patrick.net

For what its worth, I think prices will be less sticky in this housing bear market simply because there is so much speculation. People can sit on houses when they own them, or are renting them at something approaching break-even. But if they are sitting empty houses/condos or renting at a large loss, people are eventually going to just sell, damn the torpedos. This will be especially true when the reality of declining prices hits and when banks tighten lending practices right as people start refi-ing the teaser loans they took in the early 00's. All of this is fairly standard bubble head boilerplate.

So... 50% DROP BY JANUARY! Or, more realistically, I think prices will be down 10-15% by next summer, and will continue downwards over the next few years until historical averages are reached. Peak to trough, I would guess 30% inflation-adjusted corrections on average. In about six months I think will be able to definitively look back at summer 05 as the peak, with Peter the sage having called October correctly.

Now, on the other hand, please bear in mind that I'm a moron.

Cheers,
prat

Science is concerned with trying to make sense of the physical world. Understanding the world, trying to make sense of it. In the America's for instance we know that the cultures are young, why?, because there are over 1000 psycho active plants in use by the natives (Jack, book your tickets now :) I kid I kid), why?, because they need them to talk to the gods. In the Western world we long ago abandoned these things, (well not the 1947-1960 crowd) in favor of mathematics. Science is still however based on trying to understand, now through math, the physical world. Ok, let me ask you this, what is more difficult, climbing the mountain or coming back down? So why the fuck would real estate not have an amazing plunge after it climbed such a large mountain?

I am thinking of setting up "headventure tourism" outfits to the Amazon, complete with porters toting 75lb sacks of Doritos, to take advantage of all the psycho active compounds.

Do you mean across the board, or specific properties? If S. of Novato drops only 10% in 2 years, the beer’s on me.

If South Marin drops that much, then I'll move to Novato (since it will drop by twice that and there will be a lot less gridlock in San Rafael 101), and the Congac's on me.

For what its worth, I think prices will be less sticky in this housing bear market simply because there is so much speculation.

Just for reference, I think we are in the "sticky" phase right now. If house prices weren't sticky, then they would already be pricing in alot more of the expected downturn.

Now, on the other hand, please bear in mind that I’m a moron.

Not a chance. You're one of my favorite posters, so that would mean that I must be an idiot; which objectively cannot be (lol).

"Just for reference, I think we are in the “sticky” phase right now. If house prices weren’t sticky, then they would already be pricing in alot more of the expected downturn."

Good point! Indeed, it would difficult to recognize the sticky when you're in it. It's funny, looking at RE data plots in 6 mos, we might look back to jul-october timeframe & say: "Ahhh, back then we were in the sticky; now we're in the freefall."

Further, regarding The Sticky: PERHAPS something keeping it sticky, & continuing to keep it sticky for (?) months, is the relative spotlight on rising interest rates. Although the Fed has been tightening for quite a while, I think Katrina really served to publicize this a bit more...since there was some controversy regarding the move to continue rate hikes. Since then, there has been nothing but hawkish remarks (from the Fed et al) regarding the need to control inflation aka rising rates.

My point? In light of this spotlight on rising rates, more people who've been considering buying are looking seriously at buying now...especially with long term rates rising at a higher rate lately. So I think these buyers will continue to propagate The Sticky for a little while...but we all know with high ownership levels (60% in Cali, 70% nationwide), and with tightening lending standards, there is not an endless supply of said buyers.
Oh, and by the way, The Economy's Not Making Any More Buyers (R).

Nothing WRONG with Novato ,it just gets a bit of the snob treatment from the rest of Marin, thats all. (And I am not aware of any “ethnicity” issue whatsoever)

For the record, I would agree. Conversely, I find some places like Tiburon or Ross a bit of a turnoff. Just passing on some comments I heard about "ethnicity" (struck me as rascist), as a possible explanation when some turn their noses up at Novato.

I’ll take you up on that Kurt, just for fun.
Cool...it's all in fun, right? (Just in case I sound too serious in my predictions).
If Marin never drops, I suppose it means we'll have more equity when we finally move.
Cheers either way!

"Actually, a realtor, who is an agent of the seller, is not at liberty to disclose how many days a house has been on the market, as this might lead a buyer to believe that the seller would accept an offer below the listed price."

ScottC, given your adamant insistence that the price is determined solely by a buyer and a seller agreeing on a price, and that both parties have the prerogative to NOT buy, or to NOT sell, if they don't think the price is fair, I would think that you would think this "rule" is complete & utter bull$hit. Do you think differently? It would not seem consistent to me, but I may not be thinking about it right (?).

OX, that's an interesting read; thanks for the link!

Excerpt:
"What is not debatable is whether the rate of home equity extraction will revert to the mean rate of about zero, from the current rate of more than $250 billion annually. It will. "

Jack and KurtS, thank you for the explanations. I've had Novato on my radar screen recently because of the warmer weather and more "affordable" (heh) houses. Nice to hear a little more from a local's perspective.

Jack is a bear that lives in Marin. Not a housing bear, but an actual bear, a honey loving, bee hating bear. Don't trust him, as he's about to go underground until spring, at which time he'll venture out an proclaim, INTANGIBLE.

One wonders if pornography is considered a contributer to core-inflation…

Grooooooooooan. I can't believe this passed without comment. Goofball.

Interesting timing btw. Aren't vice businesses like porn/booze etc. supposed to do well in a lagging economy? Seems Playboy is maybe planning on doing more business soom.

SQT, funny you should mention.
Just the other day I was at 7-11. The guy in front of me, middle aged w/sagging "say-no-to-crack" jeans & wifebeater tank top, plops down a porno magazine...$9.59 (had no idea it would've cost that much...honestly!).
The guy behind me, elderly--probably around 70'ish--requests one each of the whole front lineup of lotto tickets...you know, the rolled up tickets under the glass window on the checkout counter. Made me a little sad.
Oh, what about me, the guy in the middle--what did I buy? 6-pack of beer.
So there you have it: vice-vice-vice...Trifecta!
I just thought it was an odd sequence...but maybe I don't frequent 7-11 enough to know.
Perhaps vice sales should be a leading economic indicator. :)

SJ_Jim, sorry but I'm losing a bit of respect for you, living in San Hosebag and you go to the 7-y and don't buy a fotay (note: this means a 40oz screw top bottle of malt liquor, it gets your jimmy quicker) and nachos? Jim, Jim, Jim, where did it all go wrong?

surfer-x, long gone are the days when I indulged in the fotay...probably not since I spent a hellish year in beautiful riverside california (one positive about riverside is that the receding smog on occasion provides for very nice sunsets... kind of like after a volcano eruption). But don't get me started on riverside.
Just so you'll respect me less...the 6-pack was [gasp] Newcastle. Alas, not to be found in a fotay; a 22, maybe. [ponders: what does it mean when 7-11 carries Newcastle?]

Never heard that; too much newcastle in newcastle?

Grooooooooooan. I can’t believe this passed without comment. Goofball.

_laugh_ It was an innocent comment. Pinky swear.

Chewbacca,
prat

>Things are much uglier than the general public realize.

Could things turn out much worse than anyone of us could anticipate? Do you sense another recession coming?

If a recession is afoot, none of us could possibly buy a house even if the bubble pops. Rising unemployment, inflation, growing and growing federal deficits... could they happen within the next year or am I too pessimistic? BTW, I'm totally clueless. It's just my worry (and guess).

One thing for sure, I'm going to relocate my 401(k) more into International funds (Dodge & Cox, etc.) I'm not a financial expert. Just hope that could help (somewhat).

ScottS, what are you, a Realtor(TM)?

you wrote . . .
And it states clearly in the listing agreement that the realtor will not disclose that the seller will accept an offer below the listed price.

And if it stated clearly in the listing agreement that my thingy was giant, that wouldn't be true either, would it?

I've found Realtors, in the aggregate, to be among the lowest of the low. While true that liars and scoundrels can be found in every walk, the job of Realtor(TM) seems to attract a greater than average share.

Let me assure you that what happens in many of these transactions is similar to mediation, where the weak sister is quickly identified and subjugated.

The selling whore and the buying whore both only make money if the buying john pulls the trigger.

The sw and the bw therefore have an almost equivalent motive to get the buyer to buy. I'm sure both Realtors(TM) are very excited upon learning that the buying John is interested in the property. The conversation very quickly turns to what it's going to take to seal the deal.

Perhaps the bw does not come out and say, "my John will spend up to 20k more for this house," but through the proper wording and signalling, like a finely honed bridge pairing, the information will be sent.

ScottC, if you deny this, then you're either a fool or a Realtor(TM).

brightc, I confirm your suspicion that you are, in fact clueless.

If you are just now coming to the realization that we may be looking into the black double barrel of a recession, then I suggest you read like a fiend on this site and places like prudentbear.com.

As for your question, "Could things turn out much worse than anyone of us could anticipate?"

Well, I'm probably on the very severe end of the "how bad can it get" spectrum for this site. In essence, I think it's going to be worse than the great depression - by a lot. If this turn out "much worse" than I anticipate, then we're all dead or living underground like in 12 monkeys or Dr. Strangelove.

ScottC =
"Since the listing agreement is a fully binding legal contract, any violation of it by the broker, who is an agent of the seller, or any of the broker’s associates, who are subagents of the seller, is an actionable offense. The broker and all associates would lose their licenses and render themselves subject to a serious lawsuit for a lot of money. And that is not bullshit."

It is bs.

How about you find me the last 10 cases in Texas that were litigated where the plaintiff was a buyer/seller suing his/her agent for breach. Find out what the final settlement was. Also, find out how many have lost their licenses.

A "serious" lawsuit for "a lot" of money? Please. No breach of a listing agreement is going to result in a judgement for "a lot" of money. Moreso, no lawyer is going to take the case on a contingency basis, so the cost of pursuing a suit against a Realtor(TM) will be prohibitive.

he’s about to go underground until spring, at which time he’ll venture out an proclaim, INTANGIBLE…”

That could be true for those sellers, who have dropped off the MLS, hoping to find a resurge in demand come spring (to find that "right" buyer), and slowly waking up to see everyone else is doing the same thing...

brightc, I confirm your suspicion that you are, in fact clueless.

Escaped, are you always this ornery? You need to master the subtlety of the rant without insults. Lighten up man!

"Escaped, are you always this ornery? You need to master the subtlety of the rant without insults. Lighten up man!"

Now SactoQT, that's the second time you've told me to lighten up, so here's yours . . .

Of all of the people I have met in life who regularly use the expression, "lighten up," 95% of them are losers and slackers who will do nothing but grab on to you and drag you down if you aren't dilligent about swatting them away.

So no, there is too much at stake to "lighten up." I'll lighten up when all of the bozos who trot around this planet figure out that they're killing themselves . . . and dragging me off the cliff with them.

So SacQT - Get serious, girl!

I do agree, however, that insults are not welcome here.

BrightC I apologize if my line came accross as insulting to you. Because insults are, I guess, in the ear of the receiver, I'll defer to you on whether it was an insult. It was an attempt, albeit a weak attempt, at humor, and I didn't mean it as an insult, but rather as a kick-start.

Of all of the people I have met in life who regularly use the expression, “lighten up,” 95% of them are losers and slackers who will do nothing but grab on to you and drag you down if you aren’t dilligent about swatting them away.

You know nothing about me, and I am most definitely not a slacker. I have found that people who refuse to lighten up take themselves way too seriously. Tell me, does the shoe fit?

SactoQT, I didn't say you were a slacker.

Do I take myself "too seriously"? I don't know what that means, but if you define what you mean by that, like any question you ask me, I'll answer it.

Taking one's self too seriously....

-Not willing to see another side to an argument.
-Not having a sense of humor about oneself.
-Being so literal that double meanings are often lost in translation.
-insulting others who have different opinions rather than respect a persons intelligence enough to think they might have a point to make.

That's just my opinion. Maybe other's have better definitions.

Signs of Armageddon

-Realtors (tm) stop saying "Now is the time to buy"
-Used car salesmen stop asking "What's it going to take to get you into this car?"

Do I, or am I, . . .

"Not willing to see another side to an argument."
I don't think so. I try to be a rationalist and empiricist with everything. Probably too much so.

"-Not having a sense of humor about oneself."
I don't think so. In fact, although I'm sure many people would describe me as arrogant at times, I'm also exceedingly self-deprecating.

"-Being so literal that double meanings are often lost in translation."

Do you mean that receiving double meanings is lost, or giving double meanings is lost?
I don't hink I miss much in interpreting other people's double meanings. As for putting out such things, I'm not sure, really.

In general, I am a very literal person. This is by necessity, however, because what I've learned in life is that if you give people the slightest wiggle room, they'll lie and screw you over. Like the one time I asked a woman I was dating, "did you put that in the mail?" and she replied, "I've taken care of it." Which meant that she left it with someone else, who didn't take care of it. So now when somebody says, "I took care of it," I depose them and ask, "what does that mean?"

-insulting others who have different opinions rather than respect a persons intelligence enough to think they might have a point to make.

Well, I think you have got me on this one. I think 90% of people are too uneducated/ignorant/stupid/self-centered/biased/and so on to have a well reasoned opinion on most things that are more complicated than whether "desperate housewives" is cultural garbage or social evolution.
Therefore, I don't "respect" most people's opinions on most things, as I think you mean the word "respect."

On the other hand, I avoid most people most of the time, and when I'm forced to interact with them, I almost always avoid insult, particularly if I don't know them.

Of course, insult is a conditional and relative thing.

For example, a woman once asked me what I thought of her hair do. I said I thought it looked horrid.

Is that an insult?

For example, a woman once asked me what I thought of her hair do. I said I thought it looked horrid.

Is that an insult?

That's a rhetorical question right? So I guess you're saying you're honest no matter what-- or something like that. Not a bad thing, at least people know where they stand.
Thanks for answering my question.

"That’s a rhetorical question right?"

Well, if she asked me any of the following questions . . .

"Do you like the Renoir?"
"What do you think of the new Trade Center architecture?"
"What do you think of the economic outlook?"
"What do you think of your car's exterior?"
"What do you think of that woman's hair over there?"

and I answered truthfully each time, "I think it looks horrid," then most people would say, "that's not an insult."

So what is the difference? And the answer to this, by the way, is the answer to how you define insult, I'd guess.

The difference is one hurts her feelings and the rest don't.

I don't define insult that way.

I'd define it as, "a statement created and delivered with the intent to hurt another person."

By my definition, of course, a truthful answer to a question asked can never be an insult.

Allah wrote . . . "Buying before interest rates rise is the absolute dumbest time to buy!"

This is wrong as a blanket statement.

For example, if there was no bubble today and you were going to lock in to a 30 year fixed rate, my advice would be to buy as soon as is practicle, because IMO rates are going to climb dramatically over the next 5 years.

Of course, the current bubble makes this statement seem correct - that is only coincidental however.

I've had problems in the past with being what I thought was truthful, but what I said was interpreted as insulting.

I had a friend who could be both self-destructive and stupid. When I would try to steer her away from the more idiotic behavior she'd take exception and tell me that a "supportive" friend wouldn't do that. Huh? I thought being a friend meant you try to help your friends, not stand by and let them self-destruct. But her idea of friendship was that I cheer her on no matter what. Oddly, this can relate to RE, I mean how many stories have we read here about people trying to talk friends/relatives out of stupid home purchases?

I do believe that the unvarnished truth is the best thing under most circumstances. But I've learned the hard way that most people don't seem to see it that way. No matter how abrasive I think you can be at times, I will always respect that you tell the truth as you see it. (Now am I being insulting by calling you abrasive? ;) )

SactoQt, I don't mind about EscapedFromDC comment, although I doubt his ability to articulate. Well-adjusted individuals can state their own ideas to the clearest intention with potentially offending anyone, or befuddling their own messages so that they will have to broadcast a few extra more to clarify their own ideas. I'll just turn out the noise and look for objective answers, which are what I'm looking for from my hypothetical question regarding a coming recession.

I believe in the housing bubble burst just as much as any of you. But as I'm reminded of the old saying "beware of what you wish for", I'm concerned if economy conditions could turn out to be much worse that most of us could be out of job and would not even be able to buy the deeply discounted homes we ever want. Any objective take on this one?

In closing, it is said the patriotism is the last refuge of the scoundrels. Similarly, we can say honesty is the last excuse of the uncultivated.

SacQT wrote . . . "I do believe that the unvarnished truth is the best thing under most circumstances."

Now if we can get that "most" to "all", then again, I'll come out and we can get married.

SacQT, I am abrasive, so, by my definition, your honesty will not cause you to be insulting.

Yeah, I pretty much don't have any friends, by choice and by consequence, because I can't play the game anymore.

Like the one guy who adopted a baby and the baby was in day care 6.5 days a week 3 days after they got it.

I lost him when I noted that they meant to get a dog but accidentally got a person.

So many . . .

"Similarly, we can say honesty is the last excuse of the uncultivated."

Actually, it's my only excuse.

I lost him when I noted that they meant to get a dog but accidentally got a person.

Maybe there is hope they listened to the message intended.. Nahhh.

I believe in the housing bubble burst just as much as any of you. But as I’m reminded of the old saying “beware of what you wish for”, I’m concerned if economy conditions could turn out to be much worse that most of us could be out of job and would not even be able to buy the deeply discounted homes we ever want. Any objective take on this one?

I'm in the "hope for the best, prepare for the worst" group. There is that bit of schadenfreude in me that wishes all the people who have created this bubble suffer for their foolishness, but the overall effect on the economy would be too devastating if that were to really happen. I am not one who hopes for the second coming of the depression just so the greedy learn their lesson. We'd all suffer in that scenario.

Scott C -

I didn't ask you do the research for me. I pointed out a hole in your statement, and I offered you a way to patch the hole.

I do understand the law, by the way. I understand it extremely well. In fact, I'd bet you a huge sum of money that I understand "the law" better than almost anybody you have ever met in your whole friggin life.

How about them apples?

Allah -
Your last post has about 4 major errors in it.

Yes?