Q: Why is it so hard to buy at the top?
A: That’s how you know it’s the top.
I just heard that J.P. Morgan is calling its people back to the office, so maybe vertical cities are not dead yet. My bet runs the other way, and, doubling-down, that employers incur liability by requiring attendance in dangerous locales.
Cinemas and shopping malls were dying, anyway. So, too, cities? A way of thinking of this urban exodus is simply as a matter of economic obsolescence: What is generally the oldest and most decrepit segment of the housing stock is being abandoned.
That pushes up prices in the suburbs, don’t it? “Gimme land, lotsa land, under smoggy skies above – and don’t dance so close to me!”
I thought we were pushing the top of this market turn before Coronavirus hit. That foreign import was killing big cities even before the rioters started burning them down. Accordingly, there won’t be a top in Phoenix for a while, where March of 2020 may be the high-water mark for decades for many great American cities.
But the thing about market tops is, they advertise themselves: Rapid price jumps, low inventory, bidding wars, waived contingencies, escalator clauses, solemn pre-dawn ungulate sacrifices, etc.
Again, not there, but very much here – and everywhere suburban parcels abound.
Here’s another characteristic of market tops, one we were all very well paid to overlook in the housing bubble of this century’s toddler years:
The real estate market tops when even the most marginally-prepared borrowers compete for and get mortgages.
What’s a bubble? It’s when the bike messengers and coffee shop waitresses come down to Wall Street with their mattress money. Wait, that’s a dated image. How about this? A bubble is when lifelong renters become very temporary homeowners. No, that was the last time. Try this: A bubble is when forty-year-old adolescents emerge from mom’s basement just long enough to sign socially-distanced closing docs in a title company’s parking lot.
My point would be that, as with the Community Reinvestment Act fiasco, a whole lot of folks who may not have done a lot of homeownership prep-work are suddenly obliged to make a payment once a month – and to trim the trees and bushes every now and then. Will they follow through? We’ll see…
It kinda stinks the same way, though. What do gonophs – predators – do when they know the market is going to turn? They palm their soon-to-be-worthless assets off onto messengers and waitresses, that’s what. For top dollar.
There is still a huge amount of Wall Street money in the suburbs. You’ll know that suburban markets have actually topped out – even against demand engendered by both the urban exodus and belated first-time buyers – when the hedge fund players bail out.
Is there a bubble bursting beyond that point?
My answer would be to help your new neighbors learn how to follow through.
