patrick.net

I don’t think that owning a piece of prime land in SF can hurt you in the long run (assuming you can afford it)…

True enough. But the psychological shock of a multi-million "paper loss" can be difficult for those who can afford.

Face Reality, I was not directing any anger towards you. Thanks for being here.

OT

See this great article:

In come the waves

Jun 16th 2005
From The Economist print edition

The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops

Great article and their are wonderful graphs showing the bubble in the US, Britain & Australia is actually bigger than the one in Japan.

http://www.economist.com/finance/displayStory.cfm?story_id=4079027

Losses on paper don’t hurt any less!

They may hurt more because you cannot deduct paper losses.

They may hurt more because you cannot deduct paper losses.

Well, if they are marked-to-market...

Again, I think people that either think RE will tank or keep going in the Bay Area who are in the middle class, and especially working class need to evaluate the reality of what the area has become. Sure- the quirks include nice weather, access to locations like Napa, the Sierras, and the ocean along with views of the Golden Gate. Maybe a few times a year you go and see those things. But the reality is that you must sit in traffic, book campsites, resorts, and events months in advance, and pay a LOT to do many of those things( like over $350 a night at a crappy lodge in Yosemite), and pay out the rear for the rest.. EVERY DAY. add to the fact that for those of us locked out of the market having to spend every day praying hard that by some miracle, housing prices will crash beyond control, which simply means the millions of us waiting for the last 4 years will jump, and hence keep the prices expensive at the very least. Is it worth it? Seriously. I think about the fact that had I moved to another city, like Dallas, Austin, Atlanta, Nashville, or any number of other unique and interesting cities, I would be way further ahead in life than I am now- instead of renting a house in an area that has a ever-stagnating salary base.
We can debate all day long. I have my own opinions about housing, which coincides with the general feel of this forum. But I'm about to say enough is enough.If anyone feels they simply must HAVE that 600k condo, then they can have right at it, and if they either retire at age 40 to "cash out" or become doomed to a life of financial failure, I don't care. It's really about what is good for me and my family. The Bay area is not a good place for my family, and when my alloted 3 year waiting period is up, and I decide whether or not the bubble has popped enough to afford a place, then I'll make my move.

As someone who lives in Alameda,there does seem to be a very distinct slowdown. There are a LOT of houses that have been up for sale at least since September, or even before. The house across from us, a victorian priced at 850k has gone up, then "pended" then gone down only to go up again. This has happened at least 3 times already. I wonder who owns it and if they bought it as an investment, because the price has gone down only 1000 bucks to 849k. Still other houses up and down central Ave go up and down continually- all with either "sale pending" or something like that. Then you assume it has sold only to see it go back up for sale again. There were 2 houses that were nothing special- ugly brick houses for 600k or more than were up for sale forever, said they sold, and now sit vacant. Who knows what the hell is going on. I have yet to see any real people move into anything yet.

which simply means the millions of us waiting for the last 4 years will jump, and hence keep the prices expensive at the very least

Not really. When the market tanks people will be afraid to buy. It is simple psychology.

The only people I know that aren’t bullish on RE are on this blog.

Very true. All housing bears here can be "absorbed" by a single subdivision.

nonadtoons says:

"The Bay area is not a good place for my family, and when my alloted 3 year waiting period is up, and I decide whether or not the bubble has popped enough to afford a place, then I’ll make my move."

Good assessment.

I made my move 7 years ago to Phoenix. I saw the handwriting on the wall back then. I grew up in San Jose.

I'm thinking about making one more go at it before I hit 40. Just for old times' sake. To see if I can recapture a bit of the old Cali magic.

I fear that it's probably too far gone, though.

Either way you slice and dice it. We're friggen' screwed royally.

Good luck soldier!

She says she is too busy to watch the carnage, but might swoop in when it’s near bottom, but only if it won’t cost much more than her (rent conrtrolled) rent.

I doubt it will be close to the controlled rent.

Probably not. Rent control is rather fascinating. In San Francisco you can have landlords subsidizing the rents of people with very high incomes. I think they have changed that in NYC. I believe rent control has been lifted or at least adjusted at luxury buildings.

I still think that rent control is one of the causes for the lack of affordable housing.

Perhaps your friend can buy an income property near the bottom and have that cover her rent. ;)

I could have made a killing on the NASDAQ in 2000/01 (if wasn’t so busy covering margin calls).

I have a friend who got out just before the peak. I was telling my wife about this amazing person.

Then, he told me he was busy covering margin calls because he re-entered after the initial drop.

Some 1-bedroom condos which sold for $510K a year ago, are now selling for $620K. That’s an increase of over 20%! This is an extreme example, but prices overall are significantly higher than they were a year ago.

CAR (car.org/index.php?id=MzU4OTk=)

San Francisco Bay Dec 2005 median price: $712,940
Percent Change in Price from Prior Month (Nov): -1.4%
Percent Change in Price from Prior Year (Dec 04): +8.2%
Percent Change in Sales from Prior Month: -9.8%
Percent Change in Sales from Prior Year (Dec 04): -14.2%

Rents have gone up similarly. A 2-bedroom condo that I saw in North Beach which rented for $2200 a year ago is now renting for $2600.

See patrick.net/ for graph of current average asking rents on 1/2/3 Bdms. Link on the left also breaks it down by city. I just don't see any huge spikes there.

Again, anyone can use an isolated example/anecdote that supports either the bull or bear position, but the aggregate market trends are currently on the (mildly) bearish side. I believe this downcycle will play out like all the others --slowly. Painfully, excruciatingly slowly. But once the Titanic has started to turn, there's no stopping her.

Apparently a lot of high rise buildings have always had large footprints because of the economics of elevators, but recently those costs have come way down, and it is possible to build narrow, small footprint highrises that don’t block much view, are not wind channelers, don’t block much sun and are aesthetically pleasing.

I agree totally. I love high rise buildings. We need to make sure that they are built on sound foundations though.

Wasn't Towering Inferno (staring OJ Simpson) set in San Francisco?

Painfully, excruciatingly slowly. But once the Titanic has started to turn, there’s no stopping her.

It is happening more quickly than I thought.

"Look up “Robotic Nation” and the writings of Marshall Brain (yes that’s his real name) to see how some cornucopians have it all worked out - the robots are going to do the work for us! In their Future, there will be no more jobs for the working class and the planet will go to hell (because of all the energy and materials needed for robots) but hot damn, it’s gonna be great, the robots will work for us!" --Sunnyvale Renter

Hey Sunnyvale, I recommend to you the book "Player Piano" by Kurt Vonnegut. It is about exactly the scenario you describe above and all of the negative connotations that come with it. An interesting read:

http://www.vonnegutweb.com/playerpiano/pp_peterjreed.html

"No one can dispute that GOOG went down, but if you look at home prices in Nob Hill, Russian Hill, South Beach, North Beach, etc. in SF you will see that prices as well as rents are significantly HIGHER this year than they were last year." --Face Reality

Rents are not higher in SF. I just signed a lease on a new apartment after being in one place for the past year and a half. Rents were lower than the last time I was looking, and that is part of why I moved, I'm now paying $150 less a month. I was looking at studios in SF though, not the opulant palace rentals that are the minimum level of suitability for Signore "Face Reality" who faces only the reality he wants to see. Now is DEFINITELY the time for YOU to buy a place Mr. Face Reality. I DO believe that everything will work out GREAT for you if you buy right now. Be my guest!

The “intangibles” argument is always interesting to me. We get people who argue that the area I live in won’t go down due to desireability.

Any intangible would have been discounted by the market long ago. Current high prices are caused and sustained by unrealistic high expectations of future pricing. This psychology is reversing fast.

"I would argue that if you buy at the top of the market and are making mortgage payments on that $500,000 that has disappeared it isn’t just a loss on paper. You are going and working a certain number of hours to make payments on that vanished equity. You are also paying property taxes on the higher amount (until you can get reassessed)." --SFWoman

The lady speaks the truth. It's all about the cash flow. A cold, unemotional financial analysis. The way it should be.

Check out all the development planned for just downtown Oakland alone. It is staggering to say the least - Oakland hasn't experienced this kind of growth in decades:

http://72.14.207.104/search?q=cache:lWvpzBfgyW8J:www.business2oakland.com/main/documents/DTDevelopmentActivity-Spring2006.pdf+oakland+essex+%22grand+avenue%22&hl=en&gl=us&ct=clnk&cd=2

My wife has been dragging me to open houses for a year and a half and while she may be looking at homes, I’m just there for the “wine and cheese”.

Coming soon to a theater near you....

"Open House Crashers
Starring Vince Vaughn & Owen Wilson.

Plot: Two jealous, bitter Gen-X renters invite themselves to open houses in overpriced neighborhoods with *no* intention of making an offer. They freeload, womanize and engage in hilarious hijinks (including the infamous "upper-tanker")!

You'll laugh, you'll cry, you'll fall in love all over again...
Fun for the whole family!

Open House Crashers
Starring Vince Vaughn & Owen Wilson.

You’ll laugh, you’ll cry, you’ll fall in love all over again…
Fun for the whole family!

LOL :lol:

Let's hope homesellers are desperate enough to serve lobsters and caviar soon.

Check out all the development planned for just downtown Oakland alone.

Buildings are sprouting in SJ downtown as well. Developers have guts. Or shall we say "glut" ? :)

"Buildings are sprouting in SJ downtown as well. Developers have guts. Or shall we say “glut” ?"

And yet Face Reality claims that new housing stock just aint in the cards...

The kicker here… he majored in finance and I used to think of him as borderline brilliant. Until I hear him talk about real estate.

Have some faith in your friend. Perhaps he is merely misguided.

And yet Face Reality claims that new housing stock just aint in the cards…

I don't know... the Bay Area can easily accommodate 10 million people. How many does it have now?

Hi all - I lurk on this site on occasion. Just thought you might want to check out the latest thread at housing bubble 2. All about the inventory growing in Silicon Valley. Topical to this thread.

Welcome here, lunarpark.

We would love to have you as a regular here.

Thanks.

Thanks!

I like this site a lot (love all the articles on the main page). I'll try to check in more - I only have so much bubble time each day!

Fantastic piece of research on the last RE bubble from Patrick's link page:

youdovoodoo.com/80sbubble.htm

Home Prices Do Fall - A Look At The Collapse Of The 1980's Real Estate Bubble Through The Eyes Of The New York Times
by James Bednar

OT but here is today's Hot Real Estate Deal of the day:

http://www.craigslist.org/sby/rfs/133956793.html

Now pick a number & get in line.

Resume regular programming.

OT but here is today’s Hot Real Estate Deal of the day:

The listing has been removed. :(

Google, seems like the world would be full of people who would love to compete with a company run by pasty-faced kids playing with legos and riding scooters.

I love Lego when I was small. It is a great toy that removes social skills and turns the player into a future engineer. :)

"The listing has been removed. "

Awww shucks! You've should've seen what the poster described as a "Hidden Treasure"...in Compton LOL. Complete with metal security bars on the _upper_floor_ windows. But hey it was less than 400K so it must've been a screaming deal.

Complete with metal security bars on the _upper_floor_ windows.

I may consider it if it has a moat and a mindfield.

There's an interesting post today about computerized/automated stock trading and it's impact on market volatility, etc.
It's on this site, 2nd post from the top:

xanga.com/russwinter

I think there's more than a few savy folks here that might have a take on this...for the rest of us, well, it's quite a tolerable read!

There’s an interesting post today about computerized/automated stock trading and it’s impact on market volatility, etc.

Well, I thought "program trading" (delta hedging) was suspected to have caused the 10-sigma+ 1987 stock crash.

what do you guys think about Zillow.com?

Very interesting. But it is more of a lagging indicator, isn't it?

People are selling their google stocks because they need the money to pay their ever rising monthly payments.

"I think that it makes the market more transparent, and will put presure on the Realators to reduce transaction costs"

It is a nice toy for now. But it's making its debut in what many of us feel is a transitional market; a very tough environment to prove its worth. As of now, many people have questioned its valuations, and it will take much time for it to prove how much of a "real time" indicator it is. I'd say only about 10-15% of the comments I've read (numberig probably 25 or so) have indicated that the zillow zestimate is accurate.