I really don't want to steer away from my blog focal point, which in Networking technologies. This topic is most discussed in office and in many social gathering. I would like to record my 2 cents with this post,
DISCLAIMER: I am not an economist OR Banker OR Real-estate agent. This is not my answer to a Quora question.
US house price goes through cycle your purchase point the cycle decides your yield. IMO, at this moment [July, 2016] ]US economy is not ready for another recession. Do not expect 30-50% correction in home prices. Economy mends (oct-dec 2013 house market index corrected, may-july 2016 index corrected), It's really hard to find these drop points. Given the housing demand in bay area, It takes about 3-5 failed offer to get one successful accepted offer.
House rents have gone up disproportionately with individual income. 2BHK apartment, which costed $1550 a month in 2010 is at $2550 today. Give Interest rates is still at an attractive rate. For the same floor plan mortgage is less than rent, since earning on cash is 1% best case.
Few facts to substantiate my view on housing bubble timing,
Recovery time (Down trend to the beginning of appreciation) gives a good hint about Market explode time (continuous UP trend to down).
- 2008 recession affected housing market by 60% (CA value, not national)
- Other corrections .com (2000), underwriting collapse (199x) impacted only by 10%
- 2007 to 2011 => Down trend, we are currently in up trend 2011 to 2016. 3.5 yrs Vs 5 years
Factors affecting house market,
- Bubble needs Irrational fraudulent and excess greed – IMO, Three factors can make this happen: Tech valuations irrational, Post Brexit and politics
- Effect of TECH valuations footprint is limited to select pockets
- FED support to housing market. Owning a house is relatively cheaper than renting one.
- 5 years of UP trend is too short for a bubble to form.
Find a value for money place. Look at your need, you don’t need high school rating of 10 with elementary starting kid.