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No Bubble, My Bad :-(


By HARM   Follow   Wed, 15 Feb 2006, 10:02am PST   4,147 views   89 comments   Watch (0)   Share   Quote   Permalink   Like   Dislike  

Bay Area Bubble Bloggers Admit Defeat, Throw in the Towel
Copyright © 2006 UnReality Times®. All Rights Reserved.
by Leslie Appleton-Young and David Lereah

The housing bubble blogosphere today was reeling from a shocking announcement made by an obscure but popular Bay Area Housing bubble blog, Patrick.net. The blog's overall tone is as bearish as any on the web ("SF Bay Area Housing Crash Continues" staunchly declares the site's link page).

Evidently, the site's main contributors have completely reversed course and now claim there is no housing bubble. "After so many months of denying the obvious, we had no choice but to call it quits and Face Reality," says Peter P, one of the blog's earliest threadmasters. "Agreed," says HARM, "it's painfully clear that we were dead wrong and housing is going to keep appreciating 15% a year forever, just like Gary Watts says it will."

The mood was mostly somber and contrite among the Patrick.net blogger gathering at the Marin Brewing Company in Larkspur, CA --a marked change from previous gatherings. "No matter how many risk-reward calculations I did, or how many times I crunched the numbers, I just plain old underestimated the power of 'it never goes down' and 'MIRAGE'," declared Randy H, one of the group's most talented market analysts. "Totally," agreed SQT, "Plus we completely ignored 'they're not making any more of it' and the lure of all those tax deductions."

Bloggers attitudes ranged from glum to confrontational. When asked to comment, Praetorian merely shrugged and began quoting G.K. Chesterton. By contrast, Surfer-X loudly encouraged the staff of UnReality Times to have sexual relations with farm animals. He then dipped his shoulder and spun Mr. Lereah around before storming out the door. "Don't take it personally", says Kurt S, "It's just 'X' blowing off a little steam. We're all a little disappointed, that's all."

Patrick Killelea, the site's founder, was not present and could only be reached by email. When asked to comment he wrote back, "Thanks, I'll post this to the links page!"

Of course, not everyone was upset. A few of the Patrick regulars, described as being moderately bullish, welcomed the news. "I think it's great," declared Jack. "Now I can start posting again about those Marin Positive Intangibles!" "It's wonderful news," agreed Mr. Right, "but it's too bad Marina Prime isn't here to share our glorious victory. This is really his payback for being banned and all. Oh, well, more free beer for us..."

"I guess there's nothing left to do except go out and get the biggest, nastiest neg-am loan on the planet and buy a stucco $hitbox before we're all priced out forever," mused HARM with obvious regret. "Imagine how much better off I'd be if I had bought when the price-rent multiple was only 35!".

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lunarpark   befriend   ignore   Thu, 16 Feb 2006, 4:35am PST   Share   Quote   Like   Dislike     Comment 50

"What are “down payments”?"

I don't know. I will ask my grandpa. He might be familiar with the term.

DinOR   befriend   ignore   Thu, 16 Feb 2006, 4:39am PST   Share   Quote   Like   Dislike     Comment 51

athena,

Had this good friend. Worked in a bank. Sold retired guy THE MOST secure investment after a money market. AAA rated, well run bond fund for God's sake. The prinicpal eroded about 1% (1% of a million is 10K). Old guy goes berserk, threatens legal action if he doesn't get his 1% back. Bank manager buckles and writes old guy a check. Wrong! This is called "riskless" investing. Example; guy calls up and says buy me xyz shares. O.K, xyz goes up 5 points and the guy says just sell me out and send me the profit. Well, O.K but you have to pay for the principal first! The guy was never AT RISK! I have NO compassion for the slick bastards. How is I/O w/zero down any different? They never had any "skin" in the game! Peace out yo.

inquiring mind   befriend   ignore   Thu, 16 Feb 2006, 4:42am PST   Share   Quote   Like   Dislike     Comment 52

Here's a direct link to today's released Bay Area report from DataQuick:

http://www.dqnews.com/RRBay0206.shtm

DinOR   befriend   ignore   Thu, 16 Feb 2006, 4:43am PST   Share   Quote   Like   Dislike     Comment 53

SF Woman,

Can I be the manager? I've always wanted to say that I was a REIT manager. Like George Costanza telling people he's Art Van Delay, an architect. A B/A REIT w/positive cash flow? This I gotta see. While we're in Fantasyland, can we start it in 1989?

DinOR   befriend   ignore   Thu, 16 Feb 2006, 5:17am PST   Share   Quote   Like   Dislike     Comment 54

SF Woman,

Normally to retain exemption from "double taxation of dividends" we'd have to pass 90% of the profit thru to the shareholders but since we've utterly trampled traditional financial architecture anyway? Besides, what profit? New Volvos and vacation homes are expensive! That is part of my comp. package right?

And there you have it. At the core of many of the issues we face here in Ameruka center around many of us wanting "our dessert first"! Dues? Too painful! Short cuts, that's what I want!

SJ_jim   befriend   ignore   Thu, 16 Feb 2006, 5:30am PST   Share   Quote   Like   Dislike     Comment 55

From the DQNews report:

"The annual price increase was the lowest since prices rose 13.1 percent to $474,000 in March 2004. It's probable that appreciation will dip into the single digits during the next month or two."

Hmmm...which statement doesn't belong???
Why don't they that 13.1% is the absolute lowest YOY appreciation that can be expected in the BA? I fully expect a bounce-back to +25% YOY in the coming months. What is wrong with all of these nay-sayers lately? Don't they know...(?)

SJ_jim   befriend   ignore   Thu, 16 Feb 2006, 5:36am PST   Share   Quote   Like   Dislike     Comment 56

Also from the DQ report:

"Adjusted for inflation, mortgage payments are 13 percent higher than they were at the peak of the prior cycle sixteen years ago. "

What is this "cycle" thing they're talking about? Real estate, especially in the land of golden asphault, only goes up. Don't they know...(?)

HARM   befriend   ignore   Thu, 16 Feb 2006, 5:45am PST   Share   Quote   Like   Dislike     Comment 57

I, for one, have become the office pariah because of my views on the bubble market...
Oh well, I’ll send them a “get well” card after I see their properties on the foreclosure list.

George,

You could always save/invest like crazy, then offer to take those condos off your co-workers hands in a few years --at a very steep discount of course. THEN we'll see who the "pariah" is (_rubs hands with schadenfreude glee_). :mrgreen:

Peter P   befriend   ignore   Thu, 16 Feb 2006, 5:47am PST   Share   Quote   Like   Dislike     Comment 58

You could always save/invest like crazy, then offer to take those condos off your co-workers hands in a few years –at a very steep discount of course.

Huh? Are you suggesting that it is possible to buy in the future at a discount? What kind of concept is that?

HARM   befriend   ignore   Thu, 16 Feb 2006, 5:54am PST   Share   Quote   Like   Dislike     Comment 59

Sorry, Peter. I guess I had a temporary lapse of sanity --I'm feeling much better now.

George, what the f@#$ is wrong with you?! You call yourself a Realtor? It's never been a better time to buy and 'Indicators of market distress are still largely absent.'

HARM   befriend   ignore   Thu, 16 Feb 2006, 6:09am PST   Share   Quote   Like   Dislike     Comment 60

@Pop!,

Makes perfect sense to me. I'm a firm believer in driving with my rear-view mirror. Sharply rising equity will bail us all out. This irresponsible fear-mongering from bears is akin to yelling "fire" in a crowded theater. Or crowded McMansion, whatever...

HARM   befriend   ignore   Thu, 16 Feb 2006, 6:12am PST   Share   Quote   Like   Dislike     Comment 61

"Newly abundant liquidity can readily disappear"

- Alan “Bubbles” Greenspan

Tomrisk   befriend   ignore   Thu, 16 Feb 2006, 6:31am PST   Share   Quote   Like   Dislike     Comment 62

I don't know who is right, is there any bubble or not, but what I seen was, for the last several years, the real estate create lots of unstable and unfairness on US society, that drive ppl become greedy and let those end-users suffer.

I spend years in college, carrying 2 degrees and still worring about my job, or will recieve a pink slip one day, but those flippers, so-called investor, making $100,000 in weeks. Real estate actually create nothing, but bunch of greedy middle men, transfer the burden to the real end-users.

What I want to say is Thanks for patrick.net, that I visit everyday, and learned a lots the current news of Real Estate, which the realtor wont tell me. I feel sorry for those who server our committee well like Policeman, Nurses, Fireman, Teachers, their salary cannot let them afford a house, and have a stable life.

If I remember it correctly, Leslie Appleton-Young is the VP of CAR - California Association of Realtors, I think she just doing her job, cause thousands of people still working on Real Estate, or related business, they need to feed their families too.

Actually, I like to see the price go down or just calm down, at least let the society have a chance to breath, and recover. It just went too far.

Peter P   befriend   ignore   Thu, 16 Feb 2006, 6:57am PST   Share   Quote   Like   Dislike     Comment 63

Just one note: we should probably remove the reference to Realty Times.

San Francisco RENTER   befriend   ignore   Thu, 16 Feb 2006, 7:10am PST   Share   Quote   Like   Dislike     Comment 64

"That’s because in most of the country, anyone who has owned a home for even a year or two is likely sitting on enough equity to sell or refinance if the loan payments become unaffordable.”

Okay, so maybe a lot of them are sitting on enough equity to sell without going upside-down, but selling of course creates downward pressure on prices, especially desperation selling.

And sure, many of them may have enough equity to refinance, but what do they refinance into that is going to be MORE affordable? Last time I checked mortgage rates are a lot higher than "even a year or two ago."

HARM   befriend   ignore   Thu, 16 Feb 2006, 7:11am PST   Share   Quote   Like   Dislike     Comment 65

Just one note: we should probably remove the reference to Realty Times.

Changed it to "UnReality Times".

HARM   befriend   ignore   Thu, 16 Feb 2006, 7:23am PST   Share   Quote   Like   Dislike     Comment 66

anyone who has owned a home for even a year or two is likely sitting on enough equity to sell or refinance if the loan payments become unaffordable.”

This is patently false. Depending on what region of the country we're talking about, anyone who bought in the last year or two (late to the party) is sitting on slim-to-none price gains. Within a matter of months, the rest of that vapor-equity --along with the easy credit that created it-- will evaporate. The days of the serial refi'er are rapidly drawing to a close.

Anyone who wishes to refinance out of an I/O or NAAVLP into a FR amortizing loan had better do so quickly, or they will be caught upside-down in an environment of tightening credit and falling prices --a negative feedback loop.

HARM   befriend   ignore   Thu, 16 Feb 2006, 7:58am PST   Share   Quote   Like   Dislike     Comment 67

All these Gov. agencies, all these brilliant mort. lenders? Why didn’t these guys pull the plug in 2003? Not ONE person with authority could see this coming any earlier? What were they waiting for?

DinOR,

I strongly suspect they DID know what was happening, and deliberately goosed the market along. After all, to whom do bureaucrats owe their allegiance/jobs?: politicians. Who do politicians most aim to please: generous campaign contributors (NAR, Ameriquest, etc.) & regular voters, who cooincidentally also tend to be homeowners by a wide margin.

Politicians/regulators have done their best either to actively blow the bubble (Fed's negative real rates, A.G. cheerleading ARMs, GSE-issued MBS/CDOs) or --at best-- turn the other cheek on abuses within the system. You can expect them to do absolutely nothing until all the horses are gone and the barn has burned down. At that point, expect lots of blustery rhetoric and scapegoating/finger-pointing. Who knows, maybe we'll even get to see D.L. on TV doing a "perp walk".

San Francisco RENTER   befriend   ignore   Thu, 16 Feb 2006, 8:35am PST   Share   Quote   Like   Dislike     Comment 68

See, look at this, an article posted on CNN Money right next to the above one about how nobody is going to get foreclosed on:

http://money.cnn.com/2006/02/16/real_estate/weekly_rates/index.htm

Mortgage rates on 5-year ARMs average 5.95 percent and mortgage rates on 30-year fixed average 6.28 percent. So again, it's all well and good that they make the broad generalization that "most homeowners have enough equity to refinance" but the question still remains: what do they refi into that is going to save them money? The answer is they don't, and many people are already caught in the trap. Can you imagine what a shitty feeling that must be to your typical clueless homedebtor? "Oh fuck, next month my ARM is going to adjust and my monthly payment is going to double. I can refi, but that raises my monthly payment by $500.00 which I also can't afford. I'm fucked. Whelp, I think it's time to go by a bottle of whiskey!"

San Francisco RENTER   befriend   ignore   Thu, 16 Feb 2006, 8:37am PST   Share   Quote   Like   Dislike     Comment 69

"Once the $hit hits the fan, and a majority of foreclosed properties fall into the hands of the major lending institutions, there will be a final push to break the REALTOR monoply and it will be successful." --George

Oh I couldn't agree more. Right now we're seeing people eager to break the NAR cartel "just" because of the ridiculous commissions they are pocketing on our current inflated property values. Just wait untill the bubble bursts; the NAR is royally screwed.

HARM   befriend   ignore   Thu, 16 Feb 2006, 8:38am PST   Share   Quote   Like   Dislike     Comment 70

@George,

I tend to agree. Plus, internet upstarts like Zillow, ZipRealty, Help-U-Sell may end up doing to Realtors what Hotwire, Expedia & Orbitz did to travel agents in the 1990s.

Have you read this thread: "Monopoly MLS Post-Mortem: What Comes Next?" Check the main page.

HARM   befriend   ignore   Thu, 16 Feb 2006, 8:56am PST   Share   Quote   Like   Dislike     Comment 71

"REALTORs may deal in realty, but few of them transact in Reality"

I may have to add that one to the "favorite quotes" thread.

HARM   befriend   ignore   Thu, 16 Feb 2006, 9:01am PST   Share   Quote   Like   Dislike     Comment 72

Man, I was duped. I feel so cheated by all the gold buys, and housing bears. Damn you HARM! I am going to sue you for all this crappy investment advice.

Fewlesh,

While I was always careful to point out that my opinions were *Not investment advice, I am truly sorry if they influenced you to make some bad decisions --like not buying as many homes on credit as possible.

Please accept my most sincere apology. I have seen the error of my ways and am trying my best to atone for them. :-(

Peter P   befriend   ignore   Thu, 16 Feb 2006, 9:28am PST   Share   Quote   Like   Dislike     Comment 73

Please don’t do it. I’m counting on a crash of mega proportions vaprizing at least a couple billion, make that trillion dollars of home ATM equity, to put downward pressure on our own stupid prices here in Canada.

But Vancouver is so desirable that people will always want to live there. I am going to fly over there so that I can buy a condo myself before I am priced out.

Peter P   befriend   ignore   Thu, 16 Feb 2006, 9:38am PST   Share   Quote   Like   Dislike     Comment 74

Really there is no bubble? Gee Wiz….if you can be the boomers might as well join em.

I woke up today and found that I am actually 59 years old.

I have been wrong all these years, thinking that I was born in the 70's.

I am suddenly a boomer. :)

Where is my Woodstock CD?

lunarpark   befriend   ignore   Thu, 16 Feb 2006, 9:45am PST   Share   Quote   Like   Dislike     Comment 75

"Where is my Woodstock CD?"

I thought that was only available on vinyl.

Peter P   befriend   ignore   Thu, 16 Feb 2006, 9:48am PST   Share   Quote   Like   Dislike     Comment 76

I thought that was only available on vinyl.

Oh no, our generation has worked hard to embrace technology. Look at those hi-tech muscle cars!

Michael Holliday   befriend   ignore   Thu, 16 Feb 2006, 10:51am PST   Share   Quote   Like   Dislike     Comment 77

TampaRentor Says:

"He told me that I had better get in while these types of loans are still available."

"He told me that once these loans are no longer available, then I will be priced out and will be stuck renting for the rest of my life."

Tell him Michael Holliday says he has a bridge he'd like to sell him...and if he's in Alaska, some snow too!

HARM   befriend   ignore   Thu, 16 Feb 2006, 11:01am PST   Share   Quote   Like   Dislike     Comment 78

Tell him Michael Holliday says he has a bridge he’d like to sell him…and if he’s in Alaska, some snow too!

Are you referring to the Alaskan "Bridge to Nowhere"?

DinOR   befriend   ignore   Thu, 16 Feb 2006, 11:54am PST   Share   Quote   Like   Dislike     Comment 79

TampaRentor,

Once these types of loans are no longer available?

There are two ways out of the "hood".

One is to have a great jump shot.

The other, is to sling crack.

I didn't have a jump shot, so I started slinging crack.

Giovani Ribisi in "Boiler Room"

OO   befriend   ignore   Thu, 16 Feb 2006, 11:55am PST   Share   Quote   Like   Dislike     Comment 80

Patrick,

can we start a discussion on what to SHORT? Let's all make some money from this sucker. We need to act fast because some of these shares are starting to become difficult to borrow. Gotta get hold of the borrowed shares before the door closes.

Subprime lenders are definitely a prime target, credit card companies in fact are more juicy, because the subprime people don't carry their own loans on the balance (packaged off and sold as MBS), but the credit card companies are carrying UNSECURED loans which the borrowers will default on first when they are in stress! Builders like TOL, CTX are already coming down, any more room for shorting the way down? Profund Short Real Estate is good, or you can short M Reits yourself.

We have a group of smart people here, let's all make some dough while this baby blows up in the idiots' face.

Peter P   befriend   ignore   Thu, 16 Feb 2006, 12:21pm PST   Share   Quote   Like   Dislike     Comment 81

can we start a discussion on what to SHORT

Shorting? But Dow is on its way to 36,000!

NOT INVESTMENT ADVICE.

Peter P   befriend   ignore   Thu, 16 Feb 2006, 12:27pm PST   Share   Quote   Like   Dislike     Comment 82

New thread: Not investment advice!

HARM   befriend   ignore   Thu, 16 Feb 2006, 2:49pm PST   Share   Quote   Like   Dislike     Comment 83

@PS,

Thanks for the lesson --I stand corrected.

Peter P   befriend   ignore   Fri, 17 Feb 2006, 5:02am PST   Share   Quote   Like   Dislike     Comment 84

The Fed will raise interest rates to 13% but who cares, you might get a 3% loan from Canada or China. The price of a house is the monthly payment.

Huh? Are you suggesting that China will loan many to you at 3% instead of Uncle Sam at 13% because they are nice to you? Never.

Peter P   befriend   ignore   Fri, 17 Feb 2006, 6:21pm PST   Share   Quote   Like   Dislike     Comment 85

SF Bubble blog lives!

Bubble blogs of the world, banzai!

Peter P   befriend   ignore   Fri, 17 Feb 2006, 6:42pm PST   Share   Quote   Like   Dislike     Comment 86

SF Bubble, great blog!

brightc   befriend   ignore   Mon, 20 Feb 2006, 6:25am PST   Share   Quote   Like   Dislike     Comment 87

How many houses have been sold with backstage deals like these:

http://tinyurl.com/r9ezs

It seems realtors are trying so hard to keep house prices from falling on transaction papers.

I suppose when I hear someone saying he's just bought a $1 million condo, what actually happened was the seller offered to pay 6 months of mortgage, 2 years of HOA fee, a free cruise to Finland, points and closing cost buyoffs, and a seller-financed, balloon interest-only mortgage. If you're a tough cookie, you can get the seller give out his left ball, too (if that's a he).

Add all that together, and you've got a bargain! No bubble after all.

surfer-x   befriend   ignore   Mon, 20 Feb 2006, 2:49pm PST   Share   Quote   Like   Dislike     Comment 88

just posted to their "feedback" section

how about asking your piece of mother fucking shit real whore to lower their fucking commision? I mean afterall, most of you assholes have what, a high school education? Get limber asshole because you'll be taking in the ass soon.

I hope you get herpes from fucking the admin.

Asshole

brightc   befriend   ignore   Mon, 20 Feb 2006, 3:20pm PST   Share   Quote   Like   Dislike     Comment 89

D.R. Horton's having a 30% off sale in Sacramento:

http://tinyurl.com/l4t82

Realtors don't need anything higher than a high school diploma to turn their heads sideway and announce "this is turning into a NORMAL market".

Is this market becoming normal as the various "teams" of Realtors are mouthing off? Maybe it should be topic of a new thread!

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