patrick.net

thomaswong.1986 says

relative to 1970s prices 1980's prices ? or peak 1990s prices ? they are still way down...

Way down from what? 70s, 80s or the ludicrous prices they reached at the peak of the bubble? That isn't the mean. Why are you spending your time talking about reversion to the mean but when convenient to you comparing current prices with an extraordinary bubble?
And if you know so many people in Tokyo, what are the current prices and why do you think they are a good example to compare to the US? Homes are still hugely expensive there. Just not as ridiculous as they once were.

thomaswong.1986 says

SubOink says

I am gloating at the destruction of others??? Where do you read that?

you dismiss home prices never correct to long term mean...which they do!

I dismissed prices going any lower when I bought in 2011 (obviously). You were one of many claiming they would go down based on your shiller graphs. YOU WERE WRONG. What good is your long term theory when that could be in 50 years from now when I am dead. Or in 30. Or in 20. My house will still be a whole lot more than I bought it for.

FYI, I would be perfectly fine with your 2-3% increase idea because once again its about monthly payment for me. It really doesn't matter what my house is worth. It's cheap on a monthly basis. I do not need 20-30% increases but if they happen I take it. Securing a home equity line for emergencies is a nice thing to have. I am not gonna lie. And for that prices need to go up. But its not necessary.

Waitingtobuy says

I would have been happy with my place going up 2-3% per year. I attribute the increase not in being an oracle, but good fortune again, like the period 1999-2008.

Yep. Me too. Congrats! May the force be with us :)

SubOink says

I dismissed prices going any lower when I bought in 2011 (obviously). You were one of many claiming they would go down based on your shiller graphs. YOU WERE WRONG. What good is your long term theory when that could be in 50 years from now when I am dead. Or in 30. Or in 20. My house will still be a whole lot more than I bought it for.

what has been true for 50 years will be true today thats what measures bubbles then, now and way into the future..... there is nothing wrong with Shillers conclusion.. The fact prices have gone down validates his conclusion.

SubOink did time it well. I was about to pull the trigger at the same time.

I've almost completed a cycle of saving which will allow a cash purchase in a normal part of the country. Job is portable.

What people here dont care about is Family. No kids are going to be able to stick around, so if you plan to have a long term relationship with your kids and live in this horrible worst-quality-of-life I have ever seen place, good luck and win the lotto, because if you had to time the market to hang on here that is not a sustainable thing. At all. Who wants to live where there is no middle class and just lucky people who think they did something other than being at the right place and the right time.

Luckily I have lived in 6 other states, and anyone who thinks the slightly higher salary in SFBA is worth it, even with RSUs that work out, is seriously deranged. And your kids will have tats, purple hair and probably hate you due to the sewer system schools , even GreatSchools rated @ 10 which I have experience with.

I have fleeting times of melancholy, but my life's plan the SFBA dont work. Its just easier to keep a job and get new ones here, but its not worth it.

If you arent in tech here, you have to be mentally ill to stick around.

SubOink says

My house will still be a whole lot more than I bought it for.

And your progenies will suffer that. Particularly when cost of living outpaces both inflation and salary increases. Whats the point of ensconcing yourself behind a virtually area wide gated community? Whats the benefit of being here anymore? 10 years ago? it was ok. 20? it was majorly nice. more, dream. Lately, its a bigger-fool-than-I theory keeping things going.

Lots of companies are investing in tech centers outside this region. 150K as engineering minimum wage wont last much longer. Its breaking backs. That and the best and brightest around here are busy using that mindpower to shovel ads in people's faces by spying on them.

thomaswong.1986 says

there is nothing wrong with Shillers conclusion..

nothing wrong except that's an abstract conclusion which is completely useless for anyone trying to make a decision NOW and HERE. If you are not buying because mr. sheller says..hey, wait, prices will come down to the mean...you may rent for 20 years until that happens and that advice was for the dogs then.

Mick Russom says

SubOink did time it well. I was about to pull the trigger at the same time.

its never a question of when, but how much ! hang out with your sales people and learn to price negotiate (haggle)... understand the long term prices of what your looking at .. whats the worse a realtor will say to you today... Prices NEVER go down... REALLY ! would you buy that nonsense even today !

How much ? you have all the tools on the internet today.. look up past prices on same/similar what it sold during the mid 90s (most rational prices) and extrapolate with inflation for todays prices...

Bingo !

And there is your number as starter.. and you have Robert Shiller's
research to back you up.. Its that simple...

SubOink says

NOW and HERE. If you are not buying because mr. sheller says..hey, wait, prices will come down to the mean...

Learn to price negotiate...
Learn what the historical sales prices were for the past decades...
Never disclose your financial backing and amount your looking to buy..
Never disclose your wealth or where you work... (dead giveaway)

be prudent ! ...

at the risk of being clawed by perma-bears and accused of being an opportunist capitalist, i too would like to congratulate you on your 3rd year of real estate appreciation. now back to my corner of shame.

I'M SORRY I AFFORDED A HOUSE!

I'M SORRY I MADE PRICES WENT UP!

I'M SORRY I AFFORDED A HOUSE!

I'M SORRY I MADE PRICES WENT UP!

I'M SORRY I AFFORDED A HOUSE!

I'M SORRY I MADE PRICES WENT UP!

I'M SORRY I AFFORDED A HOUSE!

I'M SORRY I MADE PRICES WENT UP!

He said himself, that as a renter, the high prices had him and his wife "destroyed"

Now he got his, and prices are back up, so its I got mines fuck y'all for not having.

Even more mindblowing is these people see their paper values of "wealth" going up, and are all like "yea!,,,fuck yea! Look at me I'm king shit"

In the end, face is face, and its what's for dinner

Thomas says.....
there is nothing wrong with Shillers conclusion.

Strategist.....
Except for the fact he has never been right.

Mark D says

at the risk of being clawed by perma-bears and accused of being an opportunist capitalist, i too would like to congratulate you on your 3rd year of real estate appreciation. now back to my corner of shame.

I'M SORRY I AFFORDED A HOUSE!

I'M SORRY I MADE PRICES WENT UP!

I'M SORRY I AFFORDED A HOUSE!

I'M SORRY I MADE PRICES WENT UP!

I'M SORRY I AFFORDED A HOUSE!

I'M SORRY I MADE PRICES WENT UP!

I'M SORRY I AFFORDED A HOUSE!

I'M SORRY I MADE PRICES WENT UP!

I forgive you.

Sorry suboink,,,,I bought in 07. Now renters pay my nut and I stay at my girls. For free. Well,,,,I pay her with my nuts

A real horse trader, can find a deal in any market.

My landlord at the time was levered and sweating it. They listed the place mid 07,,,,couple quick price drops. Then I swooped in and grabbed it 30% less then comps. But if you remember aug 07, financing was drying up and things were really going sour.

That's right. I was destroyed and LEARNED from it so that it doesn't happen again. When the time came, I pulled the trigger. You could have done the same. Had you not listened to the crowd here.

I am not the reason why things are f-ed for ya. YOU ARE! And until you realize that you will never put yourself in the right position to get lucky. You are the type that blames everyone around you for things not happening in your life.

------------

I also think for myself and would never "listen to the crowd" when it comes to something so unique and important as buying a house. Well, maybe id listen to what the crowd is crowing so I can make sure to be on the opposite side of the crowded trade.

Way too simply of rent vs buy arguments here. If buying was so affordable...why millions of foreclosures and crying to obama for assistance? P.net was about buying reasonably...

Sometimes renting is better, most of the time you save a lot by renting. Just dont go renting a mansion and wonder why you aren't saving.

errc says

A real horse trader, can find a deal in any market.

Bu not everyone is a horse trader. So you should be set then why so mad?

errc says

Well, maybe id listen to what the crowd is crowing so I can make sure to be on the opposite side of the crowded trade.

Exactly - and the opposite side in 2011 was BUYING :)

With respect to revision to the mean crap,

You can buy it or sell it, but you must understand the logic behind it.

First, that graph is benchmarked to the magical year 1980. Who is to say 1980 is all magical and revert back to that year. Why not 1989?

Secondly, revert to the mean theory naturally means there are no transformative changes, which is impossible. An easy one is mortgage interest which was around 13 percent in 1980 vs. 4.25 today. There are plenty of transformative changes favorable and unfavorable. If you rely on revision to mean, you are living in the movie pleasantville, not reality.

SubOink says

errc says

A real horse trader, can find a deal in any market.

Bu not everyone is a horse trader. So you should be set then why so mad?

I'm not mad. Its just super fucking crass to be here gloating about gains in house prices, when, as mick rossum pointed out, come at such high costs. Even tho. I own I root for housing costs to go down, because I understand that higher housing costs make us all poorer

Call it Crazy says

Strategist says

Thomas says.....

there is nothing wrong with Shillers conclusion.

Strategist.....

Except for the fact he has never been right.

So, does that mean Shiller's wrong AGAIN???

Case-Shiller: Home prices up, but boom fading

The home-price index covering 10 major U.S. cities increased 13.6% in the year ended in October, according to the S&P/Case-Shiller home-price report. The 20-city price index also increased 13.6%, close to the 13.7% advance expected by economists.

http://www.marketwatch.com/story/case-shiller-home-prices-up-but-boom-fading-2013-12-31?dist=lcountdown

His conclusions of a fading boom are incorrect.
Remember, Schiller is a brilliant professor, but can they make money with their forecasts? There is a saying about professors..."if you are so smart, why aren't you rich"? It seems they know everything about everything, except, how to make money.
I doubt if his money ever came from his bad forecasts.

thomaswong.1986 says

SubOink says

so what should a house that cost $50k 1970 be sold for now in your book?

plus inflation....

as was the case for LA and SFBA...

what you bought in 1975 or 1980 was same plus inflation by 1995...

@thomas - I'm with you that I think prices are way too high, but I'm also realistic that the inflation benchmark in all these housing graphs is likely understated given how our beloved gov't (most recently under Clinton I believe) has been changing their methods for calculating inflation, which is interesting because house prices start really breaking away during that era (late 90s). Coincidence? Maybe that green line should be sloped up quite a bit higher.

SubOink says

errc says

Well, maybe id listen to what the crowd is crowing so I can make sure to be on the opposite side of the crowded trade.

Exactly - and the opposite side in 2011 was BUYING :)

Right on! You would think that people would have been thrilled when prices fell 2008-2011 and would have pulled the trigger like they would have on many other things that are used for consumption. Instead, they got greedy and thought that prices would fall further and not only that but they betrayed their incorrect view that primary residence is more about investment than consumption.

debyne says

Coincidence? Maybe that green line should be sloped up quite a bit higher.

I think that's an excellent point.

SubOink.

Thanks for the update. We need to see the world for what it is, not for what we want it to be. This is what drove me to buy last year. I found a good house at a fair price that met my needs / wants, and was within my budget.

But it was after YEARS of looking and MONHTS of hard fought negotiation. Deals are out there - but with cash buyers / investors having an implicit edge, they are getting harder and harder to come by.

So I'm not going to gloat, and I'm not going to say that rising house prices are a good thing simply because I own now. At the end of it all we need to be on balance. Prices seem to have caught up to where they would have been had been no bubble, only inflation - but wages haven't risen in real terms.

FWIW I expect that to change over the next decade and we should (finally see real meaningful wage growth on the go forward basis).

SubOink says

debyne says

Coincidence? Maybe that green line should be sloped up quite a bit higher.

I think that's an excellent point.

Even an impotent squirrel busts a nut once in a while. :)

dublin hillz says

Instead, they got greedy and thought that prices would fall further

yep!

Thank God you decided to stop following the completely wrong predictions of the doom and gloomers in here. Most are probably broke haters who cant stand seeing other people making wise financial decisions anyways while their 40+ Loser asses are still living at their parent's house. High 5 SubOink. I did the same thing. I bought in March of 2012. If you have the time read my posts. I was completely on from the start. I bought for $43.5k and now my place has been assessed, in the medium to high range, at $130k+. Thank you Jesus and God bless all of you. Also. HAPPY NEW YEAR! weeeeeeeeeeeeeeeeee

postbubblesucess says

completely wrong predictions of the doom and gloomers in here.

Jez! There is a reason people run the numbers, perform financial analysis, and look at trends and have a understanding when things are way off from the norm can expect a correction... Its not about "Doom and Gloom".

As such not all markets have corrected as they should. They are still pending. Its no wonder some come back here to "Feel Good" about their purchase knowing there is still downside risk.

Had you priced it at 1996 plus inflation, you wouldnt be so worried as much. Your downside risk would be far far less, near zero.

postbubblesucess says

I bought for $43.5k

lol I think I have that much in my wallet.

Clearly the bubble in your area was on a VASTLY different scale than most of the posters here.

thomaswong.1986 says

Its no wonder some come back here to "Feel Good" about their purchase knowing there is still downside risk.

You still don't understand that its not about price but monthly payment. I have no downside at all because my low monthly payment is locked in.

If I was renting I would be very nervous thinking...when is my rent going up again and can I afford it? (And rent for my house would be $1000 more a month to begin with...)

postbubblesucess says

I bought for $43.5k and now my place has been assessed, in the medium to high range, at $130k+.

Is this a joke? What 1bdr in Tirana has to do with houses in SF Bay Area?

SubOink says

You still don't understand that its not about price but monthly payment. I have no downside at all because my low monthly payment is locked in.

Comical... do you not price all your other purchases and compare, bargin and say no, another place, i saw it cheaper.. of course you do. Financing a purchase has no bearing on prices and therefore inflating prices ... you been duped !

Just like in 1989 to early 90s prices also fell as interest rates fell...
what happened, so payments as a measure were not a factor.

"not about price but monthly payment" that was ..2000 to 2008.. and currently is the same talk Realtors keep blowing...

thomaswong.1986 says

Comical... do you not price all your other purchases and compare, bargin and say no, another place, i saw it cheaper.. of course you do

Everybody HAS to live somewhere - no way around it

so when shopping around you compare what it costs to rent a place to what it costs to buy a place.

Exaggerated Example to make a point: lets say they had a 1000 year mortgage which would drop my payment to $50/month vs $3500/month rent - would you not take that over renting it???

Let's say it together one more time: It's about monthly cost!!

(not sure what you don't understand, it seems you have been duped...wasting money on rent while hoping prices come down...how has shopping around for a better deal work out for you? - you will never pull the trigger in your life)

SubOink says

Everybody HAS to live somewhere - no way around it

so when shopping around you compare what it costs to rent a place to what it costs to buy a place.

sure, but even rents go down. there is no escaping ... you have to look at price trends. it would be foolish to think a perm jump in prices will not correct downwards. ever since 1945 home prices adjusted for inflation have been flat ....

no, you dont have to hold your home like some Casino / ATM !

Call it Crazy says

I think I heard that before... let's see..... 2007 or 2008....

Probably here at Pat.net. That was the best argument against buying in 2007 or 2008. The buy/rent ratio was WAY out of whack, especially in CA. If you analyzed based on monthly payment, you would NEVER have bought in 2007

Call it Crazy says

SubOink says

Let's say it together one more time: It's about monthly cost!!

I think I heard that before... let's see..... 2007 or 2008....

Except that in many cases the monthly costs were still well above renting. The rationalization was the principle part of the payment was just a type of forced savings. Which it would have been except the crash caused such "savings" to sublimate like frost on a warming spring of 2009 morning.

That and Buy Now or be Priced out Forever!

Call it Crazy says

SubOink says

Let's say it together one more time: It's about monthly cost!!

I think I heard that before... let's see..... 2007 or 2008....

and even further back in 2002 to 2005... as prices doubled in a few years.

Call it Crazy says

SubOink says

Let's say it together one more time: It's about monthly cost!!

I think I heard that before... let's see..... 2007 or 2008....

Thats a moot point because what was true then was not true 5 years later. Things change. Sorry. You have to re evaluate things.

2007: I rented for half what the mortgage would have been - made no sense to buy

2011: I bought for the same costs as renting, made sense to me to buy

2012: Due to refinance my mortgage dropped $350 ish/month at the same time rents have gone up = buying has paid off to be much cheaper than renting - ok, that was lucky. Who knew?

2013: rents have shot up even further and now I am $700-1000 below rent for owning.

time flys - things change - don't get stuck in your way of thinking - be objective

SubOink says

Exaggerated Example to make a point: lets say they had a 1000 year mortgage which would drop my payment to $50/month vs $3500/month rent - would you not take that over renting it???

1000yr mortgage would not drop your payment to $50/month unless the interest rate is 0% and the town cuts property tax to about 1/10 of where it is :-)

The key is comparing interest payment+property tax + insurance + water bill + repair bills to rent . . . then see if the initial payments can be justified for the cash flow difference, with some forward projection.