Once upon a time in a neighborhood far far away developers made new zero plot line 3500 sqft. stucco homes for everyone to enjoy. These “homes” were valued beyond belief, for they were on the most hallowed ground in all-of-the-world, the San Francisco Bay Area. For a long while these magnificent edifices to all things boomer grew and grew in “value”, this of course was expected from Mr. Boomer and his second (third?) trophy-wife. After all, the entire world has curried their favor thus far, why shouldn’t their “home” provide an endless source of income in the form of cash out refi’s and HELOCs?
This world existed in peaceful harmony with all creatures big and small for many many moons. While the estates were labeled “McMansion” by some, their comments were taken on face value as these sort of mudslingers are typically just jealous bitter renters. All was well in Boomerville until an evil presence was felt. Rumors of a dark evil propaganda monger began to spread, and there was much fear. Ford Expeditions were piling up on the showroom floor and the Botox clinics no longer had waiting lists. For a short while it was whispered that this evil one sustained himself on the bitter tears shed by over-extended boomers.
This dark evil Prince of Propaganda upped the ante when he broadcast his vile diatribe for all to hear on the world wide web. A new sort of lighting fast propaganda delivery vehicle was developed, the blog, this device which has brought so much sorrow upon the happy development by the calm tranquil bay has come to be known as “Patrick.net”.
Patrick was a hideous vile hate filled little man; with venom coursing through his veins he sat by his cheap pine table writing his callous disparaging words. The “home-owners” were justifiably enraged. How dare one without the daring do to sign his life away make such callous and darn right mean statements? The rumor mongers at Patrick.net brought up, over and over again, terms that they clearly manufactured from some unknown, unverified data source, things such as “true valuation”, “reversion to mean” etc, were mentioned ad infinitum, ad nauseum.
The “home-owners” had a secret weapon though, not only was the Sweet Baby Jeebus on their side, but also were a group of skilled wordsmiths uniquely qualified to respond to the hooligans at Patrick.net. These Master Pulitzers were of course besmirched by Patrick’s neo-fascist online militia. One of Patricks Brownshirt’s, a creature so loathsome he goes by the name “HARM”, went so far as to call the skilled these skilled wordsmiths, “trolls”.
It was indeed a sad day in Boomerville, one can smell the bitter tears and only envision how sweet they taste to the horrible Patrick, sitting by his cheap pine table, in his pathetic rental.
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For a long while these magnificent edifices to all things boomer grew and grew in “value”, this of course was expected from Mr. Boomer and his second (third?) trophy-wife.
Then these magnificent edifices (Mc Mansions) were exposed for the giant, money-sucking orifices (a--holes) they really were, and then the party was finally (and mercifully) over!
Please turn out the lights.
And don't let the door hit you in your greedy Boomer a-- on the way out...
FollowBefriend3 threads1,170 comments
FYI, the otherside is upping the bet amount in the old thread:
FollowBefriend (6)5 threads2,368 comments
Not everybody who wants a regression to the mean here in the Bay Area is a jealous bitter renter.
Some of us are homeowners who hope that a correction will also correct some of the distortions around here. I remember the years between the Bush I base closures at the beginning of the decade and the rise of Netscape, there was a nose to the grindstone ethic in Santa Clara Valley. Unfortunately the dotcom bubble burst didn't finish the job to wrench us free from the arrogance that came up again with Netscape. We need another real estate correction like the one in 1991.
I am Enthralled with , A Bay Fable.
FollowBefriend23 threads2,038 comments surfer-x's website
FollowBefriend2 threads2,944 comments Different Sean's website
I can't afford real pine... mine is all Ikea chipboard coated with 'lacquer'. Some of it is pine veneer for that luxury feeling...
The best way to fight poverty is to eliminate welfare.
But they brought in welfare to eliminate poverty, poverty far worse than you see today in modern welfare state countries...
> Supervisor Sophie Maxwell has an initiative that would
> require private developers to sell 64% of their condos/
> houses/townhouses in the eastern part of the city at
> below market rate, which means that in SF they would
> actually lose money on each unit, and therefore build
> none in the entire eastern half of the city
This isn't so bad, if you do it the right way. The trick is to cool off land price speculation. What has been done can be undone. It just means land vendors will have to take less when they sell their land, not that the developers will have to go broke. And many land vendors are making windfall profits right now, if they bought back in 1970, or bought a 5-acre chicken farm in 1970, or whatever -- they will just make a lot less of a windfall. But, you can use so-called 'not for profit' developers also, as Bridge Housing in SF do, where the construction workers get paid but no-one walks off with 30% profit from the deal. The other thing you do is limit selling prices down the track with price covenants locked to the CPI or a similar measure, which stops people buying low and selling high -- kind of like rent control, but purchase price control instead. It's all doable with a little regulation, no-one has to go broke, and a reasonable social settlement can be reinstated. (See my blog. And please leave copious fawning comments, nothing disagreeing.)
> Different Sean, No private developer is going to
> build houses where you lose money on 64% of them.
> That is the job for the government, not private business.
For years I have (seriously) been working with elected leaders to get the government out of the housing business. I know that some people can point to the rare “nice, clean and safe” government housing project, but most (as I mentioned above not ALL) housing projects around the world are violent, gang infested dirty and dangerous places. In San Francisco year after year most (well over 50%) of the murders happen in and around our housing projects. A few years back over 50% of the murders in the city were in or within a block of just ONE (the Double Rock in Hunters Point) of the cities many housing projects.
In San Francisco we spend about 200% to 300% (it’s hard to gat accurate numbers) on public housing than private landlords in the city spend to operate much nicer units on average. The city could reduce the tax money they spend on housing and improve the quality of the housing by giving Section 8 vouchers and getting out of the business. The city could provide housing for all the poor in the city without spending ANY tax money if they would just give away land (or even increased density in exchange for a deed restriction that required a landlord to house low income people on the site in perpetuity…
FollowBefriend2 threads2,498 comments
Absolutely correct! theotherside's antics are only one of many attempts by realtors (TM), owners trying to sell, or anyone with a vested interest in the market not reverting back to the norm. These morons come here (and other boards) and loudly proclaim that real estate is booming, or, if it's not, it's the fault of the media and the worst is behind us. It reeks of desperation.
Speaking of spinning the bad data, the NAR's pending home sales numbers are out for November, and of course, they are down YoY, and they are slightly down MoM:
Check out the massive spin job from the NAR and the "journalist" who wrote this article.
FollowBefriend (5)44 threads4,602 comments Los Altos, CAPremium
palo alto renter
Exactly. "theotherside" is about as clear example of a provocateur who stays right on the line of being a bona fide Troll. The only reason I say he isn't a Troll is because (this time around*) he threw out numbers and calculations we could reconstruct and falsify.
But you're right, who's going to enter into any kind of agreement with an anonymous blogger who won't even answer the simple question: "What do you do for a living?" Can you even have a legal agreement with an anonymous counter party?
*I'm fairly sure TOS is MP is FR. Just a kid who dropped out of the investment banker track to become a realtor during the late bubble, now grasping at straws. This is why he thinks his math works. Unlike the standard issue realtor, he carries around a HP12c.
FollowBefriend1 threads6,749 comments Premium
The "Pending Home Sales Index" is a hell of a lot more important to realtwhores (TM) than it is to homeowners, sellers and buyers! The only home the average FS (TM) cares about is HIS! As a buyer, it means even less. For NAR this "all important" gauge is all about what NEXT month's commissions will look like.
Exactly! The NAR would be ecstatic if home prices dropped 50% AND sales volume tripled - that would net them more commission than they currently have, while Joe Homeseller would be ecstatic if home prices tripled and sales volume dried up to nil, as long as the tripling of home sale prices includes his own!
Hence the moral hazard inherent in being a realtor (TM), which is why the current system of real estate transactions needs to be thrown in the dumpster.
The current system by which real estate is bought and sold through "agents" is a textbook example of "The Agency Problem" (aka "principal-agent problem").
Or a specific reference to real-estate agents and this moral hazard from an economics perspective:
As always good points and great having you back!
In all fairness though for most realtwhores (TM) for better or for worse their own personal residence is kind of their "business card". I personally wouldn't have any problem dealing with one that said, "Yeah, I used to have a big trophy house but w/the kids off to college/divorce/spouse career change I decided that selling and renting just made sense at this time".
I want to stress, "I" wouldn't have issues w/that. Actually, I don't think most people would. What's really funny is that where it seems to matter most is in the minds of the realtors themselves.
The dumpster indeed. I can't count how many studies I've read where realtwhores (selling their own homes on their own behalf) typically sell more quickly and on avg. for 3% more than clients w/comparable homes.
It's funny though b/c that's what a lot of sellers on say C/L seem to be saying. "I don't give a rip about decline in sales volume, decline in median etc. I just KNOW there's a sucker out there just for me and "I" only need to get lucky once"!
"This is clearly a political move to maintain a political base in certain neighborhoods."
If they want to see how the experts do it.....visit N.O.
The Cresent City would have already been rebuilt if they didn't figure out a way for all the "evactuees" to vote, and vote often, from Houston, Atlanta, and all points distant.
It's about political power....always has been.....always will be.
There's been some head scratchin' about how Nagin was re-elected even though he's completely incompetent. Doing some checking with friends, here's what I was told:
1) Republicans hate Mary Landreiu (D-Senate)
2) Her brother, current Lt. Gov and pretty sharp guy, runs for mayor
3) To send her a message, they send it through her brother
4) Repubs funnel support to Nagin
5) Nagin wins and "owes them"
Strategy for defeating her is to have Nagin "sit this one out" during her upcoming campaign. Neutralize N.O. and she has no chance of winning.
The enemy of my enemy is my friend......
Who is the guy that does the impeccable Nagin impersonation on Imus' show? The guy has him down to "t". Freakin' hysterical.
Subdivision is Fun:
Or in the case of San Francisco, they would probably build large condo buildings. Just make 64% of them tiny studios and the rest large 2-3 bedrooms units.
But I'm sure the folks in charge are smart enough to have thought of this scheme.
FollowBefriend (4)117 threads17,655 comments Premium
Just make 64% of them tiny studios and the rest large 2-3 bedrooms units.
Better yet... tiny 2-3 bedroom units, designed in Tokyo, Japan. :)
Anyway, any anti-market policy cannot possibly be good.
palo alto renter Says:
> I have a few questions for the locals here,
> that I have not really seen addressed in
> any research or in MSM:
> What was the foreclosure mkt like here when
> we had the last bust? There was no such thing
> as a foreclosure here in the last ten years
> because if you owned the home for 30 minutes,
> you had equity. In 1990-1994, could you get a
> deal on an REO?
There were a lot less foreclosures in Northern California than in than Southern California in the early 90’s, but there were still quite a few. I was buying pools of bad commercial loans at the time and was getting faxes every week from most California Banks. The big banks like Home Savings had commercial only lists, but many of the smaller banks would send 10 page faxes listing all their bad loans (commercial and residential) that were REO or just went on the NOD list… My Uncle (the one with a urinal in his garage) made almost a couple million dollars on a two Hillsborough homes that he bought vacant from banks for half of the previous loan amounts. He rented the homes until 1999 and sold when they doubled in value (not having any idea that they would have doubled in value again by 2005)…
> Why so few FSBOs in the Bay Area?
> You see them everywhere,
> even in Tahoe. But rarely here.
I like to make fun of REALTORs tm as much as anyone else in the list, but like most other well educated intelligent people I’ll hire a broker (who may or may not be a REALTOR tm) to sell real estate for me. The more intelligent people are the more likely that are to 1. realize that they are not best person to perform every task and 2. that in the long run you are usually better off making money doing what you do best and paying an expert to do something that you know nothing about. In my neighborhood you don’t see a lot of people working on cars, hanging laundry from windows or trying to fix major appliances. If you drive through almost any trailer park in the US you will see a Camaro up on jackstands, laundry hanging from trees and windows and at least one major appliance taken apart that just “needs a little work” to get going. There are some nice parts of Tahoe, but there is still a large low IQ redneck population that saves money by buying retread tires, making their own anti-freeze window washer fluid and trying to save a few $ by selling their double wide (or A frame that they bought for $62K in 1997) without a broker…
In my neighborhood you don’t see a lot of people working on cars, hanging laundry from windows or trying to fix major appliances. If you drive through almost any trailer park in the US you will see a Camaro up on jackstands, laundry hanging from trees and windows and at least one major appliance taken apart that just “needs a little work” to get going.
Uh, is that really a consequence of their low IQ? or is it a consequence of them not having any money to spare?
Of course it is a consequence of some of them not having money to spare.
And probably some of them who may enjoy doing things for themselves. Doesn't mean they are "low IQ rednecks". Means they are different. Aren't Bay Area people self-described as being tolerant of, and respectful of, people who are different?
Whether or not it was intention of the writer, referring to such people as "low IQ" is an example of "liberal bigotry" that has come to dominance in the Bay Area. Maybe not expressed with the designer Hummer that has sprayed on mud for appearances, but just as hip and arrogant.
There's more of them types that were referred to with such derision in the USA than there are of the hip and cool who look down on them. (And, lest you think we can become the People's Republic of California, think again: the "low-IQ redneck" population of the Central Valley and Inland Empire (including "low IQ and redneck" people of color) is growing a whole lot faster than in the hip and cool coastal counties).
Such attitudes play right into the hands of those who are stoking a backlash by reference to Nancy Pelosi and her "San Francisco values".
It can be a function of their regional culture somewhat too. Although, I do very strongly agree with FAB's logic. Where I grew up, if you didn't participate in many of those behaviors you were ostracized. Most middle class people tried to do as much themselves as possible. A lot of this had to do with the fact our parents were children of the Depression/War, and our grandparents were parents of the Depression/War. A lot had to do with rural midwestern values vis-a-vis "decadence".
It didn't matter if you were a doctor, lawyer or busy business owner. When people got whiff you had maids and thew out old refrigerators you'd hear a lot more whispering behind your back in church on sundays.
So quite a bit has nothing to do with low-IQ; it has to do with a need to conform. To be successful is fine, but you'd better not show it in any way. "Who do you think you are? Too good to open your own hood?"
Of course I'm guilty of saying that successful people generally need to leave the rural midwest in order to succeed. (They can return later, but they seldom can become successful there initially). Maybe it's because they're too busy trying to replace their own fan belts.
FollowBefriend4 threads2,115 comments
Thought you would enjoy this nugget from the 2004 elections in Berkeley (given all the rabid enthusiasm for affordable housing here).
I have been following with dismay and some amusement the “affordable penthouse saga,” written by my District 5 Council race opponent, developer Laurie Capitelli, and some other affordable housing fanatics on our Zoning Adjustment Board. The story goes like this: While we ordinary middle-class folks pay through the nose to live in Berkeley, poor people are entitled to luxury ownership accommodations at the expense of taxpayers and a lower-density livable Berkeley. My opponent Capitelli and some other affordable housing fanatics on the Zoning Adjustment Board insist that some number of the “penthouse” condominium units in the unpopular and dense proposed nine-story new downtown Seagate project should be allocated to poor people, since to do otherwise would be to “segregate” them amongst the less-than-elite occupants of the downstairs units.
I am not making this up! You read all about it recently right here in the Planet.... I will not support subsidized penthouses for anyone.
Barbara Gilbert City Council candidate, District 5
FollowBefriend (1)119 threads4,785 comments HARM's website
Despite all the recent reports of sub-prime lenders going belly-up (Sebring Capital, Ownit, MLN, etc.), I'm still getting option-ARM spam at work. Latest fax advertising 0.25% payment locked for 5 years up to $1,000,000 loan. Monthly payment: $208.33.
Conclusion: Punchbowl has not been taken away yet. In fact, it's now approaching 200-proof and being offered to the town drunk.
FollowBefriend8 threads1,513 comments
208.33 per month for 5 years ? Wow.
Take the offer. It's the biggest no-brainer in the history of mankind !
This article starts off positively...
For all the talk of a housing slowdown, almost 97 percent of people who sold Bay Area homes in November got more than they paid for their properties and almost half at least doubled their money, according to a new report.
And then gets interesting....
Cagan says economists and others are also interested in the percentage of homes sold at a loss, meaning the most recent price is less than the prior sales price. Most homeowners are extremely reluctant to sell at a loss, and an increase in this number would be an ominous sign for the housing market and the economy.
In the Bay Area, these numbers are still low, ranging from 1.7 percent in Napa County (unchanged from October) to 5.6 percent in Marin County (up from 1.6 percent in October).
In Southern California, homes sold at a loss ranged from 1 percent in Los Angeles County to 6.2 percent in San Diego County. The condo market in San Diego County is even worse, with 10.8 percent of units being sold at a loss in November.
In 1992, almost 24 percent of Southern California homes and condos were sold at a loss, according to figures from Dataquick.
Long term, in the Bay Area and Southern California, housing appreciates only 3.5 percentage points a year over the rate of inflation, he says.
The current system by which real estate is bought and sold through “agents” is a textbook example of “The Agency Problem” (aka “principal-agent problem”).
Thanks for the link and info. If we were to maintain some kind of real estate agency system, one glaring problem I see that would need changing based on the "agency problem" you referenced is a complete lack of performance evaluation and/or incentive structure from the principal in the equation. Realtors get their 6% (split x ways) no matter how long it takes to sell a home, how much they sell in an absolute sense and relative to comps, how easy they make the transaction process for the seller, etc. etc. They see this 6% as some god-given privilege.
The reference to the "biggest no-brainer etc" is to an ad about mortgage/refi I hear every day on KCBS (a local radio news channel).
RE: affordable housing units in new developments, the possibility of developers "gaming the system" by building tiny units to sell cheaply depends on whether the BMR rules are based solely on price or on price per sq foot. Based on price per sq ft, a 400sf studio would need to sell for less that $300K to be "below market" compared to a 1200sf "loft" going for $900K in the same building. Of course, I'm discounting factors like ppsf is usually increased for smaller units, and floor location matters tremendously in high rise units the city (put all the BMR units on the 1st and 2nd floor of a high rise, looking at the dumpsters across the street).
@person & StuckinBA,
Y'know, I'm actually considering it. If some asian central bank is willing to underwrite a million-dollar suicide loan with a 5-year lock @$208/month, why not? I'd get a nice place to live for 5 years, virtually rent-free.
In CA, new mortgages are no-recourse, basically meaning the lender can't garnish/sue you for the balance owed, unless you refi (or HELOC). So, as long as I don't refi or pull money from the place, I could just mail the keys back in January, 2012, virtually without consequence. My FICO would take a hit, but so what? Lenders don't seem to care anymore and it's not like I'm planning on buying "for real" anytime soon.
Come to think of it, I could even just hire a straw buyer --some illegal or homeless person, like those crooks in St. Petersburg did. That way, I still get the nice, almost-free place to live in for 5 years and just move out. The straw buyer's credit takes the hit and I walk away completely unscathed.
Whadd'ya all think? Is it a plan?
Since no one has executed the plan you mention, it definitely sounds like a novel financial breakthrough idea. You can have it and eat it too ! If everyone else gets the wind then it will send house prices to sky and it might form a housing bubble. But you are early in the game, so buy it, rent it out for a positive cash flow, write a book about taunting renters how they are missing on the RE boom, and then move all the money overseas.
Five years should be enough to achieve all that.
FollowBefriend1 threads3,248 comments
palo alto renter,
I bought my home in the last downturn in South Bay. There were of course foreclosures but in the better neighborhoods, far less than you'd expect from an Bay Area "average" number. There was a sharp divide among properties on east bay and those on the west, which held their value much better, but still they were down about 20-25% in neighborhoods like Los Altos, Palo Alto, Menlo Park. In fact Palo Alto was down the most just from the impression of shopping around because it had a bigger ratio of recent owners compared to the other ones, since it is the trendiest of them all. However, don't expect massive foreclosure to happen in any decent neighborhoods, that I didn't see.
I came from an ARM-only culture. 30-yr fixed is a rather innovative product only available in the US. Oz just started to have 10-yr fixed, and UK has only 15-yr fixed the last time I checked. The bottomline is, if you are used to ARM, you are psychologically prepared for it. People build in some cushion when they sign on a loan, the loan officers are also a lot more cautious in assessing the loan to income ratio. The problem of the US is, people are treating ARM as if it were fixed, that's why it is exotic.
Hong Kong, Singapore, and Japan all have clean, well-planned government housing that is not infested with crime. In fact, 85% of Singapore's population live in the government housing.
In Hong Kong, it's about 50%.
I checked out one of the listings mailed to me (BTW, 4 new today as well.)
Asking price 890K for a 1100 sqft home. That's 800 per sqft. From DQ weekly reports the Cupertino median per sqft rate is less than 600. Zillow says the comps average around 611 per sqft. So this is about 30% over current market conditions.
I do not know what special enhancements are done to this one, but it is next to freeway 85. So this seems to me like worse than denial.
... but they don't have an ownership society. People there don't even own cars.
I don't know why they hate Freedom(TM).
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