patrick.net

Life would be SOO much easier if I could just drink the condoflip Koolaid and join the lemmings. What the hell’s wrong with me??

That koolaid is probably laced with arsenic.

I don’t know, do plumbers fall into this category?

I don't know either... perhaps those new construction $hitboxes have crappy toilets that clog all the time. This would be a New Economy for the plumbers. :)

Need 2 Leave,

Thanks --this will be our first. Don't care if it's a boy or girl as long as long as it doesn't turn out to be (in Surfer-X parlance) "spawn of Satan". I am determined NOT to raise an uber-materialistic, self-absorbed, consumption-gorged mall rat if it kills me.

I think many housing bulls are underestimating the speculative nature of the boom because:

1) they somehow do not know many speculators
2) they do not want to admit any facts that would suggest a severe housing correction

(not accusing anyone)

Or the Koolaid could also be laced with Potassium Cyanide, like the Jim Jones Guyana temple many years ago.

Better yet, the koolaid contains fugu (puffer fish) prepared by an unlicensed chef. The poison in this fish is 1250 times more potent than cyanide. ;)

If you can survive over-enthusiastic grandparents who buy everything in sight, then you’ll stand a chance.

The grandparents aren't what worry me, SQT --it's Uncle Bull$hitter!! :lol:

Then half of Mexico, India, China, and every other friggin’ third-worlder moved and have have been busily doing their best to remodel the place like their own beloved home, I have literally, not figuratively, woken up, opened my door, and been greeted by a Chinese mother and her 9 year old son, son with pants around ankles taking a nice piss right in front of my place.

I think it has more to do with class than race. I guess this is one major problem in Californian apartment living. Apartment renters as a group is not a particularly "classy" one. It may help if you live in a "Yuppie" building, but you will have to deal with another type of attitude.

Hmmm... $120K for a Gen-Xer (who lacked the educational grants, easy money, cheap housing & other Boomer perks) sounds pretty good compared to most Americans:

http://money.cnn.com/2005/12/16/pf/savings_study/
Almost 60 percent of American adults do not have an individual retirement account or own any investment product such as stocks or bonds, according to a study published Friday.

Have you tried to figure out how much it would cost you to send the kids to college?

College can be "self-financed". ;) There are many scholarships and jobs available for students. However, do not expect to be able to graduate in 4 years.

How about retirement (especially if you don’t even own a house)?

In the long run we are all dead. :)

Retirement depends more on rate-of-return than contribution. Investment is the key. Saving alone is not enough especially if you anticipate high level of inflation.

Homeownership, at this point in time, turns you into a survivalist.

Only if you do survive. :)

Well, you have to admit that it’s hard to catch this asset when it’s not “overvalued”. When was the last time it was “rather affordable”?

It was affordable back in 1999-2000, even during the height of the tech bubble. I remember the equivalent cap-rates of condos were much better than long term bond yield.

owner is in the RE biz, rents out room for literal same price as a commercial apt complex. these people are high if they think they will get these prices.

Need-based pricing.

There’s nothing special about my plumber and contractor. Try asking the ones you use one day how much they make. You might be surprised.

I have a friend who used to do some contracting work. He said it is not as lucrative as it looks. He is not doing that any more because it does not worth it.

Those that understand interest, earn it. THose that don’t, pay it.

This says it all.

Those that understand interest, earn it. Those that don’t, pay it. That sums up our homedebtor sheeple.

Well said. This should be tattooed on the forehead of every sub-prime homedebtor who ends up turning in the keys to the bank (or REIT, Mutual fund, Chinese bank, whatever).

What??? You must be kidding. The housing market here was absolutely nuts at the height of the tech bubble. You had to bake a cake and grovel on the ground for a seller to even spit in your direction. People were bidding up prices like crazy. Yes, prices are even higher now, but they were very high back then as well.

Not really. Condos that could be rented for $2000 a month were usually under $450k. That translates to a P/E of less than 20. Not cheap. But acceptable.

Not really. Condos that could be rented for $2000 a month were usually under $450k. That translates to a P/E of less than 20. Not cheap. But acceptable.

Condos that can be rented for $2000 a month nowadays are usually above $750k.

Yes, prices are even higher now, but they were very high back then as well.

Not even close, Face. The median CA home price back in 1999 was $217,510, or roughly 4-5X median household incomes. In October 2005 (latest figures) it's $538,770, or more than 11X median incomes.

CAR historic stats 1968-2004:
http://www.realestateabc.com/graphs/calmedian.htm

CAR stats today:
http://www.car.org/index.php?id=MzE3ODY=

Look at the hospital situation and you will really see where this is a big problem on people that are not here legally. They all go to the emergency room for a routine cold. Many hospitals have closed emergency rooms because of this.

The society has become too tolerant on illegal immigration. For instance, anyone who knowingly hires illegal aliens should face jail time.

Interest is your companion every moment of every day. It never goes on vacation. It never gets sick. It works 24 hrs a day, 7 days a week, year in and year out. It will choke out those can can not get out from under its indebtedness.

Make sure you look at real interest (net interest after inflation) though.

Wow can't keep up w/this blog especially working 14 hrs/day so I can get it all back in one lump sum known as holiday shutdown...LOL working all this overtime is like a forced savings of vacation time...sort of like traditional POV of home mortgage payment. LOL how's that for housing tie in.

Anyways I glimpsed, w/out reading much at all, that HARM's pregnant...CONGRATULATIONS on the expectation of your mini-bubblehead!

I don't mind discussing race as long as there's a point with evidence to back it up, but I really don't want this thread to go off on yet another racial tangent. Look back on how unhelpful/unwelcome the Hun/Nazi thing was.

Let's just say that California (and the rest of the country) has a piss-poor immigration system. This system isn't likely to change soon for a variety of reasons (mostly entrenched economic interests) and that this is contributing to many of this state's ills and school/hospital overcrowding. Aside from that, who cares what race you are if you're willing to assimilate, respect this country's laws and become an American citizen?

Illegal immigrants are literally everywhere you go. they are out in the open doing gardening. they work at major fast food chains.

They are building Walmarts....

Oh, and BTW, "respect this country’s laws" automatically excludes illegal aliens.

Thanks, SJ Jim --I'll pass that along to Mrs. HARM :-)

I certainly thought prices were going to go down much more when the gold rush ended.

Ask Greenspam.

I don’t think this should affect your calculation of the affordability of buying a home.

I thought we were talking about housing as an asset. ;)

BA RE was somewhat expensive at height of dotcom, yes, due to stock options, etc....
And on top of it, interest rates were higher, decreasing affordability.
Rents were also nasty...which skewed the rent/buy ratio a bit.

All in all, it's difficult to compare. But it is certainly fact that 2000-2002/3 saw phenomenal RE appreciation...and 2003-05 saw insane RE appreciation. However the (primarily) falling interest rate environment served to cushion the affordability drop...and falling rents helped exagerate the buy/rent ratio. Glad that's all cleared up now. ;)

Sorry, Face, but I don't have 1999 BA housing stats on tap at the moment. (Anyone, anyone...?)

Nonetheless, the $62/71K median household/family incomes (http://www.bayareacensus.ca.gov/bayarea.htm) from 1999 lead me to guess that the BA price:incomes ratio in the BA was roughly in line with the rest of the state: 4-5X.

The 12% is what the stock market has returned going back about 70 to 100 years. That is compounded, including the times that it has gone up and down. That is why it is for long term investments.

The fallacy: there are not many 70-100 year old stocks. Hence one would have had to actively manage their portfolio to obtain such a return...which means market timing plays a role in that return.

Not knocking the stock market...just puting some perspective (from someone who got a bit dot.bombed way back when :) )

OH MY GOD:

Average NY salary: $45K.
Average NY transit worker bus driver salary: $61K.

On the count of three now:
1...2...3: "WTF!"

You know I don’t believe you can apply the P/E ratio of stocks to homes (in particular, primary residences). We discussed this many times in the past…

Says who?

The P/E ratio for housing can be easily estimated simply by comparing the total cost of owning vs. renting (easily done with one of the many excellent Rent v.s Buy calculators online). Furthermore, the government itself (BLS) bases its "cost of housing" component almost entirely on "imputed rents".

not so fast… Average NY State salary or Average NY city salary?

$61K is pretty mediocre for a long term job in the city.

Good question...I've no idea. It was just a blurb I caught on the tube.
But if they're both for NY city (let's assume)...I can't imagine there are so many jobs requiring less skill that would cause such a discrepancy...hence 61K vs. a 45K average would appear to be artificially propped up (based on pure $$$ for skill basis).

And sure 61K in NYC isn't much...but they don't have to live in NYC. (They could take the bus in...err unless there's a strike ;) )

Actually, now that I think about, it was on fuxnews, so perhaps it was compared to state average salary (assuming the probable skew direction based on the source of the data). 45K seems really too low for NYC salary.

Renting isn’t a realistic substitute to buying for many people... I wouldn’t be able to rent the house that I bought, or a similar house in the same neighborhood for a prolonged period of time. I would have to keep moving all the time, and may not be able to find a comparable place to rent.

Again, simply not true. In the most exclusive suburban neighborhoods, yes, finding a comparable rental could be difficult, depending on market conditions. With so many overstretched homedebtors "owning" multiple (empty) homes, I doubt that it's difficult to rent a nice SFR ANYWHERE in California right now.

I have rented the same apartment now for 11 years --far from being "forced to move all the time". By contrast, I've seen stats that show the average homedebtor moves every 5-6 years on average.

Found it: WSJ.com
"Why Renting a Home Makes Financial Sense"

http://www.realestatejournal.com/buysell/mortgages/20010205-nieland.html

"And most experts say the average homeowner moves every five to seven years."

so you are in favor of the city then?

You mean, in terms of the strike?

My general opinion is that unions are not very necessary anymore. NOT that they should be eliminated...just that the primary raison d'etre for them is long-gone. However, people will always try to hang on to their livelihoods so it's not surprising that they've adjusted to fight MUCH less noble causes....

Also, I have seen one particular union give a certain group of SF bay area professionals multiple 10-20% raises (more than once per year) throughout the local recession (i.e. from ~2001-present). This to me is absurd.

Regarding the TWU strike...I do not know all the details. I have heard that the union wanted 8% raises for several years vs. 3-4% offered by the city.
I feel pay should be more skill based than need based (i.e. we need garbage haulers, but....). I have also heard that they currently can receive 1/2 pension pay at age 55 and want to lower it to age 50. The flip side, I think the city is maybe low-balling a little bit...but that's how these things go...grind away until somebody gives. Also, the fact that the strike is illegal...carries some--but not absolute--weight in my mind.

Happy christmas and happy holidays.

By the way, $100K isn’t “a ton of money” these days even if your house is paid off. How much is it after taxes? $65K? That is depleted very quickly between retirement savings, kid-related expenses (such as tuition), car-related expenses, food, medical-related expenses, occasional vacations, etc. I’m not talking luxuries here. It’s certainly pretty tight for a family, and chances are you won’t be able to retire early

No 100 K is a lot of money. It took me several night calls and 5 years of practise to save that kind of money. you can say that iam not good at money management. well thats the reason iam a doc.
I am originally from india and am a an anesthesiologist here in california. thanks to this website i have not participated in the housing ponzi scheme. My parents instilled in all of us never to take debt. If i cant pay cash downright, i cannot afford it, so even 300-400k is unaffordable. so mr richard schmend, phd. I am buying what i can afford and thats called a house in india. check this website out "www.modiproperties.com".
BTW peter and others i think its not the bay area real estate that is crashing its the gold market thats going to crash. In fact the problem is in japan where you can leverage 80 times over your deposit in gold commodity market and thats where all the speculation came from in the gold market.
I also see that the fed, the anti gold cartel etal might tame the price rise of gold so that the average jane doesnt panic. it might be good in the long run to dollar cost average.
Full disclosure. Indians love gold and they have 20,000 tonnes of the physical metal and i want to believe that figure. there a re acouple of web site that "abc"" can look up, www.gata.com
www.safehaven.com.
gold confiscation by michael kosares.

Sad story about whales beaching themselves in New Zealand:
http://news.yahoo.com/s/ap/20051220/ap_on_sc/new_zealand_whale_stranding

Quote:
New Zealand has several mass whale strandings each summer. Whale experts have been unable to explain why the whales apparently swim into dangerously shallow waters.

Real estate analogy: Economists have been unable to figure out why the masses continue to purchase real estate with Arm/IO/NegAm financing.
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Yes, I do in fact need a vacation.

Hessesfan welcome to the blog. I have a buddy down in Irvine in your line...but also pediatric (poor guy closed on a "detached condominum" in the summer).
Good for you with the savings mentality. Current econ environment does not favor such sentiment...but hopefully it will change.

Congrats on your plan to purchase. I heard real estate only goes up in India ;) .