San Diego Housing Market News and Analysis
State of the economy and affect on housing in S California
User Forum Topic
Submitted by wallers on March 20, 2015 - 10:36am
Our economy is stable. Things are booming. No problem.
Things will flatten out. Stock market and housing market can't stay at all time highs but won't crash.
We are in for it.
I don't know anything about economics or investing but hearing some pretty scary stuff. Do you believe it or do you believe the opposite or somewhere in between.
Things such as - QE screwing the economy and enriching investors and driving a "false market". Historically some are calling for a recession within the next few years. 4 trillion debt because of qe but nothing to show for it but investor run up. Rates need to rise at some point. Household incomes way out of whack with home prices. House market decline leads to serious economy issues. Same for stock market. Other economies having issues which will affect us. Inflation with the strong dollar affect overseas trade.
3 Stages of the home price decline. Do you believe this?
Stage I: Hot to Cool: Active since Summer 2013*, Price growth is slides across the country as flippers lose money outright in the red-hot investor markets (NYC, San Francisco and Las Vegas); New home absorption rates - sales per community - are declining; investors slow their home purchases; total home sales decline year over year; developers lose pricing power, press outlets shift from positive to mixed about the health of the housing market.
Stage II: Demand to Supply: Small shocks convert demand pools into supply ripples. A first wave of investors begin trimming prices to get ahead of future declines; discounts increase to incentivize purchasers as purchasers increase their delays for better deals; developers reduce land budgets as cancellations tick up; major financial press outlets take a more negative tone toward housing lowering confidence overall.
Stage III: Deflation & Response: Falling home prices create a negative deflationary feedback loop that foreshadows a once-in-a-lifetime policy response. Deflationary economics take full hold; leveraged bets on real estate unwind in quarterly ripples due to the public reporting cycle & asset manager redemption schedules; willingness to lend shrinks; the broader consumer finally understands it is a bad time to buy a home, a shrinking housing market negatively impacts jobs causing recession; the estimated effects of never-before-seen public policy reactions determine when and where prices eventually trough.
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