patrick.net

edvard2 says

There is a lot of overreaction on this site. We too are in the market and this is the first time we've gone house hunting. We've waited 12 years to buy and have saved up a lot of cash, have perfect credit, and good jobs. Yes- there is a shortage supply problem.

I agree, not a bubble, but a supply problem.

We are in the same boat as you, and I think there is some pernt up demand for people like us, the ones who waited.

But in a true bubble, everything gets snapped up, even the crap.

I see a lot of overpriced properties and crappy homes not selling. It's just the decent stuff that goes for over asking with multiple offers.

Looks like we might be renting another year....

bmwman91 says

WHEN inventories return to their normal levels, everything will calm down again.

But the WHEN is a big deal for those of us who have been waiting for 12 years. I'm going gray waiting for the correction and to stop being a renter.

edvard2 says

Furthermore, you have to have really high creditworthiness. Lastly, you need a lot of cash as a down payment. We did this, but it took 10 years to do so. I'm guessing many couples did not do this.

Or be an all-cash investor.

Here's a house that got bought for $425 LAST MONTH, and our realtor just sent us the MLS listing for $609, all shiny and new.

This house must have been bought at auction, because I never saw it listed, and we've been looking since Christmas.

http://www.redfin.com/CA/San-Francisco/1127-Burrows-St-94134/home/1977033

edvard2 says

Funny, a realtor I talked with 2 years ago said pretty much the same thing. Still waiting...

Why would that be an advantage to a Realtor?

Wishful thinking.

Did you send the offer to the seller yourself?

Patrick, I started a thread a few days back about whether or not to submit a personal letter to the seller via mail (with whom we made a personal connection at the open house) or to include it in our offer.

Pretty much everyone on this blog said submit with your offer.

They are accepting offers on Monday. I think I will drop off another copy of our personal letter in her mailbox, just to make sure she knows we have submitted an offer.

I don't trust realtors, and I know our offer will not be the highest. There is no other way to make sure the seller sees our offer.

1sfrenter says

But the WHEN is a big deal for those of us who have been waiting for 12 years. I'm going gray waiting for the correction and to stop being a renter.

I feel for you there, and I certainly have not been waiting 12 years (almost half of that). You mentioned that both you and your partner are teachers, correct? I think that some of the challenge lies in trying to live in the hottest real estate market in the region on a squarely middle class income. There is just way too much money in this area to compete with. Having saved for 12 years will definitely help you a lot, but it might not be enough to compete with all the money from other sources. Heck, my fiancee and I are both making solid salaries in high tech, renting in a much less desirable part of the BA than SF proper, and even on our incomes & having $200k in cash savings, it looks like a bad idea to get a house at this point. It is really disappointing to think about, but the BA just isn't middle-class friendly unless your hobbies include "making money" and "being house poor."

1sfrenter says

I think I will drop off another copy of our personal letter in her mailbox, just to make sure she knows we have submitted an offer.

I read that thread. Having thought about it a little, I think that delivering the letter straight to their mailbox is the best way to go. If you want to try to work the personal angle, it is the only way to go. You really have nothing else to lose in doing to. Good luck, hopefully the things that you have in common with the seller will work in your favor!

Stop with the hyperbole about the "idiot masses". Plenty of these "idiots" make good enough money to buy their homes and stay within the old 3x rule, some go out to around 4x. Most of my friends have bought within the last 3 years. All with graduate/professional degrees and good incomes. They can probably do the math just as well as some 26 year old anonymous internet person.

Let's see:
Dermatologist--bought a 2nd property up in Sonoma County
Derm/Engineer couple--bought Los Altos
Internist/Eng couple--bought Los Altos
Pharmacist--bought Hayes Valley
Pharmacist--bought SOMA
Harvard Law--bought SOMA
UPenn Law--bought Mission
Child Psych MD--bought Hayes Valley
Child Pysch MD--bought SOMA
Radiologist--bought Burlingame
Zynga exec--bought Burlingame
MBA/DDS couple--bought Burlingame
PhD/CPA couple--bought Burlingame
Stanford MD/Stanford MBA couple--bought Palo Alto
Harvard MBA--bought SOMA
Cornell MBA/Cornell MBA couple--bought Sunset
Northestern MBA/MBA couple--bought SOMA
Stanford MBA--Pac Heights

I've owned two houses before in DC/Austin. I held off for the longest time here in the Bay Area but found a property that I really liked in SF that's within 2 blocks of some of my favorite spots in the city. 22% off the high, got it around 8% off current comps, the HOA is low for SF. Rent to Buy ratio is approx 14.3. Had 3 prior contingencies fall through on financing but I came in with over an over 800 credit score so I beat out someone coming in with over 45% down.

Prices here are outrageous compared to where I've lived previously but there are lots of really damn smart/ambitious people here that make good incomes so guess what, it's not cheap to live here.

PS House poor? What does that even mean? My houses have gotten progressively smaller as I realize that I don't need the extraneous space. Who needs 3k of square feet? How about "outdoorsy poor"? Try living in Houston and see where you'll climb, swim, cycle (much less board/ski).

1sfrenter says

I agree, not a bubble, but a supply problem.
We are in the same boat as you, and I think there is some pernt up demand for people like us, the ones who waited.

Good article on the front page of the WSJ today about the bidding wars and supply issues. I was surprised that even Phoenix has limited supply. Guess some investors jumped in with both feet there.

bmwman91 says

You mentioned that both you and your partner are teachers, correct? I think that some of the challenge lies in trying to live in the hottest real estate market in the region on a squarely middle class income.

With a combined seniority of over 20 years in our jobs, leaving the city would mean a massive pay cut. Most school districts are hemorrhaging jobs right now due to the decrease in property taxes from the bubble.

Trust me, we've crunched the numbers every which way.

Hmm, maybe we should both change careers now that we are approaching 50? Yeah, that's a great idea.

2 cents says

Good article on the front page of the WSJ today about the bidding wars and supply issues. I was surprised that even Phoenix has limited supply. Guess some investors jumped in with both feet there.

Wow, that just ruins the credibility of the WSJ. Sort of depressing that even the WSJ won't tell the truth.

Phoenix has HUGE inventory. GIANT NUMBERS of houses for sale.

Like 12,851 houses for sale right now according to Zillow:

http://www.zillow.com/homes/Phoenix-AZ_rb/

1sfrenter says

I don't trust realtors, and I know our offer will not be the highest. There is no other way to make sure the seller sees our offer.

Do this if your goal is to be seen as a potential stalker.

You're already saying the other offers are going to better than yours, and you expect the seller to give up thousands of dollars just because you're a nice person?

Isn't it just possible that the other committed buyers willing to spend more also happen to be nice people with perfectly lovely families, too?

Letters are useful if you have a situation where the seller has to pick between two roughly equivalent offers. I had this situation when I sold my Palo Alto house where two offers both had relative bids (ie, I'll offer $xK more than the highest offer and I asked the one with the lower offer to match the one with the higher offer). Afterwards, the one with the higher offer was ticked that I didn't counteroffer with something even higher.

Don't know what to tell you, multiple offers even though they seem like a great thing for the seller also bring their own emotional complexities for the seller.

This whole conspiracy thing that the listing agent is going to be unwilling to present even the lower offers to the seller strikes me as more than a little paranoid. If the listing agent really doesn't like your offer all he or she has to do is point out that its the lower offer and that the seller needs to look out for his or her own interests. If it's philanthropy that the seller is interested in, then there are better causes then you.....

DukeLaw says

Try living in Houston and see where you'll climb, swim, cycle (much less board/ski).

True, but in Houston you wouldn't be living in voluntary serfdom like you would be in the Bay Area.

1sfrenter says

With a combined seniority of over 20 years in our jobs, leaving the city would mean a massive pay cut. Most school districts are hemorrhaging jobs right now due to the decrease in property taxes from the bubble.

Trust me, we've crunched the numbers every which way.

Hmm, maybe we should both change careers now that we are approaching 50? Yeah, that's a great idea.

Sorry, I didn't mean to say that you should leave. It is a really popular place, and there are lots of younger folks with money looking to buy there as well. It may just be that purchasing won't be an option since there are a number of other competitors out there with greater financial means. For your sake I hope that you land a deal since you are obviously not one of the reckless idiots that rushed out to nab the biggest FHA loan you can, and you have worked long & hard for your cash, as opposed to striking it rich on an IPO or having mommy & daddy fund you.

Wow, that just ruins the credibility of the WSJ. Sort of depressing that even the WSJ won't tell the truth.
Phoenix has HUGE inventory. GIANT NUMBERS of houses for sale.
Like 12,851 houses for sale right now according to Zillow:

I don't know how the inventory stacks up vs. the number of transactions each month. Article states there is 2.4 months of inventory in places like Phoenix. Are they not telling the truth? Here's the link.

http://online.wsj.com/article/SB10001424052702304723304577366294046658820.html?mod=ITP_pageone_0

fizbin says

Letters are useful if you have a situation where the seller has to pick between two roughly equivalent offers. I had this situation when I sold my Palo Alto house where two offers both had relative bids (ie, I'll offer $xK more than the highest offer and I asked the one with the lower offer to match the one with the higher offer).

This is exactly what happend to us as buyers. Wrote a nice letter with a family picture and put up a strong offer. We were a little shorter than another offer. They asked us to come up a little bit- we did- deal done. A couple of other offers we made the same thing happened and we declined to up the bid. A letter may buy you a chance to match or come close to another competitive offer. It will not buy you a severe discount.

fizbin says

Isn't it just possible that the other committed buyers willing to spend more also happen to be nice people with perfectly lovely families, too?

Letters are useful if you have a situation where the seller has to pick between two roughly equivalent offers.

*Almost* all of the buyers are Chinese investors in this neighborhood, and the seller explicitly told us she did not want to sell to them.

Our offer is 19K over asking. 6 months ago, it would have been a done deal, but now, this spring, I don't know.

I just want to make sure our offer gets seen...if it's way under, oh well, nothing lost. But if it's in the ball park and she wants us and asks for more, then maybe...

wthrfrk80 says

Try living in Houston and see where you'll climb, swim, cycle (much less board/ski).

True, but in Houston you wouldn't be living in voluntary serfdom like you would be in the Bay Area.

I guess there's always tanker surfing in Texas:

oops, video won't embed, here's the link:
http://www.youtube.com/embed/4m4MsUHOUC0

Those waves don't look as fun as Norcal waves...

1sfrenter says

Those waves don't look as fun as Norcal waves...

They are probably a lot warmer though :)

1sfrenter says

With a combined seniority of over 20 years in our jobs, leaving the city would mean a massive pay cut. Most school districts are hemorrhaging jobs right now due to the decrease in property taxes from the bubble.

Trust me, we've crunched the numbers every which way.

Hmm, maybe we should both change careers now that we are approaching 50? Yeah, that's a great idea.

I definitely see your dilemma. That said... I come from a family of teachers and all of them live in the Southeast. My parents, who also work as teachers live in NC and make about half of what I do combined. Yet they own over 10 acres of land with a 2 story house, a pool, a large workshop, a camper, a couple of newer cars, and so on. You would have to be a millionaire for that in the Bay Area yet they do just fine on less than 70k combined a year there. The value of everything they own is well under 200k. Its literally the difference between night and day between here and there. Prior to making the decision to buy here the thought had been to just save up our Cali money and move back to the Southeast and semi-retire because if you're willing to say- live 30 minutes outside a major Southeastern city, you can buy land, a house, and probably a small farm with it for under 200k.

1sfrenter says

*Almost* all of the buyers are Chinese investors in this neighborhood, and the seller explicitly told us she did not want to sell to them.

I'd suggest making sure to remind the owner who you are and that you appreciated talking to him/her and an attractive, warm photo wouldn't hurt.

I don't recall you saying anything about your own agent. If they are at all competent, they should be able to ask to pass along a few kind words wrt your situation and ask for a counteroffer at the point where it looks like the news is going to swing against you....

Hopefully you are already using an agent who is willing to return the bulk of the commission to you, right? An easy google look around reveals several obvious candidates who will rebate everything past the first 1% commission back to you. When I bought my current home, I found a Sacramento broker (with local area MLS membership) willing to rebate all but .6% of the commission back to me. She isn't working anymore, but looking around I do see that there is at least one Sacramento broker with local MLS credentials who claims to rebate "up to 75%" of the commission back to the buyer....

BTW, Patrick, I've been meaning to say this to you: if you are really looking to change the industry then you should try to track down all of these "deep discount" buyer's brokers willing to rebate the vast majority of the commission. Perhaps let them advertise on your site if they agree to conform to your minimum set of rules.....

1sfrenter says

*Almost* all of the buyers are Chinese investors in this neighborhood, and the seller explicitly told us she did not want to sell to them.

Just out of curiosity, how do you know that they are investors, versus people looking for a house to live in?

It is another bubble/buying frenzy.
The anticipation of inflation and rising interest rates that come with it ENCOURAGE people to take on debt and buy things knowing that they will be paying back the debt with discounted dollars. This, in turns drives UP prices as the market bids up the price. The increase in price means more inflation and people anticipate more inflation and take on more debt to buy things... And around and around we go

bmwman91 says

Just out of curiosity, how do you know that they are investors, versus people looking for a house to live in?

Talking to neighbors and watching houses in the neighborhood get bought and then resold. Property shark and the assessor's online web site.

There is definitely something going on with RE. The inventory that is at least decent is gone days after it hits the market (OC), and multiple bids on everything. We've been looking but nothing is available to even bid on.
One thing is different from the bubble years: homes that are overpriced are sitting until they lower price. People aren't stepping up for substandard inventory either. But the premium stuff is flying off the shelves!

edvard2 says

Its literally the difference between night and day between here and there.

Yeah, but can you surf there?

1sfrenter says

Yeah, but can you surf there?

No, but you can water ski, hike, bike, go tubing in the river, camp in the Appalachians, eat GOOD southern food, see tons of live music, go to lots of newer microbreweries popping up all over the place ( friend of mine is starting one too), go muddin', take riverboat paddlewheeler cruises, and so on.

Lastly, you can buy 5 acres with a nice house- even a nice older house- with a barn and enough room for a HUGE garden for under 200k.

Course' you could also go surfing. Its a 1.5 hour flight to Miami and most beaches in FL...

ih8alameda2 says

That's just crazy @ptiemann.

Living a normal life and buying a house should not be such a bend-over and take it up the ass experience. Realtors are really the scum of the earth.

Ask what you want and think it's worth and take it when you get it. The upside of all this is because of my frustrations, I'm actually become an even happier renter.

(sigh)

You're not gonna live a normal life here. If that's what you want, you need to move.

It's not the realtors. It's the market. Talk to the old people, listen to what they have to say. The Bay Area was always high and now because of Silicon Valley and all the moneyed foreigners (Chinese and otherwise) who want to live here, it's even higher. If you go down to the Beltway area around DC or up to Boston, it's the same way. It's not cheap in the better suburbs of Columbus anymore. Westerville is high as hell compared to twenty years ago, and that's because of the schools.

Patrick and I just had this discussion. If you're content to rent, fine...but understand what it's costing you. If you have a family or you're not dual income or the single income isn't $150K or more, you're gonna move. The guy who works for the vendor that maintains our tape library lives in Tracy. Most of the people who work for the software company that wanted to interview me several months ago also live in Tracy. The guy who owns Ahart Aviation lives in Tracy. The lady who was my project manager when I had a contract with a local retail chain lived in Tracy and commuted to Walnut Creek every day. She had a late model BMW 3-series with almost a hundred thousand miles on it.

This is the way it's going to be. Some people will have the income or have rich parents or a trust fund to front a down payment. Life isn't fair.

It's northern California. There's a lot of money around. We knew before coming up here that the place was Disneyland. Two and two are still four, no matter how many people tell you it's five. The laws of physics, economics and common sense haven't been repealed by some dork who's spent too much time in school and runs around in a turtleneck sweater. We are strong and he is weak. So far, those values have served us well.

As for the million dollar condos or dinky little houses in Palo Alto, forget it. If you don't work for Facebook, Google or Apple and you're not coming here with corruption money from China, it ain't happening.

wthrfrk80 says

DukeLaw says

Try living in Houston and see where you'll climb, swim, cycle (much less board/ski).

True, but in Houston you wouldn't be living in voluntary serfdom like you would be in the Bay Area.

Not sure what your point is. I can afford to live here by choice. A lot of people can. I don't want to live on a small farm in North Carolina or in a cheap city in Texas. I've actually lived in both of those states already.

Pretending in your mind that everyone that buys in the Bay Area doesn't (a) have financial sense or (b) has mommy and daddy help is just an exercise in boosting your own self-esteem.

DukeLaw says

wthrfrk80 says

DukeLaw says

Try living in Houston and see where you'll climb, swim, cycle (much less board/ski).

True, but in Houston you wouldn't be living in voluntary serfdom like you would be in the Bay Area.

Not sure what your point is. I can afford to live here by choice. A lot of people can. I don't want to live on a small farm in North Carolina or in a cheap city in Texas. I've actually lived in both of those states already.

Pretending in your mind that everyone that buys in the Bay Area doesn't (a) have financial sense or (b) has mommy and daddy help is just an exercise in boosting your own self-esteem.

We lived in Texas. They had absolute top drawer shopping, brand new gorgeous infrastructure, new schools, we lived in a gigantic house, everything was very affordable...

...and we were sick about half of the time from allergies. It's a common problem for relocated Yankees. If your immune system wasn't built living in that bowl with the mold and spores, you're gonna have a problem. We had one.

So, when the opportunity came to move here we accepted it. We made it work even if the politics don't always fit us but we're also not going to deviate from the value set we acquired so many years ago in a place that's far away. Two and two are still four. If someone asks you a question, you look them in the eye and you answer it. Don't buy things you can't afford. God made Adam for Eve, not for Steve...and there's not a damn thing anyone can do about it.

rootvg says

. Two and two are still four. If someone asks you a question, you look them in the eye and you answer it. Don't buy things you can't afford. God made Adam for Eve, not for Steve...and there's not a damn thing anyone can do about it.

Hey pal, I used to believe in Santa too, but then I turned nine. Can you please keep your religious speculations out of the real estate forum? Thanks!

rowemoore says

rootvg says

. Two and two are still four. If someone asks you a question, you look them in the eye and you answer it. Don't buy things you can't afford. God made Adam for Eve, not for Steve...and there's not a damn thing anyone can do about it.

Hey pal, I used to believe in Santa too, but then I turned nine. Can you please keep your religious speculations out of the real estate forum? Thanks!

It's not religious, it's philosophical.

And no, I'm not gonna shut up and there's nothing you can do about it.

robertoaribas says

Homes are anything but commodities, each and every one is different, and each transaction has a number of variables: credit strength of the buyer, timing of the close, repairs before close, specifics of the home not observable before inspections, specifics of the neighborhood, home location etc, etc, etc.

Credit strength of the buyer is absolutely meaningless if it's a cash buyer (and even if not, the seller still receives the selling price in cash whether it's handed directly from the buyer or through the lending bank).

Specifics of the neighborhood and location are also freely knowable independent of the buyer and seller's personal details.

The only things that might influence the validity of an offer price are specifics not observable before inspection, and even those can only influence the ultimate price downward, since RE listings generally presume that inspection will be passed and that the home is livable.

For every other item in the world, an offer to sell at a price is an offer to sell at that price. The seller shouldn't even get an opportunity to wait and hope for a higher bidder.

You go to the store to buy that specific toaster.

And you go to an open house to buy that specific home. Homes are even more specific than toasters, since there are a limited number of identical units. (With single family homes, there's typically only one unique unit.)

If they want to run things auction-style with an unstated "reserve price", fine, do it that way. Just don't list a price that basically has no meaning.

Inventory is usually the number of unsold homes at the end of a month divided by the same months sales rate. For example if there are 100 unsold homes at the end of april and during april 10 homes sold then there would be 10 months worth of inventory.

robertoaribas says

Phoenix closed sales last 30 days: 9369

A simple search for Phoenix on Redfin, no constraints, last 30 days of sales, the number is 2,897.

rootvg says

God made Adam for Eve, not for Steve...and there's not a damn thing anyone can do about it.

Go back to Texas.

1sfrenter says

rootvg says

God made Adam for Eve, not for Steve...and there's not a damn thing anyone can do about it.

Go back to Texas.

We bought in Danville. We like it. It fits.

1sfrenter says

fizbin says

Isn't it just possible that the other committed buyers willing to spend more also happen to be nice people with perfectly lovely families, too?

Letters are useful if you have a situation where the seller has to pick between two roughly equivalent offers.

*Almost* all of the buyers are Chinese investors in this neighborhood, and the seller explicitly told us she did not want to sell to them.

Our offer is 19K over asking. 6 months ago, it would have been a done deal, but now, this spring, I don't know.

I just want to make sure our offer gets seen...if it's way under, oh well, nothing lost. But if it's in the ball park and she wants us and asks for more, then maybe...

Look, it's none of my business but why don't you go someplace where you can actually afford to live? Lafayette is progressive and certainly not cheap but it's also not nuts like San Francisco. It's right on BART.

rootvg says

rowemoore says

rootvg says

. Two and two are still four. If someone asks you a question, you look them in the eye and you answer it. Don't buy things you can't afford. God made Adam for Eve, not for Steve...and there's not a damn thing anyone can do about it.

Hey pal, I used to believe in Santa too, but then I turned nine. Can you please keep your religious speculations out of the real estate forum? Thanks!

It's not religious, it's philosophical.

And no, I'm not gonna shut up and there's nothing you can do about it.

I'm just saying I find your philosophy offensive and definitely not appropriate for the real estate forum.

rowemoore says

I'm just saying I find your philosophy offensive and definitely not appropriate for the real estate forum.

I would avoid this line of discussion with him. He has some good points with respect to housing and affordability in the Bay Area from time to time, although it isn't necessarily what some want to hear. However, he thrives on getting under the skin of folks with a sensitivity to political correctness. It's best to just ignore those parts of his posts that you disagree with (his whole shtick is that "progressives" are too narrow minded to tolerate a different POV and will wage war on him for not buying "their agenda").