patrick.net

SFBB,

You are right, the Skyline part will tumble first. I love the view there as well, one of the lots I looked at could see almost all the way to the ocean.

Since you work in MV/PA, then it may not justify moving further south. However, the drive on 9 is absolutely breathtaking and highly recommended, if you haven't already biked down there. Once you get up to Skyline @ Page Mill above Los Trancos (assuming this is your current target area), since there's almost no traffic, it takes only another 10-15 minutes to get to 9. Saratoga is not feasible for you, because it has no schools situated that high. Los Gatos however has very good elementary and middle schools located above the Lexington Reservoir serving the Loma Prieta and Summit area. Just check them out as a reference. I go for a weekend drive along 9 all the time.

http://www.mlslistings.com/common/properties/propertyDetail.asp?open=0&page=1&mls_number=712427&type=property&name=

Ok... what's up with this house?

318 AMERICA AV
Sunnyvale, CA 94085

Currently it's on the market for $529,000.

Last October it was on the market for $450,000.

But then Zillow says this:
Sale History
02/09/2007: $505,187
01/26/2006: $580,000
07/07/2005: $475,000

So... the guy who bought it on 1/26/2006 took $74k loss... after the house sold for $55k over asking 3 months after it was listed.

And is now for sale again?

What the heck is going on here?

Changing terms at the last minute and blackmail may be illegal actions. The other side, if they're angry enough, can take you to court.

It's also bad karma. Life is too short for you to be an asshole just because you can be one.

Wow! What a difference since the last time we ran a similar thread!

Back then subprime was alive and well and setting the market by enabling marginal buyers. Ahem, since we no longer have to compete with those that have no skin in the game it sure changes things considerably.

What has additionally changed is that builders have made every effort to subvert the natural process of a correction by throwing in every incentive, including the proverbial upgraded kitchen sink!

When they're offering you 100K OFF! (and the option of *not raking leaves so they can just blow into your "old" neighbors lawn) along with 50K in upgrades, 5K toward closing AND no HOA's for a year it kind of takes the fun out of negotiating now doesn't it? Well that's certainly how it's intended. I mean, c'mon what more do you want! This marketing ploy was carefully crafted to net knife catchers that needed help in the form of "remedial negotiating".

I want to chart the utility function for trolls?

Do trolls dream? Do they appreciate sushi? What would they do if they had 24 hours with Liv Tyler?

John D,

"Lumber prices have already dropped 50%"

And yes, they have. As others have noted, Katrina (a one time event) artificially drove "lumber" prices through the roof! God love Ben Jones b/c he really tracks all the mill closings and lay-offs. This is what builders are contending w/right now. They over bid on land options, and they paid through the teeth for bldg. materials. Hence the incentives to quickly reduce existing inventories and re-establish a new, lower and more realistic cost basis from which they can hopefully recover.

The reason for the "lumber" snub is b/c most homes today are sheathed w/OSB (TM). Oriented Strand Board. Builders will readily tell you that there's no difference between OSB and good 'ol plywood. See, that's funny b/c I'm something of a boatbuilder and I haven't seen any homebuilt plans that advocate the use of OSB for a boat?

John D and DinOR:

I'm afraid it is concrete I must watch, and not lumber. The design I have is mostly precast and stone, and probably wouldn't burn if you soaked it in gasoline.

I am told Asia has become irrationally exuberant where concrete is concerned - that my future 'dream' is in a losing competition with an overpass in Beijing - though I'm not quite sure I believe that.

Anyway, no glue-and-chips-under-pressure will go into the new place unless someone sneaks it in while I'm not looking.

"glue-and-chips-under-pressure"

You sure Bruce? It's all the rage? I especially like the "glue-lam" beams they're using. Basically glue'n chips with "c" channels to nail into. (How hard is it to imagine those sagging in 3-5 years). Oh, that's right, most end user/flippers plan to be long gone before that becomes an issue.

Can anyone confirm? When a house is reposssed is that recorded as a sale? Does this affect the existing home sales?

"The price of a median home sold last month dropped to $212,800, down by 1.3 percent from the same month in 2006. It marked a record seven straight months that the median home prime has fallen compared to the same period a year ago."

"Sales of existing homes were up 3.9 percent in the Midwest and 1.6 percent in the South, while sales were unchanged in the West. Lereah said the reluctance of sellers in the West to trim prices was holding back a rebound in that region."

DinOR:

Of course I am extremely fond of that saggy fake beam, cottage in the Isle of Wight look and all the rising damp and Black Watch beetles which come along with it.

But also a raging reactionary and an engineer's son. It will cost me, I'm sure, but the karma's good.

Can anyone confirm? When a house is reposssed is that recorded as a sale? Does this affect the existing home sales?

No and no.

Apparently that sales increase in exisitng homes is a comparison of Jan 07 to Feb 07,
YOY i.e. Feb 06 to Feb 07 they are down.

They spin and they spin and they spin.........

TheOtherSide
1- It looks like you guys miss me so much that even when I have a few busy days at work and don’t post anything on Patrick.net, you really can not get me out of your mind…

I like you.

Year over year is most important. You are right Claire, the spin is the normal seasonal increase being played as a rebound.

PAR,

Can you believe that stuff? Gee that's funny since realtwhores and lenders sleep in the same bed? The realtwhore was getting a kickback from the MB for steering business their way you'd THINK they'd know, right?

And you're right, the constant REIC msg. from the late 90's on was, you can't AFFORD not to get it! (Regardless of the cost).

Bap33 Says:

my plan: Take in the zillow page of the home, show them on the graph what the home cost is 1999, offer that amount and not one penny more

A person after my own heart! Although, I'm kinder than you, as I add 5% compound interest per annum to my projected lowball. Even with the interest, the price is still roughly half of what the asking price is, here in Los Angeles.

Existing home sales are tabulated at close of escrow. There should be a fair number of pre-subprime meltdown sales from dec-jan in those figures, according to Calculated Risk this morning.

speedingpullet,

As are you dear! That's been my battle cry all along. Pre-bubble pricing, then add back CPI plus a point two (as Robert Schiller assures us has been the case since the signing of the Declaration). This is what sane offers are based on.

Saying "I'll give you 1929 prices for your 2029 401K" is beyond stupid. Especially given that many of the companies that made up the Dow at the time are no longer in existence and legions have come and gone. Who KNOWS where technology will take us over the next TWO decades (but a house.... is still.... just a house) :(

Seems it would be useful to plot a Case-Schiller graph with a ten-year moving average?

Mark,

You ARE aware this is a housing "bear" blog, right? Unless you're prepared to make an embarrassingly low lowball offer I'm afraid we can't condone that. If you ARE seriously considering buying, what are your motivations, particualrly now?

Tax advantages? Fear of being "priced out forever"? The prestige that comes with being a "loanowner"?

I'm not trying to be mean here but the dollars you've saved up for "earnest money" would be better spent attending our BLOG PARTY! :)

speedingpullet ,
Oddly enough all the other ratios fall into historical norm when adding inflation to late 90's as base.

Owning 120xrent
Rent cover mortgage
Payment 20-30% of takehome
Etc Etc Etc

While yes, your base is 1999 in LA is feasiable, up here in the Bay Area our 1999 prices were already out of wack, given that a few drove prices with free money(IPO Cash-Out). Our prices already doubled by 1999-2000. I would say 1997-98 would be a better base for us in SF Bay Area.

That first bubble was all madness as well, which prices have yet to correct for!

Mark,

"Earnest money" is soooo 2005 --like writing love letters & feeding squirrels. We're entering a New Paradigm now, and that paradigm is a real bitch. She says: "take what I'm offering or go pound sand".

Note to delusional wanna-be sellers: SILSIH

Mark,

Schwew! (Close call). Remember her @ Patrick.net friends don't let friends buy ridicuously overpriced POS! :)

Now, (and I can't believe I'm saying this) I would approach this the same way subprime ARM'ed to the teeth FB's went about it! Pretend you're qualified to pick up each and every property provided that fits your "investment criteria". Don't own a bimmer? Borrow a friend's! Tell them you represent a consortium of sophisticated and well moneyed investors looking to "build positions" in _____ area. In short.... bullsh@t 'em! Believe me, they'll be guys out bottom feeding, guys like FAB won't have to fake it (but he's probably pretty well recognized in those circles). In fact, his moves might be construed as a buy signal to others! That's the tough part. Not broadcasting your intentions. Guys like us? No probalo. Use your anonymity to your advantage.

NBFA (Not bottom feeding advice)

I nominate HelloKitty's New Era tips for buying in a down market:

“Make sure to ask for all appliances, furniture, and clothing. Sellers will have to cave in. If the wife is hot, make sure to ask for a ‘date’ with her too, they can only say no. Also always ask for the sell to write a 2 page report why they deserve to have you buy thier property, if they reveal financial distress subtract 10% from offer price.”

Sound crazy to you? Imagine going back to 1996 and telling desperate sellers that in ten years people would be writing "love letters", feeding squirrels and groveling on their knees before imperious sellers. Wait a few years and see...

Mark asked about "Good Faith" deposit.

God help you! ... you made a deposit and a two dozen others as well.
so the con walks away with all your cash. Man good luck. A least-worst case you most likely are financing the realtors operations (rent salaries and other costs) to keep them afloat.

There is no such thing as "Good Faith Deposit". You just be "punked"!

LOL! Why do you need to make a Good Faith Deposit if so many buyers are making "multiple offers". If you walked away wouldnt there be others ?
Or maybe there are no other multiple offers!

HARM,

You're in rare form today sir! That's why I made the distinction of saying "earnest money". Like our man Ace, I've never heard of a "Good Faith Deposit". Good Faith Estimate maybe?

I'm only half kidding about the misrepresentation discussed above. Think about this, subprime FB without two nickels to rub together is offered a no money down McMansion, BUT (and get this) he wants to SHOP for the best rates! If it worked on the way up (I'm willin' to give it a shot on the way down!) :)

I want to chart the utility function for trolls?

Do trolls dream? Do they appreciate sushi? What would they do if they had 24 hours with Liv Tyler?

In my dreams, theOtherside is Liv Tyler. No need to graph the utility function.

Sorry Randy, in your dreams. In your dreams. :(

I actually have a lot of respect for Casey Serin. He has a lot for me to learn.

“Sales of existing homes were up 3.9 percent in the Midwest and 1.6 percent in the South, while sales were unchanged in the West. Lereah said the reluctance of sellers in the West to trim prices was holding back a rebound in that region.”

lunarpark,
That seller "reluctance" is a reluctance to enter into short sale territory, given the lack of equity most sellers in CA and the rest of the West have.

We now have a parallel meaning for 'graph the utility function'...

bahHAhahahaha. sniffle. heh.

Randy, that's prime.

I figured I could troll some car dealerships and waste their time

Every time I walk into a Toyota dealership, I buy a car within two weeks. I have never bought a Toyota-brand car though.

Be careful.

From that same article:

The Realtors said they're hopeful that prices could start to turn around later this year. Pat Vredevoogd Combs, a Grand Rapids, Mich., Realtor who is president of the trade group, said the weakness in pricing should help bring in buyers who had been priced out of the market during the white-hot boom years.

"Overall, home prices should rise slowly this year, and many buyers have an opportunity now that was only a dream during the five-year boom," she said in the group's statement.

There are SO many things wrong with these two paragraphs:

- So, a couple percentage points drop in prices will finally make homes affordable for those who've been priced out?

- Does anyone really think that MI of all places is going to have a comeback in housing prices this year? Dream on!

- What's up with "The Realtors"? It's already silly enough that Realtor (TM) is capitalized - why the "The" now? It sounds sorta like "The Mob"...

Person,

Do most of your "leg work" over the phone! Tell 'em your "putting out a bid" for a 2007 ____. Say something like "could ya' fax it over to me?" They'll probably suspect you're BS but at least you're not like 99% of the J.O's they have to deal with! If they say something like "If I can get you in below____ would we have a deal?" Would you come down? Say "sure" and fax 'em you're business card and say "but you DO realize I'll be looking at other bids, right?".

Now before any of you judge, please try and remember we're coming off of 5 years of armpit high BS so... "I'M" supposed to feel bad here?

I’d like to think of me and my friends are civil people, but on occasions that people I know almost or did get into a fistfights (since grade school) happened in car dealerships.

Wow. What happened?

skibum,

Where "reluctance" is concerned you are absolutely right! For all the cussin' we've done about subprime it actually turns out that it is our friend. Had these people bought w/sensible financing packages they may have been able to hang in their forever. Now? No so much.

Of course, then again had they bought on sensible terms we wouldn't have a bubble now would we? But the fact remains this will be a significant catalyst in getting these "squatters" out!

More food for thought RE: the existing home sales numbers from the WSJ below.

Pretty good take on the issue, IMO. All I can add is, I didn't realize that Omar Shariff is now a housing analyst! Man, Lawrence of Arabia is a great movie.
:)

**********

Home-Sales Surprise
March 23, 2007 12:34 p.m.
Federal Reserve policy makers say that the housing "adjustment" is "ongoing." But some investors could be wondering if what really needs adjusting are their bifocals, after home sales came up hot last month.

U.S. home resales actually advanced 3.9% during February to a 6.69 million annual rate, the National Association of Realtors reported today, trumping forecasts of a decline that came amid worry that buyers might be having problems securing financing. For those tuned into the subprime scarefest, that may seem a truly puzzling result. But the encouraging headline reading may just be the rustling of vultures' wings, as scavengers descend on the market amid a decline in home values. The median home price declined 1.3% in annual terms during February, the seventh consecutive month that prices have eased. Also troubling, more homeowners appear to be dumping their homes on the market, which means prices may decline to an even greater extent. The inventory of existing homes for sale surged 5.9% during February to 3.75 million, a backlog that would take more than six months to work off at the current sales pace. Economists say that means anyone looking to celebrate the end of the housing correction may want to keep their streamers in storage. Steven Wood, the chief economist at Insight Economics wrote that the inventory problem needs to be eliminated first.

That could be a tall order. Easy credit is drying up fast thanks to the unraveling of the subprime mortgage sector, herding a pack of potential buyers out of the market and eliminating them as candidates to sop up all that extra supply. Even the reliably optimistic David Lereah, the chief economist for the realtors, thinks the subprime fiasco could wipe out a quarter of a million home sales in coming years. (To be sure, some housing bears think that's a pretty Panglossian estimate, and that the toll may turn out to be much higher.) The inventory problems aren't the exclusive province of new or resales markets, either. The chief executive of KB Home, which reported some flimsy earnings yesterday, said the "persistent imbalance" between home supply and demand "is fueling intense competition and pricing pressure among homebuilders and other participants in the new home and resale markets." With a number of subprime lenders going into the tank, or no longer dishing out new loans, the squeeze may get even worse.

Some economists believe that the national data may be masking acute problems in particular markets, as well. Joseph Brusuelas of IDEAglobal pointed out that a very strong condominium market in New York City that is being bolstered by fat income gains for the Wall Street set may be obscuring "the real problems in Miami, Las Vegas and several other urban areas at risk when the condo sector unwinds." And other say that balmy winter weather may also have caused some funny business in the data. Omair Sharif, strategist at RBS Greenwich Capital, pointed out that the existing-home sales are recorded at contract, "so February's data mostly reflect transactions that occurred in January." Temperatures during the first half of January were downright tropical by normal Northeast standards and Mr. Sharif wrote that that "likely contributed noticeably to the 14.2% surge in sales in that region."

Am I interpreting this incorrectly, or are people asking for a deposit when you simply make an offer?

I can see after you have negotiated a deal that both people have agreed to, but is this money that people are asking you to put down before that point? Is this 'Are you serious about this?' money?