Posted on 12/11/2018 8:59:22 AM PST by SeekAndFind
The Wall Street Journal reports that speculation on housing by house-flippers is down, and the writers seem to treat that as a bad sign for housing.
Small-time investors who flooded into real estate in the past decade to take advantage of low borrowing costs and rising home values are starting to cut back. The moves indicate that the market's short-term risk-takers see limited upside – and possible turbulence – ahead.
I believe that it is actually an excellent thing when speculative bubbles get gradually deflated. If the speculative bubbles deflate naturally and gradually, there is much less risk of a recession or worse. The more speculators who get into the market for anything, the worse it is for the public who would like to buy a house without chasing the market.
Whenever prices of anything go up faster than incomes, the risk increases of collapse. That is what caused the economic collapse in 2008. What is happening in San Francisco is terrible for the long-term economic health of the city.
When you price the lower-, middle-, and upper-middle-income people out of the market, eventually, there will be huge problems, which will not be solved by government aid or a higher minimum wage. Every large city needs people working all sorts of jobs that are not paid like the high-tech companies, and the farther they have to move away to get affordable housing, the bigger the problem will eventually become and the more likely it is that people will move to more affordable areas..
It is also good that the FAANG (Facebook, Apple, Amazon, Netflix, Google) stocks are coming down to more reasonable prices. The Price/Earnings (P/E) ratio is getting closer to reality for a lot of stocks that got ahead of themselves.
(Excerpt) Read more at americanthinker.com ...
WSJ does not seem to realize that the more Capitalism is presented as a casino game the more likely people are to veer towards Socialism.
You can get a mansion in Buffalo, NY for half that- and retire on the rest and enjoy 4 seasons.
Probably not a good idea. My Florida neighborhood is full of people from Buffalo. There must be a good reason the place is depopulating.
With the Fed pushing interest rates to 3.5% in 2020, what the hell do they expect?
What is not good for the economy is when the lowest on the totem pole cannot buy a house for a reasonable price.
I remember meeting a guy who had purchased half a dozen new houses in Gilbert, AZ that he was holding vacant.
He bought the first one with cash and then borrowed against that one to buy the next one, and so on.
His "theory" was that the market was rising so quickly he could afford the carrying costs until he sold out at a big profit.
Seemed like a crazy idea at the time and that was in 2006.
1) Inventories are real low if even existent for cheap fixer uppers in areas that people actually want to move to or buy into.
2) Interest rates are high compared to the last 10 years because of the Fed.
Do they stay down there all year?
Those are the wimps- who don’t ski
(just kidding I am sure they are fine people)
PS Who do you know from Buffalo? I live near Buffalo
Jeez - what’ll HGTV do for programming?.....
My wife and I are still flipping. Closing on our sixth one soon. We aren’t looking to make a killing but we enjoy it and our net profits have been fair, 10 -22%. Modest priced homes and we do a lot ourselves.
Houses aren’t made to flip. Just silly.
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