Comments by "J Garcia" (@jorge1170xyz) on "Home Builders DESTROYED With CANCELLED Contracts! (PRICE CUTS COMING!!)" video.

  1. Great video. I'd like to disagree on one point you made at the very end, though. I personally do not see this bubble deflating over the course of just two years, but about five years top to bottom. Since it actually is true that the quality of loans this time around were significantly better than 2006, I think this bubble deflation will more closely resemble the bubble deflation that I witnessed in the 90's in Los Angeles, where houses slowly but surely deflated from about 1990 to 1996-97 (because it was a drip, drip, drip of job losses in aerospace and other reasons that precipitated it). You say this bubble formed over two years but I strongly disagree. I feel like housing has been detached from REAL incomes for about five years, at least in Los Angeles and many other "nonsensical" cities. What I mean by REAL incomes is this: Half the people you meet here in California who have been doing well for themselves in the last five years or so have done so by either being involved in some way with a frothy (money-losing) tech/crypto company OR by being part of the real estate bubble itself (which as I said, I see as starting to take shape around 2016 or so). I'm talking house flippers, mortgage agents, home stagers, drone pilots, you name it, So many jobs were tangential to the sale of assets in a low rate environment. So if mortgage rates stay high AND the national market is eventually flooded with inventory (as I expect, but not all at once) then LOTS of people who previously benefitted from the inherent distortions caused by the Fed's low-interest-rate induced bubble itself will probably be forced to find other employment. And I suspect that the next round of employment for many of these laid-off people may line up much more with a "REAL" 2016 standard of living rather than with a 2019 standard of living, which means housing costs may in fact revert much closer to 2016 than 2019, in my view. This is all assuming no massive government intervention, which we can all expect to happen of course, even if Trump comes back in 2024. We have seen that the government will let people squat indefinitely before allowing another mortgage/foreclosure crisis to happen "so soon". But I think they will lose the war eventually and we'll see 2016 prices in many places, by like 2026 or so. The only way this doesn't happen is if inflation makes wages go up 25-30% and then the home pricing suddenly makes sense (very doubtful that happens in my opinion, since we don't produce hardly anything of value in this country anymore and need constant monetary devaluation just to make it "grow"). But as you say this is all just my opinion :-) BTW, I have a significant stake in So Cal property and several equity positions will be harmed greatly if my own prediction comes true, so it's not wishful thinking on my part, it's my real view.
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  2. With regard to "certain areas", I want to add an interesting wrinkle to your very valid point....while I personally think the whole "work from home" thing will prove to be a heavily overstated phenomena over time, I think it might just contribute to changing the old "pricing domino effect", at least a bit. I'll try my best to explain what I mean...In the past, if the builders misjudged demand and built too far away from the "actually in demand" area, it was a HUGE problem for them, as literally no one wanted their wares. But now, due to more remote work than in the past, any type of "sale" in the more remote subdivisions could in my view better succeed at drawing in bargain hunters, which in turn may, like a domino, put downward pricing pressure on the other subdivisions and eventually the "actually in demand" neighborhoods, in a way not experienced before. People used to poo-poo the idea of very far away subdivisions helping to "solve" a given city's housing shortage, but maybe this time around those far away homes will in fact contribute a lot more to solving the inventory problem, due to the remote work phenomenon. Just a thought.
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