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housing prices peak 2


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2022 Apr 29, 9:29pm   51,261 views  1,575 comments

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https://finance.yahoo.com/news/pimco-kiesel-called-housing-top-160339396.html?source=patrick.net

Bond manager Mark Kiesel sold his California home in 2006, when he presciently predicted the housing bubble would pop. He bought again in 2012, after U.S. prices fell more than 30% and found a floor.

Now, after a record surge in prices, Kiesel says the time to sell is once again at hand.



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1   Patrick   2022 Apr 29, 10:37pm  

It feels to me like Kiesel is right.
2   FarmersWon   2022 Apr 29, 10:53pm  

Patrick says

It feels to me like Kiesel is right.


Govt interference is key. Europe brought negative interest rates to save housing... US can do the same.
All capitalistic structures today are standing on Govt support pillars and the whole thing will fall without QE after QE.
3   ad   2022 Apr 29, 11:11pm  

I am looking at rent and home prices in the Florida panhandle within 10 miles of the beach. They have gone up about 30% over the last 2 years. They need to go down to spring 2020 levels to make them affordable for the working class. They likely will over correct and drop to 2018 levels.

Stocks are not overvalued much if you compare the PE ratio now to 2000: https://www.multpl.com/s-p-500-pe-ratio?source=patrick.net

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4   FarmersWon   2022 Apr 29, 11:21pm  

ad says

I am looking at rent and home prices in the Florida panhandle within 10 miles of the beach. They have gone up about 30% over the last 2 years. They need to go down to spring 2020 levels to make them affordable for the working class. They likely will over correct and drop to 2018 levels.

Stocks are not overvalued much if you compare the PE ratio now to 2000: https://www.multpl.com/s-p-500-pe-ratio?source=patrick.net

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On this metric stocks are in huge bubble. It is hard to grow market valuation much faster than GDP over long run.
https://www.longtermtrends.net/market-cap-to-gdp-the-buffett-indicator/?source=patrick.net
5   SunnyvaleCA   2022 Apr 29, 11:22pm  

Timing is everything. For my shack, selling in 2006 and buying back in 2012 would have been a bad move... transaction costs, reset Prop 13 taxes, need to rent for 6 years, and the small problem of selling at $900k and buying back at $1MM.
6   ad   2022 Apr 29, 11:39pm  

FarmersWon says
On this metric stocks are in huge bubble


Yes, I have followed the Warren Buffet valuation for stocks. Market cap needs to go down more relative to GDP. A lot of the run up is from the significant increase in demand, thanks to monetary and fiscal policies.

The left wing media has been reporting about this. Just look at Tyson Foods stock price and PE ratio.

https://www.theguardian.com/business/2022/apr/27/inflation-corporate-america-increased-prices-profits?source=patrick.net

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7   FarmersWon   2022 Apr 29, 11:48pm  

ad says

FarmersWon says
On this metric stocks are in huge bubble


Yes, I have followed the Warren Buffet valuation for stocks. Market cap needs to go down more relative to GDP. A lot of the run up is from the significant increase in demand, thanks to monetary and fiscal policies.

The left wing media has been reporting about this. Just look at Tyson Foods stock price and PE ratio.

https://www.theguardian.com/business/2022/apr/27/inflation-corporate-america-increased-prices-profits?source=patrick.net

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As you said that artificial demand was created by too much money. Once money is taken back inflation will correct and they will be forced to reduce excessive price increase.
Govt is in driver seat... there is no free capitalistic economy anymore.
8   ad   2022 Apr 29, 11:59pm  

FarmersWon says
they will be forced to reduce excessive price increase


I agree. They are pricing beach condos (sleep at 6 to 8 people) at $400 per night (total) here in Panama City Beach. That is what they charged back in 2020 and 2021 with all the unemployment, stimulus, cancel rent, etc. They got to lower that price from $400 to $250 to make it affordable again.

Now all that freebie money is gone and interest rates like the 30 yr mortgage are going up in anticipation of a Fed interest rate hikes.

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9   BayArea   2022 Apr 30, 6:09am  

I think April/May 2022 could be a peak because it’s just after the last months of pending inventory before the rate explosion.

But I don’t see a decline large enough for it to makes sense to sell/buy and reset a 2012 property tax.

Kiesel is what Italians would refer to as “stupido”
10   clambo   2022 Apr 30, 6:12am  

Kiesel is gonna owe a shitload of taxes, worse if he sells a house in California.
11   BayArea   2022 Apr 30, 6:14am  

Also a guy sells in 2006 and buys in 2012 and is now the authority figure for all future RE moves.

But Zillow is still telling me to expect double digit 1yr forecast % gain. 🧐
12   Bitcoin   2022 Apr 30, 6:45am  

to try and play the buy low sell high for your primary home is the worst thing. I know horror stories of people who tried that.
If you do that with investment property, be my guest. With your actually home you live in....unless you hate living there, dont touch it.

Dont be an idiot and try to think YOU know when the market peaks and when the market bottoms. You are an idiot for even trying.
13   mell   2022 Apr 30, 7:21am  

BayArea says

Also a guy sells in 2006 and buys in 2012 and is now the authority figure for all future RE moves.

But Zillow is still telling me to expect double digit 1yr forecast % gain. 🧐


Agreed he is wrong. There will be no decline for obvious reasons, immigrant pressure. The wealthier will seek refuge in good areas and keep bidding them up
14   GNL   2022 Apr 30, 8:02am  

Is there any truth to Blackrock overpaying for tons of housing stock across the country?
15   BayArea   2022 Apr 30, 8:07am  

mell says

BayArea says

Also a guy sells in 2006 and buys in 2012 and is now the authority figure for all future RE moves.

But Zillow is still telling me to expect double digit 1yr forecast % gain. 🧐


Agreed he is wrong. There will be no decline for obvious reasons, immigrant pressure. The wealthier will seek refuge in good areas and keep bidding them up


Agreed, wealthy areas are mostly immune. Everyone knows that you have to price yourself out of the riff raff. That’s expensive and always will be.
16   Al_Sharpton_for_President   2022 Apr 30, 8:07am  

So I get that folks view RE as an investment, like a less liquid stock or bond. I am seeing a lot more homes coming on the market, the sellers trying to get an annual 20-25% gain on a home with minimal to no improvements, that was purchased 2-4 years ago. It seems like a magical belief to expect someone to pay you 50% more for the home you bought two years ago, doesn't it, especially when the tide seems to be turning?
17   BayArea   2022 Apr 30, 8:09am  

Al_Sharpton_for_President says

So I get that folks view RE as an investment, like a less liquid stock or bond. I am seeing a lot more homes coming on the market, the sellers trying to get an annual 20-25% gain on a home with minimal to no improvements, that was purchased 2-4 years ago. It seems like a magical belief to expect someone to pay you 50% more for the home you bought two years ago, doesn't it, especially when the tide seems to be turning?


Here in the tri valley, exactly what you describe is happening in the early part of 2022. We have friends in the area who are walking away with >50% gain on houses they bought 2-3yrs ago.
18   FarmersWon   2022 Apr 30, 8:16am  

BayArea says
Here in the tri valley, exactly what you describe is happening in the early part of 2022. We have friends in the area who are walking away with >50% gain on houses they bought 2-3yrs ago.


Yes it is true but make sense only if you are leaving bay area.
They will have trouble getting back in market after realtor,uncle sam's and paper manager's cut.
The people who are buying have shit load of money and won't default or lower prices anytime soon.
(Flushed with RSU & real estate sale in south bay money)
19   BayArea   2022 Apr 30, 8:22am  

100% right… not to mention a massive property tax reset.

Yes, the ones that sold in 2022 are moving back to be with family out of state. They are living the CA dream. Come to CA, spend 2-3yrs working an assignment in tech, and take $1,000,000 of equity with you back to your home state (ya, half of that is tax free but still).

They’ll probably go back and tell everyone how easy it was… when in fact they rode the wave of an unprecedented time.
20   FarmersWon   2022 Apr 30, 8:28am  

BayArea says

100% right… not to mention a massive property tax reset.

Yes, the ones that sold in 2022 are moving back to be with family out of state. They are living the CA dream. Come to CA, spend 2-3yrs working an assignment in tech, and take a $1,000,000 of equity with you back to your home state (ya, half of that is tax free but still)


It works in their case. But I will be surprised if you can afford bay area home working for only 2-3 years.. But may be had good jobs.
I looked at danville,dublin & pleasanton area.
Houses sold 1 month :350
On sale : 252
Pending : 382

It is hard to imagine this will reduce prices in short run.
21   BayArea   2022 Apr 30, 8:31am  

Yes in this case the couples had good jobs and were able to afford 2019 homes.

Also, curious where you are getting the sales figures? Will be very interesting how those numbers look 2-3mo from now.
22   FarmersWon   2022 Apr 30, 8:34am  

BayArea says

Yes in this case the couples had good jobs and were able to afford 2019 homes.


If true and they still had jobs, it is not very wise to leave such high paying jobs as once things get normal and layoff season is back, the remote will be cut first or forced to come back.
Hiring is tough these days but employers will have upper hand soon.
23   FarmersWon   2022 Apr 30, 8:35am  

BayArea says

Yes in this case the couples had good jobs and were able to afford 2019 homes.

Also, curious where you are getting the sales figures? Will be very interesting how those numbers look 2-3mo from now.


REDFIN
You can draw a area interested in and can dow following:
1) for sale
2) pending
3) sold in 1 week to years... It shows few listing and tells the total number.

109 new homes came to market in last week and 67 sold. So surplus was 42. if it grows to few thousand over summer will get interesting, but right now is balanced.
24   FarmersWon   2022 Apr 30, 8:46am  

Looking further, Some people are trying to sell tri-valley at Palo Alto prices to net some naive fish.
These people will do well and the people who buy will lose their money.
If your friends did this .. they will do well.
https://www.redfin.com/CA/Pleasanton/3410-Zion-Canyon-Ct-94588/home/1901934?source=patrick.net
25   B.A.C.A.H.   2022 Apr 30, 9:40am  

BayArea says
But Zillow is still telling me to expect double digit 1yr forecast % gain. 🧐


Yeah.

Every ®ealtor always says, all the time, except for some non-Cool-Aid Drinking ones who confide to their closest inner circle, it's always a good time to buy.

I remember "shopping" for a home in my section of SJ in the summer of 2006. I was not interested in buying. I was interested in seeing WTF was going on. Spoke to so many ®ealtors at the "Open Houses". My story was that I wanted to "trade up" by selling our home and buying a larger or newer or otherwise better one in the same area. I told them that I wanted to discreetly sell ours so as not to call attention of the neighbors.

You could see the Greed in Their Eyes, like Daffy Duck in his Greedy Coward cartoon:
( https://www.youtube.com/watch?v=-71uqV0LHag&source=patrick.net ); TWO Listings!

They congratulated me for my savvy idea and told me what a great time it was to buy.
26   Al_Sharpton_for_President   2022 Apr 30, 9:43am  

Talking One's Book
1. The act of promoting a stock one owns in order to entice others to buy it. This would in turn benefit one's own investment portfolio. Talking one's book is not a well-regarded strategy.

2. More generally, the act of promoting one's company, product or other good or service.
27   B.A.C.A.H.   2022 Apr 30, 9:44am  

mell says
Agreed he is wrong. There will be no decline for obvious reasons, immigrant pressure. The wealthier will seek refuge in good areas and keep bidding them up


Yes.

Patrick started his blog in frustration of how "it's different here". It is. Commonplace sensibilities don't apply in the SF Bay Area, which is becoming like a colony of India and Greater China.

About half the world's population lives in those places. The rich in those countries outnumber all of the US + Canada. They all covet a postage-stamp residence in just a few prime zip codes in Vancouver, SF Bay Area, and for the "losers" among them, maybe Seattle and LA.
28   mell   2022 Apr 30, 9:52am  

Al_Sharpton_for_President says

Talking One's Book
1. The act of promoting a stock one owns in order to entice others to buy it. This would in turn benefit one's own investment portfolio. Talking one's book is not a well-regarded strategy.

2. More generally, the act of promoting one's company, product or other good or service.


Agreed. Though it's fine to make recommendations with disclosure, I do that from time to time with small cap biotechs and people on patnet who bought those fared quite well. That being said I see no point in housing predictions since it's a tightly controlled racket, moreso in areas like CA. 2008 was an anomaly were they lost control due to too many banksters cheating. Sure this could happen again, but it's so rare that it's not worth speculating on it, you're more likely to lose your shorts shorting housing than to make any money. The housing market is even more entrenched than the stock market due to its locality, and much easier to control than the stock market. They will not let it fail, so predictions are useless.
29   BayArea   2022 Apr 30, 2:41pm  

I just saw something this weekend I haven’t seen in the past year:

Homes in the tri valley are going for a second consecutive week of open house.
30   Booger   2022 Apr 30, 3:04pm  

FarmersWon says
once things get normal and layoff season is back, the remote will be cut first or forced to come back.


This will put downward pricing pressure in some locations.
31   Eman   2022 Apr 30, 3:30pm  

From my real estate network, the last 3-4 weeks suggested the market is in a holding pattern. Buyers, who used to qualify for $1.8-$2.2M, are getting bumped down to $1.5-$1.8M due to higher interest rate.

Buyers have become more selective. However, homes in good location still sell nicely. Does 2022 feel like 2006 now?
32   Blue   2022 Apr 30, 5:21pm  

Inventory is picking up, now more open houses are seen around.
33   richwicks   2022 Apr 30, 5:23pm  

The Bay area has a 10% unoccupancy rate, people just buy homes here as an "investment". When the dam breaks, it will be interesting.
34   Booger   2022 Apr 30, 5:58pm  

richwicks says

The Bay area has a 10% unoccupancy rate, people just buy homes here as an "investment". When the dam breaks, it will be interesting.


Florida unoccupancy rate is high too.
35   HeadSet   2022 Apr 30, 6:51pm  

richwicks says
The Bay area has a 10% unoccupancy rate,

Then lots of room for illegals to squat..
36   REpro   2022 Apr 30, 7:46pm  

FarmersWon says

BayArea says
Here in the tri valley, exactly what you describe is happening in the early part of 2022. We have friends in the area who are walking away with >50% gain on houses they bought 2-3yrs ago.


Yes it is true but make sense only if you are leaving bay area.
They will have trouble getting back in market after realtor,uncle sam's and paper manager's cut.
The people who are buying have shit load of money and won't default or lower prices anytime soon.
(Flushed with RSU & real estate sale in south bay money)

I will not sell now in current environment. Someone counting on repurchase can get himself out of market. Small reduction on prices can be eaten by inflation in two years.
Builders already on edge to stop building single family houses due to incredible costs, will go into affordable multifamily because this is where city subsidy make building feasible.
Biden already damage what Trump strat to build. Now we even more dependent from overseas. Half of EU countries have double digit inflation. People cry on prices of heating gas, gasoline, electricity, and won't be better any time soon.
Yes, shortage of goods, components, food, too expensive utilities and fertilizer, will definitely create layoff situation again. The bright spot of grow will be in welfare segment.
Consequently, housing supply be reduced to mostly of relocation and estate sale. Can be easy swallow by successful people.
Immigration is not a factor. Millions of illegals have limited chances to find job, marginal number will ever succeed in US. They still under pressure to send money home. Most will stay on welfare. Theay are not future home buyers or pension supporters (Sweden mistake).
Current house owner more likely can rent room to immigrants than sell house due to cash flow shortage.
37   Blue   2022 Apr 30, 8:02pm  

Mountain house, Tracy hills, Manteca areas skyrocketed during the last two years. Met someone who is in house upgrade business says all recent purchases in Manteca are from many investors with no occupants. 4 or 5b 1mil new house still looks like may be a bargain compared to few decades old 2 to 4b 3+ mil house in silly con valley.
38   BayArea   2022 Apr 30, 8:29pm  

SFH is king.

I don’t see any new ones going up
39   Blue   2022 Apr 30, 8:38pm  

HeadSet says

richwicks says
The Bay area has a 10% unoccupancy rate,

Then lots of room for illegals to squat..

didn't go well when I said the same a year ago on nextdoor that it any way come from a blood money from corrupt 3rd world politicians through their network to park here.
40   BayArea   2022 Apr 30, 8:49pm  

Eman says

From my real estate network, the last 3-4 weeks suggested the market is in a holding pattern. Buyers, who used to qualify for $1.8-$2.2M, are getting bumped down to $1.5-$1.8M due to higher interest rate.

Buyers have become more selective. However, homes in good location still sell nicely. Does 2022 feel like 2006 now?


No because loans aren’t being written to people with nothing more than a pulse.

I agree with your mortgage qualification amounts however… And it happened very quickly too!

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