It’s the demand, stupid!

I don’t agree with this article at all. Have been a real estate broker 30
years and bought extensively at trustee sales.

Something very unusual has happened no one expexted. Sellers
just stopped listing. They see the turn around and say, “I’ll hold now.”

Listings are down 50% in one year. There is little to sell.

Demand is the key in the housing market place, supply will come if the market is there, usually to a higher degree than the demand causing cycling in the market place. We have another factor in the California market, in my opinion, the over regulation in many sectors, the EPA is and will continue to attract business and individuals to move to other states. Many people have voiced this opinion but are locked in with there current property that are not marketable with out heavy loss of equity value.

This article presents some fascinating arguments, but it seems not everyone is agreeing with the conclusions made.

From what we see, all reasonably priced middle to low end homes are selling rapidly in the Southbay, some immediately. The demand is therefore obviously IN EXCESS of the supply of homes in that price range.

Who is buying? If it is long term investors, buying them as rentals, that will be a good thing. If it is buyer occupants that will be even better. But, if it is flippers or renovators, indeed those buyers DO hope to dump them back onto the market soon.

In this area, there seems to be a mini-boom in purchasing, no doubt fueled by speculators (many from foreign nations)–which could bump up prices, at least temporarily. That bump up in prices could coerce wavering potential sellers to list their properties, thus increasing inventory—but this is mere speculation on our part.

We do believe the would-be flippers will be stuck with properties and end up renting them out for much longer than they expected. But, we do not think that will be for the reasons stated in the article.

It will be for this reason: Considering the OVERALL economic and financial situation of the U.S. and the world, it seems another Great Depression may be immanent if powerful actions are not taken by the governments of the world, including our own, to circumvent it. And, they may be helpless to do so even if they wanted to.

Therefore, with a depression comes DEFLATION in values. The dollar INFLATES in value, which means it then purchases much more as everything else plummets in cost due to massive unemployment and social unrest. The other side of the coin is HYPER-INFLATION, which would result if the dollar were deflated and the economy stayed the same or picked up—in which case Chinese imports would rise dramatically in price as would everything else, including –presumably– property values.

Yet in this bizarre current world, where all the old “rules” seem to be unraveling, could property values actually fall as everything else inflated? Massive unemployment could be a causative factor in such an ironic scenario. Massive unemployment is a given without dramatic action by government to circumvent it. Jobless persons cannot buy homes, and will have trouble paying rent—throwing more people onto government programs for life support.

Americans will soon learn what it is like to live in a third world country, as the middle class is vanishing, the welfare class is ballooning, and the wealthy will be subject to added scrutiny by government and IRS, higher taxes, and diminishing market returns.
The fraud perpetrated by the “ruling” class upon the masses for decades will finally be exposed for what it is, and BIG MED, BIG PHARMA, BIG OIL, etc. will finally see their day in court—–if we’re lucky.

Only when true balance is restored—a healthy and growing middle class, a diminished welfare class with jobs to go to, and a curbing of the excesses of the wealthy elite, will America ever see a healthy sustainable economy.

Thank you for your brilliant summary.

The road ahead is challenging. With any recovery comes at least a modest increase in inflation, which will cause interest rates to rise, and decrease the “organic” buyers ability to purchase. There are no quick corrections right around the corner, especially with so much of the “the market will always increase” attitude still in the market.