@Dan Grassi
Those are some observations that I was based:
1. A couple of my debt investment in the luxury single house side are in the process of foreclosure mainly due to the rise in interest rate;
2. The housing market cycle in the Bay Area is about 8-10 years and we are right about there;
3. Housing market usually peaks roughly at the peak of the more broad economic cycle, which I envision ending some time this year, based on studies of Elliott wave and some other technical indicators;
4. Specifically in the Bay Area, unemployment is probably more important than the economic recession. I am seeing some negative effects from the Trump administration policies, which may cause the high-tech companies to perform worse, causing unemployment rate to tick up;
5. The crackdown of Chinese government on moving funds out of China is certainly going to affect the housing market, in particular in California. I have observed much fewer cash offer deals than previous years;
6. The housing prices in California and in particular in most of the Bay Area and some in LA, are becoming so unaffordable (simply just from the income to mortgage ratio) that any small increase in interest rate can move a lot of people away from owning a house, effectively slow down the upgrading motion chain (sell a cheaper house to buy a more expensive one) from bottom up;
7. There are a lot of people, including myself, have been enjoying the low interest rate ARMs and it is about the time for people to refinance either to another ARM or fixed. This would become a lot harder to do, effectively slow down the upgrading motion chain from the top down.
I probably can squeeze a couple more; but I think these are enough for me to be cautious. Please share your thoughts if you believe otherwise.
Best,
-george
