Days on market vs. price expectation

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Submitted by moneymaker on May 15, 2015 - 10:03am

How many days on market today suggests unreasonable price expectation by seller? I'm thinking 45 or more. Should have made this a poll but got to leave here soon, seems like a lot of houses are lingering when there is low inventory.

Submitted by flyer on May 19, 2015 - 5:01am.

flu wrote:
rockingtime wrote:
If they want to contain cost, they'd need to reduce their headcount in SD and increase # in low cost places like India/China
They can still keep their chip biz running with few k less engineers in sd.

A simple engineer in SD is no less/more than an engineer in China/India although a lot of folks here may argue against it

The said focused group that are buying in said area I mentioned aren't aren't necessarily the local enginerd worker bees salary workerbees. In fact, if we haven't already been priced out, a lot of us are going to get priced out really soon if this trend continues...

The bulk these 1:3 make up the 0.1% wealthy overseas, or if they are enginerd types, they are kids of parents overseas with sufficient cash reserves. To put the that in perspective... 0.1% of 1 billion people is still 1 million people...And when the economy does turn south overseas, those folks are going to have a pretty big target on their back...So I'm wondering if this trend is a flight to safety for them.

That's why I'm considering the worst case scenario wrto what may happen to RE prices in certain areas/demographics, similar to what sort of happened in Vancouver, pockets in NorCal, and pockets in L.A. Up until recently, San Diego was under the radar so to speak. I'm not so sure now. I will say one thing though. I doubt these people will be looking in the low end. Maybe, North County is their definition of low end. Prices won't go up forever. Where it stops though, that's to be determined. And I'm not so sure it has anything to do with what us worker bees make here. It will be interesting to see what happens when interest rates go up. Though, I have some suspicion it won't do that much in this group.

Should be interesting to see if this plays out--making San Diego more and more unaffordable for more and more people.

Submitted by The-Shoveler on May 19, 2015 - 6:19am.

They will just do what they have done for the last 50-100 or so years.

Sprawl further north and east until that becomes the new Jobs center(s), then repeat.

Submitted by spdrun on May 19, 2015 - 8:28am.

Didn't they say that about the Japanese and others in the 1980s? It never played out the way it was expected.

Ha. Ha. Ha. Dollar just got more expensive again today. Should make buying more expensive for the epicanthic crowd ;)

Submitted by Coronita on May 19, 2015 - 9:07am.

spdrun wrote:
Didn't they say that about the Japanese and others in the 1980s? It never played out the way it was expected.

Ha. Ha. Ha. Dollar just got more expensive again today. Should make buying more expensive for the epicanthic crowd ;)

Sure chief. If you say so.

Japan didn't have 1 billion people. And a close second would be another billion or so from india. 0.1% of 1 billion is still a lot of wealthy people. Don't worry though. They won't be fishing for rentals in the markets you are looking at, especially Jersey.

Submitted by spdrun on May 19, 2015 - 9:21am.

Japan had a higher percentage of comparatively well-off people than China or India does today. Japan was a much wealthier country on average by the 80s than China or India are today.

(Actually, parts of NJ are heavily Indian -- around Edison. But fortunately, that hasn't helped prices recover very well so far.)

Submitted by Coronita on May 19, 2015 - 9:25am.

spdrun wrote:
Japan had a higher percentage of comparatively well-off people than China or India does today. Japan was a much wealthier country on average by the 80s than China or India are today.

(Actually, parts of NJ are heavily Indian -- around Edison. But fortunately, that hasn't helped prices recover very well so far.)

If you say so...

Submitted by an on May 19, 2015 - 10:59am.

spdrun wrote:
Japan had a higher percentage of comparatively well-off people than China or India does today. Japan was a much wealthier country on average by the 80s than China or India are today.

(Actually, parts of NJ are heavily Indian -- around Edison. But fortunately, that hasn't helped prices recover very well so far.)


We don't care about average. We care about total number of rich people. Japanese total population is 127M today. 30-40 years ago, their population is much smaller. So, combining China and India, you have almost 3B people. If you're counting just 0.1%, that's 30M people. So there are more people in the top 0.5% of China & India than all of Japan. Also, you're more likely to see 0.1% of the population in China & India leaving for greener pasture than 25% of Japanese leaving Japan. My bet is, 0.1% of Chinese and Indian are A LOT richer than the top 25% of Japanese.

Submitted by spdrun on May 19, 2015 - 11:07am.

That's 3 million people, not 30, only twice as big as the top 1% of Japanese society in the 80s.

Submitted by an on May 19, 2015 - 11:12am.

And extend that to top 1% of China/India and you have 30M people.

Top 0.1% of Chinese/Indian is 2X the top 1% Japanese, but what about the actual total wealth. Not to mention the political climate differences.

Submitted by The-Shoveler on May 19, 2015 - 11:45am.

In the 80’s there was a small rise created by emigrating Japanese (I know of several families who became instant millionaires selling their Tokyo properties and moving to L.A. Area).
But I think the Chinese emigration influence still has a long ways to go yet in this cycle IMO.
(plus they were actually building enough homes back in the late 80’s, not the story today).

We are building a little more than 250K homes in the west which is a little more than 1/2 what they should be building.

Submitted by joec on May 19, 2015 - 6:18pm.

The Japanese are very different in terms of Chinese or Indians coming to live in America. Outside of Japan, the largest Japanese population is actually in Brazil.

If you look around Asian communities, there are actually very few Japanese people in general compared to the other Asian ethnic races. There is just not a huge desire to "leave" Japan compared to people living in China or India.

There are a fair amount of Japanese in LA, but those tend to be from Hawaii I think so they are already Americanized.

With such a large and upcoming middle class growing in China, and a strong desire to send their kids to the US for college (India too), etc...which in turn allows the kids to get jobs here and and eventually have their parents move over, this will put upward pressure on various communities that these people desire to live in. I think in this type of low interest rate environment, real estate in prime areas seems like a better long term hold just due to the demographics of people buying/moving in certain areas.

Prices sound very silly to us here in SD, but compared to places in metro areas in China, Hong Kong, Europe, and the bay area, it's still pretty affordable for what you get.

Submitted by andymajumder on May 19, 2015 - 10:27pm.

AN wrote:
spdrun wrote:
Japan had a higher percentage of comparatively well-off people than China or India does today. Japan was a much wealthier country on average by the 80s than China or India are today.

(Actually, parts of NJ are heavily Indian -- around Edison. But fortunately, that hasn't helped prices recover very well so far.)


We don't care about average. We care about total number of rich people. Japanese total population is 127M today. 30-40 years ago, their population is much smaller. So, combining China and India, you have almost 3B people. If you're counting just 0.1%, that's 30M people. So there are more people in the top 0.5% of China & India than all of Japan. Also, you're more likely to see 0.1% of the population in China & India leaving for greener pasture than 25% of Japanese leaving Japan. My bet is, 0.1% of Chinese and Indian are A LOT richer than the top 25% of Japanese.

I am from India and trust me there are lots of really wealthy folks in India. I would say 0.1% of Indians are really wealthy, with net worth at least 10M+, that would be around 1.2M people. After that there would be another 5-7% (60-84M) of the population, urban upper middle class which probably is worth somewhere between 400K - 2M & a lot of their wealth is tied to owning real estate in places in Bombay, Delhi, Bangalore etc. Also these upper middle class folks are willing to spend on their kids education and even help them with their home purchases etc. I have members of extended family in India who downgraded to a smaller house in Mumbai so that they could send their son to a top grad school in US. All in all India would probably have close 80M people who are quite wealthy of which 3-4M would be very wealthy even by global standards. Yes, that's a small % of India's overall population but that's still a lot of wealthy people.

Submitted by Coronita on May 20, 2015 - 4:09am.

andymajumder wrote:
AN wrote:
spdrun wrote:
Japan had a higher percentage of comparatively well-off people than China or India does today. Japan was a much wealthier country on average by the 80s than China or India are today.

(Actually, parts of NJ are heavily Indian -- around Edison. But fortunately, that hasn't helped prices recover very well so far.)


We don't care about average. We care about total number of rich people. Japanese total population is 127M today. 30-40 years ago, their population is much smaller. So, combining China and India, you have almost 3B people. If you're counting just 0.1%, that's 30M people. So there are more people in the top 0.5% of China & India than all of Japan. Also, you're more likely to see 0.1% of the population in China & India leaving for greener pasture than 25% of Japanese leaving Japan. My bet is, 0.1% of Chinese and Indian are A LOT richer than the top 25% of Japanese.

I am from India and trust me there are lots of really wealthy folks in India. I would say 0.1% of Indians are really wealthy, with net worth at least 10M+, that would be around 1.2M people. After that there would be another 5-7% (60-84M) of the population, urban upper middle class which probably is worth somewhere between 400K - 2M & a lot of their wealth is tied to owning real estate in places in Bombay, Delhi, Bangalore etc. Also these upper middle class folks are willing to spend on their kids education and even help them with their home purchases etc. I have members of extended family in India who downgraded to a smaller house in Mumbai so that they could send their son to a top grad school in US. All in all India would probably have close 80M people who are quite wealthy of which 3-4M would be very wealthy even by global standards. Yes, that's a small % of India's overall population but that's still a lot of wealthy people.

I think the point is, basically regardless of the nationality or country of origin people are from, these wealthy and/or highly educated families all want the same thing.

As screwed up as people here think the U.S. might be, people still want to come here, because things are much more screwed up elsewhere.

The folks from asia/india we see here are the top 1%ers+ from their respective backgrounds. They have the means to come here, either (1) because of their education status or (2) their wealth status or (3) both. And being in that category, they will end up wanting the same thing, more or less. And considering how large and how many people there are there, even a top 0.1% of that population is huge.

2013-2014 foreign purchase stats

http://www.realtor.org/sites/default/fil...

Transaction volume leaders: Canadian
Total transaction amount leader: Chinese

Submitted by Coronita on May 20, 2015 - 4:06am.

http://www.latimes.com/business/la-fi-ch...

Quote:

Chinese buyers bought 12% of all U.S. homes purchased by foreign citizens last year, up from 5% in 2007, according to the National Assn. of Realtors. More than half their home purchases were in California. And more than two-thirds of them paid cash, the trade group said.

The trend appears unlikely to unwind soon. More than 60% of China's wealthy have left or plan to leave the country, at least part time, and their No. 1 destination is the United States, according to the Hurun Report, a Shanghai publishing firm focused on recently minted millionaires and billionaires.

And here's what I meant about Arcadia.. It's not just above peak, it's well above peak... And that was last year

Quote:

But it's getting more expensive quickly. Heavy demand pushed the median home sales price past $1.32 million last quarter in Arcadia's 91007 ZIP Code — 30.5% above its peak in 2007, during the housing bubble, according to researcher DataQuick.

Next door in the 91006 ZIP Code, prices are up 23.7%. Other areas with prices exceeding their peaks include Walnut, Temple City, San Marino and parts of San Gabriel and East San Gabriel, all hubs for Chinese investment.

Others want the prestige of a San Marino or Pasadena mansion, even if paying for it means working in China and rarely visiting. One of Ng's neighbors bought a Pasadena estate, then lived there for just two days out of the two years that followed.

"He was not renting it out," Ng said. "People have so much money, they just say, 'What the heck. It's a nice neighborhood. I might as well just buy one.'"

It's a story echoed by Patti Hahn of Arcadia, gesturing to the house next door, which sold for $2.45 million last year, up from $1.55 million in 2006, the last time it changed hands.

"No one lives there," Hahn said.

The buyers pay for twice-weekly maintenance work, she said. They live overseas but plan to start splitting time between the U.S. and China this year, said Johnny Lam, the buyers' agent.

Submitted by flyer on May 20, 2015 - 5:36am.

Interesting, flu.

Have seen indications in RSF, LJ, and other similar locations that this trend is "spilling over" into San Diego. Should be fun to see if it becomes as "mainstream" here as it has in LA.

Submitted by The-Shoveler on May 20, 2015 - 9:00am.

Actually ALL of SoCal is becoming increasingly Asian.

By far not all of the more recent Asian Immigrants are rich (multi-millionaires), far more of them are coming here with just the shirt on their backs and a desire to better themselves.

Submitted by an on May 20, 2015 - 9:36am.

The-Shoveler wrote:
Actually ALL of SoCal is becoming increasingly Asian.

By far not all of the more recent Asian Immigrants are rich (multi-millionaires), far more of them are coming here with just the shirt on their backs and a desire to better themselves.


That is also true. These two things are not mutually exclusive though.

Submitted by FlyerInHi on May 20, 2015 - 10:13am.

There is a combination of factors for higher prices in top cities.

Low rates of course. And not enough building to match population increase.

Plus, recent immigrants just have higher tolerance for higher housing prices as a percentage of income. They also have higher tolerance for smaller, older spaces.

New York is the prime example. Look at the demographics of NY in the 1950s vs. now. Lots of White people from NYC left the city and moved to NJ or even to the South.

Demographic shifts is just the way America works and renews itself.

With globalization and international banking, moving wealth around the globe is just so much easier now.

Immigrants are more likely to settle in big cities. Multi-culturalism is now in. Immigrants search for enclaves in America where they feel safe and have access the food and products they are used to. They watch TV and stay in touch with the home country thanks to the Net.

With more knowledge, thanks to the Internet, there is more desire from professionals and millennials to move to the "glamour" cities. So will see the price gaps between the top cities and the average American city get larger. Housing wise, in past decades, San Diego was maybe 1.5 to 2x more expensive than the average. But we could see 4 to 5x.

The world's middle class is also a lot more education focused. So places close to universities will do well.

I was just in Hollywood over the weekend. Lots of new condos and apartments being built. There's renewal with all sorts of people moving in. That's a truly diverse place with racial as well as income diversity (mansions to riff-raff apartments).

Washington, DC is attracting millenials who are moving into the city. Prices in DC are now easily triple the suburbs whereas in the decades past, people were moving out.

Demographics is destiny.

Submitted by FlyerInHi on May 20, 2015 - 10:21am.

There was an article in the NYT about EB-5 visas and how real estate is attracting foreign investors.

http://www.nytimes.com/2015/05/17/reales...

Immigration to the US is more a middle-class and lower-class phenomenon.

The term middle-class is confusing, but in this context, it's not the average person. Middle class refers to the professional and small business owner class. The rich don't want to get American green cards because they would have to pay US income taxes on their worldwide income.

In America, the term "middle-class" is overly broad. Middle-class in the British sense is more precise.

Submitted by The-Shoveler on May 20, 2015 - 10:31am.

Suburbs in SoCal tend to grow into major cities over 10-20 years.

Submitted by FlyerInHi on May 20, 2015 - 11:21am.

The Chinese love glamour buildings.
Interestingly, Las Vegas is attracting a lot of EB-5 investments.

Investing in a casino and getting green cards for the whole immediately family is not a bad deal. You can live anywhere in USA and get in-state college tuition. The $500,000 investment likely won't lose value, so the overall return is pretty good, I would think.

http://lasvegassun.com/news/2014/may/11/...

http://www.forbes.com/sites/muhammadcohe...

http://www.lvgea.org/key-industries/inte...

Submitted by joec on May 20, 2015 - 6:55pm.

I know if I owned a lot of real estate in prime areas here in California (Bay Area, LA, SD), I certainly wouldn't be in a rush to sell. This is why when some folks here say things like a "bubble" is just waiting to pop/collapse, I think that's very unlikely and it's more wishful/hopeful thinking since they may have missed out or now have more cash to buy more.

In the short term, Rich has ran the numbers so there isn't a bubble compared to rents and inventory...

Of course, this doesn't cover a lot of areas some folks may be looking at (like NJ), but as an asian myself, I don't think I could ever live in some parts of the country, let alone outside of CA. There's the food/dining problem, groceries, and certainly discrimination when you live where you are the minority. Just don't see a lot of the asian FOBs will ever buy in say, East or South county in SD.

Unlike the Japanese from the 80s where they imploded, the Chinese and Indians actually have a desire to leave their country I think so as their kids grow up, they'd want to 1) shelter their assets from their home country and 2) attend college here.

At least my parents have a lot of places so maybe it'll work out for me in 30 years also.

Submitted by njtosd on May 20, 2015 - 6:56pm.

andymajumder wrote:

I am from India and trust me there are lots of really wealthy folks in India. I would say 0.1% of Indians are really wealthy, with net worth at least 10M+, that would be around 1.2M people.

I'm not so sure about this, unless things have changed quickly. Last summer there were 14,800 multimillionaires in India (defined as having assets over $10 million U.S.) according to this article: http://articles.economictimes.indiatimes...

That would result in a rate of multimillionaires in India of .0012% You are off by a factor of 100.

Submitted by spdrun on May 20, 2015 - 7:47pm.

There's the food/dining problem, groceries, and certainly discrimination when you live where you are the minority.

There's no shortage of heavily-Asian areas in and around NJ/NYC.

Submitted by flyer on May 20, 2015 - 10:36pm.

Agree the "glamour lifestyle" is definitely in vogue among the newly minted "wealthy" in major cities in the US. I would have to say especially among those who have relocated here from other countries. We see a lot of it, especially in LA, and as it relates to the film industry.

In negotiating deals, my wife has found that many major investors in film today are bringing foreign funds to the table. It's been a great new resource for Hollywood studios and production companies, with a seemingly endless flow of money coming from abroad. She says they are like a bunch of kids who just learned a new candy store opened on their block.

The "glamour lifestyle" is something most born in the US have had access to for most of our lives, but for those who just got to the party, it seems a desirable and accessible way to achieve "perceived status," (ala Kardashianism) which, imo, along with increased employment opportunities, is another reason why these population centers are booming.

It's really fascinating to watch this financial and social phenomenon unfold.

Submitted by FlyerInHi on May 21, 2015 - 10:25am.

flyer wrote:

The "glamour lifestyle" is something most born in the US have had access to for most of our lives, but for those who just got to the party, it seems a desirable and accessible way to achieve "perceived status," (ala Kardashianism) which, imo, along with increased employment opportunities, is another reason why these population centers are booming.

I see a renaissance in LA.

Funny you should mention Kardashianism. That lifestyle is being brought to the masses by Rick Caruso with his lifestyle centers.

Also Sam Nazarian (uncle a founder of QUALCOMM and dad and early investors) is having great success in LA with his bars, restaurants, and hotels.

Submitted by spdrun on May 21, 2015 - 10:29am.

The problem is that such a renaissance tends to turn cities into theme parks, destroying a lot that's good and interesting about them. Of course, you're a fan of Vegas, so maybe you dig that noise.

Submitted by FlyerInHi on May 21, 2015 - 10:46am.

spdrun wrote:
The problem is that such a renaissance tends to turn cities into theme parks, destroying a lot that's good and interesting about them. Of course, you're a fan of Vegas, so maybe you dig that noise.

I'm not a fan of theme parks... but neither am I fan of poverty.

Don't you think that rich NYC today is better than gritty, grungy NYC of the 1970s/1980s? Same goes for SF.

There is a give and take, and a better economy is always preferable.

Submitted by flyer on May 21, 2015 - 2:39pm.

FIH, yes, there is a tremendous amount of change going on in LA. I think it's mostly positive, but, as sp mentioned, it is also a bit of a circus.

Imo, the lifestyle you mentioned which is being brought to the masses is, at it's core, predicated on "status by association," and people are buying into this fantasy hook, line and sinker.

These marketing masterminds are employing very interesting techniques which lead people to believe they are "insiders" via living in certain locations, frequenting certain bars, restaurants, hotels, etc., even though there is no basis in reality. Again, I find it fascinating.

Submitted by FlyerInHi on May 21, 2015 - 3:02pm.

flyer, that's creating new billion dollar markets and new opportunities. Your wife must love it, being in the entertainment market.

Entertainment is one of the best American exports. It require constant reinvention and creativity, and cannot be outsourced,

Imagine LA remade and brightly lit, as a major tourist draw, the capital of Asia-Pacific region, with high-speed rail to Las Vegas, all providing an American glamour lifestyle.

I like all the improvements at LAX, and Hollywood. LA metro and public transport is also getting better. Make it safe, clean and tourist friendly and people will come!

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