344 Laguna Dr, Milpitas, CA 95035
By anonymous Tue, 4 May 2010, 12:54pm 2,259 views 55 comments
In Milpitas CA 95035
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Boulder Creek, CA
I don't to be honest, sorry. Since I'm happy where I'm at I don't really look all that often.
I just went through craigslist and bargained. For instance I said I'd do the lawn, so the rent was reduced $100.00. I have it done for $50.00 :)
Craigslist are asking prices, if you have good credit and seem like a good tenant, I think there's quite a lot of bargaining room.
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thomas.wong1986 says
Why be so disingenuous in the way you report your data? It depends on where you want to take your housing baseline. I know you like to take the mid 90's as your baseline. I like to look at things based on all factors affecting it.
This home was bought in 1988 for $299k. We've had 100% inflation since 1988. Shouldn't this home worth $598k now based solely on inflation?
Also, your forgot to factor in the interest rate. It was around 10% in 1988 vs. 5% now. Based on this information, couldn't you arguably say this home could worth close to $1.2 million now? I'm just saying.
I just don't like the fact that your argument is so one dimensional. What if the current interest rate is 30% and this home is selling for $250k. I guess you would say this home is under-valued.
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CrazyMan says
Just by your statements above, we're pretty much in agreement more often than you think. Based on all the data I've gathered, I do think we're much closer to the bottom than the top. I just don't think we have much room to fall. 10% max IMO.
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SiO2 says
This home could be rented for $2,200/mo. If you want to go the Section 8 route, it shouldn't have any problems renting for $2,400.
My cousin currently rents his 3/2, 1,400 sq.ft. SFH in Santa Teresa/Bernal area to Section 8 for $2,200/mo. I know it's crazy, but that's the market.
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Boulder Creek, CA
E-man says
If unemployment was 4% and the market wasn't being propped to retain artificial prices, I'd be more inclined to agree with that.
If unemployment stays at 20% for a couple more years and prices don't move further down, I'll begin to worry :)
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Never mind! It went pending w/o release yesterday. That means they have a solid buyer. It was scheduled to go to auction next month, but I guess it won't make it.
@ SF ace,
"The only thing is the pool, which may be a dealbreaker for some and valuable to others."
It's funny you said this. It's a deal breaker for my wife, but valuable to my friend's wife. I however see this as an opportunity to knock $10k of the asking price since I would make it to be a deal breaker.
If you play your cards right, I think you could buy this home for as low as $520k as a short sale. You could however pick this up at the courthouse steps for around $450k IMO.
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now pending, I suspect it may be around 569K-589K.
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Redwood City, CA
I missed out on jaso and the other stock. I was thinking I would buy into it. Then some news came out and it popped up 20% and I thought I would wait until it dropped after the news wore off, and it didn't :P 40% gain would have been nice too. :)
So what are your thoughts on our current trends? We've just broken the 9800 level. Where are we headed guys? I'm sitting in 50% cash right now. I have some buy orders in if C hits 3.56, which was it's last low. But I'm wondering if I should be waiting and/or looking at something else right now. C seems to be in it's own world, churning between 3.75-4.00 regardless of what the market has been doing.
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pkennedy,
lots of sell trigger late. up trend was broken this quarter and now key support appears to be broken, the next support level is around 8800 or another 10% or so. Clearly, it is not a good time to be long. institutions have been buying all class of bonds agressively.
We broke support because GDP growth has stalled, the recovery is less than expected, jobs situation is still weak, Europe is hunkering up and the exchange rate will work against US corporation for the first time in quite some time. Short term, we are headed down and July may be a tough month.
2Q closed today for most companies so a slew of report cards will be coming in a couple of weeks and that will determine where support may be headed.
In these cases, I always caution on the side of the defensive with a mix of bonds, preferred shares, stategic longs and cash. If you don't make money oh well, just don't lose money. I always felt that gains comes in big spurts so as long as you are not riding the market down, you will outperform in the long haul. You'll have to resist the urge that every month will return a certain %. I always felt holding bonds is more effective than holding cash in defensive alignment.
That's my strategy in a nutshell, Corporate bonds (25%) Cash 10%, preferreds (25%) and Common Longs (40%)
401k non control allocation, REIT index 25%, Bonds 25%, Foreign index 25%, S&P index 25%.
Housing will be significantly weaker this Summer, with month to month price decrease. interest rates will stay low for quite some time.
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S Face,
What is meant a "support level"? What is doing the support?
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Redwood City, CA
I'll give it a shot.
A support level is nothing more than a combination of where people have bought into a stock, when they bought in, and how the stock has performed over the past. Generally a 200 day moving average is a pretty good indication of a support level. It isn't backed up by any solid math either, but because so many people use the 200 day moving average it becomes a self fulfilling prophecy.
Think of it this way. If you bought a house for 800K, how high or low would you let it go, before selling it? Now add in all of your neighbors thinking the same way. How high or low are they going to let it go. You don't want to be the last one selling either! So you're trying to stay ahead of them. Even if the house is worth 800K, if they all start selling, your house value is going to go down. So you want to sell before that happens! This is more or less the support level mentality. How many people bought at an X price point, how long have they had it at X price point and how much pain are they going to accept before selling, or saying "wow! this is a great deal!" and start buying and pushing the price up.
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E-man says
No I would not use 1988 as a starting point since it was a peak bubble years as was 2005-06 all based in irrational exhuberance. If you cant justify 2005-06 prices why justify 1988 prices? Lets just recall that after 1988, prices went into a deep fall. Prices dropped 30-40%. Soberity is a b*tch.
Yes mid 90s plus inflation and factoring in incomes is the only dimensions I use to justify prices. What ever that home sold for as new during peak year becomes irrelavent considering similar new homes were selling for much less. We have already seen today, prices of newly made homes go down.
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E-man says
No. Back in a few decades ago, buyers focused on the price, price, price. Today with all the 'new financial products' its been a marketing wet dream, where buyers focus way too much on payment. And this is why we got into this mess which created a near depression.
As I recall, many in the RE industry kept saying: "your not buying a house, your buying a payment". That kind of thinking has failed.
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Redwood City, CA
@thomas
It's two sides of the same coin.
Price, price, price and monthly payment are fairly tightly tied together.
Price is relevant when you have only one type of mortgage available. You could even then look at monthly payments and work backwards to the price.
With multiple methods, people can decide how long they want to pay for, but their primary objective is still monthly payments.
If you told someone back then they could buy a house for X, or X, or X and it wouldn't change their monthly payment, they would do it as well. It's just that the options were far fewer so they viewed the price as the only moving target for them to look at.
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Hmmm...
pkennedy says
Thank you Kennedy; it sounds more like a bunch of crap to me; kind of like how the Cool and Hip refer to different mutual funds or loans or bonds or CD's as a "Product".
I got some http://www.merriam-webster.com/dictionary definitions for "support"
"...to endure bravely or quietly"
"... to promote the interests or cause of"
"...to uphold or defend as valid or right"
"...to act with"
"...to pay the costs of"
"...to hold up or serve as a foundation or prop for"
"...to maintain at a desired level"
"...to keep from fainting, yielding, or losing courage"
"..to keep going"
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@sybrib
If it was an exact science, there wouldn't be any investors.
It's a fairly well understood metric that most investors use. It's fairly loosely defined by nature. It isn't an exact science and brings into trading the mentality of the traders. Are they feeling good in general? Are they feeling down? Are they bearish or bullish? If they're bearish, at what point will their numbers turn into bulls? Generally at a support level.
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@pkennedy
S&P 500 50MA day is about to cross the 200MA. when that happens, it is extremely bearish and 200MA becomes resistance not support. Also known as Death Cross. Option futures are extremely bearish as well.
The death cross by itself is not worrisome, but Bonds yield made the cross as well and options futures are negative. Institutions already moved from equity into bonds. These are times to protect your assets. I've been working and talking to people a lot lately and for me personally decided to hunker up. I need to reallocate my non controlled 401k to cash and fixed income soon.
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SF ace,
Very interesting. We typically get a 3- to 5-year bull run after a bear market. However, this bull run looks so short lived this time around . The buy signal was in 05/09, which is barely over a year. Hmmm.
At this point, the bear does have the upper hand. S&P 500 broke its support. Long-term bond yields are at historic low since 1962. This tells us the fundamentals of our economy are not as rosy as some recent published data. I believe it's time to get a little defensive and don't try to be a hero :o)
I guess take profit on JASO?
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Bethesda, MD
We're just seeing the inevitable double dip in the market. Honestly, were did all of this value in the market suddenly come from over the last couple of years?
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@ SF ace and pkennedy,
I just sold $700 shares of JASO and locked in the 25% profit. I'll let 500 shares ride. I will buy back in if it hits $4.25 again. REITs are doing terrific. I own AGNC, NLY and HTS. No death cross yet :o)
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congrats on locking in profits in a tough market. I'll let JASO and SPWRA ride just before solar companies are set to report.
i'll keep you guys in mind for future opportunities. Thanks for sharing REITS. Watch out for what's going to happen to taxation of dividends.
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Thanks SF ace for the recommendation and the warning :o)
Couldn't have made $$ without you.
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Sold JASO @ 6.09, 37% in one month
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No reason to hang on. Sold the rest @ $6.07 :o)
Too much over-head resistance after a big move up.
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SF Ace - I think that REIT dividends are currently taxed as regular income, not qualified dividends. So the change in dividend taxation wouldn't matter. Is that right?
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SiO2 says
Correct, thanks for pointing it out. But since there is no income tax at the enity level, REIT's make great holdings for a non-controlled 401K type retirement account or persons who's taxable income is low so oridinary treatment is not penalized.
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Thought I would lob this in:
http://gmw.consrv.ca.gov/shmp/download/pdf/ozn_milp.pdf
This house is located in the green area of the above map. Be sure to buy some earthquake insurance, especially if you are a landlord. Personally, I would not buy anything in the green or anywhere near the blue areas of the map. Maybe on the fringes of the green area if it was built in the last 10 years or so when building codes advanced appreciably, and if it was located far enough away from rivers or streams where liquefaction would be the worst. However, its what you cant see underground that is the real killer - think Marina District during the 1989 quake.
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rblack says
Wow, really? Are you comparing apples to oranges? Give me a brief summary of the geology of Marina District comparing to Milpitas or this residence then we'll talk further. Otherwise, you shouldn't be putting this information out there without a good understanding of it.
In regards to buying earthquake insurance, what's the probability of another earthquake happening in the next 80 years? Please don't quote "The Working Group" if you don't fully understand it.
If you don't respond to this, I would assume that you have no idea what you're talking about :o)
E-man
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E-man:
Ok, maybe I am comparing tangerines to oranges. The part of the Marina District that liquefied was primarily built on reclaimed land (i.e. reclaimed from the bay and filled with whatever material they had - sand, bricks, etc.). Admittedly, most of Milpitas geology doesnt fit that description - but some likely does, especially near rivers, streams, sloughs, old estuaries, etc. that have been straightened out by past development. How would the typical homebuyer find out?? How does one know which areas are more or less risky by looking at that map????
I believe the chances of an earthquake on the Hayward fault are about 30% within the life of a typical home loan (not sure about that but I'm in the ballpark - havent read anything re: "The Working Group" so cant comment on that) This is probably much higher probability than having a house fire, which nobody thinks twice about insuring for.
I suppose you could rely on FEMA, but the govnt is notoriously stingy when it comes to reimbersing disaster victims. I guess I am just more risk averse than most so consider my opinion on not buying in Milpitas just that - an opinion. But you might want to think about the insurance just in case I'm right :).
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Redwood City, CA
@rblack
30% of an earthquake happening during a 30 year term? Ok that is decent enough.
How about the % chance of an earthquake being near enough you, that it could even cause damage? 30% chance of a big one around here, yes. Near where you buy a house? 1%?
How about the % chance of an earthquake being large enough to cause damage to your property? Lots of earthquakes, only a few are big enough to cause damage. Look at the last big one in LA. It caused a lot of damage, but really how many houses were 100% written off?
If your house is damaged, how easily could it be fixed after an earthquake?
Chances of it fully disappear into the land are almost non-existent. Which means you'll have a property that might require straightening, or putting in new supports for.
Deductible on earthquake insurance is fairly high. After you've paid off that deducible, unless you've had a near full write off, you're likely not going to net much.
Finally, many places might have back fill, but it requires massive amounts of area to be back filled, otherwise you might get an unstable situation in one area, but it will be "locked in" by the surround stable land. In an area that has water, sand and back fill all mixed together, the back fill has a place to escape into.
Fire insurance - It might not happen, but when it does, you're going to lose a LOT of your house, if not 100% of it. If the fire gets a few minutes head start before the fire department is notified you'll lose the whole thing for sure.
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@ rblack and pkennedy,
I used to be in this seismic business and was pretty damn god at it. However, I decided to quit late last year to pursue real estate investing full-time. I'm only one phone call from having my job back if I want it. Yes, I'm that good, or may be I'm just over confident :o)
In general, I know the geology of the entire Bay Area pretty well. rblack is talking about "risk" management by having an earthquake insurance. That's totally understandable. Seismologists estimate there is a 70% chance that an earthquake of 6.7 magnitude or greater to occur in the Bay Area within the next 30 years. Basically it narrowed down to 3 faults that can generate this magnitude (San Andreasn Hayward & Calaveras Faults). Seismologists believe that we're due for a big earthquake from the Hayward fault. The last time we had a 7.0 magnitude earthquake from the Hayward Fault was in 1868 (142 years ago). The last 2 big ones from the San Andreas faults are 1989 (7.0M) and 1906 (7.9M).
Note: The Hayward runs through the Berkeley Stadium and whole bunch of homes in that region. So yes, I would be careful buying in the Marina District (or areas with similar geology)as well as certain parts of the East Bay. If you buy an older home, make sure the foundation has anchor bolts. If you were going to buy earthquake insurance, I would cancel it immediately after the next big earthquake since you would likely not experience another one in your lifetime :o)
I would say comparing the Milpitas to Marina District is like cumquats (sp?) to oranges, not quite tangerines to oranges in my humble opinion of course :o)
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Redwood City, CA
Ok forget about quakes..
Back to the economy. Christ, intel blew their numbers out. Amd is next (still holding a good number of those shares... hopefully this didn't come at the expense of AMD share...)
I missed the boat on the 9800-10300 runup :( I'm guessing we're due for a decent run up? What do you guys think?
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@pkennedy,
LOL, I got a good laugh out of that.
AMD is on a down trend channel. I would sell if it pops tomorrow. It's coming up against resistance at $8 or low $8. Another reistance at $8.75 to $9. Right now, its share price is in the middle of the channel. Its chart sucks. Big volume on down days, light volume on up days. Also, it doesn't pay a dividend.
I'll let SF ace have the final say.
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Oh I know AMD sucks, but it's on a roll right now, on it's cycle up. I'm going to dump it when it's finished this cycle for sure.
I'm thinking other stocks right now. I'm guessing if intel hit that hard, others are likely to follow suit. Companies felt flush with cash and bought up new equipment. Although I'm wondering if they were buying to prepare for a recovery or buying due to need.
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Something to keep in mind, the market anticipates the cycle. Therefore, it tends to run up before the cycle ended. Something like "buy on rumors, sell on the news."
For whatever it's worth, here is my IRA portfolio with 10% in cash. I get 5.5% dividend yields annually from this portfolio. Don't have time to day trade. SF ace, feel free to give any inputs.
AGNC
HTS
NLY
DO
TOT
GS
MO
VZ
SBUX
PFE
GILD (A dog :o)
TEVA
SID
SCCO
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@e-man, that's definitely a dividend focused portfolio. I love reits as much as you do and love the fact that they are not taxed at the entity level which makes them great for IRA's. Maybe you should look into a REIT index instead, but if you know the individual REITS well, perhaps buy 5-10 instead.
Not a fan of Altria going forward, maybe consider LLY instead. My other favorite and one that my entire family has is WLFCP.
For someone in the valley, you're a little light on tech, I don't blame you, they create employee value, not shareholder value. But I have GOOG as a core.
@pkennedy, you're probably aware, but I despise AMD management, AMD has been a public company for 30 years and have not created a dollar of shareholder equity. All they do is get bigger through stock dilution and distribute the shares to management and employee, that has never changed. Great to work for but absolutely horrible investment. AMD management has collected billions in salaries and owing/selling more and more shares while leaving shareholders with nothing but dilution. But I guess you can play the semi-cycle if you understand it well.
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SF Ace, you wrote:
"For someone in the valley, you’re a little light on tech, I don’t blame you, they create employee value, not shareholder value. But I have GOOG as a core."
A Si valley resident being light on tech may be a good diversification strategy. If tech goes up, then employment and house prices go up. If it goes down, said resident may be happy to have some non-correlated non-tech stocks.
You may guess from my handle that I'm in chips. I don't own any individual chip stocks (other than indexes, and stock grants from my employer.) My company is correlated to INTC and other chippers, so diversification is good.
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Redwood City, CA
@SF ace
I agree. Unfortunately I've learned the semi-cycle the hard way, but now I'm confident of the next cycle coming for AMD. Things have changed slightly this time, but I'm pretty sure the cycle will be there. I'll be dumping it during the next cycle for sure! Now that I realize holding it is bad over time :)
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@ pkennedy,
Good luck with your semi-cycle timing. I hope you'll catch this wave and get out of AMD.
@ SF ace,
Yes, I have tech in my portfolio. GILD is a bio-TECH company in Foster City. j/k
Ok, I'll swap MO for LLY. I'll buy some WLFCP. I got out of GOOG a while back after realizing I bought in at the wrong entry point. I'll find another entry point for it (probably mid $400).
Try to sell me on SPG & AVB. They pay only 3% dividend. Are they having more growth potential than other reits?
Thx.
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@e-man
I have roughly a 18 month window I'm guessing. Since I'm sitting on that window now, it seems useless to sell now :( But I do want to get out of it, I just have a pretty firm understanding of where the tech is going for the next "round" and it could really bump this stock up.
And AMD is drumming to it's own beat, as always... Essentially every stock other than GS is down today, Down down 230 now, and amd is up 2-3% still.