WatchWe need to move and are sick of renting, but worried that the market has another leg down. We've been waiting for this bubble to play itself out since 2001, are getting older, and don't plan on being lifelong renters.
If you've been waiting to buy, are you waiting indefinitely (as we have for the past 13 years) or do you have a time frame (ie., 6 months, 1 year).
If we buy we plan on staying 10-20 years, or forever, whichever come first.
Thanks to this website and a few other housing blogs, we didn't buy during the bubble. I have friends who did and are now seriously underwater and stuck.
Would hate to be the sucker that shoulda waited another 12 months. Waiting another 3-5 years isn't really an option, I'd like to quit being an amateur armchair economist and get on with my life and stop thinking about housing before I retire.
I know none of us have a RE crystal ball, but the group wisdom saved me from being a sucker 6 years ago when everyone else was behaving like lemmings.
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Um there is not one single piece of data in his post, in which even he states are his observations. Please highlight actual verifiable data in his post (hint: you won't find any).
He may or may not be correct, but without any actual facts to backup the claims it's meaningless and disregarded.
And yes it's because I'm jealous (lol) and actually has nothing to do with the fact THAT THERE'S NO ACTUAL DATA TO BACKUP ANY OF THESE CLAIMS.
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I'd like to add that the company I contract for is ~80% EE PHDs and quite frankly the majority of them have the common sense of a turnip.
Of course some of them are absolutely brilliant, but it stands for paid high dumbass for a reason.
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CrazyMan...it IS true that housing here is a bargain for anyone that lives in HK and has any money. $1M will barely get you a 400SF condo in the desirable parts of that place. You can have all the cash in the universe and still not be able to get a house because there are so few of them in HK and they almost never go up for sale. Now, whether those people actually want to come here in any large number is another story entirely, but it is absolutely true that a Chinese person with money would see Bay Area RE as a deal.
I am not really sure WHY, but buying a house is even more dogmatic in Chinese culture. They are a pretty group-think society (not saying it is good or bad, just that it is what it is). You do well by conforming and not rocking the boat. So, there are a billion people over there convinced that buying a house is the only way that one can ever appear successful and (for males) attract a mate. Buying a house equates to safety & stability, and demonstrates that one is serious about making money & investing. Much of this mindless dogma carries right over here, and I see it a little among some of her family, and among some of her first-gen friends (spread by their zero-gen parents). Once they have been here a couple of generations, it usually subsides slightly to match the still idiotic fervor of white Americans.
My fiancee's father is worried, like REALLY worried, that we still rent. In his mind, not having a house prior to marriage just doesn't compute, and I imagine that he is embarrassed to tell friends/family in China (where he lives & works) that his daughter is marrying some American guy with no house. Over there, marrying a guy with no house is probably a social statement like, "well she's a nasty hag and that's probably the only option she'd ever have anyway, although you'd think she'd at least try find an UGLY guy with money!" Money & appearances are huge...it's an odd bastardization of eastern culture mixed with most of the worst parts of western capitalism. Sad, really.
With that said, not everyone there is like that. Most people are decent, hard working folks. It is the ones that have come upon a lot of money that generally seem to be the piles of crap. That's probably because you get rich by breaking rules and screwing over anyone and everyone, including family, to get the money. I have seen real life examples of this in my fiancee's family, and a number of my Chinese coworkers families. Anyway, most people there are good & hard working just like us. But, with a population of well over 1 billion, even if only 1% are bad apples, that is still over 25% of the US population worth of bad apples!
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CrazyMan says
+1111111111111111
sf ace is so full of shit and the sheeple just eat it up like crack. no data ever.
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CrazyMan says
I think that BACAH's point is that people of that culture assume that everyone aspires to live in a coveted place like cupertino. They would talk shit on someone that did if they didn't because they are jealous, and assume that anyone else that does has the same myopic view of life. He wasn't necessarily saying that YOU, or any culturally-American person is jealous.
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CrazyMan says
This is precisely why the BA is so ridiculously expensive. As I have been saying for a long time, you don't have to have any financial sense to make a lot of money. Start handing 6-figure salaries to people that find a way to live paycheck-to-paycheck, BEFORE buying a house, add 3.5% FHA loans & other creative instruments, and voila, you have stupid high RE prices!
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Crazy,
Like bmwman bimmerman says, I am office mates with those folks but i don't drink their Cool Aid. I am more like you than like them but like bimmerman says it is what it is and many of them will diss you off inside of their minds as being jealous.
It's sad really when you think of it. In the extreme, we wind up with things happening like what happened at Siport or on the train tracks near a local high school.
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bmwman91 says
I'm not Chinese but Asian so I can relate. In my culture, it is essential to own your own home. It is essential to help your kids to own their own home. We believe in real estate over money currency or gold. Once we own a piece of real estate, we will keep it and pass it down to the next generation. We are not into selling to upgrade into a bigger home. We tend to keep the small home in the family or rent it out, but not sell it. We upgrade to a bigger home because we can afford it.
You guys like to rent and save money. We like to buy real estate and save it. It's just a different form of saving.
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Hysteresis says
I know you guys don't like what SFace has to say, but he's speaking the truth. The fact that you guys cannot relate to our Asian culture doesn't invalidate his points. Calling others name when you disagree with their POV or having a lack understanding of their culture doesn't reflect very well on you.
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When you guys say buy, you really mean borrow, right? I mean you don't actually have the money for the house... and if you did,.. then you would just borrow for a bigger house , right?
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E-man says
Sure. I have no problem with anyone buying a house to LIVE in it, and to pass it on to children. That's what houses are supposed to be for. My gripe is with all the dummies that saw houses as ATM machines and quick money makers (and many that still do). Doling out loans to people that can barely save 2 months worth of income to buy $700k houses is also a big problem.
I wish to have a house someday for my own reasons (garage for woodworking & car projects, no attached walls so that I can fully enjoy my speaker-building hobbies). I rent apartments (relatively) cheaply to save money faster so that I can eventually buy what I want to live in. I could rent a house now, but that is prohibitively expensive!
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bimmerman, your comments about your inlaws' values speak volumes about the outlook for your intended union.
Good luck.
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B.A.C.A.H. says
I didn't mean to imply that my in-laws are the folks that I have a "cultural disagreement" with. Her dad is slowly understanding the whole idea that here, a house is just a house. Her family is mostly all here anyway, and has been since the 1980's, so they are about as American as anyone (except they seem to eat healthier lol). We all get along fine, and I never get hassled about the house thing personally (her dad nags her about it). Perhaps there was a little exaggeration on my part about her dad's outlook. The segment of her family that I have met is a bunch of nice good people. There is another segment that I have never met, and nobody talks to because they sort of put money before family in the past...and they live 6500 miles away so it isn't really an issue anyway. I wouldn't be marrying her if her family wasn't solid since you marry more than just the individual!
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bmwman91 says
RE prices in major cities of Asia is very expensive. For example, the price/rent ratio in Sentosa of Singapore is 764. S$17.6 mil (US$14.1 mil) for a house on a 8000 sqft lot size.
Source: http://www.propertyguru.com.sg/listing/5447781/for-sale-warm-welcoming-balinese-style-bungalow.
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Helloeeze says
And yet hardly any white gals marry Asian men?
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bmwman91 says
I don't know...in the IPO-rich 90's, I don't remember housing shooting up that much -- maybe the upper upper end will see a little thrust, but I think this is mostly an overplayed scenario.
For the original poster -- I'm in your boat. I just renewed the lease on my baby-shit green hovel, as I see nothing worth a damn out there, and no good lots to build on. I've been saving for the last four years. I had been saving and looking to buy in 2003-4, but backed away from that plan for obvious reasons. Spent the money on other stuff, and then started saving more seriously in mid-2008. Most of our salaries, plus every bonus, every ebay sale, every freaking onesy-twosy surplus. The biggest expense this year was paying my income taxes and replacing the transmission in my '89 Volvo. My savings habits have gone beyond frugality and well into abstemiousness. If most of Americans enjoy wealth effect, I enjoy something like poverty effect! The crisis I am encountering right now is that longer I defer gratification and live beneath my means in this way, the more my expectations rise in tandem. I find myself thinking, "is this really the dump it's all been for?" about places I would have readily considered even two or three years ago. I know I can't be alone in this.
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Helloeeze says
We came from a culture where we don't get rewarded for working hard. We bust our behind just to get by. Here in America, we get rewarded for busting our ass. This is the reason why we don't mind working 12 to 16 hours a day seven days a week as long as we get rewarded. Many of my family members did this for years. Yes, working 12 to 13 hours a day, 7 days a week.
Another contrast I see is that we shelter each other. Yes, the strong supports the weak. We unite our financial forces to make things happen. The parents are more than happy to sacrify their lives so they can provide the best for their kids. They will try their hardest to leave behind a pot of gold for each of their kids when they leave this world. Every generation is willing to sacrify to make sure the next generation is better off then theirs. How many of us are making this sacrify for the next generation in America? Or are we only thinking for ourselves, or are we not thinking far out enough?
For us, if the property doesn't cashflow neutral with 20% down, then we put 30%, 40% or even 50% percent to have cashflow neutral. We use the money we save to pay down the mortgage instead of blowing it on vacations or wine-and-dine. We're more than happy to work two jobs so we can pay-off our mortgage early. Our goal is to own a home free and clear so we can pass it down to our kids. Our joy is being a homeowner instead of taking vacations.
There are many people in my community, who used to work for Solectron for $4.25/hour, are homeowners. Yes, they bought in the 90's with their minimum wage and their little accumlated fortune. These people volunteered to work overtime every chance they got. Yes, they accumulated their wealth from working hard and being frugal. It's a shame that many of us, who are making a 6-figure salary each, keep on whining about how expensive real estate in the Bay Area is.
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1sfrenter says
Same boat. We are doomed. You could make double what you are making, and be in the same boat. The banks are giving the speculators and gamblers and the landed gentry/one-pecenters (like iwog) all the breaks.
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E-man says
Most bay area real estate results in a 625k loan. No amount of multiple jobs will ever pay that off. In fact, the people I see with the most money do nothing, its unearned, massive bonuses or massive capital gains. Working like a dog is not going to pay off a house.
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1sfrenter says
Patrick designed and operates a website devoted to this question.
Our gubmint decided to manipulate prices to mitigate damage caused from over-lending & over-borrowing. We will never know who would have suffered the most between citizens & financial institutions, if gubmint did NOT intervene.
No one knows the exact year that Real property will once again begin to appreciate. But we ALL agree, values are still being artificially propped up by centralized gubmint. Hopefully, our grandchildren will not be asking why housing keeps falling ?
What OUR gubmint ignores is the fact, that banks lack morality. Does that make you wonder who the gubmint is working for ?
Miss a few payments ? banks demolish your home.
Gubmint gives bank your tax money.
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Helloeeze says
my own experience:
1. from the guy's perspective: asian women usually have less attitude than white women(less hassle)
2. from the asian girl's perspective: asian women want to be white and can move up in class (an economic decision). white guys are more generally masculine than asian guys making them more physically attractive
the guy and girl both see benefits, for the small price of getting used to a different race.
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E-man says
So, who was selling in Hong Kong, when house prices dropped 70% back in 97-03. Where these not Asian people?
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Helloeeze says
Hysteresis says
from
http://en.wikipedia.org/wiki/Asian_fetish
It's no wonder why Tiger Moms will run themselves and their spouses ragged to secure their kids a slot in a school district that is free of blacks and hispanics.
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bmwman91 says
I laughed out loud when I read this because I could've written it myself, about some of my partners' remote relatives.
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dunnross says
The years after 1997 in HK are anomalous -- didn't people leave in droves when HK was given back to China?
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B.A.C.A.H. says
i would think taking a sample strictly from Columbia University's graduate programs would bias the results - the sample is extremely educated compared to the general population. while racism exists at all levels, the less informed and less educated often have greater discriminatory biases.
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Hysteresis, could be.
On the other hand, Bay Arean patrick.net bloggers are probably more akin to the Columbia cohort than your Bubba Belt cohort.
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B.A.C.A.H. says
columbia is a world renowned ivy league in NYC.
i'm not sure if patnet readers are closer to the bottom of the barrel or the top. maybe you're right and we're slightly closer to the top but then i wonder if we're just flattering ourselves. lol
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The discussion has taken an interesting turn. By odd coincidence, my girlfriend was Chinese from Shanghai and she was perhaps the epitome of driven hard working and eventually bossy woman.
She insisted I was "throwing away" money but I resisted to take my *capital* and buy a place in Monterey or environs. I told her to come up here and commute down. Nope. She had other plans, her friends had parents and relatives come on long visits for vacation, etc.
She also had interesting stories from Shanghai. Her aunt asked her for money because her cousin had lost a shitload of money gambling. My gilfriend's Shanghai ex-fiance had blown his money in similar fashion, and with no money she told him to find another girl.
Everyone knows that if they had a huge chunk of change or income, etc. a house with a view would be the second purchase after a Lambo or BMW. The point is how much debt you want to service.
In this country, you can get ahead. The parents who plan on leaving fortunes to their children or houses, etc. to them are missing the point. Let them sink or swim unless of course they have an obvious handicap.
What I saw in her and some other ladies was the odd combination of frugality and savings while wanting to take huge financial risks also.
She told me why not buy a house in Vegas? Her friend had done so.
"Because I don't live in Vegas for one reason." I replied.
The pressure started in Oct. 2009 I think and later I would email her from time to time about the differences in AAPL price and house prices down in Monterey or Marina.
They joke in China about women from Shanghai being bossy, and that the men wash the woman's panties there.
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Michinaga says
And, I suppose, Japan was also anomalous.
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What's also interesting is that in Japan there was so little supply and yet prices still fall.
My ex GF lived in a suburb of Tokyo. Her parents had to win a lottery to be privileged to buy their house. The house was pretty nice and the thing was probably worth a gazillion bucks around 1991.
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clambo says
Exact same thing is gonna happen to USA. 2006 + 20 years. We have screwed ourselves for until 2025,whether we like it or not,that is what it will be.
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Please refer to this chart: http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_pop_totl&idim=country:JPN&dl=en&hl=en&q=population+in+japan#!ctype=l&strail=false&bcs=d&nselm=h&met_y=sp_pop_totl&scale_y=lin&ind_y=false&rdim=region&idim=country:JPN:USA&ifdim=region&hl=en_US&dl=en&ind=false
Population of Japan hardly changed for the last twenty years. It is likely that the population of USA would continue to grow. Hence it is not likely that RE in USA would behave similarly as Japan.
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hanera says
Well, let the population increase as much as you want but those newly populated(local or foreign born) will not have enough money to buy the overpriced shacks - hence continued decline in high priced RE.
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Population increase does not matter,if most of that increase is in the middle class. Middle class will be toast in America for quite some time.
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Since you've already decided that would happen, I've nothing to add.
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hanera says
Hey, I don't decide, it is solid analysis. Think about it. There is a million $ shack sitting to be occupied and there are 10 middle class buyers thinking to occupy it and you throw in another 10 to make it total 20 buyers. All 20 or original 10 won't afford insanely price RE. I don't see all 20 to get big pay raises to get to that million $ shack any time soon,instead they will be hit by high cost of living,health care etc. - Middle class is really a toast in America.
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Bubblesitter,
First thing first, I do agree with you that prices in SV is insanely high. Also agree with you that middle class would find it increasingly difficult to buy (may be even rent) a house in SF Bay Area (I assume we're talking about SFBA, I'm not familiar with other places). That doesn't mean that house prices would be declining. House prices are influenced by availability of jobs, housing loan conditions (DP, interest rate), quality of schools, crime rates and existing established neighborhood conditions.
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RE: White guys & Asian women
I don't know why it is so prevalent here, to be honest. When I was younger, I SWORE that I'd never date an Asian woman because a) every white guy in the Bay Area does, and b) I figured they were all boring little subservient types (HAHA, yeah right) that cared about nothing other than fashion. I ragged on one of my buddies pretty bad when he was dating a Chinese girl back in like 2002.
Well, as karma would have it, I met my fiancee (HK/Chinese) in 2006 while I was an intern at Cisco Systems. It was a total coincidence as she was the other intern's friend from their days at UC Davis (she was visiting Cisco as a vendor and randomly went to lunch with my coworker, I tagged along...the rest is history). As far as I can tell, part of the reason for white guys + asian girls in the Silicon Valley is just the nature of high tech. There just aren't any white chicks in engineering! Well, even if there are, attractive ones are even fewer. From my experience, most of the ladies are Asian (Chinese) in technical fields around here. If you are going to meet a girl at work, and you are an engineer, then your options get sort of narrow.
I don't have any preference between white chicks & Asians. It just worked out that way...her & I clicked & the rest is history. She moved here in 1997 from HK (for obvious reasons) and went to HS & college in Davis. She got her citizenship a few years ago. I do have to say that she is a LOT more reasonable than a lot of white females that I knew & dated in college. Lots (not all) of American white chicks have this sort of "feminist entitlement" mentality where they think that they are supposed to own the man in the relationship, and that "maternal instincts" will always trump anything else (like common sense about borrowing $730k on 3.5% down "for the baby"). I think that that mentality leads to a lot of divorces, and it's been documented that women initiate the divorce 70% of the time, probably because they feel like they are not getting their way. People in general seem to have difficulty compromising & being reasonable, but I really do feel like women have become MORE unreasonable in the last 30 years, largely because society tells them that it is OK ("you are asserting your rights as a woman"). What ever happened to the 50/50 relationship?!
Anyway, I knew my lady was a keeper because we can both call each other on each other's BS, and we can both say, "I'm sorry I was wrong." I dated a lot of girls, and very few were capable of that (and neither was I when I was younger). Just as a funny aside, Planet Granite in Sunnyvale after 6PM is basically nothing but white guy / asian girl couples climbing. It must be the fact that white people are obsessed with the outdoors & related activities, and that Asian women are super competitive that seems to make that sport so attractive to them lol.
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BTW, I can't wait for the PPP (pious peninsula progressives) to read my last post. The PC-police will have a field day with that one lol.