patrick.net

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?

- dresses
+ skirts

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:

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:

-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 “investment”. 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!

alien,

So right!

I think I ripped that off from the old joke about the Dr. that upon leaving the morgue says "Call me if the patients condition gets worse"!

DinOR,

I was guestimating while you actually bothered to source your evidence. The kudos go to you.

Mainly, I was looking for an opening to introduce the word "truthiness" to this blog. I think we'll find it very useful in describing FB behavior.

http://youtube.com/watch?v=nZy9OhEcLLc

DinOR,

Let's not forget that the "official" CAR reported housing affordability index bottomed out at 14% statewide, before they, uh, stopped reporting that stat.

The HAI conveniently went on "hiatus" for 8 months, just as median prices and interest rates continued to climb (which would indicate it probably dipped into single digits during this time), and even after they seriously re-jiggered the index, the best they could produce was an amazing 23%!

See Lies, Damned Lies, and the C.A.R.

Have you seen my damn HAI? I know it was around just a little while ago? Well.....anyway it was old, out dated, antiquated, busted, disgusted (and not to be trusted)!

WTF! I want everyone to get up and do a little *astrid victory dance around their chair right now!

Yeah you too alien!

I think they are installing a new server or something and it is taking a bit longer than expected?

Okay so if they bail out the FB's I guess that we become F'ed instead?

skibum,

Nice catch re the Merc article. So far the dq news report has not made it to the front page at sfgate.com. I'm waiting to see what they publish.

Ben’s blog is back up.

Not quite. The main page is there, but no content. But at least we know he's "working on it".

SFWoman,

I guess that's the value in a Kelly or a Birkin bag. Hellaciously expensive but timeless.

I am not sure how the bailout can actually happen. Has anything this massive ever been bailed out ? LTCM is nothing compared to the bubble we have.

After none of the stock market crashes, were the investors bailed out. I don't even even think it's practically possible.

On the other hand lowering rates or ZIRP is not out of the realms of possibility. What effect it might have is an interesting debate and we did that many weeks ago.

But bailout ? That's being paranoid.

The only LV bag I have isn’t really LV but a knockoff my Mom got in Thailand. I wouldn’t buy it myself, but hey, I’ll take a cheap bag as a gift. I know women who’ve paid $250 for a knockoff. Silly for a purse.

LV bags are quite well-made though. I personally like them.