughters teachers. They don’t get paid much in flyover country, but they do it as a calling. They love their job. I know for sure that they will never get rich off of those jobs, but that is not the reason they do it. I have a son doctor. I told him the same thing – don’t do it for money because you will hate your job. He is doing it with a passion because he loves it. He earns a lot because of shortage for doctors. He also wants to go to the Amazon jungle to work for indians, free of charge – volunteer. That is his calling.

        The pay is determined by the market. If the cost of living becomes unbearable, lots of teachers will move out to the point that there will be a shortage of teachers. The schools will have to raise the pay in order to attract teachers like in any field of work. Be happy that you don’t have the competition of people from Mexico to take your job.

        Another interesting statistic I read is that out of all professions out there, the highest % of millionaires (more than a million not billions) is for teachers. Why that happens is a totally different subject; however, the fact remains (I’m not talking about individual cases) that by and large teachers have the highest percentage of millionaires, more than doctors, dentists or stockbrokers. I know that you will be very intrigued as to why. We can debate about that forever. I have my own assumptions.

      • Mr. L.

        The topic of this discussion is the pay that teachers should receive. You were the one who introduced this topic. You said you were tired of the narrative of the lowly paid teacher just scraping to get by.

        Calling other people dumb or what have you is childish. Well not even kids think that is acceptable. If for you “proper discipline” is physical assault, well that is craven, illegal, and moot. And no, I assure you, that would not result in better learning.

        You have no idea what it takes to be a teacher. And you have no understanding of life as a nun.

        My dad’s sister was a nun. My mom’s cousin is a nun. And my great aunt (who today is 101) is a nun.

        Let’s go back to the topic: The cost of housing and teacher pay. You want good teachers? Pay professional wages.

        Teachers more than earn their pay. And they merit wages that enable them to buy a home and put their kids through college.

        That’s what showing respect for teachers looks like.

        Signing off,
        Lowly Teacher

      • son of a landlord

        Lowly Teacher: The topic of this discussion is the pay that teachers should receive. You were the one who introduced this topic.

        No. You were the first to say: “Imagine if a shrink, an accountant, or an eye doctor assisted 35 clients every hour. Crazy! But teachers must teach 35 youthful individuals …”

        You introduced the topic that teachers are burdened with too many children per class.

        You don’t get to introduce a topic, then pretend that you didn’t.

        And you don’t get to cherry pick what “the” topic is among the several topics you introduced.

      • Lowly,

        Give me a break. I’m tired of elevating teachers to some sort of sainthood. That old saying “if you can’t do, teach” is still true. Anyone with a pulse can get an education degree. And then it’s a lifetime union job with 0% chance of ever getting fired. And let’s face it, America’s best and brightest aren’t flocking to become teachers. It’s not a choice between working for Google and teaching 4th grade. It’s a choice between teaching 4th grade or doing admin work in a cube.

        Are there some decent teachers? Yeah, there is always the exception to the rule. But for the most part they are clock watchers, counting down the day to retirement at 55 while making $70K a year, with the most generous benefits available and 3-4 months vacation.

  • Recently, I have found homes offered for sale at 10% less than Zillow’s stated value of those homes. I don’t remember seeing this before–sudden large price drops. Are prices in So. Calif. beginning to fall?

    • The short answer is no.

    • Yes, price reductions are all over the place.

      • It is completely normal to have a slowdown this time of year. The market moves like a crippled freighter – you cannot call an end to the mania with only a month of autumn data to go on. Look at the median for the past few years, not (lol) listings. There have been numerous drops that look exactly like this one. If it’s still dropping next spring, then you can call 2017 the peak.

  • Billions more dollars pour into LA –

    I cant see how their will be a crash UNTIL there is a job loss recession.

    https://www.cnbc.com/2017/09/26/billions-pour-into-la-as-it-gears-up-to-be-the-next-silicon-valley.html

    • I’m not in the crash camp, but prices can crash regardless of the job market. Most jobs in LA don’t pay enough to buy a home in the region anyway. Much of the money coming in is foreign. If that ends for whatever reason it could crash prices. Or government may decide to place severe restrictions on home ownership in California. Or people just lose faith in the strength of real estate.

  • Dow just hit another high of 23,000. Stock markets are roaring. As long as this continues, there is zero percent chance of any tanking.

    The holidays are right around the corner and already low inventory will decrease dramatically in the next several months. There was absolutely no tanking hard in 2017 and unless there is an external trigger, there will be no tanking hard in 2018.

    • Lord, I must agree with you. As long as the stock market is making new highs, there is zero chance of a real estate crash. Each new Dow high guarantees that a real estate decline is at least six months further away. The recent stock market highs mean that real estate should remain strong at least through next spring.

      It would be very ironic if the stock market’s optimism turned out to be correct and that Trump’s economic plan actually worked, that U.S. economic growth surged to 3 or 4%, that worker’s started getting huge pay raises and that interest rates stayed low even as the Fed stated selling bonds. There is no doubt that the stock market is predicting an economic boom. More often than not the stock market is correct.

      • I hope you are right. If you are, the MSM will hate Trump even more. I have a feeling that all of this will be derailed soon by a major war. If that happens, Trump is a one term president.

      • The caveat is the tax plan. Markets are buying the rumor right now. Passage of the plan might incentivize selling the news…bigly.

    • I suspect that any RE crash will have little to do with market fundamentals. It will likely be because of something gone horribly wrong with Trump and Little Rocket Man, or something equally bad with Iran. Supply lines being cut off, etc. or a million other “unintended consequences” that happen when their Dear Leader clashes with our Dear Leader.

      • The situation with Tump and lil’ Kim the Rocket man is sort of like having Huey Long vs Big Brother. Huey needs to keep his base happy by throwing them raw meat. BB needs to keep his people in a constant state of mock-war so they won’t revolt and line him up like Ceaucescu. SO THEY BOTH HAVE SOMETHING TO GAIN FROM A PERMANENT WAR OF WORDS! Note that Kim/BB hasn’t shot anything NEAR Guam. He won’t because it’s far safer and easier to shoot ’em over J-pan. Trump/Huey has Mattis and his most powerful military on the planet to do exercises international air space and waters off NK to keep the Hawks happy. The pace of NK nuclear development should slow as China/East Asia and Trump/Huey withdraw foreign exchange bit by bitcoin.

    • “Professional traders are taking a record amount of short positions against the Dow Jones Industrial Average”

      http://www.marketwatch.com/story/smart-money-and-dumb-money-are-moving-in-opposite-directions-2017-10-18?siteid=yhoof2&yptr=yahoo

  • To everyone to give an example of the current rental market status.

    I recently purchased a property and moved out of the condo that I was renting for the past 7 years.

    My rent was 2500
    Just hit the market at 3500

    If someone wants to argue that rents have not increased dramatically in the past few years they are crazy.

    • Rents have not been increased much since 2009. I can still find the same deals for a one bedroom. My landlord has never increased rent….not even ones. In the meantime houseprices have been artificially inflated. Its clear that these prices are not sustainable and that they will come down hard.

      • Landlord? Dude, you live at home with your parents for free! You need to lay off the meds

      • I thought you lived with your parents?
        Do they charge you rent?

      • You’re like the new Alex in San Jose, that guy used to make the most asinine comments. Are you him with a new name? What do you mean rents have not gone up much since 2009, what planet are you living on? You don’t even own real estate, there is no way you can gauge that. Let me help you, rents have gone up like a rocket since about 2010 in all of CA.

      • I wish I would live with my parents….unfortunately, the commute was over 30minutes to work so i moved to a cheap apartment (private landlord) a few years ago.
        I would move back in with in-laws or parents in a hard beat. Its like a pay raise.

      • heartbeat

      • By “rent” I think he means when he volunteers to pay for gas once a month for his parents car that he drives.

      • So is Millie a liar or insane?
        SAD

      • Nor cal fella,
        “What do you mean rents have not gone up much since 2009,”
        I mean that i can still find a one bedroom today for the same amount i rented it for in 2009/2010.
        Sure, if you live in a professional managed apartment complex they increase rents. But why live there if you can live with a private landlord for a much better rate.
        My landlord for instance has never increased my rent. The old lady likes to talk to me and appreciates me paying on time. I also don’t cause any trouble or hassle.

        If you think about it, it makes sense that rents have not moved much. Incomes are stagnant and a landlord is only as liquid as his renters.

      • “By “rent” I think he means when he volunteers to pay for gas once a month for his parents car that he drives.”

        It’d be nice to share a car. I do drive a paid off Honda. I like to maintain a debt free life.

      • Seen this all before, Bob

        I respect Millennial. He has a good grasp on not throwing his money away and is likely a good tenant since his landlord hasn’t raised the rent in years. I miss Alex from San Jose, he had a good perspective on what the US will be after Trump is thrown out and replaced with an FDR-like President.

      • At this point Im really not sure what to think of you and your posts. Either constantly changing your story of just plain delusional.

      • “I would move back in with in-laws or parents in a hard beat. Its like a pay raise.”

        It’s like a freaking pay raise???

        whisky tango foxtrot…

        … that’s a pay raise?…. well I guess a crap sandwich is also a free lunch…

        Dude, you are living in a fantasy world, or completely lying to yourself… rents have gone up like like a nuclear missile aimed at the moon since 2009 in both SoCal and NorCal.

      • NoTankinSight,

        “It’s like a freaking pay raise???
        whisky tango foxtrot…”

        Yes, if I were to move back in with them, I would save over 1k each month. That would def. feel like a pay raise and I could save that on top of what I am saving now.

        “Dude, you are living in a fantasy world, or completely lying to yourself… rents have gone up like like a nuclear missile aimed at the moon since 2009 in both SoCal and NorCal.”

        Unfortunately, the check i write to my (very nice) landlord lady is very real. The fact that you are so adamant about rents have skyrocketed shows me I am getting a steal here. But i certainly doubt that i am the only one who gets this rent rate. I do call up on neighborhood “for-rent” signs and compare rents. I do this to make sure i am not overpaying. When rents start to come down (during next recession) i would move very quickly or would try to re-negotiate. Again, in this area rents have not moved much since 2009. But, okay, if you think otherwise, that’s fine. Maybe you live in a much more expensive area. That would tell me I have chosen the right area to save money.

    • Rents in the Sacramento region (where I am) have increased dramatically over the past 2 years. I’ve watched local rental SFRs increase from $1695 to $2300. Apartments in my area $1550 now $2100. Pretty much 30% rent increases in a span of only 2 years. I have no idea who is paying these rents. Or who can afford them. Sacramento region salaries are pretty sad, and welfare relied on by a good part of the population.

      • 2300 for an apartment??? That should be illegal! We need to get organized, go out there and protest! If they would raise my rent like that I would simply stop paying rent at all as part or my protest. Also, if they force me out I would def. leave some nice surprises for the landlord when he open the door. Let me get this straight. Prop 12 allows the homeowner to keep their property taxes at a minimum but a landlord can raise rents by more than 2% per year???? Dude, we need to take back whats ours and fight this crap!!!!

      • son of a landlord

        Richard Star: if they force me out I would def. leave some nice surprises for the landlord when he open the door.

        You’re an idiot. The landlord can track you down and sue you in court. You’ll pay for whatever damage you caused.

        My late father had a private investigator on retainer. The P.I. once found that a tenant who claimed to still be using her NYC rent stabilized apartment, as her primary residence, no longer lived there. Thus was my father able to boot her and jack up her unit’s rent.

      • LOL Richard – your posts are so filled with misdirected anger and ignorance that I’m sitting over here praying you’re trolling. If so, bravo. If not, you really should stop embarrassing yourself.

      • “Dude, we need to take back whats ours ”

        Richard Star,

        You can take back what is yours – furniture, clothes and your car. However, the RE is not yours and you can not regulate prices in a free society. Yes, you can do that in Venezuela, Cuba or N. Korea and some communist enclaves in US. The end result is always MASSIVE shortage of what has price control. It is pretty basic and logic if you understand the introduction to ECON 101.

        With Prop 13, you are right. That is another government intervention to pick winners and losers – that is the only thing the government can accomplish in any type of intervention. That Prop 13 should go away. Yes, the voters can cap the tax increase by putting a cap on how much the government can tax the property – for example in Switzerland the cap is set at $1,500. In this case all homeowners pay the same because they benefit the same from what the city/county provides. However, when you have a billionaire like Buffet paying $2,200 tax on a $22 million dollar property while a new teacher/firefighter pays $22,000 on a million dollar home, then something is wrong. That is how the limousine liberals on waterfront benefit from useful idiots who vote them in power – they pick themselves as winners and leave the useful idiots as losers.

  • PS condo is very dated and 0 work was done other than cleaning and hanging a curtain

  • Simple answer to all of it….Home ownership Unsustainable at these prices. Market is distorted and with all time low interest rates for construction projects but no construction actually happening there seems to be some kind of a “invisible hand” up the pretty real estate skirt. Not sure why this “free market economy” isn’t really free at this time. Otherwise we would see big construction boom. There might be lots and lots of inventory hidden on Banks balance sheets?

  • To all of the bulls, I would say, very simply, don’t fight fed Fed. That giant sucking sound you hear is the $450 billion dollars of QE being unwound from 4Q2017 through 2018; and if you listen closely you’ll also hear the approaching footsteps of 50-100 bps in fed funds rate tightening by YE2018. As is customary, the Fed is foolish enough to believe it can pull off the proverbial soft landing. I’ve been around the sell side and buy side a long time, and I’ve not seen a single instance of any central bank ever having engineered an ultra-easy money unwind without tanking both assets and the real economy. You certainly just can’t raise the discount (cap) rate by 2 to 4 points without inflicting carnage on real assets. It was a bad idea to fight the Fed (on the way up) when the S&P bottomed at 666, and the big monetary bazookas came out; and it’s an equally bad idea to fight the Fed when it is going into full retreat. This is as close to a no brainer as you can get.

    • CBS, perhaps the Fed isn’t making a mistake but simply wants to give the rich another opportunity to buy stocks and real estate at bargain prices again like they did 8 years ago.

      • Not until after the rich unload their overpriced assets onto retail buyers and investors. My advice still stands, don’t buy at nose bleed levels in the hopes of perpetual appreciation.

    • Your post should read “to all Bears, don’t fight the Fed.” If you bet against the Fed for this ENTIRE decade, you were smashed like a freight train crushing a penny on the rail road tracks. The Fed is in the game of asset inflation. Renting or have money in a savings account was punished to no end. No matter how much you despise the Fed, it’s pretty easy to profit from their policy making.

      • What part didn’t you understand about the siphoning off of ultra easy policy? Or maybe you really believe in the magical unicorns of soft landings? As I said, it was a no-brainer trade 10 years ago to go long when global central banks were flooding the markets with liquidity; the converse is true today. My goodness, people, have some perspective.

      • “The Fed is in the game of asset inflation.”

        @LB, were they not in the same business in 2007-2009? Or were they on vacation????!!!!…

        Yeah, I’m sure they will inflate it again after they buy assess for pennies on the dollar in the next engineered crash. All the profits they make today have to go into assets. It’s just that they like to buy everything at steep discount. This is the oldest game in town. I thought you learned it by now. The sooner you learn it the better. That is how I made most of my money, by playing along.

      • You are certainly not drinking from the moderation spigot. Do you really not understand that the Fed is leaving with the punchbowl? How long do you think you suckle on Janet’s teet? Let me say this clearly: when everyone was running for the hills in 2009 and 2010, I was buying hand over fist in any volatility asset. The policy is in reversal now, so like any rational (and “moderate”) person, I am de-risking my portfolio. Don’t fight the Fed. Do you get it now?

      • The Fed is leaving with the punch bowl? Not true. The Fed curtailed purchases quite some time ago, but that is not an issue because other central banks picked up the slack. Currently, a record amount of QE is entering the worlds financial markets. That will continue … if the fed takes the punch bowl away, another central bank will bring a bigger punch bowl to the table.

      • So let’s hear your honest play 10 years ago

      • To JT: Respectfully, you’re not thinking about liquidity correctly. First of all, the Fed stopped buying assets in 2014, but had until recently been reinvesting securities that were maturing, so the balance sheet stayed constant at $4.5 trillion. Now, the Fed is actually letting letting securities just roll off, so the B/S will be reduced by about half a trillion dollars by YE2018 alone. Second, you are also not correct when it comes to the RoW. Leaving aside the BoJ (which will never be in anything but a state of QE), in the next 12-18 months: it is widely expected that the ECB will completely taper its purchase programme (now at 2.1 trillion euros) this coming year (Draghi will tell us more on Thursday); the BoE is done buying assets (435 million pounds), and there is some talk the BoE may start unwinding soon; and the PBoC and EM collectively are going to be net liquidity WITHDRAWERS. When you add it all up, even with the BoJ, net liquidity injections by global central banks will go decidedly negative in 2018. (But don’t believe me; take a look at a graph on FT.com in article called the “QE Retreat”; it’s actually a little dated, and would look worse today). Separately, it is indisputable that rates are going up around the world. If you can’t see that the punch bowl is being removed, you are living in the river of Denial. Now, if you ask me if the central banks won’t back off at the first sign of market panic, that’s another story. But, come on JT, come stronger with the facts next time.
        To Dan: How did I play it? It wasn’t rocket science, given my job (buy-side high yield research & trading). I got out of weak single B and below names at the earliest signs of crisis (which was evident as early as when Northern Rock failed and certainly by the time the Bear Stearns MBS hedge funds blew up). On the other side of that, I gradually started buying high single Bs and double BBs that had years of debt service on balance sheet, reasonable leverage, decent business models, etc., that got thrown out with the bathwater and were trading for upwards of +1000 bps. Now did I top tick and bottom tick everything? Of course not. But there are very simple investment axions that work over time, like swimming in the same direction in the Fed! I’ll be a little early on this one, but I’ll be right too.

      • Incidentally, I’m not predicting a market collapse redux. If you were in the trenches in 2007, it was no secret that the banks were at incredibly high risk insomuch as they were running their balance sheets at 30x leverage (A/E). The math was very easy: a 3% correction in assets would result in insolvency (at least in a mark-to-market universe). The PMs at my shop were furiously making calls to the worst offenders trying to talk some sense into them. Today, with most banks in the 10x leverage area, and with mark-to-market accounting effectively suspended, there is little risk of another financial crisis. However, I don’t think business or market cycles have ceased to exist. There will be a normal correction (hint — the Fed wants a correction, they just don’t want it overdone) in the area of 15-20%. Still a great opportunity to make money if you like active investing. If you have been studying this stuff intensively for 30 years, you don’t get lulled to sleep by what appear to be “it’s-different-this-time” stories. I would highly recommend the writings of Schumpeter, Minsky and Von Mises in times such as these. (And please burn anything by Keynes.)

      • Calling BS, you are just plain wrong. Record levels of QE ( when adding all central banks flows ) will never stop. Why would they? If they stopped, as you suggest, everything would crash. Even a big coordinated taper would crash everything. The alternative is inflation … if they keep printing money. That is their choice … either crash or inflation. The central bankers are a bunch of politicians whose career would be cut short by a crash. So, it is inflation and QE forever. I am retired in my 40s with a string of beach homes … all small and old .. but cash cows. I bet everything on inflationary policies, and won big.

      • JT: Did you notice that I used facts to illustrate that QE is in fact reversing? You simply say the banks will never end QE, but ignore the actual data I provided. Can you refute the numbers I stated? No. QE is in reversal. If you want to argue that the central banks will REVERT to aggressive QE when the markets fail again, then that is a valid thought. But you are ignoring the present reality; if you don’t have alternate numbers to the ones I provided, then I think your argument is busted. If you respond with our actual data, you will just look foolish. Incidentally, what is your training in economics and finance?

      • Calling BS, right now QE is at a record levels … from a world wide view. Of course, they always talk and talk, but once the market shakes a little from the talk, they always walk that talk back. That is the game. This QE thing is a real problem as far as asset inflation is concerned.

        More fuel is being added by new bank regulations worldwide that require more and more bank assets in the form of sovereign debt … more market propping trickery.

      • JT: I think you’re beginning to accept the numbers that I have put forward, which demonstrate that central banks are in fact tightening policy now. I understand your point that they won’t have the nerve to follow through on it. My concern is this: I believe that global central banks (especially the Fed) are having increasing internal dialogue about asset market (in)stability, and would like to gently arrest or prick bubbles in the near term. The problem is that no central bank has ever organized a “soft landing.” This is the Von Mises/Hayek complaint — Fed intervention only results in instability in the long term. The bottom line to what I’m saying is that the Fed thinks it is clever enough to reverse all of the liquidity it has provided without causing some type of accident, and I think that is truly wrongheaded. As I’ve said elsewhere, I’m not insinuating a 2008-like event, but a significant correction should not be shocking to anyone. Best regards

  • The problem with perma bears is they never think it’s enough. The 08/09 crash was quite spectacular. Prices fell 20-30% on average and into the 50% range in some isolated areas. But even then they weren’t happy and were waiting for the 80% off fire sale which never came. And here they are nearly 10 years later and prices are 20% higher than the previous peak. They had a once in a generation opportunity to buy cheap real estate and blew it. And when the next downturn comes they will play the same game and miss out once again. Rinse, repeat forever.

    Same with stocks. I remember reading from people who were convinced Dow would fall to 1000 and thought it was crazy to buy when it was 8K. Even thought it had falledn from 13K to 8K they were still convinced it wasn’t enough. And now, again 10 years later, Dow at 23K, they’re still clinging to the fantasy of a 90% fall in prices while earning 0.025% interest in a savings account.

    Moderation is the key to a good life kidz.

    • Once a generation buying opportunity? Let’s see, 30% off of $600K (a low estimate) was 420K in OC. That represented a price/income ratio of only 5.25 (assuming a 80K median household income) around that time. Wow, what a bargain for the middle class!

      Let me guess, you knew for sure that the Fed’s and government extraordinary asset reflation programs would last this long at the cost of a historical level of debt. Now, do tell us how this record credit expansion can last indefinitely to ensure that real estate and stock prices remain permanently at a high plateau.

      • Prince, I agree. How could one know “for sure that the Fed’s … extraordinary asset reflation programs would last this long at the cost of a historical level of debt”? The Fed could have stopped inflating the asset bubbles long ago. It certainly would be suicide in the long run to continue the zero interest rate policy until the dollar collapsed and the middle class was destroyed by high prices.

      • And that same house is now $800K. So yes, a once in a generation opportunity squandered by perma-bears. Whatever man, no skin off my nose is you rent for the next 50 years. As a landlord, I welcome it.

        You’re making my point for me amigo. You are a perma-bear who thinks in absolute black/white terms. I never said stocks and real estate will never see another correction. That is idiotic for anyone to say. What I have said and will continue to say is that your fantasy of 80% corrections are just that, fantasy.

        Will there be a 10% correction? 20%? 30%? I don’t know. Maybe. Probably. Will it be tomorrow or in 5 years? Again, I have no idea, nobody does. But yes, there will be a correction eventually. There always is. The point is when you see a correction like that, you jump in and buy buy buy as much as you can. Instead, you and the rest of the perma-bear crew sit around and scoff at a 15% drop because you are convinced 80% is just around the corner. And then when that 15% drop is erased and the asset goes up another 50%, you gnash your teeth and scream about the fed or whatever.

        And I didn’t say $420K is or isn’t a bargain for the middle class. It was a bargain compared to prices today. Whether or not that is good or bad for the middle class is irrelevant. The middle class is not entitled to own a 4 bedroom home in a nice part of OC. You guys keep confusing market forces with fairness. And you will always lose money doing so.

        Here’s a tip: want to help the middle class? Stop voting for socialist Democrats every 2 years in CA. That will help the middle class immensiley. Whining about the fed….not so much.

      • “The middle class is not entitled to own a 4 bedroom home in a nice part of OC. You guys keep confusing market forces with fairness. And you will always lose money doing so.”

        Truer words have never been spoken. Back in the 1970s, Joe Middleclass could buy his new tract home in OC and live a good life on one income. Those days are long gone and will never return. This has nothing to do with fairness, it’s reality. As others have said, don’t fight the system…profit from it!

      • “And that same house is now $800K. So yes, a once in a generation opportunity squandered by perma-bears. Whatever man, no skin off my nose is you rent for the next 50 years. As a landlord, I welcome it.”

        So in other words, you’re assuming that the next downturn will be mild or will not occur within the next 25 years.

        “You’re making my point for me amigo. You are a perma-bear who thinks in absolute black/white terms. I never said stocks and real estate will never see another correction. That is idiotic for anyone to say. What I have said and will continue to say is that your fantasy of 80% corrections are just that, fantasy.”

        First of all, I am not a perma bear. I think housing is worth buying WHEN prices are sustainable over the long term — I.E. not the speculative commodity supported by fantasy financing it currently is. The fact that you can’t wrap your around that fact does suggest that black and white or 2-dimensional thinking is your forte. BTW, when did I predict a 80% correction?

        “Will there be a 10% correction? 20%? 30%? I don’t know. Maybe. Probably. Will it be tomorrow or in 5 years? Again, I have no idea, nobody does. But yes, there will be a correction eventually. There always is. The point is when you see a correction like that, you jump in and buy buy buy as much as you can. Instead, you and the rest of the perma-bear crew sit around and scoff at a 15% drop because you are convinced 80% is just around the corner. And then when that 15% drop is erased and the asset goes up another 50%, you gnash your teeth and scream about the fed or whatever.”

        Just as I thought. That 15% max drop claim is sticky with the RE cheerleader crowd.

        “And I didn’t say $420K is or isn’t a bargain for the middle class. It was a bargain compared to prices today. Whether or not that is good or bad for the middle class is irrelevant. The middle class is not entitled to own a 4 bedroom home in a nice part of OC. You guys keep confusing market forces with fairness. And you will always lose money doing so.”

        Hey, you wanna know what happens to countries where the middle class is irrelevant? Not a pretty picture. Market forces? What part of Fed and government manipulation don’t you understand? Just forget about QE, ZIRP, and the cheap and easy credit. The RE cheerleading crowd only believes in “market forces” when prices go up.

        “Here’s a tip: want to help the middle class? Stop voting for socialist Democrats every 2 years in CA. That will help the middle class immensiley. Whining about the fed….not so much.”

        How cute, you believe that there’s only one major party that is pro-socialism. Next you’ll tell me is that the Fed has the back of all landlords and will ensure that the price of your properties will have reached a permanently high plateau. Socialize losses and privatize losses. Nothing to see here folks. It’s only “sustainable” market forces at work.

      • And that same house is now $800K. So yes, a once in a generation opportunity squandered by perma-bears. Whatever man, no skin off my nose is you rent for the next 50 years. As a landlord, I welcome it.”

        In other words, you see a shallow dip (15% tops meme) or a no major correction within the next 25 years. Gotcha.

        “You’re making my point for me amigo. You are a perma-bear who thinks in absolute black/white terms. I never said stocks and real estate will never see another correction. That is idiotic for anyone to say. What I have said and will continue to say is that your fantasy of 80% corrections are just that, fantasy.”

        The only thing I see is another RE cheerleader who loves to put words in people’s mouth because logic is beyond them. I never said anything that you claimed. Buying RE makes sense if the long term fundamentals are strong. They absolutely are not at this point. But then again, I doubt that you can see the big picture.

        “Will there be a 10% correction? 20%? 30%? I don’t know. Maybe. Probably. Will it be tomorrow or in 5 years? Again, I have no idea, nobody does. But yes, there will be a correction eventually. There always is. The point is when you see a correction like that, you jump in and buy buy buy as much as you can. Instead, you and the rest of the perma-bear crew sit around and scoff at a 15% drop because you are convinced 80% is just around the corner. And then when that 15% drop is erased and the asset goes up another 50%, you gnash your teeth and scream about the fed or whatever.”

        As I said before, if RE prices were to go up another 50% without corresponding income growth, owning properties will be the least of your worries. But that probably flew over your head.

        “And I didn’t say $420K is or isn’t a bargain for the middle class. It was a bargain compared to prices today. Whether or not that is good or bad for the middle class is irrelevant. The middle class is not entitled to own a 4 bedroom home in a nice part of OC. You guys keep confusing market forces with fairness. And you will always lose money doing so.”

        You’re also the last person to decry “entitlements”. The downturn was due to market forces (high debt and credit consolidation). The current “recovery” was due to manipulation. Now it’s up to you to convince me that this manipulation is perpetual and comes with no consequences.

        “Here’s a tip: want to help the middle class? Stop voting for socialist Democrats every 2 years in CA. That will help the middle class immensiley. Whining about the fed….not so much.”

        Dude, you’re funny. You actually believe that only the Democrats believe in socialism. Next, you’ll tell me that the Fed has got your back and knows what it’s doing.

      • Your meme is the same as that of other cheerleaders:
        – Either a shallow price dip or no major crash in the next 25 years.
        – In complete denial that you’re the beneficiary of extreme Fed and government manipulation. Hence beating your chest for your investing acumen. Market forces or it’s really different this time?
        – Resorting to straw man arguments — when did I claim a 80% correction?
        – Believes that manipulation can only work on the way down. Accusing the middle class feeling entitled is the biggest pile of ego stroking as can be. Next, you’ll claim that ZIRP and exotic lending are condusive to free market economics.

        BTW, name a major political party that trully care about the middle class or doesn’t resort to socialism to fund their political machine.

      • @LL
        Your meme is the same as that of other cheerleaders:
        – Either a shallow price dip or no major crash in the next 25 years.
        – In complete denial that you’re the beneficiary of extreme Fed and government manipulation. Hence beating your chest for your investing acumen. Market forces or it’s really different this time?
        – Resorting to straw man arguments — when did I claim a 80% correction?
        – Believes that manipulation can only work on the way down. Accusing the middle class feeling entitled is the biggest pile of ego stroking as can be. Next, you’ll claim that ZIRP and exotic lending are condusive to free market economics.

        BTW, name a major political party that trully care about the middle class or doesn’t resort to socialism to fund their political machine.

    • All the geniuses who stepped in and caught a falling knife were absolutely bailed out by the FED – so, take a bow? I get the points about catching the top or bottom, but I also know the banks were on the edge of oblivion and were bailed out – the knife-catchers getting bailed out was a knock-on effect. In terms of r.e., yes if you get a good loan or all cash overall yield to your liking that is one thing, particularly in a supply constrained locale. Historically, there have been long spells in the horse latitudes; IOWs, no bounce or grinding slow trend lower. I think that happens in the next adjustment, the dip buyers will get knee-capped. Just the way markets work – people like yourself have been conditioned to buy the dip then crow. I suspect peeps will be eating crow.

      I am looking to live in Europe. Portugal has a golden visa program with 10-year tax holiday. I could have retired in 2000 – the oddest twist of life is that I enjoy my profession and don’t want to quit, but my daughter in in UK and son will be in Europe before long and I miss them.

      For younger peeps, read “Millionaire Next Door” – those are real people like you. Then read Your Money or Your Life and Cashing in on the American Dream by Terhortz. Work hard, spend little, invest the rest and compounding interest will carry most of the load.

  • One more clarifying point for Mr. Landlord, who is blinded by his own avarice, and perhaps intellectual limitations. You seem to be under the illusion, first, that there is some fundamental underpinning to today’s valuations. There is not; that quaint concept blew away in 1997, when Greenspan lost his mind over the failure of a tiny hedge fund and ushered in the era of central bank machinery absolutely antithetical to free market capitalism. Where, oh where, would you be without the three-headed Alan-Ben-Janet monster? I think it would make a lot more sense if you just said, “damn, thank you Alan for making me a filth rich rentier, even though I did little (proportionately) to deserve this outcome.” Second, were you brain dead during the last tightening cycle? Were you a better seller in 06/07 and a better buyer in 09/10 as I was? Did you, like I did, retire at the age of 43 after having generated huge trading gains at a bulge bracket investment bank and one of the world’s largest asset managers? If you need some lessons in macro and finance, let me know; I can afford to work pro bono. And, yes, other than having a knack for standardized tests which got me into Ivies, it was freaking luck! It’s called self awareness.

    • I am pretty much in the financial position of Mr. Landlord. I made most of the money in RE buy buying low and selling high and am a landlord. I admit that the FED actions helped me. I just positioned myself to take advantage of their game.

      If you study the way the FED acted in the past (boom and bust) you can predict the future. Yes, the cycle lenght varies, the amplitude of the curve varies and nobody knows when the top and the bottom is unless you look into the past. However, the key is to avoid extreme greed or extreme fear; in other words moderation is everything. Better a year earlier than a month late.

      In my youth I talked to an extremely rich fellow who also made his money in RE. He gave me the advise above. He said – be happy when you get the direction right; forget about the absolute top and absolute bottom. I listened and implemented it. Some people are afraid of leaving money on the table (greed). That is OK. It is better to make a smaller REAL profit (in hand) than a large one on paper. Over decades it served me well. Some people think that 12% per year is small. In some cases, looking back, yes it is. For me, I am happy when I get it. That means 100% every 6 years (compounded). Looking back, there were only few instances when I sold or bought at the very bottom or top and that by chance. Most of the time I sold way before the top and bought way above the bottom.
      However I don’t regret it – water under the bridge. My strategy consistently implemented over a long period of time still served me well. Most of the time I had the direction right.

      • @ Flyover…you are spot on. Why drive yourself bananas by trying to buy at the exact right moment? Seriously that window is usually so small it doesn’t make sense to always look at ‘absolute lowest prices ever’, cuz it aint gonna happen.

        Southern California is especially hard as its so expensive relative to incomes.

        My husband and I saved,scrimped and got into a fixer in Santa Monica in the 90s when there was a nasty local recession going on. No one…NO ONE!… thought it was a good idea to buy…the sky was falling, yadda yadda.

        But we were ‘life stage’ ready, which meant we had 2 good jobs, a baby on the way and a tiny rental we were jammed into with noisy neighbors and bad faux wood paneling all over the walls which I couldn’t tear off. Drove me nuts.

      • I forgot to mention, that like the Landlord, I also have an MBA and years of working in finance. I was not lucky to profit from the tech sector and dot.com boom, but I built my portfolio slowly over a long period of time. Patience is virtue. In RE most who want to get rich quick leverage too much and in a downturn lose everything. Leveraging is the offense; however, the defense is equally important. Leverage a little bit over a long period of time and diversify your portfolio. Try to diversify the sources of income and the nature of income.

    • I was very much a seller in 2007 and a buyer in 2010-11. I actually rented between 2007 and 2011 while watching prices fall. I was in this weird place in 2010 where I was renting my own home while buying rental properties. Reason was the low end had pretty much hit rock bottom, but the high end (which I was renting and looking to buy) still had some downside. So I was a renter and landlord simultaneously. It was kind of a weird place to be. I also made a killing shorting Countrywide. That was an easy one. Also shorting oil in 2008. That was a no brainer as well.

      As for lessons in finance, I have an MBA, so I think I’m good there bro. I mentioned this before, but I worked for evil Wall St banks for a few years out of college, before heading out west to the land of Silicon milk and honey where I made the real money. So yeah I think I know a thing or two about markets. But please do regale me with your knowledge….

      And I too somewhat retired in my late 30s. I say somewhat because I still do some consulting work here and there. More for something to do than the need for money. But I don’t have a permanent job. Between my rentals and money I made from stock options (which Millennial is convinced doesn’t exist, LOL) and general evil rich (white guy) activities, I don’t really ever have to work again. Especially since I got the hell away from coastal cost of living and moved to flyover country.

      I will say that I was lucky in terms of timing. I was out of college right as the .com frenzy was happening. I was in NY slugging away 70 hour weeks and thinking, there has to be an easier way. So thanks to a friend of a friend type of thing, I somehow ended up at a start up, having no effing clue what I was doing. But nobody else did either. That was a hell of a fun time. And the weather was much nicer in San Jose in winter than in Manhattan. We all got rich(ish) doing it. And yeah, it was all about right place, right time. And then a few years later, did it again at a second start up. I know Millie is convinced this never happens, but yeah it does.

      As for Greenspan. Yeah I guess I can thank him. If it hadn’t been him it would have been someone else. It’s kind of funny how you’re shocked that the powers that be, don’t have your interests in mind, but have the bankers’ interests in mind. It’s always weird how people who supposedly understand the world are shocked to find that life ain’t fair, LOL. So you have 2 options…..whine about fairness or profit from the unfairness. I know what route I’m taking.

    • There is a fundamental reason, and it is called inflation. It is the reason that stocks and real estate are on a tear.

      • Artificial inflation to be precise. The question is, how long can it last before economic forces push back?

    • So many millionaires on this board. I didn’t realize this was the well-to-do part of the internet, better find my way home.

      • I think they are all millionaires on paper with that one house they bought in 2010. Until they are not…. In the meantime, they will encourage others to continue to buy at outrageous prices to drive their house into the multi-million range. Until it’s not……

        I told my poor mom who is collecting Social security once that she was a millionaire in 2006. She didn’t believe me. And then she wasn’t in 2010.

      • Who knew we’d get to watch them cross streams!

      • Or you could stick around and take notes, and maybe have a laugh along the way…

      • Thanks to inflation induced manipulated markets there are more millionaires than you can think of. It has to do with money printing and doubling in the national debt.

      • Despite what Millie tells you every day, not everything is doom and gloom. Plenty of opportunities to make money in this once great (and maybe great again in the future) country. But there is one way guaranteed to never make money: sit around feeling sorry for yourself blaming others.

      • Bob,

        I don’t really care what you believe or don’t believe. I’m not here to get into a pissing context of who has the most zeros in their bank account. But you, like Millie, live in a dreary world where everything and everyone is somehow corrupt and not legitimate. I have news for you my man, it’s not like that. There are around 5.5 million millionaires in this country. You probably know several of them, but don’t know they are millionaires. Remember, the #1 vehicle owned by millionaires is a F150 pickup, not a Porsche or BMW 7-Series whatever. Most millionaires are the guy next door who drives a 5 year old car and shops at Target. That’s me. I drive a non-descript car, I shop at Target and I live in a nice, but not ostentatious house. Now granted I do enjoy the finer things in life, like I’ll go on nice vacations, I eat out a lot at nice restaurants, and buy groceries from the organic hippie store that costs a fortune. My kids are spoiled rotten (I know, I know, but I can’t help myself LOL). I generally don’t ever have to worry about money. And that is a terrific feeling. But if you met me on the street you’d never know it. And there are literally millions of people like myself (and I hazzard to guess Flyover) that are out there, just quietly living life while accumulating a nice chunk of wealth.

        I’ve been both lucky and smart in my finances. Smart in knowing where to look for value. Lucky (as everyone who has ever “made it”) in being at the right time and the right place. And I’m not going to apologize for either. And also having the fortitude to take risks which is as important as the smarts/luck. That’s key. If you always play it safe, you’ll never make it. The biggest risk I took was walking away from a pretty sure thing working in finance to go to a start-up nobody heard of, on the other side of the country, for a lot less money but the chance to strike it rich via options. It paid off. But it could easily have been a flop. Had I not taken that risk, I never would have known. That’s what made this country great; people walking away from their comfort zones and heading out into the great unknown hoping to strike it rich. Some made it, some failed. Sadly though, hat spirit is gone. It’s depressing to read some many posters here continually whine about how unfair life is and looking to govt as their savior. No matter who wins elections, the left has won the war of ideas. In just one generation the country’s gone from unbridled optimism to 25 year olds living at home with mom and dad content to live like that for decades to come. As the yuugely bigly Yuge Donald Trump would say….SAD!

      • Wheelin, that made me laugh! YES,

        I am with you!

        This board’s comments has become a celebration of a few ppls great luck/wisdom.

      • Back in the 1980s, I told my Supervisor at work that I would probably be worth a million bucks when I retired, but that it wouldn’t mean much. He gave me a little smile and a nod.

        I’m not yet retired, but I guess I probably will still be worth at least that much when I do retire, whatever age I happen to be at that time. With a paid-off SoCal suburban house, an IRA and a 401k plus out of state inherited real estate, I’m easily there already. A million bucks today is just plain old middle class, not great wealth.

      • Joe, the typical SWR (safe withdrawal rate) is cited as 4%, so your $1 mil for retirement equates to $40k/year (adjusted going forward for inflation). Is that enough?

        This assumes that you’re invested in stocks and bonds.

        ——————-

        I’m on MrLandlord’s side of this discussion. In 2011 it was ‘obvious’ to me that both house prices were low as well as interest rates. I cashed out every penny of my 401k after having diligently putting money into them for just shy of 20 years and never having withdrawn from them prior.

        I told lots of friends and coworkers that they should do something with this unusual dynamic but nobody did. So it goes.

        Keep up the complaining, as it means that the pool of renters continues to remain large.

      • Seen it all before Bob

        Like Mr Landlord, and Warren Buffet, I follow the philosophy to buy low, hold, and sell high (or don’t sell at all if I doon’t have to). I know that every homeowner in Coastal CA from San Diego to Santa Barbara that has held their house for 15 years (or bought in 2010) is likely a millionaire. How many houses is that? I know many people who were housing and stock market millionaires and had rosy plans for the future in both 2000 and 2006. In 2001 and 2010, they were lucky to hold on to their underwater houses. Millions couldn’t hold and and joined the ranks of the poor and are currently paying high rent somewhere trying to dig out. I’ve seen it all before. IMHO, both the stock market and housing market are more insane now than in 2000 and 2006 so my recommendation is to hold on for the ride. Save cash, live at home if you can’t pay cheap rent, and be prepared to buy when houses drop 20-30% and when stocks drop 50%. As Jim Taylor says, Everything to tank hard soon.

    • Dazzling us with words like ‘avarice’ and working in ‘quaint’ unnecessarily does not make you sound smart. Lo siento Captain BS.

      As someone who is also a self-made and rich from RE (I was able to retire at 27’ish,) I will state unequivocally that the advice of Flyover and Mr. Landlord on this blog represent the two main voices one would be smart to listen to if they have any desire to build real estate wealth.

      They may not foist fancy googled synonyms on us like you, but they ‘get it.’ I can tell based on your sophomoric post Sgt. BS that you are not independently wealthy from RE investment. Most landlords I have worked with with a substantial net worth don’t even know what ‘avarice’ means. They drive dilapidated trucks and don’t wear pointy hates with wire rim glasses.

      Cue the bozos, here let me help, “Ummm, well if it’s true that you ummmm are rich from real estate then why are you ummm posting on this blog, ummm, I too am calling BS, ya BS!!! Real successful people don’t use blogs or the internet or type! BS you live in your basement like me!!!! BS!! bsbsbsbsbsbsbsbsbs”

      • Just because you did some thing doesn’t mean just anyone else with who knows what other circumstances is going to be able to achieve the same results you did. Though I’d disagree with Calling BS on the no fundamental underpinning part since there never seems to be a short supply of participants trying to do it like the last guy putting up tent poles and that’s worth something.

      • Captain BS sure has some nerve. Calls out the rentier class and government socialist financial policies and dude supposedly retires from “big banking” at 43. I wonder if the Captain benefited from the tax payer bailout money in any way, shape or form??????

      • Mr. Landlord, you even described my truck, yes and old F150. And I am in Lowes or Home Depot once and often times twice per day getting supplies, every employee knows me by name and thinks I am a low paid construction worker (I wear my bright orange construction shirts all the time) and my hands are more calloused and caked with materials than most people you’d ever see (I do all my own maintenance and work.) In summary, they all think I’m a bum, when they ask what I do for work I always say ‘maintenance.’ Most days I look homeless no kidding. I have over $2M cash in the bank and I’m 37 years old self made. Whether you believe me or not I could care less because you’ll never meet me in person. Everything I said above is a fact, deal with it or learn from it as you may, no skin of my back. Cheers!

      • Unfortunately this board has been hijacked by a bunch of wanna-be Buffet’s and Greenspan’s who seem to think anyone cares about how savvy an investor they think they are.

      • Yeah Lord Blankfein, that was my point you fecking idiot. That’s why I left the Street; because it became a complete sham. I gave a great deal of my money away and now live a decidedly middle to upper middle class life by choice. I grew up in the projects of NYC; believe me, I could care less about acquiring shiny objects. I have always been about the truth. I’m trying to drive home to Mr. Landlord that he did nothing special except benefit from government intervention, and ought to stop crowing about it. And I would advise you to keep my name out of your mouth; I will always be from the projects.

      • And to be clear Lord Idiot, I left the Street shortly after the bail outs because I found the whole thing sickening. There were a few other folks with a conscience that did the same. That is why I’m railing against the current financial structure. You think someone who had benefitted from the bail outs would be taking my position? This site seems to consist of a fair number of mindless idiots with poor inferential skills. Go back to your hole now. I’m done with this site.

      • How come people thinking alike have the same car – Ford 150???!!!….that’s my car, too. 12 year old. It still runs great.

      • Heh Norcal,

        I hear you man. I have a pretty big yard at home, it’s several acres of property and about an acre fenced in that’s the lawn. I do all the work myself, mow it, aerate it, etc. I could easily pay someone to do it, but I’m a cheap SOB when it comes to things like that. Plus my thinking is, if I can do it myself, why pay someone to do it? One guy quoted me $400 once just to mow my entire property one time. Are you effing kidding me? Of course there are things I can’t do myself, like electric work or major plumbing work. But anything that isn’t either a safety issue or a “if you fuck it up it will cost a lot to fix issue”, I’ll do it myself.

        But I see so many people the exact opposite. People with postage stamp yards hiring lawn maintenance companies to cut their lawn that would take 10 minutes. And then these are the same people who whine all day long how unfair the world is and how the powers that be are conspiring against them and how Bernie needs to be elected in order to save the middle class or some such bullshit. And post their diatribes to facebook on the $1000 iphone that they just had to have, of course.

      • So let me get this straight from the BS Master. You were so disgusted with whole thing that you gave most of your money away and still kept enough to retire at the ripe old age of 43. Whatever you say dude. Those 1%ers sure do have some tough problems!

      • you just described half the guys i know ,, amazing isnt it? ya, they think you a bum, but you could prob fund their kids college education along with your kids ,look like a bum daily, then dressing silk for charity ,its nice to be low pro, good vibe,,,,no one bothers you,and you can get your job done working for yourself is nice 🙂

      • NorCalFella: There are a lot of things to get upset about in the world today, but I don’t think words like “avarice” and “quaint” should really push anyone over the edge. I mean is there some prescribed reading level that I should know about? Seriously man, it’s just a website. I’m just having a few laughs on here a couple of times a week. Keep calm and carry on.

      • As clarification to “Truth,” when I say there are no fundamental underpinnings, I am referring to every asset class, including real estate, because the Fed has taken away the market’s capacity to establish a non-manipulated cost of money against which to discount future cash flows. If the Fed were on the sidelines, would the cost of capital increase to such an extent that equity multiples would significantly compress? I don’t (can’t) know, but I suspect so. With respect to real estate, if one says that housing supply is so constrained on the Coasts that prices have some fundamental underpinning, one must also take into account that artificially low rates and financing availability have skewed demand. I mean, supply seemed awfully constrained in 2006; then the Fed put the brakes on, mortgages got (more) expensive, leverage came out of the system, 20% down payments were a thing again — and, bang, supply aplenty! We may never live in a world of “fundamentals” again; in fact, it doesn’t seem likely at this point. So we’re all left to dissect every word of the pinheads hiding out in The Eccles Building. If anyone here has much confidence in the long-term central planning capabilities of the Fed, I’d like to introduce them to the Soviet Union. Leaving philosophy aside, does anyone else want to get off of the Fed rollercoaster of the last 20 years? Cheers

    • If that article is not a clear example of Cultural Marxism taught in public schools, read this one to remove any doubt:

      http://www.zerohedge.com/news/2017-10-24/professor-claims-math-algebra-and-geometry-promote-white-privilege

      • I knew math was racist when I saw a plus sign yell a racial slur at a fraction.

        Going by this article, anything and everything in the history of the world that white people invented could be deemed as racist and oppressive to minorities.

      • Seen it all before Bob

        Math causes a division between people who favor multiplication versussubtraction. This is a racist statement.

    • “They allege the property owner is responsible for untenable rent increases that are displacing old-school Eastsiders and mariachis in Boyle Heights.”

      Yes by all means we must save the mariachis. I mean where would our society be without them?

      I’m sorry but this article makes me want to puke.

    • Finally!! I would totally join some rage protest against high housing cost! We need to fight back with all we got!!

      • No, you need to move.

      • So now i think your posts are just sarc b/c they cannot be legitimate

      • Dan, I don’t know if Richard Star is using sarcasm or not. However, you’ll be surprised at the large percentage of useful idiots who think exactly like that. I met plenty and I still do everyday. When I meet them I just roll my eyes. How can you educate them? Can you fix stupid??!!!…

      • Yep, Richard is either an idiot or enjoys playing an idiot. I’m going with the latter, which may be more pathetic than the former.

    • There was an article going around a year or so ago that said reading to your kids is also racist. For you see, ghetto children don’t get read to by their parents, so if white upper middle class parents read to their children, it’s racist. I don’t know if it went anywhere but the “action item” from that article was for liberal rich white women to no longer read to their kids.

      So now, reading AND math is racist.

      The stupid…..it hurts!

      • Mr. Landlord,

        I can tell you from my practical life and decades of communist indoctrination while growing up in communism – cultural marxism inhibits excellence. They want everyone to be brought low to lowest common denominator because that is the only way you can accomplish equality – everyone to be “EQUALY” poor. They do that out of envy. You can never make stupid to be smart and you can never make the poor rich. That takes effort and energy used in a constructive way over long periods of time with the right mindset. The stupid ALWAYS go for instant gratification. It doesn’t matter that long term they are going to suffer enormously; whatever the feelings of the moment say, that is what they want. Richard Star in all his postings shows the same mentality which is the result of cultural marxism taught in US public schools by the teachers unions – brainwashing at its finest.

        I am glad I had parents and grandparents who “coated me with teflon” against the communist propaganda; otherwise, today I would be living in poverty in the former communist block. Another example of the value of good parental advise in US is Ben Carson. He was “coated in teflon” by his mom so the mindset of the getto and cultural marxism he was indoctrinated with, would not stick. That was the reason he left the “plantation” and today he is a free thinking person and free indeed (financially and intellectually).

      • Flyover,

        Next to you, I’m probably the most anti-commie/socialist you’ll find. So don’t look at what I’m about to write as a defense of communism.

        But one thing I have heard from several people who grew up in the eastern block is that the education system was excellent. As in, what they learned there in middle school wasn’t taught until junior/senior year of high school here (that’s what a buddy of mine from Czechoslovakia told me anyway). So it’s kind of weird that while the idea of communism is to dumb everyone down, back then, and over there, education was important.

        Thoughts?

      • Mr. Landlord,

        By and large (at least in large cities), the 1-12 education in the eastern block was excellent. The university education by and large was not as good as in good US universities (there were some exceptions). At least that was the situation till communism fell.

        With the exception of a small percentage (0.0001% at the top) all people were poor and could not get ahead regardless how much they tried. The class difference and better quality of life were possible ONLY through education. For that reason, the competition for good schools (high schools and universities) was enormous. There were no second chances or alternate paths for success. Therefore, studying till 3 AM if you want to amount to anything was the norm.

        The many layers of exams at all levels sorted the achievers from the slackers constantly. The end result was to always find yourself with other students as good or better than yourself. That was the ONLY free market in the communist block and the only honest way to have a better life than the rest. For the real riches you had to work for the brutal security forces or be related to the president.

  • I think Flyover is my brother from another mother, LOL.

  • LOL…

    Prince of Heck
    October 24, 2017 at 10:14 am
    @LL
    – Resorting to straw man arguments — when did I claim a 80% correction?

    meet

    interesting
    October 22, 2017 at 5:19 pm
    EVENTUALLY what you earn will be what drives home prices and that means a 80% drop. NOBODY i know can buy a house and can ONLY get one thru inheritance. That is insanity.

    You guys should talk…..

    • Not only do your arguments depend on straw man arguments, but you resort to outright deceit. When did “I”, not “Interesting”, claim a 80% drop?

  • Per the OC Register, OC median home prices hits all time high of 710K…and median is up 11% in the last year. How this equates to tanking hard or tanking has already started needs to be explained.

    http://www.ocregister.com/2017/10/24/o-c-home-prices-shatter-700000-barrier-set-record/

    • Bbbbburt bbbbbut bbbbbut STUFF!!!

    • Mille and Jim will buy that 710k house when it falls to 190k.

      In essence they need a time machine set back 30yrs

      • Yep, 190k would be great price. I would be willing to pay even a bit more. During the next collapse we will see 50-70% price reductions. Similar to last time. The last buying opportunity was just a few years ago (2009-2012). The RE cycles move in about 10year waves. 2019+ we will see a nice crash again. This time it will be much more severe than the last one. They say patience is a virtue….why? Because not everybody has it.

      • Millenial, you’re right about most of your strategy but so wrong on a few key points that matter most. You are dead-on in terms of your patience and frugality. Kudos to you for embracing those ideals, that is rare in your/our age group (I’m gen-ex by a sliver.)

        You are also spot on about the market hemorrhaging generally every 10-12 years. Good on ya for hitting that too.

        You are off though in thinking that simply waiting for a massive price cut (your estimates of 50% which are pure conjecture and no man on earth knows what it will be) and then buying a single family home will somehow launch you into economic freedom. That coupled with your parents dying and inheriting a house.

        Waiting to buy cheap is good, but becoming independently wealth is not a ‘home run’ type move. It requires constant home runs in all markets. It took me ten years starting with the goose egg status (zero cash or help–but a heaping spoonful of white privilege!!!!) to become independently wealthy.

        I’ve bought and repaired and managed so many properties I don’t remember addresses now, but I was working 7 days a week in all market conditions to do that. I bought cheap deals in bull markets and cheap deals in bear markets. You’ve got to do it 24/7 and not just wait for the golden unicorn crash that may or may not be coming.

        Timing is key but there are always deals and opportunities, even as a type this. It’s a rookie move to think you can only buy in the 2008’s of the world and that will somehow get you rich, it will not.

        Kudos to you for nailing the most important components though which are patience, the ability to delay gratification, frugality. The other which I don’t know if you have and only you do is the ability to work as tenaciously as a street weed grows in a sidewalk crack. Without those virtues nobody will ever become self made and rich.

        And PPS, rich people are all around you, they don’t wear rolexes and drive Bavarian cars. They look like handymen most the time. Off to Lowes for me now, I’m in my nicest pair of paint splattered cut off grey sweats and my camo hat. Peace bra.

    • From the article and the complete opposite of what the bears like to espouse of a plethora of inventory.

      “Orange County has 1,122 fewer homes for sale this month than at this time last year when the number of listings already was well below average, reported Steven Thomas of ReportsOnHousing.com.

      And listings for low-cost starter homes — priced at $500,000 and below — are down 38 percent from last year.

      “We’re dealing with such a limited inventory, we should see (price) appreciation,” Thomas said. “There really is nothing available, especially below $750,000.”

  • “fight “against corrupt property owners, predatory developers “; they request more government regulation!!!!….

    This quote is from the article. Reminds me vividly of the years lived under communism. Why would someone save and invest in a property totally controlled by the government???!!!…..The demonstrators act like the private property is now own by the public.

    Requesting more government regulation when the government regulations caused the shortage is insanity. This is the product of communist indoctrination provided by socialist CA schools. Do the public schools in CA teach any ECON 101??? Or do they produce only illiterates good for voting for Maxine Waters and communist Bernie? “sad!…..”

  • If there was any doubt left that some people actually choose to rent, even though they could afford to buy, the latest surge in the number of highly-educated renters should help erase those doubts. Of all education levels, those holding a bachelor degree or higher account for the largest share of new renters added between 2009 and 2015 in both suburban and urban areas, percentage-wise and in net numbers. The number of renters who hold a bachelor degree or higher increased by 26% in the suburbs and by 20% in the cities.

    The second highest increase in renters comes from people with some college education or equivalent (a 19% increase in suburban areas and 12% in urban areas), while those with a high-school diploma or less accounted for the smallest increase.
    However, the largest net increases were in Los Angeles metro (which gained 134,000 new senior renter-occupied households and lost 26,000 renter households under 34 years of age) http://www.zerohedge.com/news/2017-10-23/meet-americas-new-renter-class-baby-boomers

    • “highly-educated renters” LOL

      It’s funny how people still think someone with a BA is automatically “educated”. Have you seen some of the filth on college campuses these days? They can barely string together 2 sentences. In some state schools, 1/2 the students are in remedial classes, learning how to read and do basic math. That’s what passes for “educated” today, LOL. And all for the low low cost of $40K a year.

      You know why these geniuses are renting? Because after spending $150K on a useless degree they work for $9/hr at Starbucks.

      I’m willing to bet large sums of money that if you break that down by a) degree and b) college you’d see way different numbers. For example: Stanford grads with an engineering degree: very unlikely to rent after say 10 years in the workforce. On the other hand, Cal-State-Northridge grads in Womens Studies….probably will be renting for the rest of their lives. And that rent will most likely come in the form of Section 8 payments.

    • “Of all education levels, those holding a bachelor degree or higher account for the largest share of new renters added between 2009 and 2015 in both suburban and urban areas, percentage-wise and in net numbers. The number of renters who hold a bachelor degree or higher increased by 26% in the suburbs and by 20% in the cities.”

      This increase is roughly similar to the greater percentage of bachelor graduates in the same time period. Same people, just more of them with degrees. Likely no correlation with intelligence. And choosing to rent in the city (if that’s where you must be, degree or not) is a no-brainer.

      The additional older renters are likely just feeling as though this is the right time to cash in, and of course the wrong time to trade down. But what will the poor helpless millennials do? I guess they’ll just have to (gasp!) move?

    • Seen it all before Bob

      It is likely some of these educated investors bought low in 2010 and are selling very high now to cash out. They are renting on the sidelines with suitcases full of cash to do it again. That’s what an educated person (OK, maybe slightly paranoid) would do.

  • Empty-nest Baby-Boomers. Whether driven by a change in lifestyle, a consequence of the housing crash, or an inability to find affordable homes to downsize, senior households are embracing renting in droves. Baby Boomers are increasingly giving up their participation in America’s perpetually re-inflating housing bubbles and opting instead to return to the smaller living accommodations of their youth.

    “Lowering living expenses, looking for a different lifestyle, less house-related work and overall less responsibility can be achieved by downsizing, so a lot of retirees opt to rent.” All of which raises the question, if boomers are giving up their basements to move back into apartments then where are their millennial children going to live after graduating with their $200,000 degrees?

    • Funny you mention this Ira. I had a conversation with my parents just a week ago. They actually talked about downsizing to a smaller home somewhere further east where its cheaper. Cashing out here close to the beach and retiring further east might work for them but sure as hell would not work for me. Living with them is like Christmas and birthday on the same day, EVERY day. My parents live close to my work and charge me no rent. I would be fucked if I had to move and pay for a roof over my head. Especially, at this location.
      I put a ton of effort in convincing them to stay put. It’s tiring but the only way to save a ton of money and maintain my lifestyle. I really feel there should be a first-time home buyer credit awarded to millennials and other youngsters. If we would get 50grand from the government I could see myself buying a small house.

      • WOW. Convincing your elderly parents to stay against the better choice for them just so you don’t have to sack up and pay rent? Seem like a stand up guy Richard.

      • “…the only way to save a ton of money and maintain my lifestyle.”

        “If we would get 50grand from the government I could see myself buying a small house.”

        So you can save a ton of money but you still want me to give you mine. Riiiiight.

      • Richard Star:

        You have a parasite’s mentality. Sounds like your parents have spoiled you.

        And giving younger people & 1st time buyers a $50,000 credit would be not only be atrociously unfair to those who either cannot afford a house on their incomes, and/or who are very frugal and cautious, but worst of all, would merely inflate house prices that much more. As it is, the array of government-sponsored programs to make housing “affordable” have mainly worked to inflate house prices while entrapping buyers in more debt. Low-down FHA & Fannie Mae loans, down payment assistance, principal write downs, and other help for buyers, or for those who are having trouble making the payments on houses bought for grossly inflated prices, are only fueling another bubble runup and making housing less affordable for everyone.

      • I am with you Richard. I am feeling hopeless and angry. Plus, we hear daily what losers we are and that everything is awesome. Its one thing if all people are not doing well. But if just a few people are making out big and most have to rent and barely make ends meet its frustrating. On top of that these few who are winning are telling us we are scum. Therefore, I rather have socialism than what we have now. At least than the owners and rich will feel some pain too. I dont care anymore.

    • Look,many people can afford to buy homes & simply choose not to, & I doubt any of my close friends could not afford to buy their existing shacks. I suspect, most could write a check for the house amount. Retirees, can rent the big house, move to a 1Br at the beach and be cash flow positive – and create a bit of tax shelter.

      What I have been seeing in San Diego is smaller blue collar families increasingly moving from 2Br to 1Br apts. The increase is rents keeps their rent appx the same, just need twin beds in the living room.

      If you think about it, the proposed lower $2,400 annual 401-K contribution would be a defacto housing market subsidy.

    • “Empty-nest Baby-Boomers. Whether driven by a change in lifestyle, a consequence of the housing crash, or an inability to find affordable homes to downsize, senior households are…”

      “Staying in place.” Fixed your sentence for ya.

  • You know what Lord Blankfein, I’d be happy to actually talk about these things substantively as opposed to hiding behind keyboards. If you want to question me on my integrity, my financial markets views, or just about anything, and you happen to live in Orange County (or within say 60 miles), I would be happy to meet you in person. You pick the place and time. I’ll buy the coffee. Nothing here but the genuine article.

    • I’m sure Lord B and Mr. Landlor are both lining up to meet you in person for a latte.

      You sound like the ‘genuine article’ alright. Straight out of The American Journal of Psychology.

      • NorCalFella — How old are you that you haven’t sorted out the internet is a fantasy world. /trolled

  • More proof that the housing crash is upon us…..

    WASHINGTON (Reuters) – Sales of new U.S. single-family homes unexpectedly rose in September, hitting their highest level in nearly 10 years, offering hope that the housing market was regaining speed after appearing to stall recent months. The Commerce Department said on Wednesday new home sales surged 18.9 percent to a seasonally adjusted annual rate of 667,000 units last month amid an increase in all four regions.

    • In September, new single-family homes sales raced to a more than 9-1/2 year high in the Northeast. Sales in the South hit their highest level since July 2007. There were also strong gains in the West and Midwest last month.
      May be it is the fear of an increase in interest rates?

    • Wow, 667K new homes were sold in September of 2017? That would be impressive — if you conveniently forget that the number has been topped several times in the past 5 decades despite a decidedly smaller population.

  • My travels have ended for a now, I did finally sell my last property had a nice loss? That’s okay you win some you lose some I mostly own in the game of investing. But now I’m on the sidelines and as I travel I’m convinced more than ever that a major crash is coming.

    Believe it or not many businesses are busy but like the old saying Monkey Business in other words expenses, employees, and home expenses are killing them as a result many filings for chapter elevens.

    Home prices throughout this country out of control if it’s not the price, then it’s the taxes ,the HOA the everyday utilities, the two kids for college education sorry I see this all crumbling and a lot sooner than one may think

    Throw in a possible launching of a missile by our North Korean nemesis and you see where this will all end up. For you who have cash and I mean a good amount of cash you can still go to McDonald’s and say Here’s a $5 bill to buy a hamburger fries and a Coke but for you who have very little money then they won’t be taking IOU’S to buy a Hamburger.

    I know it’s hard for you to believe you’re in the younger generation that you see past pictures of 1929 and think that was just a movie ,or World War II another Hollywood Epic ,but history repeats itself,

    Folkes,it’s long overdue save, save, save ,I don’t want to be the one that opened my window and give you a $10 bill when you’re standing out on the corner. At $10 it isn’t going very far today?

    • Hah ah ha ha ha. I love it.

      The sooner this fraud of a car company goes away the better.

      • Tesla cars are great performance wise. But their accounting methods border on fraudulent. Stock valuation buoyed by hopium — hype + government subsidies + investor desperation for yield (thanks to ZIRP). Few markets remain uncorrupted by Government and Fed intervention.

    • Talked to someone who works there… just 2% of staff let go standard performance review stuff.

  • There is only one solution to survive this craziness. Vote for the most leftist guy out there next time.

    • If the problem is not big enough make sure next time you compound the problem. That is liberal “logic” for you!!!!…

    • Because they’ve done so much for California in the last 60 years.

    • Profound, that has been an excellent strategy in California.

      We have a 25% poverty rate last time I checked, and our ‘6th largest GDP on planet earthhhh’ that is always referenced by stoners and dimwits, is 50% Facebook, google, etc…yes, it’s like Mexico with a handful of rich people and the rest not doing so hot.

      Let’s go more Left though, in fact let’s just cut to the chase and bring in Nicky Maduro and get this over with. If we eliminate all white privilege in California and educate children to be more fluid (pun intended) in gender neutral pronouns then we can truly make California Great. Once we clean this Hepatitis on the sidewalk crisis then we can start finally focus on removing white people from their homes and giving them to transients.

      I need a safe space from you extreme leftist lunatics. I will never use ZE or ZER even if it’s on my deathbed and the Californian tranny nurse requires it of me in exchange for administering a life saving drug.

      • Yeah GDP is pretty overrated… maybe we need “quality of life index”.

        In most stated median per capita GDP (*not* mean or average) would work but in California it would be adjusted for the cost of living which would result in a low QLI

  • I personally sense that this SFR valuation boom might finally be reaching critical mass. Could be seasonal but I am seeing more reductions and deals slower to pend.

    Also, this rent ‘growth’ is maxed out bigly for MF projects. Hope these leveraged landlords who have been gouging tenants are prepared to walk back rents at some point when the recession hits. Actually I don’t care if they are prepared to do that, I like buying distressed properties.

    Trump should not have ‘owned’ this bubble. What a huge bigly mistake that was. I liked Trump when he called the bubble for what it was on the campaign trail. Why he took ownership of this hubris I will never understand. Guess he is confident they can continue directing it until the end of his term. But the looming market headwinds are superior IMO.

    • “Trump should not have ‘owned’ this bubble. What a huge bigly mistake that was. I liked Trump when he called the bubble for what it was on the campaign trail. Why he took ownership of this hubris I will never understand. Guess he is confident they can continue directing it until the end of his term. But the looming market headwinds are superior IMO.”

      Trump will most likely change his tune and pull an Obama (blame his predecessor). His handlers are well aware of general voter short attention span. This is why America had to choose between a clown and a crook in the last election.

      • I don’t disagree with you there Prince, they all blame their predecessor. He is turning out to be more of the same of course although I do like that he is like a stick of dynamite to the system. I can’t help it, I like that part of it. Very embarrassing at times? Check. But I kind of like the circus.

      • I will go as far as blame GW Bush and his sidekick, the evil Cheney. The trillions we spent on an unnecessary wars took us in the wrong direction for decades. We could have had a complete rebuilding of our infrastructure and put millions to work for the past 20 years. Trump was right about that.

      • Any differences between administrations of the past 30+ years are minor. They all serve corporate interests.

  • Get rid of prop13. Get rid of mid and give renters a big tax credit. That would be fair. Renters are the new middle class. All these homeowners who are bragging about being millionaire need to start paying their fair share.

    • Comrade Jenny,

      20% of tax payers pay 95% of taxes. A simple thank you would suffice.

      http://www.washingtonexaminer.com/omb-top-20-pay-95-of-taxes-middle-class-single-digits/article/2638746

      • For the communist Bernie voters, the taxation is never enough till it reaches 120% (nationalization). They want the whole pay and pay property taxes equivalent of a mortgage on top of that; add sales taxes after taxing 100% of your income. That is all communists final goal.

        Trust me; I speak from experience. In communism, if you had a cow, the communist forced you by law to bring in more milk than the cow produced, same for eggs and…you get the point. Poor farmers had to work in cities to be able to buy milk and eggs to give it to the communists for a lower dictated price.

        Now, do you understand me why my blood boils when I see psycho communists like Bernie and his supporters????…..Don’t trust me? Ask those in Venezuela and Cuba and N. Korea.

    • Jenny, you do realize that without prop 13 rents would increase substantially due to the increased costs of property taxes on rental property. And how do you propose they structure tax breaks only to renters? Furthermore the wealthy minority in this country already pay the majority of income tax collected.

      https://taxfoundation.org/new-irs-data-wealthy-paid-55-percent-income-taxes-2014/

      • Actually, by eliminating prop13 rents will go down.
        Its very simple. You increase property taxes to that the owners pay their fair share. Many will start to downsize and sell their million dollar homes. Increase of inventory means lower prices. Finally, renters can afford to buy at a reasonable price. Less renters means less demand means lower rents. Lower rents will make buying less attractive > even lower prices. When you go grocery shopping you want cheap prices. Thats good for the consumer. Same for housing. We need heft deflation and much higher taxes.

    • In the town I live, the voters (mostly renters) voted for lots of bonds (mainly for schools). As a result, property taxes went up significantly. Over night, most of rents went up through the roof. Some of my renters asked me why I raised the rents. I told them that the costs for landlords went up as a result of the bonds you voted for. No wander they are renters – math is not their strong point and the logic was lacking. They never made the connection between higher costs for landlords and higher rents. Then they left for a worse part of town because they could not afford the higher rent.

      Soon, that higher cost for landlords caused a shortage of new rental space and I was able to rent the places at way higher rent than before in a heart beat with the whole rent paid a year in advance. Who suffered because of stupidity? The renters. They thought that landlords will pay more and go negative so their brats can have a newer building. Like now they become smarter for having a nicer school building. That is the reason that poor will always exists – for the most part they lack logic and fall for all the liberal scams.

      • Most renters never took Econ 101 and it shows.

      • Flyover, you nailed it. It really is hard to believe how short-sighted some people are. I have also witnessed renters championing unnecessary bonds thinking they are sticking the wealthy property owners with the bill. It’s all good until the bill come due. Nothing is free.

      • Logic is not something that resonates with leftists and commies. Their college professors taught them to operate purely on emotional whims.

  • For the third month in a row, prospective homebuyers in Los Angeles County faced a median sale price of $575,000 in September.

    https://la.curbed.com/2017/10/24/16538684/la-county-home-price-cost-to-buy

  • A healthy rental market:

    Survey Finds 1 In 5 American Renters Missed A Payment In Past 3 Months

    http://www.zerohedge.com/news/2017-10-26/rental-insecurity-survey-finds-1-5-renters-missed-payment-past-3-months

    It shows landlords need to lower rents or have more people not paying them at all!

    • If you screen properly, the risk of non-payment is very low.

      Screening 101:
      – 750+ FICO score
      – Gross income of 4X rent or higher
      – No criminal record
      – Steady employment (2+ years)

      That’s not to say that someone like that won’t ever default on a rental agreement, but the risk is veeeeeeery low. The 1 in 5 you cite are the scum I would never rent to.

      • Mr. Landlord I have to call BS on this. As a fellow landlord your requirements are ridiculous. Anyone with a 750+ Fico earnings 4x the rent will have bought a place. You’re being ridiculous. It’s more like a Fico of 620+ and gross income of 3x the asking rent. Let’s try and keep it real here.

      • Speaking of screening tenants. I have a friend who is a RE broker and also owner of a condo which he rents out in Santa Monica. He said being a landlord IS hard work but if you can rent to a good person, that is half the battle. His renter application for requires the applicant to list their last full 10 years of employers and landlords. He says that when they submit their form, if they have not filled out every box on the form, he throws it in the trash regardless of their FICO score. Out of 50 applications he will have about 10 applicants to pursue. Out of those 10 applications he said another half will fail when he calls every contact they list for employers, friends or prior landlords. He said it is a difficult process but in 10 years he has never had a problem with the tenant who passes his screening.

    • Missing a payment for most renters is not uncommon.

      That’s why they are renters.

      • Instead for #metoo we should start a #SkipRent movement. If most renters stop paying rent together as a unity we can accomplish something and protest against this rip off.

      • Jenny Potato: the poster child Bernie voter….an imbecilic moron who has no clue how the real world works. Why don’t you move to the people’s paraside of Cuba where everyone is equally poor and has “free” housing and “free” health care? Trying to comprehend how someone can be so uninformed as you truly hurts my brain. Please do the world a favor and never reproduce.

      • “If most renters stop paying rent together as a unity we can accomplish something…”

        …mass evictions?

  • GDP grew 3% last quarter, Google and Amazon had blowout quarters.
    Looks like the wait for Great Depression #2 will be bit longer.

    • Then why the ongoing interest rate suppression and easy money policies? Things are going so well that indebted companies *coughAmazoncough* should be able to withstand higher borrowing rates.

  • It’s disturbing reading some of the comments here about taxing the rich, taking over property from land owners, etc. Venezuela is literally starving right now (not that you’d know it from MSM coverage). They did everything you want. Yet you people still think communism works. Even though it has never worked. Its batting average is .000. It will never work. I have a better chance of flying to the moon than communism ever working. And yet dullards all across this once great country still push for it.

    This is what 50 years of Democrat control of education has done.

  • Realtors make a commission just as do car salesmen and I have been in real estate for some time. Housing prices are driven up by supply and demand and supply is low and demand is high. If you ask a realtor if it’s a good time to buy or sell the answer is always “yes” right now is a good time to sell as I just did on a condo I made 4x my original purchase price from 2009. I was told by my realtor to get something fast as pro es are going to continue to go up. Do I believe him, NO! The reason I sold was because I know we are at a record high. Why would I buy at the peak??? There is a formula to use when it comes to what a home is worth: annual rent (say 50k annually) x10, That is the homes actual value. Realtors drive up costs by using “comps” say a home that sold for 900k down the street but that same Home is only worth what it can rent for in the formula above. There are many other factors that drive up home prices such as foreign investors and of course what we see now the low supply but if we wait out the craze we are soon going to see this flip flop and repeat itself. These opinions are of course based on research and historical trends I have observed and I can’t oredict the future but it looks very likely we will see a huge correction and likely another bubble. Buyer beware!!

    • Realtors are just salesmen. Never believe a salesman.

    • “There is a formula to use when it comes to what a home is worth: annual rent (say 50k annually) x10, That is the homes actual value.”

      That formula may be valid when interest rates are 8%. You can absolutely throw it out the window when interest rates are 4%.

      Using your formula. A house in a desirable socal city that rents for $3500/month should be valued at 420K. One word, NO. That house is likely valued at 800K+. As I have said umpteen times on this blog, low interest rates changed everything and some people never caught on to this. When the cost of borrowing half a million dollars equals the cost of rent for a 2 bedroom apartment, that’s all you need to know.

      • ” As I have said umpteen times on this blog, low interest rates changed everything and some people never caught on to this. When the cost of borrowing half a million dollars equals the cost of rent for a 2 bedroom apartment, that’s all you need to know.”

        Cheap and easy credit never changed anything. It only encourages the gambling to be riskier and more degenerate. Rentier speculation = Rising rents.

    • Based on that formula. Most houses in the UK are insanely overpriced!/?

      Can I ask what you did with your money? Shares?

    • This is a good article explaining what “money changers” are doing to our economy – same thing they did to Soviet Russia. When you see prices higher and higher, you’ll know why and you’ll also understand the end result.

      http://www.acting-man.com/?p=51700

      Money are gold (store of wealth). Currency is not money and it is not wealth (just a medium of exchange). While I agree with gold in principle that it is useful in a society where the rights of the citizens are respected, it fails to provide protection in a society where criminality and corruption not only go unpunished, but it gets rewarded. At that point, the “bolsheviks” confiscate everything – Gold, Guns and Ground. What I am afraid of is that this time around it is not going to happen only in Eastern Europe, but worldwide, through one mafia controlling the whole earth with one currency and one global central bank. The architecture is already in place via New World Order. Politically we have UN, CFR, TC and financially IMF, BIS, WB. These are the forces Trump should fight and he is puny for that task (better than Obama and Hillary which were part of the problem). The best we can hope for him is to be a wrecking ball against these unpopular/undemocratic forces. Also, hope against all hope is that he will be followed by a coalition of smart individuals to build again from the ashes. The mafia against the middle classes is too powerful, organized and greedy. That greed might provide the ground for some wealthy opportunists afraid that they might be next in the soup line if they don’t do something. That was always the history of human kind. For those who love real history, the thread is always present there; not the same, but with a rhyme.

      • Love all the advise and information you provide for many of us younger readers.

        This may be totally random or weird but how can I contact you email or something to ask you a few questions.

        Can I just give you my email.

        Thanks so much.

      • Seen it all before Bob

        The New World Order is one of the signs of the Revelations Armageddon. Some wackos (including elected congresspeople) are hoping for this to happen so they can go to heaven. Otherwise, there isn’t much hope of that for them.

      • Eforce,

        If you have questions related to RE or economics, feel free to ask here. If they are of different nature, sometimes I post on Personal Liberty website as “reply to”. You can post them there where you see one of my posts and use the same handle (Eforce) and I can answer them. As long as questions are civilized, they don’t censor anything – everything goes. There they have multitude of subjects discussed in a civilized matter, not just economics.

        Here, as much as I can, I try to reply or comment on the subject of RE or things affecting the RE.

      • son of a landlord

        Eforce: Love all the advise and information you provide for many of us younger readers.

        Younger readers should learn that it’s advice (with a C), and not advise (with an S).

        Advice (with a C) is the noun form.

        Advise (with an S) is the verb form.

      • Thank you for the reply. Most seem guarded with their ideas to investing or retirement. I am 35 married (two young boys), my wife is a stay at home mother. I have a solid gig where I work but it does not offer a 401k or anything but medical/dental.

        what should I do for my own retirement? I have to get something started and quickly. I do not like the 401k, seeing that the government keeps talking about changing the rules etc..
        you mentioned some outside investing for 12% if I remember correctly.
        I thought of doing the dave ramsey plan (growth stock mutual funds)

        right now- I am just going to pay off my socal home as fast as possible and then save for another home many years from now.

        thanks again

      • A few re questions and some personal ones
        Jhiggins.bls@gmail.com

      • Did you get my questions above “Fly over” or Mr. Landlord
        (seeing you both drive F-150’s)

  • This is off-topic, but how does one keep track of new comments? Right now, 288 comments have been made to this blog-post, dated October 14. If I read this post a week ago, when there were only 100 comments, how do I sort the comments by date so as to not have to re-read the earlier 100 comments??? Is there an RSS Reader that does that?

    • son of a landlord

      You can use your web brower’s Find feature. Just type the date into the Find box.

      • So if on October 14, there are 100 comments, which one has read, and then on Oct. 28, there are 350 comments, one should search for Oct. 15, Oct. 16, Oct. 17, Oct. 18 and so on in order to view the unread comments? Is that your solution? That’s a Taco Tuesday solution if there ever was one.

      • son of a landlord

        Zaragoza: Is that your solution?

        That is THE solution. If that’s inconvenient for you, well, the world cares little for your comfort or convenience.

    • The old fashioned way: Ctrl+F.

    • control f key to search and put in the most recent date

  • Here We Go Again: A developer in Sacramento in selling $425,000 homes in an infill development with no money down…

    http://www.zerohedge.com/news/2017-10-26/what-housing-bubble-sacramento-development-pushing-425000-pads-no-down-payment

    • As I said before, exotic lending is alive and well. The real estate has been functioning on fumes for a while as financial institutions continue to roll back lending standards. Gotta keep the party and illusion of a healthy market going.

  • How utterly depressing. Housing financialization.

    Its batshit insane in my view – and essentially speculators are enjoying the high-life and being carried by the young.

    • Galaxy Brian. I am with you, totally depressed with this co-opting of homes from those who need them to live in by those who seek passive assets and/or Airbnb and/or pied-à-terre. The bailout really had perverse effects and reinforced the moral hazard. But shit, memories are short for that it would seem.

      Here is SF the amount of homes that are lived in by community people is fewer and fewer. I have fantasies of starting a campaign with chalk art where we put something like “#safetyDespositBox” or a picture of a house with dollar signs on the sidewalk in front of all the houses that are not dwellings for permanent SF residents. I think it would be astounding to really know the percentage of structures on a block that are not lived in. Or simply write the number of people that live there. We’d see lots of zeros.

  • From the OC Register:

    “First low-income family housing communities open at Irvine’s Great Park Neighborhoods”
    http://www.ocregister.com/2017/10/28/first-low-income-family-housing-communities-open-at-irvines-great-park-neighborhoods/

    So I guess you can work overtime for years and years to get that down payment together, take a seven figure mortgage, and land up living next door to someone who did nothing. This is just not fair. Furthermore, your property will never appreciate much if next door is low income housing.

  • All this talk about eliminating the state tax deduction. Why not eliminate the mortgage interest deduction instead? Seems to make more sense for the feds to be “subsidizing” the states instead of the banks.

    If Trump eliminates the state tax deduction it will royally screw a lot of people in CA. I mean bigly. I don’t think any of the proposed tax cuts can offset the loss of that deduction for many CA homeowners. Especially for those that own multiple homes. If this comes to pass I expect the property tax piggy bank for local bond measures will close.

  • California? It’s the poorest state in the US.

    California once again has nation’s highest rate of real poverty

    http://www.sacbee.com/news/politics-government/politics-columns-blogs/dan-walters/article101657302.html

    • You, sir, are a liar!!

      Many smart liberals have repeatedly pointed out how CA is a land of riches. Why it’s the 6th largest economy in the world dontcha know? Poverty only exists in flyover states, filled with yucky white Trump voter non-persons.

  • https://www.usnews.com/news/business/articles/2017-10-30/us-consumer-spending-surged-1-percent-in-september

    WASHINGTON (AP) — Consumers boosted their spending by 1 percent in September, the biggest monthly gain in eight years. The surge was led by strong sales of autos and other durable goods.

    Why, it’s almost as if a capitalist president is better for the economy than a Marxist president. Nahh that can’t be. The very smart people at NYT swore up and down we’d be in a Great Depression by now if Trump won. And they are never wrong/.

    • Seen it all before Bob

      If it is just more borrowed money on credit cards, is that good? People loved Republican Bush and were happy until everything just went downhill fast. Now they just blame Obama for the downhill (and 9/11 for some insane reason). It is guaranteed that Trump will blame Obama also.

      As a footnote in the article:

      With spending so strong, the personal saving rate dropped to 3.1 percent of after-tax income, down from 3.6 percent in August.

      The end is nigh!

      • People blame Obama for 9/11? On what planet?

        As for the savings rate….that’s one of those meaningless data points that stopped being relevant 30 years ago. It doesn’t include contributions to 401k or IRA accounts. A savings rate that doesn’t include the one area where most people save the most? Gotta love government, lol. For example someone who makes $100K and puts $10K in a 401k and spends $90K, has a 0% savings rate. While someone $100K, spends $95K and puts $5k in the bank, has a 5% savings rate. You can see how absurd that is. But it’s how the figure is calculated.

        But even so a low savings rate is a good thing. Look at the chart below. mid to late 90s: low savings rate, booming economy. Late 2000s, into mid 2010…high savings rate, economy in the toilet.

        Saving money (outside of retirement accounts) is a sign of fear. People are afraid to spend money. No bueno for the economy in the near term. When people are confident in their financial situation, they spend. Which means your data point suggests a booming economy for a while to come.

        https://fred.stlouisfed.org/series/PSAVERT

      • +1

        Don’t look at the man (Yellen) behind the curtain. All is well….until credit risks become too high and financial institutions have to curtail lending.

      • Obama deserves to be blamed. Obama ran up the debt more than all presidents combined to $20 trillion dollars with his Fed cronies printing money, he ignored the Constitution and made up edicts, he bailed out the TBTF banks, he and his Democrat cronies enacted Obamacare, he set race relations back 50 years, and he along with Hillary made a complete mess in the Middle East.

      • The BEA does include retirement accounts in the savings rate. However, 401K matches are not included.

        The numbers are skewed, I agree. My employer (in addition to an “A” fund pension) puts 12% of my gross pay into a “B” fund (401K). That exceeds the max limit so any amount over is added the following year. So *I* am not saving anything but the company is putting that money in on my behalf.

  • I am hoping Bernie is going to run again. He got cheated out of the race by Hillary. Trump wants to cut taxes for the rich!! The rich need to be taxed at least 90%. We need to re-distribute the wealth to the people who actually work and feed the rich.

  • Occupy Wall Street

    I miss the good old days. We went out there had a good time and protested for a better cause. Why did it die? We need to get back out there! It’s not like I am missing out when I am not at work lol

    • It died because the weather got a little chilly, and apparently being uncomfortable had a bigger impact on the protesters than whatever jealousy/injustice each individual was focused on. Besides, you only succeeded in making huge swaths of the downtowns and parks in various cities reek of feces. Congratulations?

  • Calling BS, I miss your commentary. Please post more often

  • I’ve only just recently started to realize that rents have been rising at a pretty fast rate in the Sacramento area. A friend of mine, who is a single mom, just bought a small house, because the cheapest (noncrappy) apartment she could find was $1800. So far as I know wages still haven’t caught up with the rising cost of living. Though I have a lot of friends where the wife had to find a job after the last recession because health and college were too much for one income.

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