Grand Rapids, MI -- (SBWIRE) -- 06/26/2013 -- For those people who are too busy to stay on top of events in the world's economy, financial advisor Dennis Tubbergen lends a helping hand.
Tubbergen is a financial advisor, author, radio show host and CEO of PLP Advisors, LLC. Tubbergen does his best to give brief updates when it comes to some of the latest significant events in U.S. and world economics and politics and how these events may impact the average American.
Whether people enjoy his monthly newsletter at www.moving-markets.com or his blog at www.dennistubbergen.com, Tubbergen can be counted on to share his viewpoints and opinions. On June 20, 2013 his blog was titled Housing Bubble, Take Two?
"The housing bubble and subsequent bust of 7 years ago might seem like a distant memory given the stories of rapidly increasing housing prices and bidding wars and fights over properties," began Tubbergen. "Is the housing market fully recovered? Or, is this just a repeat of the last bubble?"
Below he quotes from an April 5, 2013 article in The New York Times.
Bidding wars sound almost quaint. These days, the only way for would-be buyers to secure a home, it often seems, is to offer all cash and be ready to do so within hours, not days.
The bursting of last decade’s housing bubble feels like ancient history here, where first-time home buyers are competing with investors to get into single-family homes with prices approaching $1 million.
“It’s everyone from a kid out of law school to an investor from China, walking around with thousands to spend,” said Kameron Eliassian, a Los Angeles real estate agent. “I don’t know where it’s coming from, and I don’t care. Just show me proof that it’s there, and we’re good.”
After saving money for years, waiting for the residential real estate market to hit bottom, buyers all over the country appear eager to get back in, lured by low interest rates and the prospect of a good deal.
But with the number of homes for sale at historically low levels and large investors purchasing thousands of properties, buyers are facing a radically changed market and prices are quickly rising.
The percentage of homes bought with cash has shot up in many markets across the nation. Nearly a third of all homes purchased in Los Angeles during the first quarter of this year went for all cash, compared with just 7 percent in 2007. In Miami, 65 percent of homes sold were for cash deals, compared with 16 percent six years ago.
The prices on all-cash deals are also rising significantly. In Los Angeles, the median price on an all-cash home this year is about $351,000, compared with $230,000 in 2009. Over the same period, the median price over all increased to $410,000, up $85,000. In fact, last month, home prices in Southern California hit their highest level in the last five years.
All-cash buyers, typically investors eager to renovate and quickly resell or rent out homes, are making it more difficult for first-time buyers, who typically rely on mortgage loans that can take weeks or months to materialize. More California homes have been flipped in the last year than in any year since 2005.
"Bubbles can be identified when irrational activity exists," explains Tubbergen. "This article describes prices increases and bidding wars that could only be described as irrational in my opinion."
Tubbergen goes on to say that while shadow inventory is falling and houses in many parts of the country are selling like beer at a NASCAR race, he would proceed with caution.
"It’s probably a good time to sell a house but not such a great time to buy one," notes Tubbergen. "If the Federal Reserve stopped buying mortgag-0 backed securities each month at their current frantic pace and the U.S. government was suddenly not involved in the mortgage business, I believe the housing market would look a lot different than it does presently."
So what is Tubbergen's bottom line here?
"Look for a sequel to the first housing collapse in the future," he concludes. "The only good news is that the sequel will probably be less dramatic and less interesting than the first. But, that’s the nature of sequels."
To read the blog in its entirety go to http://www.dennistubbergen.com and select his June 20, 2013 entry.
Tubbergen’s syndicated radio show can be heard on metro Michigan stations WTKG 1230 AM and WOOD Newsradio1300 AM and 106.9 FM.
About Dennis Tubbergen
Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in Grand Rapids, Michigan. Tubbergen is CEO of PLP Advisors, LLC and has an online blog that can be read at http://www.dennistubbergen.com. To view Tubbergen’s latest Moving Markets? newsletter, go to http://www.moving-markets.com.
The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.