patrick.net

It is rather interesting that the law becomes effective in October. I wonder if it will cause additional market volatility.

Do people even realize the pending changes?

October is traditionally a volatile month.

No, mostly equities markets. The most famously volatile Octobers were also market crashes. Most Octobers are down months.

I think real estate follows longer trend lines, I don't know if October (or any month) is significant.

Wouldn't the volatility appear before October, as people went into bankruptcy to beat new laws?

My guess is that 95% of people who might be in that kind of financial trouble don't know about October 17th (also the anniv of Loma Prieta, btw). The other 5% have lawyers working to make sure their filings are finished in time.

So, small bump, no major macro effects in the short term. But I'll bet when large numbers of IO/NA/ARMs start morphing, it'll only take a few months before the new bankruptcy laws become newsworthy.

PS I bet this thread gets way more posts that the one about making money! ha ha J/k (not really)

Quite frankly I do not know much about the law changes. Perhaps astrid or New Attorney can shred some light on this subject.

Peter P,

Perhaps astrid or New Attorney can "shred" some light on this subject.

Quick the bankruptcy laws:- shred the docurments ahhhhhhh!

Maybe Flippers do add value in a abstract way.

Doesn't Wal mart add value to the dollar product from China by importing it to the US , marketing the product and then selling it for $100.

Maybe Flippers are similar in that they are able to motivate people to buy a house that the original builder wasn't reaching with their own marketing.

MP:

OK, I read the article. But it is interesting how it also basically says that Google is keeping other start-ups down. Not everyone can work at Google, nor does Google want every computer programmer. "Sought after" - whatever THAT means - is the key. How likely is it that there happen to be 2 such sought after programmers in one household? Not very.

@ SIM

No offense, SIM. At the time, the tone of your post didn't sit well with me so I felt compelled to respond.

BayQT~

Believe me, when i say there is Google effect on the high-end.

I believe you, but the high-end has less connection with the credit bubble thus making it less interesting to talk about. :)

“Google, Mr. Hoffman said, has caused “across the board a 25 to 50 percent salary inflation for engineers in Silicon Valley” - or at least those in a position to weigh competing offers. A sought-after computer programmer can now expect to make more than $150,000 a year.

Add two of these guys together, is the median household income really only $100K as many of you claim? hmmm

MP, there are only 3,000 full-time employees at Google. Not enough to bust a grape in the RE market. And as someone said, the chances that there will be 2 "sought-after" programmers in one household is really pretty slim. Just a guess, but I would bet money on that. In fact, I would also bet that many of these households (with the highly paid programmer) includes an at-home Mom (I was one a LONG time ago. LOL!). They are finding themselves priced out of the present market. And those who jumped in with 2 instead of 4 feet, may find themselves in trouble. I wish them all the best, as I work in the high-tech arena and know that a few people are on the edge.

Case in point: married couple. Great combined salary. One quits to sell RE a few months ago in an already over-crowded industry. Hopefully, all will be well, but as the market continues to soften...who knows, perhaps they will be back for the old job. This is not to say they are on the edge, but they definitely put their trust in the RE market and the tide is turning.

BayQT~

so as many have said Google is a load of wheatgrass.

And it's selling at $284/share. Whoa!

BayQT~

Do you guys know how much of the Adwords revenue comes from very expensive keywords like "refinance"? :)

That's funny, Peter P. How about keyword "bankruptcy"?

BayQT~

That’s funny, Peter P. How about keyword “bankruptcy”?

Can we buy adwords futures?

Add two of these guys together, is the median household income really only $100K as many of you claim? hmmm

Huh? Who's assuming these wages are median? That's a rather huge leap, no? If I'm not mistaken, there's no need for debate in that regard, as there's ample stats--segmented by Bay Area city too. People can easily find the data--it's no secret.

Moreover, handpicking a specific job/salary to show wage-based demand is driving a a much more encompassing (and expensive) housing market is the proverbial "tail wagging the dog". One needs to research the overall demographics (data, remember?) to understand more accurately what wages in low, median, and upper segments support. The very clear, much-discussed, problem of the housing affordability gap suggests a clear disconnect between fundamentals and RE prices. If you can brag you're above the income vs. housing pinch--nice. However, it doesn't have any relevance for the majority of Bay Area residents.

MP, even outside the window you can still do a 1031 exchange, right?

IV on GOOG options is *very* low at about 25%. Perhaps we should implement long vega strategies like long straddle?

(Not investment advice.)

Macroeconomic concerns aside, Google has the potential to be a much larger company in a few years than it is today. Some of that is definitely factored into the valuation, but I am not convinced it's overpriced yet.

That doesn't mean it won't go down 50% in a month. Or up 200% the month after. In the short term, the madness of crowds will dictate. In the longer term, it has room to grow.

(However, don't believe the bunk about Google singlehandedly raising tech salaries in the valley. The truth is, except for some tech celebrities (e.g. Rob Pike, etc), Google pays less than most employers. They give their employees other benefits, engage them intellectually, and treat them like adults...but they don't skew the pay scales.

Is stupidity the American way?

TBD, but arrogance is definitely popular.

From Ben Jone's blog...

"Lenders are now adjusting buyers STATED income to whatever level they need to "QUALIFY" them for the desired loan ammount."

Sounds like a stated-OUTCOME loan to me.

HARM, should we add stated-outcome loan to the glossary?

To Patrick or whomever can administer posts,

Would you mind deleting my last 2 posts that are "awaiting moderation"? I have a couple of links that were translated into tiny urls but something is still wrong. :-( Let me know if there is something else I should do.

Thanks!

BayQT~

Here's another post from Ben Jones's blog that I thought was interesting. Sadly, it does relate to the bankruptcy topic.

What is the freaking deal with Californians?

What do they put in the water in California?

Talk about risking your life savings......

BayQT~

@BayQT,
Peter P's the thread moderator, so he can do it for you.

@Peter P,
From Ben Jone’s blog…
“Lenders are now adjusting buyers STATED income to whatever level they need to “QUALIFY” them for the desired loan ammount.”
Sounds like a stated-OUTCOME loan to me.

HARM, should we add stated-outcome loan to the glossary?

Sure - I'll also add "Liar Loan" as a synonym.

He can’t cover the mortgages by renting so he is forking out $1,500+/- a month to cover his costs.

sfbayqt.
Yeah--a scary scenario, and too close to home. My sister and husband recently bought a home, and now want to buy a second in C. Valley as an "investment". They both quit biotech jobs to do photography (a seasonal business), have a baby boy, and now they want to burden themselves with a 2nd mortgage. When I raise concerns about rent not covering mortgage, I get blank stares. They've already decided they have the economics figured out--and won't be talked out of this "sure thing". :(

@BayQT,
Peter P’s the thread moderator, so he can do it for you.

But I cannot touch moderated comments though... only Patrick can help.

I wrote on a thread a few weeks ago about a friend of my husband who had sold his tiny house for $450,000. We we astounded he got that kind of money, but in this market....
Anyway, the buyers are a couple that got lucky on home purchases in the last couple of years and thought they had this whole thing figured out. He's a janitor and she's a nurse. Anyway, they sold a rental and used the money to buy this house. They wanted to rent it out for about $1550 a month, but that's proving difficult because there's a house for rent down the street that's bigger and the asking rent is $1400. So now they're complaining to my husband's friend that they're negative on cash flow.

They're just NOW figuring this out. They bought the house before they calculated what they could get in rent. And really, they paid waaaaaay too much, even for this market. I don't think there's any chance they're going to get out of this without getting burned. I should ask if they're aware of the new BK laws.........

But I cannot touch moderated comments though… only Patrick can help.

Are you sure Peter? On my first post I had a comment in moderation and I was able to take it out of moderation and post it.

Are you sure Peter? On my first post I had a comment in moderation and I was able to take it out of moderation and post it.

I see. I could not take them out of moderation directly but I could delete them. Thanks.

Obviously, you are more powerful than me.

Seriously doubt that. Look at the post again where you would normally edit the comment and see if there is a button to delete or post the comment. I think that's how I did it before.

I see you figured it out. :cool:

Obviously, you are more powerful than me.

You guys are TOO funny. :lol:

They’re just NOW figuring this out. They bought the house before they calculated what they could get in rent. And really, they paid waaaaaay too much, even for this market. I don’t think there’s any chance they’re going to get out of this without getting burned. I should ask if they’re aware of the new BK laws………

Yet another example of people NOT doing their homework. And they tried this on a janitor and nurses salary? Boy, oh boy.

They both quit biotech jobs to do photography (a seasonal business), have a baby boy, and now they want to burden themselves with a 2nd mortgage. When I raise concerns about rent not covering mortgage, I get blank stares. They’ve already decided they have the economics figured out–and won’t be talked out of this “sure thing”.

Kurt....I really don't know what to say about what your sister and bro-in-law did. One would think that at most only ONE of them should have quit their job to test the waters...especially knowing that photography is a seasonal business. Good for you for trying to talk some sense into them. It's so bad to watch family and close friends do stupid things.

BayQT~

Seriously doubt that. Look at the post again where you would normally edit the comment and see if there is a button to delete or post the comment. I think that’s how I did it before.

I bow down to you both. :lol: :-P

BayQT~

It’s so bad to watch family and close friends do stupid things.

It is very bad... but I stopped trying recently. They are so leveraged that it is diffuclt to turn back anyway.

They have done some innovative work to manage that. In addition to the talent and creativity needed, that task is also capital and infrastructure intensive.
But I agree with you that the stock is overvalued at this point.

I still refuse to believe that Microsoft cannot duplicate their effort and integrate its own search in the next version of Windows.

Think Netscape! I switched to IE soon after using NS1.2. I knew the battle was lost for Netscape back then.

Speaking of switching careers...
I wonder what the newbie RE moguls are thinking right about now, that is if they're paying attention. There was a cover story in the Sac Bee earlier this week about the housing market and Placer Co. (where I live) showed that sales were down 16% from last year. So that means fewer homes selling but more realtors vying for sales. I wonder how long before it sinks in that maybe they made the wrong career choice.

I bow down to you both.

BayQT~

If you start a thread then you too will have the power to delete at will. :twisted:

If you start a thread then you too will have the power to delete at will.

If you do not start a thread you can still delete...
... your own comments before you hit the "Submit Comment" button.