Are home prices just silly right now?

User Forum Topic
Submitted by poorgradstudent on August 11, 2015 - 11:24am

According to Zillow, our 3/2 SFH in Poway has risen in value 2% in the last two months. I have a coworker who recently moved to San Diego and is trying to find a slightly larger 3/2 or 4/2 SFH to buy for his family and every home they're interested in has multiple offers and bidding wars.

I guess my question is has something really changed since the Spring, when price gains seemed to be more modest and reasonable? Is there a bit of "rate panic", where everyone who is on the fence knows that rates will go up in the next 6-12 months and it's (somewhat ironically) driving prices up? Is this just a sign of an improving economy and more household formation, along with people moving to and back to San Diego? I know building activity has been slow in SD County since the bubble and starter homes aren't very popular with builders, so maybe that's also causing an inventory crunch?

Are these gains remotely sustainable? Is it all going to come crashing down if rates go up?

Submitted by The-Shoveler on August 11, 2015 - 11:28am.

I am not saying that home prices are not silly right now but I will say they are not and have not been building near enough homes.

I was hearing that resale inventory (below 800K in price) is down about 28% from last year and it was even low then.

Submitted by urbanrealtor on August 11, 2015 - 11:29am.

The-Shoveler wrote:
I am not saying that home prices are not silly right now but I will say they are not and have not been building near enough homes.

I was hearing that resale inventory (below 800K in price) is down about 28% from last year and it was even low then.

I agree with this.

Submitted by poorgradstudent on August 11, 2015 - 12:14pm.

The-Shoveler wrote:
I am not saying that home prices are not silly right now but I will say they are not and have not been building near enough homes.

I was hearing that resale inventory (below 800K in price) is down about 28% from last year and it was even low then.

Yeah, it seems like all the building that is happening is in the 2000+ sq ft range. I'll admit I don't know areas like Santee, Chula Vista and San Marcos that well, which may have building activity that is more in line with starter homes.

It sort of feels like builders just want young families to buy condos for their first home :P

Submitted by Rich Toscano on August 11, 2015 - 12:25pm.

The-Shoveler wrote:
I am not saying that home prices are not silly right now but I will say they are not and have not been building near enough homes.

Inventory is indeed low, but that's a function of how many people want to sell and how many want to buy at any given time, not necessarily of how much new building is taking place, or of overall housing supply. For example, inventory was very low during the bubble, despite lots of new construction/rapid expansion of housing supply, and then it was very high in the bust despite zero new construction.

It may be true that new building isn't keeping up with population growth (I don't know one way or the other, offhand), but current level of inventory for sale isn't really a good indicator of that, is my point. To determine this you'd have to look at population growth compared to housing supply... SANDAG probably has that info. Might be interesting to look into.

PS my take on whether prices are "silly" -> http://piggington.com/shambling_towards_...

Summary: yeah, they seem kind of silly, but it's hard to get an exact read on that, and they were a lot sillier during the bubble.

Submitted by bearishgurl on August 11, 2015 - 12:59pm.

poorgradstudent wrote:
The-Shoveler wrote:
I am not saying that home prices are not silly right now but I will say they are not and have not been building near enough homes.

I was hearing that resale inventory (below 800K in price) is down about 28% from last year and it was even low then.

Yeah, it seems like all the building that is happening is in the 2000+ sq ft range. I'll admit I don't know areas like Santee, Chula Vista and San Marcos that well, which may have building activity that is more in line with starter homes.

It sort of feels like builders just want young families to buy condos for their first home :P

I don't know about SM or Santee (both "inland" cities) but, as far as I know, Chula Vista, a "coastal" (bayfront) city, doesn't have any building going on, unless it is a very small spec/infill project. Builders don't get to decide what 1st time buyers and/or "young families" get to buy in SD County. There are plenty of SFRs currently available in at least a dozen zip codes in metro/south/east county (and likely in a dozen-plus zip codes in north county) which meet the criteria of a "starter home" (for 1st timers/young families) and priced under $400K.

And no, these SFR's generally aren't anywhere near "new" or "newer." I honestly don't understand why millenials tend to shy away from older homes in SD County. They certainly don't in LA County (where there has been next to zero SFR tracts built in the last 25 years) or the SF Bay Area (where there has been next to zero new SFR tracts built in the last 15-20 years, depending on micro area). It doesn't make sense.

Yes, a "newer" (<15 yrs old) condo can be had for under $400K in SD County today (even well under $400K) but with that purchase, the buyer typically has 12-25 more miles driving distance to work centers (one way, amounting to $200+ month higher gas/maintenance expense for daily commuters) and HOA dues and Mello Roos tacked onto its property tax bill. PITI + HOA dues + MR amounts to several hundred dollars more per month than a comparably-sized (older) SFR would cost them in PITI alone. For that extra $500 - $750 per month, the new homebuyer of a (dated) older home can make incremental improvements to it, selecting top-notch materials to their own taste, ESPECIALLY if they can DIY some of those improvements! And in the months they don't want to spend money on improvements, they have the flexibility not to.

Not so with monthly HOA/MR (whether the buyer actually uses the community facilities or not).

What's the point of buying a condo with no yard and a single garage or carport when a FTB can get a nice backyard AND double-car garage for the same price or less than a comparable-sized condo (but NOT "newer") and not grow out of their home immediately when kids are born and are not allowed to play anywhere close to their condo's front door (so they can be supervised by a parent or other caregiver working in the home)?

SD millenial-homebuyers' sense of entitlement for newer construction doesn't make sense to me. Their housing choices in SD County are cutting off their noses to spite their faces.

Submitted by thejard on August 11, 2015 - 1:07pm.

I have a hard time justifying some of the prices in Chula (west 91910, 91911) that I see they are going for compared to just a year ago. Maybe we missed the boat?

In fact, we took our savings and plunked it into debt. But, because I really want to own I keep obsessing about this!

How did they get such a price on this one?
http://www.zillow.com/homedetails/331-1s...

or this one?
http://www.zillow.com/homedetails/177-Sh...

or?
http://www.zillow.com/homedetails/253-K-...

Are they cash buyers? FHA?

I just feel very deflated when it comes to me trying to get into something. Is it different this time? Or will there be a dip sometime in the next 5 years?

Spending that kind of money on something terrifies me lol; I've been driving the same car for 14 years now, so spending more than a $1k on a single thing scares me!

Submitted by bearishgurl on August 11, 2015 - 1:19pm.

Rich Toscano wrote:
The-Shoveler wrote:
I am not saying that home prices are not silly right now but I will say they are not and have not been building near enough homes.

Inventory is indeed low, but that's a function of how many people want to sell and how many want to buy at any given time, not necessarily of how much new building is taking place, or of overall housing supply. For example, inventory was very low during the bubble, despite lots of new construction/rapid expansion of housing supply, and then it was very high in the bust despite zero new construction.

It may be true that new building isn't keeping up with population growth (I don't know one way or the other, offhand), but current level of inventory for sale isn't really a good indicator of that, is my point. To determine this you'd have to look at population growth compared to housing supply... SANDAG probably has that info. Might be interesting to look into.

PS my take on whether prices are "silly" -> http://piggington.com/shambling_towards_...

Summary: yeah, they seem kind of silly, but it's hard to get an exact read on that, and they were a lot sillier during the bubble.

There's no law mandating builders "keep up with population growth" in any particular jurisdiction. In fact, the opposite is true in many west coast jurisdictions within the states of CA and WA. Many (coastal) cities and counties in these states have disallowed permits for tract subdivision for at least the last 30 years or even as far back as since the city was formed.

Those cities are among the best-planned in the nation and have among the best quality of life for their residents today.

More residents does NOT EQUAL better, folks.

Obviously, SD County was not one of the above jurisdictions (whose leaders were more astute and concerned for impacts to their local environment). SD County's (and a good portion of its brethren cities') elected officials have consistently sold their constituents' quality of life out to Big Development since 1986/87 at every available opportunity.

Submitted by bearishgurl on August 11, 2015 - 1:36pm.

thejard wrote:
I have a hard time justifying some of the prices in Chula (west 91910, 91911) that I see they are going for compared to just a year ago. Maybe we missed the boat?

In fact, we took our savings and plunked it into debt. But, because I really want to own I keep obsessing about this!

How did they get such a price on this one?
http://www.zillow.com/homedetails/331-1s...

or this one?
http://www.zillow.com/homedetails/177-Sh...

or?
http://www.zillow.com/homedetails/253-K-...

Are they cash buyers? FHA?

I just feel very deflated when it comes to me trying to get into something. Is it different this time? Or will there be a dip sometime in the next 5 years?

Spending that kind of money on something terrifies me lol; I've been driving the same car for 14 years now, so spending more than a $1k on a single thing scares me!

thejard, I'll look at your links in a bit but I just want to remind you that 91910 and 91911 are "coastal" (bayfront). Chula's more recently annexed-in zip codes of 91913, 91914 and 91915 are "inland" and thus up to 10 degrees hotter or colder at all times of day, depending on season. Temperature alone is a BIG ENOUGH DIFFERENCE to affect the pricing in the well-established areas of Chula Vista as you are seeing. And, for the most part, there is little to zero HOA dues in SFR subdivisions within these zip codes and no MR (except for Sunbow and parts of RDR, in which the lower-priced bonds may be already or nearly paid off).

Oh, and btw, thejard, my vehicle is 21 years old and I just got back from another 2500-mile (RT) road trip with it and it ran like a top, even at elevations exceeding 10K feet!

Submitted by thejard on August 11, 2015 - 1:37pm.

I agree with all of that... that is a big driving factor in why I would like to live there :)

I may be a bit whiney ;) but I can afford what I can afford and for me to pull the trigger it has to be the middle bowl of porridge: juuuuust right!

I don't want a fixed up home, I want a fixer upper or something that has 'good bones' that is livable but needs updating.

Example of a house I would've liked, but CASH buyer:
http://www.zillow.com/homedetails/1319-E...

I also feel like the few Real Estate agents I have briefly worked with are all like (lol): I don't do foreclosures or much of anything, here is the Sandicor sight with some numbers I plugged in, call me when you like something.

I guess I thought the RE was supposed to have some insights or some hookups or call me up and say OMG this is so you, come check it out. If we act fast maybe we have a shot at beating out CASH or conventional financing. I don't, something for $10K!

I do a lot of lurking on this sight and watching what is on sale and what is sold :)

Submitted by bearishgurl on August 11, 2015 - 2:47pm.

thejard wrote:
I agree with all of that... that is a big driving factor in why I would like to live there :)

I may be a bit whiney ;) but I can afford what I can afford and for me to pull the trigger it has to be the middle bowl of porridge: juuuuust right!

I don't want a fixed up home, I want a fixer upper or something that has 'good bones' that is livable but needs updating.

Example of a house I would've liked, but CASH buyer:
http://www.zillow.com/homedetails/1319-E...

I also feel like the few Real Estate agents I have briefly worked with are all like (lol): I don't do foreclosures or much of anything, here is the Sandicor sight with some numbers I plugged in, call me when you like something.

I guess I thought the RE was supposed to have some insights or some hookups or call me up and say OMG this is so you, come check it out. If we act fast maybe we have a shot at beating out CASH or conventional financing. I don't, something for $10K!

I do a lot of lurking on this sight and watching what is on sale and what is sold :)

Yes, thejard, that was a good buy in that it had forced air and central A/C which the vast majority of older coastal-situated SFRs in SD County weren't built with (instead were built with "whole house" wall heaters in the LR and no A/C). The homes in that neighborhood are very well-built but that street is now a VERY busy street with Food-4-Less and Toys-R-Us diagonally and directly across the street. BUT, the homes lining 30th on those 2-3 blocks are both elevated 3-5 feet and mostly "walled off" to the street, IIRC. Most of these homes have frontages allowing for driveway turnarounds (to prevent having to back out onto what is now a 4-lane thoroughfare with a left-turn lane in the middle).

I note the subject has a .26 AC lot which is typical for this area as well as part of its (uninc) neighbor of 91950 directly to the east known as "Lincoln Acres."

$250K was a very good price for the cash buyer, thejard. Thanks for sharing this very conveniently-located listing in a nice area just 6.5 to 7 miles from dtn SD!

Submitted by bearishgurl on August 11, 2015 - 3:47pm.

thejard wrote:
I have a hard time justifying some of the prices in Chula (west 91910, 91911) that I see they are going for compared to just a year ago. Maybe we missed the boat?

In fact, we took our savings and plunked it into debt. But, because I really want to own I keep obsessing about this!

How did they get such a price on this one?
http://www.zillow.com/homedetails/331-1s...

or this one?
http://www.zillow.com/homedetails/177-Sh...

or?
http://www.zillow.com/homedetails/253-K-...

Are they cash buyers? FHA?

I just feel very deflated when it comes to me trying to get into something. Is it different this time? Or will there be a dip sometime in the next 5 years?

Spending that kind of money on something terrifies me lol; I've been driving the same car for 14 years now, so spending more than a $1k on a single thing scares me!

Uhh, thejard, these were all good buys with the first one being the best buy and I haven't checked but all likely sold for all cash at these prices. (If I could stomach acting as my own property mgr, I might have purchased one of them.) All are completely walkable to all with multiple public transportation choices within 1-3 blocks walk with your 3rd sold comp link being the most conveniently located. All are in very safe, walkable, bikeable, skateboardable neighborhoods with mature-tree-lined sidewalks .... great places to raise a family!

Your first recent sold comp link for $305K on 1st Ave just north of G St is located on a very good street in a great area and has the typical 9700 sf lot of the area (up to 1 AC lots exist on 1st Ave and up to 2 AC lots exist on 2nd Ave in this area). Within 1.5 to 4 blocks of this home are dozens of homes valued at $850K to $2.7M (incl "move-on" Mills Act gems). This listing is directly adjacent to a very stately, shaded and beautiful area . . . absolutely THE "crown jewel" of Chula Vista.

Your second recent sold comp for $320K is a good-sized house, just one and two blocks respectively from two different bus lines (the stop for the one-block-away bus line is just one mile from the trolley stn). The subject is just 6-8 minute walk to Hilltop HS (taking the shortcut) and a 7-8 block walk to a regional mall anchored by Sears (incl BIG auto center), Macys and JCP. Much of Shasta St is overly obliterated with power lines but not this particular section.

Your third recent sold comp link for $340K is incredibly conveniently located, yet still very quiet. The houses around there have an average space between them of 20-30 feet, with the homes on adjacent 2nd Ave sporting an average of 35-50 feet between them. This home is on a very well-kept street sandwiched between the prestigious SD Country Club area (5-6 blocks to the east) and the reknowned Del Mar Mills Act corridor situated 1 block NW of this home on Del Mar Ave. A fabulous location, 1.5 blocks to large post office and cleaners, 2.5 blocks NW to Albertsons, 2 blocks to Fresh n Easy, 3 blocks to Sprouts and 7/11, and to the SW, 2.5 blocks to Wells Fargo, Haggen (fka "Vons") and CVS. In addition, there are three large medical buildings in the immediate (2-3 block) vicinity, including a Quest Lab and numerous doctor's offices. The South County Courthouse, County ARCC, and several banks are located 4-6 blocks northwest, J St Marina/boat launch just over one mile west and same regional mall as above is located 7 blocks NW of this home.

I'm not sure why you didn't place offers on these properties if they were in your price range, thejard. I don't think these prices will ever come around again, ESPecially if the new owners significantly modernize and/or improve them.

Perhaps your agent didn't know the area well (or didn't know what they were really looking at)?

If any of these three buyers took out 80%+ mortgages, then, IMO, these listings were absolutely the best an end-user buyer (taking out a mtg) could do at this price point in SD County.

I seriously doubt any of them went FHA, which has never been very widely used in SD County.

It doesn't get any better in Chula Vista than those (April 2015) sold prices you linked here, thejard. Thanks for sharing them!

Submitted by thejard on August 11, 2015 - 5:06pm.

BG - Thanks for the insight :) Sounds to me you really know your Chula well! Got any recommendations on an awesome RE agent that knows Chula? ;) ;) nudge nudge

When I was actively looking the good priced homes went pending prior to even being able to send an offer. I called on a few to see how they were sold and got CASH as an answer. There was one that sold... (http://www.zillow.com/homedetails/633-4t...)... that was sold by the brother of the owner and they took the first full asking 20% conventional offer they had.

This led me to the conclusion that I was seriously outgunned.

Submitted by utcsox on August 11, 2015 - 7:39pm.

Where is rockingtime? Ok.. I will post on his/her behalf..

This time is truly different. Houses in Southern California can only go up. I am not saying this but a lot of folks on this board are saying this as they have already bought houses during the last down turn..

Submitted by paramount on August 11, 2015 - 8:47pm.

In my experience it's a bad time to sell. Buyers extremely picky having spent to much time watching HGTV.

Seeking perfection in a starter home, and in the perfect school district of course.

Submitted by Rich Toscano on August 11, 2015 - 10:06pm.

It may be different in Temecula, but here in SD it's a seller's market... less than 2 months of active inventory:

Submitted by paramount on August 12, 2015 - 12:00am.

My understanding is that inventory is pretty low in Temecula. I had very little competition with my listing. Didn't seem to matter much.

The median home value in Temecula is $395,900. Temecula home values have gone up 1.0% over the past year and Zillow predicts they will rise 3.6% within the next year. The median rent price in Temecula is $1,850, which is higher than the Riverside Metro median of $1,625.

# Homes for Sale 664 9.6% 17.7%

Submitted by poorgradstudent on August 12, 2015 - 9:07am.

The thing that confuses me is inventory looks like it was actually lower this Spring, but prices seem to have been rising more rapidly in June/July.

I guess we don't really have the July data yet so it's hard to make real comments on July yet.

Submitted by bearishgurl on August 13, 2015 - 12:16pm.

.. .This timely piece just in this morning:

The Death of the Starter Home
Money Talks News
Aug 11th 2015 5:00AM

. . . In fact, you could argue -- and I will -- that starter homes are basically disappearing. They aren't being built, and those that exist are either falling into functional disrepair (they are old), or more likely, being snapped up by investors to rent to young families.

First, a little housing lesson. Back in the postwar boom, America's housing industry was on fire. Single-family housing starts jumped an incredible 400 percent during the decade. According to this great housing history, in 1950, the average price was $11,000. For perspective, median income, in real dollars, was about $3,300.

But here's the number to watch: the average home was 963 square feet. A majority of homes had two bedrooms and one bathroom.

By 1972, prices had jumped to $30,000 while family income was nearly $10,000. Homes, which typically had three bedrooms and at least a bath and a half, now averaged 1,600 square feet. That kind of house can pretty comfortably shelter a family with 2.3 children. . .

[snip]

But that's why there's "used" homes, right? Young families are supposed to buy a needs-TLC place in their 20s, fix it up and trade up to their dream home later.

The problem is that cheaper, older starter homes are nearly as hard to find. Here's one piece of evidence: The folks at RealtyTrac ran the numbers for me, and it turns out that year-to-date sales of sub-$200,000 homes is down this year compared to the last three years. That's strange, given that sales above $200,000 are up. For example, two years ago, there were 395,000 sub-$200,000 homes sold from January to May. This year, there were only 343,000. Rising prices can't account for more than a fraction of that drop.

Worse yet, families who would buy cheaper homes are being edged out by investors who buy the homes and rent them out. Nonoccupant buyers of single-family homes hit a record last quarter, according to RealtyTrac. . .

http://www.dailyfinance.com/2015/08/11/d...

This is an excellent article about today's buiders being unable to make a profit building "starter homes" and millennial first-time buyers (FTB's) being "too picky" and unwilling to buy an older home is from a nationwide perspective but I still take umbrage with the message it is sending. I don't believe builders have a "duty" to build "starter homes" or any type of home, for that matter. AFAIK, they can build whatever they can manage to secure permits for in a particular jurisdiction as well as whatever project also pencils out for them, attached or unattached.

I DO believe there are a sufficient number of "starter homes" in any given market (flipped and unflipped) for FTB's to choose from (except in well-known expensive cities, such as SF and "resort areas"). The problem is that most agents who work with FTB's carry no listings of their own, have little sales experience and tend to attempt to service buyers over a very wide area (ex: one whole or more large counties instead of a specialized micro-area) in attempt to eek out a living with little to no past referrals. Therefore, these agents don't have relationships with agents in any particular micro-area and thus aren't aware of any "pocket listings," which are typically flipper-team-owned properties (where one "partner" on the team is an agent) or probate properties. THIS is where the "older" starter home inventory can be found and a FTB and/or their newbie agent across town would not know about these listings because they can't see the sign in the yard of a property not listed on the MLS aggregators. (A CA agent can still write in a commission for themselves in an offer on a pocket listing.)

The article also infers that young dual-income couples today (residing in US real estate markets with a pop of over 500K) with a child and another on the way are now "stuck" in a "one-bedroom apt" essentially because no starter-home tracts are being built in the US today. I believe that presumption is patently false. When their lease is up, no tenant is "stuck" living anywhere. In SD County, these couples can easily go out and rent an older-but-partially-or-fully-remodeled 2-3 bdrm/1-2 bath "starter home" with a fenced backyard for their kid(s) for zero to $400 more a month (depending on area) than they are paying in rent for their "luxury" or "coastal" one-bdrm apt from one of the many buy-and-hold flipper teams around the county. This will accommodate their growing family while they save more downpayment and go through the laborious mental process of "getting real" about the local housing market they live in.

The REAL problem that I see here is that these whining millenial would-be buyers' current apt often has granite countertops, underground parking, a pool, spa and a gym and this typical luxury apt inhabitant considers it a "downgrade" to rent a "starter SFR" just a bit inland or away from the high-rise hustle-bustle or both. According to the article, this phenomenon is prevalent all over the nation.

In my experience, FTB's in CA coastal counties have never been "guaranteed" availability of new or newer construction to buy for their first home. Why should it be any different now? To get on the homeownership ladder, everyone has to start somewhere.

Submitted by thebazman on August 14, 2015 - 12:18pm.

I would be curious to know how many more investors, landlords, and vacation home / pied a terre` owners there are compared to the 50's when homeowners primarily bought SFR's for their families. I'm no economist or finance major but I'm sure this must have some effect on supply and demand for starter homes.

Who wouldn't want to have their home make money for themselves during retirement or instead of 9-5 job?

FYI I had my chance to buy one in 2010. I'm sure there are many others who were too picky like myself and didn't realize what a good opportunity that would be to combat rising rent prices in the future.

Submitted by CA renter on August 17, 2015 - 3:01am.

thebazman wrote:
I would be curious to know how many more investors, landlords, and vacation home / pied a terre` owners there are compared to the 50's when homeowners primarily bought SFR's for their families. I'm no economist or finance major but I'm sure this must have some effect on supply and demand for starter homes.

Who wouldn't want to have their home make money for themselves during retirement or instead of 9-5 job?

FYI I had my chance to buy one in 2010. I'm sure there are many others who were too picky like myself and didn't realize what a good opportunity that would be to combat rising rent prices in the future.

We've been hearing about highly unusual numbers of "investors" in the RE market ever since the downturn began (technically, since the late 90s, which led to the beginning of the housing bubble). There are markets where the majority of sales are going to non-owner-occupiers.

This is not what housing should be used for, but it's a manifestation of the highly manipulated credit and currency markets -- which affect every other market.

But now that there is turmoil in currencies, commodities, and international bond and stock markets, we'll get to see how leveraged some of these positions have been and how this might affect other types of markets around the world. It's entirely possible that much of it is interconnected.

Submitted by Jazzman on August 19, 2015 - 11:22pm.

I had to check the date on this post to make sure it wasn't an echo from the past. Are home prices silly right now? No. What's silly, even absurd if the mood takes you, is that buyers remain prepared to pay silly prices. I'm continuously informed that I'm the silly one for thinking such nonsense. The logic is that if buyers continue to buy homes, they must be affordable. How is that silly (double entendre)?

Submitted by Escoguy on August 20, 2015 - 9:54pm.

Think we have some room to run if LA is a proxy for San Diego

http://www.latimes.com/opinion/op-ed/la-...

Submitted by scaredyclassic on August 20, 2015 - 11:35pm.

the house next door to me just sold for about 3x what i paid for mine. that is too much.

Submitted by CA renter on August 24, 2015 - 4:59am.

CA renter wrote:

But now that there is turmoil in currencies, commodities, and international bond and stock markets, we'll get to see how leveraged some of these positions have been and how this might affect other types of markets around the world. It's entirely possible that much of it is interconnected.

Stuff like this...how interconnected is it? A short-term blip, or is this a sign that things are about to get really interesting?

------------------

"World stocks and oil prices plunged Monday as a global sell off accelerated on worries about the health of China's huge economy.

China stocks crashed and all Asian markets suffered major losses. Europe's major indexes opened about 3% down before trimming those losses slightly.

Oil slumped 3.5% to a new six-year low of just over $39 a barrel.

China's benchmark Shanghai Composite index declined 8.5%, wiping out all gains made this year. Many companies, including some large state-owned firms, fell by the maximum daily limit of 10%. The index is now down 38% since its June peak.

The smaller Shenzhen Composite lost 7.7%.

Related: China's stock crash ... in 2 minutes

In Japan, the Nikkei closed down 4.6%. Germany's DAX shed 2.7%, as did the FTSE 100 in London. And Wall Street was poised for another sharp drop on Monday."

http://money.cnn.com/2015/08/23/investin...

Submitted by livinincali on August 24, 2015 - 7:12am.

CA renter wrote:

Stuff like this...how interconnected is it? A short-term blip, or is this a sign that things are about to get really interesting?

Subprime was contained right. Biggest lesson I learn from the housing bubble is that there' no such thing as decoupling. Not sure when it's going to matter (well maybe today?), but it's going to matter at some point.

Submitted by CA renter on August 24, 2015 - 10:05am.

livinincali wrote:
CA renter wrote:

Stuff like this...how interconnected is it? A short-term blip, or is this a sign that things are about to get really interesting?

Subprime was contained right. Biggest lesson I learn from the housing bubble is that there' no such thing as decoupling. Not sure when it's going to matter (well maybe today?), but it's going to matter at some point.

It's crazy how they never learn, isn't it?

Submitted by FlyerInHi on August 24, 2015 - 11:48am.

Learn what, CAr? The economy is now well above precious peak. Houses were built but we still have a shortage. It's not like houses are sitting empty.

Overall, we are better off. Until we are worse off, there's nothing to learn but to do things better.

It's might be better to have booms and busts but overall higher growth over decades.

Submitted by bearishgurl on August 24, 2015 - 11:56am.

FlyerInHi wrote:
Learn what, CAr? The economy is now well above precious peak. Houses were built but we still have a shortage. It's not like houses are sitting empty.

Overall, we are better off. Until we are worse off, there's nothing to learn but to do things better.

Actually, FIH, houses ARE sitting empty. Sometimes up to 3 on each block! Many are still in disrepair and some of them have had household goods stored in them for up to 12 years. Some have landscapers visit periodically to keep the weeds down so the property won't be cited. They're not distressed and no one is in any hurry to sell. Why? The biggest reason is that it costs the owners almost nothing to keep them . . . in any case, much, much less than a storage unit would cost them. Hence, my (now tired) arguments against Props 58/193 on the public housing thread :=0

Submitted by fun4vnay2 on August 24, 2015 - 12:27pm.

Market is swinging wildly.
As a big investor in market, I just saved myself from a big save though could not completely avoid it.

It'd be interesting to see how things turn out as the stock valuations are still historically quite high despite this correct.

Don't think bad stock market or economy or thousands of lay offs in sd qualcomm would have any adverse impact for local san diego economy or housing..

Submitted by CA renter on August 25, 2015 - 6:48am.

FlyerInHi wrote:
Learn what, CAr? The economy is now well above precious peak. Houses were built but we still have a shortage. It's not like houses are sitting empty.

Overall, we are better off. Until we are worse off, there's nothing to learn but to do things better.

It's might be better to have booms and busts but overall higher growth over decades.

Prices of assets are not "the economy." When the Fed/govt manipulate markets the way they have over the past ~7 years, we no longer know how to determine the value of things.

Bubbles, booms, and busts are NOT healthy for the economy, no matter how desperately you try to paint it otherwise. As the market was crashing the last time (2008), there seemed to be a consensus agreement that the Fed had held rates too low for too long which resulted in the devastating credit/housing bubble and subsequent bursting of that bubble. So, what did they do to solve the problem? Break up the banks and force derivatives to be sold on public exchanges? No. Honestly evaluate counterparty risk where all of these derivatives are concerned? No. Reinstate Glass-Steagall so that commercial banks were separate from investment banks and insurance companies? No.

Instead, the Fed added fuel to the fire and dropped rates even lower for an even longer period of time, not to mention all of the other purchases of various assets at well above market price, etc. They ignored warnings (often by the same people who were warning about bubbles in the late 90s and mid-2000s) about the risk of blowing yet another credit/asset price bubble in stocks, real estate, bonds, commodities, etc.

The lesson was not learned. And now, they have not only caused the same kind of damage as we had during the past couple of bubbles, but I believe that we are in even more dangerous territory because of our exceedingly high debt levels and the already low/negative interest rates, which leaves them very little ammunition to fight the next fight.

Rising asset prices do not make a productive economy. If people never grasp this fact, we will be doomed to repeat these same mistakes over and over again.

[edited to add the following]:

------------------

"Quantitative easing—the Federal Reserve‘s program of buying long term government and mortgage debt known as QE—is one of the more controversial policies practiced today. While there is evidence that it has successfully lowered interest rates, and therefore put more money in the pockets of creditworthy businesses and Americans, opponents of the policy have argued that the risks associated with the policy far outweigh the benefits"

http://business.time.com/2013/11/13/this...

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