The takeaway from Trulia’s June “Bubble Watch” is that we’re nowhere near a real estate bubble, thank goodness, except in a frothy nineteen of the one hundred largest US metros. It probably won’t surprise you to learn that eight of those “overvalued” large metros are right here in California.
“A gentleperson is generous without having to spend; s/he makes people work without making them groan; s/he has ambition but no rapacity; s/he has authority but no arrogance; s/he is stern but not fierce.”
Open houses aren’t as crowded as they were a month ago. You can find a parking space in downtown Palo Alto. My Facebook real estate page seems permanently stuck at twelve likes. Is this the end of Silicon Valley real estate? Or the beginning of summer vacation?
A fresh look at the best of the MLS.
You’ve been acting too strange
You don’t love me with soul
Well, there’s lots of other guys
Who’d love to play your role
One Monkey Don’t Stop No Show, Big Maybelle, 1955
Over the past few weeks we’ve looked at what I’ve called Silicon Valley “home price volatility” from 1994-2013 and 2000-2013. But I realize that what we’ve been looking at can be better described as “historical downside risk”: combined home price depreciation during the last two real estate busts. Volatility isn’t just depreciation–it also includes the “good” volatility, appreciation. But…
“My husband and I have been house hunting for a few months in the PA/MP area. The market has gotten VERY HOT this year and we are starting to wonder if the bubble is back…this time encouraged by zero inventory, a handful of IPOs and a great deal of foreign investors worried about the stability of the economy in their home country. Seems like a great time to sell but would you advise waiting for a market correction to buy? Thanks!”
Two weeks ago we looked at home price volatility in Silicon Valley from 1994 to 2013. You’re thinking “Remind me what home price volatility is, and why I should care”. Okay, home price volatility is the heart-pounding roller coaster ride your biggest investment takes in that cyclical market called real estate. When home prices go up, life is good. Your equity goes up, and you look like a hero. When home prices go down (as they have, and as they will again) your equity evaporates and can even turn negative, making it painful or even impossible to sell. Just as bad, you and your friends wonder if you made the right investment.