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tannenbaum Says:
No surprise from the Fed today:
http://www.federalreserve.gov/boarddocs/press/monetary/2006/20060920/default.htm
Yawn. Not really much of a shocker, eh? The current toolbuckets at the Fed will be remembered by history as the fools who let inflation out of the bag. Can we say, "Election time?"
You gotta love Jeffery Lacker, though. Twice in a row dissenting and voting for a rate increase.
"Indicators of market distress are still largely absent"
Thus begins another DQ (keep the Debacle Quiet) (TM) closing paragraph.
Uh..... I don't want to tell you guys how to run your business but did you bother to read the chart you provided below the closing standard "ostrich" paragraph?
Are BA rents really going through the roof as indicated at patrick.net? Those charts, esp, 2 bedrooms, seem a little too unbelievable.
Can't sell it? Try to rent it. SF Penisula is lit up like a Christmas tree:
SQT,
You should cut Skibum a break on that comment. I think the meow was intended for women threatened better looking women and certainly not for SFWoman.
I suppose in the mainstream work place I must have been something of an anomaly. Very good at mentoring and a lot of younger people I still run into remark they never had that much fun at work (and haven't since!)
Yet...... gifted in the Art of Gossip! (My buddy who we'll call "Frankie") was in AA so he had "the goods" on everybody. Even knew about the ex-stripper on the Apprentice and her "best lap dancing customer" before he ran out of $'s and resorted to...... Anyway, it is possible to be a work/life mentor but if you don't have the "dope", why would I listen to some old guy?
My objective was alway to make the next 8, 10, 12 hours pass as painlessly as possible! But you have to remember to "give" too! My former co-workers still love to tell the story about when I walked down to the local tavern at closing time in my bathrobe and slippers DEMANDING to be served!
http://www.mercurynews.com/mld/mercurynews/15565577.htm
Mercury News on the DQ numbers.
"We’re likely to see all BA, perhaps all CA negative prices YoY within the next month or two."
I agree that this seems possible now.
John M,
I'm not ready to throw in the towel just yet! (But the Twins season is basically over and the only real schedule they face is the Sox!) On the other hand it is make it or break it time for the southside!
RANDOMGUY! Friends don't let friends buy condos! (Or houses, at this point anyway). I thank you and Surfer X thanks you!
Hey SQT,
astrid is correct - I was referring to the catty scientists that SFWoman referred to. SFWoman has never to me seemed catty or petty in any way. Moreover, I think men are in fact dissed ALL the time about this kind of crap. Women are called catty or bitches, men are assholes and jerks. I really don't think this sentiment is biased one way or another.
*DinOR,
I gossip can be a force for good or evil. It really depends on the spirit of the comment and the type of work place. Your gossip seems to be good humored and informational, rather than focus on making specific people look bad. Gossip is fine as long as it doesn't hurt people or distract people at work. Plus, I bet your younger coworkers all found that story a hoot.
* because I'm really sure DinOR is not your real name either
lunarpark,
WHOA! Wait a sec here. Check out the numbers from the Merc:
"The median price of existing single-family houses sold in the nine-county region in August was $664,000...2 percent higher than a year earlier, but down 1.5 percent from July 2006.
In Santa Clara County, the median price of houses sold last month was $725,000. That's down from $750,000 in July, but 1.6 percent higher than the August 2005 median price of $713,500."
And the DQNews actual press release:
BA median price: $620K
BA YoY change in price: +0.2%
Santa Clara median price: $658K
Santa Clara YoY change in price: +0.6%
The Merc is off (favoring a less significant slowdown, of course) on all of these numbers. What gives????
Oh, and SFWoman, if you did indeed take my "claws out" comment as directed at you, rather than the people you referenced, my apologies - it was directed at the folks in your story.
The hag was a looksist!
lol. Probably not a looksist, but just extremely insecure, is my guess.
Inter-Office MEMO:
Brokerage Firm Guidelines for suitable Office Gossip:
1. Any story involving alcohol (especially if used to excess) meets firm guidelines for "fair game".
2. Wives are OFF LIMITS.
3. Ex-wives are fair game as long as the ex-husband initiates the character assasination.
4. Once a story has left the domain of general office gossip and becomes common knowledge ie. (it's in the local paper) it is NO LONGER cool to gossip about it b/c you're a dickhead and if you have to wait until it comes out in the "funny pages" YOU good sir are obviously out of the loop!
5. Try and make the most out of your "water-cooler time".
Some guy on CNBC saying everything's fine, will bottom out in the next quarter and then go up, people won't loose much equity in their home....
Pleeease!
SFGuy,
Huh? The outfit was a bit on the expensive side, but it conforms to standard interview wear. I'm generally advised to wear dresses and pantyhose (hate!) to interviews, so I don't think SFWoman was overdressing.
When will they stop saying it's because the interest rates went up and now that they've paused everything will be hunky dory again?
Claire,
Do you know who made that prediction?
I wouldn't take house buying advice from someone who appeared on CNBC. Most of them don't live in reality anyways.
DinOR Says:
“Indicators of market distress are still largely absentâ€
Thus begins another DQ (keep the Debacle Quiet) â„¢ closing paragraph.
Uh….. I don’t want to tell you guys how to run your business but did you bother to read the chart you provided below the closing standard “ostrich†paragraph?
I think it's not an "ostrich" statement, rather, a "calm the masses" statement. We don't want a panic, do we? Titanic Captain: "No worries. We just hit a tiny piece of ice in and a bit of choppy water!"
Claire,
At this point with words of comfort and wisdom coming from the likes of Marshall Prentice joining the ranks of DL and LAY it may be more beneficial for us to track from our foriegn correspondents? Please see HARM's post above (just look for the dark print).
Since obviously our MSM and even analysts have conflicts of interest here perhaps the UK and the folks "down under" can provide more objective and meaningful coverage?
"Not even God himself could sink this market!"
/someone had to say it
Astrid,
I didn't get his name - just one of the people they trot out to give predictions on the market and to be honest when he said it, I was not too interested in what he had to say after that because he was either deliberately putting a spin on lower housing starts etc, or he was completely out of touch with reality!
skibum,
Interesting. So it would be financial disaster planning at work. This market is still in the denial phase, with some FB anger tossed in.
austingal,
Had you the cash (and I don't) to pay the mid price of 400K that's about a 3.3% return on your money! Not bad huh?
randomguy Says:
September 20th, 2006 at 11:29 am
Hi Guys,
I’ve been reading this blog everyday for the past 6 months or so and I wanted to finally post. Just wanted to say thank you to all of you! I was very close to buying a condo in San Jose 6 months ago for 515K. I only make 75K a year but my parents were gonna help me out a lot with the down payment so I didn’t have to get an IO loan (or some other kind of weird loan). It came down to the last day where I was supposed to e-mail the condo guy and tell him if I wanted it or not. I got scared thinking about this huge financial commitment so I searched for “housing bubble†on Google and this came up as the first page. After reading all of the info and a lot of the posts I decided against buying the place. I think this blog saved me what would have been a lot of buyer’s remorse and financial hardship. I am definitely looking to buy when the crash gets in full motion, preferably in Mountain View.
-Very grateful patrick.net reader
*sniff* It's stories like this that make all the time I piss away here seem worthwhile. Thanks, randomguy! :-)
Oh, per side? Okay, then a 6.6% return. Uh, unless they've defaulted muni bonds don't require eviction notices.
Claire,
Yeah, now that I heard skibum's take, the pieces all seem to come together.
Most of these financial analysts (as opposed to honest to God real academic economists) seems to forget the relationship between housing costs and income. Right now, housing is so expensive that 80+% (apologies to DinOR) of CA can't afford to buy their own home on their own income with a traditional loan. A 10% increase in wages is not going to correct that situation. Housing prices have to go down.
astrid,
It's close enough. I'd heard it's actually 78% but when you're that high up in a range I'm not going to make a liar out of you over 200 bps!
DinOR,
Huh? I crunched the numbers
(12*1100-6,500-1,000)/400,000 = 0.01425
Assuming 6.5K in annual property taxes, 1K in insurance and other costs, and 400K as average selling price.
So the return would be less than 1.5% and you gotta pay income taxes on that princely return.
randomguy Says:
> I was very close to buying a condo in San Jose 6 months
> ago for $515K. I only make $75K a year…
Only 6 years ago you could buy a nice big home near downtown Mill Valley or in Burlingame Hills for $515K (and the average buyers made around $175K a year)…
> It came down to the last day where I was supposed to e-mail
> the condo guy and tell him if I wanted it or not. I got scared
> I decided against buying the place. I think this blog saved me
> what would have been a lot of buyer’s remorse and financial
> hardship.
The guy who bought the condo probably makes $60K a year and probably bought the place with no money down using a neg. am IO first and a 2nd. Odds are that he will soon have two mortgage payments and HOA dues that are more than his take home pay…
DinOR,
Oops, my bad. I heard city affordability numbers bandied about in the single digits, so I figure 80+% would be safe.
astrid,
Oh, no arguing here! And that "princely return" also assumes you collect the rent your damn self! When one factors in inflation and the devaluation of the Yankee dollar it's probably a negative number. Like I always say, "I don't have to slide down a bannister full of razor blades to know that will hurt"!
RE: CA Affordability
http://calculatedriskblogspot.com/2005/08californias-housing-affordability.html
austingal Says:
> There are some duplexes near us.
> Pretty nice, big yards, good schools.
> They are listed between 350-450k.
> Taxes are 6-7k a year. They rent for 1100/month.
> Now, am I missing something. Is there anyway
> that this type of property could be a good investment?
It does not sound like a good “investment†(since you will probably not get much of an actual return on your “investmentâ€. If a $400K place has Gross Rents of $26,400 it has a GRM (Gross Rent Multiplier) of 15.15x about 50% above the historical average for homes and duplexes of ~10x (for apartments that average is ~8x).
A good rule of thumb for expenses (and a cap X) are $4K a unit + Property taxes so if we have Gross rents of $26,400 we will be lucky to actually collect 95% of that after vacancy & collection loss. If we subtract $14.5K in expenses from an EGI of $25,080 we get a NOI of $10,580 or a 2.6% Cap rate about 1/3 of the historical average for homes and duplexes (for apartments the average cap rate is a little higher just under 10%)
My bad,
http://calculatedriskblogspot.com/2005/08/californias-housing-affordability.html
Let's try that.
SFGuy,
Maybe you're right. I've always gotten advice to dress as expensively and as conservatively as possible for interviews and by that criteria, SFWoman's choices were impeccable.
Though I'd gone through a couple wedding registries of friends who work as scientist or scientist types. They seem to know brand names quite well or married someone who did.
alien,
Thanks! I just wanted to show all the lurking doubters that we here at patrick.net take this business seriously! (Although taken from market peak in Aug. 2005) you get the idea. Do you suppose it's gotten any better over the last year?
DinOR,
I guess it was 80+% after all at 16%, though their methodology is a bit different from what described.
Should I do an astrid called it victory dance around my chair?
astrid,
Uh...... you MAY!
I recall seeing an article on bankrate.com that said 78%?
I also saw I pop-up there that said I could get a 600K loan for $1,278.12 a month too though!
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