patrick.net

On the high side of the multiples.

A number of law firms imploded a few years ago. There are plenty of lawyers out there to chose from. What one bills the client is vastly different from salary earnings. The lawyers that bailed out of firms to work for corporate have found their earnings stagnant due to prolonged tech slow down. No one in corporate is interested in subsidizing extravagant live styles.

I know dual income families pulling in $400-450K who believe that only $1.3-1.5m houses are the limit of their financial wherewithal. These are folks who've moved/traded up in the past 4 or so years. I'd be surprised if any of them have less than $250K to put down; most probably more like $500K.

My point is, here's normal professional folks, living in the Bay Area, who have elected to *not* take on voodoo loans. They earn the better part of half a million a year, maybe have a half a million to put down. Yet, they summarize $1.5m is an upper limit.

Why? Because the "normal people" Big Brother is referring to usually do silly things like save for their kids college (usually assuming Stanford or East Coast Ivy tuitions). They do silly things like pay for private elementary and high schools. They do silly things like take very cool family vacations overseas, towing along their children. They do silly things like _save_ some money, in case Dad needs a sabbatical break or otherwise quits the rat race; or Mom decides to disengage from career for a while.

Most "normal people" don't desire to become slaves to their homes.

My hats off to curned.com 's article...

http://www.curbed.com/archives/2007/01/11/ask_curbed_am_i_bidding_against_a_phantom_offer.php

Just love to hear from Realtors...
"there are other bidders, I dont know how many or what the bids are, but can you go higher."

Realtors tells the media...
"we have a multiple bidding market, so everyone is expected to make offers well above asking" or "buyers are offering over asking" Etc Etc Etc

Then the cycle repeats itself. LOL! The biggest CON job made this century.

My favorite quote, from a realtor who's trying to get us to bid on a home in Mill Valley (which we won't because we want to leave Marin and it's in the fog anyway):

Prices were up nearly 3% in Mill Valley last year! That's not bad in a year where the market is 'adjusting' and everyone's full of gloom and doom! Where else could you earn 3%?

Yea, where could I possibly have found a 3% return in 2006? It boggles the mind.

Well, I'm sure the doctors and lawyers are truly ashamed of themselves for being so normal and underachieving.

Smart mamas raise their babies up to be hedge fund managers...

Because the “normal people” Big Brother is referring to usually do silly things like save for their kids college ...

And they eat silly things like sushi.

Randy H said:
Yea, where could I possibly have found a 3% return in 2006? It boggles the mind.

Yeah, my notoriously $rappy Wells Fargo savings account gives 3% interest.... ;-)

I should have replied (I always think of these things after the fact):

Let's see, 3%? Well, it would cost me over $90K to have owned that home in 2006, at that price, with my downpayment.

It cost me $35K to rent last year.

Isn't that a return over 250%?

* 150%. Maybe better I didn't say anything smartass, lol.

While looking at a $475k teardown, Realtor said "I'd buy this myself, where'd you find it". Then she got back into her S55 and left, well after calling Mrs-X and I by different names.

Another great Realtor quote, "there is tons of interest on this house, lowers voice, but no offers". I love that one.

GC,

You should date Paul Wolfowitz.

But I do need to make enough to eat all I want.

GC

500K/year is nothing after you take away the taxes.

If by "nothing" you mean "exceptionally more than otherwise normal people have left after taking away the taxes", then yes, I agree with you.

Marginal taxes aren't 100%. Not yet, anyway. So making more $ is _always_ better than making less $, unless you're comparing poor people to really f-ing poor people who get EITC.

Most “normal people” don’t desire to become slaves to their homes.

During the IT orgies in the mid to late 90's, my friend in Toronto was charging PriceWaterhouse $250/hr (not unusal for some Oracle, Siebel consultants), PW in turn charged their clients $500/hr. He made that kind of money for more than a year. He bought a house for $575K (now it's around 800K).

The fear of being priced out is strong in the Bay Area and realtors play that up to many first gen immigrants.

GC,

I'm impressed. Does that amount include treating other people to meals? If not, I'm even more impressed.

All things equal I would prefer to be an heiress, as long as it doesn't involve botched plastic surgery or syphilis.

That BigBrother is a goldmine. Quite possible the smartest Jukubot yet.*

* Unless peter p really is a jukubot.

GC,

No, I'm in envy, no sarcasm. I do agree, we only live once

I'm too lazy to eat out (I also can't afford to eat out very often, but I'm more lazy than poor).

I do agree, we only live once

I disagree. The karmic debt accumulates. But since debt is wealth, we will all achieve spiritual enlightenment eventually.

Unless peter p really is a jukubot.

You will have to hunt me down and find out.

I always found karmic accounting rather Enronish. I was really into Buddhism for a while, but then I took a college Buddhism seminar. My professor, a practicing nun started talking about interconnected karma and throwing around really big numbers.

I dropped out of the class about halfway through. Real math is bad enough, but karmic math is too much. It's a lovely religion but these Buddhist are way too numbers obsessed.

Brand, Malcolm,

I was gone yesterday, so missed most of the Sunday comments on the 'Wealth Disparity' thread. I left you some closing comments.

Real math is bad enough, but karmic math is too much.

This is why we invented Realty Math.

Peter P,

I might not have the opportunity for a while. After talking about moving to BA on this since about the beginning of this blog, it looks like my boyfriend is actually going to move to DC with me. There's a pretty good chance he will do the Berkeley MFE, but it'll be a while longer before I move to BA permanently.

Maybe we can do a Patrick.net eating tour through East Asia.

maybe there's a stone age tribe out there who put up big posters of David Lereah in hopes that he'll bring them untold riches in HELOC, perigranteel, and stainless steel appliances...

Oh wait!

There’s a pretty good chance he will do the Berkeley MFE

My wife may be pushing me to do that too.

DC is a nice place. Free museums and all. I heard that housing prices are coming down over there.

Heck, I may even be moving out of BA myself.

After going lower for the past couple of weeks (~120), the Bay Area Craigslist ReduceOMeter has risen sharply to 158 listings (April 20-21). Ahhh, Spring fever is in the air.

A couple of thoughts on solar... I was looking into this last year but decided to hold off a couple of years until I need a new roof (what, capx begone!) and am waiting for those low cost thin film modules :-)
I was kicking myself as PG&E closed the old TOU (time of use) metering schedule a little over a year ago. It was quite advantageous as you could sell back power at almost 3 times the nightly rate. The new TOU schedule is around 2x for power sold back during the day and the time of use hours are not as generous (to be fair, it is proabably more correct as to the way the grid gets used). I also don't use a ton of electricity a year (no AC), so it does get a bit harder for a system to "pencil out". Most folks also recommend going on a energy jihad around the house before trying to size your system. I found a KillAWatt meter to be helpful in that regard (and of course, doing the whole compact flourescent thing...)

Jimbo,
Get thee back to the three dot lounge. Ess Eff is also classic Herb Caen. Baghdad By the Bay indeed...

DC is a nice place. Free museums and all. I heard that housing prices are coming down over there.

Parts of DC is. Some parts aren't. It's pretty sad that one of the Supreme Court Justices got mugged while jogging near the... Supreme Court.

But more importantly, it's not special there.

But more importantly, it’s not special there.

Or, it is special everywhere.

The fear of being priced out is strong in the Bay Area and realtors play that up to many first gen immigrants.

The way to avoid being priced out or anything is to make more money.

From LowlyRenter's link:

"For example, with a $250,000 mortgage, a rise in interest rates from 6.5% to 7.5% means an additional $2000 in annual payments. This may boost currently available homes out of financial reach for potential buyers. Today’s low rates offer a unique opportunity for buyers. "

Just who could this be aimed at? A guy fearing being priced out forever because $167/mo extra would break him? The guy would also have to believe that rising rates would not cause house prices to fall.

That said, IF I were an agent I would definitely play to people's fear. It will be my specialty.

Free museums is a good perk, these museums would cost $20-30 elsewhere. Very few locals take advantage of them though.

I miss the big pre-9/11 blockbuster shows. We never get really big art exhibits anymore.

I wouldn't recommend living in DC itself. It's either too expensive or too dangerous, and often both.

Just who could this be aimed at?

Not only that... if everyone is priced out, no one is.

I am totally priced out.

Another Quote, from a Mill Valley realtor in Tam Valley, on a rare sunny day with no wind or fog:

"You just can't beat the weather here! That's part of the appeal of Mill Valley!"

It’s either too expensive or too dangerous, and often both.

Of course one will instead live in Virginia.

Food in DC is not the best though. NY and Boston have much better food.

Favorite realtor quote from a couple of months ago re Boise, Idaho houses:

"You are losing $50,000 per year by not buying a house right now"

Another Quote, from a Mill Valley realtor in Tam Valley, on a rare sunny day with no wind or fog:

“You just can’t beat the weather here! That’s part of the appeal of Mill Valley!”

I am sure you can find a day to say the same for Portland, OR.

I've got a quote for you, this is from the largest homebuilder in the land, a real classic :

"As I've said to all our salespeople, if a buyer is warm and has a pulse, we want to put them on paper." -DR Horton CEO

This is at the very bottom of the link.

http://p287.news.mud.yahoo.com/s/nm/20070419/bs_nm/drhorton_results_dc