I am of the belief that because of low interest rates and the ever increasing mountain of debt countries, corporations and individuals have taken on over the past 10+ years we are in a giant bubble. I believe the governments method of trying to fix the great recession was a way of kicking the can.
Like I’ve said. I could be wrong and in all honesty I have been proven wrong for the past nineteen months. In December 2015 I screamed sell and I looked like a hero when the market tanked in January. But then the powers that be decided that it wasn’t time and the market and most asset prices like houses have gone straight up.
What’s wrong with going straight up you ask? It’s not a natural progression. Personal incomes and growth are not increasing at the same rate and that means a lot of people are getting FUCKED in that equation. Notice all the homeless encampments around LA? Know anyone that owns a brick and mortar store? Know anyone that needs to drive for Uber or rent out part of their house to stay afloat?
The other side of the coin is that the country is on the mend. GDP is increasing. Inflation is under control. Jobs are scarce and new technologies and innovations are increasing our quality of life. Everything is awesome! So why wouldn’t the trend continue?
The median price of a home in Lost Angeles has DOUBLED in five years. How many people doubled their income in that same time frame? That’s not normal. We’ve been here before.
They say a broken clock is right twice a day. So am I crazy for thinking this will not end well? Am I the broken clock that will eventually be right?
I have a down payment for a nice home in LA. It makes ZERO percent interest while the prices of homes escalates at 5-10% a year. I am losing. But I cannot afford to lose this money. Maybe losing several hundred thousand dollars is a risk you are willing to take. I am not. I will over-pay for rent and sit and wait. Will I get priced out of SoCal completely? I hope not, but it’s possible because at some point it doesn’t make sense for me to not take this enormous life changing amount of money to a state where my quality of life will increase 10X.