patrick.net

Where is bmwman91? I would like to hear what he has to say about the current market and where the next few years will take us.

hrhjuliet says

Where is bmwman91? I would like to hear what he has to say about the current market and where the next few years will take us.

BMW was one of the few bearish-but-reasonable people who I consider to be a success story of pat.net. He like so many, didn't want to endlessly pontificate or push his POV on political/economic affairs. All he really wanted was to avoid the heights of the bubble, buy near the bottom (such that he wouldn't be hopelessly underwater), and go on with his life.

Accordingly, he bought in mid 2013, quit posting, and moved on with life, never to be heard from again.

Too bad. He was always so reasonable. I would like to hear from both the bulls and the bears on where we are heading next. I'm a unicorn, so I am willing to hear from both sides. ;-) So shoot.....

If you are asking me personally, I expect that so long as inventory stays low prices will rise. My hope is inventory rises enough such that the aggressive gains of 2013 will slow, turning into much more moderately rising prices. In any event, my outlook will change once the inventory situation changes, be it 2014, 2016, whenever.

Other than that, I don't expect much. People have a tendency to (intentionally or not) greatly exaggerate what factors X,Y and Z will do to prices. Thus, most of what I do here is now is not to predict but instead try to tamp down the lack of knowledge, hysterics, and general gross exaggerations which constituted much of the advice here.

Unfortunately, my sister in law used to lurk here and believed much what she read. She was on the verge of buying in 2009 when she found this site. She decided to wait and listen to the "experts" here who promised that prices for expensive homes will come crashing down before she bought. Instead, as inventory bottomed, she dug in continuing to come here for assurances that it was inevitable. Unfortunately she didn't wake up and realize she was being spoonfed bad advice until she couldn't afford it and eventually moved out of state.

Her reliance on the experts of this site who "knew what they were talking about", caused a lot of family tension, traded accusations of who was "delusional", etc, etc. Its a situation that still irks me to this day and something I would like to make sure that other regular people can avoid if they so happen to stumble across this site.

I guess I am interested in where things are heading towards 2015 because I believe that things are going to flat line in 2014. I am curious about where the bulls and bears think it's heading after the elections.

CDon says

He like so many, didn't want to endlessly pontificate or push his POV on political/economic affairs. All he really wanted was to avoid the heights of the bubble, buy near the bottom (such that he wouldn't be hopelessly underwater), and go on with his life.

Hardly.. he was getting married to an Asian girlfriend... and if you aint got
a nest ready... no dice Charlie ! Never underestimate the power of pussy!

Didn't know pussy was so powerful. My husband didn't have a nest ready, but that didn't matter to me. What happened to love? ;-)

hrhjuliet says

Didn't know pussy was so powerful.

Its a guy thing...

http://www.youtube.com/embed/lXKB77cLGqI

IIRC, bmwman bought a house that had a psycho neighbor (the son of the neighbor). He made some posts about the situation, and had to ask Patrick to remove all the posts for fear of law suits or complications in his lawsuits against the realtor / previous owner for not disclosing the condition. Hope he is doing all right.

Many people saw the 2009-2011 double bottom. Some jumped in a little too early, some on the nose, some a little later. IMHO, the real estate market will do all right 2014 for the overall market, but outstanding markets of the past year, like SFBA and NYC, may stagnate a bit. We shall see.

Oh my, poor guy. That's too bad. None of us have that crystal ball, but I am enjoying reading the different ideas and possibilities. None of us can KNOW, but educated predictions are always interesting. As for the "guy thing" I guess I can't understand. Didn't care if my husband had a house. He's smoking hot, so it doesn't matter...it's a girl thing. ;-)

They are all good, I hope they post. There are others I enjoy reading just as much. I hope to hear from a good variety.

hrhjuliet says

As for the "guy thing" I guess I can't understand. Didn't care if my husband had a house. He's smoking hot, so it doesn't matter...it's a girl thing. ;-)

Then stop complaining about why houses are unaffordable. LOL. Do you see women married to husbands who can provide nice houses, comfortable living and good environment for their children complain about why their husbands don't transform into some kind of "smoking hot" dude? We all make choices in life; live with the consequences. Be happy with whatever you have.

I have plenty. Hot husband who happens to be brilliant, two cute kids, my own business, a safe place to live, community recognition, great family, great in-laws, and my health. I am advocating for my generation, not for me. A person doesn't have to be against the screwed system only if it's personally affecting them. I see a lot of things wrong with the world that doesn't affect me, but I am vocally against it just the same. I want to see real changes, changes that help the people around me I see working their tales off and getting nowhere, and I want to see change for my students, my children and yes, in some ways for myself, for all of us. I want a republic that supports a thriving middle-class and more opportunities for the generation behind my own. That isn't a complaint, it's a hope.

High real estate prices in select few highly internationalized coastal metro areas is simply a dollar repatriation game underway. Would you rather have all those dollars coming back from overseas vaporize in the next bubble burst in those cities? or would you rather prefer having those dollars coming back competing for things that you actually need on a daily basis? like beef or fruits? or would you prefer paying them out of your paycheck as interest on government debt?

What I'd prefer is manufacturing jobs back in the states and homes no more than twice the median income. I wouldn't mind cleaner and more aesthetic environments. I often wonder if being constantly surrounded by ugly architecture, pollution and billboards while listening to crap a person is being kind to call music in every store and on every channel isn't somehow contributing to the aggression and depression that is so common today. Our senses need a break. That's what I want, not that what I want matters.

Before the arrival of more advanced robots, keeping manufacturing jobs here would have meant environmental damage on top of keeping your hot husband from the gym and keeping the typical woman sole-proprietor from running their statistically speaking 75% chance money losing businesses.

On top of that, whose fruits of labor would be ripped off to pay for the multiplying government bureaucrats at more than double the pay of the typical productive person in the private economy . . . if not for all the imports filling the gap?

The foreigners stumped up for all the widgets, so the bureaucrats could be paid while the fall of living standards for the rest of America could be gently cushioned. It's the foreigners who put up the work hours and sucked up the poisonous gas and drank the polluted waters. In return, they got the dollars. Now the real estate bubble in their favorite cities is just a way to eliminate the purchasing power of those dollars.

I have thriving business. I have over 200 students, and started it while still in college. We don't go to the gym. My husband is always outside building, and we both do enough hiking and ballet to not need a gym. The over generalized view of this generation is bit distracting from the issues. I don't see how bringing home prices back to twice the median income would be harmful. That's the main issue as far as I can see.

We talk a lot about low inventory, stagnant wages, low interest rate, affordability, economy, and politics. I don’t see much attention taken on who really represent a pool of buyers (Demand). We know that about 50% of buyers are all cash buyers. Who is in this group?; institutional investors, flippers and foreign buyers. First two slowed down significantly, because risk of finding another full, who will qualify for a mortgage and pay higher price, becomes more difficult. Foreign buyers are mostly takers with cash payment. So a lot of depend on mood, prosperity or popularity of investing in US asset between foreign investors. If that group be taken away we will see significant drop in demand. Lately I checked a couple open houses over last few weeks. It is not a statistically significant pool, but more than 50% lookers where Chinese steps after Chinese speaking agent. Conclusion is that we should monitor more carefully what is going in emerging markets, Canada etc., to predict future prices of domestic RE.

hrhjuliet says

I often wonder if being constantly surrounded by ugly architecture, pollution and billboards while listening to crap a person is being kind to call music in every store and on every channel isn't somehow contributing to the aggression and depression that is so common today.

It's spiritual blight, yes. Dogshit in, dogshit out. But keep in mind, people are not altogether passive in this equation; if there is one thing that I have been and remain beside myself about throughout my years is the out-and-out appetite for ugliness exhibited by so many (most?) people I encounter. The fairness police always rush to the scene with some spin on "beauty being in the eye of the beholder," but this is just milky prattle put out by the same people who say "nobody's any better than anyone else" (and think they're better for having said it).

Five fundamental components for establishing the quality of nearly anything for the tone deaf and blind: sincerity; imagination; durability; compositional integrity; love. If all five criteria have been satisfied in the conception and realization of whatever it is that's being judged, then it's good quality in my book. And if more of what we install into our environment met with these fundamentals, I think we'd better off.

All said, what offends me even more than ugliness is conformity.

China's wealthiest citizens are looking to secure their riches and improve the quality of their lives. And many of them are looking to do it overseas.
http://money.cnn.com/2013/05/09/news/economy/china-wealth/index.html?iid=EL

JodyChunder says

ive fundamental components for establishing the quality of nearly anything for the tone deaf and blind: sincerity; imagination; durability; compositional integrity; love. If all five criteria have been satisfied in the conception and realization of whatever it is that's being judged, then it's good quality in my book. And if more of what we install into our environment met with these fundamentals, I think we'd better off.

All said, what offends me even more than ugliness is conformity.

Well said!

Beijing's tax collectors have been vexed by wealthy residents who are able to launder money and move it abroad through casinos, fine art buys and fake trade invoices -- practices that result in lost tax revenue.
http://money.cnn.com/2014/02/09/news/economy/china-tax/index.html?iid=Lead

Call it Crazy says

Instead of Spanish as a second language, maybe you people in CA better bone up on your Mandarin.....

Actually it is more serious than you think.

1051173">REpro says

Beijing's tax collectors have been vexed by wealthy residents who are able to launder money and move it abroad through casinos, fine art buys and fake trade invoices -- practices that result in lost tax revenue.

http://money.cnn.com/2014/02/09/news/economy/china-tax/index.html?iid=Lead

One could make a ton of reward money as Bounty Hunter going after the Chinese Tax cheats... a bounty of $5000 for each member of the family sounds fair.

Call it Crazy says

REpro says

Call it Crazy says

Instead of Spanish as a second language, maybe you people in CA better bone up on your Mandarin.....

Actually it is more serious than you think.

I bet it is... Any chance they are concerned that we won't pay them back and might default on the debt we owe them, so this is why they are stocking up on Gold and buying hard assets here??

Every heavy industrial economy comes to the point, where financial crisis is triggered by oversupply. US don’t have to default on bonds, just create super inflation and all interest owned will devaluate to ‘peanut’.

Send thousands to die in Vietnam in a supposed war on communism, put billions into the Cold War using the same battle cry, then give communist China tax incentives to buy up our property, while becoming so in debt to them that they wouldn't need a war to take us over. Hypocritical sick little plutocracy we live in.

Hyperinflation is a dangerous game. It can severely undermine the middle class in this country. OTOH, selling paper title of properties in the US to foreigners at super-inflated prices, then buy the same properties back for peanuts, is a tried and true method of dollar repatriation and elimination of purchasing power that the foreigners had:

Mistsubishi bought the Rockerfeller Center building for $4B in 1989, then sold it back for nothing. $4B was real money 25 years ago! The first Iraq War only cost $60B in 1990.

Daimler-Benz paid $37B for Chrysler, then again sold it back for nothing. That's the equivalent of giving a decade's worth of cars shipped to the US for free!

Do you really think the Chindians buying SFBA real estate today will fair better?

Reality says

Do you really think the Chindians buying SFBA real estate today will fair better?

In a word, yes.

One is sure: rich bankers and the rest of 1% have always plans ready to implement, how to milk people from excessive money.

rooemoore says

Reality says

Do you really think the Chindians buying SFBA real estate today will fair better?

In a word, yes.

"This time, it's different"

Four most dangerous words in investing.

2015 housing will be ....

Reality says

Hyperinflation is a dangerous game

Hyperinflation is an act of desperation. However, well-engineered and executed high inflation is nothing else as financial TOOL and is far safer than deflation.
Last time US had high inflation was in ‘70th, (12%-14%)

REpro says

Reality says

Hyperinflation is a dangerous game

Hyperinflation is an act of desperation. However, well-engineered and executed high inflation is nothing else than financial TOOL and is far safer than deflation.

Last time US had high inflation was in ‘70th, (12%-14%)

The result was stagflation, just like what are having now.

BTW, don't think the 70's experience was safe. Apparently the whole system came close enough to collapsing to necessitate crisis planning such as committees on government continuity, which apparently was in doubt in the minds of some elite. At present, if a double-digit inflation take place like in the late 1970's, the Volcker solution of raising interest rate over 15% like he did in 1980-81 would bankrupt the country, simply due to much higher debt to GDP ratio now compared to back then.

hrhjuliet says

Where do you think we are going to end up in 2015?

If history is any indication, 2016 would be the top of the housing market. That means we should see some more appreciation in the next couple of years. I know it's hard for some to grasp, but it is what it is. However, the depth of the next housing correction would not be as severe as the 2009-2011 one.

I had an unfair advantage because I was buying properties at the courthouse steps during the financial crisis. Investors were buying properties at 75%-80% FMV all day long at the steps. When the foreclosure inventory started to dry up in late 2011 and early 2012 at the courthouse steps, that was an indication that the housing market would get hot in the next 4-6 months. I gave the warning to Patnet readers, but it felt on deaf ears. People only like to hear what it would fit their preconceived notion unfortunately.

The law of supply and demand trumps everyone's opinion and prediction. If you pay attention to the Bay Area housing market, there's hardly any distressed sales now. Any distressed sales that come up are immediately locked-in before they even hit the market. The typical buyers have no chance of buying these at a discount.

Unlike flippers and banks, who are okay with cutting prices because they have to move their inventory. Regular sellers, on the other hand, are reluctant to cut their wishing price. Unfortunately, the current housing market is dominated by regular sales. Coupled this with loans generated since 2009 have performed flawlessly, where is the housing inventory coming from? If not from regular sales or new construction, where else?

Have you been to open houses lately? How many buyers are Asians? How many of these buyers are loaded with funny money? At this pace, I'm afraid that our kids would eventually be servitude to the Chinese landlords in the Bay Area.

Edvard2 almost missed the boat. His tone of voice changed quite a bit since he bought his house in Spring 2012. Otherwise, he would still be a Bay Area housing hater now. It's unfortunate that there are so much misinformed advice on Patnet about the housing market. On the positive side, some Patnet readers got off the sidelines and did well. So congrats to those.

I had lunch with BMWman in early 2013. Great guy and very reasonable in his analysis. He sees the world for what it is and not what he wanted it to be. He bought an older house in Santa Clara for $775k in May 2013. Again, someone on here gave him ill advise when he shared his purchase journey and his problematic next door neighbor's son. Thus, he requested Patrick to delete a couple of his threads on these topics, packed his bag and moved on with his life. That was a big loss for the Patnet community IMO.

Anyways, night night.

Bmwmans million dollar dream house quickly turned nightmare before he could even move in, when he realized the neighbors kid was psycho. Hopefully, he is ok. But I fear the worst,,,,,

errc says

Bmwmans million dollar dream house quickly turned nightmare before he could even move in, when he realized the neighbors kid was psycho. Hopefully, he is ok. But I fear the worst,,,,,

I'm sure he's fine. He's probably been busy catching up on all the deferred maintenance left by the previous owner. As I remember he also had a dream of a speaker building workshop.

It would be nice if he'd check in once in a while though.

Not just BMW, what happened to Troy, RayAmerica?

bubblesitter says

Not just BMW, what happened to Troy, RayAmerica?

Troy became Bill.

Reality says

Troy became Bill.

Yeah, what happened to Bill? he posts very thorough and analytical.

bubblesitter says

Reality says

Troy became Bill.

Yeah, what happened to Bill? he posts very thorough and analytical.

I think he finally recognized the follies in Georgism, and is intellectually honest enough to avoid bamboozling people with nonsense after the new realization. It's a little like Karl Marx could never finish Das Kapital after the first volume, after he learned that his Labor Theory of Value assumption was wrong, and his proposed social theory and solutions could not reconcile with the reality of Values being Subjective.