I am unable to give exact dates, but there is a 25% chance that it will begin in the spring (what year, I cannot say)
You can quote me on that too! :-)
If the near future is the unicorn version of the dot-com bubble, its aftermath would be a good time for tech stocks you're interested in.
My point is that there are plenty of financial instruments that exist precisely so you can "put your money where your mouth is".
China has a middle class as big as the entire US, and a huge number of millionaires in USD, and an unstable, opaque state-run economy, so huge numbers of rich Chinese are buying real estate abroad to protect their wealth and to give their kids a life in the US.
I would be happy to see a movement to keep Chinese money out of the U.S. housing market, at least in places like SV.
You're right it's not that big but it's the biggest in the world: http://qz.com/523626/chinas-middle-class-has-overtaken-the-u...
"Too expensive" does not equal bubble. It has to be expensive because speculators are driving the price up, thinking they're all fooling each other. As soon as they get get scared that the other speculators might be thinking of selling the price suddenly collapses as they race to not be the last to divest.
If something is expensive because it's scarce, is actually being practically used, and there are no substitutes, then there is no way to make the price suddenly collapse other than flooding the market with new supply, and it would take many years to increase the supply of housing by a significant percent. If the price of housing drops a bit all of the homeowners aren't going to rush to sell their homes in a panic like you might see with a purely speculative asset.
Even in an insane place like SFO, a few high profile failures can shutdown the cash pipeline for all sorts of companies. No cash, no coders, no rent.
2008 proved that when people are underwater, they walk away from mortgages because they see no consequence.
For primary residences most are driven by loss aversion ("I'll sell it when it comes back to the price I paid for it, I don't want to lock in my losses, and this is still a decent place to live").
You're right that some markets experienced steeper declines than others, and the ones that descended quicker were highly leveraged through 0% down, or interest-only (or both) loans. Post-2008 lending scene has been much more restrictive, I can't imagine a lot of people being highly leveraged at the moment.
In the early to mid 00's the idea of "flipping" real estate became popular. The idea was that you would agree to buy a property, and then sell it very quickly, often setting up a deal to sell it before you even fully closed on it yourself. There were a lot of more-or-less amateur investor types who flocked to markets with cheap real estate and strong population growth - e.g. Las Vegas and Phoenix - and started flipping houses. This was pure speculation completely divorced from underlying demand.
I don't think there is anything like that happening today - at least not nearly on as large a scale. So, while I would disagree with the idea that "the market didn't collapse" - it did in some locations - I certainly do agree that it's not likely to collapse in quite as dramatic a way any time soon.
It's not so much that any one entity is "too big to fail", but all the big entities are too interlinked so they cannot fail separately.
It really seems like if we all agreed to keep the music playing, the music would continue playing. But once we decide it's going to stop, it has to.
You actually can't just keep dumping money into companies that are doing nothing but burning it.
But, yes, for the record, I do want the bubble to burst, because the world has real problems and I just got a cold recruiting email from someone building a GIF keyboard. "Silicon Valley" is a spectacular, world historical squandering of brain power and it needs to stop.
Are you implying that there are less-frivolous actors offering competitive salaries and getting ignored, or that SV is inflating the price of programming labor? Because if the latter, and you're hoping for a correction of programming salaries down to lower-middle-class clerical work that humanitarians can afford, won't those with brain power just "squander" it in some other better-paying field?
First, the aforementioned funding bubble.
Second, a correction to depressed wages due to collusion between the big tech companies.
Third, increasing demand for tech workers in historically non tech sectors (Eg. Home Depot has mobile apps for home improvement).
I have no idea what the attribution split is. But I'm fairly certain wages will be propped up in the event of a funding collapse.
The non-tech sector seems perfectly content to pay engineers 60k under constant threat of outsourcing. In the absence of Silicon Valley competing for talent they'll get away with less, not more.
Google/Facebook/Apple/Microsoft/etc have been and will continue competing for talent. 2005 to 2009 was hardly a time of "easy money", yet the big tech companies still had to resort to collusion to combat demand for engineers.
EDIT: Easy data point, YCombinator was only a 20k investment back then. Very different story of access to funding.
How?
Outside the bubble, New York has always been like this, and it's not because of the tech industry.
Like the Bay Area, New York appeals to a lot of people, and with the appeal comes competition for housing. The Bay Area is a desirable place to live -- the weather is always excellent, there's plenty of stuff to do (try finding a mountain to ride your bike up in New York City), etc. People pay it because they like it. I don't think it's because tech is there.
Say what you will of all the bullshit we fund, every one of those represent projects where talent can improve their skills, and many of these will eventually stop working at a bullshit startup and get recruited by one of the companies actually building something valuable.
I don't see it. Maybe bubbly areas like SJ will correct a bit, but at the end of the day real estate is a supply/demand calculation. YoY% increases don't look like they did in the last bubble.
The more people who want to live somewhere -- whether renters or buyers -- the higher the prices go, until sales start dropping off. Real estate is like anything else: it's worth whatever you can convince someone to pay.
EDIT: I am specifically referring to the "Price to Income" chart in my comment below, not the one that shows up by default. Sorry for the confusion.
--
Uncheck everything but the 'US' graph. Different data sources give different ratios, but they all show that it's still well above historical norms & headed up. Some data sources say that it's already approximately back to where it was in the peak (see a link further down, that chart is up-to-date), others like this one only show it ~1/2 way there (note tat this chart is two years out of date), but either way we're above what has been stable in the past.
People are just stubborn and think that if they can't afford the type of house they want in the type of neighborhood they want in the city they want, then housing must be in a bubble and out of reach.
Just look to how much online universities typically charge for tuition. Answer: the max given in federal financial aid.
Both of them were chiefly monetary initiatives rather than fiscal. The Fed acts pretty much independently of who's President, which explains the "oddness".
http://politicalcalculations.blogspot.com/2015/04/the-curren...
See: the results of Sweden's negative interest rate policy (ie a huge housing bubble).
That's the quote right there!
Not really. The Iraq and Afghanistan wars together cost something on the order of $750 billion, which was less than one year of stimulus spending at the beginning of the current administration.
Ignore this person. They don't know what they are talking about.
The estimate cost of the Afghan + Iraq War is estimated to be $4-6 trillion when you account for long-term medical care and disability compensation for service members, veterans and families, military replenishment and social and economic costs.
Source: http://www.hks.harvard.edu/news-events/news/articles/bilmes-...
ARRA didn't even crack a trillion.
Maintaining a near-zero interest rate creates artificial demand, and encourages investment of capital in inefficient enterprises. The thought process is "hey, I lose value with money in the bank. I'd be better off if I found something -- anything -- else to do with it!"
I think that once things take a turn, housing will also turn again, because in many areas the median house now costs enough that it's beyond the reach of the median person. That environment is unsustainable over a large time scale. Ultimately, we'll need a correction that sticks if we want to avoid repeating these events, and for that to happen we'd need a government willing to tolerate a politically unpalatable permanent reduction in asset prices.
(edit/note: I do find it odd that under a Democratic president, the major flows of borrowed cash (debt) have been directed to the big guys, while under a Republican president, they were directed to the little guys. Both were a terrible idea, but it seems backwards for what one would expect.)