Saturday, August 8, 2015

Housing Bubble 2.0: Some Things Never Change

home for sale
As someone who lives in the Bay Area, I can say from experience that I am absolutely sick of the housing bubble. While this is a national problem, it's especially bad in America's major metropolitan areas. You can't buy a house out here without selling your children into slavery. And forget about rent. In places like Oakland, arguable one of the crappiest cities in America, the rent has doubled in the span of 5 years to an average of $2800 per month. The cost of shelter has surpassed the ridiculous heights of the last housing crash, and the average wage earner in California can neither afford to buy, nor rent.

And yet, the bubble continues to grow, and where it ends, nobody knows.

Recently in Venice, California, someone had the gall to price a 714 square foot house for $1.1 million. That same house sold for $450,000 in 2010, and $30,000 in 1982. Inflation doesn't have anything on the housing bubble.

And who could forget the man who half jokingly placed an ad to rent out a tent in his back yard in Mountain View, California. He managed to get an offer for almost $1000 a month.

The one that really takes the cake for me, was a small house in San Francisco that was recently under contract for just over $1 million. There was only one small problem with the place though.
Located in the city's Richmond District, a fairly desirable neighborhood, the home has one very undesirable flaw: In April of this year, the mummified corpse of the home's former owner was found inside,wrapped in a blanket.
The woman, named Anna Ragin, had reportedly died five years earlier, but her 65-year-old daughter hadn't told anyone that her mother's body was still in the home...
...The home is apparently in a very sorry state. According to a piece written by Bob Calhoun for SF Weekly, "A fresh coat of paint on the walls and scrubbed floors couldn't quite chase away the smell of toxic mold and urine from the corners of the bedroom and kitchen."
When you're not in a housing bubble, those kinds of houses don't sell very well, or at all in some cases. The stigma (and supernatural implications) of a house that had a mummified corpse in it, is enough to keep most buyers away. And that's without it smelling like piss and mold. But in a market like this? You take what you can get.

It's gotten so bad that some people are trying to get creative with their housing, by living in shipping containers.
Luke Iseman, 31, leases a 17,000-square-foot warehouse in Oakland in which he has built 11 micro residences out of cargo containers, Bloomberg reports. He charges $1,000 per months for each of the makeshift homes, which aren’t legal, strictly speaking. Iseman and his “cargotopia” (as he calls it) have been chased from two other locations by the authorities. But that hasn’t dampened his spirit.
“It’s not making us much money yet, but it allows us to live in the Bay Area, which is a feat,” Iseman told Bloomberg. “We have an opportunity here to create a new model for urban development that’s more sustainable, more affordable and more enjoyable.”
On Iseman’s website, he lays out the cargotopia manifesto: “We're living in a solar-powered, sustainable home we built for less than the cost of a car. Chickens in the yard, fast internet, occasionally-alive gardens, and providing affordable homes for our friends: it's getting harder and harder to consider our sustainability a sacrifice.”
Isn't it interesting that if you try to live self-sufficiently, and within your means, you get "chased off" by the authorities? That's the real tragedy of the housing bubble. You can't look at the absurd housing prices and say "screw that, I'd rather live in a steel hut." After all, terrible houses still sell for mansion prices, so why not pay less for what is less. Unfortunately there aren't a whole lot of other options that won't get you into trouble. You can either sell your organs to live in a shack, or you can go homeless. There's no in-between.

Obviously, none of this is sustainable. This bubble was largely fueled by the Fed's money rain, which means the market is flooded with inflated dollars. While housing prices have soared, wages are stagnant and homeownership rates have fallen to record lows. It's only a matter of time before the housing market crashes again, and like clockwork, all these people who bought houses over the past few years will be just as shocked and bewildered as they were in 2008. Some things never change.

Delivered By The Daily Sheeple

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