My pic is a "sign spinner"


http://bakersfieldbubble.bl...

Clearly you're a believer in the "bubble", however, consider one thing - real estate values always go up.  Always.  This town is still one of the most affordable housing markets in all of California - this will continue to attract buyers of all levels - from first time buyers who could not afford LA or SF (where entry level properties start at ~$600,000), to retirees who are cashing out of LA and SF and want to buy a new house for cash and still have a huge nestegg left over.

There are hundreds upon hundreds on new houses going up all over, maybe even thousands - certainly thousands of people coming to buy them and live here...  they'll need doctors, dentists and all other kinds of highly paid professionals so they are all moving to town too - even in places like Seven Oaks Grand Island the $1,000,000+ housing marketing has buyers coming daily (and for these folks coming from LA, SF etc. $1M+ is still a deal!).  Tons of new service industry jobs have come to town as well, with new businesses opening on every corner it seems!

Imagine a lot of people who believe there is a big bubble, so they panic and put their house on the market to "cash in" and get out.  Question is, get out where?  No matter what you sell your house for today, you're not going to find a better deal in housing than right here in Bakersfield.  Sooner than later people are going to start figuring it out - there's nothing on the horizon but growth - and that's not exactly and indicator of falling home values.  Once that happens, a lot of real estate listings are going to disappear and the market will continue to surge ahead!

Keep Dreaming Golfnut!

You made several points which are not true:

(1) There are thousands of homes going up all over - EXCESS SUPPLY has been created. Go ahead keep building that will only continue to drive prices down further

(2) Real estate always goes up - Always? That is obviously not true. Prices are down in Bakersfield YOY right now as we speak. Prices are down 10% YOY on new homes in the US. Prices are down by 8% YOY in Sacramento. Prices went down from 92-97 in Ca! All facts. Real Estate does not always go up!

(3) "Get out where?" - you say. 40% of all the sales made in the last 3 years were to/from "investors/speculators". This created artificial demand. This demand was created by the FED dropping rates to historic lows and loose lending standards! The supply of speculators is not rerturning any time soon to drive up homes prices again. 

(4) Affordablity is at an all time low in Bakersfield. In 1997 Median Income to Median Price was approx 3, today that number is 7.5. We may not get all the way back to 3 but we will get close!

I am glad you posted, as this massive credit bubble unwinds I will continue to re-visit your comments and remind you of the serious economic and fundamental flaws in your arguments!


Thanks!

Look for the market to sag big time after the first of the year.  Winter is traditionally a slow period and the dropping demand is going to be felt over the next year.

I doubt the bubble will "burst", that would be more in line with a recession, but a gradual loss of aor is indicated.

We will never get back down to cheap housing as in the past but it WILL drop.  Watch the rental market..hard to find decent housing and high rents.  The people having to walk away need a place to live so it is becoming a landlords market..
Who ever heard of paying 1200-1500 a month for a house in Bakersfield?  You do now.

Nancy II -

Thanks for responding.


Your comment - "people will need a place to live so it is becoming a ..."  

40% of the recent purchases were from speculative demand. This demand will not return anytime soon. These purchases were not from folks who live here. I have reviewed numerous streets around town and many have out of town mailing addresses for their property tax bills. These folks will never need to live here. They were speculating on an appreciating market. Our market is now depreciating and that "fake" demand is not there to support the current supply of available homes on the market. 

I have spoken with several of the large builders in town, one in fact told me "We are not selling $hit right now. We wont break ground on another home until we clear out this massive level of inventory. The speculators who were gobbling up homes have gone from net buyers to net SELLERS."

For the remaining folks who bought during the "creative financing" era, a large share now can't afford to make the payments.  I talked to one young man who is moving back into his old neighborhood because as he put it.."I jumped into something I couldn't afford."

My landlord was ready to sell one of his houses a year or so ago and a Help U Sell agent came to him stating he had a buyer.  The buyer never saw the inside of the house so it was obvious he was a speculator.  This house is in the Seasons tract so you know how much rent he would need to get to even break even.

If you drive through my sons neighborhood you'd see a sea of for sale signs and a lot are empty...to me, that shows the people HAD to move for some reason and I'd find it difficult to believe they all got transferred.  A friend lives over in Silver Creek and a house near here is up for rent for (I believe) 1400 a month.  She said it's still empty.

Who can afford that kind of rent?  Given the ratio used to be 1/3 your income for housing, you'd have to earn $4200 a month just for the mortgage.   When the market was hot they were saying you could use 50% for the number.
Of course that doesn't include taxes, insurance, mortgage insurance.  Even when they give you the PMI they often don'e tell you it doesn't include mortgage insurance.

The sad thing is that lenders were beating down doors to give loans to people who could not afford the house they were buying.  Buyers counted on increased earnings, spouse working.   What they didn't count on was wife getting  pregnant, either one getting very ill and going on disability, kids illness where one parent had to be home with them and a host of other things.  They didn't count on window treatments, shower curtains, new trash cans, landscaping the back yard.

I feel sorry for them but when you're making the biggest purchase of your life, you should be doing ALL your homework.
So very many didn't and are now paying for it.

Golfnut,  I think you're overestimating the market in the Bay Area.  Condos start around 280,000.  Houses in the East Bay go for 350/sq. ft.  SF, depending on neighborhood, goes for 350 to 550.  I just saw a place in great shape today 2500 sq ft, 4/2.5 for 750,000 near transit and shopping.

I think Bako is going to get bad.  South of Panama, it seems like half of the houses are for sale.  Only a matter of time until people dump their houses and we see a real correction.  I agree that house values always going up in the long term.  To paraphase though, the market can stay irrational a lot longer that most people can stay solvent.

We bought a house in 4/04  just before the "bubble" was created. I mean JUST under the wire. We paid $141M for a 12,000 sq ft home, 12 yrs old. Nice little place.  A year later we thought about selling. Realtors told us we could double our money. But....like someone here mentioned, where were we gonna go here in Bakersfield? A tiny condo? A mobile home? Everyone else was "doubling their money" as well.

Since then, we made some improvements to the house. I believe when we do sell it, we'll get more than we paid for it, but there is no way we'll be able to sell it for twice what we paid for it.

So, I feel good knowing I won't LOSE money.  That's basically all I'm thinking about while we ride it out for awhile.

And, you've have been doubling your property tax basis, too.

Termite-

You said "... I won't LOSE money."

Time will surely tell. No investment, IMO, is without risk or NEVER goes down. NONE!

I still believe that prices will revert back to their historical norms (in relation to incomes and rents) and that would prices back to 2001-2002 levels. I could be wrong, but...

 

 

Now that you site is I private I will remove it from my bookmark list,  thanks.   tbarta@  yahoo.com