patrick.net

*increasing, 1st word, 2nd line.

If you told someone back in the 80’s and 90’s they would sell of over $1M many would think your nuts.

Well back then they were still making more land and it wasn't special.

There's a mildly good discussion about where prices are heading on this thread:

http://www.yelp.com/topic/rDp0r5MtesBaUfS6ee1TpQ?fsid=V_FHAD7imW4y1K7CCr-51w

a) I do NOT believe a bust will occur in the BA; however, I think a smaller, slower decline of 10-15% over a few years is probable.

Agree? Disagree?

Dorcas,

Way cool chart! Now all we need to do is create a third line on the graph to show subprime lenders going belly up for the "full effect"!

"I pity the fool"

Let's save that for a future thread. Mr. "T" and an FB sharing a cell. Guess who's going to be the "mommy"? I know, I know, that's a visual we could all live without!

eburbed,

I tend to.....disagree. Not only do I feel there will not be a 10-15% correction in the BA, homes will actually continue to appreciate. :)

Randy H Says:

> 118 Neider Ln, Mill Valley 94941
> Sale History
> 02/28/2007: $1,200,000
> 02/28/2007: $1,900,000

The info I show is:

1997: The 3,216 sf 5br 4ba home on a ¼ acre lot was built
10/20/05: $1,725,000 sold to Sirva Relocation, LLC
02/27/07: $1,900,000 sold to Christopher J. Harney & Barbara B. Harney (Sale recorded on 02/28/07 and a first TD of $1.3mm)

I can’t see the actual recorded document in .pdf for this property.

LOL! eburbed said

"Well back then they were still making more land and it wasn’t special."

Actually again, many did say that land was limited back many years/decades. Nothing new.

However, I never heard anyone boast about this area before as we hear today. I often ask, who are these idiots?

Take DinORs, comments...'homes will actually continue'... yea right... Many peoples jobs will be moved elsewhere if this continues.

FAB

Numerous thanks. Does a first TD $amount mean the amount owed to lender or the amount owned by buyer? Should I read this that the guy took a $1.3m loan?

Space_Acer,

Isn't it funny that when money is expensive there's no great sense of urgency to build. Yet when money is cheap WE'RE RUNNING OUT OF LAND! (Oh and every place becomes "more special")

We dont need to build more homes,
There is no shortage of housing.
Because we dont need to hire more
people, however if the current workforce
continues to become more expensive
where employers are unable to create
a profit will force them to seek lower cost
workers elsewhere. At the end of the day,
its all about the numbers.

Its no accident that we have programers working
for feed by local employers in China/India.

Just like the textile/auto industry we too
in SV have matured.

speedingpullet,

The SF Zoo is in the Outer Parkside and it is one of San Francisco's more affordable neighborhoods. Of course these things are all relative, but you can get a pretty nice home for ~$700k there. This is probably the cheapest area in The City that is not crime ridden. It is very foggy, though.

My wife who grew up here in the Bay Area always said, the weather is very nice, the landscape is beautiful, but not that this price.

The funny thing is, sometimes we meet these new immigrants or out-of-state migrants who just came to the Bay Area just a few years ago explaining to my wife why BA is so special and the housing price well justified. She is like, oh really? Thanks for the enlightenment.

Isn’t it funny that when money is expensive there’s no great sense of urgency to build. Yet when money is cheap WE’RE RUNNING OUT OF LAND! (Oh and every place becomes “more special”)

Exactly! Since they aren't going to be giving money out as easily as they were you can now say:

"Buyers, they're not making any more of them!"
"Sell now, while you still can or you'll be priced in forever"

OO -
Both funny, sad and very dangerous... Maybe someone needs to explain to them the deflationary nature of the local tech economy, what makes it grow and what will destroy it.

The funny thing is, sometimes we meet these new immigrants or out-of-state migrants who just came to the Bay Area just a few years ago explaining to my wife why BA is so special and the housing price well justified.

Although clearly current house prices are not justified, natives of the BA and other "prime" areas often take their environs for granted. Having grown up in the Midwest I will argue with anyone that there is, and should be a premium for the BA and other great areas of the world.

...I await the requisite "teh bay area suxorz" replies, keeping in mind that 99% of those folks wouldn't survive 2 months living where I grew up.

I await the requisite “teh bay area suxorz” replies, keeping in mind that 99% of those folks wouldn’t survive 2 months living where I grew up.

teh wolrd sux.

Dorcas

So I don’t mean to seem rude just posting out of nowhere, but I hardly ever post anything on any blog I read

If only that were the extent of "rudeness" that sometimes passes around here. Seriously, everyone is welcome to post. No need to be shy, it's just a blog after all :)

I await the requisite “teh bay area suxorz” replies, keeping in mind that 99% of those folks wouldn’t survive 2 months living where I grew up.

The Bay Area really does do a good job of producing people who can't live anywhere else.

A few years ago I met a guy who had just returned from a 4 month stint in Houston (consultant). He said he couldn't wait to get back here because it wasn't diverse there.

(But what he really meant was "It isn't 30.2% Asian there".)

I also met someone who did a stint in Boston. She couldn't wait to move back because it was too cold and gloomy there.

Go fig, maybe this is the most perfect place in the world. :(

I also met someone who did a stint in Boston. She couldn’t wait to move back because it was too cold and gloomy there.

What about Chowdah and raw littleneck clams?

I just came from an auction where a 1 million dollar home which needed some serious work just sold for 1.155 million. There are still some suckers out there.

Auction is a form of psychological manipulation. You need to be very detached to be successful. If any participant has any "passion" about the object, game is over.

Randy H Says:

> Question for experts:
> What does it mean when a homes sells and
> is recorded twice in the same day.

This is a situation where a speculator put a deposit down on a lot and found a buyer before the project was even finished. This is a classic flip.

Randy -

"I will argue with anyone that there is, and should be a premium for the BA and other great areas of the world."

And who do you expect will to pay you a salary so you can in turn pay premium $$ for housing. We are not like other great areas of the world, our economy is pegged to deflationary products we make. We are in short more Walmart in many ways.

Eburb writes'

"The Bay Area really does do a good job of producing people who can’t live anywhere else."

Well now as you may know, only 1/3 of Natives still live in California. Many are actually living in Utah, Or, Wash, Tx and Nevada.

I know many who I grew up started to move outofstate starting in the 80s and into 90's.... Did BA fail them?

On a BWOnline artifcle, they wrote about rent:

"In general, price trends in the apartment sector are inversely related to those in the housing market. When home prices increase, as they did between 2001 and 2005, rental rates decrease. After the price runup, which made homeownership unaffordable to many, renting became a better option and rates skyrocketed."

http://www.businessweek.com/bwdaily/dnflash/content/jan2007/db20070110_511187.htm?chan=rss_topStories_ssi_5

Does this make any sense? Wouldn't an increase in house prices increase underlying rent as it is the way owners extract value from their asset?

Peter You said

"Auction is a form of psychological manipulation"

Do you prefer your realtor to tell you...
"There are other bidders, Can you go 10% above asking?
And you ask "What are the other bids and who are the bidders?"
To which they reply... "I dont know, look do you want this or not"
..Trust but verify...Nice Jedi Mind Trick... I hope you really trust your realtor and really believe he isnt ripping you off. Trust me its happening every day.

Does this make any sense? Wouldn’t an increase in house prices increase underlying rent as it is the way owners extract value from their asset?

Renting and purchasing are alternatives to each other. On the other hand, asset pricing is driven primarily by expectations of future pricing. Here we have an interesting interaction between the two.

Do you prefer your realtor to tell you…
“There are other bidders, Can you go 10% above asking?

People can tell me anything. I listen to my inner voice. (And my astrologers.)

Trust me, auctions can be brutal. This is why I will only use Buy It Now at eBay.

You can't force rents higher because your mortgage is high. With a bunch of new houses going up and people buying houses, the number of people renting decreased, lowering demand, thus lowering prices. You'll see the occasional FB trying to rent a 3/2 for enough to cover his PITI, but they won't be able to rent them out for that, and quickly drop down to close to 'market' rate. It slows the hemmoraging of cash.

Rents dropped because a lot of people left the BA after the dot com crash, and there was much more rental space than was necessary. With people buying all the new housing going up, even fewer rentals were required. With the speculators now trying to rent out their properties, I doubt we'll see much of an increase in rent even as the foreclosures start the shove FBs back into the rental market.

If a lot of speculators and FBs manage to hang on to their homes through the next ten years, we may see the 'golden' era of renting here in the BA... Housing stagnant, but rents not rising either.

Home prices from 1998 to today have been artifically inflated by number of factors. Rentals were inflated in 1997-2000 due to shortage of housing,
hwoever once demand for workers declined so did rental prices.

I quick note... Back in 1991-93
Home prices fell,
Rental cost fell,
Interest Rates fell.
In 1990 the workforce of SV was around 850K, todays its the same number if not less. So demand for housing has been flat for 15+ years.

Today home prices however have gone up 400% in 10 years...
never has this happened before in history.

"Here we have an interesting interaction between the two."

Peter, I would say we have an interesting "Divergence" of the two...
Just like the Divergence of NASD new economy and Dow old economy.
One went to the moon while the other did so so... we are no where near 10,000 on the NASD Y2K peak... we may never see that in our life time again.

Does a first TD $amount mean the amount owed to lender or the amount owned by buyer? Should I read this that the guy took a $1.3m loan?

Yes---buyer put $600K down and took out a $1.3M loan.

SFBubbleBuyer, what was interesting was back in 2000-2001, with all that vacancy for Commercial space the landlords (based in LA) didnt want to lower the rent from 3/sq ft... They often said, the BA will snap back... well we may be back... but in no way could a local company afford $3 per sq ft. The norm today is around 1-1.33/sq ft. thats 2/3 down since 2000.

Peter, I would say we have an interesting “Divergence” of the two…

But the two compete for occupants (and specuvestors). When everybody runs for purchases, the demand for rentals drops. This is how they interact.

"I listen to my inner voice. (And my astrologers.)"

Yes im shure the Realtors help out with that too...
It only takes a few to pepper the area with fake bidders a
and force others in the market to the new paradigm.

You wonder if the realtors ever took their ques from OPEC...
Nice monoply they have on setting prices... Not an shed of light
on true values to the public. I just cant wait for the RE industry to get slamed with what Accountants have to deal with --- SOX legislation.
they are already talking about it in Congress...

Peter P Says:
March 22nd, 2007 at 4:36 pm
Does this make any sense? Wouldn’t an increase in house prices increase underlying rent as it is the way owners extract value from their asset?
Renting and purchasing are alternatives to each other. On the other hand, asset pricing is driven primarily by expectations of future pricing. Here we have an interesting interaction between the two.

The disconnect between the two is the bubble. IMO it is actually reversed, increasing rents should mean the home's value has increased. A bunch of FBs though are going to disagree.

Thanks CB,
Some of my coworkers sold their home ... in each case it was the same... one offer only (which was accepted) and the only offer was 5-10% above asking. What gives!!! 10% above asking and only one offer? The sellers didnt care! Which is understandable! If I was the buyer, well now....

"At the same time, open house activities appear to be picking up. Could this be the start of a considerable spring bounce?"

Corporate accountants/FPA may look at this and say, Maybe backend loaded... borrowing from March sales. That may no look rosey when March numbers are reported...

Yea so many similarities like the software-internet equity bubble of 2000-2001. (what many call the dot.com)

"The disconnect between the two is the bubble. IMO it is actually reversed, increasing rents should mean the home’s value has increased."

You could add to that "wage inflation" as we saw in the 1970s. Some on CNBC are talking about stagflation returning.