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It's been quite a while since I authored any threads. I've been very busy lately and have fallen behind on most of my blogging. Damned need to make a living!
Anyway, I thought some of you might find this NYT article today interesting: Be It Ever So Illogical: Homeowners Who Won’t Cut the Price
--Randy H
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Los Altos, CA
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And yes, prices are sticky. :)
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Let them keep their overpriced homes and keep dreaming. It distracts them and allows me to buy more Oil Sands Stock. The more money they throw after a bad bet, the better it is for me.
In the end I think more people will simply lose their sources of income and be forced to adjust their views. When the banks take the collateral, I think they will be more reasonable in the price points. The suburbs are the slums of the future.
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Randy H,
How did they approach you about doing the article?
Must feel good to be right on BOTH counts! Sometime back I pointed out an ultra-ridiculous priced home in Wilsonville, OR to the crowd at Ben's blog. Even those most familiar w/ the area just laughed.
I found the owners die-hard stance depressing until someone pointed out that there are... those sellers that simply like to list their property at peak o' last cycle (+ 10%) just so they can daydream about what life would be like with all that money! I haven't taken the irrational actions of delusional sellers personal ever since.
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Los Altos, CA
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Hey DinOR
I had been emailing the reporter over the past year or so following up some articles he wrote on the subject a while back. He called me up last week and asked about our situation and that led to his idea to use us in this article. A lot of the reasoning in the piece might sound a little familiar too.
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BayAreaIdiot's website
So now you're getting your propaganda about price stickiness - which every idiot knows doesn't happen - into the NYT? I never trusted them anyway :-)
In all seriousness, I think this article does everyone a great service and I hope it gets lots and lots of play. I'm thankful you had the audacity ;-) to allow your name in the story, so it's obvious nobody is making anything up.
I've just about had it with all the "victimology" focused RE articles. Seeing a NYT story about a non-idiot affluent couple and their considerations when buying - even in prime territory - can only help open some eyes. I hope.
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765980 Active $1,099,999.00 -- 11/30/2007 3 2.5 2331 105 --
743272 Sold $1,199,000.00 $1,199,000.00 8/2/2007 3 2.5 2331 6 9/8/2007
Look at these 2 houses, first one is 100K under comp and still sitting there for more than 3 months.
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I have noticed a lot more for sale signs up in Burlingame and Menlo Park. I know of many people (with great credit and great jobs) that will be in big trouble if they don't sell by the end of the IO period. I often stop and grab the flyers on for sale signs to see the asking prices and at least in Burlingame and Menlo Park the asking prices are commig down (one home that has been on the market for over a year just got a third new Realtor who is asking $500K less than the original asking price...
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Wow!
The reality is that to most people being right is more important than the bottom line.
Then again, market is mostly psychology.
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For both economic and psychological reasons, there is no asset more conducive to hopeful overvaluation.
Most people hope. Be it a stock or a house.
Since one cannot swing-trade a house or short-sell a house, they all hope that prices will go up.
Classic buy-and-hope syndrome.
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Boise, ID
I really like that new term: "hopeful overvaluation". Should we add this to the glossary?
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HARM's website
Congratulations, my man! Nice piece --and yes, the reasononing has a "familiar" ring to it :-). Not a bad layman's primer on mental accounting and loss aversion psychology.
Btw, are you really paying $3250/mo. for a Marin 4Bdm? Compared to current wishing prices, sure, it's a relative bargain, but... still.
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Hope is the hybrid of greed and fear.
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HARM's website
“hopeful overvaluation”. Should we add this to the glossary?
A.k.a, "wishing price".
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Randy H,
It's always good to get that story out there and it's also important to get the MSM to understand that not everyone that is bubble-sitting wears a tin foil hat.
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"I often stop and grab the flyers"
Oh FAB don't be modest. We all know you see today's flyers as tomorrow's foreclosures?!
(There's blood in the water)
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Randy,
How does the stickiness this time compares with stickiness in other downturns ? There may not be a metric, but seems like there is lot less stickiness in this downturn - this year at least.
From the point of view of RE agents, sellers, mort brokers, perma-bulls and knife-catchers something simply imploded last summer. Now, "all of a sudden" getting a loan and refinancing an existing loan became difficult.
Hence I am seeing nice % drops in asking price and very rapidly. I was trying to make some prediction for EBGuy in another thread and stared looking at Dublin. I saw routine price drops of 50K+ on 800K houses and many even with 100K drops. Dublin has been also interesting to me, as I was predicting that the bust will travel on 580 from Stockton to Tracy to Dublin and onwards, and that script seems to be playing well. The same has happened on 101, Gilroy-Morgan Hill - San Jose. The summer is going to be interesting.
Anyways, it "feels" like less and less sticky as we move along. This was not the case last year.
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If this site is getting 50k hits, should we do an example of what leverage looks like on the way down?
I have done a quick analysis using Patrick's Sanaa Clara County data and the difference between what you lose investing the amount of a down payment in the market versus the loss in investing in a home is just staggering.
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What the heck caused that viewership spike on Monday, I wonder?
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Duke,
Roger that. The "stand-off" used to be between reluctant buyers and entrenched sellers. (Now it's between buyers and lenders!) LOL
I've heard of closings folding literally on the day of signing because lenders now want 20, not 10% down! So... if "someone" is going to take the hit...
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For those of you who don't want to register with the NY Times the piece can be reached here. Inflation adjusted Shiller graphs -- what will they think of next? :-)