Thursday, May 16, 2013

And just like that - the last four years never happened.

There isn't a day that goes by that I don't wonder if it was the right thing to do to keep my crapshack. I'm still not sure. During the worst of the recession it was all I could do to not join everyone around me and bail. I expected ups and downs (it's the way this area has always been) but no market at all for houses was a shock. Price declines? Sure. The absence of a market at all - that was something I thought impossible. Still, there we stood. For years it seemed like there would be no bottom.

Pretty much everyone I knew, lost a house, or jingle mailed their house back to the bank. Everyone who could talk said prices would never recover in their lifetime. So they walked away in droves. I wasn't sure how the whole thing was going to turn out honestly. The lessons of my childhood growing up poor were the only things to guide me. So I held on. Most days it felt like an elephant on my chest. I started having panic attacks. Usually at night when the outside world receded and the thoughts in my brain could run buck wild.

Now, in six months, the whole world has changed and the old world has been forgotten. Everyone is at the party and prices are up 22% in a month here in California. 30% YOY. It feels like whiplash. And the market is impossible to figure out again between the lies and euphoria. A non existent market is not reality. Nor is what is happening right now. Prices can not go up faster than wages. The truth lies somewhere in between. Basically nothing got built for four years. Yet there is some form of population increase. How do you calculate that into reality?

So, when an agent was walking my neighborhood today beating the bushes for houses to sell I didn't want to talk to him. Still I needed to shake him down for information. As a side note - I can't believe how agents got out of the whole recession scott free from blame. Those bastards have way more power than you think.

Anyway, this guy confirmed what I had been seeing in the market. This has only been going on for six months. Perhaps the 22% gain isn't as crazy as I think it is. If you start from a very low point. He told me that houses now take 30 days to close again. Two weeks if you are all cash. That is a normal market. During the height of the recession houses were taking upwards of six months to close. The other thing we'd been seeing in the market is that anything under a jumbo is gone. Very close to 0 inventory. However, jumbos are still hard to get - so the market is compressing everything to non jumbo max, plus 20% down. He said FHA will take up to 750 grand.

Then he told me what my rental was worth right now. And it's breathtakingly close to what I put that house on the market for before I realised the market was completely falling out and shoved a renter in. This has got to sting for the jingle mail crowd. If you managed a short sale - you were able to get back in after two years. Which doesn't make me bitter at all. They got to walk away from everything with no repercussions. And now they are starting the whole thing over again. Sure they took down the whole economy. But... whatevs.

The only reason I kept that house is because I felt by the time these peoples credit was restored - they wouldn't be able to afford to get back into the market. I absolutely believe in a rent trap. The whole time during the recession people would say owning a house is a suckers game. No my friends... renting a house is a suckers game. Since the rent keeps going up, it makes it harder and harder to buy.

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