patrick.net

Where is the project?

Between downtown and Chestnut, East of El Camino. There's another newer one going in South of Woodside Road, East of El Camino, in an even worse area. They're going for the Emeryville standard: build condos in the worst part of a rail corridor, carved out of Section 8 housing neighborhoods.

The Ikura is on me.

The Ikura is on me.

I will get some Uni.
Add one quail egg.
We have a cholesterol feast.

Converting chickencoops to living quarters for $79K MIT graduates in the Bay Area?

Even my cat lived better when I was living in San Jose, and he doesn't have any fancy college degrees.

Certainly there is some sort of larger metaphor being presented to us by this whole housing hysteria. Certainly it is an image of some higher, unpleasant truth.

Perhaps it's that California in general, and the Bay Area in particular is nothing more than a giant friggen' psych ward, where the inmate pay
for the privilege of being incarcerated.

Certainly the Bay Area is becoming a caraciture of its former self, if
not a shell.

Pray for the housing bubble collapse...

Pray hard!

Perhaps it’s that California in general, and the Bay Area in particular is nothing more than a giant friggen’ psych ward, where the inmate pay
for the privilege of being incarcerated.

There is a term for it: voluntarily committed! :)

“Is it earlier than normal for sellers to re-list”?
--I’m not sure that re-listing is part of the normal protocol.

DinOr--
I recall hearing about sellers delisting homes over the winter, hoping for things to pick up again in the spring. I'm not sure that's the case, but I'm seeing inventory pick up again. Perhaps this is a seasonal norm.

Pray for the housing bubble collapse…

Divine intervention is not necessary. We should pray hard for America though.

If you are serious about selling your “home” why would you take it off the market for a few weeks then “re-list”. What’s the strategy here? Is this like “window re-dressing”?

They are attempting to manipulate buyer psychology.

Now you see it. Now you do not. Now you see it again. Buy before it disappears.

If you are serious about selling your “home” why would you take it off the market for a few weeks then “re-list”. What’s the strategy here? Is this like “window re-dressing”?

They are attempting to manipulate buyer psychology.

I don't know if there's any truth to it, but I did notice a significant drop in home listings late November to Dec '05. All the same, I can guess which sounds better: listed since July 05, or just listed Feb 06.

I don’t know if there’s any truth to it, but I did notice a significant drop in home listings late November to Dec ‘05. All the same, I can guess which sounds better: listed since July 05, or just listed Feb 06.

Yes, realtors can point to the listings and say that most entries were listed not long ago. Meaning: buy now or they will be gone!

When a property sits on the market for a long time, people start to wonder what’s wrong with it. The de-list/re-list combats that psychology.

The price is wrong. This fact cannot be corrected until the price is significantly reduced.

Also, any respectable buyer's agent should be able to dig up this relisting history.

This is really flirting with some core ethical issues then isn’t it? I can see someone backing out of a listing b/c of personal issues, job transfer didn’t go through etc. This is getting awfully silly for adults, why aren’t there at least some guidelines as to what is ethical/legal here?

I tend to agree here. But to me it is mostly a silliness issue. Any rational buyer with a competent agent should be able to see through the smoke.

But again, I can also say that a rational buyer in this market has wings. This statement is just similar to "a unicorn has one horn".

I'll step in and say something about "bay area psychology". As a person coming from out of state, I noticed something oddly amiss here. After a few years, I've come to realize that people here seem to in many ways be fairly progressive, but alarmingly immature about tons of things. Back home, you got your job, you got your house, you had fun on the weekends, but you got your act together, and didn't fool around because by the time you are 30, you reallly should be acting like an adult. That isn't so here. I know way too many people who are 35-40 years old, still partying it up every night, drinking like drunken sailers, and the whole nine yards. The lack of maturity comes I think from the lack of experience many people have here in respects to housing, family, and kids, which a very small percentage have here. It isn't their fault, but in the end, you have a TON of really immature and financially irresponsible people who don't know what the hell they are doing, bidding on something they cannot afford, and because of this lack of maturity, the sheer stupididty just keeps right on going. Again- people from TN give me real funny looks when I mention CA housing. Just my observations...

"Will the next one be a 50 bp hit?"--PeterP
"Prepare for even more inversion, if that’s the case." --Randy H

Remember guys, HITMAN tried to tell me that a basis point is actually 1/10 of a percentage point rather than 1/100th of a percentage point a few threads ago (http://patrick.net/wp/?p=151#comments), so in his fantasy world that is going to be one Hell of a yield change and one Hell of an inverstion!

Ladies and Gentlemen, Scope this:

Barron's: Get Ready for 'Shock' Over Mortgages

Barron's warns that "sticker shock" is hitting homeowners with adjustable mortgages as rates have risen.

The rate increases may have grave effects for those with mortgages and the overall U.S. economy.

Ominously, the respected financial weekly says that "Over the next two years, monthly payments on an estimated $600 billion of mortgages, to borrowers with checkered or no credit histories - the "sub-prime" market, may zoom as much as 50 percent higher as the two-year teaser rates on hybrid adjustable-rate loans expire."

Barron's calls this a "reset problem" that poses a significant risk to the country's economic well-being. [Editor's Note: Sir John Templeton and Financial Intelligence Report first warned of this mortgage nightmare scenario - find out how to protect your investments - Go Here Now.]

Mortgages taken out by sub-prime borrowers include Hybrid ARMs, with low teaser rates in the early years, and IO Mortgages, which initially charge interest only.

Nearly all the $1 trillion in outstanding sub-prime loans were taken out in the past two years, most with an introductory rate period of only a few years, so the "teaser rates" on many of these loans are due to expire shortly.

Worse still is that due to the Fed's hikes in short-term interest rates, adjustable mortgages will see a boost in interest rates when they reset, according to Barron's.

In the recent past, borrowers who couldn't handle the increase in their monthly payment could sell their home to pay off the mortgage and even reap a profit, thanks to soaring housing prices.

But home prices now appear to be leveling off and in some places even declining. And inventories of homes are dramatically rising - meaning it will be difficult for borrowers to sell off their properties like they could in recent years. And many borrowers have only a narrow gap between what they owe on their mortgage and the price their house could fetch if sold - or no gap at all.

Doug Duncan, chief economist of the Mortgage Bankers Association in Washington, D.C., is optimistic:

"I just don't see any coming collapse in the sub-prime market as long as the U.S. economy and job growth stays strong and interest-rate increases remain subdued."

But according to one doomsday scenario outlined by Barron's, we could see "a coming spiral in delinquencies, foreclosures and credit losses from tapped-out, sub-prime borrowers facing monthly payments they can't meet."

Sir John Templeton first warned housing prices could crash 50%. Find out what he said and learn how to protect yourself and even profit from the coming storm

I don’t think that people in SF actually are progressive. People tend to be liberal about certain things, but people are very afraid of change here.

I am a moderate conservative but I tend to be very open to changes that would improve the society. (e.g. I will not object to a Bay Area nuclear power plant)

Perhaps there are no distinction between liberals and conservatives, just human nature.

Can a platform like Zillow help get rid of those tacky “Unicorns on Black Velvet”?

We probably need to wait for the open platform. Instead of a listing-based service, we need an address-based service. Users should be able to see the entire history (status, ownership, price) for any given address.

OpenMLS, banzai!

Thats a good point SFwoman, and frankly, sometimes I almost think that too much liberalism can actually lead to digression, as seen by the subject we are discussing here.
On the other hand, there are other extremes. Where my parents live, they are experiencing an explosion of growth. I am only 30 and I can't recognize places I was familiar with 10 years ago. The sprawl in many places in the south is insane, and ther is hardly any regulation to control it either. Subdivisions full of Immense houses, chain after chain of fast food joints, wal marts on every exit, and freeways that seem to pop up every year. There are 6 major freeways that run through TN now. The result is very affordable housing, but a lot of urban blight and the irreversible changing of areas that were once farmland. The Bay area is the antithisus of this, not wanting any change, which causes stagnation and a 2 tier class system similiar to Brazil.. and I still think it causes a slower maturity rate for long term residents. You only mature when you tackle life's major decisions, and people do not experience those things here until much much later.

Subdivisions full of Immense houses, chain after chain of fast food joints, wal marts on every exit, and freeways that seem to pop up every year. There are 6 major freeways that run through TN now. The result is very affordable housing, but a lot of urban blight and the irreversible changing of areas that were once farmland. The Bay area is the antithisus of this, not wanting any change, which causes stagnation and a 2 tier class system similiar to Brazil.

Change is the only constant. We can never go back to the way things were, no matter how many NIMBY laws get passed. 30 years from now our children may be pining for the "good old days" (the way things are now) and see today's world as a sort of "Golden Age" of relatively low population densities, low energy prices and a large prosperous middle class. Who knows?

Personally, if my only choice is between the affordable "urban blight" that relatively unrestricted devleopment brings vs. begging some old couple for the "privilege" of paying six figures for their converted chicken coop, I'll take the blight, thank you.

"Personally, if my only choice is between the affordable “urban blight” that relatively unrestricted devleopment brings vs. begging some old couple for the “privilege” of paying six figures for their converted chicken coop, I’ll take the blight, thank you. "
Well stated, HARM! Definitely a case where somewhere between the extremes is desirable.

Interesting Mortgage Purchase Index trend data here:

realtyworldcal.com/

@SFWoman, :lol:

Save that premis for the next 'Bubble tales' creative writing thread.

Save that premis for the next ‘Bubble tales’ creative writing thread.

Can you create one?

Or avian flu could evolve into a human-human transmissible virus or something else pop up and wipe out a fourth of the worlds population and we could end up bulldozing the sprawl.

Well, you are the expert in microbiology.

Ice (avian flu) or Fire (nuclear war)?

Will we have to perish twice?

MichaelHolliday,

I re-read the Barron's article you cited and it's funny to note that HARM brought up that very topic just a week or so back. It would appear that everyone here had that nailed down and yes, it is a mess. What's worse is that you didn't need to have an iffy FICO to wind up with one of these exotic loans. I fear that many buyers that could have easily found conventional funding opted for creative financing that will likely compound the problem!

from Face Reality's 11:15am post:
when was the last time rents in major areas in CA were close to ownership costs?

OK, I wanted to get some actual semi-reliable numbers to answer this, so here goes. Assumptions/data:

Sample year: 2000
(the year just before CA prices went parabolic)

Sample city: Sunnyvale
(relatively expensive "prime" BA location)
SV 2000 median house value: $495,200
SV 2005 median house value: $589,000
SV 2000 median gross rent: $1,270
(sources: city-data.com/city/Sunnyvale-California.html, city-data.com/housing/houses-Sunnyvale-California.html, dqnews.com/ZIPSJMN.shtm)

Mortage assumptions: traditional 8.25% 30yr-FRM with 20% down
(source: realtytimes.com/rtapages/20001207_carsurvey.htm)

Tax assumptions: 28% income tax bracket, 1.25% prop. tax rate

Home appreciation/inflation assumption: 17%
(17%/yr. median home appreciation gives us a 119% increase for 2000-present, the actual gain.)

After-Tax investment return: 5%
(assumes relatively modest non-RE investment net gains 2000-present)

Rent vs. Buy calculator: dinkytown.net/java/MortgageRentvsBuy.html

Results:
Dinkytown rent vs. buy*: winner is: Strong BUY (breaks even after 0.7 years)

*I also tried the CEPR rent. vs. buy calculator, but this one did not allow you to adjust many of the assumptions, such as rate of appreciation, actual rents, inflation rate, prop. tax rate, ROI for invested cash, etc. The CEPR result was also weakly pro-buy, but the above limitations made the results pretty much useless.

My friend who bought a house this August in Cow Hollow (in the city) asked her mortgage broker for a 30 year fixed. The broker looked at her as though she were crazy and told her he hadn’t done a 30 fixed in almost two years.

I talked to some European friends about 30 year mortgages and they thought we are crazy. Why would anyone take as long as 30 years (forever) to pay off a mortgage?

I do not know why people glorify ownership so much that they deny it is even possible for it to be comparable to renting in terms of cost.

Shit, I flubbed the numbers --obviously, going from $495,200 to $589,000 is NOT a 119% gain, and the $589K figure was wrong (from only one zip code).

SV 2000 median house value: $495,200
SV 2005 median house value: $796,020 (realtytimes.com/rtmcrloc/California~Sunnyvale)
for...60.7% gain

Ok, retrying the numbers assuming 10% appreciation per year for 5 years (1.1^5 = 161%), you still get a strong buy with break-even point at 1.5 years.

Sorry about the screw-up.

What will Black Hawk Helicopter Ben do?

I do not know why people glorify ownership so much that they deny it is even possible for it to be comparable to renting in terms of cost.

Ownership is glorified so much in the SF Bay, because after burning yourself out on your job, the only thing you have to show for your sacrifice is your possessions, aka "lifestyle". (IMO)

Interestingly, though, once you go below 4.3%/yr. expected appreciation, you no longer break even. If you had assumed in 2000 that prices would not exceed CPI-calculated inflation for that year (3.4%), then renting would have had a small advantage.

Ownership is glorified so much in the SF Bay, because after burning yourself out on your job, the only thing you have to show for your sacrifice is your possessions, aka “lifestyle”. (IMO)

I rather not get burnt-out in the first place. :)

Interestingly, though, once you go below 4.3%/yr. expected appreciation, you no longer break even. If you had assumed in 2000 that prices would not exceed CPI-calculated inflation for that year (3.4%), then renting would have had a small advantage.

HARM, you are using median price and median rent. In other words, you are assuming that the median rent is the same as the rent for the median-priced home. However, rental homes are less expensive than owned homes in general, as a result, you may have been underestimating rent.

Use higher rent and you may not require 4.3% appreciation to break even.

However, rental homes are less expensive than owned homes in general, as a result, you may have been underestimating rent.

Use higher rent and you may not require 4.3% appreciation to break even.

Sounds reasonable, but reliable past rental statistics for ANY area are extremely hard to come by (the Sunnyvale stat came from the 2000 census). I have no idea where you'd find any "ownership-equivalent" median rent statistics, unless you had access to proprietary industry data.

Crap, I'm really off today --posted the wrong #$^&@ link!

Here ya' go:
http://realtytimes.com/rtmcrcond/Virginia~Fairfax_County~monikakumar

There are times when I am ashamed to be a REALTOR…reading ignorant crap like that spewn by idiot agents is one of those times.

Do not be ashamed. I have realtor friends and they are decent people too.

I no longer blame people for their apparent optimism.

But if it takes you 30 years to *never* to pay off your place, we’re talking Middle Ages level poverty.

Theoretically, I/O loans take longer to pay off than the half-life of plutonium.

Also, with the negative amortization loans I keep hearing about, how long do they let people keep paying the minimum amount?

I think Option ARM recasts every 5 years or 125% of value whichever comes first. Do not take my work fot it.

Anyway, I am still amazed at the complexity of Option ARM and the fact that it is actually available to consumers.

"In the third quarter 73 percent of refinanced loans resulted in cash out and the recent fourth quarter, figures are the highest since the third quarter of 2000 and, in fact, are near the highest this century"

Hah! 3Q 2000? Can you say: "Margin call?!?"

New thread: No Bubble, My Bad :-(