patrick.net

make that "How drastically will the Fed act?"

With the housing bubble starting to burp air, will the Federal Reserve ruin the U.S. dollar by trying to stave off a collapse of the mortgage debt market? How drastically with the Fed act?

To combat a deflating bubble, the mortgage interest deduction tax reform can be pushed to help homeowners.

Most US mortgages are well below 400K and many homeowners do not itemize. Imposing a 400K cap while changing deduction to a tax credit will help many.

I was born and raised in the BA...In SJ on the east side in the hills by Alum Rock Park. It's so much like LA... a big smoggy pit..without the entertainment industry.
We had a big old spanish style house my parents bought for $60,000 and sold years later for $120,000. It was by the 16th hole of the Country Club and had a pool, tennis court, and a beaut. view. I should zillow it but I can't remember the address.I guess zillow is now a verb!
I think the fed will be careful about raising rates to fast...Bernanke dosn't want to blow it too soon!

I think the fed will be careful about raising rates to fast…Bernanke dosn’t want to blow it too soon!

Or he can first blow it and then ease aggressively to save the financial system from damages.

Do you think Bernanke will blow it sooner rather than later? I mean, with this scenario, he's in for quite a challenge. I'm no expert, but he seems to be in for a lose-lose situation.

The problem that I have w/Realt-whores is that EVERYTHING that comes out of their mouths is a tired, meaningless cliche'! There is no original thought at all. My wife and I have been homeowners for most of the 23 years we have been married and realt-whores STILL address us like we were first time buyers for chrissakes! It's a total "dumbed down" emotional appeal sales schtick that just drives me insane! The smarter (less dense) ones keep quite unless you ask a question and then don't follow it up with a circa 1950 "close". ABC. Always Be Closing. Or; Answer, Benefit, Close.

Actually the roof was replaced in 2002, that also helps with your utility bills, where you thinking about making an offer today?

With all of the exciting variables that RE has to offer, they "fall back" on emotional appeal every time! They're too lazy and can't be bothered to really know the listing beyond the things that you can see for yourself. Ask them something specific and you get a quick reply that is almost always followed up with a question of their own. Everyone else in sales has grown, evolved and improved. Do we really need any further evidence that this is a monopoly?

need 2 leave ca,

Thank you! Great observations. I had an appointment with a young mort. bkr. and he started telling me what a "sales stud" he is. I didn't really wail on the poor guy but I did make it clear that there is a vast distinction between working with a clients existing equity (real $$$) and selling, how is is that you put it? "A lifetime debt prison"? He looked shocked frankly as if no one ever had the guts to challenge his "debt=wealth" schpeel.

Happily Renting makes some good points but absolving realt-whores and mortgage brokers of any and all guilt isn't one of them. The thing that just amazes me is that realtors have gotten so defensive when they are updating price reductions or fielding a question with the slightest hint of a "bubble" in it! I've had several out right rude responses that seem to imply "then obviously you are not a PLAYER". If you're not willing to play, why are you asking me stupid questions? Stupid questions? Stupid, like why is this home selling for 50% more than it just sold for 2 years ago? So anyone that questions why an unremarkable home that sold for 400K 2 years ago now sells for 600K just doesn't get it? O.K, I'm not a player and I don't "get it". Why are they burning so much energy defending the bubble? Embrace the crash, encourage low ball offers and get this thing over with!

Liz in Long Island,

Or is it "on" Long Island? It would appear that there is a new wrinkle in the RE Bubble. No longer will couples fight over the profit from the proceeds of the sale they will now fight over who gets to "write off the loss"?

The problem with falling for someone that is a "horse person" is that they will always love their horse more than you. Were they horse people or "horse property flippers"?

This last weekend was weird here in Alameda. Everyone has been saying that inventory has gone up, but in the case of where I'm living, it seems that in the last 2 or 3 weeks, the inventory has SKYROCKETED. We're talking sometimes miles on end of having the ability of seeing at least one or 2 "for sale" signs within view of one another. We bike ride all the time, and recently, we've noticed a phenomina of people parking dumpsters out front, and basically emptying the contents of their houses into the trash. Good stuff. Like TV's, sofas, chairs.. you name it. At the local Salvation Army, people are donating VERY nice furnishings. Last week.. a $6500 leather couch for $800. In the corner, an almost new Sony Trinitron flat screen TV for $700. These are things people are DONATING. You never saw this stuff last year. We see lots of old people with cans of cheap paint on ladders painting their beat up houses. Then the next week: For sale! We saw an old guy the other day just about shoveling all the crap he had collected for what looked like decades out of his garage. 2 weeks later.. For sale! The neighbor's house was painted in less than a day by some fly by night spraying outfit. Some ugly hideous green color. They got overspray all over the windows.. no matter.. For sale! It's almost unsettling to me. The worst part is that while there is talk of a slowdown in sales, it doesn't seem to bother these people. Nope.. the prices they're asking are as high as ever. Now we see open house signs on top of cars, with balloons, with the driveways sitting empty. You get the real feeling now that there are a lot of people where we live who are just getting the hell out of dodge. Didn't see a soul at any of these houses. It will be interesting to see what will happen in the coming months.

One last thing: The weather. I sort of wonder that with the absolutely crappy weather we've been having all winter long( we have gotten more rain than Seattle 2 yrs in a row) will sort of provide more momentum in putting a dramatic halt to home sales, further erroding consumer confidence, and therfore causing a faster depreciation cycle. Just a thought.

About those retirees..
Well I know that quite a few of those retirees are in good condition, but those are the people who stayed in the same house for 40 years, lived in less exotic locations, as in not NY or CA, and saved by not buying overpriced toys like bimmer and boats.
On the other hand, I wonder just what the future will be like for my generation( 30-something) For example, I drive a truck with almost 200k on the speedometer. Someday it will require more extensive repairs than I care to sink into it. I looked at another bargain-basement stripped toyota tacoma with cloth seats, a 5 speed, and a 4 banger engine. I paid about $9500 for my current truck, a 96' Tacoma back whe it was brand new. The price of the new version of my truck now sells for close to 17k. The price almost doubled. You can forget the "nicer" model that's bigger, nicer, and with a V6. That one is almost 30k! A smallish truck for 30k?! yet you see all kinds of people who by guessing at the number in the Wal-mart parking lot driving them, who make perhaps less than I do. Sure, I could afford to buy one, even the nice one at that with all the whistles and bells. But that would leave little left over to save and invest.
I basically avoid buying anything non-essential these days. I am in a constant state of monetary saving not because I am cheap, but because with housing prices high, I may either have to wait, or move somewhere else that doesn't have as good a job market, hence I would want to have enough to buy a house outright in that location to counter job prospect issues. So here I sit, with signifigant savings, not spending a penny,and therfore not contributing to the economy.
I think the unseen effects of a bad economy will be contributed by people like myself, the younger generations that feel insecure about the state of things in this country along with the lost faith in procuring basic life ameneties, and refuse to buy into it.

Liz,

It is difficult for me to be objective about horse property. My older sister as well as my ex-sister-in-law have contorted family budgets, depleted inheritances and short changed children that were not into horses. Everything goes into the horses. Stable fees and boarding, vets bills on and on in addition to the all of the other black holes of "acreage" add up to being destitute (along w/your horses of course). I'll pass.

Well SFwoman,
actually, I have looked at a number of used toyotas. The problem is that it seems that dealers mark them way up. For example, I looked at a 2003 tacoma last year. 34,000 miles, with an original cost of 15k, on the lot for 13k, a 2k reduction. That and used toyota trucks seem to be almost impossible to find. They also made a huge change in the model in 2005. I'm willing to wait another couple of years until a few of the new models are used and hopefully cheaper. I know quite a few people with over 400k on their toyota trucks so who knows.
On the other hand, Ford trucks are almost a steal used. My brother has a 94' ranger with almost as many miles as my truck. He abuses the heck out of it, but it has never had a problem. Because of Ford's notoriety, they sell for way less, but then again, I'm familiar with the drivetrain of my truck so I can always fix it myself Vs a Ford which I have little experience with.The Ranger's engine came from a German Ford design, so they are diffrent animals. Took me all day to change the plugs on my brother's Vs mine which takes 10 minutes.
The point I was ultimatly bringing up was the potential stop on economic growth a younger, less willing to buy population could have. Of course I also know a ton of people my age who have yet to save a penny, but anyone my age with a family is totally opposite and buying the Safeway shampoo.

I love the idea giving your best shot to the realt-whore. Perhaps next time one approaches me with their BS I'll just say..."My Dad always told me about buying when the market is turning...never catch a falling knife...it's best to step away and watch it till it lands"

DinOR,

Do we really need any further evidence that this is a monopoly?

I thought that issue had been settled, resettled, and post-settled, and post-resettled. Let it be writ in stone.

6% commissions for nothing more than maybe 1% worth of value and 5% worth of having illegally collusively closed MLS systems and a nifty little (tm) symbol.

Sidebar:

The 10-yr has surpassed 52-week high this morning:

http://finance.yahoo.com/q?s=%5ETNX

Driving back from Sacto yesterday evening in the pouring rain, I saw a couple of SUVs trying to get mud on their tires. It was past Fairfield off I80, people were trying to go off roading in their SUVs on someone's field. What people have to do to pretend that they ever use the 4WDs on their SUVs.
Back to bashing the realt-whores.

http://news.yahoo.com/s/ap/20060306/ap_on_bi_ge/housing_slowdown

This is sort of a cliche. Why do realt-whores put their picture on everything in sight?

My favorite are the realtor face shots on shopping carts at my local supermarket. Big, blinding smiles. It's almost like: "pick me! I'll be the best student body pres. ever" And, given the amount of dog lovers up here, I've also noticed many realtors pose with their dogs. I suppose it's important we know you own a dog, because that makes you a good person, a good realtor, etc.

My favorite clichéd brain-fart sofar:
"Real estate in M_____ is a great deal--at anyprice!"

Hey Dinor,
It isn't just Dallas. Austin, Raleigh, Nashville.. even Memphis are all having this massive influx of Californians. It really bothers me because the whole time I've lived in CA( I am from TN) I've chuckled to myself that I can always get out and buy cheap elsewhere... except now that Californians and New Yorkers have fucked themselves into a corner, they're now flooding other cities, like rats fleeing a ship.
My hope is that once CA's RE crashes, the rest will have a domino effect in other cities across the country.

For the WHOLE FORUM... for the sake of an interesting change of subject, Lets say that for some reason, everything above that HARM mentioned as cliche's become true: Housing prices go into the stratosphere, and California becomes an impossibilty. Where would you move? Pick a city anywhere outside of CA, name why you would move there, what kind of area that you would want to live in, and how you think your decision would make your life easier. Just curious.

Hmmm. Well, I think I might have misposted the topic. What I meant to say was that Let' say that the target cities in the US, which would include SF, LA, NYC, Boston, DC,Naples,FL, the rest of CA, and so on become impossibly expensive, even for those of you who are doing quite well, then where in the US would you choose to live. This of course assumes that the rest of the country will not be affected by the net out-migration of residents from these areas and the prices stay 5-10 times cheaper than the mentioned areas.
On a side note, I lived in Boston for 3 years. It is a nice city. very much like SF in many ways except for the weather. The cost of living is perhaps more there than here because not only are houses really costly, but you'd have to pay for heating as well. You're right: the spring and fall there are stunning, especially if you take a train to Martha's Vineyard. The food is great too, particularly the seafood. The other thing is that unlike here, Rents are very expensive and there's not much of a supply thanks to all the students. It isn't such a stark contrast as it is here. Perhaps if people from SF saw that in most east coast cities, people complain about the cost of RENTING, they'd appreciate the relative cheap rents in SF.
I've been trying to research little known but plesant cities that offer diversity, art, a younger population,and a technologically invested economy. I especially want a place that is Off the radar of any investors, California and NY refugees, and high prices. So far, it seems that Chappel Hill, NC is a good bet. We'll see.

except now that Californians and New Yorkers have fucked themselves into a corner, they’re now flooding other cities, like rats fleeing a ship.

nomadtoons2,

I'd say it's more like a combination of a$$hole specuvestors and desperate working-class families, but, yeah, I've seen plenty of evidence that CA/NE outmigration is fueling rising home prices all over the country. The priced-out families just looking for affordable housing aren't the ones I'd be concerned about.

For the WHOLE FORUM… for the sake of an interesting change of subject, Lets say that for some reason, everything above that HARM mentioned as cliche’s become true: Housing prices go into the stratosphere, and California becomes an impossibilty. Where would you move? Pick a city anywhere outside of CA, name why you would move there, what kind of area that you would want to live in, and how you think your decision would make your life easier. Just curious.

I think we already did a thread on this a while back, but if you'd like, we can do another one.

SFWoman, I agree that Paris and Boston are both very nice. If I move there I would definitely gain weight. Boston has the best chowdah in the world. Paris also has wonderful cuisine. And there will be no idiots trying to ban foie gras. Also, London is less than 3 hours away by eurostar.

The other thing is that unlike here, Rents are very expensive and there’s not much of a supply thanks to all the students.

Not really, my friends was able to get a rather decent 1/1 for just over 1800 a month. Not cheap, but not expensive either.

Peter... $1800? Is that cheap? I rent an entire 4 bedroom house with a yard and 2 car garage for $1750. I rent with a few other guys that are never there. I've been here 7 years and never paid over $500 a month to live here.

Peter… $1800? Is that cheap? I rent an entire 4 bedroom house with a yard and 2 car garage for $1750. I rent with a few other guys that are never there. I’ve been here 7 years and never paid over $500 a month to live here.

1800 is not bad at all for about 1000sf of space in a major city. It is slightly more expensive than Silly Con Valley and is slight cheaper than San Francisco.

Hey HARM,
Sorry, I'm sort of a new guy. Didn't realize you'd had an article like that before. I see it through the perspective of the eyes of all my family that still lives in "the sticks" in rural TN,NC. There is a growing resentment with all these people moving in now. Last time I got off the phone with my folks, they are seriously considering moving to a rural part of upper TN because middle TN is becoming a huge megatropolis. I am only 30, and recall as a kid when our road was made out of gravel. As a result of this flooding of recent refugees, the houses are going up and up in value. I'm starting to be a tad concerned that if the bubble doesn't end for CA, then it will cause me some difficulty if I decide to move back because prices will be up there as well. It'd be tragic to not only be priced out of CA, but be priced out of my own damned state.. for the same reasons.

“But that was Japan! Who would want to live there?!?!?! This is California, Dude.”

I would live there! California does not even have fugu. People drive like me in Japan. I feel safe.

“But that was Japan! Who would want to live there?!?!?! This is California, Dude.”

LOL - that one's got to go into the Realt-whore Hall of Fame!

I guess Japan is less desirable for certain illegal immigrants.

The mention of Japan, makes me request a new thread on this very topic - how do we evealuate our bubble in comparison to what happened overseas.

Here is a link from Bloomberg
http://www.bloomberg.com/apps/news?pid=10000103&sid=aCSL5rNr6wUM&refer=us

Seems like Australia and UK achieved kind of soft landing - as far as housing prices go. The economy has been hurt, may be badly, but still there is no great decline in housing prices there - YET. Australia RE has been flat like a pancake now for 2 years.

Every country is unique. But what does the study of Japan, UK and Australia helps us predict about US ?

Oh, what a relief! Prices only "flattened out" in Australia. That means we're in the clear right? Wrong. The Aussies can make a legitimate claim that they aren't making anymore land. Only about 7% of down under is arable acreage. The rest? Yeah, it belongs to the road warrior. Just b/c they kind of speak english doesn't mean there's an economic parallel. I've been to Perth and just a few miles inland, you're hunting dingo.

Oh also, try submitting paperwork to become a citizen of Australia. Not as easy as here. Also, tougher to swim there.

If you are suggesting California is a better place to live, Mr Realtor at a Party……..

Well, we did invent California Roll, didn't we? I hereby condemn all California Rolls made with imitation crab.

Or worse, crab salad. Why is that becoming so common now? Terrible….

Crab salad with imitation crab? It is a high crime against humanity. :)

Quoting "To BA or not to BA", if there is a soft landing for the bubble in RE in the US, then the prices will remain steady at this rate for another 3 yrs. That means I will still be priced out of the market.
What is everyone's view on - if the bubble never pops but deflates slowly - and the prices remain where it is now for another 2-3 yrs.
We could speculate that speculators will dump their properties... doesnt sound right....

What is everyone’s view on - if the bubble never pops but deflates slowly - and the prices remain where it is now for another 2-3 yrs.

If rent catches up to prices then I will see that there is no bubble.

I doubt the this very high price-rent ratio can be maintained with negative cashflow for long.

I predict the Fed will try to make a soft landing by raising interest rates once or twice more and then lowering them a bit...just to confuse us and get the buyers buying again.
I don't want people to get hurt by a crash...but then again...if prices stay this high, I'm also priced out of the market...as will be my kids and most of my friends and their kids.

Hi guys,

I found something interesting.

I am sure you are of aware of this website called the foreclosure.com. You can enter you zip code to see who in your neighbors are filing for pre-foreclosure, foreclosure, bankruptcy etc. Now, the interesting part is as below: try entering the zip codes for the posh neighborhoods like Los Altos Hills 94022, Atherton 94027, Saratoga 95070, Monte Sereno 95030, etc. then pull up the pre-foreclosure page which will show the defendent's names. Then randomly select these names and do a google search on them, you will find quite a few names who get in yahoo insider buy/sell records, namely some CEOs and executives of publicly listed companies.

Now you start to wonder what is going wrong with our country. Why are these executive/CEO types start to miss mortgage payments on their homes? I even found a public business figure in Taiwan on the pre-foreclosure list, I dug up some of his donation records, every year in the thousands. Someone who has the money to donate 5000, 8000, but can't make payment on property tax and is on the verge of losing his home. Interesting world out there.

Have fun.