patrick.net

I try to plan my day with commute time in mind and I'm not really rich enough to eat out that often, so I'll take a good job market please!

Plus, higher wages would just be taking over from people HELOCing or flipping their RE holdings, without rising wages, the restaurants would now be empty because people can no longer liberate home equity for $9/piece sushi.

"...jack hammer the foundation, break structural items, plumbing"

You would only be hurting yourself, wouldn't you? My understanding is that your outstanding debt is reduced by the value of the house when the bank takes possession.

"I think credit is all better after 5 or 7 years."

In most cases you would still owe the money.

Should we set up a support group for the prodigal homeowners? I think we should probably accept everyone.

Yeah, strong job market...

Intel May Announce at Least 10,000 Job Cuts Next Week (Update3)

By Ian King

Sept. 1 (Bloomberg) -- Intel Corp. Chief Executive Officer Paul Otellini may cut at least 10,000 jobs next week, or about 10 percent of the chipmaker's workforce, in his efforts to slash $1 billion in costs this year.

Otellini will discuss the results of a 90-day internal review with employees on Sept. 5, said Patrick Ward, a spokesman for Intel. In an interview today Ward called reports on job cuts ``speculation.'' Mark Edelstone at Morgan Stanley is among analysts who predict at least 10,000 reductions.

Intel, the world's biggest semiconductor maker, is wrapping up its most sweeping overhaul since the 1980s as Otellini battles market share losses and falling sales. He decided to fire 1,000 managers in July to restore profit growth, marking the biggest cuts at the Santa Clara, California-based company in four years.

``It would be seen as lame if Intel does less than 10,000,'' said David Wu, an analyst at Global Crown Capital in San Francisco. He rates the stock ``overweight'' and owns shares. Wu is advising investors to buy Intel's stock because he expects recently introduced products will help recapture market share.

Shares of Intel, down 22 percent this year before today, rose 14 cents to $19.71 at 10:58 a.m. New York time in Nasdaq Stock Market composite trading. The Philadelphia Semiconductor Index fell 1.1 percent.

Market Share

Otellini, 55, is eliminating jobs and selling businesses after forecasting the first annual sales drop in five years. While Intel tried to create new markets for its personal-computer microprocessors, the company's closest competitor gained ground. Sunnyvale, California-based Advanced Micro Devices Inc. now has more than 20 percent of the market for chips that power PCs.

In addition to the 1,000 management reductions in July, Intel announced the sale of two communications units that will shave 2,000 more people from the payroll.

``You're probably going to see them go back to the core business, the company they were three or four years ago,'' said Chris Caso, an analyst at Friedman Billings Ramsey & Co. in New York. He raised his rating on Intel this week to ``strong buy.''

To win back sales, Intel this week introduced a version of its Xeon server chip five months ahead of schedule. Otellini has accelerated the introduction of products and says his Xeon chips are faster and more efficient that Advanced Micro's Opteron.

In the second quarter, Intel reported its biggest profit drop in more than four years and said it is unlikely to meet its 2006 sales forecast. Revenue will probably decline more than the 3 percent Intel forecast in April, the company said last month.

`Low End'

More job reductions may reverse a hiring binge that has added more than 20,000 employees since 2003, according to Morgan Stanley's Edelstone, who is based in San Francisco. He predicts 15,000 to 20,000 cuts including previously announced reductions.

``Ten thousand would be at the low end of everyone's expectations,'' said Doug Freedman, an analyst at American Technology Research in San Francisco who has a ``buy'' rating on Intel's shares and doesn't own any.

Before this year, Intel last announced a round of workforce cuts in 2002, when the company shed 4,000 jobs. Intel ended 2005 with 99,900 workers, according to a regulatory filing. That was a gain from 79,700 in 2003.

To contact the reporter for this story: Ian King in San Francisco at ianking@bloomberg.net

Last Updated: September 1, 2006 11:01 EDT

SFWoman,

It's great that you bought as a lifestyle investment. All this bubble stuff really gets people confused between investing in a lifestyle/home and investing so you'd make $250K every two years with no effort.

Also, you're getting really low property tax. Once the market adjusts (below current price level but way above where you purchased it), you might make good money just renting your current place out and take advantage of the lower taxes.

I live in my places.

a poor excuse indeed.... :P

sorry, i thought they were 'extra' properties - for some reason using the word 'property' connotes investment to me, tho i don't know what alternative word you use to indicate personal use - 'places' or 'homes'? 'my homes', hmm

if you were a gambler, you could sell the apartment at the top, then buy a hollywood mansion for the same amount post-crash. in the interim, you could sell the apartment and lease it back ;) maybe sell your mom and lease her back too, i did that to my grandmother once, i wasn't heartless enough to sell her outright...

Robert Cote,

Oh come on! You like your kids, you like your house and you seem to like your job too. That sounds like a fine life you're built for yourself, and one that you're rightfully proud of.

As for geopolitical importance, CA is far from the finance and political centers of the US.

I agree that the Left Coast is much more pleasant than the Right Coast in many respects, especially for weather and natural scenery. But pleasantness does not make for geopolitical significance...unless one considers Hollywood blockbusters (financed and approved in Hollywood but usually filmed in Canada or Bulgaria or Australia nowadays) or San Fernando Valley videos or apricots to be of geopolitical significance.

John Haverty,

I was responding to your proposal to disallow rates below 7.5% EVER. That's exactly the thinking that took a deep recession paired with an asset correction and turned it into an all out disaster. I think you'll find the prevailing philosophy, pre FDR, was "let the bad companies die, the bad banks fail, and the bad people go broke". After that hit about 1/5 of the population of the country someone wisely decide to rethink that strategy.

Sometimes shocks are necessary to break feedback loops. I don't want to see one of those options gummed up by ill conceived laws.

The real answer is .... (drum roll).....

Virtuous leaders and vigilant voters. Sometimes I feel like we're falling all over ourselves to avoid the obvious white elephant:

We have no leaders. We have stupid voters (or stupider non voters). Without fixing that, all the rest is fiddling to the flames.

America doesn't have stupid voters, we just have a combination of extremely self interested voters, religious "rapture me up" voters, and stupid voters. To obvious solution is to (1) break America into smaller countries so we have better voter-government interest alignment; (2) set a "now or never" date for the Rapture and make it soon; and (3) make people pass a basic logic test before they can vote.

Yeah, it's not actually gonna happen and we're all doomed and we'll never get that fresh water based rocket to Mars off on time. :-/

Virtuous leaders and vigilant voters.

How about divine intervention?

We have stupid voters (or stupider non voters).

Apathetic non-voters. And fixed elections...

punishment should be slow and lingering …

flogging with wet noodles...

KurtS,

I'm smelling a hard fall coming in Marin. Almost 2 years ago, when my move from San Mateo cty to Marin was eminent, I started doing some stats (thinking I was going to be selling and buying again right away). I wasn't sure if there was a bubble yet then. But I did find that Marin minus Novato & Marin City was range bound to a maximum of 8% over the BA as a whole, but that it had jumped to nearly 25% starting in 2000. Simple mean reversion told me that Marin would need to slow relatively (given I couldn't find any real fundamentals that would explain increased Marin demand).

Now tack onto that the regional & macro bubble effects, and Marin may be due for a double whack as it reverts to the mean regionally and also corrects with the rest of this insanity. We're already seeing 30%+ drops in Belvedere and Tiburon (of course for homes over $5M). But I'm seeing stuff for $1.4M that previously people were trying to get $1.8M+ for just 6 months ago. I just don't have that many examples of direct home-on-home price reductions, so it's all just my own judgement.

Now Girgl, you delete my Office Space Nazi flair reference but let the troll fly? Dude, stay on troll patrol. Delete all trolls upon posting.

Ok Troll, I am willing to enter into a formal legal contract with you. I will buy any house in the areas you listed above. I will hold house for 1 year and sell. If house rises in value you keep all profits with no risk. If house falls below your projection, you cover all my expenses so I break exactly even.

Come on troll put your money where all the shit comes out of. And now it's not your backside as it is filled with corn from all the asspacking you get.

surfer-x says:
Now Girgl, you delete my Office Space Nazi flair reference but let the troll fly? Dude, stay on troll patrol. Delete all trolls upon posting.

Yessir. I'm sorry I failed you sir.

ladi says:
Remember, take your rent X 1.5 to get your gross rental cost. You’re “sweet” $2,000/month rental is really $3000 in gross dollars. hahahhaha.

Still better than $9000 in gross dollars. Dumbass.

KurtS,

It is interesting that the "Marin Premium" isn't really in line with popular perception. In fact, this makes sense when you think about it. There are plenty of "prime" areas in other counties; Marin isn't really unique in this regard. What is perhaps a little unique about Marin is the geographical distribution. I was monkeying around with my old spreadsheets seeing if I could create a "prime set", which roughly cut out Marin City, remote, and everything north of "the big bottleneck". That pushes up the long term premium from about 8% to maybe 15%. But, then I see those prices have diverged by much more than 25%. It looks like about double that. So, ironically, prime Marin may be in for an even more amplified correction. Whereas, Novato has been restrained by traffic and proximity, and doesn't have that extra divergence from mean to work out.

This jives with what I'm observing on the ground. Biggest drops in Tiburon/Belvedere and upscale MV/CM/L.

To your point, we have been visiting bimonthly open houses in a new construction monster in Tam Valley sine it was completed and marketed in February. It's sat vacant, probably because it's too pristine to risk renters (really excessive upgrades in this thing). It first listed for $3.65M. The flyer read $2.98M a couple weeks ago. We were the only folks there during peak Sunday hours. Agent seemed surprised we even came in until he recognized us (it's been different agents many times). Before I could say a word he more or less blurted "throw in an offer of $2.5M and I'll see what I can do to get this thing sold!". I'm thinking, that's over $1M off in 6 months...at this pace I think I'll wait :) Also, this home shows days on market of 18 in MLS, and no price reductions. Lol. I'd maybe pay $2.5M if they could also get rid of the Tam Valley fog. lol.

Troll: (you know who you are, the guy who wishes he'd never quit his job as an investment banker to become a neophyte real estate broker)

Remember, take your rent X 1.5 to get your gross rental cost. You’re “sweet” $2,000/month rental is really $3000 in gross dollars. hahahhaha.

SUCKERS. PAy your land lord’s mortgage

Funny thing is that my landlord is subsidizing my rent; complains every month about how I'm not covering his mortgage...and he built this place in 1998. He failed to sell at the top when he could have got over $2M for this McTrashion. Now he's looking at $1.5M.

Landlord's return: -25% (less if you factor losses on cash flow)
My return, cashed out equity invested elsewhere: +14%

hmmmm. Who's the sucka?

You're an idiot. Was the HP12C too hard for you to use? You know, you could have always just bought a TI or pushed F1 in Excel.

up Tam past Sequoia Valley rd

It's tempting. We've looked at some stuff back that far, but the commute would be a killer. And you're basically stuck with Edgewood Rd. for access during tourist & surf season. I'm back behind Marin Dr./Ave. now and I've come to really hate tourists. I'm stuck, it's either 1@101 or Tam Junction. And people want $3M+ for homes back here. Give me a f*ing break.

astrid,

Agreed. I believe that about one third of the nations payroll is within a 2 hour drive of Lower Manhattan but being a west coast broker has it's perks! Sure our Mondays start in an abrupt and ugly fashion but Friday we're at the "Rock Bottom Brewery" no later than 1:15pm! After that, good luck getting the waitress's attention. The VQ (Veritable Quandry) and Moose Mulligan's have had fist fights start before happy hour started. I've seen heated arguments start in the elevator and spill out into brawls in the lobby. (Try that at 1:00pm in New York!)

But seriously the proof is in the pudding. Out west we had this now defunct firm some of you may have heard of called Robbie Stephens? Great "tech" analysts, traders and market makers. They get bought out by Fleet at the absolute DUMBEST time and they wind up blowing it out and put some of the sharpers guys and gals in the industry out in the street. So much for east coast brilliance.

Just look at Martha's broker Peter Bacanovic. The guy was more of a damn socialite than anything. What f@cking brilliance, he has an "assistant" Douglass Faneuil that I wouldn't have as a parking valet and then "pressures" the guy into forging doc's a sixth grader could decipher! Yeah, real brilliant. Out here we gotta work for it. No managing mom and dad's and their friends money until you get your feet under you! Out here it's sink or swim.

There's basically three schools of thought when it comes to wealth in this country.

East Coast: If you were meant to be rich it would have happened by now.

Mid-West: Keep your mouth shut and nose to the grindstone. Don't worry about money. Work hard, be loyal and when you're 65 you'll be a millionaire.

West Coast: Go WEST young man. An assortment of innovators, dreamers and pitch men that "believe" if they put together the right elements at the right time ANYONE can strike it rich! God love 'em.

Randy H,

What happened to the Robbie Stephens crowd? Up here in Portland we'd seen a few of them open their own shops and were pursuing their legal options against Fleet but what have you heard about those guys lately?

DrChaos,

I remember watching the comedian Robert Klein and his take on "astrology".

Let's see, what does my horoscope say? Today is a good day to ask for a raise!

Robert says; Right on man! If I had a f@cking job I WOULD!

"East Coast: If you were meant to be rich it would have happened by now."

LOL! So true.

Dear Troll, yaaaaawn, so boring, what's the matter Craigslist ban you again? Kindly explain how paying 7500 for a mortgage on an 850K house is better than 2K in rent? I'm curious because I just might be missing something.

I am still willing to have a legal enforceable contract drawn up, just let me know, I'll finance the house, you get all profit if it goes up you pay me all closing costs and the difference between the initial price and the 1 year later price?

What say asshole? Deal? No?

If mediocre people are getting raises, then I ought to be able to get a decent job.

Dr Chaos, sorry those jobs only exist in the blogosphere.

> KurtS (commenting on the possibility of a big correction in Marin) Says:

> That would be poetic justice. Along those lines, I wonder if
> more people took the IO/ARM route to upgrade to an
> exclusive area? Things could come crashing down on the
> IO and equity spending crowd.

I was just talking to a long time female friend about the "stupid" things out "smart" friends are doing and saying...

My friend moved back to the Bay Area a couple years ago (after making millions working in NY) to see if an average looking kind of chunky smart girl in her early 40's would have better luck finding a husband out here...

She was telling me that friends are "bragging" about working with a mortgage broker who "knows" the appraiser and was able to get them $500K cash from the $2mm Marin home they bought with no money down last year...

Most of these people have parents living in San Mateo and Marin County multi-million dollar homes that they bought for under $100K so they "know" that real estate "always" goes up and they have nothing to worry about...

> Speaking of “Tam Valley fog”: have you ever noticed that pronounced
> inversion higher up Tam past Sequoia Valley rd? Sometimes the
> difference is 20 degrees or more, effectively blocking uphill fog.
> The commute might suck, but the moderating effect of summer
> cooling/winter inversion could be nice

I can't believe what the little flat roof piles of crap are selling for in "Birdland" (the streets with bird names at the bottom of Tam Valley and Tennessee Valley). Not only are the homes tiny but they get a double blast of wind and fog almost every day as it rolls in both Tam and Tennessee Valleys).

P.S. I was just in the area and noticed that Tam Junction now has a Starbucks and have to think that many of the aging hippies must be cashing out and moving away, since as recently as a few years ago that never would have gone in...

P.P.S. I was thinking of calling the lady who had the "baby yoga" ad up on the bulletin board outside the Tam Junction Bell Market and ask her of business was dropping off with the VW Van driving hippies moving out of the area and the Volvo Cross Country driving yupsters moving in...

DinOR,

I haven't heard too much buzz around Robbie Stevens lately. About a year ago I heard from Andy Rachleff something about some RS guys and working with Benchmark. My network are mainly in the VC & VC/PE world, (and a few HFs) so I wouldn't know any IB stuff before you would most likely.

Just to clarify. I wouldn't say east coast is better than west coast, just more center-of-the-worldy. Importance certainly does not uniformly equate to quality, hence Washington DC (built on swampland and swarming with lobbyists and other evolution deadenders) is important as the nation's capital, but everything else about it sucks.

BTW, I was really really out of the loop to "Robbie Stevens" and actually thought that was the company name (wouldn't that be cute). So it's actually Robertson Stevens. (So instead of having never heard the name, I have heard of it once or twice in having).

lot blood spilled…….
lot (s of) blood spilled…

hella blood spilled... see, no need for plurals or prepositions...

alien,

First off, the guys over at http://marinrealestatebubble.blogspot.com/ have more credibility and detail on the issue than I. Lots of people there have lived in Marin a long time and would know more than I can offer.

Since SFD is the only way in-and-out of those neighborhoods, there's a traffic penalty to the home prices there. It gets hit by the 580/Bridge traffic and that Larkspur on/off ramp mess at SFD, which is no picnic itself.

My rough estimate is that much of South Marin is about 17% overvalued to the relative prices of the rest of the BA (that assumes an 8% historical premium and that today's premium is about 25%).

So take what you think the general BA is overvalued for the type of neighborhood & home, and add another ~17%. My own personal guesstimate for the total overvaluation of homes in my target set is 30%-40%. I'm hoping to see this area drop ~55%, accordingly.

The margin of error here is huge, of course. I'd give myself an alpha of about .25, lol.

alien

I also hope you saw my apology at the end of the last thread.

I am finally in Santa Barbara. Looks like I missed some troll actions, never mind.

This report from Saturday's WSJ might entertain Fake P and others for the holiday weekend: David Lereah is now predicting a national YoY decline in home prices! My, how his tune has changed!

Realtors Official Forecasts Decline In Home Prices

By JAMES R. HAGERTY
September 2, 2006; Page A2

The chief economist of the National Association of Realtors predicts that U.S. home prices will generally decline during the next few months.

The unusually bleak assessment from David Lereah, the trade group's top economist, came as the Realtors reported that their index of pending home sales dropped 7% in July. The decline shows that home shoppers continue to take their time, hoping prices will fall amid a glut of houses on the market in many parts of the country.

"I'm hoping for prices to drop," Mr. Lereah said in an interview. The Realtors normally stress the tendency of home prices to rise over the long term. But Mr. Lereah said lower prices are needed in some parts of the U.S. to lure buyers back into the market. During the past year, sales have plunged in California, southern Florida and the Washington, D.C., area, all places where prices more than doubled in the first half of this decade.

Sales have stalled partly because "the sellers are not bringing prices down fast enough," Mr. Lereah said. "They've been very stubborn." A drop of 5% to 10% in California and southern Florida "probably would be enough to bring sales back," he said.

For July, the Realtors reported that the national median home price was up 0.9% from a year earlier. But Mr. Lereah said he expects the national median to decline modestly in the next few months. That would mark the first decline since 1993. "The quicker we can get negative prices, the quicker we can get sales coming back," Mr. Lereah said.

Thomas Lawler, a housing economist in Vienna, Va., said the national median home price in this year's fourth quarter is likely to be down 3% to 4% from a year earlier.

In recent months, median prices in some areas -- including San Diego, Boston, the Virginia suburbs of Washington and parts of Florida -- already have fallen from year-earlier levels.

The pending-sales index, which equates the average pending-sales rate of 2001 to 100, registered 105.6 in July. The latest reading was down 7% from June and 16% from July 2005. The index, based on signed contracts for home sales that haven't yet been completed, has fallen nearly 18% since hitting a peak of 128.2 in August 2005.

By region, the July index was down 20% from a year earlier in the West and Midwest, 16% in the Northeast and 11% in the South.

On Wednesday, the Mortgage Bankers Association reported that its seasonally adjusted index of applications for home-purchase mortgages declined 1.6% in the week ended Aug. 25. That index -- a measure of demand for homes -- is down about 20% from a year ago.

Can someone please find the link to the article about the gal that went "undercover" to get the dirt on RE bubble UK style? She basically was glad to get out with her life!

High pressure sales tactics, bidding against non-existent co-bidders, cooked appraisals and funky lending are part and parcel with RE in bonnie ole' England! Perhaps it was SFWoman that revealed just how prices continue to escalate there?

If these are the caliber of straws perma bulls are clutching for, good luck.

Other than a handful of global observations we here at patrick.net stick to our knitting. But if it helps trolls/RE perma bulls feel better to parade these far flung and frankly meaningless articles more power to ya. If you're feeling that bullish pull even more equity out of your overpriced sh@tbox and speculate on a global basis.

MarinaPrime, is that you. Long time no see! :)

The Oregonian: Wednesday, August 16, 2006

Housing Market Loses its Boom:

Lower sales prices and higher inventory signal cooler times for Portland listings.

The Portland-area housing market has decisively cooled, resulting in a July median home price decline that bucks the-year trend of relentlessly rising values.

"The new market realities have frustrated sellers, such as Reid Biggs and his wife, Linda, who are hoping to sell their Hawthorne area bungalow and downsize to a floating home. Biggs said he spent $150,000 on second-floor rennovations six years ago and is annoyed with cosmetic fixes sold for more than $500,000 in last years overheated housing market".

Can you say; missed the f@cking boat pal?

Got it broke off right in the guh-zingus. (Sideways).

Best of luck getting over to that fully paid for floating home (which btw pay no taxes in OR) pal. I may have walked away from some upside selling on the last day of 2003 but this guys is now b@lls deep and NOW he's thinking about "using some protection"? Good luck with that Mr. Biggs as we now head into the doldrums for the Oregon market. They usually don't pick up again until at least March at which point Reid and Linda can look forward to Robert Cote's "Silent Spring" (the sequel).

People like this are helping us to re-define the term flipper.

Got equity?

Flip or re-fi!