patrick.net

Fear. I like it! :)

Fear is greed's twin brother --the one FBs haven't heard from in a long, long time. It's about time they became reacquainted.

Mmmmm... sweet delicious fear... yum! :twisted:

Hey, we've had six straight threads with NO graphics. What gives??

Is there any wonder we are seeing increased terrorist threats/arrests which increase fear as we head into the election season this fall. For some reason the republicans still poll better in the face of terror fear.

What is fear? It needs a more philosophical treatment. Let me meditate and I will get back to you.

Well, it's about time these FBs get reaquainted with fear. They should have been more fearful of the downsides when they were buying in 2002-2006. They should have had more sleepless nights before tying themselves to mortgages 10X their annual salary. They should have thought about interest rate jumps when they agreed to ARMs. They should have worry when they see prostitutes walking around their "gentrifying" neighborhood. They should of had a contingency plan for $4/gallon gas or soaring natural gas prices or 6 months of unemployment.

They should have been more fearful of the downsides when they were buying in 2002-2006.

But they were more fearful of being priced out and left behind forever.

Fear is..... You have depleted your savings and maxed out your credit cards and you are 14 days late on your $3500 mortgage payment when you get paid on the 15th...but you need money for groceries and the brakes are broken on your truck and your kids need clothes for school and then there's those credit card bills.... "Well, I can always sell the house if things get too tight," you tell yourself. Then you see an item on your local news telling you that the house you bought in October '05 with 5% down has depreciated by 10%.

...and how could I forget---the ARM adjusts in only 2 more months and your spouse's employer just announced layoffs are coming...

For some, it should have been a balance of the two fears, but those people only saw one side and unfortunately, they're likely to suffer for their ignorance. I see that especially with a lot of modest income people like teachers and public servants, who bought themselves crappy condos out of fear that 2005 was their last chance to "own."

But for many, maybe most people who bought, I see greed as the prevailing motive. A lot of people bought bigger and more expensive houses than they could afford, or bought multiple properties, in anticipation of double digit annual appreciation. These people weren't motivated by fear, but by greed for easy money.

a balance of the two fears

It sounds like a sequel to "The Sum of All Fears". :)

Greed and fear are linked. Greed is about the preference of getting the better possible outcomes. Fear is about the preference of NOT getting worse possible outcomes.

Fear is chi uncontrollably descending, and fright/shock causes it to scatter….

Good point! Are you really into chi and feng shui? I am actually learning to use dowsing rods to find energy lines.

I just realized I myself had been remiss in not posting a graphic for "Lies, Damned Lies, and the C.A.R." Rest assured, I have remedied the situation.

Unfortunately, whereas meditation can be used to overcome fear, shock and fright, it does little to stabilize prices.

Perhaps when the FBs are really tranced out they would see non-stop triple-digit appreciation. Mind is very powerful. :)

(As long as you can clearly “feel” the quality of what you are looking for in your mind/body)

I agree.

"Perhaps when the FBs are really tranced out they would see non-stop triple-digit appreciation. Mind is very powerful. "

I thought the point of meditation was to release yourself from material concerns.

I know some people who have recently sold homes in Pacific Heights and Presidio Heights and who are already renting in the Presidio. I think the Chronicle article today about SFH rents in the Presidio rapidly increasing will get more Town & Burke parents to think about cashing out and doing the same thing.

Some people like a childless couple I know were able to sell a home on Lake Street and rent a similar home a block away for less than the CD interest they are getting on their gain (the first $500K was tax free).

I know others who are scared that prices may have stopped going up 20% a year and are thinking about getting out from under a $3mm 1st mortgage (and many times also a 2nd) while they still can (my parents said the 30 something VC couple next to them are selling since they don't want to try and pay a $4mm mortgage with one salary)...

I am of the school of “feel it” feng shui - the other one (that uses the Lopan) is just too much like work for my liking!

The "feel" part is more important, IMO. I have problems trusting my intuition though. This is probably my biggest blockage.

But if you're a top level executive with good legal representation and a fawning board, you have nothing to fear.

http://www.slate.com/id/2148327/

““It does feel a little scary right now,” said Celia Chen, director of housing economics at Moody’s Economy.com. “I think these markets will correct. The price gains that they have seen have exceeded what can be supported by the economic and demographic fundamentals.’’

they don't seem to agree with that analysis in this country. so either the market can defy gravity, or they're simply liars and game players, fooling most of the people all of the time... the news services seem to think that the vast majority only want to hear the 'it's only going up' spiel...

@astrid,

Wow. Peter P & Randy were very prescient. Weren't they the first to suggest hedging intruments against the bubble for homedebtors (put options)? Way ahead of the curve guys.

I thought the point of meditation was to release yourself from material concerns.

It may depend on your personality. Some can be more detached from materialistic possessions. Some like to be pampered.

On a more general level, Fear is, of course, an innate human emotion. I think it drives more human behavior than we give it credit for. This is certainly true with mass hysteria type bubble phenomenon: fear of missing the boat, fear of being priced out forever, and on the downside, fear of losing everything, fear of catching a falling knife.

@SQT,

My pleasure! Just curious, is there any chance you can make it to $anta Barbara on the 3rd? It would be really cool if you were there.

spin: :x http://www.slate.com/id/2148197/

I’m not sure. I’d have to come down by myself and I’m not sure how well that’d work out. I’ll speak to my husband and see…

SQT, it would be really cool if you can join us. I know it is quite far for you...

Firstly, I just wanted to say the thread graphic hung in my elementary school hallway from K thru 6th grade. It freaks me out and pisses me off. It must have been in the vicinity of the principals office.

Anyway, much of the fear I've seen since tuning in to CNBC seems to come from the media! These guys are wetting their pants. All day long today, I couldn't believe it. Last night it was the LEAD story on regular network news. (That means even people with rabbit ears caught that one). The whole sense of urgency like FB could actually do a damn thing about it now?

I don't know, maybe that's why we graduated right to the fear factor. When the stock bubble busted everybody stood around in disbelief for a couple of months. This thing has easily surpassed that and then some. Fear? We've gone straight to panic mode!

DinOR,

I concur with your observation. It's like we went from denial to panic in less than two months. Now we just need the prices to fully reflect that panic and that's when it gets really interesting.

I think there will be multiple waves of panic. This first wave is the speculators that have multiple properties (most of the others are still in denial). The next is the overleveraged with a trigger or triggers that puts them over the edge (ARM reset, new tax bill, lost job,etc...) Then a third wave which is more of number 2 along with some foreclosures from the first two waves. Perhaps even a fourth wave which is just more of the same with heavier emphasis on the foreclosures. This thing could drag out for many years or even a decade.

Excuse me…what is FB?

Focaccia Bread

The first part of fear cycle has started even in BA. People are not buying as much as they were an year ago. The buyer are afraid of buying something that may loose value over next few months. The fear in sellers have just started. Barely.

It is still playing out like a script. Panic won't set in sellers till ARM resets hit them. Right now it's just an idea for them. When it becomes reality .... we will see fear on both sides dictating the market.

Peter P, always the class clown ;-).

FB=F@cked Borrower. See Housing Bubble Glossary

Robert Cote,

I had the same observation watching CNBC today. The way they were covering it you'd think they were covering the Hindenberg crash! It shore was weird. It seemed like every angle covered was as it pertained to the housing debacle.

From the DQ report on July numbers.

Around 30% of Santa Clara county zip codes are showing -ve YOY median prices. About 20% are showing -ve YOY per sqft rates.

For Alameda county around 40% of zip codes are showing -ve YOY median prices. About 45% are showing -ve YOY per sqft rates.

I have been waiting for the median to become -ve YOY, just to get a nice headline in local MSM. It will shock a lot of people. Before year end. Seems pretty sure now.

I think the real fun will begin on the lower Peninsula when the specu-builders start getting desperate. Do an MLS search on Los Altos or Los Altos Hills. There is a lot of discrepancy on the prices. There is a total tear down listed for $2.95M below a really nice 4BR for $2.5M in a better location.

But the builders who bought tear downs and built McMansions without a buyer lined up will really be f*cked soon.

That said, a 3/2 a couple of doors away from my place just sold in 4 weeks for $788K ($1K under asking). So there is still a lot of demand here. The young widow who sold it probably wasn't interested in waiting for a better offer, but I think she still could have gotten one. The open houses were packed.

Paul,

I absolutely have to agree with you! That just about sums up the "mechanics of fear". Kind of like The Pit and the Pendelum. What a classic eh? The "triggers" you describe are dead on. One you may have missed though (and this may sound mean spirited) is the loss of OVERTIME! For so many of these people just being cut back on OT will be enough to send them over the edge.

How difficult is it to imagine some sleazebag mortgage broker looking at these guys W-2's seeing a lot of OT and "qualifying" them "for all the house they can afford". We could well lump this into the overall category of mortgage fraud (which it is) but the way it plays out will put it squarely on the FB's shoulders.

Here is my favorite listing:

http://tinyurl.com/evtvs

It is on a relatively busy street and in the flood zone. It has been on the market (new and empty) for over three years. I think it was flipped a few times. But there are a bunch of builders out there with multiple projects with a lot of money invested. I think they will experience some fear soon.

At what point does a house built in 2001 stop being "new" if it hasn't been used as living space? I said a few years, but I did some more research and http://tinyurl.com/evtvs was built in 2001. The listing says "new". It is not new. Termites don't care. Appliance warranties don't care.

I noticed that CNBC has been gathering bubble bear steam all week. Pretty much only Kudlow & that sound effects clown are still in denial (during the hours I watch). But all the main anchors are getting very bold about challenging cheerleaders; and they usually have on some actual economists and wealth managers now, instead of just some clueless 29 year old analyst the permabulls can ridicule.

The best was yesterday. They had on a HSBC economist debating with some mortgage industry shill. The HSBC guy started getting annoyed and said something like "all you have to do is look at the first and second derivatives of the curve on that graph you just put up and see that housing prices are crashing". Her response. [Deer in headlights]. She had no idea what a derivative was.