patrick.net

The market is 99.5% psychology. Nesting instinct is a strong driving force of psychology.

My wife understands the housing bubble well. It is me who is still itching to buy from time to time.

after spending time with her “sex and the city” type skank ho friends

That show? Don't you think it corrupts family values?

If I were being honest I'd have to say that the Mrs. and I take turns waffling on this issue. There are days where I feel if I see ONE MORE Donner Party realt-whore survivor I will buy out of sheer pity and to shut them up!

Then there are days where Mrs. D wants to buy "something", anything! It's going to be alright as long as one or both have a bearish day or we take turns playing early knife catcher. God forbid we both have a bottom feeder moment of weakness!

Usually though we find that a Vegas run or ridiculously expensive weekend will slap the silly right out of you. If you're thinking "buy" at least go as far as Reno and "re-group". If that doesn't work can I suggest a tour of the "Meth Country" or pit bull farms?

It's Evolution

Females want resources (physical and emotional) committed to them to convince them to have kids with a man or that it was a good idea to have had kids with a man in the first place. This is evolutionally beneficial for her offspring.

Hidden in the back of even the most monogamous man is this lurking daemon who wishes to preserve resources to dole out to other females to convince them to have sex with him. This strategy (before contraceptives) can garner him additional offspring. Buying a house (especially now) locks in all your resources for a long long time.

As a male, I'd have to call our game-theory strategy the more evil, but that's purely subjective. Morality aside, the ability to recognize (and control) what your genes are trying to do is what elevates you above the animals.

Thus, for the housing-bubble-suffering males out there, convince your significant other of your commitment (and banish that Daemon; it may have been good for your genes survival in the old days. Either way, it's hell on your life). Walk your wife through your joint finances (if you run the books) and show her every hard earned dollar. Point out how long it took to reach that point then run the mortgage numbers.

It's commitment and stability they want. A healthy bank account and sensible financial planning can provide that. A 780 square feet POS with FBhood will rip the two of you apart.

Flip the RE's logic on it's head. For the kids sake, DON'T buy a house now.

"That show?"

Uh if some of my wife's friends were brainwashing her by subjecting her to "They aren't making any more land/Osterman Weekend" I think I could come up w/some more colorful phrases than Joey! Good on ya' Joey. Stay the course (oh, we're not using that one any more?)

I think its an excuse that husbands use, to keep on wishing for a new place.

After all, what better excuse can you get than The Other Half wants something, and who are you to deny them? ;-)

It works both ways - I'm having to hold back the husband on getting a new place, as our CD/vinyl collection is now trailing into the garage.

Oh, and its nice to be back.
Returned yesterday from a 3 week In-Law Family Holiday From Hell around the US southwest.
Very beautiful, as always, so was gutted to discover that the 'highlight' of the trip for all of them was a visit to Sea World in San Diego. I guess Monument Valley at sunset isn't as good as touching a dolphin, but what do I know.

If I'd known that, I wouldn't have bothered donating my left kidney in order to get a wheelchair accessable room at the Grand Canyon Lodge for two nights...sigh

In-Laws: can't live with them, can't kill them.

Anyway, after three weeks away from my daily ZipRealty fix, I was pleased to discover that many places in Santa Monica have been showing price reductions. Still insanely overpriced, but maybe Santa Monican sellers are finally starting to get it.

My husband, if single, would be buying the x-box, the corvette, the 54 inch plasma TV or most likely a larger one than that

Another sexual strategy. The male seeks to project an aura of wealth, power and prestige to lure additional females to his harem.

He's trying to buy them now, I just have to tell him we can't afford it at the minute.....

Rather, they are on his wish list.

Now here's a topic covering some familiar old ground! I'm convinced the nesting instinct is a real factor in pressuring men to buy now (I've witnessed it among other married men in my age group). However, it is by no means the only one. Recall the "Psychology of Ownership" thread?

There is a powerful and pervasive pro-home"ownership" bias in American and most other cultures that cannot be fully explained by gender bias/instinct alone. In most societies, renter can usually be equated with "loser" and homeowner with "winner", regardless of rent vs. buy ratios, cash flows, opportunity costs and TVM calculations.

The shrill, harpy wife (and vouyeristic Realtwhore, Suzanne) has promoted this unfortunate gender stereotype, regardless of how common it really is:

http://www.youtube.com/watch?v=Ubsd-tWYmZw

People are emotional creatures, not simply rational calculating machines. "Nesting" is but one of many emotions that define the utility one gets from owning a home. For others it may be social status, self esteem, sense of security, or even totally illogical satisfactions like "a need to feel grown up".

While we can easily dismiss most or all of these things in abstract, or when evaluating the actions of others, we rarely acknowledge the impact of these less tangible forces on ourselves. Nonetheless, we are all impacted in some way by an "irrationality". In fact, someone who truly wasn't impacted by any emotional forces regarding home ownership would almost surely be borderline sociopathic, like superstar stock traders often are.

The best anyone can do in any big, critical, risky decision like buying a home is evaluate what is best for them. People are no more interchangeable products than are houses.

Anecdotally, I know of one couple that bought at or near the peak of the market because the wife was pregnant and wanted to have the nursery ready before the baby arrived. The husband was well aware of the bubble, but ultimately relented. They paid around $800K for a "starter" home in West LA, then probably spent at least another $100K fixing it up.

I'm lucky because my wife is at least as bearish as me on housing and, as a BK attorney, even more debt-averse than me.

The best anyone can do in any big, critical, risky decision like buying a home is evaluate what is best for them. People are no more interchangeable products than are houses.

Let's assume that houses were 10X their current prices but salaries hadn't risen (e.g 2BR/1BA 850sqft was $7M). The percentage of people for whom "now" was the right time to buy using simple objective criteria would be very few indeed. This would be true regardless of all that touchy-feely subjective irrational stuff or what they felt was best for them. I could have a nice subjective motivation to buy a house on $25K salary but there's a lot of objective reasons why this would be a dumb idea (although apparently there are a lot of mortage brokers who could "make it happen" for me).

At some price point, the objective reasons for not buying a house overwhelm the subjective motivations for all but the very wealthy. I would argue that for the majority (>50%) of people that was reached a while back in the BA. Negative amort ARMs allowed a lot of touchy-feely people to defy gravity and live their dream for a while.

When you cross the street, use your head not your heart. Buying a house won't kill you, but the same rule applies.

People are emotional creatures, not simply rational calculating machines.

We need to understand why humans have the burden of emotions. It is quite difficult to understand.

Is emotion a debt? Is it a gift, a curse, or both?

Buying a house won’t kill you

It will if the house has really bad feng shui.

Can you please invoke your fearsome threadmaster powers

This is Patrick's thread. I am just a minion.

Not so fearsome. Unless you are a cow. :)

Buying a house and starting a family can support each other but none is the condition for the other. The parents of my friends did like backwardselvis heard:
> So I called around and spoke to quite a few of our parent’s friends. Almost all of them started having kids while they were renting.

And so do we.

Glen,

I feel for the guy, really I do. What a shame, 900k for a starter? It makes a lot of my bubble complaining look really lame. Like a home selling here in the Portland metro area for 350K that would have sold for 225/250 just a few years ago. BFD! In a lot of ways for me to give in at the wrong entry point would be as much about principal as it is about money.

My big reluctance centers around "making someone elses day!" Some of the ugliest and greed driven sellers show up post peak. In fact the only thing I can think of is that these 11th hour sellers must be thinking to themselves that it is their right and duty to penalize you, the buyer, for your having created this situation he is now in.

I just don't know how else to describe what they must be thinking. It's like, Hey had I sobered up and listed pre-peak and been ahead of the learning curve we could've talked more reasonably! Now that it's post peak you're gonna have to pony up a little extra to cover my mistake.

You need to pay for my lost dignity/face! WTF? I just don't get it.

Peter T,

Absolutely. I can't remember ONE thing about my life pre-kindergarten. Not one. Is the outrageously over decorated nursery for the kid, or the parents? I'm told my folks rented until I was about 4 or 5 and I turned out mostly o.k.

"Mortgage lender reviews" spam now deleted.

Please mail me at p@patrick.net if spam shows up again. Thanks.

Patrick

How will "global warming" affect housing?

According to this article, the economy will be doomed.

http://tinyurl.com/yxrcw8

"Global warming" is still unsubstantiated. Even if it is real, I believe its effects will be mostly beneficial. New sea routes in the North Pole can be opened for post-panamax cargo ships. This will save fuel and time. On the other hand, heating costs around the world will go down substantially. This will also save energy and money.

FRIFY,

I don't diminish object criteria at all. I actually disagree with Peter P's assessment that psychology is 99%. More, I think that objective criteria provide the constraints with which we all must work. So, it is true that except for the very richest, objectifiable constraints limit the range of actions in your example of 10X house prices with equal salaries.

That's why I think housing prices must come down. Reversion.

But, where Peter P is right is that on the margins psychology is 99% of every market decision. So in your example, once all the objective variables line up enough to put a portion of the population in range, then people's price versus utility criteria become unique and difficult to predict.

People aren't marginal price takers. The undergrad econ supply and demand graphs basically don't work in the real world for anything except maybe a few futures markets.

People aren’t marginal price takers.

True. But psychology reinforces psychology. In the end, emotion creates reality.

Price actions do affect the fundamentals - people's so-called objective criteria - in significant ways.

Any pregnant woman thinking of buying in the Bay Area right now should tie her money up in some sort of bond that she can’t touch until the baby is born.

This sounds a bit like Ulysses and the Sirens (of real estate).

When I first saw the thread topic as "Sex and Housing," I thought it was going to be about something else...

OT, but another piece of liberal NIMBYism run amok:

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/10/30/BAGMTM2HDE1.DTL

Only in the BA. Protesting a Trader Joe's in downtown Berkeley because it will "ruin the neighborhood." It turns out it's not the TJ's they care about - it's the 170+ housing units they plan to build above the TJ's!

Meanwhile, last I checked, there's not much neighborhood to ruin around University and MLK.

There should be regulations against zoning. The market will "zone" development better than any bureaucrat or naively self-serving voter.

If zoning is a necessary evil then a system like shareholders-of-the-city should be implemented.

I didnt want to buy the new Manola Blahniks, THE Hermes bag, or latest Gucci stilleto's but guess what? Easier than buying a massive depreciating asset.

Maybe this is the reason for those over-asking sales that ConfusedRenter likes to trot out:

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2006/10/27/carollloyd.DTL

Speaking of the shill, has anyone with the authority (Patrick? HARM?) decided to ban him from this site yet?

I find it interesting that in both San Francisco and Berkeley, where a majority of people consider themselves progressives, the one thing that seems to scare people more than anything else is change.

I thought I was one of the few social conservatives here. :)

But somehow I embrace changes. Only change is permanent.

If I have the money, I would probably build a Victorian house with a glass dome and a partial copper/titanium facade. :)

SFWoman (or anyone else with knowledge of this),

Speaking of architectural intransigence in SF, I've heard that any low-rise housing structure in the city needs to have some kind of oriel (bay window that doesn't reach the ground) on its facade. Hence, the ridiculous and downright weird uniformity of buildings - from new loft in SOMA (like the ones on Mission near the Metreon, I think??) to the "Richmond Specials", they almost all have some variation of an oriel. What idiot came up with that rule?

No true social conservative would allow that unless cream tea is served inside.

(-) loft
(+) lofts

Perhaps I am a progressive conservative. :)

Is anybody else getting loads of calls from political robot machines today?

Jukubots?

Only in the BA. Protesting a Trader Joe’s in downtown Berkeley because it will “ruin the neighborhood.” It turns out it’s not the TJ’s they care about - it’s the 170+ housing units they plan to build above the TJ’s!

Would you like to live next door to a 5 story monstronsity that cloaks your house in shadows? For some idea of how this project started out see:
http://www.planberkeley.org/1885ua_files/1885ProjHmPage.html

The neighbors have managed to get concessions from the developers which will utlitmately make it a much better project, both for the neighborhood and the city.
Also, Berkeley calculates housing density per region (several blocks) instead of per parcel, so you end up with extremely high dense developments of "student ghetto" housing (as opposed to less dense, but more desirable family housing).

Would you like to live next door to a 5 story monstronsity that cloaks your house in shadows?

That is not the point. I do not like many things but that does not make it right for me to stop everything.

If you do not like what is going on in the neighborhood, you can always leave.