patrick.net

sriramgopalan, I don't think we'll find anecdotal evidence to settle the debate about middlemen. There are travel agents who sells trips to Mexico during hurricane season. ("It's a great time to buy!") If you pick any salesman in any profession, you'll find some integrity and some slime. Stock brokers, used car salesman, you name it. I just think that this particular horse is incredibly dead and makes for somewhat boring discussion.

And I also believe that, if you look hard enough, you might find a situation where it is a good time to buy. I bought my mother a foreclosed home last year with 20% down, 15-year fixed rate loan. She's been a renter all of her life. Could she wait it out for another five years and go bottom feeding? Probably. But she's getting old. And rent in her area is more than mortgage payment. Will I make money on the "investment". I seriously doubt it. But it was chump-change to me and I sleep better at night with a roof over mom's head... It was a great time to buy.

Yes, that's a great movie. Very well acted. Lot of star power. All movie buffs should watch it.

In the BA proper, I have very rarely come across a house that is not listed in MLS and only listed on Realtor's websites. Apart from obvious FSBO and foreclosures, of course.

But I haven't been looking hard anyways.

"the tactic is just a little to clever to be effective"

There have been cases where even major lenders (CS in OH..?) where their loan portfolio was HIGHLY concentrated, but overall I agree.

Oh btw, I additionally agree that most "clever little tactics" fall into that category. Kind of like "re-creating" letters ex-post-facto.

Wow, did you guys see the PPT actions today?

MLS is now a joke. The best time to buy arrives when every magazine and newspaper has declared that "real estate is dead."

Yeah ... the reversal was swift. But was it just plain old volatility or PPT ?

In less than 6 minutes Nasdaq went up by more than 1%. I really do not want to believe in PPT manipulating the indexes - I am probably the only bubble blogger left to feel this way. But such moves always look suspicious.

The thing is PPT has not been able to stop any bear market till now. Stocks ultimately follow earnings.

The thing is PPT has not been able to stop any bear market till now. Stocks ultimately follow earnings.

Who says PPT wants to stop a bear market? It only creates selling opportunities. :)

StuckInBA,

O.K... for the last time:

There IS... no PPT, MLS Data is ALWAYS accurate and there's no such thing as a "National Real Estate Market"!

DinOR :

OK OK OK. :-) I know being alone in my beliefs is an invitation to mocking. But hey ... why those digs about MLS and RE ? Am I that outcast now ? ;-)

There IS… no PPT, MLS Data is ALWAYS accurate and there’s no such thing as a “National Real Estate Market”!

There is no housing bubble. There are no American tanks in Baghdad!

"There is no housing bubble" LOL!

Can you still find that web page? Pure genius I tell you!

You know, I'm not saying the market *wasn't overvalued going into what FAB's CT HF buddies described as "end of year window dressing" but I am disappointed somewhat. What do we know about CFC we didn't know in Dec?

DinOR Says:
Really Dr. Baen? Really. Commodities.

They mean the Beanie-Baby and Pot futures market.

"Pot futures" LOL! :)

I THOUGHT I said "sober" discussion!

There really isn't, is there? Regardless of qualifications, no matter how you slice it, 51 isn't a good time to be making career changes. Oh and at that age I guess you can rule out stripper too?

PAR Says:
is it really all that shocking when a salesperson tells you that it’s a great time to buy something

Yes, when they are a _buyer's_ agent, it is expected that they advise buyers not to buy because it isn't that great right now. Specially since these scumbags fancy themselves as "professionals".

The fact that we are not shocked by their dishonesty speaks volumes.

Can you still find that web page? Pure genius I tell you!

DinOR, here it is!

http://tinyurl.com/bpbpf

Ha ha, that is really funny. Not as great as the 'Mission Accomplished' photo that Harm did for us, but pretty good.

Is David Lereah eligible for some job retraining money?

Peter P,

Thanks! I needed that.

PAR,

The "Boiler Room" model for stocks anyway has changed, quite a bit actually. Now they have "marketing firms" that "raise awarenes" among brokers. Usually some OTC BB penny w/ "great growth potential". Then they ask the brokers if they'd want to buy on behalf of their clients. So the distribution isn't directly to the public and the sales guys aren't sec. licensed.

So rather than being "bucket shop" driven it's more a matter of the companies themselves going to these sales organizations to have THEM pump up the stock! Mostly it's a waste of time b/c unless you're RIA you can't touch pennies anyway (most firms now have regs. about soliciting penny stk. trades)

Also the Bulletin Board has a new "rating system" with a skull and cross-bones for no info, a Stop sign for limited filing and a Caution sign for full compliance. FWIW

Makes me wonder if buying is like renting always is - you find places by getting out there and walking the streets. Just look for signs.

I know there's a "public" MLS then there's the RealtWhores' MLS..... it's been that way for years.

Just wondering, when you guys consider a good time to buy a primary residence. For investment it’s different. Investors have to wait for bottom.

Working backwards:

Investors do not *have* to wait for the bottom. The oft revered Buffett makes the point broadly that he doesn't care where the bottom is.

Investors are more aware of, educated about, and prone to accept risk. Homeowners are often dreadfully ignorant that risk even exists in the world.

Finally, there is a simple rule: buy when it makes sense, qualitatively AND financially. It takes a whole-lotta-qualitative to plug the gap left by the simple reality (where I live) that for roughly equivalent housing, all opportunity costs considered (including taxes), rent = about 1/4 mortgage et. al. And 5 years makes almost no difference. I'll even spot you 10 more and it still doesn't make a difference. The sensitivity in the equation at this scale of purchase price rests almost entirely upon that price, not on any amortization or tax benefit.

If so called _buyer's agents_ weren't benefiting from the intentional misperception that they are acting as fiduciaries, then there wouldn't be a problem. But as it stands now it's more like a sleazy drug dealer pretending she's your doctor.

Yes Barb, we think you’re smokin’ dope. And this is one of the country’s “top” realtors? Barb, no one would like to see an end to the violence more than the folks at Patrick.net but does ANYONE here see any relationship between the two? Anyone?

Sure, when all the Marines/Airmen/Soldiers/Sailors return from Iraq and... uh... the other country that we're fighting a war in that no one remembers, they'll immediately want to go out and buy houses and cars!

Just like after World War II!

Sure, when all the Marines/Airmen/Soldiers/Sailors return from Iraq...

See, Ron Paul will save us all!

ptiemann Says:

> Just wondering, when you guys consider a good
> time to buy a primary residence.

1. When you decide that you are planning to live in the same place for at least 5 years.

2. When values are at least close to the historical multiples that have been around for the last 100 years or so (2.5-3.5x average household income in the area & 10-15x annual rent).

3. When you have saved a big down payment and can easily afford the monthly payments using a 30 year fixed loan.

P.S. Nice to have Randy H. back…

Just wondering, when you guys consider a good time to buy a primary residence. For investment it’s different. Investors have to wait for bottom.

Look at this listing.
http://www.mlslistings.com/Reports/Main.aspx?propertyId=795677

When such 50 year old, 1300 sqft home is listed for 1M, it is not a good time to buy. Heck, it is not even good time to go to open house.

Here is what at least one RE agency is working right now. It is a recognized big-name agency in the Peninsula/South Bay area - my friend is an agent.

If a seller is flexible (i.e. willing to negotiate), they keep the listing private and market it to their own list of buyers. My friend did not (or could not) accurately say how far these private sales were below peak prices, but hinted that it was a "good bit below last year's comps" in and around the fortress.

For sellers who are not very flexible, or for houses that don't sell privately after a few weeks, the houses either get dumped on MLS or just get stuck in the back of the private portfolio.

I don't know how long this is sustainable - all the unsold crap should eventually find its way on the market. But for the time-being, it looks like the agents are quietly turning the screws on the sellers.

Randy :

Now you are back ! Good to have you here again.

The sensitivity in the equation at this scale of purchase price rests almost entirely upon that price, not on any amortization or tax benefit.

I am absolutely certain that such thoughts are banned from entering the mind of a Fortress buyer.

ptiemann Says:
why should people NOT buy now? Because they might buy cheaper in 12 months?

My broader point was that the _purpose_ of even having a "buyer's agent" is to get impartial market intelligence on the right circumstances to buy. Not like my damn-fool of a realtwhore who tried to make me over-bid on the house - we refused to budge and still got the house. If I had listened to that sh*tface's advice, I would have forked over another 25K-50K for no reason.

Randy H Says:
January 9th, 2008 at 4:06 pm
"If so called _buyer’s agents_ weren’t benefiting from the intentional misperception that they are acting as fiduciaries, then there wouldn’t be a problem. But as it stands now it’s more like a sleazy drug dealer pretending she’s your doctor."

The new pharmaceutical marketing doesn't even want them called doctors. "Be sure to ask your prescriber before..." They are even sure to get the repetition in at least three times in the ads. "Talk to your prescriber.."

The rereport.com folks have their 2007 annual report out. It's a great read, almost devoid of any BS.

http://rereport.com/scc/annual/index.html

The sales have dropped to half of 2004. And many other nice stats.

ptiemann Says:
I had assumed that all bubble sitters here have a couple hundred $ in cash

Couple hundred bucks? That sounds like what one of our heroic homedebtors would have in their savings account. :-)

ps. I know you meant couple hundred thousand

“almost ALL told me not to sell now”..

In today's slow market, the dynamic has changed. Realtors don't want to be burdened with unrealistic sellers and have to show up to open houses every god damned weekend as a listing languishes on the market. Over the past few years, they've become used to short DOM and getting bids on an offer date, etc etc. Now that they may actually need to WORK to sell a place, it's like, not worth it to them.

I am not sure that prices will drop in all areas to 3x annual household income. In rural areas, certainly. In prime areas, I don’t think so

I don't care about London/Paris and even to an extent SFO.

But even in THE Fortress, houses were close to 3x to 4x of a dual-income techie household - as late as 2003-4. Incomes have NOT gone up that much, mortgage rates are higher, credit has tightened and psychology has changed.

So what's going to stop the prices from going to that level in BA ? Or is BA a rural area ?

Here is what at least one RE agency is working right now. It is a recognized big-name agency in the Peninsula/South Bay area - my friend is an agent.

SP,

You describe classic pocket listing BS.

SP Says:
For sellers who are not very flexible, or for houses that don’t sell privately after a few weeks, the houses either get dumped on MLS

I just realized that this may also explain why everything on the MLS is still priced unrealistically because, well, only the unrealistic sellers are being listed there. I am thinking of tagging along with my friend to see what kind of stuff is available 'privately'. Will post my findings if I decide to go waste some time on this.

I am not sure that prices will drop in all areas to 3x annual household income. In rural areas, certainly. In prime areas, I don’t think so

Even now, 600K can buy a reasonable townhouse in a not-so-bad neighborhood here. But that does not mean that prices cannot go lower.

I don’t care about London/Paris and even to an extent SFO.

I would not want to live in London or Paris. I rather live in Arizona.

Bay Area is nice but it is overrated.

This house does not even cost $1M in Thousand Oaks:

http://realestate.venturacountystar.com/sales_details/1751-500052

Statistics showed that Thousand Oaks is a lot safer than SF.

Peter P,

You can also get a similar sized brand new home in Windmere, San Ramon for a similar price. I know a family who just moved there. If you are willing to go in a different direction then you can get that 30% cheaper in Mountain House. And in Gilroy too. Morgan Hill has a fabulous collection of these "luxury" homes at that range.

The effect of so called "fringe" areas has started to show on BA proper or Fortress or whatever. Don't want to wait for the bottom, fine, just wait for a few months. It will be "cheaper" if not the cheapest.

My broader point was that the _purpose_ of even having a “buyer’s agent” is to get impartial market intelligence on the right circumstances to buy.

When I bought my town house in 1991, my agent had to do a fair bit of work. For example, only she had easy access to all the listings and she drove me to all of the places I wanted to look at. Back then houses were a lot cheaper so the 3% that she splits with her company gets is a lot less than what agents get nowadays.

But even back then her interest was getting the deal to close, she provided me with comps but I remembered she urging me to accept the counter offer from the seller saying that was reasonable. A buyer's agent will almost never negotiate hard for you except if he or she is a personal friend.

Our first Peninsula house was about 3.1x our earnings in 1996. Our second home in 2002 was about 3.3x our earnings.

Inflation adjusting 1996 dollars to 2007 dollars, a couple earning what we were then would have to pay nearly 6x their income to buy that same "starter" home, which now lies in a slightly _less_ desirable area thanks in part due to rapid turnover and flipping.

The whole "not buying today is losing out on buying something that someone else will instead, thus denying you that option" is spurious logic, to the extreme. It presupposes that we can move forward and backward in time exploiting every option at every point of the decision tree. In reality, for those of us lacking time travel superpowers, the best we can do is make decisions in the present and evaluate future options while they're still in the future. By your logic every time I fail to buy a lottery ticket is allowing someone else to win the lottery.