@Wes Blackwell I would love if Sac and the Bay Area got connected! But, I just don’t know how realistic it is unless Sac and BART come to an agreement to fund it along with other cities it runs through. Seems like a lot of working pieces to fit together
Frankly what I am reading here is a red flag in the form of "This time it is different". I recall at the turn of the century, people were flocking to areas like the coyote valley in south san jose or Gilroy or Morgan hill etc, because Cisco was thinking of expanding to that area. I think a lot had to do with the fact that prices in that area were much cheaper vis a vis the center of the bay area. Well to me it seemed foolish to buy speculate on properties in the outskirts, but hey what did I know. Cisco never really did much and started losing steam as a high growth company. The dot com bubble burst and I don't know what happened to the speculators. Lets say I can speculate on what might have happened.
Then in 2006/2007 there was hue and cry to invest in Merced and Fresno and San Bernardino. The wave was to buy remote because again it was too expensive to buy anything in the center of the bay area.
Well then the housing bubble burst and then these remote areas suddenly became ghost towns until now which is 2018. Look who is making a comeback in 2018, apparently Stockton. I hear "this time it is different", yup millennials are getting married, building families and uber is coming out with a flying car or whatever excuse we have.
To me this talk is just signs of a top. In a downturn, all markets get hurt but these out lying areas don't get hurt, I repeat they don't get hurt, they get decimated. The ones in the center of the economic activity will get hurt but they wont get decimated. I think the only reason to invest in Stockton is because it is "cheap". It is cheap for a reason and if its getting expensive, as I said before I am getting nervous and not optimistic.
That's a totally natural response, and completely understandable coming from anyone with a pulse who was around these parts just a short ten years ago. We all remember the hype... and we all remember the crash too.
But things really are different this time... with the prime difference being regulation of the loan industry. Specifically, no more NINJA loans. The only people purchasing property are people that should actually be purchasing property. And they're only purchasing property they can actually afford. So the demand is genuine, not inflated.
That being said, there are still a few concerns on the horizon that could impact the housing market... Low/No Down Payment mortgage programs, automated / hybrid appraisals, North Korea nuking the west coast, etc. But these together don't pose nearly as much of a threat as we faced last time.
Here's my Top 4 Reasons Why The Housing Market Isn't Going To Crash:
#1) In 2005, subprime loans totaled more than $620 billion and made up 20% of the mortgage market. In 2015, they totaled $56 billion and comprised 5% of the market.
#2) Banks have raised lending standards. According to CoreLogic’s Housing Credit Index, loans originated in 2016 were among the highest quality originated in the last 15 years. In October 2009, the average FICO score was 686, according to Fair Isaac. In 2001, the average score was 490-510.
#3) Homeowners are not taking as much equity out of their homes. Home equity rose to $85 billion in 2006. It collapsed to less than $10 billion in 2010, and remained there until 2015. By 2017, it had only risen to $14 billion. Obamacare is one reason for that. Bankruptcy filings have fallen 50 percent since the ACA was passed. In 2010, 1.5 million people filed. In 2016, only 770,846 did.
#4) In the last housing bubble, homebuilders submitted permits for new construction. That was less than 1 million in 1990 during the recession. It gradually rose throughout the 1990s, exceeding 1 million in 1998. It remained at that level until 2002, when it surpassed 1.5 million. It hit a new record of 2 million in 2004 and 2005. In 2006, housing prices began falling. Homebuilders sought more than 1.5 million permits. That fell to less than 1 million in 2007. By 2009, it had collapsed to 500,000. They've only gradually recovered to 1.3 million in 2017. They are expected to drift lower, to 1.1 million by 2020.
If you believe anything about the 18 year cycle, the next crash is set to happen in 2026. The only thing that could really speed it up is if Wall Street starts their risky shenanigans again and if so this time we must hang them all. But outside of that happening, I just don't see any reason why we'd be facing impending doom.
For the all the bullet train lovers...
@Matt K. It’s better than spending it on a Wall that will do nothing. Big projects like this always go over budget. But when people look back they can’t imagine how we did things without them.
Can you imagine the Bay Area without BART? LA is racing to catch up to BART with Metro. Eventually, more in more people in LA will start using their cars less, it’ll just take time.
The same goes for high speed rail, I would gladly take Rail versus driving all the way driving down to LA to visit family. Or taking an airplane which is much worse for the environment. If we just abandon the project the contractors already get a guaranteed amount that is significant.
Meh. LA public transit always has always had the problem in that there is no there there. Most people commute for work, and there isn't a "job central" in LA - industry is spread out across the whole LA basin. Heck, I'd take LOW speed rail if I could take my car with me at a reasonable price so I can get where I'm going once I get to LA.
@Deanna Opgenort Metro is get a lotttt better in LA. They’re spending so much money it. In 5-10 years it will be fantastic!
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