Yes...See a few of your points...This idea that RE prices are well bid in affluent and high job growth areas I don't buy...look at Boston... Greenwich, CT and NYC may be well bid by I-Bankers and such, but the rest of the country...O.C. Cali, to Naples, FL ..to New England (see another thread today on this site on SW FLA)... "slump" would be a good word to use.... I know a few NYC high salary folks that bought houses in CT for 1.2mmish 2 years ago..now you need to wait it out get 800k...I'm sure they'll survive and they aren't "interest only" mortgages...certainly Jumbos though...and who the F wants take a 400k hit? Dangers of leverage is rearing its ugly head to some of these top of the market buyers.... not exactly in the slums either..
FL is not a great example. I lived there for 3 years. A lot of FL is white trash man. There are not that many jobs in most of FL. People move down there for the weather and don't have a plan once they get there. So parts of FL will get hit, other parts will not. OC is not taking any hits...yet. And neither is CT. Also, how many investment bankers or hedge fund managers in CT are flipping houses or bouncing around from house to house? None of them are. They are living their with their trophy wife, their 2 kids who go to 30k a year boarding schools and they are keeping their vacation home in Cape Cod. They really could give a shit where their mark to market price is on their home which they don't plan on selling till their kids are off to Brown University. Like I said, real estate is LOCAL. Most of the country is OK as of now on the job front. That could change tomorrow. But for now, most people are working and have no problems making their mortgage payments. Some markets are much stronger then others. I was shocked at how little supply there is in Texas and how strong the economy was there. Homes were staying on the market for 7 days before multiple offers would come in. Other markets like Vegas, Arizona, and parts of FL are very soft. Location...location...location...
Sorry man, I got to bust you on this one. Any idea where some of the international $$$ is coming from to acquire real estate in CA. Simple question, when was the last time you or someone you know got mugged by an asian? :
You are correct. The asians in S. Cal. I met were all nice people, model citizens and law abiding. That being said, California might end up like Hawaii - too expensive and white guys like me feeling too in the minority. A nice place to visit, but not to stay. SoCal has changed so much in the last 5-10 years that it just doesn't seem to have the same "California dreamin" magic. A lot of the creative people from the rest of the country who used to flock there might settle elsewhere. No one is to blame, its just that things have changed.
I hear what you are saying, affordability is a major issue there. With the median home price over $400,000, being a first time buyer has gotta suck. I had a friend who traded in a 3 unit building in one of the best neighborhoods in Chicago for a 1,000 square foot, beat up ranch, up Silicon Valley way. He was not alone. San Diego is even worse, I am thinking of buying a storage locker there some day. http://www.dqnews.com/RRCA0307.shtm
The upper-end of housing buyers is not as directly affected by mortgage rates as other home buyers, because very affluent people tend to buy with cash or with very large down. Rich folks may be affected indirectly to the extent that higher rates may slow down the economy, but otherwise they don't care if rates go from 6.5 to 7.5. It's the cash-strapped folks who bought or are buying with low down who care.
I live in Los Altos, a small city in Silicon Valley, and it's whiter than snow lol. 80% white, 17% asian. My neighbor, who has lived here 20+ years, said it used to be almost 100% white. Virtually all of the Asians are rich folks who immigrated from Taiwan or Hong Kong; to them, a 1700 sq foot house on 1/4 acre of land for $1.5m is a bargain. The US policy on Asian immigration favors educated, affluent people and as long they continue migrate to Calif, they will drive up the housing prices.
And yet the upper end shows more volatility than the middle. You might find that the upper end is as subject to the vanities of over commitment as the middle. Bear in mind that the upper end needs buyers, so give a thought to where they might come from. Why does BMW get you into a 3 then work you up to a 7