patrick.net

Sybrib,

It will be interesting to see whether the masses still only care about mortage rates, or if the asset prices now will be more of a deciding factor.

Bottom definition: When the price of something seems like a bargain based on your own method of valuation. Very simple.

No, not a bargain. More like, a "trend".

Residential real estate in the Bay Area and the Fortress in particular is not and probably never will be a "bargain". But the nominal price might've trended to a bottom. ALso the interest rate for borrowing might've, also.

I have cancelled my Blockbuster account ... now getting DVD from Cupertino Library. I am thus saving around $11/month.

The only 2 ways people will "flood" the market are the same 2 ways Bay Area real estate bottomed and came to life big time in the late 90s: 1) Jobs have to come back in a BIG way. No way in hell 9% or 10% unemployment will make buyers come back in a huge way regardless of those "bargains". 2) Creative financing will also have to come back in a big way so all the bottom feeders with lousy credit can buy. We can't get all THAT much lower in rates than we have right now and when the economy does improve, they have nowhere to go but up. Just my 2 cents.

This Generation has a rendezvous with destiny.

That 1936 generation had a rendezvous with an evil president.

You're talking about Adolf Hitler, one would have to assume.

Rising gas prices have Silicon Valley drivers howling
By Gary Richards, Mercury News

Crude oil is selling for the low price of under $35 a barrel. The precious black commodity is awash at storage tanks across the country. And drivers from New York to the Bay Area are motoring less and less as the economy continues to sink.

But the price of gas is going up and up and up — to $2.29 a gallon in California on Saturday, 25 cents higher than a month ago and 49 cents more than before Christmas.

What gives?

The price for gas that companies pay on a daily basis in California is now about 50 cents higher than the national price. That's more than double the usual gap.

That has some motorists howling as prices at the pump continue to rise. Many think low crude costs should mean gas selling for under two bucks a gallon like before Christmas, when the state average had fallen to $1.80. Never mind that a year ago South Bay drivers were paying $3.16 a gallon.

"I was furious to see gas at Costco in Santa Clara go up 12 cents a gallon from just eight days earlier," said Randall Fullner of San Jose after a recent fill-up. "Big Oil is fattening its wallet by ripping off the consumer and charging what it can get away with."

Added motorist Roland Beech:

"They can call it scheduled maintenance, but that's not the truth. Let's face it, they are just cutting back to keep prices higher."

Today I explained the CENTRAL EQUATION of this thread to my relative in Houston:

MONEY = LABOR

He got it ... I gave example how lot of money is sitting in Banks and not moving ... since people who have earned and saved money through their labor do not want money to move.

So we have a confidence (money movement) crisis ... not a credit (money) crisis.

Exactly. I've said many times that I believe Obama will be an effective President because he instills so much confidence that companies will start investing again on things they pulled back on out of fear.

sybrib Says:
February 15th, 2009 at 12:58 pm
"No, not a bargain. More like, a “trend”."

Bargain is solely in the eye of the beholder. If my valuation of what I think BA housing is is higher than someone elses it is a bargain to me, and the bottom is set when I buy. As long as my decision is not emotional speculation it doesn't matter what the trend is. Trends, specualtion, and fraud are what caused the mess in the first place.

The largest lesson in finance this country needs to learn as a whole is how to put a value on something. It still amazes me that people buy houses and have no idea if the price they are paying is high or low, they don't even know how to put a value on it, the bank tells them what they can afford and they shop on payment.

A friend just bought a house near Tracy. He asked if I thought the area had hit bottom. I said there is no way to know if you just look at graphs and interest rates, but in helping him think it through we realized that the selling price was less than the cost to build the house and less than he rented his prior place for. His decision was rational and not emotional. He thinks he did well, I think so as well.

When you hear more people saying bottom is in, that is about the time to start shorting again.

Very true. :)

Malcolm,

I think trend has everything to do with it. The trend was, about three years ago, that folks were paying more for homes than they could afford, taking mortgages that were irrational, signing up for property taxes that were off the charts. That was the trend, it was irrational and nonsense.

Now the trend is that in SOME cases, housing is become REASONABLY priced here compared to renting, in some cases even with the property taxes can pencil out decently compared to renting. Maybe not in The Enclave/Fortress, but those buyers are in a different dynamic and are mostly not Americans (not naturalized nor native).

There will probably never be bargains here, if you compare the amount of labor an employee or small business owner would have to trade for housing, and what you get for the housing in comparison to the tradeoffs (commuting, public schools, tiny lots, small homes, etc.).

And then there's the other aspect to the Quality of Life in the Bay Area, involving the congestion, higher cost of non-housing stuff like car insurance, hospital stays, childcare, preschool tuition, etc, and of course necessity of sharing the same space with so many Alpha-types who put all else second to coming here from all over the USA and all over the world to "make it".

Why do you suppose that so many local kids from working class, when they come of age, move out of the area? And why so many long-time locals, when they reach retirement age, also do so?

Because if the "trend" is a low point in comparison to renting, housing might be a bargain to a rich person in a crowded place like Mumbai or Shanghai, but to an American, it ain't no bargain.

A quick Fed report for last week. The balance sheet declined by ~$10billion but this week will pick up another ~$35B from last week's TAF auction (28 day facility). It also looks like the Treasury supplemental increased by ~$30B.

This link should probably be in the last thread. Time is money...
In a small, backroom office at the Community Reformed Church in East Oakland's Sobrante Park district, a handful of local residents are running their own neighborhood bank. Instead of U.S. currency, though, the transactions are recorded in hours and minutes.

Instead of U.S. currency, though, the transactions are recorded in hours and minutes.

Hours and minutes or what? Swedish massage?

... necessity of sharing the same space with so many Alpha-types who put all else second to coming here from all over the USA and all over the world to “make it”.

Why do you suppose that so many local kids from working class, when they come of age, move out of the area? And why so many long-time locals, when they reach retirement age, also do so?

I for one wish that "silicon valley" never happened. My family moved to northern California in the 1860's, and lived in Santa Clara Co. since around 1900. These "alpha types" as you call them really are the root of the problem. People come to SV from all over not to settle there but instead just to "make their bag of gold" after which they leave. Certainly a bunch of H1-B visas doesn't help matters much. The outcome is that there is no sense of community nor the political will to fund needed infrastructure (e.g. transit). Those "alpha types" couldn't care less about SV as a place to put down roots.

And yes I retired out of the area to Boise after selling off my little stucco box in May 2006.

DennisN and Sybrib,

I'm not exactly in disagreement with you, but I think there is another aspects of the situation which is overlooked: The rampant "pyramid-scheming" around the valley by those who have been here longer, exploiting those who arrived more recently.

When times are good, the schemers are cheerleaders because they can sit around and watch their property values and rents go up. When times go bad, as they now have, even some of the same people (and I do not mean any of you two) are whining about immigrants taking their jobs, blah, blah, blah.

There is also a real division among the old-timers between property owners and the plain blue-collar folks. The latter have children that move away, the former have children that become real-estate agents and tax the newcomers. If they are really blue-blood, they dabble in *commercial* real-estate and play lots of golf.

That is more or less the picture, and I think it has been ongoing for a LONG time, maybe since 1940-1945. Right now it looks like the pyramid has stopped growing.

aspects=aspect

justme, I agree with you!

That is more or less the picture, and I think it has been ongoing for a LONG time, maybe since 1940-1945.

It was the New Deal's fault.

Hardly. More like the generic tendency of pyramid-scheming in the US, coupled with WW2, Cold War buildup, and so on.

New thread:

What now?

justme, I agree with what you said. Prop.13 is a fine example of this.

No kidding, Prop. 13 preserves the wealth of the haves (and hangers-on of convenience) at the expense of everyone else.

I say abolish Prop 13. It is a form of rent control (land rent/tax) and any form of rent control is evil.

I agree, I hate the fact that I will need to work for the rest of my enjoyable part of life if I ever wanted to own a home in the area that I grew up in. SF Bay Area.

I won't be able to take vacation days off work, I won't be able to take time off for family, I won't be able to do anything but go to work, they just want us to keep on working so they can keep on taxing, but what incentive is there to work, except to make us pay loads of money for a home.

Q: Does anyone know if banks --being as they are the effective owners of vast amounts of real estate-- are delaying settlements and recordations on theory that finalizing sales will accelerate the deflation of their assets?