patrick.net

John F,

"that is worthy of someone of my status"

Why did it take so long for someone to say that?

Thank you, although I’m starting to wonder why this bird flu seems to be evolving to a mammal transmisible virus at this point…

Shit happens.

Which is why we infectious disease types ALWAYS wash our hands.

I know.

Half the things you’ll catch out there are fecal-oral.

I used to be very careful. But then germs are everywhere anyway. I do not care as much anymore. The single most important factor in life is fate anyway.

SF Dean,

"overall economy tanking as a result?"

Will there be pain? Sure, but I tend to take the view that it will most directly impact those that are reliant on RE for their livlihood. Mort. brkrs. are already feeling the pain. The "re-fi" craze evaporated last Labor Day and with the on going fight to open up the MLS (banzai) there is bound to be pressure on realtors comp. as well. A true abberation was our own Monaco Coach right here in Coburg, OR. After 9/11 people thought twice about flying and "high end" RV's sold well. Their best years ever! That's going to dry up also. Most of the down payments were done w/ cash out re-fi's.

You can live in your vehicle but you cannot drive your house!

http://www.autoblog.com/2006/01/05/gmc-pad-wins-california-design-challenge/

All prices have to do is level off for things to get REALLY ugly.

Exactly. Also, once the expectation changes, high price-rent ratio can no longer be justified.

DinoOR (and others),

A newbie question. What is the real problem of having zero equity in one's home IF (a big IF) the home owner is not forced to sell or refinance ? Actually, the questions I have is - If I buy a house of 1M with 200K down, and the value drops to 700K in 2 years, the loan amount of 800K exceeds the value of the house. Can the bank demand more equity to be given to them in such a scenario ?

My particular example may be wrong. But I am trying to understand the "equity cushion" term. Is it only a risk that becomes real when I am forced to sell, or is it a risk because the loan is "callable" by bank ?

Ewwwwwwwwwwww. Excuse me while I go wash my hands………..

Don't worry. Germs are everywhere. What doesn't kill you makes you stronger.

But alas, there is also chance.

Fate has more influence than chance. Sometimes, it is just not possible to collect that $200. ;)

My cats will be angry when they have to stay inside if/when bird flu gets here.

Mine are always inside. It is too dangerous to let them out.

Bird flu will get here. But there have not been major human outbreaks anywhere.

It could certainly cause problems when the time comes to refinance though, and the bank is no longer willing to advance you the amount you still owe. You are responsible for the difference!

Yes, and consider that an estimated 82% of CA mortgages last year were IO or neg-ams with a national average of 2% down payment, plus the fact that most CA homedebtors are already stretched to their limits even BEFORE they've reached the end of the fixed/teaser interest rate period. Most of these buyers simply will NOT be able to cover their monthly payments when they adjust to ARMs, much less when they convert to fully amortizing mortgages.

These people will either HAVE to refinance or sell the house. Which, of course, they won't be able to do, beacause they will be NEOs (negative equity owners).

Many people refinance just to pay their mortgages. These people will be screwed.

NEOs will want to think that the reality is all fake. :)

RANDY, what is your email address? I have some questions for you. Thanks.

randolfe_@hotmail.com

You can also reach me from randolfe.typepad.com

ToBA or not toBA,

tsusiat stole my thunder BUT there are other repercussions that may be more "indirect". While you may be current on your obligations (that doesn't mean that your NEO neighbors are)! Everyone has their threshold of pain. For many Americans it is zero. Particularly if the whole idea was to make a huge killing in a short time.

Many people refinance just to pay their mortgages. These people will be screwed.

I know a guy like this. He's a pretty good friend actually. It's very sad. He was in very good shape at one point, but a career bump and nasty divorce later, now he's sitting on a McMansion which he should have sold to finance the divorce. He's a real finance quant too, so he should know better; no excuse. He's probably solvent up to a 20-25% correction in prices, but after that he's upside down bad. Even with flat prices, he's still digging a hole. Just goes to show it requires more than intelligence. You have to have some common sense too.

Peter P,

GM's "PAD" looked pretty cool! Now all it needs is graffiti proof paint. Back in the 70's my brother worked with a guy in NW Portland that lived in his RV during the week just parking it on the street. On the weekend he took it to his cabin towards Mt. Hood. Then again he was single. It certainly didn't have the appointments of the "PAD".

Floor traders go extinct, Realtors(TM) go extinct, mortgage brokers are pared back. .. I guess we will always need undertakers.

There are still bond floor traders even though much of the trading is now done on eCBOT. S&P floor is still alive after the E-mini practically took over.

SF Woman,

The "Big Board" was forced to update technology or go extinct. They were losing volume every year.

My bet is it jumps from birds to pigs, becomes transmissible between pigs and then to people in a crowded Asian city where the three live in very close proximity.

A very plausible scenario.

Unfortunately that person will probably then get directly onto a flight to SFO about 5 hours before the symptoms start.

There is no defense. Even if we close the airport bird will still get us eventually.

I think us humans have been too arrogant in thinking that we can cheat Nature.

GM’s “PAD” looked pretty cool! Now all it needs is graffiti proof paint.

Just see graffiti as THE new paint. ;)

TEST

First time posting--have been reading all of your posts for days now and am intrigued by the amount of info. and knowledge.

Perhaps we should just see a pandemic as Nature's way to liquidate "malinvesments".

We think that every human being is special, unique, and invaluable.

But Nature thinks that evey one of us is expendable.

Peter P,

Is anyone making $$$ trading the mini's?

You can't imagine the relief I've felt finally coming into contact with sane people like yourselves. I have tried many times with many different people of varying income levels and and 99 out of 100 look at me like I have 2 heads when I tell them that I think buying a home in this market is a bad investment.

Is anyone making $$$ trading the mini’s?

Don't know. It has decent liquidity and it is a 1256 contract for tax purpose (60/40 long/short term treatment), so I think it is no worse than stocks.

ps I wonder why my last post on prefab homes was moderated?

Does it contain links? Some links trigger moderation.

It's coming boys and girls, we'll show those pesky Persians a thing or two, how dare they price their oil in Euros, whoops I meant, lets keep the world safe from Nukler devices.

http://tinyurl.com/h8573

http://tinyurl.com/qw3te

Funny how the rhetoric is increasing as the Bourse is just about to open.

It’s coming boys and girls, we’ll show those pesky Persians a thing or two, how dare they price their oil in Euros, whoops I meant, lets keep the world safe from Nukler devices.

tinyurl.com/h8573

tinyurl.com/qw3te

Funny how the rhetoric is increasing as the Bourse is just about to open.

Davis,
No I haven't, thanks for the info, I'll check it out.

Believe it or not Seattle's RE is nearly as rediculous as CA. I rent a 300sq ft house on 75 ft of lake Sammamish waterfront with a boat lift for my ski boat and a huge yard for my child, in the best school district in the area, 2 miles from the Microsoft campus. $1.5 being offered to the owner to then be torn down and build a castle in it's place. I pay $2700/month

sorry should be 3000 sq ft

Believe it or not Seattle’s RE is nearly as rediculous as CA. I rent a 300sq ft house on 75 ft of lake Sammamish waterfront with a boat lift for my ski boat and a huge yard for my child, in the best school district in the area, 2 miles from the Microsoft campus. $1.5 being offered to the owner to then be torn down and build a castle in it’s place. I pay $2700/month

300sf or 3000sf?

I was a stock broker from '98-'02 i've seen this before and i learned my lesson.
I showed this blog to a few friends of mine and of coarse they said, "that's CA, it doesn't apply here.

I have tried many times with many different people of varying income levels and and 99 out of 100 look at me like I have 2 heads when I tell them that I think buying a home in this market is a bad investment.

Yes, (bad Clinton voice) I feel your pain... I have pretty given up even trying to reason with sheeple. I just congratulate them on their *wonderful* investment, suggest they buy three more just like it --preferably with a 100-year NAAVLP-- and end the conversation as quickly as possible. You can't fight ignorance and mother nature.

I live in a nicer place than almost everyone I know and they all want to come to our house and waterski and bbq but they all ask "so you lookin for a place to buy, only signed a one year lease didn't you?" I can hear the whispering and the derogatory comments insinuating that I am a lowere life form because I rent. Of coarse, that right before they tell me they'd like their burger med-rare. And, I always get the...."yes, but what about the tax deduction?" I can't take it, I'm going to lose my mind.

houselessinseattle,

Welcome fellow Northwesterner! Seattle and much of Portland is every bit as ridiculously priced as any other bubble region. What makes it more acute is that in many cases we don't have near the salaries/wages of the BA. With bidding wars up in our Pearl District rivaling NYC prices you really have to wonder what these people are thinking.

My best friend form college is an up and coming attorney in NYC and has moved a couple times in the last 5 years and made incredible gains on the homes. He makes about 300k, has a wife at home with 3 kids under 5 yrs old. He just bought a fixer-upper in a very wealthy suburb called Rye. The house cost 2mil plus all the ridiculous fees, etc, in NY. He had about 500k down and did a IO loan for the rest, and don't forget the 42k/year in taxes. This is a very frugal and intelligent person who tells me he knows it's a risk but RE in NY always goes up. Crazy

houselessinseattle,

And that's the part that grinds me! Northwesterners love to vilify Californians (that is unless they are selling their house to one)! We seem to want it both ways, the wide open spaces and abundant nature AND a decent standard of living without having any real infrastructure!

Then there's the long held myth that Californians are to blame for OUR affordability issues and at the same time chuckle under our breath b/c all these people move up here and pay whatever we ask b/c they're "stupid" and yet somehow have lots of money? To further the insanity they then insist that a correction or outright crash in CA won't affect us! I've given up.

Dinor,
I'm with you. I get less frustrated when I kick back on my deck overlooking the lake sipping on a beer knowing that I am living in a place that I have only dreamed of and I better enjoy it while i can.

SF Woman,

That was a great time! Before the "bleaching". You could go to a classy place or go slummin' on the same block! No more. The funny part is that everyone goes out of their way to act oh so sophisticated. I get it already!